

When did Scrooge become a role model?  - yannis
http://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1355327_code672404.pdf?abstractid=1332842&mirid=1

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dantheman
Complete and utter trash.

"Returning to the original measuring stick, let us see if society is
productive. Bashful is working to make ice cream. But Scrooge is not
productive. If the venture is successful, then Scrooge will get money for
nothing. He has gotten his money “to work for him.”23 In fact that is not what
is happening. Money cannot work. Bashful is doing all the work and Scrooge is
taking some of the rewards of Bashful’s labor. Is this fair? In history, this
arrangement is thought to be fair because it is an equity investment.24"

This person doesn't have the faintest idea of what investment means. Scrooge
didn't do nothing, he delayed his consumption -- he worked in essence for
free, until his investment has returns.

In general when investing you're improving efficiencies for instance buying a
faster assembly line. This allows you to make the more goods for less price
thus customers are benefited and the investors take a return. It's a win win
situation.

~~~
comment176
The problem with your analysis is that a business needs investors and
customers to succeed. Excessive saving can harm an economy.

~~~
dantheman
Excessive saving cannot harm the economy, as more people save the interest
rates go down -- the earn less, and there is plenty of money to be invested.
People do not put money in their mattress, they invest it either through a
savings account or in the stock market.

~~~
comment176
Think of this way. What if today, everyone decided to spend nothing and invest
all their money. What will happen to the world economy? You can't make money
investing in a business if no one is buying their product. That proves that
there is a point at which savings can be harmful.

Excessive savings will drive down the interest rates, and they have. Despite
the fact that government borrowing is through the roof, interest rates barely
hover above zero because of excessive savings.

I don't mean to deny the importance of savings but be careful that you don't
take demand for granted.

~~~
dantheman
Interest rates right now are not a function of saving, they are manipulated by
the federal reserve. If you look at hayek's model of the business cycle you'll
know that what we have going on right now is not good; primarily because we
are printing money like crazy instead of letting the dollar adjust in value as
it should.

~~~
comment176
The Fed can't manipulate interest rates down. They have to offer a high enough
rate to sell their notes. Right now there is such over-saving that the fed can
clear the sales by offering almost zero (really negative rates if you factor
in inflation) interest rates. For all the talk I hear of the Fed printing at
record rates, I have yet to see anyone point to a treasury auction that
failed.

"we are printing money like crazy instead of letting the dollar adjust in
value as it should." I can read that as you advocating for a variety of
different things, and so I can't tell exactly what point you are trying to
make.

Any way, thanks for the discussion and good luck in your engineering career.

~~~
dantheman
The fed doesn't sell treasury bonds in fact it buys them:
<http://online.wsj.com/article/SB123739788518173569.html>

Right now what is going on is the fed is loaning money to banks at 0%, the
banks are buying treasury bonds which pay 4% and so they get free money fix
their balance sheet at our expense. Every dollar the FED prints the less the
money you own is worth.

~~~
comment176
Earlier you argued that people are not saving too much. However, your article
says that people are in fact saving so much that the Fed is trying to turn
them away. According to the article, the Fed first dissuaded savers by
lowering the interest rate to zero, and when that proved ineffective they
bought back the treasuries they had previously issued. I assume you have
withdrawn your earlier argument.

I think your point now is that the government should not have bailed out the
financial sector. That's a different discussion that should have its own
thread. Perhaps your point is that the Fed and the Treasury are working
against each other? I don't distinguish between the two and believe
Bernanke/Geithner work hand in hand, but again that's a different discussion.

Also, for accuracy's sake, treasuries are not paying anything close to 4%,
unless you're looking at very long term rates which are neither here nor
there.

You jump around a lot, which makes it difficult to see the point you are
trying to make. Unless you want to revive your "society can never save too
much" argument, I would like to end this discussion.

