Monday, October 25, 2010

Falling Into Economic Illiteracy

During the fall of 2008, a video made its way around the Internet. Some children of Hollywood producers and Democratic activists were put into a small choir, complete with a leader who directed them to sing about how "Obama's gonna save us." The children sang praises like the choirs of Chinese children four decades earlier who had sung praises to Mao, the Great Leader who was portrayed as the very Sun.

The camera panned on the parents who listened with enraptured hearts, and the expressions on their face were of unalloyed joy. The Very Messiah was here, and he was going to spread freedom, happiness, and plenty. All it would take would be a vast expansion of the State and Obama was the One to do it.

Paul Krugman was not in the audience, but he might as well have been, given the tone of his columns that fall. Indeed, even those who decided upon the Nobel Prize were caught up in the Messiah Fever and awarded its highest honor to Obama's Prophet Krugman.

Two years later, there are no choirs singing praise to the Holy One of Chicago, and the economy is in much worse shape than we could have imagined, and all signs on the horizon are bad. What could Obama have done? Paul Krugman knows, and he shares his Prophetic Vision (Oh, lucky us!) in his column today.

Obama, Krugman writes, did not do enough. He did not spend enough, nor regulate enough, or spread Joy and Peace and Happiness. He should have immediately imposed the very medical system that Canadians would like to change. According to Krugman's fellow NY Times columnist, Frank Rich, Obama apparently did not arrest enough people, either, nor throw enough people into prison, to join with the other two-million plus that already are spending time in government cages.

Yes, the state has neither been a great enough Sugar Daddy, nor has the state killed enough people overseas, nor has it been harsh enough to people who don't meet the approval of the editorial board of the "Newspaper of Record." The same newspaper that decries the state of imprisonment in this country claims that our Real Problem is that we don't have enough people in prison. It has come to that. The children sang of Obama "spreading freedom," but apparently (at least at the NY Times) spreading "freedom" means more incarceration of people who don't meet the newspaper's definition of being politically correct.

So, what does Krugman claim is the reason that unemployment is higher than it was when Obama took office? The government did not pretend that it is wallowing in riches and money, and while it boosted spending and debt, it engaged in Krugman's definition of "austerity."
A few commentators will point out, with much more justice, that Mr. Obama never made a full-throated case for progressive policies, that he consistently stepped on his own message, that he was so worried about making bankers nervous that he ended up ceding populist anger to the right.

But the truth is that if the economic situation were better — if unemployment had fallen substantially over the past year — we wouldn’t be having this discussion. We would, instead, be talking about modest Democratic losses, no more than is usual in midterm elections.

The real story of this election, then, is that of an economic policy that failed to deliver. Why? Because it was greatly inadequate to the task.
Krugman, it seems, was the Keeper of the Secret, and he gives us the Answer For Which We Have Waited:
When Mr. Obama took office, he inherited an economy in dire straits — more dire, it seems, than he or his top economic advisers realized. They knew that America was in the midst of a severe financial crisis. But they don’t seem to have taken on board the lesson of history, which is that major financial crises are normally followed by a protracted period of very high unemployment.

If you look back now at the economic forecast originally used to justify the Obama economic plan, what’s striking is that forecast’s optimism about the economy’s ability to heal itself. Even without their plan, Obama economists predicted, the unemployment rate would peak at 9 percent, then fall rapidly. Fiscal stimulus was needed only to mitigate the worst — as an “insurance package against catastrophic failure,” as Lawrence Summers, later the administration’s top economist, reportedly said in a memo to the president-elect.

But economies that have experienced a severe financial crisis generally don’t heal quickly. From the Panic of 1893, to the Swedish crisis of 1992, to Japan’s lost decade, financial crises have consistently been followed by long periods of economic distress. And that has been true even when, as in the case of Sweden, the government moved quickly and decisively to fix the banking system.

To avoid this fate, America needed a much stronger program than what it actually got — a modest rise in federal spending that was barely enough to offset cutbacks at the state and local level. This isn’t 20-20 hindsight: the inadequacy of the stimulus was obvious from the beginning.
One wonders at the ingratitude of Krugman's words. After all, has not the Obama administration done everything in its power to undermine entrepreneurs all the while giving lip service to them? Oh, the administration has found clever ways to offer low interest rates to those firms who Follow In The Way Of Obama instead of doing real entrepreneurship.

Instead of insightful people finding ways to put resources to use that will enable real economic growth to occur, the Obama administration is dunning taxpayers to continue to finance and to expand the Ethanol fraud. Favored firms from those on Wall Street to GM to the producers of "clean energy," the vast subsidy machine rolls on, pushing us further into depression. Yes, 15 percent Ethanol in our gas tanks "is gonna save us." (Given the performance of this administration, I think that the Ethanol would do better as cheap whiskey, which at least would permit us to better drown our sorrows.)

The fundamental issue here is that not one person in this administration, nor its acolytes like Krugman, has a clue as to what makes an economy grow. They really believe that it is little more than a perpetual motion machine, a mixture of homogeneous stuff into which one throws money to make everything work magically.

So, today, instead of singing praises to His Messiah, Paul Krugman is left to rage that Obama didn't listen to him and borrow, print, and spend even more money, further empower labor unions, jack up the minimum wage to a zillion dollars an hour, or give all government employees a big raise. Thus, we see that those most honored in academic economics really have no idea what economics is, a discipline that is based upon the simple Law of Scarcity.

No, Obama refused to pretend that the Law of Scarcity did not exist. And why not? Two years ago, he was the Chosen One, the Holy One of Chicago, the One Who Would Save Us.

99 comments:

Anonymous said...

The Telegraph puts it so well:

Will someone please shut Krugman up

AP Lerner said...

Wow, this may be the most complete critique of Krugman from the Austrian perspective in the history of this blog. Bravo

Thanks for proving, again, that you are not an economist, but a spokesperson for a narrow minded political ideology.

You have openly admitted on this blog to not paying attention to current events, and this blog serves as further proof since if you were actually paying attention for the last 3 years, you would know that Krugman was not, is not, and has never been a fan of Obama. It's really baffling how you can consistently just make things up when all it takes is a quick Google search to verify the nonsense you try to spread.

Sorry, but this blog post can really just be summed up as embarrassing. No facts. No data. All ideology. Are you looking for a high paying job at a right wing think tank these days? Because that's the only reason why I can think you would sacrifice yours and the reputation of Frostburg with complete nonsense such as this.

Sad, sad, sad. I hope high school students discover this blog before applying to Frostburg.

Bob Roddis said...

Being called "ideological"* by someone who denies the law of scarcity is like being called ugly by a frog.

Here's the essence of Krugman, August 02, 2002:

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

*Although EVERYONE has an ideology, people who deny the law of scarcity are WRONG, oblivious and silly.

William L. Anderson said...

Sorry, AP. All of the think tanks are run by neocons these days, and I don't fit well into that category. Gotta live on my Frostburg salary plus whatever else I can scrounge up!

But, I do hope you enjoyed the video!

jgdes said...

You might have bothered to notice that Krugman was just predicting that Greenspan would create an unsustainable real estate bubble, he was certainly not approving of that course of action. Not content with that he also predicted the bubble would burst and leave us in dire straits. All this while most pundits were cooing that Greenspan was the messiah who could avoid all busts.

Dune said...

You completely ignore all innovation that has come about in the past century as a result of government spending and research projects.

World War II created a treasure trove of breakthrough technological and medical that were adopted by industry in the following decades.

jason h said...

And Dune assumes all these wonderful ideas are just sitting idle in someone's brain waiting until a gov't dollar unlocks it.

Gee, I can't even imagine any commercial applications of the internet, good thing the gov't invented it first.

Bob Roddis said...

What nonsense, jgdes.

Of course Krugam was advocating that the fed create a housing bubble because “that’s the only way the Fed could get traction”. What a preposterous thing to dispute. If he wasn't advocating a housing bubble, he'd have said: "OMG! Money dilution impairs the price and capital structure and at this point in time, would ignite an unsustainable housing bubble, followed by an Austrian School bust!" He didn't say that.

Then he said it again:

Guys, read it again. It wasn’t a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that’s just what happened.

[Krugman believes in “traction”! We’ve smacked that one down fifteen times before. There's really nothing more to refute.]

http://krugman.blogs.nytimescom/2009/06/17/and-i-was-on-the-grassy-knoll-too/

He was still saying it in 2006:

Paul Krugman,October 30, 2006: As Paul McCulley of PIMCO remarked when the tech boom crashed, Greenspan needed to create a housing bubble to replace the technology bubble. So within limits he may have done the right thing. But by late 2004 he should have seen the danger signs and warned against what was happening; such a warning could have taken the place of rising interest rates. He didn’t, and he left a terrible mess for Ben Bernanke.

http://krugman.blogs.nytimes.com/2006/10/30/credit-where-credit-is-due/

Also see:

http://blog.mises.org/10153/krugman-did-cause-the-housing-bubble/

http://mises.org/daily/3530

William L. Anderson said...

jgdes,

I'm not sure of your point. All of my friends were saying the same thing, and nearly two years before the bubble broke, I told the tax commission of Allegany County that we were in a bubble that would have dire consequences. They laughed and told me I didn't know what I was talking about.

And, none of my friends ever have cooed about Greenspan.

AP Lerner said...

"You completely ignore all innovation that has come about in the past century as a result of government spending and research projects"

Of course you are 100% correct Dune, but, what you need to realize is, according to everyone on this blog and true Austrian dreamers, all government spending is theft and can never contribute to the creation of wealth. Never mind the fact that the author of this blog and his hero, Mr. Higgs, is also funded by the government. That's beside the point. All the medical discoveries, communication technologies, and other innovation funded and created by the government is fake. You also need to keep in mind these are the same people saying we need to be worried about scarce resources with 20% unemployment and no inflation. And these are the same folks that claim government spending crowds out private investment despite the reality long treasuries rate keep falling more by the day. And these are the same people that have been hyper ventilating about inflation for years now. And these are the same people that pray to Peter Schiff. Good luck :)

"I'm not sure of your point. All of my friends were saying the same thing, and nearly two years before the bubble broke"

Actually, it's a pretty important point. Many on this blog like to claim Krugman advocated a housing bubble to get out of the 2001 recession. This is factually inaccurate, and those that say that (including the author of this blog) are re-writing history. When in doubt, just fabricate a theory. However, Google is the ultimate fact checker.

"All of the think tanks are run by neocons these days, and I don't fit well into that category. "

But you do such a good job of repeating the party line and disguising it as economic analysis. "Pain must be inflicted on the innocent. Bankruptcy is in the US's future. Hyper inflation is around the corner. Krugman is a kook. Where's the proof? We don't need proof, just trust me. It's all in Says Law. Or its crowding out. We're right, you're wrong. Facts are irrelevant!" That sounds about right for a libertarian think tank these days, right?

Bob Roddis said...

I would never say that government is totally incapable of creating a useful product.

The Nazis were great with rockets and, apparently, the tape recorder was invented under their watch. If the government came around everyday to make sure we ate right and exercised for 90 minutes a day upon penalty of death, I'm sure we would all be more fit.

But you statists refuse to comprehend both the nature of economic calculation, or even libertarian moral theory.

So, add up all your special and beneficial government projects (which invariably would have been discovered anyway) and subtract all the hundreds of millions of people slaughtered by government wars and otherwise. It's all on you.

William L. Anderson said...

AP,

Bob Higgs works for the Independent Institute. It does not receive government funding.

Where have I said hyperinflation is around the corner, or have said Krugman is a "kook"? (Such words usually are reserved for me! How DARE you attribute such a characteristic to Krugman!) Furthermore, I have not claimed Krugman wanted a housing bubble. I take his word for it that he was being tongue-in-cheek.

Bob Roddis said...

I claim Krugman wanted a housing bubble and that he said so repeatedly. So, I want credit for saying that Krugman wanted a housing bubble. Don't blame anyone else.

Also, predicting hyper-inflation at this time is purely a fact and data based prediction. Mish Shedlock, an Austrian, does not believe it's on the horizon while using Austrian principles in his forecasts.

Of course, neither Dr. Hut Tax nor "Lord Keynes" knows what those Austrian principles might be.

I have repeatly explained and linked to the concept of "Cantillon Effects". An increase in money dilution may or may not express itself in general price inflation.

Anonymous said...

From what I recall, Krugman was a Hillary Clinton supporter during the election.

bravo said...

"I hope high school students discover this blog before applying to Frostburg."

You think high school kids know how to read?! hahahahahahahah thats a good one.

William L. Anderson said...

"I hope high school students discover this blog before applying to Frostburg."

Yeah, my very presence pollutes the entire FSU faculty!! It must be the bedbugs!

Mike Cheel said...

@AP Lerner Any idea when the Krug is going to debate the Austrian economics side of things?

http://www.thepoint.com/campaigns/campaign-0-1240

That ought to shut Bill and Bob up for good right? And he can help a good cause to boot!

AP Lerner said...

"Bob Higgs works for the Independent Institute. It does not receive government funding"

But he has worked at Lafayette and Seattle, among other University's that have taken federal money. I'm not saying it's a bad thing, just a tad hypercritical.

"Where have I said hyperinflation is around the corner"

Since you posted Guido Hulsmann's response to my question on bond rates, I can only assume you agree with his comment that "monetizing T-bills and bonds, which will very quickly bring us on the road of world hyperinflation."

http://krugman-in-wonderland.blogspot.com/2010/06/commentary-on-current-bond-rates.html

And you have also said in a separate blog "I would agree that there is the danger of hyperinflation".

http://krugman-in-wonderland.blogspot.com/2010/07/yeah-i-kind-of-agree-with-krugman-here.html

And you have referenced Schiff a number of times, including here:

http://krugman-in-wonderland.blogspot.com/2010/03/peter-schiff-on-krugman-nobel-prize-and.html

and if you are siding w/ Schiff, then you are siding with the hyperinflationists. Of course, in that post, you said "However, if the Fed buys treasuries, that is done essentially with newly-printed dollars" which of course is false, since the Fed buying treasuries is just an asset swap, does not add financial assets to the private sector, and does not cause price inflation. But you have heard me say that 1,000 times, so that's not new information..

Ok, you never said he was a kook, instead, you called him a crook, which is worse in my book:

http://krugman-in-wonderland.blogspot.com/2010/06/paul-krugman-endorses-bernie-madoff.html

Google is my friend.

And for the record, I don't think you are kook. I just think, like most academic economists, you don't have much of a practical understanding of how capital markets and the monetary system operates. And you let your political bias cloud your economic analysis. But I still enjoy the back and forth and some folks on this blog have learned something from it!

appeal2heaven.com said...

"The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it.

The first lesson of politics is to disregard the first lesson of economics."
-Thomas Sowell

William L. Anderson said...

Let's see. Since Peter Schiff in 2006 said on television that the housing market was going to collapse, therefore when he says hyperinflation is around the corner, I automatically agree with him.

We have seen a vast expansion of the monetary base (no one argues with that point), but whether or not it translates into hyperinflation down the road can be argued. Now, one cannot argue that the U.S. Dollar is taking a beating in the currency markets, so we definitely are seeing a depreciation of the dollar, or maybe that is my imagination, too.

Richard said...

AP,

You quoted Hulsmann out of context. Here is what Hulsmann wrote;

"As soon as the rates of US T-bills and of bonds start increasing to a moderate crisis level of, say, 10 percent, all government budgets will be belly-up. Then the only remaining alternative will be between (I) US and German government default, entailing a deflationary meltdown of world financial markets, and (II) monetizing T-bills and bonds, which will very quickly bring us on the road of world hyperinflation."

Hulsmann is qualifying the conditions that would result in hyperinflation. He says if rates on gov't paper reach a certain level, and if the central banks monetize in response, then the world will be on the road to hyperinflation.

Also, stating that there is a danger of hyperinflation (might happen) is not the same thing as saying 'hyperinflation is just around the corner' (will happen).

Spider said...

"Mish Shedlock, an Austrian, does not believe it's on the horizon while using Austrian principles in his forecasts. "

You know what's funny? Mish has a post-Keynesian (not new-Keynesian like Krugman) view of the monetary system. Those weren't Austrian principles he was using to predict deflation. He doesn't even believe in the money multiplier, just like our friend AP Lerner.

http://globaleconomicanalysis.blogspot.com/2009/12/fictional-reserve-lending-and-myth-of.html

He's also influenced a lot by Steve Keen, a post-keynsian.

You think about that.

Edward said...

Lord Keynes,

i wanted to add something on the previous thread that referenced the 1920-1921 recession. it is true of course that the Fed contributed to this recession,by hiking up discount rates, and its end, by slashing them after July 1921.
But there was much more deflation in that recession than in the great depression. If deflation is so horrible and evil, and there is a nasty one-for one correlation between deflation and depression how in God's good name do you explain the relatively small decline in the real national product? to your credit, you talk about positive aggregate supply shocks. Mainstream economists as far as I know don't care about the difference between "good" deflation of that kind versus "bad" deflation we know about. To them all deflation is terrible, (which is stupid in my opinion) Also Bernanke mentions that there was much more waage and price flexibility in this recession that in the Great Depression, which is a score on the side of the classical school. Also you claim that there was not much debt. But as I said before, the way way enforce debt contracts in this INSANE! We pretend that money has a constant value when it doesn't. Nominal Debt should be indexed to a falling price level. (I know that it isn't, but it should!!!) It's a simple solution to the problem of debt deflation. All it requires is a little imagination.
Also you talk about the nineteenth century as a period where "laissez faire" failed. realtive to the Keynesian era. Um, Lord Keynes, the nineteenth century wasnt a period of laissez faire, not really, Look at the monetary contraction initiated by government, both by Andrew Jackson in his Specie Circular and the "crime of 1873' which demonetized silver. Of Course that will lead to depression. Also, the stickiness of debt contracts during the civil war and the hardships they inflicted ont the farmers played an enormous role. All of which plays into my theory that Say' Law doesn't work in the short run, (which explaisn why depressions happen) but does work in the long run. how do we know Say's Law works in the long run? Because the depressions of the nineteenth century eventually ended, despite the presence of cruel pro-cyclical policies initiated by the government. Government didnt engage in massive deficit spending during the nineteenth century. but yet the economy still recovered. According to you, how? And yes, maybe countercyclical policies would have helped, but as we see now, there is no guarantee that foolish politicians and incompetent central bankers would have the guts pursue a strong countercyclical policy.
So why not have an automatic stabilizer in the form of long term contracts indexed to a falling price level. It would be more reliable than waiting for the government to help, which is like waiting for godot

Lord Keynes said...

All of my friends were saying the same thing, and nearly two years before the bubble broke, I told the tax commission of Allegany County that we were in a bubble that would have dire consequences.

Yeah, and so were Marxists!!:

2004:
http://www.wsws.org/articles/2004/feb2004/gpan-f16.shtml
http://www.wsws.org/articles/2004/sep2004/hous-s27.shtml
2005:
http://www.wsws.org/articles/2005/aug2005/hous-a06.shtml

This doesn't prove that Marxism is right, and just because you and your friends correctly identified a housing bubble (like the Marxists) it doesn't mean Austrian economics in vindicated.

Lord Keynes said...

I love this gem:

He should have immediately imposed the very medical system that Canadians would like to change.

Ah, no: Canadians have a single payer system, free at the point of delivery, like every other OECD nation, part from the US.
Obama’s system forces people to buy private insurance, a kind of crony capitalism. Big difference.

And, as for Canadians’ allegedly wanting to change their system, perhaps you (like your own acolytes here) have never heard of empirical evidence:

http://www.nupge.ca/node/2486

http://www.healthzone.ca/health/article/679824

Yeah, apparently 86.2% (+/-3.1 percentage points) support for Canada’s public system is a sign they want to change it!

Bob Roddis said...

This doesn't prove that Marxism is right, and just because you and your friends correctly identified a housing bubble (like the Marxists) it doesn't mean Austrian economics in vindicated.

And that is because such a prediction coming true is merely anecdotal, just as phony Keynesian historical narratives are anecdotal.

I thought we previously beat that "who predicted the housing bubble first" horse to death.

Bob Roddis said...

For an informative exploration of Quebec's marvelous medical system, rent or buy "The Barbarian Invasions" (French: Les Invasions barbares).

http://en.wikipedia.org/wiki/The_Barbarian_Invasions

Lord Keynes said...

But there was much more deflation in that recession than in the great depression. If deflation is so horrible and evil, and there is a nasty one-for one correlation between deflation and depression how in God's good name do you explain the relatively small decline in the real national product?

There is a simple explanation: it’s excessive and high private debt.

Unexpected and severe deflation leads to debt deflation, as argued by Irving Fisher and Hyman Minsky, and Steve Keen. Since you admit contract are inflexible, you admit debt deflation occurs.

Regarding deflation you are right that there can be good and bad deflation. I have already said this here:

http://socialdemocracy21stcentury.blogspot.com/2009/08/deflation-and-business-cycle-is-their.html

But even in “good” deflation there are costs.

the nineteenth century wasn’t a period of laissez faire,

Yes, it was, relative to both before and after it. If your definition of laissez faire is 100% reserve banking, a gold standard, and no government at all (= anarcho-capitalism), this system has NEVER existed, at least not in the modern world. It’s a fantasy, imaginary system.

Meanwhile, in the real world, the 19th century was laissez faire, the most laissez faire system we have had over the past 200 years. No amount of special pleading will change that fact.

Because the depressions of the nineteenth century eventually ended, despite the presence of cruel pro-cyclical policies initiated by the government

Depends on how you define the "long run." High unemployment persisted in the 1890s, and it is perfectly clear that involuntary unemployment and sub-optimum growth were common in other periods of the 19th century too .
If the best you can offer a starving family whose breadwinner can’t get a job is : “Don’t worry! Say’s law works in the long run!”, you will be run out of town on a rail. People will be dead by the time it works.

Lord Keynes said...

For an informative exploration of Quebec's marvelous medical system, rent or buy "The Barbarian Invasions"

Oh! So you're intelligent enough not to challenge the mountains of evidence that the majority of Canadians support their system.

Instead to support your view you turn to... a French Canadian comedy-drama film!!!!

LOL!

Bob Roddis said...

Canadians live near Detroit. When they need good medical care, they just come here over the bridge.

They can get their free shots and pills in Canada, and expert procedures performed in Michigan. They can wait their 10 months for an MRI, or come over here for an MRI tomorrow. The marvelous Canadian government CRIMINALIZES any attempts to bring for-profit MRIs into Canada.

Since they're not as stupid as Americans with our trillion dollars wars, the Canadians have extra cash to blow on free shots.

However, nobody but nobody in Michigan would ever go to Canada for medical care.

Finally, since the Québécois loved that film and gave it awards, it must ring pretty true.

LK would hate the film because it celebrates medical freedom in the form of freedom from the socialists and the drug warriors (the same type of krypto-Nazis). We can't have free people, can we?

Lord Keynes said...

Canadians live near Detroit. When they need good medical care, they just come here over etc, etc, etc.

Umm... Having complained about "anecdotal" evidence, you know resort to... completely anecdotal evidence!

Bob Roddis, my hat goes off to you.

William L. Anderson said...

You guys fight it out for a while. I'm going to bed! I wore out the dogs on my mountain bike ride today, but wore myself out in the process.

Edward said...

"the nineteenth century wasn’t a period of laissez faire,

Yes, it was, relative to both before and after it. If your definition of laissez faire is 100% reserve banking, a gold standard, and no government at all (= anarcho-capitalism), this system has NEVER existed, at least not in the modern world. It’s a fantasy, imaginary system. Meanwhile, in the real world, the 19th century was laissez faire, the most laissez faire system we have had over the past 200 years. No amount of special pleading will change that fact."

Um, when you have government control of the money supply and severe monetary contractions actually initiated by government (Andrew Jackson, specie circular) the "crime of 1873" that's called government PRO-cyclical action Let's say variable z (depressions) is agreed upon to be bad and avoided, we look at history and see correlations of z between variables a,b,c,d,f. You're saying You SEE! Clearly a caused z therefore a is bad. Its bad science, but okay I get it everyone does it. Conservatives do it to with Keynesians when the say the 1930's was an example of Keynesiansism when it wasn't. And Lord Keynes, most systems of government were imaginary before they were tried. in the real world you have to be open to new possibilities that weren't tried before and attempt to innovate your way out of problems. otherwise you end up stagnating because you end up dismissing solutions that would work with a little tweaking
I'm not arguing for a perfect utopia, but I am arguing that you have to control variables. And you never adressed my indexing proposal I know debt deflation is bad, the way nominal debt contracts are constructed, BUT IT DOESN"T HAVE TO BE That WAY! if nominal contracts were all indexed, we would not have to fear deflation as much, it would be a more reliable stabilizer that waiting for the Fed to dump helicopter money, conduct QE or the Treasury to write unemployment checks


"If the best you can offer a starving family whose breadwinner can’t get a job is : “Don’t worry! Say’s law works in the long run!”, you will be run out of town on a rail. People will be dead by the time it works."

Not if deflation indexing were established (By the way, why didn't millions upon millions of Americans die of starvation if what you said was right, how did America despite all those depressions manage to become a premier industrial power on by the eve of World War I if laissez faire didnt work?) if deflation indexing were established, the farmers who suffered and agitated for the Free silver movement wouldn't have had such suffering during the recessions.

AP Lerner said...

"We have seen a vast expansion of the monetary base (no one argues with that point), but whether or not it translates into hyperinflation down the road can be argued"

But you and Schiff have said in the past this will lead to hyperinflation. Are you changing your view? My issue w/ Schiff is not his view, but how he has turned his (wrongheaded) view into a dangerous political platform. Thankfully, the good folks of Connecticut are rejecting his nonsense. And so are his investors these days.

"Now, one cannot argue that the U.S. Dollar is taking a beating in the currency markets",

In nominal terms, sure. In real terms, not really. We live in a real world.

Bob Roddis said...

There's nothing wrong with anecdotal evidence per se unless you are trying to establish basic economic principles with it.

Since no one can really know what goes on inside of other people's brains, surveys (even really good surveys) are ultimately anecdotal. People have free will, so predicting their actions is quite unlike predicting the actions of projectiles or molecules in the world of physics or chemistry*. That's the essence of the dispute between the Austrians and the statist "schools" of "thought". In fact, the Austrians are pretty cocky about their understanding of things because it is BASED UPON THE UNDENIABLE REALITY OF WHAT PEOPLE CANNOT KNOW DUE THE NATURE OF OUR EXISTENCE. We're real sure about what people CANNOT know. The question becomes how will the inherent ignorance of people will manifest itself in a particular situation. It's obvious that this concept flies right over the heads of the statists. Further, the data the statists love is misguided because their inquiry into what is actually happening is misguided. Statists, being cement-heads, don't know what people cannot know and always fail in their issue-spotting by ignoring that central fact.

LK cited a survey which may very well be accurate in terms of what Canadians might say about their support for their health system. Due to a lack of economic calculation, one knows that the Canadian system will be inferior to a free market system (of course, the US does not have a free market system). Without market prices, the Canadians could not possibly know how to price things in their system, except by copying US prices, which themselves are hopeless distorted. Let the US go socialist and there will be nowhere to turn for any kind of realistic pricing in the medical field. Sounds like a nightmare.

I suspect that LK's survey is probably correct and that my "anecdotes" are also probably correct.

Speaking of the use of data, I don't recall any of our statist/SWAT-team-loving commenters actually commenting on (much less attacking) Prof. Murphy's data based Austrian analysis of the bust.

http://mises.org/daily/4682

*Of course, one can always predict that an Austrian School critic will fail to understand basic Austrian School concepts. Which is almost like a hard science prediction. But not quite.

Bob Roddis said...

My first typo in eons:

"The question becomes how will the inherent ignorance of people will manifest itself in a particular situation"

should have been:

The question becomes how the inherent ignorance of people will manifest itself in a particular situation.

Of course, there are no people in the unrealistic religious realms of the Keynesians and Chartalists.

callahan auto said...

AP - just like the good folks of Connecticut are rejecting Mosler's nonsense?

Another Anonymous said...

Bob, even Hayek did not oppose - maybe even supported - socialized medicine. Anybody who is not driven crazy by ideology does. BECAUSE THE GOVERNMENT DOES IT BETTER. Just like in regular war - in the war on germs - the government does it better. The US system delivers inferior care for much more money. American healthcare is, overall, sh*t - much less than the sum of its parts. Read Marcia Angell. The problem is the profit motive, which makes for profit institutions do ABSOLUTELY NOTHING. Absolutely nothing except get in the way of doctors, nurses and hospitals and rake in more total $ than the people who do real work get.

The most shocking and little known statistic I have seen is this, from a Harvard School of Public Health study: In 2000 the top third by income of white Americans lived shorter and sicker lives than the bottom third of white Britons. Even the rich get crappy care in the US. (I have anecdotal evidence for that too.) And the UK system is probably the most efficient, statist and penny-pinching in the world.

Bob Roddis said...

We don't have a free enterprise health care system in the US. In Michigan, a hospital has to get government permission to add a bed.

Naturally, government controlled health care is terrible.

Just as Austrian theory would predict, Canadian impairment of the health care market via government control will cause more havoc in more complex areas which require longer term and more complex investment. That's why they can probably deliver shots and fix broken legs reasonably well, but could never have an efficient delivery system for complex medical equipment. At that level of complexity, the system has gone Soviet.

That is why in the Quebec film, the rich son shipped his sick dad to Vermont to get tested immmediately (at a cost) rather than have him wait months for the same (free) tests in Quebec.

http://en.wikipedia.org/wiki/The_Barbarian_Invasions

Statists and commies and Keynesians and Chartalists don't have capital structure in their theories. So, in any discussion concerning where the capital structure has been distorted, it's like talking to the family poodle.

Also, I'm a Rothbardian and I'm aware of when and where Hayek went squishy.

jason h said...

The whole notion that cost should be completely removed from health care decisions is what drives up the price. Imagine if you went to the grocery store where nothing was labeled, and you sent the bill to a third party. The grocer would charge much more than if he actually had to compete for customers. The only reason this systems survives is that the gov't mandates it as part of employment in the U.S.

On the whole gov't does it better rubbish. It reminds me of the old car shop joke about getting good, fast, and cheap service (you can only get two out of three).

The State has made the collective decision for everyone to trade price for speed. Luckily, the people have the still have the option to come to the U.S. for speedy specialist procedures.

Elliot Rosewater said...

I agree with your assessment of Krugman. However, I do not think you give Frank Rich's argument justice. He is only demanding that white collar crime be treated more seriously. AM basically stole money from shareholders when he sold off part of his stake in country wide. Based on FR's argument I think there is a strong probability he belongs in prison with the Enron boys.

Lord Keynes said...

That is why in the Quebec film, the rich son shipped his sick dad to Vermont to get tested immmediately ...

Yeah, and everyone knows that fictional films provide the best evidence ever!

If you are a Misesian who believes in a minimal state, then you have no arguments against single payer health:

The point here is that Mises, not only as a praxeologist but even as a utilitarian liberal, can have no word of criticism against these statist measures once the majority of the public have taken their praxeological consequences into account and chosen them anyway on behalf of goals other than wealth and prosperity. (Rothbard, 2002. The Ethics of Liberty, p. 213).

Health care is one of them: this is about ethics, not economic efficiency.

If someone can't pay for medical treatment and no one is willing to provide private charity, then, sure, it's more *economically efficient* to let that person die.

Unfortunately, libertarian attempts to convince people of this wretched view have failed miserably - and will continue to fail miserably.

The whole industrialized world (apart from the the US) has single payer or national health care.

Richard said...

AA,

I agree with Bob that Hayek was 'squishy' when it came to the welfare state. Still, I don't believe he ever advocated socialized medicine. According to this article, he opposed universal healthcare;

http://www.qando.net/details.aspx?entry=5176

Honestly, abolishing profits in the medical industry would improve it? How so? How is it different than any other industry that makes profits? If abolishing profits in the medical industry will improve it, won’t abolishing profits in all other industries improve them?

Finally, funny you mention how great the British health system supposedly is. In a debate with libertarian Walter Block, even this advocate of a single payer health care system in Canada (and socialized medicine in general) said the British system was ‘bad’ (he starts at 59:45) and should not be adopted as a model.

http://mises.org/media/1898

And LK,

Right, no patient ever died in a Socialist healthcare system because they could not get the care they needed, though it was available. NEVER happened. Give me a break.

Anonymous said...

@LordKeynes: Lordkeynes! Come on down. You're the next contestant on 'Name That Fallacy!' You don't actually have to do anything, we just quote your words and point out the various fallacies you've committed.

"'That is why in the Quebec film, the rich son shipped his sick dad to Vermont to get tested immmediately ...'

Yeah, and everyone knows that fictional films provide the best evidence ever!"

Is this more of a quote mine, or just a straight up straw man? I mean, you quoted his comment as if he were utilizing said film as evidence for his argument rather than simply an example to illustrate his point. Then again, as badly as you're having your ass handed to you, I guess you would desperately cling to these sort of things, wouldn't you?

"If you are a Misesian who believes in a minimal state, then you have no arguments against single payer health: (quote-mine of Rothbard follows)"

Wow. We not only have a repeat of the fallacies committed above, but a few more sprinkled on top. Let's see, we've got 'poisoning the well', 'false dilemma', and 'begging the question'. Overall, that makes 7 thus far, 4 of which are repeats.

"Health care is one of them: this is about ethics, not economic efficiency."

False dilemma, begging the question, moving the goalposts. We're up to 10.

"If someone can't pay for medical treatment and no one is willing to provide private charity, then, sure, it's more *economically efficient* to let that person die."

Straw man, begging the question, appeal to ridicule. If you'd stopped here, you'd ended up at 13, the unlucky number. Luckily, you apparently love to hear yourself talk, or read your own bloated comments.

(cont.)

Anonymous said...

(cont.)

"Unfortunately, libertarian attempts to convince people of this wretched view have failed miserably - and will continue to fail miserably."

Argumentum ad populum, appeal to ridicule. Isn't it interesting how not a single one of your paragraphs contains fewer than one logical fallacy?

"The whole industrialized world (apart from the the US) has single payer or national health care."

Spoke to soon. All I can find here is a repeat of the 'argumentum ad populum'. If I were being strict, I could possibly argue that you committed the begging the question fallacy as well. However, that would mean pointing out all the other minor logical errors, which would result in me being up all night.

LK, might I recommend you take a bit of a hiatus from blog comments for a while? You seem to be getting a bit agitated. I mean, you committed at least 16 logical fallacies in your last comment, and you only wrote 6 sentences of it. That's 2 2/3 fallacies per sentence, a high rate for even you. Add to that the fact that Mr. Roddis is thoroughly trouncing you in this regard, and you're not painting a very good image of the Post Keynesian school. I don't intend to be mean to you, but you need to take a breather and think about what you're doing for your colleagues. You're certainly not convincing anyone here with your recent displays.

Richard said...

LK,

And BTW, as far as your Rothbard quote, his point was not that the Misesian minimal statist should accept, in this case, a single payer system, but should altogether reject the state - on ethical grounds.

Lord Keynes said...

And BTW, as far as your Rothbard quote, his point was not that the Misesian minimal statist should accept, in this case, a single payer system, but should altogether reject the state - on ethical grounds.

No, he's saying that Misesian praxeology based on rule utilitarianism has no convincing arguments against interventions made on robust moral or pragmatic grounds.

Rothbard then used natural rights/natural law fairy tales to make a moral argument for his anarcho-capitalist system.

Unfortunately, natural rights/law is a joke, and Rothbard's system collapses. That just leaves us with Mises' praxeology with its devastating self-contadiction.

jason h said...

this is about ethics

Then surely you must advocate for the only system that provides the best service for the cheapest price-free market capitalism

Certainly not the barbaric system of State control that creates artificial shortages driving up prices while decreasing quality and availability.

Ban profits in agriculture and bottle water industries as well cause well people gotta eat.

Lord Keynes said...

Right, no patient ever died in a Socialist healthcare system because they could not get the care they needed

A red herring. Of course they have. The difference is that access to health care is not limited by ability to pay in such a system: it's by need.

All systems are limited by available resources and the limitations of modern medicine (some things just cant be cured), so all you have done is identify a universal problem with ALL systems.

jason h said...

All systems are limited by available resources

Ah hah! Thus economics.

A free enterprise system maximizes the use resources. And death due to lack of payment would be much less than death due to State mismanagement of resources.

The State is not omnipotent and cannot know how many resources to allocate to health care. Only by eliminating State interference in the market can resources be efficiently allocated.

The State creates an artificial shortage in doctors, medicine, and medical devices with too many regulations. The State interferes with economic calculation by interfering with the pricing structure.

Lord Keynes said...

And death due to lack of payment would be much less than death due to State mismanagement of resources

Rubbish.

The State is not omnipotent and cannot know how many resources to allocate to health care.

The private sector is not omnipotent and cannot know how many resources to allocate to health care, on the basis of need for it. Their bottom line is profit.

Only by eliminating State interference in the market can resources be efficiently allocated.

Yeah, "efficiently allocated" by letting people die.

The State creates an artificial shortage in doctors, medicine, and medical devices with too many regulations.

Pure nonsense.
You live in a fantasy world.
"Socialized" systems in industrialized countries work very well. You think France, Germany, or Sweden have medical systems with "artificial shortages" and "decreasing quality and availability"? They don't. They are better in terms of availability and outcomes than the US.

Bob Roddis said...

If there are no natural rights, why can't we just hold a vote and eat the losing 49.9999%?

And take their stuff so the government doesn't default on its obligations which it created to provide "savings" to the private sector? (See, you dumb Austrians. There are ways of satisfying these unpayable government debts without inflation!)

These are the words of wisdom of our opponents. This is who they are. These guys are just nuts.

As in "You can't be serious!!!??"

Drawing them out is such fun (but really creepy).

I'd forgotten that "The Barbarian Invasions" won an Academy Award in 2003. You can buy it for $1.41 plus shipping.

http://tinyurl.com/25w635g

Lord Keynes said...

If there are no natural rights, why can't we just hold a vote and eat the losing 49.9999%?

Because natural rights/law theory is not needed for a robust objective ethics: you can get perfectly good ethics from rule utilitarianism (a type which Mises subscribed to) or contractarianism a la Rawls.

jason h said...

The private sector is not omnipotent and cannot know how many resources to allocate to health care, on the basis of need for it. Their bottom line is profit.

It doesn't have to be and yes it can. The market dynamically reacts the decisions of each individual. Individuals who convey their needs with their dollars.

Come on..this is basic econ.

Richard said...

LK,

Mises did not base praxeology on rule utilitarianism. Praxeology is the science that studies the implication of action. It is not 'based' in any system of ethics, let alone rule utilitarianism.

Mises claimed that one cannot derive a system of ethics using praxeology. Rothbard disagreed with him. He said that because praxeology proves you cannot allocate goods without prices, and that you cannot have prices without private property, that this suggests an ethic - an ethic that supports absolute private property rights. Therefore, one must reject statism. He did support natural rights as such an ethic, but later also expressed support for argumentation ethics.

And, by the way, in a society of private property rights, anyone is free to support anyone else based on their 'needs.' Socialist healthcare systems allocate by 'needs' in name only - plenty of people in these systems 'need' healthcare, but these systems do not provide it to them.

Lord Keynes said...

The market dynamically reacts the decisions of each individual. Individuals who convey their needs with their dollars.

So people without the necessary $$ don't count!?! And therefore the private system will NOT provide the necessary resources/care for all people.

Great work! Shooting yourself in the foot.

Lord Keynes said...

Mises did not base praxeology on rule utilitarianism ... Mises claimed that one cannot derive a system of ethics using praxeology

Yeah, I know:

http://socialdemocracy21stcentury.blogspot.com/2010/10/mises-praxeology-critique.html

http://socialdemocracy21stcentury.blogspot.com/2010/10/rothbard-on-mises-utilitarianism-why.html

http://socialdemocracy21stcentury.blogspot.com/2010/10/economics-and-ethics-brief-survey.html

jason h said...

So people without the necessary $$ don't count!?!

No these people have indicated that at the price offered they'd rather spend their money on something other than health care.

Again basic econ price theory.

Lord Keynes said...

A gem:

No these people have indicated that at the price offered they'd rather spend their money on something other than health care.

So if I have cancer and cant pay for treatment, I am "indicating that at the price offered, I'd rather spend my money on something other than health care"??

Bob Roddis said...

I find it odd that LK actually BLOGS about praxeology without having the slightest understanding of what it is and he hasn't the slightest understanding of acting man, subjective value, economic calculation or the distortion of the price and capital structure.

Further, because of the importance of health care and all of its implications, it's quite immoral to impede the market in providing these essential goods and services at cheap, affordable prices.

But, hey, what's morality to someone who supports the theft and fraud of money dilution, eh?

Lord Keynes said...

But, hey, what's morality to someone who supports the theft and fraud of money dilution,

The money supply is essentially
endogenous. That is why capitalism invented fidiciary media and FRB in the 19th century - the belief that a 100% reserve standard banking is compatible with dynamic capitalism with is a farce. People already had the "free" choice to accept 100% reserve banking over FRB in the 19th century and they rejected 100% reserve banking. Get over it.

If you want to blame someone for increasing money stocks, blame the businessmen and merchants who needed money for their economic activity.

.

Richard said...

LK,

"Yeah, I know:" ???

So in one post you claim that Mises based 'his' praxeology on rule utilitarianism. You later post you that you know he didn't???

You like to argue that because Austrians themselves cannot agree on certain things (like the role of praxeology) that one can reject their methodology. Does that mean because you can't even agree with yourself, we can disagree with everything you say?

Fair is fair.

Lord Keynes said...

So in one post you claim that Mises based 'his' praxeology on rule utilitarianism.

Never claimed any such thing.
Read the comments again.

In ethics, he was a rule utilitarian.

His praxeology was based on a priori reasoning from the (allegedly) synthetic a priori human action action.

Bob Roddis said...

Get over it.

We now have all of the Chartalist commenters plus LK expressly and explicitly eschewing morality.

jason h said...

"So if I have cancer and cant pay for treatment"

The problem here is not free-market capitalism or profit, its poverty. Doctors aren't charging high prices for fun.(Not to mention all the State interventions that drive up the prices-try to import a cheap generic version of that cancer treatment.)

Cancer treatment is scare thus scare resources must be saved and offered in exchange. If two people need medicine but there is only one pill left, who gets it? Why not give it too the one who can afford it and the saved resources can be rolled into additional production. I guess you could get Bernanke to print up another pill. Is he sitting on a pill printing press? What a jerk!

If you remove the profit motive that drives productivity increases and merely let the State confiscate all the medicine and distributed based on a bureaucrat's definition of 'need' one day there may not be any medicine left and resources will not have been saved to develop new medicine.

We see this manifested in long wait times for certain procedures. You may offer the cheapest price in town but your shelves are empty.

Again, why not support a system that historically and logically drives prices down and quality up.

jason h said...

LK also seems to be confused about FRB.

FRB is not technically fraudulent as long as there is full disclosure that deposits may be lent out and are not available on demand and in fact the deposits may not even be there if too many loans default and there is a bank run.

The fraud arises when the FDIC and Fed 'guarantee' the deposits, essentially allowing money to be in two places at once. Then you have notes in circulation that aren't backed by actually goods.

jason h said...

*scarce

darn those scare resources, eek!

bravo said...

Time is the scarcest resource mankind has ever known. There is no printing press or mine or factory in which it is produced or found, or refined. It cannot be inflated, deflated, manipulated or bartered for and noone can check the balance to see how much one has left. Even the act of saving a persons life is at best a bestowing of borrowed time. Healthcare is the most personal decision any of us can make because it is the decision to trade the resources we know we have for the hope of improving the quality of what fleeting time we may have left. Or the decision not to. Or the decision that time spent with friends and family is much more valuable than time spent in hospital beds and operating rooms. To declare that these decisions must be taken away from the people seeking treatment and the people offering that treatment and handed to bureaucrats, in the name of morality no less, is a truly depraved statement.

Richard said...

LK,

Post 10/26 @ 3:59 You wrote

"No, he's saying that Misesian praxeology based on rule utilitarianism has no convincing arguments against interventions made on robust moral or pragmatic grounds."

Tell me again that you never claimed Mises's praxeology was based in rule utilitarianism?

rctlfy said...

"The camera panned on the parents who listened with enraptured hearts, and the expressions on their face were of unalloyed joy. The Very Messiah was here, and he was going to spread freedom, happiness, and plenty."

You're one of those psychic economics professors. The type who can predict what parents were thinking, and could have saved the economy.

Hmm, where did you publish your plan years ago? Did you think I meant for all of the US? No. I was referring to your visionary powers in the context of your financially strapped university. http://www.ola.state.md.us/Reports/Fiscal%20Compliance/FSU03.pdf

Bob Roddis said...

I guess rctlfy said it all.

After reading that old Frostburg report, it's clear that the entirety of the Austrian School has been meticulously and finally refuted.

Anonymous said...

@Bob Roddis: Either that, or he just demonstrated what a non sequitur was.

bravo said...

Yes, how dare someone question youth indoctrination? Where could that go wrong? The fact that those parents didnt yank their kids out immediately tells you plenty about what they were thinking.

rctlfy said...

Well Bob, no doubt your expertise lies in? Possibly Rothbardville?
LOL

Anonymous said...

@rctlfy: Do I really need to explain the fact that an econ professor doesn't have control over the budgetary decisions of the school he works at, or are you just incapable of grasping this concept?

rctlfy said...

@Anonymous, anyone who uses that ubiquitous expression non sequitur should have their internet privileges suspended.

@bravo, did you just pull a Godwin?

@Anonymous do I really need to explain the fact that when a university has so little confidence in their econ professor's advice over their economic woes, it is more than humorous he wants to advise POTUS. Or are you just incapable of grasping this irony?

Lord Keynes said...

"No, he's saying that Misesian praxeology based on rule utilitarianism has no convincing arguments against interventions made on robust moral or pragmatic grounds."

If you bother to read Rothard, you'd know perfectly well that "Misesian praxeology based on rule utilitarianism" = public policies based on Misesian praxeology justified over other systems by rule utilitarianism.

While Misesian praxeology is a priori and deductive, Mises advocated it over other rival systems by using utilitarianism.

Lord Keynes said...

The problem here is not free-market capitalism or profit, its poverty.

In third world countries that might be a problem. Not in industrialized nations, though.

A good many drugs cost pennies to produce, and even the more expensive ones can be bought cheaply by the government by buying in bulk (e.g., precisely as the Australia government does for its health care system).

The resources involved to provide health care are comparatively small for an industrialized nation, and a great deal of the actual R&D for new drugs is done by the government funded programs anyway:

http://www.mindfully.org/Industry/Pharma-R&D-Myths.htm

The belief that "scarcity" is limiting basic access to health care is a joke.

Anonymous said...

@rctlfy: "@Anonymous do I really need to explain the fact that when a university has so little confidence in their econ professor's advice over their economic woes, it is more than humorous he wants to advise POTUS. Or are you just incapable of grasping this irony?"

As I said, he doesn't have authority there. Your statement just amounts to an argumentum ad populum and an appeal to ridicule. You might want to clean the fallacies out of your comments before you try to be clever.

rctlfy said...

@ Anonymous your amandation humors me. Your cacozealous flosculation is more than entertaining.

The essomenic skills of economists have been phlyarologistic.

Few of their predictions have reached eveniency.

Feel free to instruct me keleusmatically, and happy googling!

Anonymous said...

@rctlfy: I fail to see how using the names of the fallacies involved amounts to flosculation. I can link you to them if you aren't familiar with them.

http://en.wikipedia.org/wiki/Appeal_to_ridicule

http://en.wikipedia.org/wiki/Argumentum_ad_populum

When taken as a whole, including all schools of thought and all economists, one could argue that. However, Freud and Jung made quite a few predictions and theories that have turned out to be false. This doesn't mean that the field of psychology is a useless enterprise. That's the nice thing about a science. We make changes as we go along, make better predictions.

And by the way, the Austrian school of economics successfully predicted both the great depression and our current recession pretty well. You speak as if economists know nothing about the subject they study.

Might I suggest not using outdated English terms next time you post? There's a reason the went out of use. Most of the outdated words you used above have much shorter modern counterparts that would make your sentences far less cumbersome.

rctlfy said...

Google fail I see. ;-)

Anonymous said...

Actually, I was aware of those terms already. That was more of a troll fail.

rctlfy said...

Coward and a liar. Hell, you're not another economist but a politician.

Lord Keynes said...

And by the way, the Austrian school of economics successfully predicted both the great depression and our current recession pretty well.

That is rubbish.
If you talking about Machlup's story of Mises talking
about the Austrian branch of the "Kreditanstalt" and saying "that will be a big smash" - this was a prediction about one European bank, not about the Great Depression.

Lord Keynes said...

More awesome predictions from Mises that never came true:

“Mises’s predictive powers were not always prescient, however. In September 1931, Ursula Hicks (wife of John Hicks) was attending Mises’s seminar in Vienna when England suddenly announced it was going off the gold standard. Mises predicted the British pound would be worthless within a week, which never happened. Thereafter, Mises always expressed deep skepticism about the ability of economists to forecast”.

Skousen, The Making of Modern Economics. 2008, p. 296, note 2.

Anonymous said...

@Lordkeynes: Yet again, you display a lack of familiarity with Austrian principles.

Steele, G. R. (2001). Keynes and Hayek. Routledge. p. 9. ISBN 0415251389.

Skousen, Mark (2001). The Making of Modern Economics. M.E. Sharpe. p. 284. ISBN 0765604795.

Read up a bit more on Austrian theory before you criticize it, kay?e

Lord Keynes said...

Another gem from Mises:

“The deeds of the Fascists and of other parties corresponding to them were emotional reflex actions evoked by indignation at the deeds of the Bolsheviks and Communists. As soon as the first flush of anger had passed, their policy took a more moderate course and will probably become even more so with the passage of time” Mises, Liberalism: A Socio-Economic Exposition (1978, p. 45).

Anonymous said...

@Lordkeynes: So, instead of contesting the actual predictions, you point to one that was an obvious hyperbole and one that didn't really even have much to do with economics? Is this how desperate you've become?

Lord Keynes said...

Mises did not predict the Great Depression.
His "Kreditanstalt" remark applies to one European bank, not to an American stock market crash and a US contraction that lasted years (1929-1933).

Only someone truly desperate would try and press that anecdote into a "prediction" of the Great depression.

And as for his remarks in 1934 in the English edition of Money and credit, this was years after the depression had begun, and he himself is ridiculously distorting his own earlier remarks about the Kreditanstalt, as though they predicted the Great Depression.

Moreover, it isn't difficult to predict that a huge boom on the stock market will bust - but that isn't the same thing as predicting a world economic collapse.

Anonymous said...

@LordKeynes:

http://mises.org/journals/qjae/pdf/qjae11_3_5.pdf

David in Qatar said...

@LordKeynes:

"That is why capitalism invented fidiciary media and FRB in the 19th century."

That made me double over backwards laughing. Why don't you go ahead and provide documented evidence that capitalism invented fidiciary (sic) medid and FRB in the 19th century.

I'll wait. This is gonna be fun. Then I'll show you evidence that FRB existed as far back as ancient Greece.

David in Qatar said...

"fidiciary (sic) medid"

fidiciary (sic) media

typos are fun for everyone

Lord Keynes said...

David in Qatar,

You ought to read your own pro-free market and libertarian economists:

Selgin, Those Dishonest Goldsmiths, April 14, 2010
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1589709

David in Qatar said...

I would recommend that you read Chapter 2 of De Soto's "Money, Bank Credit, and Economic Cycles." You would retract your silly statement.

Another Anonymous said...

David is right, Lord K. I've learned the thing you should trust economics textbook or mainstream views the least on - and that is saying something - is on history, which is entirely made up, a Bart Simpson book report.

Fidudulary moduli, and maybe the understanding of the endogeneity of money, go back to ancient Mesopotamia.

SINVILLE said...

I know jack about economics but a statement by an anonymous man, who declares blank is right, and his evidence is he doesn't trust mainstream economic textbooks is clueless too.

David in Qatar said...

Sinville,
That's perfectly fine. But you are also free to skim De Soto's book, in particular the chapter of the history of fractional reserve banking - from Ancient Greece to the Medicis to the Bank of England to present day. You can also verify the footnotes as you see fit.

The pdf of the book is online and can be easily found on Google.

After you are done, I am certain you will be convinced that LK's statement shows a tremendous ignorance about the origins of our current banking system.

Galeri Foto Universitas Islam Indonesia said...

Artikel yang menarik..
Salam dari sahabat di Jogja...^_^

Universitas Islam Indonesia
http://uii.ac.id/