Essential Economics for Politicians

Bruddah IZ said:
You’re welcome. But I feel like I failed you because bailouts are not bankruptcies. Kinda like a home is not an asset.
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Do you have any assets? pretend that you do and you owned a house and you filled out a balance sheet...do you know what side the house would go on?
 
.....Even though value is subjective, in a free market, people manifest their values by voluntarily deciding what they will pay for particular products and services. These objective prices, therefore, are reflections of subjective values. Entrepreneurs are able to use these objective prices to calculate expected profit and loss and act accordingly. In a free market, Mises shows, entrepreneurs are able to plan for the future and consumers will receive what they most want.

Socialism, on the other hand, is doomed because there is no way for the central planner to efficiently allocate factors of production because there is no way to calculate profit and loss. In a completely socialistic economy all of the means of production are owned by the state. There is, therefore, no actual exchange of goods, and hence no actual prices that reflect the actual subjective values of human beings. Producers, then, have no way to calculate whether their actions are productive or wasteful from the point of view of society. What is called a planned economy is, instead, as Mises so eloquently put it, “groping about in the dark.”
 
The moral of the story is that voluntary exchange in a monetary economy allows us to have the civilization we enjoy. In order to engage in voluntary exchange using money, however, Mises stresses that it is neces- sary for people to own private property. You cannot exchange what you do not own. If there is no ownership of private property, there is no actual exchange. If there is no exchange, there is no division of labor and there is no money so there are neither money prices, nor economic calculation. We would be left with chaos, not civilization. For civilization to survive, consequently, Mises teaches us that society must be a private property order. If people are able to own and trade their property as they see fit, wealth increases and civilization prospers.--Shawn Ritenour, Grove City College
 
The insights of Mises do not stop with his critique of socialism, however. From his 1929 collection of essays A Critique of Interventionism through the rest of his career, he continually explained to whomever would listen that even if the state does not fully socialize the economy, but intervenes only here and there, this too hinders the workings of the price system. To the extent that the state intervenes and curbs the free actions of individuals through price controls, monetary inflation, product restrictions, taxation, and subsidization, to that extent will prices for goods not accurately reflect the values of the people in that society. Such intervention will make it that much harder for entrepreneurs to do their job and one should expect to see shortages in some industries and surpluses in another.--Shawn Ritenour, Grove City College
 
A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings. To stress this point is the task of economics as it is the task of biology and chemistry to teach that potassium cyanide is not a nutriment but a deadly poison.--Ludwig Von Misses
 
One may try to justify [social security] by declaring that the wage earners lack the insight and the moral strength to provide spontaneously for their own future. But then it is not easy to silence the voices of those who ask whether it is not paradoxical to entrust the nation’s welfare to the decisions of voters whom the law itself considers incapable of managing their own affairs.--Mises
 
Bruddah IZ said:
the liability side as always.
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Before we go any further, let’s look at Merriam-Webster’s definition of these two key words:

as·set [ˈa-ˌset also -sət] noun

  • A valuable person or thing
  • Something that is owned by a person, company, etc.
I took the above definition from one of those new-agey articles (you’re not a fact guy, you prefer to make up opinions) suggesting that a house is an expense and not an asset.

You should try owning your house, if you can ever get one. When you do, it becomes an asset.

But it’s clear from your long posts that you have not had any success in the financial world, so you may have lost money on your house, in which case to you it’s a liability because you owe more than it’s worth.
 
messy said:
Before we go any further, let’s look at Merriam-Webster’s definition of these two key words:

as·set [ˈa-ˌset also -sət] noun

  • A valuable person or thing
  • Something that is owned by a person, company, etc.
I took the above definition from one of those new-agey articles (you’re not a fact guy, you prefer to make up opinions) suggesting that a house is an expense and not an asset.

You should try owning your house, if you can ever get one. When you do, it becomes an asset.

But it’s clear from your long posts that you have not had any success in the financial world, so you may have lost money on your house, in which case to you it’s a liability because you owe more than it’s worth.
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The home that you live in is a liability. A rental property is an asset. Big difference. One cash flows to the bank, the latter to you. That’s just how it works RE guy.
 
Bruddah IZ said:
The home that you live in is a liability. A rental property is an asset. Big difference. One cash flows to the bank, the latter to you. That’s just how it works RE guy.
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Tell your accountant and your stockbroker and your banker.
If you tell them my house is a liability and not an asset, they’ll laugh at you.
But when they look at your situation, I assume they’d think otherwise.
Your “financial life” is comprised of copying and pasting. LOL!
 
messy said:
Tell your accountant and your stockbroker and your banker.
If you tell them my house is a liability and not an asset, they’ll laugh at you.
But when they look at your situation, I assume they’d think otherwise.
Your “financial life” is comprised of copying and pasting. LOL!
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The house that you live in does not cash flow to you but it does to the bank. Get a rental property and pay your tenant to live there.
 
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