Friday, June 10, 2011

Rule by inflation

When John Maynard Keynes called for the "euthanasia of the rentier," he meant that the government's monetary authorities should hold the rate of interest low enough to where people who earn money from lending no longer would be willing to lend. Thus, the "rentier" would disappear from the scene.

Paul Krugman is repeating that call, and now claims that it is that evil "rentier" that is dragging down the economy. If only the authorities were willing to listen to him and have more inflation; if and only then would people be able to find jobs and the economy would hum along nicely:
While the ostensible reasons for inflicting pain keep changing, however, the policy prescriptions of the Pain Caucus all have one thing in common: They protect the interests of creditors, no matter the cost. Deficit spending could put the unemployed to work — but it might hurt the interests of existing bondholders. More aggressive action by the Fed could help boost us out of this slump — in fact, even Republican economists have argued that a bit of inflation might be exactly what the doctor ordered — but deflation, not inflation, serves the interests of creditors. And, of course, there’s fierce opposition to anything smacking of debt relief.
Looking at the Fed's balance sheet post TARP, one hardly can say that the Fed has not been "aggressive" in trying to spread more dollars throughout the world. However, I suspect that when Krugman calls for the Fed to be "more aggressive," he means the Fed finding a way to purchase short-term Treasuries directly, as opposed to buying them on the secondary market. (The original Federal Reserve Act prohibits the Fed from such direct purchases, although given that Washington no longer has to abide by the same laws that govern the rest of us, I am sure Ben Bernanke can find a way around such pesky requirements.)

Krugman's call for more inflation is based upon his belief that inflation benefits low-income people and hurts the wealthy. Thus, the reason that inflation is not higher is due to unwarranted lobbying by the rich, who are benefiting at the expense of the rest of us.

Now, when the main financial crisis hit in 2008, I argued (contra Krugman) that not only would bailouts retard any recovery, as they would prevent or postpone liquidation of bad assets, but also would increase the political strength of the very people who had driven the economy over the cliff. Krugman now thinks that the people on Wall Street have too much political influence, but he fails to see the connection between the bailouts and their political strength.

I will go even further. Krugman is absolutely wrong on inflation, in that the people most hurt by it are NOT the rich, but rather the small savers and people on fixed incomes. (Krugman claims that people on SS and other fixed incomes would not be hurt because SS is indexed to inflation.)

Here is the problem, and it demonstrates that Keynesians (once again) really have no concept of money and see it only as a "quantity variable." Yet, what actually happens with a burst of inflation?

As Henry Hazlitt points out in his excellent Economics in One Lesson, inflation creates a "mirage" of prosperity at the beginning, but in the end is like the "Dead Sea fruit that turns to dust and ashes in its mouth." A new bout of inflation does not raise all prices and incomes at the same time. Instead, those who receive the new money first receive the benefits, while those at the back of the line (small savers and, yes, people on fixed incomes, even those incomes indexed to inflation) bear the costs. Murray Rothbard writes:
Inflation, then, confers no general social benefit; instead, it redistributes the wealth in favor of the first-comers and at the expense of the laggards in the race. And inflation is, in effect, a race--to see who can get the new money earliest. The latecomers--the ones stuck with the loss--are often called the "fixed income groups." Ministers, teachers, people on salaries, lag notoriously behind other groups in acquiring the new money. Particular sufferers will be those depending on fixed money contracts--contracts made in the days before the inflationary rise in prices. Life insurance beneficiaries and annuitants, retired persons living off pensions, landlords with long term leases, bondholders and other creditors, those holding cash, all will bear the brunt of the inflation. They will be the ones who are "taxed."
He continues:
Inflation has other disastrous effects. It distorts that keystone of our economy: business calculation. Since prices do not all change uniformly and at the same speed, it becomes very difficult for business to separate the lasting from the transitional, and gauge truly the demands of consumers or the cost of their operations. For example, accounting practice enters the "cost" of an asset at the amount the business has paid for it. But if inflation intervenes, the cost of replacing the asset when it wears out will be far greater than that recorded on the books. As a result, business accounting will seriously overstate their profits during inflation--and may even consume capital while presumably increasing their investments.
In Krugman's Keynesian world, however, none of that matters. If anything, businesses are parasites and government, by creating "new money," also creates wealth. That really is the "New Economics" in a single sentence.


American Patriot said...

I am sure LK and Anonymous will show up soon with their twisted arguments defending Krugman's delusional views.

Anyone who has lived through inflation, or has an ounce of common sense, knows that there are no winners whether or not they have read Hazlitt, Rothbard, etal. .

Ask anyone in countries like Argentina which lived through hyper-inflationary times and they will tell you that when it was over with, no one was untouched by inflation's erosionary forces. Yes one can earn higher interests on deposits, etc. but inflation, on the net, erodes the value of all assets.

I am not surprised, however, by the views of likes of Krugman. What else could one expect from minds that believe that deficit spending is the cure for recessions. They live in a world where there are no consequences. Money grows on trees and there is no such thing as opportunity cost. They can read hundred studies like the recent Harvard study (among others) that conclude that government spending is corrosive to private investment yet they will still stick to their mantra.

As I have said many times before, these are all Marxists at heart. If they had any sense at all they could critically think things out and arrive at conclusions that are consistent with the real world outcomes.

Methinks said...

Ah, AP beat me to it. The usual suspects will show up to claim that Keynes wasn't a Keynesian and Krugman is not a Krugian.

Heck, AP, you don't have to even read Hazlitt and Rothbard to get that take on inflation. At the end of his life, Keynes became concerned about inflation.

But, we know what the problem is, don't we? Krugman is no longer an economist.

ND said...

I'm confused. Wasn't Krugman arguing that with inflation the creditors would be losers and people with incomes that go up with inflation would be winners? Isn't that exactly what Murray Rothbard's quote also says? With hyperinflation almost everyone is a loser and the financial system itself breaks up, but Krugman isn't arguing for hyperinflation. He's arguing for 4% inflation. At that level it's a zero-sum game. For every loser, there's a winner. It's just a matter of figuring out which is which. Krugman says the winners are people paying off debts (like mortgages) whose incomes move with inflation (most of us). The losers are the people who are owed those debts. Who do you think the winners are? If you say, "there are no winners," then it starts to sound like you're the one whose ideology is clouding things. It's a zero-sum game. There have to be winners.

I've wondered about this for a while. Back when William Jennings Bryan gave his "cross of gold" speech everything made sense. The creditors wanted low inflation and the farmers and other debtors wanted high inflation. Nowadays no one seems to want inflation. I wonder, what has happened to all the debtors? Why don't they demonstrate for higher inflation like they did back then? I'm not personally arguing for high inflation. I just wonder why people up to their necks in debt haven't figured out that inflation would save them...

American Patriot said...

We have more than that now, way more

Anonymous said...

No, we have less. Core inflation is quite low (1.3 ish), and headline inflation is below 3.5%.

Inflation including everything except oil is below 2%. Our inflation is quite low. If you think its higher, you are probably an idiot.

Also, if Krugman had his way there would be more stimulus spending- he just pointed out that republican economists (like Greg Mankiw) have suggested a 4% inflation would spur the economy in the absence of inflation.

Tel said...

Given that all elderly and retired people are consuming goods that they have not immediately worked for, they would all fall into the "rentier" class. Thus "euthanasia of the rentier" is just another way of demanding that all citizens be forced to work until they die.

The whacked thing is that forcing the elderly to work for longer by destroying their savings, actually makes it more difficult for the younger people to find jobs, thus scuttling the Keynesian "make work" schemes. The more they interfere, the more they need to interfere... and so it goes.

Bala said...

As feared when I read the post, some people (a fellow-Austrian included) are already making the error or mixing up the definition of inflation that Prof. Anderson is talking of. As I understand it, Prof. Anderson (as is Rothbard) is referring to 'increase in the money supply' as inflation. Given this, any discussion based on the level of 'inflation' as measured by price indices is completely off the mark.

It would be good if Austrians would avoid giving the Keynesians room to post their silly ideas by using any price indices to measure inflation.

As for whatever-Keynesian and other sundry Statists, do try to understand what the article means by inflation before commenting on it. I know it is too much to expect you to do drop your erroneous definitions, but I am sure it can't hurt to make this request.

Robert V said...

Inflation is less than 2%. These are not the droids you are looking for.

Mike M said...

" If you think its higher, you are probably an idiot"

LOL if you believe government statistics you are probably an idiot.

Bob Roddis said...

I think it should be clear by now that only an inferior mind can be a Keynesian mind. It's unfathomable that these cement-heads are still claiming that there is no general price inflation which is clearly occurring despite the continuing collapse in housing prices.

ND said...

Those of you who believe inflation is higher than 4%, I'm curious:

- Where do you get your statistics?
- Does that mean you agree with Krugman that 4% is better than 1.5% inflation, but you disagree on what the current inflation rate is? Or would you prefer something like 0% inflation, or some other inflation target?

Bob Roddis said...

We don't believe in a fiat money system that allows the regime to dilute the money supply.

Unlike 100% of the other anti-Austrians that show up here, why don't you be the first to learn some basic Austrian concepts?

American Patriot said...

First of all, don't bother me with the governments bogus definition of core CPI. For the average Joe out there, food and energy (gas, electricity, heating oil, etc. included) make up anywhere between 1/4 to 1/3 of their net income. Housing means nothing since the downward prices do not provide higher disposable income to anyone (other than those buying at a lower price).
Second, inflation is actually near 10% using older (pre-1980) measure. I know many like mushy government stats but do not fall for the statistics games being played. We all know who the idiot is here, Ananymous!

Regarding the definition: Agreed. Technically unless you specify the term "price inflation", it is the expansion of money supply.
However: inflation in M without the V to cause price inflation has the negative effect of keeping interest rates low. With sufficient V, you get price inflation. Now you tell me: which is more significant - effect of low interest rates on people's income streams or effects of price inflation?
Those who have lived through serious inflation would laugh at the notion that you can talk about inflation without any regard to price inflation.

ND said...

American Patriot, do you have any references for inflation being 10% by pre-1980 statistics? I've heard people say that CPI is wrong, but I've never run across hard data that conflicts with it (maybe for a lack of looking). The BLS at least breaks out most of the numbers. I'd be curious to see where the difference between 3.5% (or whatever CPI is) and 10% comes from.

Bob, I'm not sure if your comment was directed toward me, but I wouldn't necessarily call myself and anti-Austrian. I'm just a guy who read a Krugman editorial and then read an anti-Krugman editorial. A wise man once told me to never hold a strong opinion on something until you can state the other guy's case better than he can. So I was asking questions to try to understand all the hate :)

American Patriot said...


try the following links. Also you can do a search with key words "real inflation pre 1980 method" and I suspect you will get a few hits. You normally do not see much about it because BLS did away with that method.

We are being told fairy tales (including with unemployment numbers, which are even more suspect than CPI)

BTW, does the good professor, whom I admire, ever weigh in regarding these comments or does he simply stay above the fray?

American Patriot said...

Sorry ND, forgot to provide the shadowstats link:

Try the historic SGS unemployment rate and your eyes will pop out.
As far as CPI, the reason for changing the old methodology was to account for substitution of products, quality improvements, etc. I say bogus. The fact that I Pad II is better than I Pad I does not put any extra money in my pocket. The net effect is that I am out of more money to purchase the better product. It is just a way of deleting the price increases from the stats wherever they can.
Government loves doing that. Have you tried to analyze NOAH data on surface temperatures? Look at all the stations they have dropped off (over 1,000) so that they can keep on manipulating data to B.S. people in to believing in some kind of correlation between human activity and mean temperatures.

Here is the little dirty secret for likes of Anonymous and LK:

Government (bureaucracy) can only be empowered by more and more spending. The best way to assure that is through manipulating data. It is almost like a self-fulfilling prophecy when government analyzes and presents data that justifies actions necessary for the bureaucrats' survival.

I know that LK may call me a conspiracy theorist (as the left loves to do) but there is so much proof of manipulation and using outright false data (as in the case of Dr. Hansen of NASA) that one would have to believe either all these people are extremely incompetent (an argument in itself to limit government) or they are lying on purpose.

My belief is the latter.

Bob Roddis said...

A wise man once told me to never hold a strong opinion on something until you can state the other guy's case better than he can. So I was asking questions to try to understand all the hate J

See, I just knew you were going to be the first non-Austrian commenter here who was actually going to try and understand Austrian Theory. I’d start with “The Essential Von Mises” to which I linked.

We’re a just a little testy with all the insults from the Keynesians and MMTers. For example:

Bob Roddis said...

Other suggestions for Austrian and anti-Krugman/anti-Keynesian blogs to read:

Bob Murphy:

Jonathan Finegold Catalan:

American Patriot said...


visited your blog. Your idea about Rothbardville is not sufficient. We still have to coexist in a society with progressives and that won't do. Why? Simply because the progressive ideology cannot coexist with individual freedom any more than oil can mix with water.
It is not just/fair to forcefully make such diametrically opposed ideologies coexist when no common threads exist.

My answer would be secession of states based on predominant ideology. Then, we can have a U.S. of Progressive States and another union wedded to constitutional originalism. Each state can conduct a referandum and decide which way to go. Then we would see the most compelling experiment in the history of the world. I suspect strongly that within a decade, the progressive states would be looking like E. Germany while the other looked like W. Germany during the cold war. (you can already kind of observe that between union rights states like yours and right to work states that are much more vibrant)

ekeyra said...


Personally, I find one of the most convincing aspects of individual liberty being that wide swaths of people with differing philosophies can coexist. The hard lefties can have their workers paradise and co-op farms, and the hard right warhawks can have their paranoid walled off gated communities. As long as noone is forced to participate or fund anything they do not wish to do so voluntarily there is no problem with coexistence.

Gavin Allen said...

@ ND:

If the Fed was able to get CPI up to 4%, the price of oil and raw materials would have to go up much more. This would put a big strain on businesses and people who have to drive to work. A lot of those companies wouldn't be able to pass on the higher costs, and would go out of business.

The Keynesians are confusing the side effects of a bubble (rising prices), with a growing economy.

Bob Roddis said...

When the affluent black couple is inevitably turned away from the exclusively Flemish ethnic private neighborhood, I fully expect the liberal media to go completely ape-s*** 24/7, as opposed to their usual response to 1/3 of all black males being in the prison system or 500,000 dead Iraqi children from Clinton‘s embargo. Because the media is so concerned about minorities.

American Patriot said...


these philosophies cannot coexist because one (progressive) has to impose on others' individual liberties to work.
Don't kid yourself.

ekeyra said...


It is possible to have an entirely voluntary redistributive economy. It will most likely be inefficient and plagued with favoritism, but as long as noone is a part of it that does not wish to be, I see no problem with its existence.

Bob Roddis said...

I would agree that neither the red-staters nor the blue-staters are going to sit still while sinful behaviors (wrong sexual partners/low mileage SUVs)are taking place peacefully over the hill on someone else's property.

JG said...

If this blogger's goal was to refute Krugman's statement about growth being more of a concern than inflation, then he failed miserably.

By harpin on inflation this blogger has completely ignored the core of Krugman's latest editorial post, which was that pro-growth policies should be pursued rather than making inflation fighting the focus of current policy decisions. Krugman is not advocating inflation for the sake inflation. He is saying that we should put the interests of the larger population ahead of those whose interests are strictly tied to preserving the value of their bond portfolios.

That this blogger has completely ignored that larger point in favor of obsessing about the supposed evils of inflation demostrates that the followers of the Austrian religion are wearing blinders.

Bob Roddis said...

Like every non-Austrian on the planet, JG hasn't the slightest familiarity with even basic Austrian School concepts.

American Patriot said...


How do you not volunatrily participate? In a society you have no other choice.
There is no such a thing as "voluntary redistribution".

The free markets theoretically see to it that wealth shifts to those who merit it - I say theoretically because progressives (regardless of party) always muck the system up with redistributive policies. Such policies only kill productivity and innovation.

In an ideal system, there would be one low flat tax rate for everyone with no deductions allowed. There would also be no entitlements like we know them today (no, I am not advocating eliminating the basic safety net, just advocating keeping it "basic") Nor would there be over half the regulations we put up with everyday.

You would be surprised what human beings are capable accomplishing of when they have no road blocks in front of them. On the other hand, when you provide all sorts of handouts and roadblocks to their success, they become non producers. Look at Europe. Case closed.

We, like the Europeans have been, are all becoming more and more serfs with each passing day. It is just that some of us recognize it while the rest don't.

American Patriot said...


"supposed evils of inflation"?

Have you ever lived through inflationary times (not 4-5% but well over 10% and worse)? Have you ever visited countries with hyper inflation?

No, you have just read Krugman and never even critically thought about the issue.

Just to point out one absurdity: you say Krugman promotes pro growth policies. That is a laugher in itself unless you think more and more government spending is pro growth.

Mike M said...

JG inflation affects much more than bondholders. If you understood that you would not have made that comment.

burkll13 said...

@ Am Pa- you are not talking about the same things. you are talking a political system. hes talking about voluntary, communal association within a free system

Lord Keynes said...

My answer would be secession of states based on predominant ideology .... I suspect strongly that within a decade, the progressive states would be looking like E. Germany while the other looked like W. Germany during the cold war.

LOL.. Or the libertarian states would look like Somalia, and the progressive ones would look like Sweden:

(1) Sweden ranks at number 3 with Japan for technological achievement

(2) Sweden ranks as number 4 on the global innovation index, such as patents, technology transfer, and other R&D results; business performance, such as labor productivity and total shareholder returns; and the impact of innovation on business migration and economic growth.

(3) Sweden is most networked country in the world

American Patriot said...

What the heck is communal association with a free system supposed to mean. Wake up and live in the real world! This is not Alice in Wonderland.

LK, I knew you would eventually show up. The comparison is not between Somalia and Sweden. If you opened your blind progressive eye, you'd see the different directions right to work conservative states and union states like MI, IL, CA, etc. are headed.

I suggest you keep up with the CEI study comparing states.

Bob Roddis said...

I have a high level federal cop friend who used to be an MP during Viet Nam. Based upon experience of that time, he insists that you cannot put Swedes and Norwegians in a bar together unless you want a violent brawl. Something I never would have thought about. Recall that Norway seceded from Sweden. Both counties have the advantage of being small, consist of a single ethnic group (but for recent immigrants) and both were made up of dour, hard working Protestants. Multi-ethnic social democracy always leads to ethnic conflict and often to Rwanda. Multi-ethnic societies can live in peace only under laissez faire. Sweden does not have those multi-ethnic problems.

Playing the Somalia card shows that LK has lost the argument before it started because Somalia does not have strict enforcement of property or contract rights and has nothing to do with libertarian concepts.

The inherent instability of multi-ethnic social democracies is all explained in ALVIN RABUSHKA’s and KENNETH A. SHEPSLE’s book "Politics in Plural Societies: A Theory of Democratic Instability" which is now free as a 12 MB pdf file:

This is the book I read in 1973 that turned me permanently away from democratic socialism because it invariably leads to ethnic conflict if not slaughter. From my observation of the ongoing empirical evidence, the basic theme of the book acts as an iron law to the extent that there are iron laws for predicting unpredictable human behavior. The rule allowed one to predict that imposing democracy upon Iraq would lead to ethnic chaos and probably slaughter. I’ve never seen any evidence that any other libertarian (or anyone, for that matter) is familiar with the theme of the book, much less the book itself. It was assigned in a senior poly sci class along with "Power and Market" by Rothbard which left me befuddled at the time.

I think the theme also applies to extreme secular cultural differences like we have now in the US with both the left and right trying to grab the reins of government in order to bash the other side.

Lord Keynes said...

"From my observation of the ongoing empirical evidence, the basic theme of the book acts as an iron law to the extent that there are iron laws for predicting unpredictable human behavior. "

"Iron law". LOL... You sound like a Marxist.

And what is your definition of a multi-ethnic society actually?

Where one ethnicity is 90% or more of the population? If so, Sweden ISN'T a multi-ethnic society. Swedes are only 85% of the population.

Lord Keynes said...


If so, Sweden ISN'T a single ethnic nation

Bob Roddis said...

The demographic profile of Sweden has changed significantly as a result of unfettered immigration since the 1970s.

I believe I already addressed that point in my prior comment.

Further, 85% is still an overwhelming electoral and cultural majority. Historical Sweden didn't have a lot a gypsies forming electoral majorities at odds with ethnic Swedes.

I provided a link to the entire book. Read it.

Lord Keynes said...

Further, 85% is still an overwhelming electoral and cultural majority.

In which case social democracy should be viable in virtually all Western countries by your own (alleged) ethnic criterion. No problems there.

Bob Roddis said...

I don't claim DS is viable at all. I'm saying that right off the bat, it's got a major problem in multi-ethnic societies, especially former European colonies which are often conglomerations of completely separate societies and cultures. It's just another of many problems DS has but one that most people are oblivious to. The same type of problems afflict all DS societies because an electoral win means the winner "owns" the economy. That is the major problem of human existence, not free-market unemployment.

Naturally, the western elites imposed DS on the independent multi-ethnic 3rd world colonies with the expected results.

American Patriot said...


what is it with you progressives
and love of Sweden and Denmark . A blog nemesis of mine (a prog needless to say) worships Denmark as the model (because it was listed 1st for happiest people or something of the sorts)

Ethnic problems arise in countries like former Yougoslavia or Iraq where there are multiple ethnicities and one group oppressed the others. These type of underdeveloped countries have very hard time transitioning to democracies. The key word - always - is underdeveloped and oppression.

BTW, an observation that may have skipped you: Sweden has been backpedaling from socialism faster than any other euro social democracies lately.

A question: Have ever lived in or spent substantial time in any euro social democracy?
I am willing to bet no.
If you had, you would know the stark differences between quality of life here and there.
Try living a winter in a cold N. Euro country in a cramped little apartment that does not heat well.

The std. of living in the U.S. is so much higher than any euro social democracy that it is not funny.

A gallon of gas at $10, a big mac for $8, a simple dinner out in a decent restaurant for $50+ per person......all that on incomes same or less than here (based on country)
All for sake of proping up unmaintainable welfare states.

One day all you progs will finally figure out that Margie was right: sooner or later you run out of OPM

burkll13 said...

@ Am PA- you've never heard of communal living? seriously? think manson family without the killing.
these people CHOOSE to live in communities that are essentially communist. they are generally very poor, but apparently happy. these things are real and are really happening

here are some links if you dont believe me:

Mike M said...

Bob and others. Stop wasting your time. LK is the Church and you are speaking as Galileo. In LK's case the church is the state.

LK I will spare you the effort and provide your response in advance:

"Straw Man"
citation, citation, citation etc

Bob Roddis said...

Mike M

You forgot a few. Australia's 1890s boom and bust during a period of a 30% bank reserve requirement completely disproves the Austrian School and laissez faire.

And that electoral pluralities always know best (certainly better than an individual human might) and they always act in a completely moral and humane manner.

Lord Keynes said...

"If you had, you would know the stark differences between quality of life here and there.
Try living a winter in a cold N. Euro country in a cramped little apartment that does not heat well."

LOL!!! Now you're blaming the weather on "social demoracy"??
I know a number of Swedes and they don't spend their lives "freezing."

The std. of living in the U.S. is so much higher than any euro social democracy that it is not funny.

A statement of pure &%$** idiocy:

1 Qatar 88,559
2 Luxembourg 81,383
3 Singapore 56,522
4 Norway 52,013
5 Brunei 48,892
6 United Arab Emirates 48,821
7 United States 47,284
— Hong Kong 45,736
8 Switzerland 41,663
9 Netherlands 40,765
10 Australia 39,699
11 Austria 39,634
12 Canada 39,057
13 Ireland 38,550
14 Sweden 38,031

The US gets beaten by Luxembourg and Norway. Switzerland, Netherlands, Australia, and Austria aren't far behind.

Also, poverty rates as % of population are lower in a number of Western European social democracies, lower than the US rates (14.3%). So by absolute numbers and by % of the population, you have less poor people over there.

Anonymous said...

I guess I should't be entirely surprised, but I truly am shocked to find that you _teach_ economics.

If a fixed benefits program like OAS/DI is pegged to the inflation rate then the people on this program are at the head of the line, they are not laggards.

American Patriot said...


how does living in a commune exempt you from paying to support deadweight in society? Only way is to not make any money (as you allude to)
You think that is even an alternative for anyone who wants to lead a productive life?

American Patriot said...


look moron, you are talking to a european by birth. Stop sounding ridiculous.

I am trying to tell you that the living conditions are far inferior in Europe in general.

Switzerland, where I lived 7 years, Monaco, and Lux. are the only countries where you have decent conditions. Elsewhere, try living on $52K (like in Norway) where everything costs 2-3x the U.S. prices.
Try living in a 2800 sq.ft. house (if you can find it) that costs less than a couple of million bucks.

You are clueless and trying to argue points you have no idea about.

burkll13 said...

@ Am Pa- that wasnt his are taking that idea and spreading it out to society. he and i are talking about voluntary association. you are talking force and compulsion.

His whole point was that people can live in a communal lifestyle, if they so choose, even in a free society.

JG said...

A dozen posts followed mine and none of them managed to come up anything beyond pithy one-liners and snide remarks.

Roddis, your condenscending tone would have more credibility if you had bothered to refute what I was saying rather than just making dismissive noise. Arrogance is okay but only when you can back it up.

Mike M, of course inflation impacts more than just bondholders. But the current obsession with inflation to the point of ignoring all other threats to the economy is what Krugman was talking about. And based on the contents of this thread it's pretty clear that nobody is interested in acknowledging this threats.

American Patriot said...


I responded by saying that inflation is not a threat to brush over and Krugman knows as much about pro growth strategies as my 7 year-old.
(of course, that is unless one believes that government spending causes growth)

The only threat to this economy is from progressives who have regulated it like no other previous administration.
The latest CEO survey is out today. Check it out and see their pessimism. Same with the latest NFIB confidence surveys.
They are all shouting out the same thing: they cannot create jobs in such an uncertain environment (due to tax and regulatory concerns as they specify)

So, there is your answer. Anyone concerned with this economy needs to work on one thing only: get the progressives out of power. Until that happens, we are dead in the water.

JG said...

American Patriot,

In response to your points:

1) Inflation always needs to be considered but the threat of inflation waxes and wanes and does not always rise to the top of the policy agenda. Right now, expanding growth and reducing unemployment are far higher priorities that fighting inflation.

2) Last time I checked, it wasn't excessive regulation that brought our financial system to its knees. Dodd-Frank came after the crash, not before.

3) Uncertainty is driven by lack of growth, not fear of regulation. Business owners will expand when demand for their good increases. No amount of regulatory change or tax policy change will stop a business from expanding if demand is there. The opposite is also true, no amount of tax cuts or deregulation will encourage a business to expand or hire if demand for their product isn't there.

American Patriot said...


Agreed with your first point.
With the end of QE2, inflation threat should diminish.

You are looking only at financial regs. The problem is others (Obamacare mandates and EPA especially).

You are completely wrong on the last point. Businesses do not expand just because demand is there. A business investment requires 7-10 years to pay off on the average. If you have no certainty, just because the demand is there, you would be crazy to invest. NFIB, CEOs, and Chamber of Commerce surveys say the same thing. Confidence simply is not there. 2 year tax breaks do not create certainty. As business unfriendly as this administration is (they are just crony capitalists so if you are Google or GE or some kind of wind mill producer, you are fine) why would anyone risk their capital?
In oil exploration alone, we are losing out on nearly a million jobs.

Once and for all, it is the production (supply side) that drives expansion - not demand.
Demand is not exceptionally weak now and there are over a trillion dollars sitting on the sidelines. Yet, corporations have squeezed their efficiencies to the point where one wonders why they are not expanding - that is until one realizes that they are under virtual attack from this administration.
When right policies accompany supply side permanent incentives, expansion will start and unemployment will go down, instilling confidence in the consumer.
Without supply side policies, if companies do not invest, unemployment stays high and consumer confidence low.

See 1961, 1981 and 1995 supply side tax cuts and the response to them. It works everytime!

JG said...

American Patriot,

When you say uncertainty is behind the lack of investment and growth exactly what are you referring to? If you're referring to uncertainty about a double-dip recession or whether demand will increase or decrease over the next several years then I agree. But it sounds like you're saying that business owners are delaying investments in production capacity out of uncertaintly about whether the EPA or some other federal agency will pass some law that may have some marginal effect on their business. If that is what you're saying then completely disagree.

Uncertainty over regulatory action is nothing new and any costs that are imposed by new regulations are ultimately passed on the consumer anway. If you're Apple and you can't build enough iPhones to meet demand you're not going to delay expansion of production because you don't know what impact the healthcare reform will have on your business. You might delay expanding capacity if you feel that demand for iPhones might fall in the future, but not because of uncertainty over what regulation the EPA might impose. What you're proposing just doesn't make sense. When business leaders fret about uncertainty they're talking about the uncertainty in the larger business cycle, not in the narrow political or regulatory sense.

American Patriot said...

The uncertainty is about this president's war against private enterprise. Are you that clueless or just in progressive denial about him? Do you ever read articles by NFIB, the Chamber, etc? They are the voice of private enterprise, you know?!

Do you realize this admin has come up with more regs than any other in 2 years? Do you realize just in oil exploration, they are costing nearly a million jobs and billions of dollars to companies like Shell (the story about the gas pipeline from Canada).

Do I still not make sense to you?
If so, there is nothing else I can say when the job creators themselves are saying this admin. is a threat to them and you are denying their own sentiments. Odd.

JG said...

The president's war on private enterprise? This president has spent the past 2 years handing out tax breaks for business in the form of accelerated write-offs for investments, decreased payroll taxes and maintained generous tax subsidies to oil refiners. THIS is your war on private enterprise?

Give me friggin' break! Your definition of "war" is not using tongue when he kisses the corporate sectors behind. This is why NOBODY takes Austrian economists seriously. Because you're a pack of extremist loons who live in a Libertarian fantasy world.

American Patriot said...

You mean to his cronies like GE and Google?

You think that a temporary reprieve from taxes is a green light to invest?

You are in denial. Small to large businesses say they do not trust this admin. yet you claim this admin. is business friendly. Pathetically dishonest!

JG said...

The Chamber of Commerce has a problem with any president who doesn't toe the line when it comes to tax cuts. "Business Friendly" is code for "gimme more corporate tax cuts".

If I were the CEO of ExxonMobil then I'd be saying the same thing. But as a regular citizen who lives and works in this country my interests are more diverse than the single-issue lobbying that the Chamber of Commerce seems to concern itself with.

American Patriot said...

The CEO report, NFIB, the Chamber are not single issue organizations. They represent businesses. Period. And what is good for business in general is good for the public.
Those like you who do not agree need to stop bitching about businesses not creating jobs.
Every policy has consequences and anti business policies of the left are bearing their fruit. Hope you like 'em.
Enjoy while you can because if you thought 2010 elections were bad for the left, 2012 will be a true massacre since nothing will change significantly for the better in the next 17 months.

American Patriot said...

For especially JG, from today's Yahoo Finance:

"Corporate profits may be at a record high, but businesses on Main Street are still scraping by," wrote NFIB chief economist Bill Dunkelberg in the report. "The failure to understand why small business owners are not hiring or investing has resulted in a set of policies that have not been very effective, and Main Street is suffering."

Small businesses with say a couple dozen or a hundred employees look at the pending effects of Obamacare on their bottom line and shudder with the thought of costs that will directly affect them. So, why would they expand?

That does not even look at the several hundred other regs that have come to play that make it unpallatable if not unprofitable to invest and expand.

Even in the case of large corporations, why would a manufacturer expand now looking at NLRB sueing Boeing over assembling 787s in S. Carolina or seeing the two billion shell lost from the Canadian gas pipeline fiasco?

And you still cannot see it? You don't have to answer that.
It is amazing to see how ideologically blind you guys are.
But as I said, your days are numbered. I just hope that the next President and Congress will be able to undo all the structural damage done to the economy.

Here is a worthwhile article on this whole subject:

JG said...

"And what is good for business in general is good for the public."

What is good for business is cheap labor from India and cheap trinkets from China. Neither of which are necessarily good for the public. What is good for business is tax arbitrage and offshore tax havens in the Cayman Islands, again, not good for the public.

In general, profitable and prosperous companies are good for society. But that does not mean that every action or policy of corporate America is somehow good for America. We need to lose this simplistic concept that what is good for the largest corporations (who the Chamber really represents, not you average small business) must somehow be good for America.

American Patriot said...

Like a good prog, you exaggerate everything. If your premise was correct, we would have no businesses other than retail establishments in the U.S.
You have a lot to learn about comparative advantages.
Also, FYI, the Chamber does NOT represent the largest corporations.

Like Obama, and every other progressive Marxist wannabe, your disdain for private sector business comes out despite trying your hardest.

You are nothing but a collectivist statist.

JG said...

No, I'm not exaggerating, I'm just pointing out facts that don't fit your neat little theories and you don't like that.

Obama is only a "marxist" to right-wing extremist loons who think anyone to the left of Ayn Rand is a socialist.

I guess if I spent my days reading "Atlas Shrugged" and watching Fox News I would have a hard time separating paranoid fantasy from reality too.

American Patriot said...

There is no question about Obama's Marxism to anyone who have looked in to his past as well as paying attention to his actions.
Open your eyes.

One who is born to Marxist parents (and grand parents), mentored by a known Marxist (Marshall), hung around Marxists in college by his own admission, taught Alinsky methods in school, spent 20+ years in a church preaching black liberation theology (Marxism), whose record in Chicago as a community organizer is full of examples of shaking down private enterprise, whose voting record is the most liberal (even more than socialist Bernie Sanders of Vt.), who can be attributed (many via video and some by his books) quotes that leave no question as to his ideology........(this much is enough for now)!

Which part of that are you disputing? Are you a complete moron? No, just a typical progressive who can't even take pride in his ideology enough to defend it openly therefore has to conceal reality.
How pathetic.

And, consider it a challenge from me to prove that he is a freedom loving free market advocate.

American Patriot said...

Ahhh, the beautiful sound of silence from the collectivists....

Not being able to rescue the image of your prophet is surely a bitch, isn't it....

JG said...

Sorry, busy with other stuff. Just got around to reading your silliness.

Where are you getting this Marxist nonsense from? His grandparents were Marxists? What conspiracy theory websites have you been frequenting?

As president, Obama has spent his first 2 years in office handing out tax breaks to profitable corporations and bailing out failing companies with public money. Does that sound like something Marx would have done?

The more you write the more you sound like some paranoid Jon Bircher who sees communists hiding under his bed. And sadly, there are a lot of people just like you out there and they all vote and contribute to the ruinous cluster-f*ck that is American conservative politics.

American Patriot said...


you progressives are so ignorant. The Durhams attended the infamous Little Red Church On The Hill an openly radical communist church in western Washington State. Look it up and stop being so ignorant.

Your problem is your stupidity. Have you learned nothing from cultural marxists like Gramsci? You cannot get people to accept Marxism just like that so you take an incremental approach (like Obama is doing with healthcare). Fascists always use the private sector cronies to accomplish their ends (like Mussolini and Hitler).

You claim there are no communists? You want to make a friendly wager?

What do you call Jan Schakowski or 36 other progressive caucus members who have direct ties to the CPUSA and SDA?

If you are so clueless, at least be quiet because you are showing your ignorance.

Anonymous said...

JG: Why do you hate business so much!??!?

You mentioned earlier that sometimes businesses make decisions that adversely affect the general population! OMG!

Why can't you contain your hatred for productive companies!? Why do you have to rail against the business world with brash assertions like "In general, profitable and prosperous companies are good for society."

In general??? You and Barack are trying to replace capitalism with a planned economy!!!!

JG said...

It would be a lot more fun to have these arguments if you actually knew what you were talking about.

You read right-wing blogs written by conspiracy theorists and you think you have your facts straight. You don't. And you're broadcasting your nonsense for all the world to read.

American Patriot said...


thanks for giving me a good laugh. You spew crap like disputing the obvious about this piece of crap occupying the WH yet when I told you (or was it LK) about his radical background you cant say anything.
What conspiracy moron? Everyone says the same about Beck (who may or may not be paranoid) but the left wing smear machine has never been able to dispute the facts he puts forth.

Yeah, unlike us, you know everything; kind of like the Prez who knows how to run this country (yes Mr. blame the ATMs for current economic situation)

LOL, you are beyond pathetic.

JG said... actually referenced Glen Beck as a source of information. And you were serious....WOW.

I'm done. Thank you for proving my point.

American Patriot said...

Moron, try to develop your reading comprehension: You can call people names but can't refute facts, can you.

Wanna make a little wager?
Every fact I prove to you about your radical pals, you give me a thousand bucks and I'll do the same for allegations you disprove.

If all of what you claim is fantasy is so, you'll be rich, otherwise, you fork it over.

I have an archive of facts you wouldn't believe.
I brought up Beck because all your pals can do is verbally attack him but never disprove his evidence.


JG said...

Like I said, WOW.

I don't make wagers with deluded fanatics. Trying to rationally explain to you why you are totally wrong is like trying to explain to a suicide bomber why there really isn't a harem of virgins waiting for him in heaven. It would be a waste of time, much like continuing this conversation would be.

Farewell and enjoy your echo chamber of conspiracy theories and other delusions.