The Glade 4.0

Actually, they are a leech to the circular flow.

There are leeches and injections into that flow of income.

Savings pulls money out of the flow.

That doesn't mean all savings are bad. It just is what it is. Every dollar spent is another person's income. Saving money takes income out of that system.

It's just basic economics.

19 Yet she became more and more promiscuous as she recalled the days of her youth, when she was a prostitute in Egypt. 20 There she lusted after her lovers, whose genitals were like those of donkeys and whose emission was like that of horses.

You are certainly entitled to your opinion, but you're wrong. Government spending is one of the major portions of GDP, and when private spending falters, it can take up the slack. Taxes aren't a leech. They are simply part of the circular flow. Now, if the government sits on too high a surplus, then yes, like any other savings it represents a leech. But if that money is spent, it simply becomes someone else's income. Every dollar spent (no matter the source) is someone else's income.

Oi vey. For years this board screams and yells at me to go learn about economics. So I go learn about economics. What does the board do? Close it's ears and then screams and yells at me to go learn economics.

Look, savings *does* represent a leak from the circular flow of income. That's not necessarily bad until those savings become excessive. When that happens, people stop putting money into the economy by purchasing goods and services. When that happens, less is produced, and unemployment increases. In other words, we get further and further from equilibrium.

Don't conflate "leech" with "bad", necessarily. In fact, let's go with Leak. It's less image intensive, and probably a more accurate term. It's important to have sufficient savings to keep yourself afloat in times of trouble. However, from a macro perspective, too much savings means a reduction in aggregate demand, which means unemployment, which means less money being spent, which means a glut of supply, and so on and so forth.

Savings are a leakage. There are also injections. So long as the leak isn't too bad, it's not so bad a thing. In fact, it can have positive macro effects. It can also have negative effects.

Not every dollar put in the bank is invested into the economy. Much of it goes into required reserves.

19 Yet she became more and more promiscuous as she recalled the days of her youth, when she was a prostitute in Egypt. 20 There she lusted after her lovers, whose genitals were like those of donkeys and whose emission was like that of horses.

Because you didn't learn economics. You learned a little bit about a single school of economic thought, but not quite enough to make statements consistent with the operative theories and political history of that school.

Yours has not been a study of economics. It has been a study of selectively applied ideology. There is a difference larger than oceans.

19 Yet she became more and more promiscuous as she recalled the days of her youth, when she was a prostitute in Egypt. 20 There she lusted after her lovers, whose genitals were like those of donkeys and whose emission was like that of horses.

Exactly my point, Rynar. It's never really been tested. However, the rest of the world has been using macroeconomic theories successfully for a very long time.

Several countries have attempted to use Austrian concepts and other similar concepts, to no avail. Privitization of programs like social security failed miserably in Central America. In New Zealand, massive efforts to privitze nearly every government service resulted first with lowered inflation, but eventually with seriously failed outcomes in terms of health, education, average wages, and unemployment.

In other words, the closer any nation gets to Austrian models, or other similar models, the worse that nation does overall. Some folks make out like bandits, though. For example, the vast majority of the growth that New Zealand saw focused almost entirely at the top. The bottom earners endured the worst of the consequences.

My class confirmed for me what I had already surmised - that the Austrian school and similar schools were rightfully tossed in the dustbin after the Great Depression. It also confirmed for me that the purpose of those schools is to force a particular macro outcome, despite a focus on microeconomics. That macro outcome is just another road to serfdom. The real road to serfdom, actually.

Any economic model that rejects government as a rule of thumb is simply not realistic. Any economic model that ignores externalities like war, pollution, or natural disaster is also not a serious model.

There's a reason the Austrian school is more philosophy than it is math.

19 Yet she became more and more promiscuous as she recalled the days of her youth, when she was a prostitute in Egypt. 20 There she lusted after her lovers, whose genitals were like those of donkeys and whose emission was like that of horses.

My class confirmed for me what I had already surmised

Oh really? Open your eyes, and look around.

Blatantly false.

So it wasn't a class in so much as an applied confirmation bias? Why won't you take the class from Mises I suggested with me?

Again, farther evidence you don't understand the school of thought you are critiquing.

The Austrian school is simply a road to serfdom.

Yes, rights do include limitations on freedom.

You have to understand that, Ideally, I don't think doctors should be in private practice when it comes to health care. I think they should be state employees.

My fiance is a school teacher. She's a public servant. She's certainly not a serf. She makes a good wage, has nice benefits, vacation time and sick pay, maternity leave, etc.

That's not serfdom. A nationalized medical industry, in my mind, looks like that. Doctors that are paid a wage and benefits, etc, for the work they do. It's a system that everyone pays into, and everyone has an equal right to access.

I drew my own conclusions regarding these issues based on the things I learned. The instructor was fail, and to get the grade I got, I had to study the text closely.

Monty:

Good for you for taking an econ class. I am sincerely glad you've decided to attempt to increase your knowledge base in areas you believe weak in yourself.

That said, I'm not sure how you can dismiss the claims of confirmation bias given this statement you made:

In other words, your teacher didn't teach you anything, but you read a book and just applied your opinions to it as you read.

Given your overall self-admitted weakness in mathematics, are you sure you should feel righteous about jumping to conclusions based on a 3 hour community college econ course in which you basically self taught, enabling you to apply your biases to the readings?

It's extremly difficult on this board to overcome the prevalent biases among the majority of conservative posters here. I could point out several articles, critical of Austrian economics, that agree with me. Articles written by people significantly more qualified to speak on the subject than I am. They go into great detail about the Austrian's school near-disdain for mathematical and empirical models for their philosophy. The Austrian school has a habit of making a philosophical statement and then claiming it's true a piori. It's a ginormous flaw in the school. When I say it's more philosophy than math, I'm not trying to be a dick. I'm just stating facts.

Again, if she was failing to educate, you were simply reading a book.

Holding up the public school system as a model of what health care should look like is not going to win you any converts to your way of thinking, in my opinion.

The public school system needs a lot of work. We spend far too much energy developing new and better ways to kill people, and far to little on new and better ways to educate people.

Yes, a nationalized system would mean that doctors would have to adjust. However, we have public and private schools working side by side in this country. I see no reason we couldn't have a similar situation in regards to health care. The goal is free (or nearly free) high quality health care for all Americans. Because I feel it's a right.

Maybe we would see more doctors get into the business motivated not by the potential of great wealth, but the potential to do great things and provide great care to patients. Plenty of doctors get into medicine for that reason, anyway.

Will austerity sink European economies? Or will fiscal consolidation instead pave the way for faster growth? The debate divides policy makers, economists and voters. A key consideration is the size of the fiscal multiplier, or how much bang for its buck a government gets in terms of gross domestic product. Some evidence supports the cutters.

A fiscal multiplier above one implies a dollar of government spending generates more than a dollar of GDP; a fiscal multiplier below one implies that it is less effective. A working paper from the European Central Bank estimates that fiscal policy in the euro area has become less effective over time, with an increase in government spending of 1% of GDP generating a response of just over 0.5%, down from over 1% in the late 1980s.

A fiscal multiplier below one doesn't automatically mean government-stimulus efforts are wasted, since the boost to GDP could still be important to counteract falling private demand. But the ECB paper argues that the decline in effectiveness is due to rising government debt; as private-sector concerns about the sustainability of public finances increase, individuals and companies rein back spending amid fears of future tax increases. With the euro-zone bond-market crisis, this process may have reached its logical conclusion.

Not all government spending is equal: Multipliers on capital investment are reckoned to be much higher, for instance, than on government consumption or tax cuts. But if the fiscal multiplier overall is less than one, then tightening shouldn't be self-defeating: Public finances can improve even with weak growth.

Better public finances should also reduce the risk premiums investors demand on government bonds; this, in turn, should make risk assets more attractive, providing companies with better financing conditions.

Indeed, sometimes fiscal tightening appears to drive economic growth. A study of OECD countries from 1970 to 2007 by Alberto Alesina and Silvia Ardagna shows that of 107 episodes in which severe fiscal tightening took place, growth accelerated significantly relative to the G-7 average on 26 occasions, or 24%.

Remarkably, this is slightly higher than the 22% of periods when very loose fiscal policy drove better growth.

A vital question is whether private-sector confidence is boosted by austerity. If it is, and growth picks up, then the really important debate about tightening still lies ahead—and in the realm of monetary, rather than fiscal, policy.
—Richard Barley

In comic strips the person on the left always speaks first. - George Carlin