tag:blogger.com,1999:blog-6276561747841568697.post7139644096244771779..comments2024-03-27T05:23:48.855-04:00Comments on Krugman-in-Wonderland: Are We Really Suffering from a Paradox of Thrift? Two Critics of Keynes (and Krugman)William L. Andersonhttp://www.blogger.com/profile/01802990642236807359noreply@blogger.comBlogger29125tag:blogger.com,1999:blog-6276561747841568697.post-66155538821140471592010-08-31T15:38:25.864-04:002010-08-31T15:38:25.864-04:00Well if the Fed can't directly purchase U.S. b...Well if the Fed can't directly purchase U.S. bonds how can you say the U.S. gov't issues it's own currency? Could it be that the Fed eventually prints the money to get a hold of t-bills, and banks buy bonds at auction knowing they are immediately going to sell to Fed. You keeping nit-picking semantics over substance. <br /><br />Now that we've established that Austrians actually do understand the monetary system, care to stop dragging out your tired old arguments, and explain how the gov't can print a factory or the steel and electricity to run said factory. Or how expanding the monetary base is not inflationary? Does your empirical evidence include the CPI which conveniently leaves out energy and food, the same CPI that is measured differently every few decades when the numbers don't match the inflation targets?jason hhttps://www.blogger.com/profile/03795436962579269461noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-41994726711381325682010-08-31T11:32:45.445-04:002010-08-31T11:32:45.445-04:00Partial credit. The Fed is not allowed, by law, t...Partial credit. The Fed is not allowed, by law, to participate in treasury auctions. So when you say "the debits are accounted for in a bond auction where the Federal Reserve is happy to buy up as many bonds as necessary" you are 100% incorrect. This gets back to the operational facts that so many on this blog, including Prof. Anderson, refuse to bother to understand.<br /><br />And of course, what you are saying is the Fed buys bonds to lower interest rates which is correct and inline with their everyday open market operations. But in Prof. Andersons world this makes no sense since the Fed buying bonds is highly inflationary. Of course, it’s not (just changes the composition of reserves), but the folks on this blog want you to believe that since that’s what their neo liberal ideology says is true, despite all the empirical evidence that says otherwise. Of course, everything that is written about monetary policy by Prof. Anderson is 100% wrong and clouded by ideology, so no surprise he does not bother to understand how the monetary system in the US operates.<br /><br />However, you did just prove one of my primary points. You have correctly shown the US government is never revenue constrained. The US government, unlike a household, spends first, manages reserves second. No constrains on revenue. You have been doing your homework on MMT. Congratulations.sb101https://www.blogger.com/profile/05719317618259246022noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-48175055208334340472010-08-31T10:40:16.495-04:002010-08-31T10:40:16.495-04:00I can take this one. The treasury simply credits a...I can take this one. The treasury simply credits accounts, and adds a debit to their own, eventually, the debits are accounted for in a bond auction where the Federal Reserve is happy to buy up as many bonds as necessary to keep interest rates low.jason hhttps://www.blogger.com/profile/03795436962579269461noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-17095619596340082972010-08-30T13:50:50.348-04:002010-08-30T13:50:50.348-04:00'Ignorance is Bliss'
that should be the s...'Ignorance is Bliss'<br /><br />that should be the slogan for this blog, and so called Austrian economists in genera.<br /><br />Hey Bob - I'm still waiting on the answer to my quesion: how come big spending initiatives like TARP, the Iraq invasion, the stimulus etc. are not done on the condition of a completed bond auction? Tic, toc, tic, toc...sb101https://www.blogger.com/profile/05719317618259246022noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-61724514107461022592010-08-29T18:23:31.837-04:002010-08-29T18:23:31.837-04:00Look you guys, reality doesnt exist until you pie ...Look you guys, reality doesnt exist until you pie chart it, and you cant pie chart finite resources fulfilling infinite wants and needs. Jeez why do you guys keep bringing up the fact that theres only so many resources to go around and just face reality, i.e. my pretty pretty charts.ekeyrahttps://www.blogger.com/profile/17413110869433997820noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-43403313447493744622010-08-28T13:13:56.322-04:002010-08-28T13:13:56.322-04:00We're just as tired of "you guys do not u...We're just as tired of "you guys do not understand the present monetary system", "look at my graphs", and "it is just accounting", as you are of our emphasis on scarcity.<br /><br />What I find amusing is the lack of a causal explanation for all of this, and instead the torrent of accusations that serve as the alternative form of argumentation.<br /><br />It's hard to take the argument seriously.Jonathan M.F. Catalánhttp://www.economicthought.net/noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-17897243856434803272010-08-28T12:27:18.068-04:002010-08-28T12:27:18.068-04:00This is not about scarce resources and factors of ...<em>This is not about scarce resources and factors of production...the same tired punchline you guys keep dropping. If the public sector maintains a balanced budget, or cuts the deficit, your factors of production and/or your ability to save now and consume later is reduced. </em><br /><br />Economics is ALWAYS about scarce resources. I've determined that "Chartalist" is derived from an old term in Zimbabwe meaning "we got charts but we got no theory". <br /><br />This endless display of Chartilian obscurantism is pointless and boring.Bob Roddisnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-33103883986414744502010-08-28T08:48:35.027-04:002010-08-28T08:48:35.027-04:00Real savings?
Ugh, one more time. When the publi...Real savings?<br /><br />Ugh, one more time. When the public sector runs a deficit, and assuming the external balance remains negative, the private sector runs a surplus. See the graph i have posted 100 times. It's up to the private sector to do what it wants with this financial equity. If they want to invest, save, paydown debt, etc. it's up to them. This is not about scarce resources and factors of production...the same tired punchline you guys keep dropping. If the public sector maintains a balanced budget, or cuts the deficit, your<br />factors of production and/or your ability to save now and consume later is reduced. It's called double entry accounting and if it does not hold anymore the laws of mathematics haves changed<br /><br />If you are so up to speed on the monetary system, then maybe you can explain why spending initiatives are bit contingent in a bond auction. And maybe you can explain why China does not have a line item veto on spendingsb101https://www.blogger.com/profile/05719317618259246022noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-2695059672084048832010-08-27T22:01:51.348-04:002010-08-27T22:01:51.348-04:00Hey AP, we understand how the monetary system work...Hey AP, we understand how the monetary system works. I summarized your point above. <br /><br />Unfortunately, the definition of private savings is rubbish. Perhaps you could explain how increasing the balance of an account on a spreadsheet is equivalent to scarce goods being set aside today for consumption in the future. That is REAL savings.jason hhttps://www.blogger.com/profile/03795436962579269461noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-58710866857212108542010-08-27T20:09:28.132-04:002010-08-27T20:09:28.132-04:00"Wrong. The US government is a monopoly issue..."Wrong. The US government is a monopoly issuer of its currency which it can produce an unlimited supply of. The limitation to this production is inflation, as I have said at least a dozen times."<br /><br />I think the scarcity that poster was talking about was scarcity of economic goods, not of money per sé.Jonathan M.F. Catalánhttp://www.economicthought.net/noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-68416162298552371592010-08-27T19:50:34.069-04:002010-08-27T19:50:34.069-04:00It seems to me that there is too much emphasis on ...It seems to me that there is too much emphasis on the role of money. What is saved are actual capital-goods, and without this savings of capital-goods there's no way an entrepreneur can invest. Investments require a previous accumulation of capital-goods.Jonathan M.F. Catalánhttp://www.economicthought.net/noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-5188418067451264432010-08-27T18:33:10.965-04:002010-08-27T18:33:10.965-04:00Hey Bob- since your such the big brain on how the ...Hey Bob- since your such the big brain on how the banking system works, why don't you explain for all of us why TARP, the Iraq war, the stimulus, and all other spending is not contingent on a bond issue?sb101https://www.blogger.com/profile/05719317618259246022noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-77248032323879179452010-08-27T18:28:09.737-04:002010-08-27T18:28:09.737-04:00I take it only that you don't like donuts.
Yo...I take it only that you don't like donuts.<br /><br />Your cardiologist would, against his economic interests, probably approve.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-12899073743863295612010-08-27T17:30:38.953-04:002010-08-27T17:30:38.953-04:00"Yup. A lot of economic stimulus can happen f..."Yup. A lot of economic stimulus can happen from one donut eater." <br /><br />Broken window fallacy. Bastiat debunked this nonsense 100+ years ago. http://www.econlib.org/library/Bastiat/basEss1.htmlAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-44119045623355522192010-08-27T17:16:31.540-04:002010-08-27T17:16:31.540-04:00Well, either that, or the rich donut eater has to ...Well, either that, or the rich donut eater has to take his money from savings or pension, and pay the guy that makes the donuts, who then has to pay the guy who supplies his flour, sugar, and yeast, along with the transport and warehousing of said commodities, not to mention the oil he fries in, and since our guy is eating so many donuts, new donut fryers ...<br /><br />Oh, and his cardiologist. Don't forget how much our previously rich and now quadruple bypass candidate will have to pay to the heath care industry to unclog his arteries ...<br /><br />Then, on to his physio people, who have to be paid to get his formerly fat ass down to a manageable weight, along with all the drug companies that will be happy to put him on statins for the rest of his life ...<br /><br />Yup. A lot of economic stimulus can happen from one donut eater.<br /><br />But, I digress.<br /><br />How is it you you guys think you can grow an economy by making everyone in it poor?<br /><br />And I hope the one rich guy you have left in your limit case likes donuts.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-37822653723137487922010-08-27T15:58:37.657-04:002010-08-27T15:58:37.657-04:00Yahtzee! And the streets will run red with blood i...Yahtzee! And the streets will run red with blood if the productive class even thinks about cutting his pension or sacking his friends.jason hhttps://www.blogger.com/profile/03795436962579269461noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-5976478462602970472010-08-27T12:21:09.994-04:002010-08-27T12:21:09.994-04:00Jason H:
Thus, the government borrows to pay donu...Jason H:<br /><br />Thus, the government borrows to pay donut eater's humungous pension. The now rich donut eater puts it all in his savings account at the bank. Deficit equals savings.Bob Roddisnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-70213864180578646572010-08-27T12:08:01.692-04:002010-08-27T12:08:01.692-04:00Any money that the gov't spends eventually end...Any money that the gov't spends eventually ends up deposited in a private sector account. If the gov't spends more that it recovers in taxes the money accumulates in the private sector. This is why AP says public deficits equals private savings. However, because printed money doesn't actually represent economic goods this isn't real saving. The accounting identity may hold in nominal terms, but it has nothing to do with actual goods.jason hhttps://www.blogger.com/profile/03795436962579269461noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-56444504160054417232010-08-27T11:48:32.523-04:002010-08-27T11:48:32.523-04:00APLerner:
I've ask you nicely numerous times ...APLerner:<br /><br />I've ask you nicely numerous times to translate your charts into an explanation of your propositions in terms of individual human action. For example, if the government spends and goes into debt, what exactly is private person holding that you claim is "savings" and how exactly does that make this private person richer as opposed to just saving his money and finding his own entrepreneurial opportunties? I understand that when the government borrows to pay the large pension of a donut eater how that makes the donut eater richer. You schemes seem to deny the existence of scarcity. If the donut eater gets donuts from debt that the private folks have to pay, how exactly does that make the private guy richer, or help to support private investments?<br /><br />If you can't answer, say so. If you just won't try, say that too.Bob Roddisnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-85939751525773172472010-08-27T11:21:12.700-04:002010-08-27T11:21:12.700-04:00"See, the State must consume scarce resources..."See, the State must consume scarce resources in order to save scarce resources"<br /><br />You have it all backwards. If you paid attention to the above graph, you would see the opposite is true. Nice try.sb101https://www.blogger.com/profile/05719317618259246022noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-10039267952937232712010-08-27T10:52:24.654-04:002010-08-27T10:52:24.654-04:00Accounting troll says, "operational 'fact...Accounting troll says, "operational 'facts' overrule the laws of economics. See, the State must consume scarce resources in order to save scarce resources"jason hhttps://www.blogger.com/profile/03795436962579269461noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-59194038508578786372010-08-27T10:09:34.379-04:002010-08-27T10:09:34.379-04:00“The point should be that we need to be saving mor...“The point should be that we need to be saving more in the present”<br /><br />Wow Bob this may be the smartest thing you have posted yet.<br /><br /><br />“It's not Krugman's or the government's job to worry about whether we are saving too much”<br /><br />Actually, it is the government’s job, since it’s the government that provides the surpluses to allow the private sector to save. Of course, since you do not believe in reality, and do not understand how the monetary system operates, you refuse to acknowledge this:<br /><br />http://www.creditwritedowns.com/wp-content/uploads/2010/07/Pimcos_double_entry_bookkeeping.gif<br /><br />Public deficits add to savings. And public surpluses, a la the Clinton, take away from savings. Historical and operational fact. No theory.<br /><br />“The only real source of investment finance is from private savings”<br /><br />And yet another neo-liberal / Austrian myth. And savings are not required to fund investment. Investment ADDS to savings. Savings is just the accounting record of investment. Again, futher proof you do not understand the monetary system.<br /><br />“our standards of living have not collapsed in this depression as they did in the 1930s. Back then, most people lived a lot closer to the edge.”<br /><br />What, Prof. Anderson acknowledging government spending kept us from the edge? Prof. Anderson acknowledging the social safety net from the New Deal is actually working Wow. Who would have thought? <br /><br />“And even then - how does an "economist" jump to such conclusions from clearly anecdotal evidence? “<br /><br />Because Prof. Anderson and the dreamers do not believe in anecdotal evidence. Or statistics. Or data. Or facts. I have presented ample data, facts, and evidence disproving much of what Prof. Anderson preaches. The one time he tried to address one of my charts (the post on why bond rates keep falling despite his claims of the US heading for bankruptcy) he had to enlist the help of Guido Hulsmann, and Mr. Hulsmann response was so baseless and nonsensical, it was embarrassing. I’m the firsts anonymous in this thread.<br /><br />http://krugman-in-wonderland.blogspot.com/2010/06/commentary-on-current-bond-rates.htmlsb101https://www.blogger.com/profile/05719317618259246022noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-18402022872960453102010-08-27T09:15:32.582-04:002010-08-27T09:15:32.582-04:00Mr. Anderson:
"
I'm employed, but have n...Mr. Anderson:<br /><br />"<br />I'm employed, but have no BB or iPhone. However, I believe that the commenter was noting that generally speaking, our standards of living have not collapsed in this depression as they did in the 1930s. Back then, most people lived a lot closer to the edge.<br />"<br /><br />Please take a look at this quote, and ask yourself how much closer to the edge you think things should go?<br /><br />"<br />This comment is to Mr. Whine Whine Whine. I am a 50 year old woman and have been on unemployment for two years. I worked for 30 years with no breaks in employment until I was laid off in July of 2008. I have applied for every job opening I can find with no luck. I am now waiting on a tier 5 extension. Do you know where I’m waiting? In my car. That’s right, I have lost everything and now share my ford explorer with my 2 small dogs. Not because I don’t want to work, but because I can not find work. Just remember your smart @ss comment because things have a way of coming back and biting.<br />"<br /><br />Just because you may not see it, doesn't mean it doesn't exist.<br /><br />Please also compute this: during the 1930's, unemployment was at 25 %, population was roughly 100M. Today, the official number is about 10%, but the unofficial and underemployment puts that number at 16-18%, out of a population of 310M. What does the math tell you?<br /><br />Do you really think there isn't suffering out there? And any suffering that's being blunted is the result of ... wait for it ... government spending?<br /><br />It's no wonder we're incapable of solving problems, when it appears we're incapable of even defining them or acknowledging they exist.<br /><br />I can tell you that my family are now members of the "paradox of thrift" crowd: we will spend no money that isn't strictly necessary from now until I get employment. Multiply that by the number of unemployed or underemployed, and a picture should emerge.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-81542897035876197822010-08-26T22:15:01.004-04:002010-08-26T22:15:01.004-04:00"And the way it works in practice, in good ti..."And the way it works in practice, in good times, is that higher savings allow the Fed to cut interest rates, making capital cheaper, and hence on to investment."<br /><br />He leaves out what comes before and what comes after.<br /><br />Before: Higher rates encourage savings.<br /><br />After: Lower rates discourage savings.<br /><br />It follows from his reasoning that with lower savings the Fed should raise interest rates. Otherwise, why wait for higher savings to cut them?<br /><br />So when the Fed lowers rates during a time of high savings, it discourages savings. But as savings drop, the Fed would have to raise rates. What's the point of the Fed when the market would do this on its own?Fotsir Kovelakhttps://www.blogger.com/profile/00049323989808501493noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-8061904420690422182010-08-26T21:47:20.516-04:002010-08-26T21:47:20.516-04:00Well, isn't that because we rescued the bankin...Well, isn't that because we rescued the banking system from collapse, kept interest rates low, and injected nearly $1 trillion in stimulus money?<br /><br />And even then - how does an "economist" jump to such conclusions from clearly anecdotal evidence? Has your home been foreclosed? Have you been to the tent city in Sacramento?Anonymousnoreply@blogger.com