Economy Exactly 40 years ago today F.A. Hayek

[Eric Silva 2.0]

"Has monetary policy ever done anything good? I don't think it has. It has only done harm. That's why I'm pleading for denationalization of money."

At time 5:20..... Hayek advocates for something like Bitcoin and crypto. He called it "the solid". The man interviewing Hayek (Blanchard) calls it "The Hayek".

At 10:10....."People are becoming more aware that the present monetary system is not really satisfactory." In regard to the third world debt crisis

At 11:00..... Hayek doesn't believe in returning to a gold standard but does advocate for a transition period as we return to a "stable" currency. They agree this is fundamental to the survival of Western Civilization.

At 19:25..... "I don't believe we shall ever have good money again." He suggested introducing a new form of money that governments can't stop (Bitcoin? or some other form of money)

At 19:40.... Buchanan, What do you think is the major threat to Western Civilization? He offered ideas like another world war, political or economic issue. Hayek thought the major threat was pacifism. He thought Russia could become powerful. The west would then have to bend their ideas or ways to satisfy Russia.
At 21:50...."I am greatly alarmed at European pacifist movements"

At 23:00.... On Keynes, "He had the illusion that a little inflation is good......He was not a very competent economist at all. He was a great man but I don't think he was a great economist."

The conclusion starting at 25:00 is worth listening to. He (Buchanan) is very early but describes the world we live in today in my opinion.

 

[Yehudim]

And 40 years later, US currency is perfectly fine.

 

[HOLA]

At 23:00.... On Keynes, "He had the illusion that a little inflation is good......He was not a very competent economist at all. He was a great man but I don't think he was a great economist."

He was a great economist and something that is often overlooked about him is that he was a great investor as well. iirc he generated something like a 12% annual return from the late 20's until the mid 40's, which might not seem incredible at first, but he did it mostly during the Great Depression, which definitely makes it impressive. His outperformance relative to the overall market was significant.

Some of his ideas greatly helped me out when I was starting out:

“As times goes on, I get more and more convinced that the right method of investment is to put large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think people limit their risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.”

 

[CantCucktheTuck]

And 40 years later, US currency is perfectly fine.

Keynesian economics working as intended.

 

[Eric Silva 2.0]

He was a great economist and something that is often overlooked about him is that he was a great investor as well. iirc he generated something like a 12% annual return from the late 20's until the mid 40's, which might not seem incredible at first, but he did it mostly during the Great Depression, which definitely makes it impressive. His outperformance relative to the overall market was significant.

Some of his ideas greatly helped me out when I was starting out:

“As times goes on, I get more and more convinced that the right method of investment is to put large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think people limit their risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.”

There a is part towards the end where Hayek talked about how Keynes made a fortune in commodities.

 

[Patrick Jane]

Bitcoin is worthless, but Hayek is based.

 

[Eric Silva 2.0]

And 40 years later, US currency is perfectly fine.

If you think this is perfectly fine that's your opinion. I think it shows you don't understand the times we are in. We are at the beginning of a stagflation type of economy. It will be worse than the 70's. The best we can hope for is something like a 'hyperstagflation'.

 

[Rational Poster]

If you think this is perfectly fine that's your opinion. I think it shows you don't understand the times we are in. We are at the beginning of a stagflation type of economy. It will be worse than the 70's. The best we can hope for is something like a 'hyperstagflation'.

And when you're wrong will you write an apology thread? I doubt it.

 

[Jack V Savage]

And when you're wrong will you write an apology thread? I doubt it.

Dude, 40 years after Hayek was proved wrong, he's still saying it's right around the corner. If this guy lives to be 200 years old, and things are still constantly getting better, he'll think the disaster is right around the corner.

 

[Rational Poster]

Dude, 40 years after Hayek was proved wrong, he's still saying it's right around the corner. If this guy lives to be 200 years old, and things are still constantly getting better, he'll think the disaster is right around the corner.

Any day now will be the financial apocalypse and you'll be sorry you didn't invest into virtual currency that requires electricity to use and government backed fiat to access the value.

 

[Eric Silva 2.0]

And when you're wrong will you write an apology thread? I doubt it.

I will. I will say that I am not saying tomorrow. By the end of the decade it will be generally understood that we are in some type of inflation with lower growth (stagflation). I think the possibility of higher inflation and lower growth is in play. If inflation assets aren't in play in the next 5-6 year then I don't know what I'm talking about. As I write this, gold is over 2400. It's close to a new high. Silver just broke 30 dollars and is up over 6% today.

Dude, 40 years after Hayek was proved wrong, he's still saying it's right around the corner. If this guy lives to be 200 years old, and things are still constantly getting better, he'll think the disaster is right around the corner.

That's a fair criticism. The right around the corner stuff that people on my side predict is nonsense. I've been doing this long enough to know that the timing is very hard to predict. I give it 5-6 years but should happen earlier. I don't like giving time predictions or price based on time. I think it's more important to understand the times we are in and be in the right investments. I'm very happy with what I'm doing. Guys like you don't understand inflation and that's why you don't understand why people are in assets like gold, silver and bitcoin. These assets will shine during times like this. There are interesting things going on in the copper markets right now. All the signs are there for people who know what to look for.

 

[Jack V Savage]

I will. I will say that I am not saying tomorrow. By the end of the decade it will be generally understood that we are in some type of inflation with lower growth (stagflation). I think the possibility of higher inflation and lower growth is in play. If inflation assets aren't in play in the next 5-6 year then I don't know what I'm talking about. As I write this, gold is over 2400. It's close to a new high. Silver just broke 30 dollars and is up over 6% today.

Would you have made the same predictions 5-6 years ago?

That's a fair criticism. The right around the corner stuff that people on my side predict is nonsense. I've been doing this long enough to know that the timing is very hard to predict. I give it 5-6 years but should happen earlier. I don't like giving time predictions or price based on time. I think it's more important to understand the times we are in and be in the right investments. I'm very happy with what I'm doing. Guys like you don't understand inflation and that's why you don't understand why people are in assets like gold, silver and bitcoin. These assets will shine during times like this. There are interesting things going on in the copper markets right now. All the signs are there for people who know what to look for.

I remember a follower of quack Austrians (Greoric) who posted in 2014 that we'd see the biggest crash the world has ever seen starting late that year. I bet him he was wrong, and he just flipped out, and eventually got himself banned. Peter Schiff predicted we'd have hyperinflation by 2010 after the GFC. Another one (@Zeke's Chaingun said nine years ago that we'd have an epic meltdown within the next 10 years--I guess he still has time!). We've had this kind of thing just non-stop for as long as the WR has been around, and people never learn. Again, Hayek himself was making bad predictions before the Internet existed. I'd actually be satisfied if Austrians would at least just acknowledge that maybe they could possibly be wrong and the whole field is not just idiots or evil actors (and thus tried to think through their positions instead of personally attacking people who do).

 

[Eric Silva 2.0]

Would you have made the same predictions 5-6 years ago?

I remember a follower of quack Austrians (Greoric) who posted in 2014 that we'd see the biggest crash the world has ever seen starting late that year. I bet him he was wrong, and he just flipped out, and eventually got himself banned. Peter Schiff predicted we'd have hyperinflation by 2010 after the GFC. Another one (@Zeke's Chaingun said nine years ago that we'd have an epic meltdown within the next 10 years--I guess he still has time!). We've had this kind of thing just non-stop for as long as the WR has been around, and people never learn. Again, Hayek himself was making bad predictions before the Internet existed. I'd actually be satisfied if Austrians would at least just acknowledge that maybe they could possibly be wrong and the whole field is not just idiots or evil actors (and thus tried to think through their positions instead of personally attacking people who do).

"Would you have made the same predictions 5-6 years ago?'
I said before this decade that we would have stagflation. There are whispers about it already but it's not here yet. If it doesn't happen by the end of the decade then i'm wrong. I will admit I thought we would be further into it by now. I think the Austrian problem (my side) is the time prediction. Calling for crashes right around the corner stuff just makes it look foolish. Most important for me is that gold and silver prices will be significantly higher by the end of the decade. They are doing well now but just getting started. It's really about making money for me. The time prediction is fun but it's more about my wallet. I think bitcoin should do well in this environment as well. I don't care if the market crashes anyway. I think people that say that type of stuff don't really understand the times we are in.

 

[Jack V Savage]

"Would you have made the same predictions 5-6 years ago?'
I said before this decade that we would have stagflation. There are whispers about it already but it's not here yet. If it doesn't happen by the end of the decade then i'm wrong. I will admit I thought we would be further into it by now. I think the Austrian problem (my side) is the time prediction. Calling for crashes right around the corner stuff just makes it look foolish. Most important for me is that gold and silver prices will be significantly higher by the end of the decade. They are doing well now but just getting started. It's really about making money for me. The time prediction is fun but it's more about my wallet. I think bitcoin should do well in this environment as well. I don't care if the market crashes anyway. I think people that say that type of stuff don't really understand the times we are in.

Growth has been really strong this decade, though. We had a short-term burst of very high inflation, but that's been over. So both elements are missing, and you have only a very short time to get them in place again. What's more, the thing pressuring inflation now is that we're at or near full capacity. The expectation now is that policymakers will probably have to support demand more than fighting inflation going forward (that is, people expect rate cuts before increases). How would you measure whether you're right? Another issue I have with Austrians is that they are very slippery with the terms. Like, if they predict high inflation, and then it isn't high, they just say they have their own secret metrics that show it actually is (or they use this hack site that just adds a constant to the real numbers).

 

[HOLA]

Would you have made the same predictions 5-6 years ago?

I remember a follower of quack Austrians (Greoric) who posted in 2014 that we'd see the biggest crash the world has ever seen starting late that year. I bet him he was wrong, and he just flipped out, and eventually got himself banned. Peter Schiff predicted we'd have hyperinflation by 2010 after the GFC. Another one (@Zeke's Chaingun said nine years ago that we'd have an epic meltdown within the next 10 years--I guess he still has time!). We've had this kind of thing just non-stop for as long as the WR has been around, and people never learn. Again, Hayek himself was making bad predictions before the Internet existed. I'd actually be satisfied if Austrians would at least just acknowledge that maybe they could possibly be wrong and the whole field is not just idiots or evil actors (and thus tried to think through their positions instead of personally attacking people who do).

Peter Schiff was the patron saint of the war room for a while. Thankfully, that's one charlatan we seem to be mostly rid of now, at least.

 

[Jack V Savage]

Peter Schiff was the patron saint of the war room for a while. Thankfully, that's one charlatan we seem to be mostly rid of now, at least.

Molyneux was a good weather vane. Back when all the nuts were "Austrians," that was his thing. But then as that branch of the right fell out of favor, he evolved to being more obsessed with identity politics.

 

[Lead]

I think a pardon on a murder charge needs some heavy weight backing it. Did new evidence come out that a reasonable person would drop all charges? Was there some type of misconduct by the court (I think even in that case, an appeal court handles it). I haven’t seen anything yet from Abbott making that case really other than his administration unanimously agreed on a pardon. I’m against the death penalty but I think that can be separated from 1) Should someone convicted of murder still be punished for that crime (yes) and 2) is it the place of the executive to step in if the trial went normal and a jury made their verdict (I think not).

 

[Zeke's Chaingun]

Another one (@Zeke's Chaingun said nine years ago that we'd have an epic meltdown within the next 10 years--I guess he still has time!).

I don't recall ever giving a specific time, but we are definitely closer to an epic meltdown now than we were when I last engaged on this topic. The National Debt back then was nearly 18 trillion and now its nearly 35 trillion, with no signs of slowing down. The REPORTED deficit was 486 billion 10 years ago and has continued every year, growing most years, exceeding over a trillion per year. This is not accounting for inflation or anything else.

So pat yourself on the back as long as you can, because it is pretty clear that this is not an eternally sustainable trajectory, and when it comes due it is going to come due in a very unpleasant way. Also, as I said then, I HOPE that I am wrong and that you are right. This isn't about winning an argument for me - like it is for you.

 

[haysus31]

I wish I would have invested 100 bucks in bitcoin when I first heard about it. But I'm a cautious person so I was like naaa sounds like a scam. Oh well.

 

[Jack V Savage]

I don't recall ever giving a specific time, but we are definitely closer to an epic meltdown now than we were when I last engaged on this topic. The National Debt back then was nearly 18 trillion and now its nearly 35 trillion, with no signs of slowing down. The REPORTED deficit was 486 billion 10 years ago and has continued every year, growing most years, exceeding over a trillion per year. This is not accounting for inflation or anything else.

Inflation lowers debt burden.

No signs of any "meltdown" on the horizon, but while we struggled with excessively low deficits for a while, the economic situation has changed in that we now want lower deficits. Not because there's any kind of one-time catastrophic event being risked but because we are no longer demand-constrained, which means that we're not just filling a hole and there are tradeoffs.

Here's the post, BTW:

Not that this justifies our current situation. Our current economy is fucked anyway. Within 10 years there's going to be an epic meltdown of our economy.

So pat yourself on the back as long as you can, because it is pretty clear that this is not an eternally sustainable trajectory, and when it comes due it is going to come due in a very unpleasant way. Also, as I said then, I HOPE that I am wrong and that you are right. This isn't about winning an argument for me - like it is for you.

Obviously no trajectory is eternally sustainable. The way policy works is that you have adjustments depending on the current reality. No sane policymaker just says, "OK, that's it. We have the right trajectory forever now." The 2017 tax cuts created the necessity for future adjustments, which will come (and then we'll have to adjust in different ways over time).

It's not about "winning an argument" IMO. I do think that people should learn from getting things wrong, which Austrians never do (and many explicitly reject the idea of evidence-based analysis).