Is economic literacy directly correlated to direct experience with the free market?

[CrusaderFrank]

It's fairly obvious that someone like Paul "Wrong in the trillions column" Krugman never worked a day in the private sector and has only lyrical knowledge of how capital markets and economies function.

When people say things like "profits are stolen wages" it's glaringly obvious they never worked at a real business. Maybe they're in a Union, or maybe they're still in high school, but you can't possibly have worked anywhere in the marketplace where adults put their money into their businesses and come up with anything as removed from reality as that.

Is economic literacy directly correlated to direct experience with the free market?

 

[Toro]

I don't know, but economic illiteracy is probably related to the lack of experience.

 

[Bombur]

I would say that a lot of people don’t understand macroeconomics because they can only reduce things to their own world view. This includes business owners who only see things from the cost perspective and can’t appreciate the other side of the equation. Or those who are directly impacted by an economic change but can’t see the other side of the equation whether it be good or bad.

For example if you lose your job to foreign labor it is hard to see the benefit in reduced cost of goods and any increased demand of US made good in that foreign country.

The hard part about economics is taking a step back and trying to understand how EVERYTHING fits together. A lot of people don’t even want to talk about the nature of market economics let alone how all those markets fit together.

 

[TakeAStepBack]

Is economic literacy directly correlated to direct experience with the free market?

I would say no, Frank. But only because we lack sucha market in order for people to gain experience from. I think eocnomics iliteracy is probably correlated much more strongly with academics ridiculing and marginalizing anything not conducive to the State. Since most schools are State funded and most professors, who also severely lack any real experience in the business world, are also on the dole. I believe it is in the interest of the government elite to treat people like mushrooms regarding economics. Because if people really understood how far from any semblance of a "free market" we have, they'd likely revolt tomorrow.

Is there correlation to no business experience and economic illiteracy? Yes. i believe so. Is it a lack of experience with the free market? Well, we lack one so I'd have to say 'no'.

 

[Bombur]

Is economic literacy directly correlated to direct experience with the free market?

I would say no, Frank. But only because we lack sucha market in order for people to gain experience from. I think eocnomics iliteracy is probably correlated much more strongly with academics ridiculing and marginalizing anything not conducive to the State. Since most schools are State funded and most professors, who also severely lack any real experience in the business world, are also on the dole. I believe it is in the interest of the government elite to treat people like mushrooms regarding economics. Because if people really understood how far from any semblance of a "free market" we have, they'd likely revolt tomorrow.

Is there correlation to no business experience and economic illiteracy? Yes. i believe so. Is it a lack of experience with the free market? Well, we lack one so I'd have to say 'no'.

 

[TakeAStepBack]

Is economic literacy directly correlated to direct experience with the free market?

I would say no, Frank. But only because we lack sucha market in order for people to gain experience from. I think eocnomics iliteracy is probably correlated much more strongly with academics ridiculing and marginalizing anything not conducive to the State. Since most schools are State funded and most professors, who also severely lack any real experience in the business world, are also on the dole. I believe it is in the interest of the government elite to treat people like mushrooms regarding economics. Because if people really understood how far from any semblance of a "free market" we have, they'd likely revolt tomorrow.

Is there correlation to no business experience and economic illiteracy? Yes. i believe so. Is it a lack of experience with the free market? Well, we lack one so I'd have to say 'no'.

Very well thought out, logical and concise reply! You must be LOLberal.

 

[CrusaderFrank]

I would say that a lot of people don’t understand macroeconomics because they can only reduce things to their own world view. This includes business owners who only see things from the cost perspective and can’t appreciate the other side of the equation. Or those who are directly impacted by an economic change but can’t see the other side of the equation whether it be good or bad.

For example if you lose your job to foreign labor it is hard to see the benefit in reduced cost of goods and any increased demand of US made good in that foreign country.

The hard part about economics is taking a step back and trying to understand how EVERYTHING fits together. A lot of people don’t even want to talk about the nature of market economics let alone how all those markets fit together.

What's the "other side of the cost perspective", revenues??

 

[Kimura]

I would say no, Frank. But only because we lack sucha market in order for people to gain experience from. I think eocnomics iliteracy is probably correlated much more strongly with academics ridiculing and marginalizing anything not conducive to the State. Since most schools are State funded and most professors, who also severely lack any real experience in the business world, are also on the dole. I believe it is in the interest of the government elite to treat people like mushrooms regarding economics. Because if people really understood how far from any semblance of a "free market" we have, they'd likely revolt tomorrow.

Is there correlation to no business experience and economic illiteracy? Yes. i believe so. Is it a lack of experience with the free market? Well, we lack one so I'd have to say 'no'.

Very well thought out, logical and concise reply! You must be LOLberal.

JM Keynes made a fortune through his investment activity.

In researching a book on Keynes, I was astounded to find that none of his many biographies contained meaningful detail on his investment activities, although they were fairly well known by the cognoscenti in London and New York during the 1920s and 1930s. What I found was that Keynes stumbled several times before he succeeded — he was almost financially wiped out three separate times — but he got back in the game and altered his thinking to build wealth long term.

Most of what Keynes did in terms of investment innovation has been intricately documented by David Chambers, a professor at the Judge School of Business at Cambridge, and Elroy Dimson, emeritus professor at the London Business School. “Discovering a high degree of overlap with his personal stock portfolio,” Professor Chambers notes, the two researchers took an incisive look at Keynes’s portfolios at the King’s College endowment he managed from 1922 to 1946, when he died.

What emerges from Professor Chambers and Professor Dimson’s research, published in a Journal of Economics Perspectives paper, is a surprising portrait of an investment pioneer who started out as a “top-down” manager relying upon macroeconomic predictions of the economy’s movement and switched to become a “bottom-up” value investor focused on finding solid companies that paid dividends and had promising, long-term prospects.

Keynes vaulted into professional investing with a cocksure insider’s attitude. He had been an adviser to the British Treasury during World War I — until he walked out of the Versailles Treaty talks. Although he maintained and enhanced his Treasury and London financial district connections, he would publicly denounce the Versailles reparations forced upon Germany. Keynes correctly predicted that the treaty would lead to catastrophic economic instability in Germany, which he detailed in his classic “The Economic Consequences of the Peace.”

After the war, Keynes speculated heavily in currencies, but lost most of his capital in 1920 when several European currencies he was betting against recovered. Undaunted, he broadened his portfolio to commodities and eventually common stocks, which at the time was a rarity for institutional investors, who preferred safe bonds and real estate.

Although he was building wealth for his own account and the institutional funds throughout the 1920s, he did not see the 1929 debacle coming and was almost cleaned out again.

The 1929 crash and resulting Great Depression left Keynes intellectually shellshocked, so he changed his strategy. Professor Chambers and Professor Dimson discovered that sometime in the early 1930s he backed away from short-term trades and commodities and focused on stocks. No longer would he pay attention to overarching economic theories or short-term sentiment: The “animal spirits” of the market’s unpredictable pixies could not be trusted. He sensed that security prices were not true indicators of company values.

”Keynes anticipated Eugene Fama, the 2013 Nobel Economics Prize co-winner, in that he clearly did not believe that stock prices must be good indicators of fundamental value,” Professor Chambers said in a recent email. “Consequently, there could be periods when the irrational behavior of investors and what he called animal spirits play a significant role in determining prices on both the upside and downside.”

Unlike millions of modern investors, who latch onto every headline and interview on business television shows to gauge market sentiment, Keynes went about-face in the early to mid-1930s to concentrate on a company’s “enterprise” value, which is also known as “book” or “breakup” value. This intrinsic view of a company’s true worth stripped out the overly emotional component that is often reflected in stock prices. As a result, he often picked companies that had promising futures, but were unloved at the time.

When Keynes adopted his new investment strategy — which paralleled work by Benjamin Graham, a Columbia University professor and mentor to Mr. Buffett — he did quite well. Even with setbacks in 1929-30, 1937-38 and the early years of World War II, Keynes managed a 16 percent annualized return in the Cambridge discretionary portfolio, which mirrored his other holdings. That compares with 10.4 percent for a basket of British stocks over the same period, Professor Chambers and Professor Dimson found.

More important, Keynes staged some striking rebounds after two major declines from 1929 to 1940. According to Professor Chambers and Professor Dimson, although his Cambridge discretionary portfolio lagged the British market by a cumulative 12 percent in 1930 from inception, his performance rallied in the 1930s and ’40s and posted a 0.73 risk/return or Sharpe ratio during his tenure, compared with 0.49 for the British market.

Considering that Keynes was investing during some of the worst years in history, his returns are astounding. How did he do it?

In addition to focusing on bargain-priced small and midsize stocks, Keynes carefully evaluated managements. Could they prosper long term? Did they have a plan for when the economy turned around? “I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes,” Keynes wrote in 1934.

Shades of Benjamin Graham and Warren Buffett, and the whole school of value investing. Keynes also loved dividend payers, some of which were paying up to 6 percent during the deflationary 1930s. His portfolios were full of old-line companies in mining, railroads and shipping. Although they were perhaps boring and suspect choices at the time, he bought more shares when they became cheaper and predicted they would be worth more when the general economy recovered.

Ultimately, Keynes was vindicated, building wealth for all of his institutional clients, and he built a personal fortune worth more than $30 million in 2013 dollars at the time of his death, which did not include a tally of his extensive collection of artwork and rare manuscripts. Keynes was not only an investment innovator, but one of the richest economists ever.

While Keynes was most likely the recipient of price-sensitive information during his career, it is hard to discern if he profited from it. Insider trading was not broadly restricted in Britain until 1980. It is also hard to pin down whether Keynes invested along the lines of his famous economic theories, although it is clear that his investment activities informed his view of economics.

Nevertheless, one of Keynes’s most important insights was one that most investors still ignore: A prudent plan does not include timing the market, but focuses on long-term value and total return. It is a view that has not only worked for millions of investors who now invest in index funds — and do not time the market — but is also the foundation of a long-term strategy.

Although Keynes’s economic persona may still be the St. Sebastian of intellectual debate, Keynesian investing has proved to be a solid way to build wealth over time.

What was von Mises' or Rothbard's net worth at the time of their death?

 

[TakeAStepBack]

As if that's relevant to the discussion, Poindexter.

 

[Kimura]

It's fairly obvious that someone like Paul "Wrong in the trillions column" Krugman never worked a day in the private sector and has only lyrical knowledge of how capital markets and economies function.

When people say things like "profits are stolen wages" it's glaringly obvious they never worked at a real business. Maybe they're in a Union, or maybe they're still in high school, but you can't possibly have worked anywhere in the marketplace where adults put their money into their businesses and come up with anything as removed from reality as that.

Is economic literacy directly correlated to direct experience with the free market?

From what I can find online, which aren't exactly the most accurate numbers, Krugman has a net worth of of around $2.5 million. That's not too shabby. You figure he must earn a decent living on the lecture circuit alone.

By the way, 99% of businessmen don't under macroeconomics or how capital markets function, at all. All you have to do is listen to an interview with Donald Trump or Jack Welch. Douche chills....

 

[TakeAStepBack]

And that's 2 for 2 on complete irrelevance to the topic! Well done!

 

[Kimura]

As if that's relevant to the discussion, Poindexter.

You'd figure if Austrian Economics was relevant people would make a fortune basing investment strategies off of its various theories. Oh wait, they died piss poor.

 

[TakeAStepBack]

As if that's relevant to the discussion, Poindexter.

You'd figure if Austrian Economics was relevant people would make a fortune basing investment strategies off of its various theories. Oh wait, they died piss poor.

Oh, wait. No they didn't. Furthermore, it has little to nothing to do with the topic. Both Rothbard and Mises were teachers, and not state sponsored ones at that. You've once again, demonstrated that you lack the ability to make relevant posts on a topic.

3 for 3.

But since you've turned this thread into something entirely different from the OP, keep in mind that Charles Kock, the 6th riches individual in the world, worth about 34 billion, was a huge Von Mises fan.

Once again, you show how fuckin' dumb a chartilist can be while they make off-topic posts.

 

[TakeAStepBack]

Furhtermore such a statement goes to show how completely ignorant you are of Austrian theories. Congratulations on that too.

 

[Bombur]

I would say that a lot of people don’t understand macroeconomics because they can only reduce things to their own world view. This includes business owners who only see things from the cost perspective and can’t appreciate the other side of the equation. Or those who are directly impacted by an economic change but can’t see the other side of the equation whether it be good or bad.

For example if you lose your job to foreign labor it is hard to see the benefit in reduced cost of goods and any increased demand of US made good in that foreign country.

The hard part about economics is taking a step back and trying to understand how EVERYTHING fits together. A lot of people don’t even want to talk about the nature of market economics let alone how all those markets fit together.

What's the "other side of the cost perspective", revenues??

From a macroeconomic standpoint it is aggregate demand. It is not that business owners don't generally understand that they need people to demand their product, they simply don't always understand that different things happening in the market place can drastically change demand. Instead they think about how they can try and attract the demand that is out there.

This is why you hear so much about the supply side economic view. This is why the thought of increased wages is often thought of as a bad thing by those who are mostly concerned about the cost of labor.

Wage growth is one of the most important aspects of economic growth. Often the biggest obstacle to productivity growth is not lack of technology or capital but lack of demand or a perceived lack of demand.

 

[Bombur]

I would say no, Frank. But only because we lack sucha market in order for people to gain experience from. I think eocnomics iliteracy is probably correlated much more strongly with academics ridiculing and marginalizing anything not conducive to the State. Since most schools are State funded and most professors, who also severely lack any real experience in the business world, are also on the dole. I believe it is in the interest of the government elite to treat people like mushrooms regarding economics. Because if people really understood how far from any semblance of a "free market" we have, they'd likely revolt tomorrow.

Is there correlation to no business experience and economic illiteracy? Yes. i believe so. Is it a lack of experience with the free market? Well, we lack one so I'd have to say 'no'.

Very well thought out, logical and concise reply! You must be LOLberal.

I read your nonsense. That is all it deserved. Say something worth taking seriously and I will respond seriously. Until then.

 

[CrusaderFrank]

It's fairly obvious that someone like Paul "Wrong in the trillions column" Krugman never worked a day in the private sector and has only lyrical knowledge of how capital markets and economies function.

When people say things like "profits are stolen wages" it's glaringly obvious they never worked at a real business. Maybe they're in a Union, or maybe they're still in high school, but you can't possibly have worked anywhere in the marketplace where adults put their money into their businesses and come up with anything as removed from reality as that.

Is economic literacy directly correlated to direct experience with the free market?

From what I can find online, which aren't exactly the most accurate numbers, Krugman has a net worth of of around $2.5 million. That's not too shabby. You figure he must earn a decent living on the lecture circuit alone.

By the way, 99% of businessmen don't under macroeconomics or how capital markets function, at all. All you have to do is listen to an interview with Donald Trump or Jack Welch. Douche chills....

"Krugman could not have been more wrong in his assertions. Somehow he missed Fannie and Freddie's acquisition of $4.3 trillion in subprime, low down payment (5% or less) and Alt-A loans. How about the $2.7 trillion of CRA loans? After accounting for overlap among these groupings, he somehow missed some $5 trillion in such loans, trillions of which remain to plague the nation's economy."

RealClearMarkets - How Did Paul Krugman Get It So Wrong?

You keep listening to Krugman

 

[TakeAStepBack]

Very well thought out, logical and concise reply! You must be LOLberal.

I read your nonsense. That is all it deserved. Say something worth taking seriously and I will respond seriously. Until then.

Right. So you have no real response because you are one of the folks Frank is referring to. I got it.

 

[Kimura]

As if that's relevant to the discussion, Poindexter.

You'd figure if Austrian Economics was relevant people would make a fortune basing investment strategies off of its various theories. Oh wait, they died piss poor.

Oh, wait. No they didn't. Furthermore, it has little to nothing to do with the topic. Both Rothbard and Mises were teachers, and not state sponsored ones at that. You've once again, demonstrated that you lack the ability to make relevant posts on a topic.

3 for 3.

But since you've turned this thread into something entirely different from the OP, keep in mind that Charles Kock, the 6th riches individual in the world, worth about 34 billion, was a huge Von Mises fan.

Once again, you show how fuckin' dumb a chartilist can be while they make off-topic posts.

Charles Kock you say? I think you mean Charles Koch. Yeah, he's a fan of glibertairan economic thought, so he can consolidate more of the pie which is what rentiers do.

von Mises had taught in Vienna, but it was not a paid position. UoV turned him down four times for a paid position. By the 1940, he was broke and headed to the US, where he also had an unpaid position at NYU. His salary was paid for by an associate of the the Volker Fund, a one Larry Fertig. So for 25 years von Mises never had a real job, he depended on others.

 

[Kimura]

I would say that a lot of people don’t understand macroeconomics because they can only reduce things to their own world view. This includes business owners who only see things from the cost perspective and can’t appreciate the other side of the equation. Or those who are directly impacted by an economic change but can’t see the other side of the equation whether it be good or bad.

For example if you lose your job to foreign labor it is hard to see the benefit in reduced cost of goods and any increased demand of US made good in that foreign country.

The hard part about economics is taking a step back and trying to understand how EVERYTHING fits together. A lot of people don’t even want to talk about the nature of market economics let alone how all those markets fit together.

What's the "other side of the cost perspective", revenues??

From a macroeconomic standpoint it is aggregate demand. It is not that business owners don't generally understand that they need people to demand their product, they simply don't always understand that different things happening in the market place can drastically change demand. Instead they think about how they can try and attract the demand that is out there.

This is why you hear so much about the supply side economic view. This is why the thought of increased wages is often thought of as a bad thing by those who are mostly concerned about the cost of labor.

Wage growth is one of the most important aspects of economic growth. Often the biggest obstacle to productivity growth is not lack of technology or capital but lack of demand or a perceived lack of demand.

Supply side was a total failure, all we have to do is look its results. Ironically, it's whole premise is built on the work of Keynes. I'm talking the Laffer Curve, btw.