tag:blogger.com,1999:blog-6276561747841568697.post6747134215294616099..comments2024-03-27T05:23:48.855-04:00Comments on Krugman-in-Wonderland: What Can the Fed Do?William L. Andersonhttp://www.blogger.com/profile/01802990642236807359noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-6276561747841568697.post-85244438587638790882010-08-17T08:50:12.968-04:002010-08-17T08:50:12.968-04:00oh, ok, im convinced now.....oh, ok, im convinced now.....burkll13https://www.blogger.com/profile/00458192777661669534noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-55986350003202495222010-08-16T22:29:56.955-04:002010-08-16T22:29:56.955-04:00It really seems to me that Mises did not understan...It really seems to me that Mises did not understand chartalism, where the value of money is determined by the free market - as far as I can tell, "catallacticly." The government controls the initial supply and final demand of base money and regulates banking, which still leaves a lot of room for the market. He may have just thought that Knapp said the state just enforced it by dictate or legal tender laws.<br /><br />Looked up the word in my OED: Decided I didn't dislike it when I saw: Ruskin's: <i> You may grow for your neighbour, at your liking, grapes or grape-shot; he will also, catallactically, grow grapes or grape-shot for you, and you will each reap what you have sown. </i> <br /><br />The chartalists don't view the state as good or evil; they just describe try to build up a theory of money, which to describe the real world we see, must include the state.<br /><br />Thing is, Anonynmous, I wasn't making that up.Another Anonnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-11806877998259760002010-08-16T13:39:07.140-04:002010-08-16T13:39:07.140-04:00"I know of three Austrian blogospheredenizens..."I know of three Austrian blogospheredenizens who have come over to the dark side of chartalism."<br /><br />So what? I know of four chartalist blogospheredenizens who have come over to the good side of Austrianism. Ha, we win.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-27007142277579675472010-08-16T10:25:29.766-04:002010-08-16T10:25:29.766-04:00Mises uses the word "Catallactic" but ne...<em>Mises uses the word "Catallactic" but never defines it.</em><br /><br />My, we're up on our Austrian theory this morning aren't we?<br /><br />"Catallactics" is the scientific study of interpersonal money exchanges. Chartalism is acatallactic (and thus primitive and real dumb) because it has no theory and pays no attention to examining the basis of human money exchanges. Or human anything.<br /><br />Check out Mises’ “Human Action” and Rothbard’s “Man Economy and State” at mises.org. They’re long, but their free.<br /><br />By the way, Austrian money theory is merely a corollary of the basic axioms of human action. Since Chartalism has no concept of human action and it naively views “the state” as a neutral, mechanical force for good (as opposed to the gang of murderers, bullies, thugs and thieves that it is), I can find no common ground between the two schools of thought whatsoever.Bob Roddisnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-72450235797445187252010-08-16T05:40:59.272-04:002010-08-16T05:40:59.272-04:00Well, one or the other. These days, the more main...Well, one or the other. These days, the more mainstream and orthodox economics is, the more it is an insult to one's intelligence, an embarassment to human race. <br /><br />Mises uses the word "Catallactic" but never defines it. I would appreciate enlightement. As far as I can tell, contrary to him, chartalism is a catallactic theory. And I can't find any argument that he makes there, he just says Knapp is wrong - and he seems to completely misunderstand the theory. e.g <i>"[Knapp] was bound—to abandon all attempt at an explanation of the validity of money in commerce."</i> That's the aim of the theory; saying Knapp didn't even try is just silly. So, not shredded.<br /><br />By the way, Wray was a student of Minsky, and according to wikipedia, http://en.wikipedia.org/wiki/Minsky_moment , his theory is similar to the Austrian Business Cycle theory, which seems to be not terribly far from some ideas of the MMTers / chartalists. The point is that most mainstream economics doesn't take money and credit seriously. About as sensible as if biologists had resolved to only study dead objects, most of which were never alive, or entirely mythical.<br /><br />Finally, I know of three Austrian blogospheredenizens who have come over to the dark side of chartalism. My plot unfolds ... Bwaahhahhahha.....Another Anonnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-66952969216675338472010-08-15T22:31:01.241-04:002010-08-15T22:31:01.241-04:00Battle of the fringe schools! Charliton vs Austrai...Battle of the fringe schools! Charliton vs Austrain! Who will win??Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-10552238526384331402010-08-15T22:27:13.743-04:002010-08-15T22:27:13.743-04:00Chartalists Mau-Maued by Von Mises in 1918.
By re...<b>Chartalists Mau-Maued by Von Mises in 1918.</b><br /><br />By reading the truly creepy and bizarre article <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=69409" rel="nofollow">“From Money and Taxes: the Chartalist Approach” </a>by L. Randall Wray, we can finally understand the source of this nonsense of the state theory of money and the truly bizarre idea of “chartal money”, with Wray citing Georg Friedrich Knapp. Von Mises shredded Knapp’s “state theory of money” <a href="http://www.econlib.org/library/Mises/msTApp.html#Appendix%20A" rel="nofollow">here.</a>Bob Roddisnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-61710668759215196492010-08-15T05:46:26.685-04:002010-08-15T05:46:26.685-04:00Joe: The same principle applies to krugman wanting...Joe: <i>The same principle applies to krugman wanting the fed to target 3% inflation, but on a smaller scale. Don't you think this is better than direct government deficit spending? It would leave the spending to the market and people would buy what they want. And of course, increasing aggregate demand in this manner doesn't have a burden on our national debt.</i><br /><br />The problem is that the Fed doesn't have the power to increase inflation by setting a target rate, or by anything else it can do, other than hidden deficit spending. Monetary policy is much weaker than fiscal policy, although Krugman, along with the trend of the last few decades, when an utterly irrational belief which held the reverse gained sway, doesn't appreciate this. Since the national debt is not a burden - are the dollar bills in your wallet a burden? - increasing it is not a burden. Direct deficit spending could do a lot of good things - like immediate full employment - much quicker than a magically inflationary monetary policy.Another Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-67038987075679993002010-08-15T02:11:13.641-04:002010-08-15T02:11:13.641-04:00Anonymous said...
stop stalking Krugman! He i...<i>Anonymous said...<br /><br /> stop stalking Krugman! He is the most widely-read economist who did important work on international trade- yes he's a liberal and you are a libertarian but get over it.<br /><br /> August 14, 2010 6:48 PM<br />Anonymous Anonymous said...<br /><br /> You people are idiots<br /><br /> August 14, 2010 6:59 PM</i><br /><br />Nice to see Krugman has time to answer his critics.Jamesnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-13726800428695322912010-08-15T01:08:56.906-04:002010-08-15T01:08:56.906-04:00Oops, accidentally posted twice.
Anyway, here som...Oops, accidentally posted twice.<br /><br />Anyway, here some good defenses of Kruman by two libertarian bloggers, who are hardly buddy-buddy by Krugman. <br /><br />http://www.themoneyillusion.com/?p=1620<br />http://econlog.econlib.org/archives/2009/06/defending_what.htmlJoe the Plummernoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-44745823426159452572010-08-15T00:36:01.624-04:002010-08-15T00:36:01.624-04:00As I've noted before, Krugman has clearly stat...As I've noted before, Krugman has clearly stated that Greenspan doing a housing bubble was a good thing:<br /><br />http://tinyurl.com/2as56epBob Roddisnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-45403791119474194122010-08-15T00:33:54.277-04:002010-08-15T00:33:54.277-04:00@burkII13
Don't you find it a bigger stretch ...@burkII13<br /><br />Don't you find it a bigger stretch to think anyone would advocate a housing bubble in the first place? Just think about how ridiculous it sounds for anyone to be advocating a bubble for a second. I think this is more of a case of people's biases misinterpreting what Krugman meant than Krugman misinterpreting what Mucculley meant. Krugman was agreeing with his prediction, not advocating the bubble. I mean Mculley is a fellow Keynesian. Krugman would have no trouble understanding what he meant because they work under a similar framework. It's more likely that an Austrian econ blogger misinterpreted his language than someone who actually speaks the same "Keynesian language." Also, I've seen that quote posted hundreds on times on in random econ blogs and on Mises. Not once has anyone even bothered to looked up the context behind the quote. <br /><br /><br />In a way, I kind of sympathize with these Austrian bloggers. Sometimes Krugman has a very esoteric and sarcastic writing style, which may be hard to interpret. You have to read inbetween the lines to get what he's getting at specifically. Sometimes if you don't have an intimate understanding of the Keysian framework, you can misinterpret some generalizations and simplifications Krugman makes for the sake of not sounding "wonkish" to his general mainstream readers who have minimal knowledge of economics. For example, Professor Anderson here keeps on repeating the same strawman of KRUGMAN THINKS PRINTING MONEY CREATES WEALTH. As if Krugman means we can print a million dollars and give it to each persona and it would make them all 1 million dollars richer. But no, it's a little more complicated than that. In these specific economic conditions, printing money increases aggregate demand. If you knew for sure the fed would cause 50% inflation by next month, wouldn't you spend more money before inflation lowers the value of your dollar? The same principle applies to krugman wanting the fed to target 3% inflation, but on a smaller scale. Don't you think this is better than direct government deficit spending? It would leave the spending to the market and people would buy what they want. And of course, increasing aggregate demand in this manner doesn't have a burden on our national debt.Joe the Plummernoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-617419437627599562010-08-15T00:33:36.951-04:002010-08-15T00:33:36.951-04:00@burkII13
Don't you find it a bigger stretch ...@burkII13<br /><br />Don't you find it a bigger stretch to think anyone would advocate a housing bubble in the first place? Just think about how ridiculous it sounds for anyone to be advocating a bubble for a second. I think this is more of a case of people's biases misinterpreting what Krugman meant than Krugman misinterpreting what Mucculley meant. Krugman was agreeing with his prediction, not advocating the bubble. I mean Mculley is a fellow Keynesian. Krugman would have no trouble understanding what he meant because they work under a similar framework. It's more likely that an Austrian econ blogger misinterpreted his language than someone who actually speaks the same "Keynesian language." Also, I've seen that quote posted hundreds on times on in random econ blogs and on Mises. Not once has anyone even bothered to looked up the context behind the quote. <br /><br /><br />In a way, I kind of sympathize with these Austrian bloggers. Sometimes Krugman has a very esoteric and sarcastic writing style, which may be hard to interpret. You have to read inbetween the lines to get what he's getting at specifically. Sometimes if you don't have an intimate understanding of the Keysian framework, you can misinterpret some generalizations and simplifications Krugman makes for the sake of not sounding "wonkish" to his general mainstream readers who have minimal knowledge of economics. For example, Professor Anderson here keeps on repeating the same strawman of KRUGMAN THINKS PRINTING MONEY CREATES WEALTH. As if Krugman means we can print a million dollars and give it to each persona and it would make them all 1 million dollars richer. But no, it's a little more complicated than that. In these specific economic conditions, printing money increases aggregate demand. If you knew for sure the fed would cause 50% inflation by next month, wouldn't you spend more money before inflation lowers the value of your dollar? The same principle applies to krugman wanting the fed to target 3% inflation, but on a smaller scale. Don't you think this is better than direct government deficit spending? It would leave the spending to the market and people would buy what they want. And of course, increasing aggregate demand in this manner doesn't have a burden on our national debt.Joe the Plummernoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-52278487378721914672010-08-14T21:48:37.539-04:002010-08-14T21:48:37.539-04:00stop stalking Krugman! He is the most widely-read ...stop stalking Krugman! He is the most widely-read economist who did important work on international trade- yes he's a liberal and you are a libertarian but get over it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-1946256743638668872010-08-14T21:32:13.755-04:002010-08-14T21:32:13.755-04:00@ Joe-
it certainly does seem like Krugman misrep...@ Joe-<br /><br />it certainly does seem like Krugman misrepresented Paul Mccully, but i find it a big stretch to think that Krugman himself <i>wasnt</i> calling for a housing bubble.burkll13https://www.blogger.com/profile/00458192777661669534noreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-58182969452428185222010-08-14T19:00:58.913-04:002010-08-14T19:00:58.913-04:00Krugman was quoting Paul Mccully from PIMCO, an in...Krugman was quoting Paul Mccully from PIMCO, an investment company. The point of that article Krugman quoted Mccully from was more or less market prediction because his audience were investors, not a general audience. In this case he was predicting what the FED might do. It wasn't advocacy of a bubble. <br /><br /><br />This was the quote from Muccully:<br /><br />"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing (just like he denied belatedly attacking the NASDAQ bubble)"<br /><br /> <br />http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/1999-2001/FF_07_2001.htm<br /><br /><br />Take note of "American Hedonism." Does it really sound like he was really supporting hedonism? HURRAY FOR HEDONISM? <br /><br /><br />Although Mccully did support Greenspan's efforts to lower interest rates because it's simply good macroeconomic policy, he did not advocate a bubble. What Mccully predicted is that Greenspan would see the bubble and let it grow instead of using some micro regulatory tool to curve it, just like he let the tech bubble grow even though he knew about it. <br /><br /><br />What Mccully and Krugman advocated was keeping interest rates low and using better regulatory tools to take on the bubble. Heck, something as simple as Greenspan using his position as the Fed chairman and declaring there was a bubble would be enough to stop it.<br /><br /><br />Keeping the interest rates high during the 2001 recession is bad policy, which is why Krugman wanted it lower. As Mcully put it<br /><br />"If Mr. Greenspan were a bartender with one rowdy drunk:<br />He would double the price of beer for all, in an effort to bankrupt the drunk more quickly, rather than simply cut off the drunk, letting the decent folk continue to act decently at an unchanged price."<br /><br />or<br /><br />"Accordingly, my quarrel with him was that hikes in the Fed funds rate until tech stocks cried uncle was equivalent to "trying to get the attention of gluttons by starving anorexics. It's bad macroeconomic policy, and it's also morally wrong"<br /><br />http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2005/01/24/shades-of-irrational-exuberance.aspxJoe the Plummernoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-65319484051098332622010-08-14T15:29:16.991-04:002010-08-14T15:29:16.991-04:00"To fight this recession the Fed needs more t...<em>"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."</em> - Paul Krugman, NYT, August 2002ICYMIhttp://www.facebook.com/incaseyoumisseditnoreply@blogger.comtag:blogger.com,1999:blog-6276561747841568697.post-71363575131476795002010-08-13T11:56:05.961-04:002010-08-13T11:56:05.961-04:00Krugman has written
Some of those who consider th...<a href="http://www.guardian.co.uk/books/2009/aug/30/keynes-return-master-robert-skidelsky" rel="nofollow">Krugman has written</a><br /><br /><em>Some of those who consider themselves Keynesians, myself included, agree with what Keynes said in The General Theory, and consider the rejection of Say's Law the core issue. On this view, Keynesian economics is primarily a theory designed to explain how market economies can remain persistently depressed.</em><br /><br />Since there is no basis in fact, logic or history to suggest that “market economies can remain persistently depressed” without government interference, Krugman and his minions are trying to solve a “problem” that doesn’t exist. And their “solution” to the non-problem is, in fact, the CAUSE of the problem in the first place.Bob Roddisnoreply@blogger.com