Vegas Debate: Ron Paul rips Herman Cain over Occupy Wall Street
Ron Paul slams Herman Cain over The Fed during Bloomberg GOP Debate
Mitt Romney: I dont know what the Constitution says! Ask Ron Paul
Scapegoat: Occupy Wall Street
From The Guardian: The shocking truth about the crackdown on Occupy "No 3 was the most clarifying: draft laws against the little-known loophole that currently allows members of Congress to pass legislation affecting Delaware-based corporations in which they themselves are investors."
The truth about violence at OccupyIn Oakland, the camp coincided with a significant drop in crime. But that wasn't the story we were told
The most important direct violence Occupy faced was, of course, from the state, in the form of the police using maximum sub-lethal force on sleepers in tents, mothers with children, unarmed pedestrians, young women already penned up, unresisting seated students, poets, professors,pregnant women, wheelchair-bound occupiers and octogenarians. It has been a sustained campaign of police brutality from Wall Street to Washington State the likes of which we haven’t seen in 40 years.
But it all began with the fountain pens, slashing through peoples’ lives, through national and international economies, through the global markets. These were wielded by the banksters, the “vampire squid,” the deregulators in D.C., the men — and with the rarest of exceptions they were men — who stole the world.
That’s what Occupy came together to oppose, the grandest violence by scale, the least obvious by impact. No one on Wall Street ever had to get his suit besmirched by carrying out a foreclosure eviction himself. Cities provided that service for free to the banks (thereby further impoverishing themselves as they created new paupers out of old taxpayers). And the police clubbed their opponents for them, over and over, everywhere across the United States.
The grand thieves invented ever more ingenious methods, including those sliced and diced derivatives, to crush the hopes and livelihoods of the many. This is the terrible violence that Occupy was formed to oppose. Don’t ever lose sight of that.
Scapegoat for Congress's Insider Trading: Martha Stewart
Insider Trading is what Martha Stewart went to prison for! i.e....
The big banks make money by taking the bailout money we gave them and lending it back to the government with interest.
Notes
What Does "Too Big To Fail" Mean?Have you heard of the boom bust towns of the olden days? Lets start there. If a town pops up around one industry, say mining, and the mine goes dry. Then all the workers will be out of work. No one will have any money for groceries or any other commodities available in the small shops and the town will become a ghost town. The mine was the main industry and it's failure led to the towns extinction. From the point of view of the towns economy the mine is 'too big to fail'.
Lets say there is a two industry town. A fishing industry with a built up port and a mine in the nearby mountains. If the mine goes dry the fishing industry will still be around. If the mine employed 50 - 70 percent of the towns labor then the town will go bankrupt, many workers will leave, many shops will close. The town will not cease to exist as there is still the fishing industry. However, economic growth for that town will be the equivalent of a depression. So from the point of view of the town's economic growth the mine was 'too big to fail'. [The financial sector is like a hug mine that has come to dominate the economic landscape - for a visual image see the pie chart below - this trend has spread to all countries as they participate in global trade for their own economic growth]
We can go on multiplying the number of industries (which is what economists do - start with a model of one industry and build it until it takes many variables of an economy into account). I'm guessing you get the idea and so I want to move to our current financial structure.
To fix a problem of too big to fail you HAVE to break up the companies so they are NOT too big to fail. To let it fall breaks the whole economy. To let it go on just postpones the problem (i.e. the global economy will simply break later).
New Regulations Proposed By The Treasury Department(First read the post with the extract on Financial Regulation)
Every time there is a financial crisis new regulations and rules are implemented. The problem is that our hindsight is 20/20. Once a crisis has occurred the regulators realize that if certain rules had been set before hand this problem would never have happened (or at least have been unlikely).
First, what is a ‘Systemically Important Firm’?
Suppose the town has two big banks and a big insurance company and 4 small banks and a small insurance company. The big banks hold most of the money from the mine, farms and ranches. The big insurance company has insured all the big ranches and farms.
Most of the money in the town is in the big banks. If the small banks fall there will be a lot of capital loss. A lot of people will be unhappy. If the big banks and the big insurance company fall then most of the money of the town will cease to exist.
From the point of view of the town the loss of the small banks and insurance company will cause scandals and possibly a small recession. If the big banks fall then most of the capital in the entire town is lost. A serious recession/depression will result.
Look at it this way; The banks pass loans between each other, they have stocks in each other, they even are connected to the insurance company. i.e. all the big institutions are interconnected.
Each one of the big financial institutions of the town represent ‘systematic risk’ i.e. if one falls they can hurt the entire town financial system.
From the point of view of the town each one of the big banks and the big insurance company are ‘too big to fail’.
Treasury Department's Press Release
In Depth...
Keynesian Economics - Old School Theory (From The Concise Encyclopedia Of Economics):
Keynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation. Although the term has been used (and abused) to describe many things over the years, six principal tenets seem central to Keynesianism. The first three describe how the economy works.
1. A Keynesian believes that aggregate demand is influenced by a host of economic decisions—both public and private—and sometimes behaves erratically. The public decisions include, most prominently, those on monetary and fiscal (i.e., spending and tax) policies. Some decades ago, economists heatedly debated the relative strengths of monetary and fiscal policies, with some Keynesians arguing that monetary policy is powerless, and some monetarists arguing that fiscal policy is powerless. Both of these are essentially dead issues today. [i.e. studies have shown that these policies can have an effect, both positive and negative, depending on circumstances. A lower interest rate for an emergency in the short run makes sense. As a consistent policy, it doesn't]
Nearly all Keynesians and monetarists now believe that both fiscal and monetary policies affect aggregate demand.
Aggregate demand IS based on ALL the choices that individuals and businesses and governmentcontractors (contractors is how Governments create jobs Romney) etc. make. That means all the choices of buying made in a country's economy all added up together equals 'aggregate demand'.
4. Keynesians do not think that the typical level of unemployment is ideal—partly because unemployment is subject to the caprice of aggregate demand, and partly because they believe that prices adjust only gradually. In fact, Keynesians typically see unemployment as both too high on average and too variable, although they know that rigorous theoretical justification for these positions is hard to come by. Keynesians also feel certain that periods of recession or depression are economic maladies, not, as in real business cycle theory, efficient market responses to unattractive opportunities.
Interesting enough, based on this, Hayek and Ron Paul are both Keynesians! lol!
Keynesian Economics - Old School Theory (From The Concise Encyclopedia Of Economics): 5. Many, but not all, Keynesians advocate activist stabilization policy to reduce the amplitude of the business cycle, which they rank among the most important of all economic problems. Here, however, even some conservative Keynesians part company by doubting either the efficacy of stabilization policy or the wisdom of attempting it.
Switching from fiat currency to a precious metals based currency such as Gold, Silver, Titanium(?), Platinum etc. is a form of stabilization i.e. it would help moderate inflation. It has become a fad in political circles to assume that inflation would cease to exist if we switched back to a gold standard. This is outdated by about 50 years. Nowadays the exchange is free floating. This means that even Gold has 'boom - bust' cycles i.e. depending on other factors the price of gold goes up and down and can even end up in a bubble. To minimize gold bubble problems if it is put into a currency we have to 1. Use as many metals as possible so the concentration of gold or silver or any one metal in the hands of a few people or in a few countries doesn't cause it's own long term socialist/fascist/corporatism problems. - 2. Have a very slow infusion period in the style of the old style gold promissory notes that the ancient jewellers use to issue. i.e. For every dollar of currency out in circulation there should not only be an equal amount of gold/silver but also more (like how a 'reserve' functions in a bank) to cover the bubble problem (which is bound to happen in a free floating exchange rate... this is something that old people can't visualize properly because it was one of the results of freeing up the markets. To old people who are familiar with these ideas, as soon as a market becomes freerer it's also supposed to make people better off. That's dumb.) - 3. Allow small communities like States or cities to start. - 4. There is no rush because the worlds economy has been off precious metals for a while and moving metals to the economic position of a currency needs to be done slowly so there are no problems (like pursuing a war for gold... we just got done with a war for oil, lets not start a new mineral genocidal adventure?).
Note: Personally I don't care about returning to precious metals. Going back to precious metals as currency is mostly an old person thing. i.e. right-wing/libertarian economists from the 1970's (before all the privatizations carried out under F.A.Hayek's influence happened, which haven't been taken account into thier theoretical models because thier ability to adjust to the changing global economy ended in the 1970's. Why? I think people such as Ron Paul put together a plan and then became obsessed with the plan. Half of this plan has already been hijacked so pursuing this plan, politically, could be disastrous for the US & global economy unless some proper economists are involved in straightening this mess out - Paul Krugman isn't one of them). Old people are always complaining about how much more things cost. How burgers used to be 10 cents. Only difference is Ron Paul is doing something about it.... i.e. returning to the currency system of his childhood. Returning to some lost golden age is always what happens to a dissatisfied minority who, through constant shouting, often get everyone believing that the previous age really was better. In most cases, there was simply too little information available to the people concerned of that time. For example; based on GOP policies, we know now that incest and rape is not only common in the South it has actually increased under the new Texan Governor Rick Perry i.e. there is a decrease in women's rights & increase in child abuse (and he's not in prison i.e. this is normal for Southerners!). 50 years ago this information would not be available to people (back when this problem was probably greater). So people living in a dream world will often think thier idealized version of the past really existed when it didn't. This problem is covered by Eric Hoffer in his books "True Believer" and "The Passionate State of Mind". Moving on.
Inflation can be controlled in many ways. However, there is a problem of leaving too much up to a small group of people in any form of government as it inevitably leads to corruption as 'a little power corrupts' just as effectively as 'absolute power corrupts completely' (that's why State Governments are separate from Federal Governments in the US Constitution). The best solution is to find a way to stabilize the environment/country/economy for individuals to begin to prosper and let them take over the direction of where society will go in it's innovation and education.
Currently the system constrains that, especially the educational system in the US and Texas... in fact, I personally support isolating Texas from being involved in just about anything as that's the Nazi Homeland since World War 2 (probably because of the transfer of scientists as war booty after killing Hitler... but these scientists were allowed free reign and now thier "Neo" Nazi groups are all over the South!). Texas is also the source of most, if not all, of the US & global economic and social problems. The new Nazi terrorists in Europe (such as Andre and others that got caught before going on a killing spree) seem to have thier philosophical origins in the USA. ALSO, we have some very big problems we have to deal with or humanity's future is very bleak (such as this, this and this). Going nuts over returning to a money system that old people who have read maybe one of two books in thier lives (besides a bunch of approved textbooks) have become obsessed with, is risky and dangerous.
The problem is that when things are going badly people begin to think that returning to some past 'golden age' is the way to salvation. This desire to return to the past is common but illusory. Ron Paulwants to go back to the Gold Standard (it's impossible to go back to just one precious metal as 'currency' anyways - given supply so I'm glad he included Silver in his plan. But just two metals isn't enough). The lost Christians want to return to the Garden of Eden and thier preachers have driven them to madness. The GOP leaders want to bring the Old Testament and it's Patriarchal form of woman control and marriage back to the present. The Muslims are lost and angry. The Libertarians are being manipulated by the Koch brothers and are extremely confused. So if allowing precious metal based currencies will make some depressed people happy, then my position is to give it to them. Just allow it to enter SLOWLY so the structural adjustments can take place over the next couple of decades or so to make the transition smooth. As each currency grows it will find it's place in the market till you have a set of currencies on a free floating exchange each with it's own value and position of the market (i.e. with a very slow implementation there is no reason to withdraw ANY of the fiat currencies. The junk bond status for fiat currencies will take 25-30 years. If ever. i.e. with stable & transparent economies - even in banking ex. LIBOR scandal - even fiat currency will work. Without it... hyperinflation is a very real long-term possibility.)
In other words, precious metal currencies do no harm and could even help, so why not?
Keynesian Economics - Old School Theory (From The Concise Encyclopedia Of Economics): This does not mean that Keynesians advocate what used to be called fine-tuning—adjusting government spending, taxes, and the money supply every few months to keep the economy at full employment.Almost all economists, including most Keynesians, now believe that the government simply cannot know enough soon enough to fine-tune successfully. Three lags make it unlikely that fine-tuning will work. First, there is a lag between the time that a change in policy is required and the time that the government recognizes this. Second, there is a lag between when the government recognizes that a change in policy is required and when it takes action. In the United States, this lag can be very long for fiscal policy because Congress and the administration must first agree on most changes in spending and taxes. The third lag comes between the time that policy is changed and when the changes affect the economy. This, too, can be many months. Yet many Keynesians still believe that more modest goals for stabilization policy—coarse-tuning, if you will—are not only defensible but sensible. For example, an economist need not have detailed quantitative knowledge of lags to prescribe a dose of expansionary monetary policy when the unemployment rate is very high.
6. Finally, and even less unanimously, some Keynesians are more concerned about combating unemployment than about conquering inflation. They have concluded from the evidence that the costs of low inflation are small. However, there are plenty of anti-inflation Keynesians. Most of the world’s current and past central bankers, for example, merit this title whether they like it or not. Needless to say, views on the relative importance of unemployment and inflation heavily influence the policy advice that economists give and that policymakers accept. Keynesians typically advocate more aggressively expansionist policies than non-Keynesians.
Keynesiams exists as both anti-inflation or anti-unemployment. Just another proof that this isn't the 1930's anymore. So will the politicians in the US PLEASE PLEASE PLEASE stop arguing like elementary kids who have never been to elementary school and just been bullied all thier lives and so now must bully others... over the first theoretical paper in a baby science from 80 years ago. For gods sake! (i.e. Keynes theory)
"The successful politician owes his power to the fact that he moves within the accepted framework of thought, that he thinks and talks conventionally. It would be almost a contradiction in terms for a politician to be a leader in the field of ideas. His task in a democracy is to find out what the opinions held by the largest number are, not to give currency to new opinions which may become the majority view in some distant future." F. A Hayek
Keynesian Economics - Old School Theory (From The Concise Encyclopedia Of Economics): ’ belief in aggressive government action to stabilize the economy is based on value judgments and on the beliefs that (a) macroeconomic fluctuations significantly reduce economic well-being and (b) the government is knowledgeable and capable enough to improve on the free market.
This is the problem with too much meddling (or "fine-tuning). If you are constantly fine tuning monetary or fiscal policy you are going to mess up. it's inevitable as the laws of probability dictate. If fiat currency makes us constantly have to do fine tuning while a precious metals currencies will help stabilize economies and reduce the need for fine tuning then it makes long-term economic sense that that's what we should do.
Keynesian Economics - Old School Theory (From The Concise Encyclopedia Of Economics): The brief debate between Keynesians and new classical economists in the 1980s was fought primarily over (a) and over the first three tenets of Keynesianism—tenets the monetarists had accepted. New classicals believed that anticipated changes in the money supply do not affect real output; that markets, even the labor market, adjust quickly to eliminate shortages and surpluses; and that business cycles may be efficient. For reasons that will be made clear below, I believe that the “objective” scientific evidence on these matters points strongly in the Keynesian direction. In the 1990s, the new classical schools also came to accept the view that prices are sticky and that, therefore, the labor market does not adjust as quickly as they previously thought (see new classical macroeconomics).
The idea of sticky wages because of minimum wage requirements is being fought by the GOP (Fully Explained here = Paul Ryan's Plan Is EXTREMELY Bad For Seniors i.e. this is the same economic "balanced budget" plan the GOP-Republicans have been marketing for the last 4 years!). This is a bad idea as the US can't really return to an agricultural based economy (where kids work with thier families in the fields and paying a dollar for help in loading the truck/cart is sustainable living). Even with food towers making local food production independent and self-sustaining in times of famine and drought ... in the long run all agricultural work will be done with heavy machinery around the world and eventually robots in the first world countries. So the future of jobs in the US lies in the manufacturing sector for the US. If the US federal government wasn't supporting an off shoring outsourcing policy (since LONG before Obama - you guys do know that laws can't be removed all willy-nilly by the President don't yall? Unless you want a Despotism and NOT a Democracy/Republic - ... which, BTW, Mitt Romney is involved in as well because it's a GOP-Republican thing. Then the US economy would be at 'full employment' right now (about 4-5% unemployment).
This brings me to the Federal Reserve whose leader Alan Greenspan controlled much of government policy on banking and financial money making for the last two decades. Given the kind of arguments they have used and the recently exposed LIBOR scandal any possible objection to a private company controlling public interests must be gone by now (if there is still objection there names needs to be written down for an investigation). If the LIBOR scandal isn't enough for a full scale inquiry into the Federal Reserve and a restructuring of it's position in our economy then the fact that they have been printing money to giving it away to thier friends in the trillions should be more than enough. Unfortunately the people receiving bailouts from places like the Federal reserve (such as Mitt Romney ... and Alan Greenspan?) are too powerful in the government for any change to take place. Of course, the fact that no change is taking place is more reason for an investigation but let's not go there.
To have this private corporation also overlooking banks (does anyone remember the financial collapse of 2008 with the no questions asked TARP by Bush with huge bonuses paid out after?)... is madness. THE federal reserve proves this everyday by hiding it's analysis and decision making. Since all US banks have been proven to be involved in artificially setting rates (LIBOR) the idea that banks should be allowed to be private AND control the economy and regular taxpayer/citizen interests is obsolete (if it ever was valid!).
It's why what Andrew Jackson said is true now, more than ever!
Concerning his expansion of presidential powers:
"Taking up his presidential duties, Jackson thought the country was suffering from a crises of corruption. If virtue was central to the well being of the nation, then corruption and selfishness were corrosive, and could be fatal. By corruption, Jackson did not mean only scandal and mismanagement. He meant it in a broader sense; in the marshalling of power and influence by a few institutions and interests that sought to profit at the expense of the hole. He was not against competition in the marketplace of goods and ideas. Like the Founders, he believed in vigorous debate, and like Adam Smith, he put his faith in the capacity of free individuals to work out their destinies. But he was very much against the special deal or the selfish purpose, and he was very much in favor of his own role as defender of the many and protector of the nation. In Washington, he was intent on dismantling the kind of permanent federal establishment that created a climate in which, in his view, insiders such as John Quincy Adams and Henry Clay could thrive no matter what the people beyond Washington wanted.
Jackson worried about the power of the Second Bank of the United States, an institution that held the public’s money but was not subject to the public’s control, or to the presidents.Presided over by Nicholas Biddle – brilliant, arrogant, and as willfull in his way as Andrew Jackson was in his – the Bank, headquartered in a Greek Revival building on Chestnut Street in Philadelphia, was a rival interest that, Jackson believed, made loans to influence elections, paid retainers to pro-Bank law makers, and could control much of the nations economy on a whim."
Pay attention here: The problem was private ownership of public wealth – people with no one above them, privately owned large national resources. This is a disaster waiting to happen in any type of economy as an individual can manipulate the nation's economy at a whim.
Page 210: It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth cannot be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy of the gifts and virtue every man is equally entitled to protection by law; but when the laws undertake to ad to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society – the farmers, mechanics, and laborers – who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in the government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing.
Bill Moyers & Senator Bernie Sanders On Corporate Money In Politics
Page 273: “On Friday, December 3, 1833, Andrew Donelson took Jackson’s annual message to the Congress. The deposits had been removed, Jackson said, because of “the unquestionable proof that the Bank of the United States was converted into a permanent electioneering engine.” The issue was, “whether the people of the United States are to govern through representation chosen by their unbiased suffrages of whether the money and power of a great corporation are to be secretly exerted to influence their judgement and control their decisions.”
The problem here is powerful, privately owned enterprises, who influence the nations wealth i.e. "Capitalism Visualized" {I found the link to the above image from BillMoyers.com (at the bottom of this page)}
There is only one solution. An audit of the Fed followed by prosecutions of criminal behaviour such as the insider trading Paul Ryan was involved in... and probably Mitt Romney as he bragged about connections to Washington in 2002 AND keeps saying all the money he made was done legally... so did Paul Ryan! Congress has set up thier own corporation to do insider trading through Delawar! (probably others as well) So technically, all the money Mitt Romney made IS legal, just not moral. Proof? If what's in this paragraph isn't enough then read this and this.
Taking the money that was stolen during the Bush years and putting it back into the economy... you could probably buy everyone in the US a house or jump-start the global economy with 21st century technology rather than the 19th century oil based economy we have now... we should have a corresponding boom equivalent to the one during the Industrial age... providing our huge global corruption problem is taken care of, then it will move slowly or even backfire as traitors get thier time to make plans and take actions).
The FED - HAS - to exist as a central bank for the State as ALL countries on this planet have a financial structure that is set and stepping out of that system would be bad for the US (economically and for stability). Though all countries don't have private untransparent banks taking care of public matters. That's just crazy and something you'll only find in America!SO the FED has to be nationalized, made transparent and anyone not involved in criminal behaviour should be payed a fair share price for thier holdings in the previously private corporation (the FED) which was controlling public interests.
Keynesian Economics - Old School Theory (From The Concise Encyclopedia Of Economics): Before leaving the realm of definition, I must underscore several glaring and intentional omissions.
First, I have said nothing about the rational expectations school of thought. Like Keynes himself, many Keynesians doubt that school’s view that people use all available information to form their expectations about economic policy.
This is true as people make decisions emotionally unless they learn how to develop clarity, learn how to research and think critically. For some in the US... If they like the candidates clothes on the day they have to decide who to vote for then whether the colour of thier cloths pleases them or not WILL have an effect on thier decision for who to vote for. In addition to this most information is kept from the public under the guise of being 'polite' or 'journalistic integrity' to avoiding mudslinging . Telling the truth isn't mudslinging.
Keynesian Economics - Old School Theory (From The Concise Encyclopedia Of Economics): Third, I have ignored the choice between monetary and fiscal policy as the preferred instrument of stabilization policy. Economists differ about this and occasionally change sides. By my definition, however, it is perfectly possible to be a Keynesian and still believe either that responsibility for stabilization policy should, in principle, be ceded to the monetary authority or that it is, in practice, so ceded. In fact, most Keynesians today share one or both of those beliefs.
Keynesian theory was much denigrated in academic circles from the mid-1970s until the mid-1980s. It has staged a strong comeback since then, however. The main reason appears to be that Keynesian economics was better able to explain the economic events of the 1970s and 1980s than its principal intellectual competitor, new classical economics.
The reason Keynesian concepts such as the multiplier effect work is because they are time-tested. (which Keynes had nothing to do with as he died a long time before the math of the multiplier effect was done... and a long time before his explanation of digging ditches for the sake of digging ditches was thrown out. When investing nowadays (i.e. spending on equipment/rent/infrastructure) you have to spend money as no one likes to give up stuff for free OR by barter. Only bought economists could possibly use such an outdated theory - literally the first paper on this subject was in the 1930's. ONE paper. THE VERY FIRST ONE!)
New Keynesian Economics: From The Concise Encyclopedia Of Economics: New Keynesian economics is the school of thought in modern macroeconomics that evolved from the ideas of John Maynard Keynes. Keynes wrote The General Theory of Employment, Interest, and Money in the 1930s, and his influence among academics and policymakers increased through the 1960s. In the 1970s, however, new classical economists such as Robert Lucas, Thomas J. Sargent, and Robert Barro called into question many of the precepts of the Keynesian revolution. The label “new Keynesian” describes those economists who, in the 1980s, responded to this new classical critique with adjustments to the original Keynesian tenets.
Another example of the continuous research being done in economics as it's an empirical scienceNOT a political philosophy. Of course, economics takes years to study and test theories because that's the nature of an economy and science itself.
New Keynesian Economics: From The Concise Encyclopedia Of Economics: The primary disagreement between new classical and new Keynesian economists is over how quickly wages and prices adjust. New classical economists build their macroeconomic theories on the assumption that wages and prices are flexible. They believe that prices “clear” markets—balance supply and demand—by adjusting quickly. New Keynesian economists, however, believe that market-clearing models cannot explain short-run economic fluctuations, and so they advocate models with “sticky” wages and prices. New Keynesian theories rely on this stickiness of wages and prices to explain why involuntary unemployment exists and why monetary policy has such a strong influence on economic activity.
GOP is using New Keynesian theory of sticky wages and prices for it's plan of lowering minimum wage!
New Keynesian Economics: From The Concise Encyclopedia Of Economics: Menu Costs and Aggregate-Demand Externalities
One reason prices do not adjust immediately to clear markets is that adjusting prices is costly. To change its prices, a firm may need to send out a new catalog to customers, distribute new price lists to its sales staff, or, in the case of a restaurant, print new menus. These costs of price adjustment, called “menu costs,” cause firms to adjust prices intermittently rather than continuously.
Economists disagree about whether menu costs can help explain short-run economic fluctuations. Skeptics point out that menu costs usually are very small. They argue that these small costs are unlikely to help explain recessions, which are very costly for society. Proponents reply that “small” does not mean “inconsequential.” Even though menu costs are small for the individual firm, they could have large effects on the economy as a whole.
There is also the profit margin to consider. Generally the profit margin is so high that a few percent rise in costs just means lower profits - if sales are consistent - so a cost-push inflation on prices is not enough, in the short run, to cause a change in prices especially when adding to this the fact that people don't like change very much and more businesses are private and thus have to compete for customers.
Above Interview is of the authors of the book: All The Devils Are Here
3 mins and 30 secs - Says 'we didn't realize housing doesn't go up forever' yet the excuse for the derivatives housing nonsense (triple AAA rated toxic assets) is 'this is the normal financial crises that occurs every 5-7 years'.
Useful Information: A video of an enlightening interview from 2009 on the Bailouts.