Jim Rogers on Everything

Here’s the raw footage of our interview with Jim Rogers, for our forthcoming film The Bubble.

http://www.facebook.com/people/Paul-Sedkowski/100001467305337 Paul Sedkowski

Brilliant!
Anonymous

I rarely bother to express agreement, so if I disagree on a specific point, I’m not disagreeing more generally.

Asian saving per se is not the issue. Asian purchases of U.S. sovereign debt and mortgage backed securities are the issue.

If “Asian saving” describes Asian individuals investing their surpluses in future production, rather than consuming currently, Rogers’ assumption that saving is an essential good seems sensible, although the demographic transition still raises legitimate questions.

When “Asian saving” describes Asian institutions spending a monetary surplus on promises of more money in the future, promises backed either by entitlement to tax revenue granted by a fiat monetary authority or by dubious mortgages, then Rogers’ assumption seems misplaced.

The question is: why did Asians purchase so much U.S. paper of dubious value as opposed to investing in real means of production? Did they not have a choice? Could they not find a sufficient quantity of real investments, in Asia or in the U.S. or elsewhere?

The existence of a surplus does not imply the existence of an opportunity profitably to invest the surplus. If a hundred sixty year olds all expect to retire by investing for ten years in the productivity of ten sixteen year olds, no law of economics ensures that the hundred sixty year olds can expect a positive, real yield on their investments.

All the productive means in the world can’t make up for a shortage of labor. China’s one child policy produced what demographers (misleadingly) call a “demographic dividend”. This “dividend” actually describes people eating their seed corn rather than planting it. People behaving this way ultimately face a day of reckoning when their harvest is smaller than they wish.

Austrian business cycle theory does not explain everything. It does not explain every consequence of an historically unprecedented demographic transition. Politics and finance do not explain every uncomfortable, economic trend.
Anonymous

I don’t think Austrian economics has a goal or need to explain why people engage in irrational behavior, or explain why people act as they do when the truth of influencing factors is not known. Or to explain non-economic results. It does explain the economic results of said irrational behavior provided correct relevant information within a specific economic action/transaction. Perhaps you should give a specific example of an economic equation which Austrian economics offers no solution.

“The existence of a surplus does not imply the existence of an opportunity profitably to invest the surplus.” You are correct, but that is like saying, “having a surplus of food doesn’t imply the existence of a place to store the food.” People create places to store food just as they create investment opportunities for themselves and others. If an opportunity doesn’t exist, those savers should take it upon themselves to create an opportunity.

That being said I agree with the sentiment within your line of though, Why did they make poor investment choices? In a free market one would think that they would invest in their own future productivity. But my guess is that if you looked at the market they were in you would see that it was being manipulated (not free)to the detriment of the savers just as ours is now.
Anonymous

People can create opportunities to invest, but they can’t produce anything they can imagine with any means at their disposal. A hundred sixty year olds can’t necessarily all retire at 70 by employing ten twenty-six year olds along with any means of production the seventy year olds create with their investments.
The ten twenty-six year olds cooperating with other means of production might produce only enough to satisfy themselves and twenty or thirty of the seventy year olds, without additional labor from the seventy year olds. If each of the hundred old men try to be one of the twenty or thirty, they necessarily waste many resources either by forgoing consumption that they could have enjoyed or by failing to create other means of production more suited to their own efforts than to the efforts of twenty-six year olds in short supply.
Free markets can organize resources most productively without organizing them miraculously. This fact has noting to do with shortcomings of Austrian economics. Austrian economics does not imply any miraculous productivity of ten twenty-six year olds employing means organized by a hundred seventy year olds.
A politician might pitch such miracle to the old men, or the old men might adopt such wishful thinking themselves independently, but Mises and Rothbard do not pitch any miracles. Rothbard discusses the decreasing marginal utility of one of an ensemble of cooperating factors of production in section six of the first chapter of Man, Economy and State.