Reply to David Altig

Commenter 123 sent me the following list of questions by David Altig, of the Atlanta Fed:

The questions about the costs and benefits of any particular policy intervention are abundant, and for virtually every potential pro there is a potential con. Here is my personal, certainly incomplete list of pros/cons or benefits/costs associated with another round of large-scale asset purchases:

Pro:  Lower interest rates (and perhaps a lower dollar) will on balance spur spending.
Con:  The expectation of low interest rates for a longer period of time will reduce the urgency to borrow and spend.
 
Pro:  Expanded asset purchases and lower rates will preserve needed liquidity in financial markets.
Con:  Expanded asset purchases and lower rates will create or exacerbate financial market distortions.
 
Pro:  More monetary stimulus reduces the probability of an undesirable disinflation in the near term.
Con:  More monetary stimulus increases the probability of undesirable inflationary pressures in the longer term.
 
Pro:  Lower Treasury and MBS rates will induce an appetite for risk taking that is needed to get productive resources “off the sidelines.”
Con:  Lower Treasury and MBS rates will induce an appetite for risk taking that sets us up for the next bubble.
 
Pro:  Monetary policy is the only channel of support for the economy, absent new fiscal policies.
Con:  Monetary policy support is relieving the pressure to make needed fiscal reforms that would be much more effective than monetary stimulus.
 
Pro:  With additional monetary stimulus, GDP growth will be higher and unemployment lower than they would otherwise be, and outcomes may be more consistent with the FOMC’s mandate to promote maximum employment.
Con:  With additional monetary stimulus, the exit from monetary stimulus once the economy improves will be more difficult than it would otherwise be, and outcomes may be inconsistent with the FOMC’s mandate to achieve price stability.
 
Pro:  The performance of the economy has not been consistent with the FOMC’s mandated objectives.
Con:  The economy is slowly moving in the direction of the FOMC’s mandated objectives, and the Fed should “keep its powder dry” in case of further deterioration of the economy.

[Note: The rest of this post is aimed at the Fed as a whole, not at Altig personally.] 

I am not going to answer Altig’s specific questions.  Instead I’d like to suggest that the Fed as a whole is thinking about the entire issue in the wrong way.  Let’s start with the term ‘intervention,’ which Altig uses in his opening paragraph.  Suppose you went up to the front of the Greyhound bus, and started chatting with the driver.  Suddenly he asked whether you’d like him to continue “intervening” with the direction of the bus.  Most people would be taken aback, indeed that sort of “intervention” is pretty much the be-all-and-end-all of being a bus driver.  You steer the bus.

The Fed essentially steers the nominal economy.  But it has a very ambiguous attitude toward this responsibility.  In real time, it sees movements in NGDP as being caused by factors beyond its control.  Thus banking panics and hoarding caused NGDP to fall in half during the early 1930s, not the Fed.  A private sector wage/price spiral drove NGDP up at an 11% rate from 1972 to 1981, creating high inflation.  And (the BOJ) argued that the bursting of a credit bubble and banking distress drove NGDP lower in  the late 1990s.  And of course the Fed argues that banking distress and a bursting housing bubble drove NGDP 10% below trend in the 2007-2010 period. 

On the other hand when things go well, as when NGDP grew at relatively stable rates from the mid-1980s to 2007, the Fed takes credit for the resulting “Great Moderation.”  It attributes these gains to technical improvements such as the Taylor Principle.  So it doesn’t entirely deny that it drives the nominal economy, rather it only denies responsibility when things go poorly.

Academics see things very differently.  Milton Friedman (and later Ben Bernanke) argued that the Fed caused the collapse in NGDP in 1929-33, and that the Fed was responsible for the Great Inflation.  And they both argued that the BOJ was responsible for the fall in Japanese NGDP in the late 1990s. 

And although Fed officials won’t take the blame for contemporaneous policy failures, they are happy to blame their predecessors, as it makes their current actions seem more enlightened.  Thus the semi-official Fed view is now that Friedman and Bernanke were right, that the Fed did cause the Great Contraction, and that the Fed did cause the Great Inflation.

But this creates a problem, as the arguments used by Friedman, Bernanke, et al, in blaming the Fed for previous errors, also would suggest that they are to blame for the 2007-2010 plunge in NGDP growth.  Consider two important Bernanke arguments from the early 2000s:

1.  Financial distress is no excuse; the BOJ had the resources to boost NGDP growth, it failed to show “Rooseveltian resolve.”

2.  Both interest rates (real and nominal) and the money supply are poor indicators of the stance of monetary policy.  In the end only NGDP growth and inflation are reliable indicators of the stance of policy. 

Of course if you average those two “reliable” indicators, since mid-2008 America’s had the slowest growth in AD, and hence the tightest money, since Herbert Hoover was president.  How does Bernanke reconcile these views?

Bernanke claims money has been “extraordinarily accommodative,” based on the low interest rates and fast money supply growth.  Thus he simply walks away from his 2003 definition of the stance of monetary policy.  And no one in the press has called him on this inconsistency.

He has not walked away from his much more well known denial of “liquidity traps” as preventing monetary stimulus, as that would make him look like a fool.  Instead he’s consistently argued that the Fed could do more, but is held back by certain unspecified “risks and costs” of further stimulus.

This approach to the problem is wrong on all sorts of levels.  There are no costs and risks of keeping expected NGDP growing along a 5% track, level targeting, all the “costs and risks” come from missing the target.  To take just one example, the ultra-slow NGDP growth after mid-2008 drove nominal rates to zero, and greatly boosted the demand for base money.  This forced the Fed to buy lots of assets, exposing them (allegedly) to risk of capital losses on those assets.  But that “risk” is caused by tight money, not monetary stimulus.  Even worse, it’s not really a risk at all, as the Fed is part of the Federal government.  Any losses to the Fed from falling T-bond prices are more than offset by gains to the Treasury.  Indeed that’s why inflation has traditionally been viewed as a boon to government coffers.

But all this minutia about costs and risks misses the bigger picture.  The Fed does not face a difficult choice about whether to intervene or not, it is already steering the bus, it just doesn’t understand that fact.  The Fed needs to decide which direction it wants to take.  There is no “non-intervention” policy by the Fed, as it has a monopoly on the supply of base money.  Admittedly at zero rates there is a lot of slack in the market response to temporary currency injections, but the Fed also has the ability to steer expectations about its longer term goals for NGDP.  I don’t know if Fed officials realize this, but the markets have basically decided that the Fed is happy with no return to the old NGDP trend line, and indeed a downshift to a lower rate of NGDP growth, probably about 4%.  If the Fed doesn’t want that to happen, they need to use different language when talking about their longer term policy goals.  Where will they push NGDP once they’ve exited the zero bound?   Right now they are signalling 4% NGDP growth as far as the eye can see, which means a slow recovery.

I’m not arguing the Fed should “intervene” to “fix problems.”  I oppose discretion.  I want them to clearly set out a path for NGDP (or some other nominal indicator like a weighted average of inflation and output gaps) and set policy at a position where they expect to hit their target.  Just as I’d want a bus driver to set the steering wheel at a position where he expected the bus to remain on the road.

Like Brad DeLong, I thought they had basically decided to do that in the decades before 2007, keeping NGDP growth close to 5%.  And like Brad DeLong I was shocked to find out (in late 2008) that they had no such policy intention.  That they were still like the old Fed of the 1930s, willing to blame the naughty market economy for any deviations of NGDP from a stable path.

I’m sure most readers are much less naive than I am, and understand that big institutions cannot accept blame (in real time) for costly mistakes that screw up the macroeconomy and cause millions to lose their jobs.  Such as failing to cut the fed funds target much more aggressively in 2008, when rates were still 2%.

PS.  Altig links to a John Cochrane piece that seems to take the view that monetary policy is ineffective when nominal rates are zero.  How ironic would it be if Chicago became known as a “liquidity trap” school.  Friedman must be spinning in his grave.

PPS.  Several commenters sent me an excellent piece by James Pethokoukis.  For the record I like Paul Ryan, but not as VP.  Too ideological.  And don’t worry about Romney, I assure you he has zero interest in gold.  It’s all about getting the Ron Paul voters enthused.  Readers from other countries should understand that in America these campaign promises mean nothing.

PPPS.  Very said to hear that Arnold Kling has given up blogging.  I disagreed with is views on macro, but was in awe of his skill in analyzing regulation and the interaction of government and markets.  He was one of my favorite bloggers.


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54 Responses to “Reply to David Altig”

  1. Gravatar of Morgan Warstler Morgan Warstler
    26. August 2012 at 21:58

    “In real time, it sees movements in NGDP as being caused by factors beyond its control.”

    ROFL.

    Scott get over yourself.

    The most important people in America are the top 1/3.

    NOT the Fed chairmen.

    I say this with a bit of whimsy because wehn in Nov. Romney wins…

    you will bow down to the HEGEMONY.

    All this bus driver drives the bus GETS IT WRONG. Because you CANNOT ASSUME willing gas.

    The correct analogy is DOG SLEDDING.

    Nobody is disputing that when the dogs are running great, that Todd Palin can still lose the race.

    BUT, we ARE disputing that the dogs don’t get VETO power over the Scott Sumner strategy for winning dog sled championships.

    Now, let’s get clearer…

    The DOGS want Chairmen Ben to feed them the choicest meats, they want Chairmen Ben to ADMIT they only run because they like to race, and they EXPECT to be given ALL THE AWARDS, ALL THE KIBBLE when push comes to shove.

    Ben isn’t an academic anymore Scott, he’s suddenly not spouting off at the Japanese from a far.. he’s looking square in the eye of the Hegemony, to the he is but a monkey, and they expect him to dance to whatever tune they grind.

    Dance, monkey, dance.

  2. Gravatar of Morgan Warstler Morgan Warstler
    26. August 2012 at 22:00

    “To Morgan… because economists are but monkeys”

    this isn’t exactly the right dedication, but we’re geting close.

  3. Gravatar of Benjamin Cole Benjamin Cole
    27. August 2012 at 00:08

    Excellent blogging.

    Right on: The Fed is always doing something regarding the economy.

    I contend the Fed is passively asphyxiating the economy.

    The present Fed’s policy is equally an activist policy (if I may mangle the language) as much as starting up a $100 billion a month QE program until NGDP hits 6 percent growth for six straight quarters.

    The current policy is starving the economy; and my policy would stimulate the economy. Which is “activist”?

    What makes strangling the economy less or more activist than stimulating the economy/

    I renew my encouragement to all MM’ers to try to seize control of the language regarding monetary policy. We are fighting against not only conventional econo-shamans, but powerful rhetoric about “debauching the currency,” and “monetary doves.”

    Egads, being a “dove” in the USA is like being a pant-less pansy in the Chicago Bears locker room. Get tough, dudes, at least in our rhetoric.

    Please use language like a “dithering, dissipated Fed is suffocating the economy,” or “We need a bullish monetary policy.”

    That is my rant for the day.

  4. Gravatar of Jim Crow Jim Crow
    27. August 2012 at 00:18

    You know, I kind of wish you had two blogs. One for politics and one for economics. Why not fight a war on two fronts? Anyway, I’m really curious about this offhand quote, “For the record I like Paul Ryan, but not as VP. Too ideological.” Could you elaborate?

  5. Gravatar of Saturos Saturos
    27. August 2012 at 00:48

    I love it when you get all Friedmanite. But Noah Smith would retort that you are once again assuming Fed omnipotence. He doesn’t think there’s enough evidence to suggest that the FOMC are in fact bus drivers. He isn’t sure that the Fed can keep NGDP on a path at all times, or even expected NGDP. He even referred to Friedman on long and variable lags. What would you say to him?

  6. Gravatar of Saturos Saturos
    27. August 2012 at 00:50

    Jim, does Ryan’s ideology really need elaboration?

  7. Gravatar of Saturos Saturos
    27. August 2012 at 00:52

    David Altig needs to read this: http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/10/engdp-level-path-targeting-for-the-people-of-the-concrete-steppes-.html

    (No I don’t think I’ll ever tire of that one.)

  8. Gravatar of ssumner ssumner
    27. August 2012 at 01:52

    Saturos, I think they can keep expected NGDP growth on target without an NGDP futures market. But if they are really that incompetent, then by all means create an NGDP futures market and let the market determine the monetary base.

    Jim Crow, I don’t want a President who might experiment with zany monetary regimes tied to commodities, which could put us in a depression.

  9. Gravatar of Ram Ram
    27. August 2012 at 05:55

    So why did you “endorse” Romney’s plan if campaign promises mean nothing? We’re you just endorsing Romney over Obama?

  10. Gravatar of Bill Ellis Bill Ellis
    27. August 2012 at 08:03

    Scott says…
    “And don’t worry about Romney, I assure you he has zero interest in gold. It’s all about getting the Ron Paul voters enthused.”

    What Romney says may not matter much. But the true-believer-don’t-let-the-Fed-debase-our-currency-Tea-Party-types… control the Repubs in congress.
    The only “achievements” a Mittens presidency will make will come from placating the Tea congressmen.

    No one believes Romney will work with dem congressmen over the tea congressmen do they ?

    President Romney would not go out of his way to put us on the Gold standard, but he would have no problem giving it lip service. That matters.

    And when it comes time to appoint Fed officials…he is not going to upset bagger inflation hawks.

  11. Gravatar of Major_Freedom Major_Freedom
    27. August 2012 at 08:13

    ssumner:

    There are no costs and risks of keeping expected NGDP growing along a 5% track, level targeting, all the “costs and risks” come from missing the target.

    This is wrong on all sorts of levels. A non-market agent creating arbitrary quantities of money in order to increase a particular statistic (which by the way no individual market agent sells or invest into, and as such is not an object of economic action) along a rigid arbitrary growth path which is itself based on fallacious status quo reasoning, has the cost of increased impairment in economic calculation by market agents, and it also increases the risk of future recessions in the market brought about by scarcity manifesting itself due to capital misallocations founded upon prior non-market money creation.

    In utopian Australia, this capital misallocation and scarcity manifestation can be understood by the RBA finding itself having to accelerate aggregate money inflation over time in order to maintain the increasingly stressed capital structure.

    Of course history of the RBA’s choices has shown that the RBA in 2008 preferred abstaining from continuing the acceleration, and instead chose to reduce the acceleration from 22% annual growth, down to 5% annual growth, which then revealed all the investments that were dependent on continually accelerating inflation, as not sustainable given the existence of resource scarcity. This exposure of malinvestment was accompanied by a drop in NGDP growth as well.

    The RBA then reversed course in 2010. They again began to increase the rate of aggregate money supply growth, from a 5% low to its current 10%. Yet NGDP growth is still falling. It is still falling because the malinvestments were not all liquidated. I expect the RBA to continue accelerating the aggregate money supply growth if this trend continues.

    Finally: Note the close association between unemployment rate changes and aggregate money supply growth changes (inversely proportional with a lag).

  12. Gravatar of Major_Freedom Major_Freedom
    27. August 2012 at 08:14

    (Bad formatting corrected)

    ssumner:

    There are no costs and risks of keeping expected NGDP growing along a 5% track, level targeting, all the “costs and risks” come from missing the target.

    This is wrong on all sorts of levels. A non-market agent creating arbitrary quantities of money in order to increase a particular statistic (which by the way no individual market agent sells or invest into, and as such is not an object of economic action) along a rigid arbitrary growth path which is itself based on fallacious status quo reasoning, has the cost of increased impairment in economic calculation by market agents, and it also increases the risk of future recessions in the market brought about by scarcity manifesting itself due to capital misallocations founded upon prior non-market money creation.

    In utopian Australia, this capital misallocation and scarcity manifestation can be understood by the RBA finding itself having to accelerate aggregate money inflation over time in order to maintain the increasingly stressed capital structure.

    Of course history of the RBA’s choices has shown that the RBA in 2008 preferred abstaining from continuing the acceleration, and instead chose to reduce the acceleration from 22% annual growth, down to 5% annual growth, which then revealed all the investments that were dependent on continually accelerating inflation, as not sustainable given the existence of resource scarcity. This exposure of malinvestment was accompanied by a drop in NGDP growth as well.

    The RBA then reversed course in 2010. They again began to increase the rate of aggregate money supply growth, from a 5% low to its current 10%. Yet NGDP growth is still falling. It is still falling because the malinvestments were not all liquidated. I expect the RBA to continue accelerating the aggregate money supply growth if this trend continues.

    Finally: Note the close association between unemployment rate changes and aggregate money supply growth changes (inversely proportional with a lag).

  13. Gravatar of Jim Crow Jim Crow
    27. August 2012 at 08:26

    Well, some bloggers seem to be pointing to Reagan’s Federal Gold Commission as an example of a President trying to satisfy his base with a bait and switch. Personally, I tend to think that all the veto points in the American system of government is more effective than a lot of us realize at preventing extreme change and steering policy down near the middle of the road (except for anything involving the military, anyway). Scott mentions the Fed as being a reflection of the opinions of consensus Economists in practice. If you replace ‘Economists’ with ‘Educated Elite’, then I tend to believe that’s how the 3 branches work as a whole, for good and for ill.

  14. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    27. August 2012 at 08:38

    Too ideological? What about Obama.

  15. Gravatar of Doug M Doug M
    27. August 2012 at 08:52

    Professor,

    I hate the driver of the bus metaphor. The driver’s main concern is to keep the bus on the road, and aviod a colision. The economy does not have a direction. I think a better analogy would be the engineer on a steam train (or ship) who must evaluate what temperature / pressure is ideal to maintain momentum, ration the coal to last for the journey, and not blow up the boilers.

    There are some questions that are bothering me:

    The Fed’s traditional policy tool has been the Fed Funds rate. With the FF rate at effectively 0, what should the new tool be?

    As the Fed engages in QE, does increasing the risk (i.e. duration) of the Fed’s balance sheet do anything? (If, so how?) Or, does only the size matter?

    As the fed puts trillions of dollars of assets onto its balance sheet, how does it undwind that? It seems that we are going to have a lengthy period of tight money while the fed is a net seller of securities.

    If banks are not lending money, why not? It seem that the Fed, as regulator of the banks, should be focusing its attention in fixing this linkage, rather than open market operations to create more base money, that sits as excess liquidity on banks balance sheets.

    What are your thoughts on the “fiscal cliff” and should the fed be doing anything now so that the fiscal adjustment in 2013 has a less severe impact?

  16. Gravatar of Dirk Dirk
    27. August 2012 at 09:04

    Scott, I know you disagree with Friedman that there are “long and variable lags” in response to monetary policy, but isn’t it possible you are wrong on this point and that the big fear of the Fed is that they have already created too much money?

    If you look at a hundred year chart of base money the increase since 2008 looks ominous. Friedman believed it often took one or two years before inflation reacted to a large monetary increase. We’re at four years now, but it’s been a strange four years. There have been other periods when it took more than a few years for inflation to respond to a monetary increase, but it always did eventually. Friedman believed that an increase in the monetary base would always eventually lead to inflation on a magnitude more or less on the scale of that monetary increase. The magnitude since 2008 has been 300%.

    Why do you believe it’s different this time?

    I know that you’ve pointed out that TIPS spreads indicate low expected inflation, but maybe there are good reasons why the TIPS market isn’t a good indicator. For instance, maybe the market views TIPS as a bad bet because people don’t trust the government not to manipulate the official inflation numbers following a period of high inflation. (Buying TIPS may be like playing poker against a man named Doc.) Or maybe the market believes there are much better inflation hedges than TIPS with much less risk of government manipulation. Or maybe TIPS prices will have gone through the roof by the time I’m finished typing this.

    So, if you remove TIPS spreads from the picture, why do you think it’s different this time and that significant inflation in the future isn’t already baked into the cake?

    (I suppose another explanation would be that the market believes the Fed will eventually vacuum up all the recent money it has created. In fact, that’s the only Sumnerian view I can come up with which doesn’t conflict with Friedman.)

  17. Gravatar of Major_Freedom Major_Freedom
    27. August 2012 at 09:07

    ssumner:

    I don’t know if Fed officials realize this, but the markets have basically decided that the Fed is happy with no return to the old NGDP trend line, and indeed a downshift to a lower rate of NGDP growth, probably about 4%.

    Right now they are signalling 4% NGDP growth as far as the eye can see, which means a slow recovery.

    If market expectations are in line with actual Fed policy, then it shouldn’t matter to monetarists what the particular Fed policy happens to be. A 4% growth should not differ from a 5% growth, if the market expects and plans for 4%, and 4% is what the Fed actually gives them.

    As long as expectations are consistent with the actual NGDP growth, then in monetarist land, no monetarist can blame insufficient inflation for why a so-called “demand side” recession persists.

    If I expect my sales to grow by 4% year after year, and I make decisions on the basis of such expectations, and I end up being right, then you cannot say “insufficient demand” is a reason for any problems I might be experiencing. The problems would necessarily be independent of nominal demand. You cannot say that these particular problems will be eliminated if I expect and get 5% growth in nominal demand instead.

    What is really going on here, which is never closely analyzed or appreciated by monetarists, is the vital importance of relative demands (and prices). Even if a market agent expects NGDP growth to be 5% each and every year, and that is actually what happens, then this market agent still has to make expectations of his own “share” of NGDP, which will be based on his “real-side” behavior. The key characteristic of inflation of the money supply however, even one that is used to target 5% NGDP growth, is that inflation does not result in every market agent experiencing a 5% growth of nominal income each year at the same time. What actually happens is that some market agents experience a growth in nominal incomes before others. The relative differences in nominal incomes due to inflation brings about relative differences in the “real side” of the economy. This is the connection between inflation and the business cycle.

    If the Fed increased everyone’s bank accounts at the same rate at the same time, then relative changes in demand and prices, and thus relative changes to the real side of the economy, would be all but eliminated. But we’re not living in that world. We live in a world of temporal action in finite space. We live in a world of sequential limitations as compared to the concept of eternal absoluteness.

    Contrary to being an otherwise minor inconvenience, or insignificant collateral damage, this change in relative demands and thus relative prices, which changes relative “real-side” capital allocations, is the problem of inflation, and why Austrians are trying to get monetarists to understand that nice, stable aggregates does not mean nice stable, equally expanding real side phenomena. No doubt, we can measure aggregates like aggregate spending, but this masks the more important relative demands, prices, resource and labor allocations that are even more important than aggregate demand, aggregate price levels, aggregate resource usage, and aggregate labor hours.

    I doubt anyone would say that a population is doing well if for one half of the population labor hours and output fall to zero, while for the other half of the population labor hours and output increase to equally offset the decline, or adds an additional 5% to it. Something is seriously wrong with this population that aggregate statistics won’t be able to show.

    I also doubt that anyone would say that a population is doing well if they endeavor to build 10 modern cities when there are only enough resources to complete 8 such cities. I also doubt that anyone would say that once the errors are revealed, and the planners reassess, which looks like, and actually consists of, rising unemployment and idle resources for a period of time, that this problem can somehow be corrected by creating more green pieces of paper to circulate within the population, as if the unemployment are unemployed and the idle resources are idle because of insufficient money circulation.

    Monetarism is intellectually statist. It is not designed to help millions of unemployed or increase output. That is a cover to mask the actual purpose of ensuring that the state can tax the maximum (the state can’t tax what isn’t spent), without causing a revolt from the general populace. Confiscate juuuuuust enough from them, and teach them that it is the individual’s duty to incur “small costs” of inflation and recessions.

  18. Gravatar of Eric Dennis Eric Dennis
    27. August 2012 at 09:23

    Scott, This post is why I read your blog. You call yourself naive, but you have a knack for unravelling the Fed’s plodding, monotone self-exculpations and subjecting them to honest analysis.

  19. Gravatar of FormerSwingVoter FormerSwingVoter
    27. August 2012 at 09:28

    M_F:

    For the love of God, man, get back on your meds.

  20. Gravatar of Brito Brito
    27. August 2012 at 09:34

    Scott, have you read this?

    http://libertystreeteconomics.newyorkfed.org/2012/08/interest-on-excess-reserves-and-cash-parked-at-the-fed.html

    I’d like to hear your response.

  21. Gravatar of Major_Freedom Major_Freedom
    27. August 2012 at 09:42

    Doug M:

    I hate the driver of the bus metaphor. The driver’s main concern is to keep the bus on the road, and aviod a colision. The economy does not have a direction.

    That is how central planning minds work, Doug M. Instead of understanding the state to be a gang of property violators writ large, they instead come to view it as a central planning institution that “guides the economy” towards utopia and away from dystopia.

    Many of these people have been inadvertently brainwashed by a particular tradition of philosophy that stretches back over 2000 years, which was made particularly explicit by Hegel and his followers, that mere apprehension and cognition of an object is equivalent to abolishing the “antagonism” between subject and object, and in particular, the mere apprehension and cognition of state activity is equivalent to abolishing antagonism between the state process and the market process.

    Thus, they are lead to believe that as long a particular set of state activity is “expected”, then it is equivalent to abolishing any destruction the state would otherwise have unleashed on individuals had the state’s activity been “unexpected.”

    These people just don’t grasp the concept of economic calculation. They fail to grasp that no individual can know how all individuals are to act in the market given resource scarcity. It doesn’t matter if NGDP rises by 5% annualized each month. The very inflation from non-market agents brings about relative changes to demands and prices and hence to relative capital allocations. In a division of labor economy, each capital allocation has to “fit in” with every other capital allocation, or else the entire structure becomes unsustainable and many individuals will eventually incur losses, no matter how much money is circulating in the aggregate.

    Sumner will continue to treat the Fed as a “bus driver”, for the same reason North Koreans consider Kim Il Sung their “dear leader.”

    He’s been trained to assume that central banks are a given fact of social life that can only ever be dealt with through study and advisory. Recall: through knowledge of the object, the subject and object become one, in harmony.

  22. Gravatar of Major_Freedom Major_Freedom
    27. August 2012 at 09:47

    FormerSwingVoter:

    For the love of God, man, get back on your meds.

    Is that why people take medication?

    OK, let’s suppose I did take your internet doctor advice and took “medication”. Now what? Your psychological fix in telling me to take “meds” has been satisfied, but you will only feel empty again once it wears off.

    What will you do now? Other than, you know, completely evading everything I said and going for personal attacks and all.

  23. Gravatar of FormerSwingVoter FormerSwingVoter
    27. August 2012 at 10:05

    M_F:

    The last paragraph of your prior post was simply unhinged:

    Monetarism is intellectually statist. It is not designed to help millions of unemployed or increase output. That is a cover to mask the actual purpose of ensuring that the state can tax the maximum (the state can’t tax what isn’t spent), without causing a revolt from the general populace. Confiscate juuuuuust enough from them, and teach them that it is the individual’s duty to incur “small costs” of inflation and recessions.

    Your posts generally seem to start off… reasonable? Plausible? Internally consistent, at least? But then they consistently devolve into paranoid delusions towards the end that have no basis in reality. You seem to be implying in the above paragraph that recessions don’t occur without a central bank, which is just explicitly false, while explicitly stating that the entire purpose of a central bank is a secret plan of theft from the general populace that has somehow gone undetected for generations.

    You have to realize that this isn’t normal, right? When people disagree with you, there are generally going to be more likely explanations than “undetected worldwide conspiracy of evildoers”. You know that, right?

  24. Gravatar of dwb dwb
    27. August 2012 at 10:13

    i think Altigs “cons” are mostly good news. Implicitly, the business cycle solves itself, we don’t need the Fed, so let the FOMC members who think that resign and save the taxpayers money.

  25. Gravatar of Don Geddis Don Geddis
    27. August 2012 at 10:21

    @ Doug M: I know you were addressing Sumner, but let me take a stab at answering your questions anyway…

    The Fed’s traditional policy tool has been the Fed Funds rate. With the FF rate at effectively 0, what should the new tool be?

    If you’re asking in the very short term, just today, the answer is QE. The Fed should buy Treasury bonds.

    If you imagine that somehow the Fed’s old actions are “broken”, and they need a new long-term lever, then you haven’t fully appreciated why the FF rate is at zero today. That’s a consequence of future expected NGDP growth being very low. If the Fed committed to NGDPLT, then the FF rate would naturally be significantly higher than zero, and the “traditional policy tool” would continue to work fine in the future, just as it has in the past.

    As the fed puts trillions of dollars of assets onto its balance sheet, how does it undwind that? It seems that we are going to have a lengthy period of tight money while the fed is a net seller of securities.

    But these are opposite sides of the same coin. The Fed only needs to “unwind” it, if the expanded monetary base is leading to higher-than-desired inflation. In which case, tighter money is exactly what is desired. On the other hand, if the economy is not experiencing excessive inflation, then there is no need to unwind.

    There is simply no scenario where the Fed is required to have a tighter monetary policy than it wants, because of “unwinding”.

    If banks are not lending money, why not?

    Because, given NGDP expectations, they cannot find profitable investments. You fix this by raising NGDP expectations.

    rather than open market operations to create more base money

    MV=PQ, right? Four years ago, V fell sharply. In other words, the public’s demand for base money rose sharply. It is exactly the role of the Fed to produce more M in these circumstances, so that PQ maintains steady growth.

  26. Gravatar of Doug M Doug M
    27. August 2012 at 11:09

    Don,

    Thanks for taking a crack at this…

    “If the Fed committed to NGDPLT, then the FF rate would naturally be significantly higher than zero.” — I am not convinced.

    Were are NGDP expectations — I would put it at about 3.5 – 4%, below 5%, but not all that far below 5%

    Dispite Prof. Sumners assertions, I do not beleive that the Fed can target NGDP any better than they can target any other future economic statitic (Real GDP, Inflation, Unemployment). In fact the Fed has a poor track record even forcasting the numbers let alone hitting their targets.

    And then, even if we thought the fed would hit a long term NDGP target of 5%, I don’t see that rates would necessarily be higher now.

    “The Fed only needs to “unwind” it, if the expanded monetary base is leading to higher-than-desired inflation.”

    Are you suggesting that the Fed’s ballance sheet is in fact infinate, and there would be no point at which the market would have a crisis of confidence?

    “Because, given NGDP expectations, they cannot find profitable investments. You fix this by raising NGDP expectations.”

    This says to me that if the economy is to grow, we need higher rates — Not short-term rates, but mortgage rates / long-term rates, and credit spreads, to give banks an incentive to lend. This means that actions like “Operation Twist” will have the opposite affect from what the Fed hopes.

    “MV=PQ, right? Four years ago, V fell sharply”

    This is in the vecinity of my point. Increasing M isn’t doing the job, what can the Fed due to influence V?

    V can not be observed directly. It is a fall-out from the rest of the variables.

  27. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    27. August 2012 at 11:30

    I noted the NY Fed piece too;

    http://libertystreeteconomics.newyorkfed.org/2012/08/interest-on-excess-reserves-and-cash-parked-at-the-fed.html

    Seems illogical;

    ‘Because lowering the interest rate paid on reserves wouldn’t change the quantity of assets held by the Fed, it must not change the total size of the monetary base either. Moreover, lowering this interest rate to zero (or even slightly below zero) is unlikely to induce banks, firms, or households to start holding large quantities of currency. It follows, therefore, that lowering the interest rate paid on excess reserves will not have any meaningful effect on the quantity of balances banks hold on deposit at the Fed.’

  28. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    27. August 2012 at 11:32

    Also, the NY Fed piece begins with;

    ‘The European Central Bank recently lowered from 0.25 percent to zero the interest rate it pays on funds that Eurozone banks hold on deposit with it. On the same day, Denmark’s central bank began charging banks 0.20 percent (that is, paying a negative interest rate) on certain deposits.’

  29. Gravatar of StatsGuy StatsGuy
    27. August 2012 at 11:49

    There’s an interesting current emerging among critics of intervention. First, from above:

    “Monetary policy support is relieving the pressure to make needed fiscal reforms that would be much more effective than monetary stimulus.”

    The following is about Fisher (Reuters):

    “Fisher, who does not have a vote this year on the Fed’s policy-setting panel, said he commissioned the paper “to inform me in my capacity as a member of the Federal Open Market Committee.”

    Calling the 45-page paper’s findings “most illuminating,” Fisher called particular attention to its contention that easy money is ineffective at boosting growth and in fact hurts the economy by encouraging governments to pursue “imprudent behavior” like excessive borrowing.

    When central banks use easy monetary policy to buy time for policies like debt reduction that are better placed to foster strong and sustained growth, “The danger remains, of course, that ultra easy monetary policy will be wrongly judged as being sufficient to achieve these ends,” former Bank for International Settlements head economist William White wrote in the paper.

    “The arguments presented in this paper then logically imply that monetary policy should be tightened, regardless of the current state of the economy, because the near term expected benefits of ultra easy monetary policies are outweighed by the longer term expected costs.””

    This is eerily similar to an opinion from the Bundesbank president. “Bundesbank President Jens Weidmann opened a new line of attack over the ECB’s plans, warning in Der Spiegel that monetary financing of budgets can “become addictive like a drug.”

    Merkel told ARD she welcomes input from Weidmann, lauding him for continuing “to make demands on policy makers.” ”

    The argument is basically this: We would love to ease, but even if it’s good in the short term, it’s bad long term because it removes the incentive for governments to make needed fiscal adjustments… We need to keep the pressure on fiscal policymakers to make the needed adjustments.

    There are severe problems with this logic. First, it’s unconstitutional for the Fed to be running fiscal policy, and it’s against mandate for them to consider fiscal restraint as one of their priorities.

    Second, if they had done their job earlier, we wouldn’t be in this pickle.

    Third, they haven’t credibly followed through with their promise – for example, Spain and Ireland have cut expenses, but the ECB has continued to allow bond rates to float to unsustainable levels, which is crippling NGDP and guaranteeing that austerity will fail. The central banks have said “clean up and we’ll reward you”, but then balked when the reward was called in – the next time they make the promise, countries are less likely to take the offer.

  30. Gravatar of Bonnie Bonnie
    27. August 2012 at 12:05

    We hear all this talk about the costs and risks to doing something, but we don’t hear a delineation of the costs and risks of explicit inflation targeting with bygones being bygones, not did we before it was implemented. It would be a good idea for the Fed to have that kind of conversation, at least internally, because lack of price stability in the downward direction with a majority of policy decisions being based on stale data is a pretty risky place to be.

  31. Gravatar of Morgan Warstler Morgan Warstler
    27. August 2012 at 12:10

    Stats,

    Er, dude, do you need a refresher course? Have you not met me???? This is not NEW.

    And th ENTIRE reason that we say the Fed is “independent” is because it serves the same masters as the govt. seres (the Hegemony).

    And THEY WANT IT INDEPENDENT precisely to offer a check on the Govt.’s power.

    tossing out “unconstitutional” is goofy.

    Hit the real points.

  32. Gravatar of Major_Freedom Major_Freedom
    27. August 2012 at 12:33

    FormerSwingVoter:

    The last paragraph of your prior post was simply unhinged:

    Monetarism is intellectually statist. It is not designed to help millions of unemployed or increase output. That is a cover to mask the actual purpose of ensuring that the state can tax the maximum (the state can’t tax what isn’t spent), without causing a revolt from the general populace. Confiscate juuuuuust enough from them, and teach them that it is the individual’s duty to incur “small costs” of inflation and recessions.

    Your posts generally seem to start off… reasonable? Plausible? Internally consistent, at least? But then they consistently devolve into paranoid delusions towards the end that have no basis in reality. You seem to be implying in the above paragraph that recessions don’t occur without a central bank, which is just explicitly false, while explicitly stating that the entire purpose of a central bank is a secret plan of theft from the general populace that has somehow gone undetected for generations.

    First, I never said recessions don’t occur without a central bank. I said central banks bring about recessions, which is explicitly true. Blaming A for X does not mean that ONLY A can in principle do X.

    If I said that states have murdered over 200 million people during the 20th century alone, in “peacetime”, then I am not saying that murders cannot be committed by non-statesmen.

    Second, the entire purpose of central banking IS to allow banks and politicians to gain at the expense of non-banks. You are naive if you believe they were designed by value free technocratic economists who only had “the economy” in mind.

    The formation of the Fed for example was designed by bankers and their men in Washington to give the banks a source for gain when market forces deny them that gain. The banks wanted to expand credit via fractional reserve, and the market kept punishing them via bank failures. On the political side, tax revenues periodically collapsed, thus preventing politicians from sufficient bribing voters. Politicians and bankers met on Jekyll Island in the early 20th century not to “help the employed”, not to “help output”, not to “stabilize prices”, not to “benefit the economy”. It was solely a self-interested, sinister, screw the powerless because we have the power, series of events.

    Quite frankly I have listened to you just world view naifs for years, and you’re all alike. You don’t know your history, you hold the state as sacred, and anyone who even hints at ulterior motives by selfish individual statesmen, is dismissed as “conspiracy theory”, as if the mere mention of the magic word gets you off the hook.

    You have to realize that this isn’t normal, right? When people disagree with you, there are generally going to be more likely explanations than “undetected worldwide conspiracy of evildoers”. You know that, right?

    Haha, I’d rather be considered “insane” by you people who live in an insane asylum, than “normal.” If I were called “normal” by you, I’d start to question my sanity.

  33. Gravatar of Cthorm Cthorm
    27. August 2012 at 12:36

    Sandra Pianalto confirms all of my suspicions of her positions on monetary policy

    The market should get ready for a disappointment at Jackson Hole. Those scary “costs” of ‘intervention’ will hold us back again.

  34. Gravatar of “Reversal of Fortune” | Historinhas “Reversal of Fortune” | Historinhas
    27. August 2012 at 12:50

    […] a post yesterday, Scott Sumner writes: Bernanke claims money has been “extraordinarily accommodative,” based on the low […]

  35. Gravatar of Ben J Ben J
    27. August 2012 at 12:54

    Everyone,

    Please note that MF just explicitly used the “only sane person in the asylum” trope.

  36. Gravatar of Bill Ellis Bill Ellis
    27. August 2012 at 13:48

    Major_Anarchy,

    You’re so normal you’re a cliché.

  37. Gravatar of StatsGuy StatsGuy
    27. August 2012 at 14:30

    @Morgan –

    Yes, we all know. The interesting part is not what the Fed/ECB are doing. It’s that they’re now making this argument through official channels, and above the radar. There’s never been doubt that the Fed (regional banks) desire to control fiscal policy, but to make the argument so blatantly is new.

    Let’s see how well the prediction regarding romney as nominee plays out. The ideal Fed scenario, if one believes it, is for the economy to stay awful enough to lose Obama the presidency, but not so awful that the markets demand QE. So far, that’s how it’s been playing out.

    BTW, I don’t doubt that Romney will kill any gold standard (softly, of course) – he’s not an idiot. But there’s always the chance that something happens to him, and we end up with President Ryan.

    It’s interesting to watch how quickly the tea party fell in line behind Romney (after professing to be non-partisan). Romney is the epitomy of everything they claimed to hate about big banking and corporatism. I struggle to understand, howeve, why you think corporates are the B power to the Tea Party’s A power… if that were the case, wouldn’t the tea party have Ryan on the ticket first, instead of vice versa?

  38. Gravatar of Morgan Warstler Morgan Warstler
    27. August 2012 at 14:56

    Stats,

    I don’t say Corporations, I say the 1% – including the management of the Fortune 1000.

    Corporations themselves are far more supportive of the whims of the top 1/3.

    Meaning you might get up everyday and personally be super Blue State Liberal, meanwhile, your Fortune 1000 spends most of its entire day serving the hegemony, re-enforcing its power, and caring for its interests.

    and while I want your Fortune 1000 company to get worse tax treatment than SMBs, but I want that because it is good for the economy to favor SMBs / Newco formation… not because I simply want to weaken the super strong B power (the 1%)… it simply isn’t that strong.

    It has no votes, and maybe 30% of the wealth of the top 1/3.

    My REAL point is that the C Power, the bottom 2/3 – THEY PLAY THE GAME REALLY BADLY.

    They should get the A Power constantly fighting with the B power, and split their allegiances – instead the bottom 2/3 they bend over and ALWAYS side with the 1%’s… they ALWAYS side with Blue State elites.

    For 12 years, the B Power has has 100% support of C power, and the A power has played to a draw non-stop, the C power got crushed, and the B power ate the C’s losses.

    It’s hard to see how the C Power could do any worse than they have done in the past 12 years.

  39. Gravatar of Major_Freedom Major_Freedom
    27. August 2012 at 15:03

    Ben J:

    Everyone,

    Please note that MF just explicitly used the “only sane person in the asylum” trope.

    Thanks for the heads up Ben. Perhaps you are assuming that it needs to be repeated due to some belief in the quality reading comprehension on this blog?

    Or did you want to emphasize my usage of psychological subjuctives so as to divert attention away from the fact that FormerSwingVoter was so generous as ot share his beliefs concerning normal/insane posters here? I guess your seeming jab at other people’s reading comprehension here is not without irony.

    Bill Ellis:

    Major_Anarchy,

    You’re so normal you’re a cliché.

    Nice try, but I meant genuine statements regarding my normalcy from those in an insane asylum, not your childish trolling sarcasm.

  40. Gravatar of Major_Freedom Major_Freedom
    27. August 2012 at 15:10

    In a surprising twist, the Dallas Fed, via BIS economist William White, warns that easy monetary policy from the Fed has “unintended consquences.”

    http://www.dallasfed.org/assets/documents/institute/wpapers/2012/0126.pdf

    “From a Keynesian perspective, based essentially on a one period model of the determinants of aggregate demand, it seemed clearly appropriate to try to support the level of spending. After the recession of 2009, the economies of the AME’s seemed to be operating well below potential, and inflationary pressures remained subdued. Indeed, various authors used plausible versions of the Taylor rule to assert that the real policy rate required to reestablish a full employment equilibrium (and prevent deflation) was significantly negative. Such findings were used to justify the use of non standard monetary measures when nominal policy rates hit the ZLB.”

    “There is, however, an alternative perspective that focuses on how such policies can also lead to unintended consequences over longer time periods. This strand of thought also goes back to the pre War period, when many business cycle theorists[9] focused on the cumulative effects of bank”created”credit on the supply side of the economy. In particular, the Austrian school of thought, spearheaded by von Mises and Hayek, warned that credit driven expansions would eventually lead to a costly misallocation of real resources (“malinvestments”) that would end in crisis.”

    [9] For an overview, see Haberler (1939). Laidler (1999) has a particularly enlightening chapter on Austrian theory,
    and the main differences between the Austrians and Keynesians.

    ————

    I bet this will make heads spin on this blog, hahaha

  41. Gravatar of StatsGuy StatsGuy
    27. August 2012 at 16:03

    “It has no votes, and maybe 30% of the wealth of the top 1/3.”

    Morgan, it’s hard to buy your broader argument when it is based on data that is quite wrong.

    The top 1% own about 36% of ALL wealth, which is (mathematically) no less than half of the wealth of the remaining 99%… Also, if you consider how much of their wealth is “discretionary” – not required to pay future retirement expenses – the top 1% own even more.

    http://www.accuracy.org/wp/wp-content/uploads/2012/06/distribution-of-us-wealth-2009.png

    You seem to think the 1% consists of northeastern liberals… Actually, the northeast (and california) contain the greatest portion of upper middle class (this is reflected in median wages). The numerical reality is that the republican party disproportionately draws massive contributions from wall street during this election cycle, and likewise dominates the vote in many of the poorest states. If there is an alliance between the 1% and the very poor, you’re looking in the wrong place.

    You’re misperceptions are as deeply rooted as those who believe welfare moms are mostly black (they’re mostly white). It reminds me of the Missouri dairy farmers who despise government, but bitterly complain the government has left them out to dry, while the corn farmers hate government, except for the goverment backed crop insurance payments.

    Or the anti-tax folks who don’t even realize that the pentagon budget is twice the size of all other discretionary programs combined.

  42. Gravatar of Ben J Ben J
    27. August 2012 at 16:46

    Major I pointed it out not because the reading comprehension of our peers might be lax, but simply because some don’t bother to read you at all. Now that’s not meant to be an insult, just a simple truth.

    I’m not trying to start a squabble with what I said about the asylum, I just think it demonstrates your view of yourself as the ultimate contrarian.

  43. Gravatar of Morgan Warstler Morgan Warstler
    27. August 2012 at 17:19

    Stats, I apologize I meant to say income. Wealth is wrong.

    I will go dig out the tables.

    It was surely not a mis-representation, it’ll be the same set of graphs I’ve linked to before.

    FORGET the 1% and very poor.

    I’m talking about the standard Democrat block – basically only the half of the 2/3 that VOTE, (they are the C Power), they follow the Blue State elites – the 1% (the B Power) to their detriment. If they don’t vote I don’t even consider them.

  44. Gravatar of Scott Sumner on the Republicans and the gold standard « Thought du Jour Scott Sumner on the Republicans and the gold standard « Thought du Jour
    27. August 2012 at 17:23

    […] Sumner, “Reply to David Altig“, The Money Illusion, 26 August […]

  45. Gravatar of Morgan Warstler Morgan Warstler
    27. August 2012 at 17:27

    Still looking for the links I made from Scott’s blog, but this will get you there;

    http://www.decisionsonevidence.com/2012/02/want-to-know-your-household-income-percentile-ranking/

  46. Gravatar of Morgan Warstler Morgan Warstler
    27. August 2012 at 17:34

    Another, Scott’s blog isn’t conducive to searching:

    http://visualizingeconomics.com/2011/10/25/2008-income-share/#.UDwfKmjybgM

  47. Gravatar of ssumner ssumner
    27. August 2012 at 18:13

    Ram, I never “endorsed” Romney’s plan.

  48. Gravatar of Don Geddis Don Geddis
    27. August 2012 at 18:17

    Doug M:

    “NGDP expectations “” I would put it at about 3.5 – 4%, below 5%, but not all that far below 5%”

    You’re missing the critical difference between levels, and growth rates. Check out the graph of NGDP over the last decade. The uncorrected nominal shock of 2008 is still having effects on the economy. There needed to be “catchup growth”, and that never happened.

    “I do not beleive that the Fed can target NGDP any better than they can target any other future economic statitic (Real GDP, Inflation, Unemployment).”

    GDP and unemployment are real measures, and thus beasts of very different character. The Fed has monopoly control of the money supply, and thus (in principle) absolute control of nominal variables. Has not US inflation remained in a very narrow range for about 30 years now? Is that not evidence of excellent control over a nominal variable?

    It happens to be the wrong nominal variable, for the maximum health of the economy. But it’s the one they picked, and it sure seems like they controlled it.

    “Are you suggesting that the Fed’s ballance sheet is in fact infinate, and there would be no point at which the market would have a crisis of confidence?”

    I’m not sure exactly what you’re asking, but this sounds a lot like people who are worried about either deflation or hyperinflation, but can’t seem to imagine a world of “just the right amount” of inflation.

    But yes, the Fed’s balance sheet is (in principle) infinite. If the Fed wants to inflate the dollar, and some other entity doesn’t believe it, the Fed eventually wins that battle.

    “This says to me that if the economy is to grow, we need higher rates”

    Yes, but not by simply setting them higher. The problem is inadequate aggregate demand. Raising rates now would make that problem even worse. What you want to do is cause the (nominal) economy to grow, such that the market-clearing interest rates are much higher than they are today.

    Raising rates follows the economic growth. It doesn’t cause that growth.

    “Increasing M isn’t doing the job”

    M wasn’t increased enough, and also there was no commitment to the future path of M. Temporary currency injections have very different effects from permanent ones.

    “what can the Fed due to influence V?”

    Very close to nothing.

    Or, to put it another way: fix the economy, and V will take care of itself. But it is inappropriate to attempt to fix the economy by (somehow) directly manipulating V.

    Unless, I suppose, you want to count a monetary authority’s credible commitment to the future path of M (aka level targeting), as a “manipulation of V”. Changing expectations of the future, will change people’s current desire to hold quantities of base money.

  49. Gravatar of Steve Steve
    27. August 2012 at 18:55

    Jackson Hole Symposium

    Pro: Beautiful scenery
    Con: Groupthink

    Pro: Delicious Food
    Con: Taxpayer foots the bill

  50. Gravatar of Saturos Saturos
    27. August 2012 at 21:40

    Steve +1

  51. Gravatar of Ram Ram
    28. August 2012 at 05:49

    Scott–last I checked you were on that website of economists endorsing Romney’s plan. Maybe you should ask them to take your name down.

  52. Gravatar of Max Max
    28. August 2012 at 06:26

    Uhm, when you sign a public statement the first sentence oh which reads “We enthusiastically endorse Governor Mitt Romney’s economic plan to create jobs and restore economic growth while returning America to its tradition of economic freedom.” – well, it’s reasonable to assume that you endorse Romney’s plan. Enthusiastically so. Perhaps the problem was with the scare quotes?

  53. Gravatar of Major_Freedom Major_Freedom
    28. August 2012 at 11:08

    Ben J:

    Major I pointed it out not because the reading comprehension of our peers might be lax, but simply because some don’t bother to read you at all.

    You have an interesting way of manifesting that alleged belief. You prefaced what you wrote with “Everyone, please note what MF just did”.

    What was that other than repeating to people what they can read for themselves?

    Now that’s not meant to be an insult, just a simple truth.

    I don’t care that you pass over what I write. That also isn’t an insult, it’s just the truth.

    I’m not trying to start a squabble with what I said about the asylum, I just think it demonstrates your view of yourself as the ultimate contrarian.

    I wouldn’t go that far. Perhaps on this blog I am the ultimate contrarian, but thankfully the posters on this blog are not representative of the general population.

    Any way, FormerSwingVoter happens to consider me contrarian. He even went out of his way to insinuate I am not “normal.”

    This isn’t just me thinking this in my own little world you know.

    Perhaps you are mad that I am viewing myself as contrarian on this blog? Perhaps you are upset about the choices of your intellectual investment that is leading to a little resentment towards those who made other intellectual investments? Why else would you even mention your thoughts of my own view of myself? Why would they be important to you, someone who claims not to even read my posts?

    I suspect you’re not being fully upfront. Maybe I am your guilty pleasure, and your claim that you skip over my posts is like the lady who doth protest too much? You know, like how people make totally unsolicited declarations that end up being exactly the opposite of their actual beliefs, in that they only made those declarations to convince themselves more than others who probably don’t even care?

  54. Gravatar of Ben J Ben J
    29. August 2012 at 04:01

    I’ll let you have the last word mate, I just thought it was interesting.

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