[negligible91]

Oh cool, he will be speaking at my college as well (GT). Not sure if I’ll be able to go, but maybe this thread will help me come up with questions too.

[negligible91]

Was about to make a post about this same issue, so I’m glad I saw this. Is anyone clear about what the founders meant by well-regulated or is this not specified properly anywhere? Dr. Woods makes a good point about the 9th amendment, but I’d like to know if it’s still technically covered under the 2nd amendment or not.

[negligible91]

Thank you Dr. Herbener, will do.

[negligible91]

Thanks everyone!

[negligible91]

To clarify my question in the simplest way possible, were they correct? Would that actually do what they thought it would do?

[negligible91]

He’s agreeing with you.

“The person acting has reclassified the objects themselves as consumer goods.”

[negligible91]

No, I believe you’re correct. There’s no reason why money can’t be a consumer good like other consumer goods. Maybe someone just likes the color of them.

If the purpose of saving the money is security (i.e. safety from risk), I’m not sure if the money falls under the category of consumer good. In a sense, that’s still saving money with the purpose you may spend it, so perhaps money for that specific purpose still falls under the category of a medium of exchange.

[negligible91]

“If money does not have some value as a consumer or producer good, why would it hold any value at all?”

With this insightful question, you are on the verge of discovering Mises’ regression theorem.

bbinder states:
“I understand your explanation regarding money and it not being either a consumer good or a producer good, but why cannot the accumulation or savings of a specific amount of money be an end? If I wanted to save $25,000, then why is money not considered a consumer good, since it is necessary to satisfy my end?”

Presumably you are saving money to use it at some point in the future. Of course, I have to admit the possibility of saving just to save. Generally though, I don’t think that needs to be given much attention to.

[negligible91]

Haha, I’m sure you’ll agree that Marx would only be right in such a case that state capitalism exploits workers to subsistence.

And no problem, glad I could help. The Rothbard quote can be found in Man, Economy, and State. CH. 12.

[negligible91]

hayek_novice, I think it would be good to define some terms first to make what Dr. Woods was saying more clear.

Rothbard made a distinction between the incidence of a tax and the indirect effects of a tax.

The incidence is who the primary effects of the tax actually fall on. The indirect effects are the effects on individuals who trade with the individual whom the incidence falls on.

To clarify, Rothbard states “Thus, if an income tax is levied on Jones at 80%, this will hurt not only Jones, but also — by decreasing Jones’ incentives as well as capacities — other consumers by reducing Jones’ work and savings. It is therefore true that the effects of taxation diffuse outward from the center of the target.”

So the incidence of a payroll tax partially levied on an employer will fully shift toward the employee. That’s what Dr. Woods means. The employer will still be hurt through his interaction with the employee. If the employee was better off, then so would the employer.

[negligible91]

You should tell him to smash all the windows in his house to help the economy out. If enough people do this, maybe the unemployment rate will fall and our 15 trillion debt will disappear!

[negligible91]

Oh, forgot to mention, increased saving will lower interest rates, acting as a market signal to producers that consumers desire increased consumption in the future more than increased consumption in the present. This will allow producers to increase capital (and therefore, future consumer goods) rather than increasing the supply of current consumer goods. An increase in the money supply by the central bank distorts this signal.

[negligible91]

J.B. Say, a 19th century economist, exposed the fallaciousness of the underconsumptionist philosophy in an economic law that came to be known as Say’s law. Basically, it states that the demand for a good is made up of the production of other goods. This economic law can be represented fairly easy by a barter economy. If there are only two goods, apples and oranges, and someone wants to buy an orange, they have to exchange an apple for the orange. They would not be able to buy the orange without first producing an apple. So in a larger economy, the production of a larger amount of goods will make up the demand for the orange. And in a money economy, this is no different, because money is only a medium of exchange, that eases the process of exchange (producers simply sell the products they produce for money, and then exchange the money for other products; the only difference is that there’s an intermediate step). Because of this, there cannot be a general overproduction of goods (the flip side of underconsumption). There can only be an overproduction of goods in one sector and an underproduction in another.

Now, as to your particular example, all additional saving brought on by lower prices means that consumers value consumption in the future more than consumption in the present. If consumers decide to save more, additional “stimulation” of aggregate demand will just result in creating and then prolonging a bubble of particular areas of production that consumers do not desire.

Also note that from 1921-1929, the money supply was increased in attempt to maintain price stability. Austrian business cycle theory predicts the inevitable bust from this unsustainable boom. ABCT also happens to be consistent with Say’s law, unlike the Keynesian theory of underconsumption that Volti explained.

Hope this reply is helpful!

[Author]

Posts