[johnwinters91]

Professor Herbener,

I recognize that this is not directly related to the coursework, but I have a somewhat odd request for suggestions for reading materials that I would very much appreciate if you could point me in the direction of.

I plan to go to law school, and I really want to help businesses get out from under the boot of our government and to help them navigate the tax and regulatory codes. I am planning on going to Albany in New York State to get my undergrad in Financial Market Regulation…partly because it’s very interesting to me and partly because I want to learn how to work around the regulations to help businesses. But I know that it’s going to be an onslaught of indoctrination about the virtues and necessity of Keynesian tinkering. I’d like to go into it with a solid understanding of the Austrian view of the financial market regulations.

Can you suggest any book(s)/literature that evaluates the main regulations in a comprehensive and substantive manner from an Austrian standpoint?

As always, I greatly appreciate your time.

[johnwinters91]

Thank you so much for all the time you put into answering questions and explaining things.

[johnwinters91]

Is this narrative correct despite the fact that that China manipulates it’s exchange rates?

“the exchange rate system ensures that the money that leaves our country makes its way back into the US. For example, say that the Chinese are stockpiling dollar reserves, rather than reinvesting them. If people are offering more dollars for yuan(intending to either buy Chinese products or invest in Chinese assets) than others are willing to trade yuan for dollars( to invest in American goods or assets), then currency dealers will see that there is a shortage of yuan and a glut of dollars, and will raise the dollar price of yuan. This depreciation of the dollar will make Chinese products and assets relatively more expensive, and American products and assets relatively cheaper. The exchange rate will adjust until there is equilibrium.”

This comes from Bob Murphy’s book, except that the country he was talking about was Japan, not China.

Are the Forex traders able to overcome the peg?

[johnwinters91]

Professor Herbener,

Why is it that certain sectors get more artificially bloated than others during an inflationary boom?

For example, why did labor have to come down in certain sectors to facilitate the movement of workers into the “correct one” during the Depression in order to have a correction?

Is the manufacturing sector more sensitive to business cycles than others?

Are there any good articles or lectures that go in depth in showing how recessions correct the problems caused by the artificially high cheap credit?

Thank you!

[johnwinters91]

See the US China trade relations post in the What’s Wrong With Textbook Economics forum. Professor Herbener did a great job explaining this stuff

[johnwinters91]

Was it outsourcing that was responsible for the decrease in manufacturing jobs from the early 80’s-2010? Or is it true that the decline in manufacturing jobs is due more to automation?

What sorts of jobs have replaced them in that time?

Also, is manufacturing more sensitive to the business cycle than other sectors? If so, why? Because of the malinvestment resulting from misjudgments of consumers’ time preferences?

[johnwinters91]

With respect to your response to my question about China’s devaluation and it’s purchases of our treasuries and the effects on interest rates, I feel like you’re talking over my head a little to be honest. I keep going back and studying your response and getting bits and pieces, but I still really struggle with that one. Can you break it down a little more fundamentally? Or suggest an incremental study plan that covers the fundamentals so I can get a better grip?
I know that’s a huge thing to ask, and that an economics class at my college may be a better way to understand these things, but I don’t trust the government schools to teach me correct theory, and since I can’t afford a private school, I feel like that’s what makes the Liberty Classroom so valuable.

Also, I understand the idea that when manufacturing is shifted to China, it’s nothing to fear because the division of labor will make it so that employment here is just shifted to different sectors. But in concrete terms, what would that look like? What are our manufacturing jobs replaced with? What opportunities for good jobs are opened up for Americans? I understand the theory, and I work in a law office, so my job isn’t threatened, but it seems to me like good paying manufacturing jobs for people who don’t have white collar skills are being sent to China, and all my friends now have to work at Lowe’s or some other crappy job because there aren’t enough good paying jobs available. How does the division of labor replace good paying blue collar jobs with something equivalent?

Also, I understand that the money sent overseas through our imports sometimes comes back into our economy when foreigners buy assets here. But how is that neutral or beneficial to Americans? How is it that we wouldn’t benefit more if those private assets were purchased by Americans, rather than by foreigners?

[johnwinters91]

Are we making China rich, or are we taking advantage of them by borrowing all this money we’ll never pay back so that they can subsidize our imports?

Is Peter Schiff right that it’s a vendor financing scheme?

If so, should we worry that China would retaliate against tarriffs and crackdowns on their currency manipulation by discontinuing the purchase of our treasuries?

[johnwinters91]

I’m reading Hazlitt’s book Economics in One Lesson, and I’ve come across the concept that our imports provide foreigners with dollars to use to buy our exports, and that there’s almost an equilibrium there when you have free trade policies. But couldn’t foreigners just exchange their native currency for dollars? How is it that our imports are the only thing that makes our exports possible?

Is that still true in the age of central banks, where money is created out of thin air?

Perhaps I’m missing something fundamental.

[johnwinters91]

Fantastic! Thank you.

[johnwinters91]

Thanks to Dr. Woods, I have learned about that. And I’m not disputing that, but do we have any additional periods that attest to that? From a devil’s advocate position, I can see people saying, “that’s not even a five year period. How is that conclusive?”.

Also, do you think it’s possible that the reason for that prosperity here is because Europe was in shambles as a result of the interventionists’ war?

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