Tuesday, August 16, 2011

Save us from space alien economics!

While waiting at JFK International Airport last Sunday to catch a plane to Riga, Latvia, I saw Paul Krugman on the tube (along with Harvard's Ken Rogoff). While the words were provided, nonetheless I could not get myself to watch it, as I just was not in the mood for ridiculous. Apparently, I missed a doozy. For that matter, I didn't even know that space aliens were upon us, although I would say that in economic terms, space aliens will attack us before Keynesian "solutions" set the economy on a correct and sustainable path.

According to Krugman, war (be it with Germans and Japanese or space aliens) is a great thing (even though he admits it gives us "negative product social spending") because it both gives us more employment AND inflation! I mean, what's not to like? You can have prices rise and have empty store shelves -- but you have a job, even if you can't buy anything, as was the case in WWII.

As for Krugman's "alien threat" comments, Bob Higgs has it right. On a recent Facebook post, Robert Higgs has written:
Professor Krugman, I can be even more Keynesian than thou. My plan: invite aliens to bring to earth the blueprints for a global debt-financed public-works program in which every nation would construct thousands of pyramids (constrained only by the condition that public debt not exceed infinity and policy makers' IQ not exceed 63.)
Higgs makes more sense. Really. Mary Theroux of the Independent Institute agrees, and has this to say:
As Dr. Robert Higgs has more than ably shown, the Great Depression continued, and deepened, throughout the New Deal and throughout World War II. The World War II years were a time of shared privation, with virtually every item that we take for granted today either rationed: e.g., meat, gasoline, sugar, clothing; or not available at any cost: e.g., new cars, appliances, etc. The American standard of living throughout World War II remained at an excruciatingly low level that no 21st century American would accept. Meanwhile, unemployment disappeared simply because 16 million able-bodied people were sent to war, paid below-market rates and subject to danger, death, and maiming they may not have preferred to unemployment.
To be honest, I think that we will be better with space aliens running things than the Keynesians.

90 comments:

LK said...

"he Great Depression continued, and deepened, throughout the New Deal and throughout World War II.

Typical Austrian nonsense.

The recovery that began in 1933 continued with positive and high rates of GDP growth and falling unemployment to 1937.

1934 – GNP grows 7.7%
1935 – GNP grows 8.1%
1936 – GNP grows 14.1%

1935 and 1936 were years of expansionary fiscal policy.

Once we correct for the bias of Lebergott’s figures on unemployment, employment under Roosevelt came down from 25% to just under 10% by 1937 before the recession fo 1937-38:

http://socialdemocracy21stcentury.blogspot.com/2011/06/roosevelts-record-on-unemployment-myth.html

When Roosevelt cut federal spending and contractionary policy, this plunged the economy back into recession.

And don't point this rubbish:

http://mises.org/daily/4039/Dangerous-Lessons-of-1937

Catalan can't even get his facts straight. He is so incompetent he can't even admit that the deficit had been virtually eliminated fiscal year 1938, by tax increases and spnding cuts - a massively contractionary fiscal policy.

João Marcus said...

Yay! So, it look SEVEN YEARS and LOTS OF SPENDING for unemployment to get to 10%. Wow, that's so nice! Nevermind the fact that, in those seven years you are actually spending money, and the bill will have to be paid in the future. Oh, no, a Keynesian doesn't want do talk about real things. They want to show their shiny statisticts and pretend that the world needs to spend, spend, SPEND! When you it pay the bills? Oh, never! That's the LK's fantasy world!

Major_Freedom said...

Just more proof of the rot and intellectual bankruptcy of Keynesianism.

Last night after realizing that a Nobel Prize winning Keynesian advocated for consuming resources in order to build up a military for a non-existent alien invasion, I did some pondering as to how anyone can believe in it. I think I know a major reason.

Keynesianism is non-human.

It seeks for nothing but mechanistic "movement." If there is movement, then the economy is working. If there is not movement, then the economy is not working. In addition, anything that doesn't move by nature is not worth considering, and anything that does move but isn't moving, has to be physically forced to move.

Thus, if anything is "idle", then Keynesians will seek to physically force them back into movement.

If laborers aren't moving, then that's bad. There's a "gap" between maximum movement and existing movement. Therefore, physically force spending to get the laborers to move.

If money isn't moving, then that's bad. There's "hoarding." Therefore, physically force that money to move.

If capital isn't moving, then that's bad. There's idle resources. Therefore, physically force that capital to move. And yet, in another respect, capital is also ignored, because if there is full movement of people, it is still the case that most capital isn't moving. Peering into a warehouse, or a factory, and there is lots of physical stuff that isn't moving. Therefore, capital must not be important. Most of the capital isn't moving and so it all can be ignored in the quest to get things moving, and thus can be relegated to intellectual bin called "K". All capital is in this category. There are no differences.

Further, time is a variable that cannot be physically forced to move. It is moving on its own. Time can be ignored. Time therefore plays no part in the quest to get things moving. Production, consumption and investment, are thus simultaneous and not sequential. Circular flow of income!

Interest rates cannot be connected to time, that is, to time preference, because time is ignored. Therefore, interest must be connected to money moving. Liquidity preference! Higher interest rates means less money is moving in lending. Therefore, physically force interest rates down!

Interest rates already decreased? Still no movement? Physically force movement of money in spending.

A fixed aggregate supply of money is not moving. That's bad. Therefore, physically force the supply of money to move.

Progressivism means movement. That's good. Conservatism means no movement. That's bad.

Gold doesn't move. Gold just sits there. More gold cannot be physically forced to move by decree. Therefore, gold should be ignored, ridiculed and attacked.

Peace implies calm, and calm implies little movement. War implies agitation, and agitation implies more movement. Therefore war should be chosen over peace if it means more movement over less movement.

Investment has connotations of little movement. Consumption has connotations of more movement. Therefore, consumption should be favored over investment. That which can be moved must be able to stay motionless. But that should be taken to mean all that can be invested, and put into a state of little movement, i.e. investment, *depends* on that which moves more, i.e. consumption. Thus it is possible for investment, i.e. that which moves little, to exceed the ability to consume, i.e. that which moves more. Keynesians therefore believe their purpose in life is to find ways to increase consumption, so as to maximize movement.

Keynesianism is just an anti-rationalist ideology of forcing things to move. It ignores that which cannot be moved by force, and it overrules individual human judgment if such judgment is to not move something that can be moved.

Major_Freedom said...

LK:

The recovery that began in 1933 continued with positive and high rates of GDP growth and falling unemployment to 1937.

"Recovery" of GNP does not mean people's lives are better off. All it means is that aggregate spending has increased. Increased aggregate spending on account of government spending does not mean that the economy is recovering.

When Roosevelt cut federal spending and contractionary policy, this plunged the economy back into recession.

That myth is refuted here:

http://mises.org/daily/4039/Dangerous-Lessons-of-1937

...the deficit had been virtually eliminated fiscal year 1938, by tax increases and spnding cuts - a massively contractionary fiscal policy.

Taxes collected are almost immediately respent you dolt. They are not hoarded by the government. Increased taxation and decreased spending generate less borrowing and/or less inflation.

Government spending in 1937 was greater than all years prior to 1936, and yet in 1933, when there was less spending, the economy improved. That goes against the idiotic Keynesian myth.

Bob said...

"When Roosevelt cut federal spending and contractionary policy, this plunged the economy back into recession."


This statement reminds me of an interview I saw with Robert Atkins, the creator of the Atkins diet. When confronted with the inconvenient truth that many who lost weight on his diet quickly gained it back once they resumed a normal healthy diet, he replied with something like, "see, that proves that with my diet you will lose weight."

Here's a better one. I had a boss who once bought $2000 worth of cocaine. He snorted so much of it that his sinuses would hurt when the hugh subsided. When that happened, his solution was to snort more coke. Every time he did that the pain got worse and worse when the high would ebb. That worked until he finally decided it would be too painful if he continued doing that until the coke was gone.

LK said...

"Taxes collected are almost immediately respent you dolt. They are not hoarded by the government.

Correct: money merely redirected to new types of spending imparts 0 stimulus. Learn some basic Keynesian economics, fool.

Government spending in 1937 was greater than all years prior to 1936,... etc

Red herring. If you looking at government fiscal policy in any particular year to see if it was expanionary or not, you have to look at

(1) increased spending done via deficits, not just the size of spending.

(2) whether that increased federal spending overcame state and local auterity.

The US government could have increased spending by 2 billion in fiscal year 1937 covered by taxes increases, but that would not impart Keynesian stimulus.

Again: learn some basic Keynesian economics, fool.

LK said...

Here's a better one. I had a boss who once bought $2000 worth of cocaine etc etc...

An analogy all dependent on the idiocy of ABCT, a false theory.

Daniel Hewitt said...

Sumner on 1937:

If taxes and transfers don’t count for much in 2009, then shouldn’t they also be disregarded in 1937? I’m referring to the famous Keynesian explanation for the 1937-38 depression, one of the most severe in US history. Keynesians often point to the tightening of fiscal policy that occurred in 1937 as the key factor that aborted the recovery. But here’s the problem with that explanation. Fiscal policy wasn’t all that contractionary in absolute terms, and more importantly the big changes in fiscal stimulus occurred in the area of taxes and transfers–the exact area that Krugman thinks are relatively unimportant.

The reduction in the budget deficit mostly reflected two factors. First, the large one-time ”bonus” payments made to WWI vets in 1936 (an election year) was not repeated in 1937. And a 2% payroll tax was instituted to pay for Social Security in January 1937. As far as I know those are the major contractionary moves. But it was always understood that the 1936 bonus payments were a one-time deal. How could that have caused a severe stock and commodity crash in late 1937, as well as a sharp plunge in industrial production in late 1937?

I found the following data from Thayer Watkins at SJSU:

Year RGDP Cons. Inv. Gov. Exp. Imp. Balance
1934 641.1 519.0 31.5 127.3 21.4 31.1 -9.7
1935 698.4 550.9 58.0 131.3 22.6 40.7 -18.1
1936 790.0 606.9 75.5 152.5 23.7 40.2 -16.5
1937 831.5 629.7 94.0 147.0 29.9 45.3 -15.4
1938 801.2 619.5 61.3 157.8 29.6 35.2 -5.6

I just don’t see it. Government output does decline slightly in 1937, but is still far higher than 1934 and 1935. If you apply a multiplier of 1.6, it should have reduced GDP by about 1%. But RGDP rose more than 5% in 1937. Then in 1938 government output rises by twice as much as it fell in 1937, and RGDP plunges by almost 4%. (BTW, we should be using NGDP figures, but everyone else uses RGDP, and the qualitative results would be similar either way.)


http://www.themoneyillusion.com/?p=9548

Brent said...

So do the crackheads who call themselves Keynesians still call what they apparently believe a "theory" or a "mystery & suspense novel"? At what point is it so ridiculous the nerds who believe / promote this BS go get a life?

At least Krugman shows what the problem with these people is. It's not that they aren't smart enough people, it's that they are losers who think they are playing superhero in a videogame.

Major_Freedom said...

Correct: money merely redirected to new types of spending imparts 0 stimulus.

You mean it imparts zero inflation you idiot. All you're doing is admitting that an inflation distorted economy needs accelerated inflation in order for it to be maintained. But accelerated inflation will eventually collapse the currency, so the government has to stop the acceleration of inflation in order to save the currency, which then manifests itself in a correction of the real economy.

That the government spent less in 1938 relative to 1937 is not what caused the increased unemployment. In 1937-1938, there was inflation, and yet unemployment plunged. Why? Not because Roosevelt decreased spending. It was because the federal government passed the Fair Labor Standards Act, which established a federal minimum wage, and that made it impossible for employers to hire workers with the money they had available to pay wages.

Red herring.

No, it's not a red herring. You only want it to be a red herring because it refutes your crap.

If you looking at government fiscal policy in any particular year to see if it was expanionary or not, you have to look at

(1) increased spending done via deficits, not just the size of spending.

(2) whether that increased federal spending overcame state and local auterity.

No true scotsman fallacy. You originally claimed that Roosevelt's decreased spending qua spending "plunged the economy back into recession." Now you're claiming that it's the decreased deficit that plunged the economy back into recession.

Those are two very different claims you dishonest snake.
You're just making shit up as you go.

The US government could have increased spending by 2 billion in fiscal year 1937 covered by taxes increases, but that would not impart Keynesian stimulus.

Red herring. The argument being addressed is the Keynesian myth that spending cuts plunged the economy back into recession.

Now you've been relegated to claiming that it was a decrease in inflation. Well, if a decrease in inflation plunged the economy back into depression (as if 10% unemployment is not a depression), then that can only mean that the economy was distorted by prior inflation, and therefore had to go through correction.

Inflation is a temporary delaying of depression. It doesn't solve it you moron. By claiming that it was a decrease in inflation that caused the 19938 double dip, you're just claiming that the economy was addicted to inflation taking place prior to 1938, and thus made unsustainable, exactly the Austrian explanation.

Learn some Austrian economics you idiot.

Mike Cheel said...

Again what no one appreciates is that Keynesian economics is and has been working as intended. Can even LK dispute that?

Major_Freedom said...

An analogy all dependent on the idiocy of ABCT, a false theory.

No, it is a correct theory.

Keynesianism was intellectually refuted in the 1930s, and empirically refuted in the 1970s with stagflation.

Bob Roddis said...

Let's keep in mind the real unemployment rate during the New Deal, taking out the make-work projects:

1933 -- 24.9
1934 -- 21.7
1935 -- 20.1
1936 -- 17.0
1937 -- 14.3
1938 -- 19.0
1939 -- 17.2

There was never any "recovery". No wonder the New Dealers needed a war to get the rabble's minds off the catastrophe they had inflicted upon the nation.

Deep thought: Kroogie and His Lordship Lord Keynes are THE BEST the other side has. We've won.

LK said...

"You mean it imparts zero inflation you idiot."

Nope, it imparts zero fiscal stimulus, you red herring loser.

"No true scotsman fallacy. You originally claimed that Roosevelt's decreased spending qua spending "plunged the economy back into recession."

LOL.. No, I didn't you pathetic liar:

"When Roosevelt cut federal spending and contractionary policy, this plunged the economy back into recession."


See the words: "and contractionary policy", idiot? That refers to the virtual elimination of the deficit fiscal year 1938.

In 1937-1938, there was inflation, and yet unemployment plunged.

What? Unemployment increased from late 1937-1938. It peaked in 1938, then fell significant when fiscal stimulus was implemented again.

Mike M said...

LK said: "Again: learn some basic Keynesian economics, fool."

We don't have to. We are living it. How is that working out? Oh thats right we just haven't done ENOUGH of it to work properly.

Whats next? Pick a major US city and destroy it? Think of the jobs created to rebuild it.

Red Herring! Rubbish! Citation, Citation Citation Yeah as as my teenage daughter would say "whatever"

Krugman knows its “unpleasant” to discuss war as an economic stimulas in public discussion. Substitute alien invasion. Why does anyone take this salon monkey serious?

LK said...

Catalán's stupidity refuted here:

http://socialdemocracy21stcentury.blogspot.com/2011/08/debunking-catalan-on-recession-of-1937.html

Mike M said...

BTW make note of this Krugman event. It may very well be teh day he "jumped the shark"

Bob Roddis said...

His Lordship Lord Keynes does not even understand the concept of economic calculation so he cannot begin to understand the ABCT. I love reading his blog posts which are very informative and usually proceed to reinforce Austrian truths. Bob Murphy’s claim that there are multiple dynamic interest rates instead of one “natural” rate implies merely that reality is more complex than Hayek had proposed. We need the pricing process more than ever to discern that reality. It really says nothing about the ABCT which is based upon distortions in economic calculation caused by funny money dilution. And, of course, HLLK does not comprehend the concept of economic calculation so around and around we go:

http://socialdemocracy21stcentury.blogspot.com/2011/07/robert-p-murphy-on-sraffa-hayek-debate.html

http://socialdemocracy21stcentury.blogspot.com/2011/07/robert-p-murphy-on-pure-time-preference.html

LK said...

"Let's keep in mind the real unemployment rate during the New Deal, taking out the make-work projects:"

LOL.. figures which show you that unemployment fell by 42.5% from 1933-1937?? That is, by nearly 50%, idiot?

And it is only ideologial nonsense that prevents government jobs from being included in employment figures.

When they are included unemployment fell by 63% from 1933-1937:

http://edgeofthewest.wordpress.com/2008/10/10/very-short-reading-list-unemployment-in-the-1930s/

It was well on the way to going below 5% when Roosevelt implemented his austerity in 1937-1938.

That tells you that more fiscal stimulus and direct jobs problems were necessary, not less.

Also: name one country that recovered rapidly from the Great Depression to have minimal unemployment without any fiscal expansionary policy at all, and with severe fiscal contraction

Care to name one?

Your lame ass attempt to invoke Canada as one collapsed like a house of cards.

Mike M said...

LK said: "And it is only ideologial nonsense that prevents government jobs from being included in employment figures."

OK. Lets draft all of the unemployed into the military. Problem solved!

Wait .... from where should get those resources? Details details

Bob Roddis said...

We need to keep a few concepts distinct in our minds when discussing the 1930s with statists.

1. The depression was not caused by laissez faire.

2. Austrians freely admit that government policies like tax increases and labor law impaired the economy in 1936-1937.

3. FDR didn't cure the depression.

4. Keynesian policy makes no sense is always the cause of the problem. There is still no evidence that it "works" at all.

5. Keynesian policies will tend in the short run to increase economic activity in an unsustainable manner.

6. The fact that FDR did not follow a "pure" Keynesian policy in 1936-1937 does not prove that Keynesianism works or that it isn't the cause of economic catastophe. But it proves that FDR failed.

7. 1937 was the EIGHTH year of the depression with 14.3% unemployment. There was never any real sustainable recovery.

Bob Roddis said...

Also: name one country that recovered rapidly from the Great Depression to have minimal unemployment without any fiscal expansionary policy at all, and with severe fiscal contraction

Care to name one?


Actually, they all found it necessary to engage in Statist Slaughterfest II. War is all about local politics and misdirecting the focus of the rabble as to the cause of their problems.

You can't prove economic theory with your anecdotes, LK.

LK said...

"Oh thats right we just haven't done ENOUGH of it to work properly."

Correct.

Contrast that with countries that DID do enough to see much better growth and unemployment reduction:

(1) Germany 2008-2010
http://socialdemocracy21stcentury.blogspot.com/2010/09/germany-success-of-keynesianism-and.html

(2) Australia 2008-2010

(3) South Korea, 2008-2010
In 2008, South Korea was quick to pass a 14 trillion won stimulus package in November 2008. It then returned to economic growth after a brief contraction in 2009.

http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=KRW

The unemployment rate NEVER rose above 5% despite the recession and has stayed well below 4% since 2009:

http://www.tradingeconomics.com/south-korea/unemployment-rate

(4) Canada, 2009-2010
Canada unveiled a 40 billion Canadian dollar ($32bn, £23bn) stimulus in January 2009:
Growth returned in late 2009 and continues:

http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=CAD

Because of their effective financial regulation (a significant government intervention), Canada were also largely untouched by the financial crisis

Its unemployment rate has been falling since August 2009:

http://www.tradingeconomics.com/canada/unemployment-rate

(4) Sweden, 2008-2010
Sweden implemented a large Keynesian stimulus in 2008 and 2009, a 8.3 billion Swedish kronor package for 2009, to complement earlier spending plans. The result?
Sweden returned to good growth in 2009 and growth continues:

http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=SEK.

(5) Norway

http://polemarchus.net/2009/01/norway-keynes/

Unemployment has remained below 3.4%:

http://www.tradingeconomics.com/norway/unemployment-rate

It is typical of American libertarians: you live in friggin' la-la land and never pay much attention to what happens overseas.

If you bothered to look, you'd find countercycilcal policy has been used very effectively in a number of nations.

LK said...

"Actually, they all found it necessary to engage in Statist Slaughterfest II. "

The war was wholly unnecesary, if the allies had not adhered to appeasement in the early 1930s.

And in other words: there is zero empircal evidence that any country emerged recovered rapidly from the Great Depression by savage fiscla contraction or a "do nothing" Austrian policy.

In fact, the "do nothing" policy was tried by Bruning in Weimar Germany, and it caused Hitler to get elected, you dishonest hack.

Mike M said...

Well LK confirmed it. We need more. Start picking out your favorite cities for destruction and reconstruction.

Typical statsts. Look overseas to other statists for support on how to order people's lives for them.

LK said...

"7. 1937 was the EIGHTH year of the depression with 14.3% unemployment. "

It wasn't.

The Great depression went from 1929-1933.

What followed was a growing economy with positive real GDP growth and falling unemploynment.

If high unemployment is only criterion for determining whether there is a depression, then most of the 19th century was a depression, idiot - and we had no depressions at all under the era of classic Keynesianism.

Bob Roddis said...

These other countries don't have our bloated and insane military budget.

LK said...

Well LK confirmed it. We need more. Start picking out your favorite cities for destruction and reconstruction.

Yep. You're a friggin' straw man fool.

Keep it up.

Mike M said...

LK said: "do nothing" policy was tried by Bruning in Weimar Germany, and it caused Hitler to get elected, you dishonest hack."

WRONG. The crushing economic burden imposed by the Treaty of Versailles after WW I created that environment. WWII was unnecessary is correct. But you fail to recognize its seeds were sown by the surrender provisions of WWI. Which by the way was an unnecessary war and had the US stayed out probably would have ended like previous European wars.

Before you start throwing “hack” around please read some history instead of living in Keynesian citation world. You have lots of knowledge but deficient in understanding. Two different things.

Bob Roddis said...

Suppose you have a beautiful gorgeous fiancee who, unbeknownst to you, just happens to be a thief and a porn actress. Your rich mom finds out and decides that you would be totally crushed if you found out. So she pays the fiancee to pretend she loves you and live your life in a phony dream world. Your mother dies when you are 50 and your now evil wife immediately tells you the truth and leaves. You would have been much better off learning the truth when you first met the woman.

Liquidation of unsustainable investments is dealing with the truth. Keynesian policies are like mom paying off the evil wife so the rabble do not learn the sad truth until it is too late. But politicians will always go for the fraudulent Keynesian cover-up so they are not blamed for the misery in the short run and kicked out of office.

LK said...

"The crushing economic burden imposed by the Treaty of Versailles after WW I created that environment. WWII was unnecessary is correct."

Wrong.
The Germans suffered under the reparations for years and years without electing the Nazis.

It took deflationary depression from 1930-1933 - the insane Austrian nostrum for economic ills - to drive them into Hitler's arms:

“Without the depression Hitler would not have gained power. Mass unemployment reinforced all the resentments against Versailles and the Weimar democracy that had been smouldering since 1919. Overnight the National Socialists were transformed into a major party; their representation in the Reichstag rose from 12 deputies in 1928 to 107 in 1930. The deflationary policies of the Weimar leaders sealed the fate of the Republic” (Adamthwaite, A. P. 1977. The Making of the Second World War, Allen & Unwin, London and Boston. p. 34).

Dennis said...

Canada enjoys a relatively good fiscal position because large portions of the country have become petro economies whose growth is driven by demand for oil. Provinces such as Ontario and Quebec which don't have oil are experiencing high unemployment despite all the fiscal "stimulus".

Canadian unemployment stands today at over 7 percent. It briefly got down to around 6 percent a couple of years ago, but traditionally has been parked in the 7 to 9 percent range, thanks in large part to an interventionist state sector which loves to strangle business with high taxes and red tape.

LK said...

Unemployment in Canada stands at 7.2%, but fell virtually continously in the last 2 years from its height of 8.7% during the recession of 2009:

http://www.tradingeconomics.com/canada/unemployment-rate

The Canadian unemployment rate stood at about 6% BEFORE the US financial crisis of 2008 and global recession of 2008-2009.

It then soared as the recession struck. It has fallen since Canada's stimulus took effect and has continued to fall.

Get your facts straight.

Bob said...

As interesting as it is to read the arguments presented by both sides of this issue, it is disheartening to see all the name calling that goes on. I can tell that there are intelligent people on both sides of this issue, and both sides have well thought-out arguments to support their views. It's a shame that while some of you disagree, you can't at least be respectful.

Major_Freedom said...

LK:

Nope, it imparts zero fiscal stimulus

Because it doesn't impart any inflation you moron.

LOL.. No, I didn't...

"When Roosevelt cut federal spending and contractionary policy, this plunged the economy back into recession."

See the words: "and contractionary policy"...? That refers to the virtual elimination of the deficit fiscal year 1938.

You see the word AND you dishonest moron? That means you hold that the contraction in spending qua spending was (in part) responsible. That is the myth that is refuted.

In 1937-1938, there was inflation, and yet unemployment plunged.

What? Unemployment increased from late 1937-1938. It peaked in 1938, then fell significant when fiscal stimulus was implemented again.

I meant unemployment grew.

Catalán's stupidity refuted here:

You moron. The data CONFIRMS Catalan's argument.

You just changed your story...again! First you claimed that it was ROOSEVELT'S actions that caused the double dip, now you're claiming that it's wrong to look at only federal spending, and that we now have to look at state and local government spending as well. You continue to make shit up as you go.

Why is state and local government spending important? They can't print their own money. They are cash constrained. Their spending is offset by a one for one reduction in civilian spending. There is no difference in Keynesianism between state and local spending, versus civilian spending. You idiot.

If state and local spending contracted, and you blame that, then you must also blame civilian contractions in spending...but then you'd have to ask WHY civilians would all of a sudden cut their spending. Oh that's right, I forgot, Keynesianism doesn't think that far.

LOL.. figures which show you that unemployment fell by 42.5% from 1933-1937?? That is, by nearly 50%..?

That's because unemployment initially ROSE 1929-1933, because of credit expansion during the 1920s distorting the economy. That employment recovered is not due to the government, it's due to economic calculation. But employment was still at 10%, which is depression level, even after 8 years of massive government spending and regulation.

Major_Freedom said...

LK:


And it is only ideologial nonsense that prevents government jobs from being included in employment figures.

Yes, ideological nonsense from statist Keynesians who refuse to let the market work.

When they are included unemployment fell by 63% from 1933-1937:

It was well on the way to going below 5% when Roosevelt implemented his austerity in 1937-1938.

But you just admitted above that Roosevelt increased spending in 1938 you idiot.

That the deficit was lower in 1938 does NOT mean that it was "contractionary." A smaller deficit can be expansionary if it is accompanied by increased spending. That's exactly what happened in 1938, idiot.

Also: name one country that recovered rapidly from the Great Depression to have minimal unemployment without any fiscal expansionary policy at all, and with severe fiscal contraction

What does mere historical incidents of what governments did have anything to do with economic principles and what is good policy versus bad policy? You're arguing from counter-factuals.

The Great depression went from 1929-1933.

Guess we can chalk up historical revisionism alongside your bankrupt economics.

The Great Depression lasted from 1929-1946. It was in 1946 that the government drastically slashed spending, and taxes, that the economy was finally able to recover.

The Germans suffered under the reparations for years and years without electing the Nazis.

It took deflationary depression from 1930-1933 - the insane Austrian nostrum for economic ills - to drive them into Hitler's arms:

False. It took massive inflation after the Weimar Republic to distort the economy to such a degree that the economic calamity that resulted, coupled with nationalist philosophy, turned the country towards fascism.

Deflationary depression exist because of prior inflationary booms. The Austrians are the only ones who understand what causes the deflationary depressions, and no, it's not stingy governments and central banks refusing to print money after the collapse. It's governments and central banks that printed money in the first place to generate the boom and then bust.

Inflation cannot be used to maintain a distorted economy. The Weimar Republic was proof of this. They tried to stimulate their way out of the bust, and they collapsed the currency.

In short, it was Keynesian economics before Keynes that helped create Hitler.

LK said...

"That the deficit was lower in 1938 does NOT mean that it was "contractionary." A smaller deficit can be expansionary if it is accompanied by increased spending. That's exactly what happened in 1938, idiot."

Wrong. Do you just make this BS up?

Federal budget figures:

Year* Outlays
1935 $6.4
1936 $8.2
1937 $7.6
1938 $6.8

1939 $9.1

*Fiscal year

Federal spending was reduced in both fiscal year 1937 and 1938.
Taxes were raised at the same time virtually eliminating the deficit, causing fiscal contraction.

LK said...

"It took massive inflation after the Weimar Republic to distort the economy to such a degree that the economic calamity that resulted, coupled with nationalist philosophy, turned the country towards fascism.

Do you have any grasp of basic history?

Before the Great depression hit, in the late 1920s the German economy had strong growth and low unemployment.

If hyperinflation is what led to fascism, Germany would have elected the fascists in the early 1920s when they actual DID have hyperinflation, not 10 years later in 1932-1933, when they were in the depth of a deflationary depression.

The German voters in 1932 voted for the Nazi party giving them 230 seats in the Reichstag not because they were angry about hyperinflation under a different government 10 years earlier in the early 20s, but because they were suffering mass unemployment and depression in 1932.

LK said...

"But you just admitted above that Roosevelt increased spending in 1938 you idiot. "

Where, idiot?

Roosevelt in fiscal year 1938 (July 1, 1937–June 30, 1938) reduced federal spending to $6.8 billion from $7.6 billion in fiscal 1937 (July 1, 1936–June 30, 1937). In April 1938 he did indeed stop the drive for budget balancing and begin spending increases which became significant in fisal year 1939 (July 1, 1938–June 30, 1939). The recovery began in July 1938 (first month of fiscal 1939) and accelerated as the spending was raised to $9.1 billion in fiscal 1939, with a deficit of $2.8 billion.

The recovery 3 months after the turn from budget balancing - precisely as you would expect, and beocme stronger as fiscal stimulus was imparted in higher spending in that fiscal year.

It sounds like you are as friggin' incompetent as Catalan - incapable of understading the difference between a fiscal year and calendar year.

Dennis said...

Canada, as I said previously, is now in large part a petro economy. The soaring price of oil, along with rising prices for agricultural commodities and inputs like potash, is the primary reason why Canadian unemployment has fallen for the past few years. Significantly, it has fallen the most in oil-rich provinces like Alberta and Saskatchewan. Similarly, North Dakota has an unemployment rate that is around 5 percent today, thanks to Bakken oil, not some phony stimulus.

If the Canadian government's "stimulus" package were as great as Keynesians claim it is, then why is unemployment much higher in oil-less provinces like Ontario and Quebec?

Major_Freedom said...

LK:

"That the deficit was lower in 1938 does NOT mean that it was "contractionary." A smaller deficit can be expansionary if it is accompanied by increased spending. That's exactly what happened in 1938, idiot."

Wrong. Do you just make this BS up?

False. You even called increased spending "expansionary" on your own stupid blog.

You wrote:

"In fact, total government spending in fiscal years 1935 and 1936 was highly expansionary:"

You're just making shit up after your shit got exposed.

Before the Great depression hit, in the late 1920s the German economy had strong growth and low unemployment.

Nice cherry picking. Are you a troll or are you retarded?

Weimar hyperinflation from 1921-1923 threw the economy into chaos. Unemployment went from 3% to 23%. Adolf Hitler himself in his book, Mein Kampf, makes many references to the German debt and the negative consequences that brought about the inevitability of "National Socialism". The inflation also raised doubts about the competence of liberal institutions, especially amongst a middle class who had held cash savings and bonds. It also produced resentment of bankers and speculators, whom the government and press blamed for the inflation.[7] Many of them were Jews, and some Germans called the hyperinflated Weimar banknotes Jew Confetti.

Things don't happen overnight you idiot. By your logic, people don't think but three minuted behind them. Not everyone are shortsighted Keynesian morons like you.

If hyperinflation is what led to fascism, Germany would have elected the fascists in the early 1920s when they actual DID have hyperinflation, not 10 years later in 1932-1933, when they were in the depth of a deflationary depression.

Bwahahahahahahahahahahahaha, you idiot! Massive social movements like the onset of FASCISM don't happen overnight. They can take decades. Almost all historians now conclude that hyperinflation in part sewed the seeds for the rise of Hitler.

In Germany's case, the period of hyperinflation had a major effect on the social psyche, not to mention the massive wave of bankruptcies that took place after the currency was stabilized post 1923.

The German voters in 1932 voted for the Nazi party giving them 230 seats in the Reichstag not because they were angry about hyperinflation under a different government 10 years earlier in the early 20s, but because they were suffering mass unemployment and depression in 1932.

Because of yet another inflationary boom post 1923 distorted the economy once again you idiot.

Social change does not happen on the basis of what just took place in the one or two years prior. Social change takes many many years. Not everyone thinks so short term like you do.

The people did not even vote for Hitler. They voted for the Socialist Worker's Party, which then took control of the legislature, and then legislature then voted to grant Hitler's Nazi Party dictatorial powers, not to stop the recession, that's long gone news. It was to establish a German hegemony, because the people were influenced by nationalist philosophy that began with Hegel and reinforced by Nietzsche.

Major_Freedom said...

LK:

Where?

When you said that Roosevelt increased spending starting in April 1938 you idiot.

The recovery 3 months after the turn from budget balancing

There was no recovery 3 months after the "turn" from budget balancing. Unemployment was still in double digits. Corporate saving was negative. Net investment was negative.

But yeah, let's say "recovery" so that it makes it looks like the economy turned on a dime as soon as government spending increased. Hahahaha

Dennis said...

I'd like to make a couple of more points about the Canadian economy. The finances of the federal government today are buoyed enormously by capital gains from oil, resource and metal stocks such as gold which are abundant in some regions of Canada and in high demand worldwide.

Ontario, as I mentioned, is rather poor in resources compared to other regions, and its provincial government is now in dire fiscal straits despite its best attempts to "stimulate" its own economy with massive deficit spending.

LK said...

You even called increased spending "expansionary" on your own stupid blog.

You wrote:

"In fact, total government spending in fiscal years 1935 and 1936 was highly expansionary:"


And surpress everything else that follows:

"In fact, total government spending in fiscal years 1935 and 1936 was highly expansionary:

Year* Total Outlays
1933 $12.62
1934 $12.81
1935 $14.78
1936 $16.76
1937 $17.22
1938 $17.68
1939 $19.05
1940 $20.42
*the fiscal year

The expansionary effect of fiscal policy in these years must be attributed to the large federal deficits. In fiscal year 1934 there had been a large deficit, but its expansionary effect was reduced to some extent by state and local austerity. In the fiscal years 1935 and 1936 federal deficits overcame that state and local austerity and imparted significant stimulus at a time when the financial system had been stabilised and monetary policy aided recovery.



"Almost all historians now conclude that hyperinflation in part sewed the seeds for the rise of Hitler"

"Sewing the seeds" for something does not mean anything will grow.

It took deflationary depression for the people to ACTUALLY make the Nazi party the largest party in the Reichstag.

"The people did not even vote for Hitler. They voted for the Socialist Worker's Party, which then took control of the legislature, and then legislature then voted to grant Hitler's Nazi Party dictatorial powers, "

LOL!!!
So Germans voted for the Nazis but somehow missed the fact that the party's leader was Hitler??

The Nazi party won the largest number of seats in the Reichstag by 1932 and Hindenberg appointed Hitler chancellor in January 1933, as head of a coalition government with Hugenberg's party (the DNVP), in a manner was that utterly consistent with the Weimar constitution and Weimar democractic process.

Anonymous said...

Regardless of the merits of deficit spending, Anderson and anyone claiming Krugman is 'pro war' in the effort to discredit the policies he advocates is a demagogue and nothing more. It's obvious to anyone paying attention that Krugman laments the only way the US would spend to the extent he believes is necessary is to go to war. He clearly would much rather see such spending go into infrastructure and the like.

If you've read Anderson's post and wonder why Krugman would think war is good, consider Anderson's hatred for Krugman and willingness to distort whatever is necessary to discredit him. It's willful ignorance and little else. Those who say Krugman advocates war need to grow up.

Major_Freedom said...

And surpress everything else that follows:

The expansionary effect of fiscal policy in these years must be attributed to the large federal deficits

Idiot, that is just explaining how the expansionary spending policy specifically came about. That is not saying that expansionary policy only includes deficits.

You are saying A occurred, and A occurred due to B. You called A expansionary. You did NOT call B expansionary.

"Sewing the seeds" for something does not mean anything will grow.

In this case it almost certainly did, as many philosophers, historians and economists will attest.

It took deflationary depression for the people to ACTUALLY make the Nazi party the largest party in the Reichstag.

No, that is just you trying desperately to deflect responsibility away from what actually caused it, which was a growth in the philosophy of statism, which manifested itself in a hyperinflationary collapse and economic calamity.

To call the stock market collapse of 1929 and the subsequent depression as being responsible for the rise of fascism in Germany is like blaming a bird that hits a skyscraper just before it is demolished.

You are hilariously trying to blame Austrian economics for Hitler's rise to power, when it is precisely Keynesianism that is economically responsible.

Hyperinflation and credit derived depressions don't take place in economies with sound money and economic freedom. History and logic prove this to be the case.

And before you troll about the 19th century depressions, they were all caused by movements away from sound money, and movements towards credit expansion and funny money.

So Germans voted for the Nazis but somehow missed the fact that the party's leader was Hitler??

Straw man.

No you idiot. The Germans voted in the PARTY. The political landscape at the time was to vote in parties, not individuals. Hitler was leader of the socialist party. The people did not vote Hitler to be dictator. He was given dictatorial powers by the legislature.

That the worker's party won the majority of votes does not mean that they voted in a dictator. Hitler was popular however, and so the majority of the public did not revolt. Those that did were either sent to prison, or to death.

You have proven that not only are you intellectually bankrupt when it comes to economics, but you are also intellectually bankrupt in history as well.

LK said...

In this case it almost certainly did, as many philosophers, historians and economists will attest.

And historians and economists tell you that deflationary depression drove a very large number of Germans to vote for the Nazi party in 1931 and 1932.

But in any case appealing to "philosophers, historians and economists" is a lazy appeal to authority fallacy.

The data on German elections speaks for itself perfectly well, without the need for "philosophers, historians and economists".

LK said...

"The people did not vote Hitler to be dictator. He was given dictatorial powers by the legislature." etc etc

I never claimed that Germans voted "Hitler to be dictator".

This is just your stupid straw man.

Germans voted for the Nazi party, knowing full well that making it the largest party in the Reichstag
would make Hitler the leading candidate for the office of chancellor.

Major_Freedom said...

And historians and economists tell you that deflationary depression drove a very large number of Germans to vote for the Nazi party in 1931 and 1932.

Philosophers, historicans and economists will tell you that national socialism among the populace did not arise due to the stock market collapse of 1929 and subsequent depression. It was already way entrenched by then.

But in any case appealing to "philosophers, historians and economists" is a lazy appeal to authority fallacy.

Not when they are experts on the subject matter.

The data on German elections speaks for itself perfectly well, without the need for "philosophers, historians and economists".

The data does speak perfectly well. The philosophers, writers, books, historical events, even Hitler's own writings, show very clearly that fascism arose not because of the latest stock market collapse, but because of being marginalized by western powers, bankrupted, in addition to hyperinflation, war reparations, and underlying philosophical movement of national socialism engrained into the German psyche by the German School of philosophers.

João Marcus said...
This comment has been removed by the author.
Major_Freedom said...

I never claimed that Germans voted "Hitler to be dictator".

I never claimed you did claim it. I made a point to mention this because your clear misunderstanding of German history.

Germans voted for the Nazi party, knowing full well that making it the largest party in the Reichstag would make Hitler the leading candidate for the office of chancellor.

You keep repeating the same one liners over and over like it constitutes knowledge. Auto-trolling is not critical thinking.

The German people did not vote in the worker's party "knowing full well Hitler would become leading candidate for office of chancellor." What crack are you smoking?

Hitler's party won 230 seats out of 608 in the Reichstag. That was NOT ENOUGH to make him chancellor you idiot. The public understood what was needed to make him chancellor. It was all over the news pretty much everyday during the election.

The way Hitler became chancellor was NOT in accordance with Weimar laws. The way he became chancellor was through backdoor double-crossing and political backstabbing, coupled with a threat of a military coup. Hindenburg finally relented and reluctantly appointed Hitler, whom Hindenburg called "that little corporeal", as chancellor.

At the time Hitler was head the worker's party, democracy still existed, and over 50% of the Reichstag was against the Nazi Party, meaning it would have been next to impossible for Hitler to pass any law he wanted. Hitler called for a general election in spring 1933. One week before the election was to take place, the Reichstag burned down (many historians conclude it was Hitler who did it), and Hitler blamed the communists as attempting a coup, and that's when Hindenburg gave "emergency powers" to Hitler, and the rest is history.

LK said...

"Philosophers, historicans and economists will tell you that national socialism among the populace did not arise due to the stock market collapse of 1929 and subsequent depression. "

That is BS:

Without the depression Hitler would not have gained power. Mass unemployment reinforced all the resentments against Versailles and the Weimar democracy that had been smouldering since 1919. Overnight the National Socialists were transformed into a major party; their representation in the Reichstag rose from 12 deputies in 1928 to 107 in 1930. The deflationary policies of the Weimar leaders sealed the fate of the Republic” (Adamthwaite, A. P. 1977. The Making of the Second World War, Allen & Unwin, London and Boston. p. 34).

Adamthwaite is but one of dozens and dozens who say the same thing.

Major_Freedom said...

LK:

That is BS:

“Without the depression Hitler would not have gained power. Mass unemployment reinforced all the resentments against Versailles and the Weimar democracy that had been smouldering since 1919. Overnight the National Socialists were transformed into a major party; their representation in the Reichstag rose from 12 deputies in 1928 to 107 in 1930. The deflationary policies of the Weimar leaders sealed the fate of the Republic”

The author agrees with my position.

"That had been smouldering since 1919" is the key phrase, you idiot.

The depression after 1929 was just the last straw that broke the camel's back.

If a single depression caused fascism to rise in Germany, then there would have been a fascist uprising long before, after the prior depression following the hyperinflationary collapse in the early 1920s.

Major_Freedom said...

Hitler first entered the scene in 1923 after the hyperinflationary collapse that wiped out the middle class. In Munich, him and 2000 other Nazis gathered support and marched into a meeting at the Munich Beer Hall, containing many of Bavaria's elite, including Hans Seisser, Otto von Lossow and Gustav von Kahr.

Without the hyperinflationary collapse, Hitler would not have risen to power.

ekeyra said...

LK

Why did von mises flee germany if they were following his precriptions for economic policy? Most people dont flee the country when it does what they say it should do.

LK said...

"The depression after 1929 was just the last straw that broke the camel's back."

LOL... So now after all your crap, you admit that the depression was the key factor that saw the Nazi rise to power?

LK said...

"Why did von mises flee germany if they were following his precriptions for economic policy? "

(1) He didn't flee Germany - he wasn't even in Germany duirng these years, but was in Austria then Switzerland.

(2) Weimar austerity followed extreme neoclaiiscal Walrasian thinking that Austrians woudn't disagree with:

i. let the depression run its course,

ii. do not allow the "evil" central bank to intervene and stabilise money supply,

iii. do not engage in deficit spending or increase spending

iv. let wages and prices correct.

That is what Bruning tried and it led to a long depression, probably worse than America's.

Mike M said...

LK I was going to inquire as to whether or not you were a dolt (The Germans suffered under the reparations for years and years without electing the Nazis) but Major covered in his 1:18.

However your comment does reveal the persistent flaw in your thinking (liberal use of the word)

You think an economy is a science lab experiment. Add an ingredient; change a mix and presto instant result. Not getting the result you what? Simply add more ingredients.

This is not a lab experiment. It is real human beings synthesizing hundreds and thousands of variables to make decisions about their own lives. Then overlay all of that with human emotion.

I know that conflicts with your academic tube view of the world but its reality.

Major_Freedom said...

LOL... So now after all your crap, you admit that the depression was the key factor that saw the Nazi rise to power?

No, it was not the key factor. It was a factor, but the previous events were absolutely necessary in Hitler's rise to power. If the German economy was humming along the whole time, then suddenly the stock market crashed in 1929, there is no chance that Hitler's party would have been elected.

Hitler's rise required the hyperinflationary episode. He even wrote about that fact in his memoir Mein Kampf.

After all your crap, you're still in denial because you're trying to pin the entire rise of fascism in Germany to one stock market collapse.

LK said...

\" you're still in denial because you're trying to pin the entire rise of fascism in Germany to one stock market collapse.

= more straw man BS.

I said nothing whatsoever about the US stock market collapse above - my comments about Hitler;'s rise to power refer to the Weimar liquidationist economic policy in 1930, 1931, and 1932.

That policy worked wonders didn't it!
Led to a quick depression and return to a booming economy, did it?

Major_Freedom said...

LK:

(2) Weimar austerity followed extreme neoclaiiscal Walrasian thinking that Austrians woudn't disagree with:

i. let the depression run its course,

ii. do not allow the "evil" central bank to intervene and stabilise money supply,

iii. do not engage in deficit spending or increase spending

iv. let wages and prices correct.

That is what Bruning tried and it led to a long depression, probably worse than America's.

Utter BS.

Bruning tried austerity, but not only was his plan overruled within a month, but it wasn't even "Austrian". His leadership oversaw an increase in inflation, leading to rising prices, and he also raised taxes. No Austrian will say this is the correct way to engage in austerity.

In addition, Bruning resigned in 1932, only two years after becoming chancellor. How in the hell can he have been responsible for a "long" depression, "probably" worse than America's, when the economy no longer existed starting in 1933 with the onset of fascism? America went through a 15 year depression you idiot. Two years of non-austerity is not austerity.

Dennis said...

The German depression was the direct and inevitable result of the hyperinflation and runaway spending of the 1920's. It could not have been avoided by more inflation and more spending.

Hitler's "solution" to unemployment was to conscript young men into rearmament programs and public works and make it difficult to employ married women. Married women were simply not counted as unemployed even if they wanted or needed to work.

Paying for such programs, however, was not as easy as many made it sound. The Reichsbank was instrumental in buying up German government debt; i.e. engaging in inflationary money printing. To deal with the upward pressure on prices that such policies must bring, Hitler imposed stringent wage and price controls. To pay for it all, he ultimately launched attacks on his neighbors, one purpose of which was to loot them to finance his spending spree.

Major_Freedom said...

LK:

= more straw man BS.

Nope. You made that argument you liar.

I said nothing whatsoever about the US stock market collapse above - my comments about Hitler;'s rise to power refer to the Weimar liquidationist economic policy in 1930, 1931, and 1932.

I didn't claim you said it was the US stock market collapse.

You said it was the depression following the 1929 collapse that caused Hitler to rise to power. That is obviously false. It was more than a decade of events that caused it. The collapse of the German economy at the end of the 1920s was due to an inflationary boom during the 1920s. The bust would have been inevitable even if the German government printed and spent money like gangbusters. In fact, that's exactly what they did in the early 1920s, and the result was hyperinflation.

Inflation begets more inflation, and the choice is either depression and saving the currency, or trying to print your way out of it and collapse the currency. Once the boom distorts the economy, NO AMOUNT OF MONEY PRINTING CAN EVER remove the inevitable correction.

If there was no boom, then there would not have been a bust. But there was a boom, and the boom is the cause.

That policy worked wonders didn't it!

Keynesian policies before Keynes collapsed the currency in the early 1920s. All the pre-Keynesian yammerings of more printing and more spending, they were actually practiced, and the result was the rise of fascism in Germany, whereas without it, Hitler probably would have remained obscure.

In other words, Keynesianism as an ideology is responsible for over 6 million murdered civilians.

LK said...

"His leadership oversaw an increase in inflation, leading to rising prices, "

B.S.

(1) the money supply collapsed by 25% from 1930-1932 in Weimar Germany

(2) price deflation occurred in these years.

Dennis said...

Hitler rose to power in large part because the middle classes, who liked him the least, were wiped out financially during the Weimar inflation. With their savings and investments looted by hyperinflation, they were in no position to oppose whatever mad man came along promising salvation.

Major_Freedom said...

B.S.

(1) the money supply collapsed by 25% from 1930-1932 in Weimar Germany

By the time he left, monetary inflation was already well on its way upward.

Anonymous said...

Death and destruction were not the only means of wasted productivity that occurred during WW2. My conscripted grand pappy spent the vast majority of his time during that war playing cards and mopping a deck while being transported around the Pacific on a battleship at the whim of clueless Admirals while his farm back home went fallow for three growing seasons. He thought it was a waste of time for everyone involved.

Anonymous said...

Typical Austrian nonsense.

Seriously, you want to talk about what is and is not nonsense when your Jim Jones is talking about recreating Nixon's plot from the Watchmen?

At least the Japanese knew when they were defeated.

Tel said...

I think I've mentioned it before... the London riots represent a real-life experiment of the "Broken Window" scenario. They now have plenty of broken windows in London, plenty of additional money going to pay police overtime, hire more public servants to "fix" the problem, etc. Most likely they will have more riots as well before this is all over.

The Keynesian logic is that riots should be good for the London economy, the Austrian prediction is that riots should damage the economy. We merely observe the outcome and there is your answer.

LK said...

"Bruning tried austerity, but not only was his plan overruled within a month"

But then Bruning imposed his deflationary policy by presidential emergency decree:

"The Reichstag rejected his measures within a month. President Hindenburg, already bent on reducing the influence of the Reichstag, saw this event as the "failure of parliament" and with Brüning's consent called for new elections. These elections cost the parties of the grand coalition their majority and brought gains to both Communists and National Socialists. This left Brüning without any hope of reforging a party coalition and forced him to base his administration on the presidential emergency decree ("Notverordnung") of Article 48 of the Constitution, circumventing parliament and the informal toleration of this practice by the parties. Brüning coined the term "authoritative (or authoritarian) democracy" to describe this form of government based the cooperation of the president and parliament."

http://en.wikipedia.org/wiki/Heinrich_Br%C3%BCning#The_Br.C3.BCning_administration_and_the_Reichstag_parties

Anonymous said...

War works out great as long as it isn't your country's industry that gets blown to hell.

João Marcus said...

Oh, the tragedy. Money supply collapsing after an unimaginable expansion. That's horrible! Obviously, Weimar Germany's problems really began because they didn't start using scientific notation in their money:
- How much for the water?
- 2,45 x 10²³
- Wow, it was 2,4 x 10²¹ yesterday!

Bob Roddis said...

Why it's a waste of time to debate LK on his anecdotes:

1. Keynesian-type policies will probably induce economic activity in the short run, however unsustainable.

2. Ending those policies will invariably cause liquidation, unemployment and pain in the short run.

We know this already. But without #1, we would never be in the position to need #2.

Nathan said...

In no way was Bruning carrying out Austrian policy. He bailed out failing industries, imposed price and wage controls, and raised taxes. He carried out interventionist policies similar to Hoover's and those of other countries during the time. The reason the recession of '29 transformed into a horrific depression was the unprecedented economic interventions employed in all countries during that time -- bailing out businesses, raising tariffs, raising taxes, inflating (in some cases), imposing price and wage controls, burdening businesses with new regulations, and expanding the welfare state. In the case of the European countries, unemployment persisted primarily because wages were not allowed to fall to natural levels because of special government-granted privileges to unions. Yes, according to the current "progressive" view, the governments of the time did not do enough, but these progressives would not have been satisfied unless a total Stalinist or Hitlerian state had been imposed -- as illustrated by Lord Keynes' implicit praise for Hitler's economic policies. Of course, Hitler did end the depression, but he did so by transforming the previously mixed economy into a totalitarian socialist slave state. Even then, the effectiveness of Hitler's economic policies has been tremendously overblown, as illustrated by Adam Tooze's book The Wages of Destruction: The Rise and Fall of the Nazi Economy.

Anonymous said...

How does it feel to make a career of criticizing someone when he doesn't even acknowledges you exist?

Anonymous said...

The irony is that Lord Keynes comes across as more extreme, in my opinion, than anyone else on this site - he is almost religious in his faith to one theory and not being able to make an allowance for an alternative or deviation from the script. The theory he puts forth can seemingly explain it all. Now, I don't consider myself a devotee of a single "faith", but the Austrian perspective makes the most sense and captures more of what I see going on. Nevertheless, I concede that no one has gotten it all right.

And, by the way, I think Dennis does a better job of explaining what's going on in Canada...LK apparently must agree since he hasn't tried to refute it again.

Scott D said...

"How does it feel to make a career of criticizing someone when he doesn't even acknowledges you exist?"

How does it feel to lack the basic faculty to understand the difference between a casual blog and a profession, and to be unable to reason the usefulness of logical debate?

Bob Roddis said...

Krugman notes that Austrians have acquired a real and really bad influence in current policy debates.

In a way, I really should not spend time debating the Modern Monetary Theory guys. They’re on my side in current policy debates, and it’s unlikely that they’ll ever have the kind of real — and really bad — influence that the Austrians have lately acquired. But I really don’t feel like getting right back to textbook revision, so here’s another shot.

So, shouldn’t the media examine and, if the Austrians are so wrong, refute Austrian theory? What is the justification for avoiding it at all costs?

My comment:

http://tinyurl.com/3baczta

Major_Freedom said...

LK:

But then Bruning imposed his deflationary policy by presidential emergency decree

He raised taxes, so his actions were not Austrian.

Then he was gone after only two years. He did not, contrary to your idiocy, preside over a longer depression than the US. The US depression lasted way longer than 2 years.

LK said...

He did not, contrary to your idiocy, preside over a longer depression than the US. The US depression lasted way longer than 2 years.

The usual laughable inability to define depression and stick with it in a consistent definition.

If "depression" is just defined as a period of high unemployment (by ignoring other factors like whether real GDP/GNP was falling or rising, or whether unemployment was actually falling), then most of the 19th century was a depression.

Even in your lazy, stupid sense, the era of classic Keynesianism (1945-1973) eliminate depressions.

Sam said...

Even in your lazy, stupid sense, the era of classic Keynesianism (1945-1973) eliminate depressions.

And you used the same logic to prove that Canada's unemployment is low because of Keynesianism.

João Marcus said...

If "depression" is just defined as a period of high unemployment (by ignoring other factors like whether real GDP/GNP was falling or rising, or whether unemployment was actually falling)

Yeah, who cares if people are unemployed, can't find jobs and life sucks? GDP is "growing", so everybody is certainly happy! Nice!

Mike M said...

Marcus, thats because LK thinks the econonmy is a lab experiment. "Yeah I know the patient died, but we got some really cool data to cite for our paper".

Major_Freedom said...

LK:

The usual laughable inability to define depression and stick with it in a consistent definition.

You fallaciously claimed that the German depression under Bruning was a "long depression", perhaps worse than the American depression.

That claim is false. A 2 year term as chancellor cannot make one preside over a "long depression." You just arbitrarily defined it to be long as a rhetorical flourish.

If "depression" is just defined as a period of high unemployment (by ignoring other factors like whether real GDP/GNP was falling or rising, or whether unemployment was actually falling), then most of the 19th century was a depression.

Then so was the 20th, and the 21st.

Even in your lazy, stupid sense, the era of classic Keynesianism (1945-1973) eliminate depressions.

The era of Keynesianism is 1933-present.

What you call "classic Keynesianism" is really just the time period in between the Great Depression and Keynesian created stagflation of the 1970s. Nice cherry picking.

By that logic, the "classic period of Austrianism" was in 1946, when the government decreased spending and taxes, and productivity skyrocketed.

Anonymous said...

I think we can all agree there is great imbalance and inequality in the economy today. This imbalance and inequality led to the use of excessive debt to sustain consumption which has almost reached its limit. The Keynesians want to restart growth by stimulus and loose monetary policy, and there is some empirical evidence that they could spark some growth. However, without addressing the imbalance in the system, this growth always led to greater crisis. History has told us once growth resumes, everybody gets complacent and thinks everything is now OK and clear sailing (witness the public sentiment during the Dot.com and Housing bubbles). As a result, nothing is done to address the imbalance, as anything to that effect will harm growth. This process of kicking the can down the road and feeling good about yourself inevitably will lead to a major collapse (Great Depression + World War II), after which things can start over again. The Austrians are just saying we need to take the medicine now, but what is the medicine? Is there medicine that doesn't cause some pain? Is the solution to do nothing let the existing system collapse on its own weight? Do we just let people figure out their own way of surviving the storm without government assistance? We don't have any convincing answers, so the easy way out is to kick to can further down the road until we reach the cliff....

fraud-smasher said...

Lord Keynes: the god of failure.

Bob Roddis said...

MF has me energized.

Murray Rothbard on the evil "social democracy":

When I was growing up, I found that the main argument against laissez-faire, and for socialism, was that socialism and communism were inevitable: "You can't turn back the clock!" they chanted, "you can't turn back the clock." But the clock of the once-mighty Soviet Union, the clock of Marxism-Leninism, a creed that once mastered half the world, is not only turned back but lies dead and broken forever. But we must not rest content with this victory. For though Marxism-Bolshevism is gone forever, there still remains, plaguing us everywhere, its evil cousin: call it "soft Marxism," "Marxism-Humanism," "Marxism-Bernsteinism," "Marxism-Trotskyism," "Marxism-Freudianism," well, let's just call it "Menshevism," or "social democracy."

Social democracy is still here in all its variants, defining our entire respectable political spectrum, from advanced victimology and feminism on the Left over to neoconservatism on the Right. We are now trapped, in America, inside a Menshevik fantasy, with the narrow bounds of respectable debate set for us by various brands of Marxists. It is now our task, the task of the resurgent right, of the paleo movement, to break those bonds, to finish the job, to finish off Marxism forever.

One of the authors of the Daniel Bell volume says, in horror and astonishment, that the radical right intends to repeal the 20th century. Heaven forfend! Who would want to repeal the 20th century, the century of horror, the century of collectivism, the century of mass destruction and genocide, who would want to repeal that! Well, we propose to do just that.

With the inspiration of the death of the Soviet Union before us, we now know that it can be done. We shall break the clock of social democracy. We shall break the clock of the Great Society. We shall break the clock of the welfare state. We shall break the clock of the New Deal. We shall break the clock of Woodrow Wilson's New Freedom and perpetual war. We shall repeal the 20th century.

One of the most inspiring and wonderful sights of our time was to see the peoples of the Soviet Union rising up last year to tear down in their fury the statues of Lenin, to obliterate the Leninist legacy. We, too, shall tear down all the statues of Franklin D. Roosevelt, of Harry Truman, of Woodrow Wilson, melt them down and beat them into plowshares and pruning hooks, and usher in a 21st century of peace, freedom, and prosperity.


http://mises.org/daily/3931

Major_Freedom said...

MF has me energized.

And you energize me. When I feel like not responding to LK's nonsense, you tend to be there to refute his nonsense.

macroman said...

WWII was a time of deprivation is not the point. The point is that output was vastly greater than during the depression. (and the previosly un employed probaly were a lot better off despite the rich being worse off than before)Deprivation came about because we threw most of the output away and built planes and ships that were not good for much except throwing output away.

If we could think of a better reason to use idle resources it would be better. The Apollo program wasn't too bad, and not a time of depravation, and come to think of it there were many, many, many spinoffs in technological advance from
war spending. Just like moon program spending. Via newt!

macroman said...

And come to think of it, all those war surplus DC3 planes, and jeeps, and trucks where a great economic advantage to the US after the war, and maybe even the Victory ships. We didn't,t throw everything away. After the war we grew and prospered and built the interstate freeways, another massive economic boost, while paying off the war debt of 120 percent of GDP.