Ryan Avent on monetary policy
Ryan Avent has an outstanding essay on monetary policy that traces out how monetary policy ended up on the wrong path:
But the total amount of spending in the economy is nothing more and nothing less than aggregate demand. If demand were higher, people would have spent more. If it were lower, less. Monetary policy, at all times, controls demand. In the short run, higher demand will generate an uncertain mix of changes in the economy””some price and wage increases but also some real output increases””so that higher inflation is, at all times, likely to accompany higher demand. There is no pure, sterile stimulus that the Fed can deliver that will bring higher real growth without higher prices, as Bernanke now claims he would like to do.
. . .
Central banks should focus their efforts on measures of demand — nominal GDP, nominal income, nominal spending””rather than measures of inflation. If nominal GDP is at a level that’s inconsistent with full employment, demand is too low and the central bank should do more. That might take inflation above some arbitrary level, and that’s totally fine. It won’t stay above that arbitrary level and accelerate unless the central bank keeps raising demand indefinitely. This is not to say that there are no costs to having 4% inflation for a year rather than 2%. There are surely some efficiency costs to changes in relative prices. But if the alternative is a trillion dollar output gap and 6 million unnecessarily unemployed workers, that’s probably a pretty good trade-off to make.
We learned a hugely important lesson from the Depression””that central banks could influence the economy and prevent demand-side macroeconomic disasters. But we took a wrong turn in thinking that the way they did this was by moderating inflation. It was as if we discovered a magical sword in the woods and then went about confronting enemies by whacking them with the sheath.
Read the whole thing.
I was perplexed by a recent Tyler Cowen post:
3. Price inflation and stock returns (pdf), and here, and here, and most recently here; “There is a consistent lack of positive relation between stock returns and inflation in most of the countries.” I am urging a) a bit of caution, and b) engagement with the literature on this topic. I do favor a more expansionary monetary policy, but I see the balance of evidence as different from how it is frequently portrayed in the blogosphere.
The study he cites looks at data from 1966-2009. Market monetarists have argued that higher inflation did not help either the economy or the stock market prior to 2008. After 2008 stock prices became strongly correlated with inflation expectations from the TIPS markets. (David Glasner has documented this pattern, which is actually pretty obvious to anyone who followed the TIPS spreads and equity prices in recent years.)
Stocks and TIPS spreads became highly correlated after 2008 because the economy’s main problem was too little NGDP, and higher inflation expectations were correlated with higher NGDP growth expectations. Prior to 2008 higher inflation merely pushed up real tax rates on capital. Maybe I misread Tyler’s post, but he seems to imply that this study was somehow in conflict with the argument for monetary stimulus, when in fact it supports our argument. Indeed the pattern found by David Glasner (and other researchers) may be the single most powerful piece of evidence in favor of our position.
PS. Robert Hetzel sent me this interesting article by Dylan Matthews in the Washington Post:
Alternatively, the Fed could have targeted nominal GDP “” that is, the real size of the economy multiplied by the rate of inflation. This idea, made famous by Bentley University’s Scott Sumner and embraced by the likes of former White House chief economist Christina Romer, would have the Fed allow inflation to rise during an economic downturn, and tamp back on growth if inflation is getting too high during an upswing. Though Bank of Israel governor Stanley Fischer “” coincidentally, Ben Bernanke’s dissertation adviser “” hasn’t explicitly embraced this idea, economic wunderkind Evan Soltas has mustered some evidence that Fischer has been following this policy. Israel let inflation rise when the recession hit by the same amount as economic growth fell, and as a consequence, the economy quickly rebounded:
Source: Evan Soltas.
In the United States, by contrast, inflation stayed constant while both real and nominal GDP fell considerably:
Of course, the United States and Israel are very different countries and what worked for them may not have worked here. But the evidence suggests they were doing something right.
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27. July 2012 at 12:46
“There is no pure, sterile stimulus that the Fed can deliver that will bring higher real growth without higher prices, as Bernanke now claims he would like to do.”
This misses the point.
The govt. CAN deliver higher productivity gains, making public employees work harder / smarter for less money, which is REAL GROWTH.
As such, Fed policy that alleviate pressure on the govt. and public sector to deliver those productivity gains – is not optimal.
Taxpayers spending less and getting more makes them FEEL RICHER.
The problem is that too many of the economists screaming for more Monetary right now are DEAD SET AGAINST seeing the bureaucratic class forced into a torture position while the SMB owners dance jigs in the streets.
If you don’t want to see a problem, it is very hard to make you see one.
But public employees having delivered less than 1% YOY productivity gains for over THIRTY YEARS where it should have been 2-5% YOY…
That’s THE problem, not A problem – that’s a parasite that has grown to large, it has reached the tipping point, and it must be killed with an ax, not a scalpel
27. July 2012 at 13:02
Morgan, monetary policy seems an orthogonal issue from public sector productivity. The private sector may increase productivity by firing the least productive workers (this is likely why many European countries with lower employment rates have higher productivity per worker or hour worked), but there is little reason to expect the public sector to be so rational.
27. July 2012 at 13:18
“The private sector may increase productivity by firing the least productive workers (this is likely why many European countries with lower employment rates have higher productivity per worker or hour worked), but there is little reason to expect the public sector to be so rational.”
That’s too bad, the beatings will continue.
Look, we KNOW this what is happening.
We see the ECB say explicitly that these shoddy South states MUST do exactly what I’m talking about.
Why do you all want to stand around pretending the Fed doesn’t have the same assumptions?
I’m not talking about an EXPLICIT intentional thing here, so please think deeper.
I’m talking about a basic PRIVATE growth is good, PUBLIC growth is bad mindset.
No one at the Fed thinks “you didn’t build that”
So WHEN we would see actions from the govt. that FEEL AND TASTE like the Greeks BENDING, like Obama cutting regulations, and basically NOT BEING OBAMA.
We are gong to see a different mindset at the Fed.
Now sure, we can create a system, where a PC runs the show, and we do MY Futures market proposal, since Scott’s doesn’t solve for price fixing.
But until we create such a system, there is a bias, and IF you are upset there is one, or think it isn’t there…
WHO CARES WHAT YOU THINK???
We KNOW it is there, we WANT a certain immediate Fed action, so we are really showing HOW BADLY we want it, when we analyze how much time we spend screaming at Obama to stop being a commie.
I don’t care if he is a commie.
If everyone starts screaming commie at him, he will BEND, and if he BENDS the Fed will be sated, and htey will have a sunnier disposition.
It isn’t intentional, it is just natural.
Imagine I told you that the Fed was gay men, and you are all asking them to make love to women.
That’s how deeply ingrained the PRIVATE over PUBLIC mindset is amongst memebers of the Fed, indeed, amongst the owners and producers in America.
——
The annoying thing about Obama’s “you didn’t build that” rant is that they DID BUILD IT.
Not their business.
They BUILT THE ROADS, they BUILT the BRIDGES.
When Oabama and Warren sneak in the phrase you used the roads that “all of us” paid for…
THAT IS A LIE
The top 1/3 PAID FOR EVERYTHING.
The bottom 2/3 just pay enough to cover their own Social Security and Medicare.
NONE of their tax dollars are left over for the roads and bridges.
Obama’s people didn’t PAY to build the roads or the tanks, or the monuments, or any of that.
The same guys who built the businesses PAID to build it all.
27. July 2012 at 13:28
Nick Rowe has a perfect response to Cowen, and he only intended it in respose to Mulligan yesterday.
Morgan, yes the ECB would like the PIIGS to reform. But they’ve been urging that for years and there’s no evidence Greece, for example, is improving its policies at all. Bryan Caplan actually suggests that there is an “idea trap” where people are most resistant to neoliberal reforms when economic growth is lousy and most amenable when things are good, hence why a Pinochet type figure may be necessary to kick an economy into a neoliberal equilibrium.
27. July 2012 at 13:36
Morgan:
“But public employees having delivered less than 1% YOY productivity gains for over THIRTY YEARS where it should have been 2-5% YOY…”
It’s a great story. You tell the same one every day but I admit it’s entertaining. Just for the heck of it though do you have any evidence to support this claim you keep asserting?
27. July 2012 at 13:38
What about a sort of Lucas critique against NGDP targeting in Israel? The moment they consciously, formally and publicly adopt NGDP targeting, it will fail.
27. July 2012 at 13:44
“The same guys who built the businesses PAID to build it all.”
We know Mitt Romney didn’t pay for it.
27. July 2012 at 13:50
Saxie, don’t play dumb:
http://www.bls.gov/mfp/mprff97.pdf
Table #1 (p. 22) should make you puke.
Caplan is wrong. Sumner is wrong.
This is EXACTLY my bet with Scott…
“If I am right about the idea trap, then advocates of free-market reforms should always root for good times and marginal improvements. A free-market in health care is unlikely to emerge after the U.S. public experiences the drawbacks of full socialization. Modern Zimbabwe is not fertile ground for a libertarian experiment. Depression and disarray benefit the Lenins of the world. That is when the public is most receptive to nonsense, to scapegoating sneaky foreigners and greedy corporations.14 The voice of reason, in contrast, gets its most sympathetic hearing when things are running smoothly, so the public is calm enough to think rationally about how to improve on the status quo, and maybe even appreciate how much their favorite scapegoats do for them.”
I argue that humans can be trained, educated, and grow objectively and that the strategies of the right since 1980 are DOMINANT, just as the strategies of the left until 1980 were dominant.
And that once the right began its strategies, the left will continue to lose until they actually ALTER their playbook.
I think Obama loses. He loses because he didn’t do a Clinton, and throw the left overboard.
And that as long as the right can cut taxes, run massive deficits, the PAY OFF of “vote for free shit” disappears for Dem voters…. the only question is how long it takes them to give up on getting free shit.
I won’t be surprised if 20 years from now less than half the people vote.
—-
Anyway, that’s not the point here.
The point is Ryan Avent and Scott are both being intentionally willfully naive.
And it makes you wonder WHY folks who claim so desperately to want Fed action…
Don’t just give the Fed what it wants?
“Buy the Ticket, Take the Ride”
It isn’t complicated.
We could be SELLING NGDPLT to the Tea Party as a Obama killer, and getting much further, and we aren’t.
We are committed like Chickens, not like Pigs.
27. July 2012 at 13:52
Yes Sax, you have been covering Mitt’s share.
27. July 2012 at 14:15
Morgan:
What do you think the Fed is doing to all the people WHO DID Build THAT when it can’t control inflation by raising interest rates – because it doesn’t want to cause too huge of a panic or wants the housing market to recover? Come on, you’re a smart guy – you can figure it out.
Don’t give me the dodo about how it really does care about anything than the arbitrary 2% target – most of all real capitalists.
27. July 2012 at 14:38
Bonnie,
I getcha I really do.
I just know that Nov. 2012 is more important than anything that happens between now and Nov. 2012.
Ending Obama is a bigger positive for growth, with more upside, than wasting time screaming at the Fed for three more months.
Anyone not fully on board with ending Obama, can’t REALLY say they are most concerned with GROWTH.
Moreover, we ALL believe that if Romney wins the Fed will be more likely to act.
So why are we not beating that drum as hard and as fast as we can?
I understand single mindedness.
Single mindedness as a MM means delivering unto the Fed a pliant public sector, with less entitlements and less regulations.
This isn’t an intellectual exercise.
This is brass tacks – the powers that be are not going to be blogged to death.
Buy the Ticket, Take the Ride.
p.s. the people who did build it are doing ok right now Bonnie, it is the marginal utility workers, the least productive amongst us, the ones who did not build it, who Obama is pretending have some legitimate claim – they are getting a beating.
27. July 2012 at 14:42
The point isn’t to oppose monetary stimulus, which indeed the cited link endorses. The point is to get people to think about why nominal stickiness models don’t always have money being effective. That said, I’m not as convinced about the interpretation of the recent link as you are. “High inflation” is also reflecting the strength of the real economy, and the ability of the private sector to manufacture its own nominal gdp, and not just the stance of monetary policy.
27. July 2012 at 15:33
Here is another way to put the point. One tendency (sometimes yours!, though I was not directing the post to you) is to wish to argue that microfoundations are not so necessary. But differentiating “the money/stock returns link today” from “the money/stock returns link over previous decades” requires some fairly exact microfoundations. Microfoundations tend to reassert themselves, even in light of people denying their importance, maybe I should even say especially in light of people denying their importance. We all want to make arguments parasitic on claims about microfoundations, so I get worried when their relevance is denied selectively.
27. July 2012 at 15:35
Wonks, Great Nick Rowe post.
JoeMac, Why would the Lucas critique apply to NGDP targeting?
Tyler, I define NGDP as the stance of monetary policy. So when it comes to NGDP, there is nothing else. On the other hand some would define it as inflation, in which case the private sector could manufacture more NGDP by creating more RGDP. So it’s really just a definitional issue. The important issue is what should the central bank target, NGDP or inflation? If they target NGDP, then the private sector can’t manufacture NGDP.
I do realize that the point wasn’t to oppose monetary stimulus, as the link said. But I had thought that you interpreted that study as weakening the case for monetary stimulus, as being a sort of cautionary tale. In my view the enormous stock boom of 1982-2000 was partly caused by lower inflation. And the poor performance of the stock market from 1966-82 was partly due to high inflation. So I certainly would not have expected any sort of robust positive correlation between inflation and stocks. Maybe I misinterpreted the post.
27. July 2012 at 15:41
Tyler, Good point, but I think I do have micro foundations:
1. The negative link between inflation and stocks is due to the fact that higher expected inflation imposes a higher real tax on equity due to non-indexed capital taxes (that’s micro). That became a big problem when inflation expectation rose far above zero after 1966.
2. The positive link between stocks and expected inflation occurs when a combination of falling NGDP and sticky wages (lots of micro evidence of that!) leads to a huge output gap.
I noticed that the strong positive correlation between inflation and stocks of the Great Depression went away after WWII, and then came back after 2008. Coincidence?
3. Stop wasting time on my blog and get out and enjoy Beijing!
27. July 2012 at 15:49
On your first point, note the use of the word “should,” namely that the central bank should target ngdp, Fair enough, but we can agree that they don’t and indeed haven’t. Then, in positive terms, we are back to the private sector manufacturing ngdp. That’s it for now, time for dumplings!
27. July 2012 at 17:29
Morgan, I get your game by now. It’s plausible. I still think you’re wrong but as you have made a falsifiable claim I’ll just leave it at we’ll see for now.
Presumably you can understand that at this point I have no reason to think we can’t win. When the most conservative SJC since the 20s couldn’t strike down Obamacare that tells me something about the political winds and maybe the dominance of the Right has already reached it’s nadir.
To me I see it this way. William F. Buckely wrote “Dream Waljking” in 2004 which was at the zenith of Right wing power. He never guessed that was as good as it would get.
This will be more clear soon. Look at it this way-Americans might have allowed the GOP to nibble at the edges-“the end of welfare as we know it” , etc.
But the Repugs have already grabbed all the low hanging fruit. The stuff now they’ve been trying to get traction on is the heart of the New Deal-privatizing SS and Medicare.
Bush had all the power in 2005-both HOuses of Congress- and wanted to privatize SS but ended up shelving the plan-no political capital.
Paul Ryan is highly polarizing. I know the Right loves him but he’s got a lot of people who don’t love him too. This is why I doubt Romney gows Ryan-I’d be very surprised-but pleased. Ryan is polariizing for wanting to end Medicare
Romney likes to play it safe. Portman is the most likely. He’d prefer Pawlenty most of all but he’s too boring. Romney will accept the second most boring choice.
Anyway-you got a theory. I got a theory. I defintely see no reason as a lib Dem to concede anything now. The proof will be in the pudding.
I wish we had the British electorate-he’d lose there in a landslide! See this is why I don’t think he has what it takes. That was the ultimate softball and somehow he hit into an inning ending triple play and forfetied the series all at once.
27. July 2012 at 19:33
I think Romney wins with Portman (I’m an Ohioan), but I suspect he’ll go with a weirder choice.
The correct choice is Condi.
Sax, the Brits are a deeply intellectually inbred people. They’d get more from admitting that they are a small island that makes things no one wants, than any other truth they could absorb.
I love the Brits, but I spend all day July 4th screaming “F*ck the British!”
They still have never admitted outright that we are their betters.
This annoys me deeply.
27. July 2012 at 19:51
Excellent post.
Side note: In general, for the last 20 years, global interest rates have been trending down in major economies.
Draw a trend line, and we are all Japan soon.
Thus, the traditional central bank tool for stimulus, lower interest rates, soon becomes as useful as a firehouse against a flood.
So, QE become the policy tool, if only be default.
This leads to swelling central bank balance sheets. As Sumner pointed out reentry, the Fed makes more money than anybody ever in history.
What do do with these balance sheets becomes an interesting question. Turn over to national treasuries? Cut tax rates? Cut down national debts?
Should central banks really be independent, if they have such large assets?
This is the next round of policy challenges.
27. July 2012 at 20:32
Wow Scott!
The paper by Ding Du is amazing. It’s like a missing jigsaw puzzle piece in explaining the initial recovery from the Great Depression.
As you know a lot of people have doubts about monetary policy’s effectiveness in a zero lower bound environment. The most similar situation to our current one is the Great Depression. I once went though how the monetary transmission mechanism likely worked then and I’d like to share it, and show how the Ding Du paper fits in.
Many characteristics that we have now were all true then as well: a burst asset “bubble” (stock market value was down 90%), excess capacity, depressed nominal housing values (down by over 30%), the relative unimportance of the exchange rate channel, etc. Other factors were low inflation (actually deflation of course) and high debt levels (private debt was 230% of GDP in 1933) which imply a liquidity trap type situation where the traditional interest rate channel and the bank lending channel were impaired.
The initial recovery from the Great Depression was swift. Real GDP growth averaged 9.4% a year from 1933-37 and unemployment dropped from 20.6% to 9.1%. And yet we know based on analysis by E. Cary Brown, Christina Romer, Barry Eichengreen etc. that the contribution of fiscal policy to the recovery was minor.
Real GDP increased by $27.9 billion in 1937 dollars. Let’s see how it is divided up (billions):
Source——Amount-Share
Durables—-$3.2—11.5%
Nondurables-$7.3—26.2%
Services—-$4.9—17.6%
Structures–$1.4—-5.0%
Equipment—$3.2—11.5%
Residential-$1.3—-4.7%
Net Exports-$0.2—-0.7%
Defense—–$0.3—-1.1%
Nondefense–$2.1—-7.5%
State&Local-$0.6—-2.2%
So government spending accounted for 10.8%, nonresidential investment accounted for 16.5%, durables accounted for 11.5%, other consumption for 43.2%, residential investment 4.7% and net exports 0.7% of the increase in real GDP.
Based on E. Cary Brown’s estimates fiscal stimulus contributed less than 5% to the recovery during this time period. Based on the above numbers I think it was pobably more. Eichengreen has estimated that the fiscal multiplier was 2.5 on impact and fell to 1.2 after a year. Thus a generous midrange estimate might put its level of contribution at about 15-16%.
Frederic Mishkin enumerates nine channels of the monetary transmission mechanism:
http://www.econbrowser.com/archives/2008/01/mishkin1.jpg
Most people confuse monetary policy with credit policy so it’s interesting to note that the Bank Lending Channel contributed almost nothing to the recovery.
Here are the debt levels:
Nominal Debt (Billion $)
Sector—–1933-% of GDP-1937-% of GDP
Government-40.6—-72.0—55.3—60.2
Business—86.0—152.5—84.4—91.8
Household–30.2—-53.5—31.2—33.9
Finance—-11.7—-20.7—11.3—12.3
Total—–168.5—298.8–182.2–198.3
NGDP——-56.4———–91.9
Note that debt as a percent of GDP declined in every single sector. Since the GDP implicit price deflator increased by about 12.5%, real debt declined in every sector except government. Nominal debt declined in every sector except government and household although household sector debt only increased by one billion dollars or about 3.3%. Examination of the subsector data reveals that household sector mortgage debt fell in nominal terms. The only kind of household debt that increased in nominal terms was consumer debt which increased from $3.9 billion to $6.9 billion over this period.
My own rough estimates indicate the most important channel was the Wealth Effects Channel (43.2%) followed by the Traditional Interest Rate Channel (10.2%) and the Household Liquidity Effects Channel (7.4%). (The Bank Lending Channel contributed only 4.4%.) These three channels alone appear to account for over 60% of the increase in real GDP over this period.
Is this reasonable?
We know for example that nominal stock market wealth roughly tripled from about $30 billion to $90 billion between March 1933 (the month FDR entered office) and February 1937 (nominal GDP was $91.9 billion in 1937), so household stock wealth alone soared. (Nominal housing prices also increased by about 20%.)
Similarly, thanks to rising prices real short term interest rates plunged from about 10% in 1932 to being consistently negative from the moment FDR entered office through 1937, falling as low as -5.4%.
The importance of the Ding Du paper is that it is a confirmation that the Wealth Effect Channel and Household Liquidity Effects Channel were in full force during 1926-1939. And as we already know, David Glasner’s research has shown that they came roaring back to life in 2008. And to me this is simply an amazing demonstration of how powerful monetary policy really is. As some monetary transmission channels shut down, others come on to take their place.
This reminds me of that scene in Apollo 13 (everything reminds me of a film) where Jim Lovell describes how he found his way back home after the instruments shorted out on his plane:
“Uh well, I’ll tell ya, I remember this one time – I’m in a Banshee at night in combat conditions, so there’s no running lights on the carrier. It was the Shrangri-La, and we were in the Sea of Japan and my radar had jammed, and my homing signal was gone… because somebody in Japan was actually using the same frequency. And so it was – it was leading me away from where I was supposed to be. And I’m lookin’ down at a big, black ocean, so I flip on my map light, and then suddenly: zap. Everything shorts out right there in my cockpit. All my instruments are gone. My lights are gone. And I can’t even tell now what my altitude is. I know I’m running out of fuel, so I’m thinking about ditching in the ocean. And I, I look down there, and then in the darkness there’s this uh, there’s this green trail. It’s like a long carpet that’s just laid out right beneath me. And it was the algae, right? It was that phosphorescent stuff that gets churned up in the wake of a big ship. And it was – it was – it was leading me home. You know? If my cockpit lights hadn’t shorted out, there’s no way I’d ever been able to see that. So uh, you, uh, never know… what… what events are to transpire to get you home.”
And like Jim Lovell, we just need to follow the “green trail” home.
27. July 2012 at 22:06
A caveat on Ryan Avent’s essay: Bernanke did not really follow the Friedman playbook in dealing with the GFC. That is being too kind to Bernanke and not kind enough to Friedman.
28. July 2012 at 04:44
I always find it weird when Tyler talks about the “private sector manufacturing NGDP” (and not only because it’s a clunky metaphor). I define monetary policy as the totality of the central bank’s influence (or more generally the controllers of the money supply’s influence) on the supply and demand for money. NGDP determination follows from that. But here’s the thing. If private expectations are not anchored around anticipated central bank behaviour towards NGDP (say in the 60’s, because policy was not rulebound or credible, or more precisely because the Fed’s target of unnaturally high employment left NGDP indeterminate), then NGDP is partly determined by the Fed, partly by Treasury and partly “manufactured” by the private sector. But if the Fed even implicitly targets NGDP (as for instance right now it is implicitly targeting a 2% inflation ceiling), then NGDP is fully determined by the central bank. This is the insight of the Sumner Critique, as well as the “Dajeeps critique” and the Chuck Norris effect (see if we MMers can coin any other colorful concepts). It also relates to Milton Friedman’s thermostat, which Nick recently mentioned. So I guess what I’m saying is that even if the private sector can boost NGDP (via velocity and money multipliers), it will appear to have no effect on it, as Nick explained, so long as the Fed does a very effective job of doing exactly the wrong thing. So Tyler is largely holding out for nothing (except in so far as the Sumner Critique isn’t perfect, as you admit).
28. July 2012 at 06:44
Saturos,
It’s interesting to think about times when NGDP was basically followed by the Fed and times when it wasn’t. In the 60s when there were no rules the knowledge based service sectors were in the process of being expanded and in some cases defined for the first time. By the time rules were taken into consideration the perimeters of those services were largely set. In fact, during the Great Moderation there was little resistence to what basically amounted to NGDP targeting (behind the scenes) because knowledge based services did not present a problem, and government debtloads only recently became unwieldy.
One problem for the measurement of the whole is this issue: The knowledge based service sectors don’t not show productivity convergences, whereas manufacturing does. There are some who think they can create such convergence merely by privatizing knowledge use but that’s a hornet’s nest I won’t throw any rocks at here! My point is that some resistance to the Fed’s continuance of responsibility stems from different sets of desires as to how knowledge markets can work.
28. July 2012 at 07:00
Correction: don’t show productivity convergences.
28. July 2012 at 07:31
ssumner:
Evan Soltas has mustered some evidence that Fischer has been following this policy. Israel let inflation rise when the recession hit by the same amount as economic growth fell, and as a consequence, the economy quickly rebounded.
In the United States, by contrast, inflation stayed constant while both real and nominal GDP fell considerably
This is an excellent example of an a priori theory being presented as if it were empirically derived, and then making contradictory characterizations for the same data pattern.
Sumner views the stable NGDP as the reason for why the Israeli economy “quickly rebounded.” And yet, he has constantly stated that the US economic recovery has languished for too long. But how can that be? The duration of the dip in real GDP was the SAME in the US as it was in Israel, if not shorter! Look at the real GDP dipping and then rising back up and then peaking. Look at this local peak for both countries. Notice that this peak occurred in mid-2010 in the US, whereas in Israel it occurred late-2010? I don’t want to quibble over this so much, I just want to point out the overall fact that the durations of the dips in real GDP for both countries are at the very least very similar. The declines started at roughly the same time, and the mirror-side stabilizations started at roughly the same time as well (mid to late 2010).
Here are the same three statistics (NGDP, Real GDP, and GDP deflator) for the US economy for the same period as the Israeli chart:
http://research.stlouisfed.org/fredgraph.png?g=94s
Why doesn’t Sumner say that because the Fed let NGDP fall, the “consequence” was that the US economy “quickly rebounded”? After all, it’s the same rebound as it was in Isreal! The reason, of course, is that the Fed let NGDP fall, so when characterizing the US REAL GDP pattern, which is the same as the Israeli REAL GDP pattern, we’re not permitted to link a fall in NGDP with “quick” recoveries. No, we have to characterize the same pattern in falling NGDP countries as “drawn out”, and “agonizing”, and “sloooooow.”
—————–
If someone proposed the a priori theory “If the central bank lets NGDP fall, then there will be a quicker recovery”, and then they looked at the above US data I linked to, and used the same logic as Sumner, then they too could conclude that their theory was vindicated. They could conclude that if central banks let NGDP fall, then it has the “consequence” of bringing about a “quicker recovery.”
They could perhaps even argue that central banks letting NGDP fall brings about a SUPERIOR recovery compared to temporarily accelerating inflation as what occurred in Israel! How is that you might ask? Look at Soltas’ chart, and notice that Real GDP, on the far right of the chart, went back into a downward trend. This subsequent downward trend pattern is absent in the US chart I linked to. Real GDP growth in the US has stablized at around 2.5% since 2010.
One could use Sumnerian logic in the reverse to argue that because there was no temporary acceleration of inflation in the US, because the Fed let NGDP fall, it had the “consequence” of bringing about fewer malinvestments as compared to Israel, which enabled the growth in the US coming out of the recession to be “more legitimate” than it was in Isreal!
Using an analogy, since the weekend circus that came to town in the US was relatively smaller than the weekend circus that came to town in Israel, it had the effect of relatively fewer investments being devoted to the circus, and relatively more investments devoted to long term consumer preferences, which means that once the circus left both countries, relatively fewer investment corrections would be needed in the US as compared to Israel. Hence Isreal’s recent decline in real GDP, while in the US Real GDP has stabilized.
——————–
Please note that I am not making any certain conclusions of what economic policy is superior based on the data in these charts alone. All I am doing is showing the futility of Sumnerian logic: Observing the same patterns of data and making contradictory conclusions when it suits one’s a priori theoretical agenda. Sumner says recovery was “quick” in Israel because the central bank didn’t let NGDP fall. But for the US, even though the dip lasted the same amount of time, if not shorter, recovery is characterized as something other than “quick.”
Maybe Sumner is so blinded by his worldview that it takes an outside person to see what he is doing. Maybe it also takes an outside person who disgrees with his a priori worldview. For Sumner didn’t pick up on what he did. None of you who agree with him picked up on what he did.
28. July 2012 at 08:52
Major Freedom:
Without you, I would have never discovered the unparalleled joy of Mike Sax.
If you spend any time at Money Illusion you are aware of certain characters. One that you may have noticed is Major Freedom, a cranky old Austrian who never tires on lecturing against any kind of stimulus to the demand shortfall.
This is because Austrians don’t believe in the idea of a shortfall in demand. They think it’s impossible-literally they think Say was right. There’s no such thing as a demand shortfall it’s always about supply. If you leave the market to do its work eventually a collapse in prices will enable consumption to rise up again. I notice that a lot of these Austrian guys always sound the same.
http://diaryofarepublicanhater.blogspot.com/search?q=austrian
I get it. It is an iron-clad a priori law of the universe that entrepreneurs cannot ever accurately forecast how much stuff to manufacturer for sale to “consumers”, but central planning fiat funny money diluting bureaucrats can. A priori.
Makes sense to me. What’s wrong with you?
28. July 2012 at 09:11
Actually, I thought Major Freedom was young and industrious. I’m old and cranky.
28. July 2012 at 10:21
Major even your buddy Bob reads my partisan rag. I don’t need you to pay me everyone else does.
28. July 2012 at 10:22
Bob Roddis, you spelt me name right so it’s good enough for me-not that it’s hard.
28. July 2012 at 10:24
And Bob as to me being an unparralleled joy? That’s what nine out of 10 say, and even 7.5 out of 10 cranky old Austrians say the same
28. July 2012 at 10:27
“I get it. It is an iron-clad a priori law of the universe that entrepreneurs cannot ever accurately forecast how much stuff to manufacturer for sale to “consumers”, but central planning fiat funny money diluting bureaucrats can. A priori”
Seems like you’re the one who believes in the a priori laws Bob. You think that no recession happens as long as you let the market “sort it out.” I say there are times this doesn’t work.
Who’s aruing an a priori law? You’re the one claiming always. It’s like libertarians claiming that liberlas worship the state. Not true. I don’t demonize it but that doesn’t mean I worship it. In truth you worship the market. I like the market but see government as having a role as well. Always has done.
28. July 2012 at 10:32
“The correct choice is Condi”
Morgan there you are dead wrong. Actually the correct choice probably is Portman. The Right will not accept any one prochoice-I’m shocked I know you’re Right wing brothers better than you do.
Also she is too intimately tied with the Bush Administartion. As much as you guys may hate Obama, most Americans even now hate Bush and even most Republicans don’t have good memories of him.
Like Mark Levine said that would be the perfect pick. Then Romney will not only have to defend Bain until electino day but also the Bush Administration.
Maybe we get to ask Condi how that search for WMDs is going.
I think that’s a great choice-for the Obama team.
28. July 2012 at 10:32
“The correct choice is Condi”
Morgan there you are dead wrong. Actually the correct choice probably is Portman. The Right will not accept any one prochoice-I’m shocked I know you’re Right wing brothers better than you do.
Also she is too intimately tied with the Bush Administartion. As much as you guys may hate Obama, most Americans even now hate Bush and even most Republicans don’t have good memories of him.
Like Mark Levine said that would be the perfect pick. Then Romney will not only have to defend Bain until electino day but also the Bush Administration.
Maybe we get to ask Condi how that search for WMDs is going.
I think that’s a great choice-for the Obama team.
28. July 2012 at 10:37
MOrgan Portman is the right choice. Romney’s instincts is to go boring. Ideally he’d like to go Pawlenty but Pawlenty’s too boring. Portman is boring enough without being too boring.
Jindal might be tempting to thikn could somehow apppeal to someone not white-whatever the heck Jindal is he has brown skin which in the GOP’s mind might be good for a few Spanish votes. In fact I think Jindal’s actually Indian but in the GOP mind it’s the same thing-their skin color is the same right?
Paul Ryan is much too polarizing. I don’t think he’ll go Ryan though I would love it if he did. Portman is safe-he’s prolife, and maybe he picks up a few votes in the all important Ohio.
28. July 2012 at 10:42
Bob Roddis as I explained to Major UnFreedom before the troulbe with you guys is that you think that money is just another commodity. this consusion along with your illusion that there can be no general glut not government caused is the source of all your other many confusions.
28. July 2012 at 11:46
There is just one paragraph at would have been better left out of that essay by Ryan:
Earlier in the essay he gets that the notion of a level SRAS is wrong. Any increase in output will cause an increase in inflation and thus be neutralized by an inflationary targeting CB.
In this paragraph he falls into the trap of claiming that the extra inflation is non-accelerating, but of course this is false. As output growth picks up, inflation growth will pickup too. This is why even though we have a stable ngdp growth rate again today, the past policy error is not being corrected.
The point of a level target is that–yes the expansion has an accelerating component but there is still a bright line. The process will terminate with inflation going up and up and then back to trend.
Ryan got that part of the story just a bit wrong.
28. July 2012 at 13:40
Mark, Yes, But I wouldn’t characterize it quite the same. I don’t think that inflation was caused by supply shocks during the post war period. It was caused by monetary policy. But the combination of supply shocks and a higher tax on capital caused by higher inflation expectations produced the result he found.
The paper is similar to a study I did with Steve Silver in 1989 (JPE) on wage cyclicality. Real wages tend to be procyclical in periods dominated by supply shocks and countercyclical in periods dominated by demand shocks.
My research on the GD suggests the expectations channel was the key.
Lorenzo, Yes, I can’t imagine Friedman going for IOR in the middle of a crash.
Saturos, The central bank could and should control NGDP. They may adopt an (insane) operating procedure where private sector actions influence monetary policy in such a way as to affect NGDP.
What’s the “Dajeeps Critique?”
Jon, I agree, we had substantial inflation in 1933-34.
28. July 2012 at 13:51
Seems like you’re the one who believes in the a priori laws Bob. You think that no recession happens as long as you let the market “sort it out.” I say there are times this doesn’t work.
Both “the market” and “the state” consist of human beings. In “the market”, people act voluntarily. “The state” initiates force with SWAT teams. Human beings cannot read each other’s minds. The only method for obtaining a good approximation of the desires of other people, especially strangers for the purposes of mutual voluntary exchange, is from the prices that result from their mutual voluntary exchanges. Fiat funny money tends to distort those prices and thus impairs the essential process of economic calculation. It is not inevitable that such might happen because the populace is always capable of waking up, realizing that it has been lied to for years by the Keynesians and monetarists and then eliminating the fiat funny money system. Absent that, prices will be distorted and economic calculation will be impaired. This will cause malinvestment and is the cause of the boom/bust cycle. Absent the issuance of the fiat funny money, there would not have been the distortion of prices and the impairment of economic calculation. Prices would always be real and never “nominal”.
Who’s arguing an a priori law? You’re the one claiming always. It’s like libertarians claiming that liberals worship the state. Not true. I don’t demonize it but that doesn’t mean I worship it. In truth you worship the market. I like the market but see government as having a role as well. Always has done.
The claim that entrepreneurs cannot gauge how many finished goods to make and the bureaucrats backed by SWAT teams can make that decision is a BS a priori assertion without basis in fact, history or theory. “Liberals” do worship the state because they think that bureaucrats backed by SWAT teams have some form of superior knowledge and benevolence that voluntary actors lack. I don’t “worship” the market. I insist upon a prohibition of the initiation of force against innocent people. As Major Freedom keeps pointing out, the entire Keynesian/monetarist program is based upon the threat of violence and the perpetual theft of purchasing power to solve a “problem” that does not even exist. It’s all a scam.
Further, as Murray Rothbard explained that because his epistemological position rested on Aristotle and St. Thomas rather than Kant, the Austrian axioms of action and ignorance are fully empirical. Human ignorance of the desires of others is empirical. The claim that entrepreneurs cannot and will not be able to gauge how much finished product to make is a priori nonsense as is the assertion that bureaucrats and their SWAT teams a prioir have such knowledge.
http://mises.org/daily/5195/
28. July 2012 at 15:22
Bob, even reading your link makes it clear that what Rothbard means by “empirical” is quite different than what anyone else outside of the Rothbardians mean.
“My own epistemological position rests on Aristotle and St. Thomas rather than Kant, and hence I would interpret the proposition differently. I would consider the axiom a law of reality rather than a law of thought, and hence “empirical” rather than “a priori.” But it should be obvious that this type of “empiricism” is so out of step with modern empiricism that I may just as well continue to call it a priori for present purposes”
Ie, it’s in reality apriori which is what you accused me of.
28. July 2012 at 15:39
Mike Sax:
Nice try at evading the essential undeniable gist of Austrian theory. People act and they are ignorant. There are limited sources of knowledge to determine the wants and needs of the vast army of strangers on the planet: PRICES. As Rothbard also stated, it’s rather silly to sit around worrying about classifying the nature of those truths as a priori or empirical. But truths they are. In fact, they are negative assertions: Due to the nature of reality, humans have very limited knowledge and bureaucrats are human too. The Keynesian and monetarist plans and nefarious schemes will invariably fail due to a lack of knowledge on the part of the planners and schemers. That’s an empirical fact.
That’s why you and all the other Keynesians, monetarists and statists are so desperate to avoid thinking about those axioms, much less engaging them.
28. July 2012 at 16:14
In February, 2011, the American Economic Review (specifically Kenneth J. Arrow, B. Douglas Bernheim, Martin S. Feldstein, Daniel L. McFadden, James M. Poterba, and Robert M. Solow) named its top 20 articles of the last 100 years. Included therein was:
Hayek, F. A. 1945. “The Use of Knowledge in Society.” American Economic Review, 35(4): 519-30.
http://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.101.1.1
The “knowledge problem” is real and it ought to be understood. It is at the core of Austrian school thinking.
28. July 2012 at 17:21
Scott,
I’ll have to take a look at your paper.
The “Dajeeps Critique” was the subject of a recent post by Lars:
http://marketmonetarist.com/2012/07/23/the-hargrove-critique-and-why-i-am-skeptical-about-qe3/
28. July 2012 at 17:23
Mike Sax:
Bob Roddis as I explained to Major UnFreedom before the troulbe with you guys is that you think that money is just another commodity. this consusion along with your illusion that there can be no general glut not government caused is the source of all your other many confusions.
Mike, as I explained to you many times, you are wrong to claim (you did not “explain”) that money is not a commodity. Not only have I positively shown you why money is a commodity (recall: it is a scarce object of economic action, hence it is economized), but I have also pointed out that you have not even attempted to justify your claim that money is not a commodity. The statement “just another commodity” is sloppy, and doesn’t accurately characterize the economist’s position. Money is a commodity yes, but it is not “just another commodity”. It is a special commodity. It is a commodity that is the most marketable and universally accepted commodity, such that it becomes a catallactic tool for economic calculation, whereby individuals can judge profit and loss according to the net gain/loss of this commodity as against exchanges for real goods and services through time.
I have also pointed out to you many times, referencing the correct interpretation of Say’s Law, that a general glut is impossible for mankind, due to there being no practical limit to the amount of wealth that people are willing to acquire. Depressions, contrary to your continued claims otherwise, are NOT periods in which there is too many goods in general relative to the amount of goods in general that people are willing to acquire. What is taking place during a depression is partial relative overproduction and a corresponding partial relative underproduction of goods and services that you cannot observe because they were not produced, precisely because the partial relative overproduced goods tied up scarce resources that could not be used to eliminate/reduce the partial relative underproduction elsewhere.
YOU are under an illusion, Mike, not economists.
28. July 2012 at 17:26
ssumner:
After 2008 stock prices became strongly correlated with inflation expectations from the TIPS markets.
One cannot infer inflation expectations from the TIPS market. A falling yield on TIPS bonds COULD be the result of the embedded call option rising in value as investors expect higher future inflation and are willing to pay a premium and a low yield in the present. In this case, falling yields would represent higher inflation expectations, not lower inflation expectations.
28. July 2012 at 17:30
Mike Sax:
Seems like you’re the one who believes in the a priori laws Bob. You think that no recession happens as long as you let the market “sort it out.” I say there are times this doesn’t work.
Since we don’t have a free market from which you can observe free market data, it means that your claim is an a priori one. A priori, you assert that people can’t sort out their own problems according to voluntary exchange, and you a priori assert that the state can “solve” this alleged problem of people being idiots who can’t solve their own problems because they need to be deluded by fiat money price signal distortions.
What is the foundation for the a priori claim that the market process inevitably results in the business cycle?
28. July 2012 at 17:32
Major we can just as soon ask you where teh a prior claim is that it doesnt. In truth I don’t believe in any of this apriori nonsense.
I think observation is sufficient.
28. July 2012 at 17:38
Bob Roddis:
Without you, I would have never discovered the unparalleled joy of Mike Sax.
“If you spend any time at Money Illusion you are aware of certain characters. One that you may have noticed is Major Freedom, a cranky old Austrian who never tires on lecturing against any kind of stimulus to the demand shortfall.”
“This is because Austrians don’t believe in the idea of a shortfall in demand. They think it’s impossible-literally they think Say was right. There’s no such thing as a demand shortfall it’s always about supply. If you leave the market to do its work eventually a collapse in prices will enable consumption to rise up again. I notice that a lot of these Austrian guys always sound the same.”
http://diaryofarepublicanhater.blogspot.com/search?q=austrian
What a drama queen. All statists sound the same don’t they? They all believe the people are too stupid to be able to solve their own economic problems, and that we need overlords to take care of us, even though they have no way to predict what even they will know and do in the future, and they’re expected to do this for 300 million other people?
Thanks for reminding me why I never visit that partisan blog. If that comment is any indication, then I was right to suspect it is just another tripe filled daily affirmation for a non-economist who wants to play in the economics sandbox.
I get it. It is an iron-clad a priori law of the universe that entrepreneurs cannot ever accurately forecast how much stuff to manufacturer for sale to “consumers”, but central planning fiat funny money diluting bureaucrats can. A priori.
Makes sense to me. What’s wrong with you?
Maybe I was breast fed as a baby, so my brain was able to develop so that I was able to avoid the cognitive challenges that beset Mike Sax, who doesn’t understand Say’s Law to save his life?
28. July 2012 at 17:43
Mike Sax:
Major we can just as soon ask you where teh a prior claim is that it doesnt.
That doesn’t even make sense.
In truth I don’t believe in any of this apriori nonsense.
Then why do you a priori claim that the free market (in which there is no observable data) is prone to the business cycle, and why do you a priori claim that the state is needed to “solve” this alleged problem of the market, and why do you a priori claim that the state’s “solution” of printing and spending money isn’t counter-productive?
I think observation is sufficient.
You can’t observe causality, you can’t observe human action, you can’t observe what it means to make observations. This concepts must be understood. Their validity is not grounded in observation. The meaning and validity of observation cannot be grounded in observation, lest one be engaging in circular logic.
Your philosophy is a crude form of positivism. No wonder you’re clueless.
28. July 2012 at 17:46
+1 for Saxie needing more breastfeeding.
Altho being an effete beta chock full of feelings isn’t the best strategy for getting it.
28. July 2012 at 17:56
Hi Scott,
I’m sure you’re aware of the latest quarterly numbers from the BEA have been released — but maybe you didn’t see that quarterly annualized NGDP growth was 3.0 percent. I offered some comments on my blog (http://bit.ly/MRr9jc) but you will surely have something to say of your own.
28. July 2012 at 18:06
Major I had assumed if you were breastfed as a baby it was probably at gun point which is why you have such a bad neurological blog.
Unlike your obssessive compulsive blathering people actually want to read my blog. I got the google analystics to prove it. You calling me a nonecononmist sure is calling the kettle black.
28. July 2012 at 18:09
Morgan now you can’t even answer comments I direct at you instead you mimic Major Unfreedom?
And you say Bill ellis can’t think for himself? Whatever credibility I thought you had as an analyst was foregeited when you said that Condoleeza Rice was the correct choice for VP.
Please nominate her. I dare you. I double, triple dare you. It would be evey worse than that Sara Palin. And she needed cue cards to remind her which Korea is our allie.
28. July 2012 at 18:10
Although Morgan I always like breastfeeding from the opposite sex, not a she-male like the Major.
28. July 2012 at 18:11
“What’s the Dajeeps critique”
Shout out to Bonnie: http://marketmonetarist.com/2012/07/23/the-hargrove-critique-and-why-i-am-skeptical-about-qe3/
(Seems to be getting Bonnie and Becky mixed up in the url there)
28. July 2012 at 18:11
Major when are you going to get in on the Treasury bublble? You know the one where Jim Rogers and Bill Gross lost all that money?
I’ll take the opposite side of any trade with you any day of the week.
28. July 2012 at 18:17
“You can’t observe causality, you can’t observe human action, you can’t observe what it means to make observations. This concepts must be understood. Their validity is not grounded in observation. The meaning and validity of observation cannot be grounded in observation, lest one be engaging in circular logic.”
what is circular logic are the idiotic Theses of that baloney, Methodological Indvidualism.
“What a drama queen” Major you are just another Internet coward. If we ever meet in person we’ll figure out who the queeen is and it’s not me.
If you were breastfed as a babay at all it’s the last time you touched any woman. All you progbably have to do is start going on and on in your pompous ignorant babbling and she’ll leave the state.
If you are finally admitting money is not just another commodity it’s about time YOu didn’t say that before.
I have no problem with real economsts. Neither you or Bob Roddis are economists. I’m not saying economists are wrong, you are.
28. July 2012 at 18:29
“being an effete beta chock full of feelings”
Morgan that will be you the day after the election.
28. July 2012 at 18:42
Lars fixed a bunch of his pingbacks but he couldn’t get them all!
28. July 2012 at 18:44
More reasons to never miss the Mike Sax blog:
Unlearningecon November 16, 2011 2:44 AM
I might be splitting hairs here, but a couple of points about the Austrians:
– They actually don’t support austerity. They just don’t support fiscal expansion.
– For the most part, they should simply be ignored. Their methodology was eviscerated in the 15th century by Immanuel Kant, Hayek’s trade cycle was dealt devastating blows by, among others, Sraffa and Kaldor, and the only reason anybody knows who Mises is is because of big money, as he was dependent on Rockefeller grants for half his life.
P.S. As a Keynesian, the reason I can’t get on board with NGDP targeting is because nobody has persuaded me it isn’t another backdoor bailout of the banks.
Reply
Mike Sax November 16, 2011 2:53 AM
I’d be interested to hear how Kant refuted their methodology before the fact… Interesting
http://tinyurl.com/cuhb47x
28. July 2012 at 18:53
Appreciate the publicity Bob Roddis. I’ve read your blog a few times too. However my analytics are better.
28. July 2012 at 18:54
Scott, what do you think: http://www.economist.com/blogs/freeexchange/2012/07/monetary-policy-8
Mike Sax, why Kant? Why not go back to Hume? (there I go evangelizing again) FTR I think Mises’ “Socialism” is kind of magnificent, all left-wingers should read it. (Much better than Road to Serfdom, as a one-stop shop that is.)
28. July 2012 at 18:56
Saturos if you look at the quote, I didn’t write that. It was a comment by Unlearning Econ. He actually got the date wrong of course Kant was the 18th not the 15th century but I’m not so boorish as to point out every time I see an error.
28. July 2012 at 19:01
“What is the foundation for the a priori claim that the market process inevitably results in the business cycle?”
History.
28. July 2012 at 19:08
“Depressions, contrary to your continued claims otherwise, are NOT periods in which there is too many goods in general relative to the amount of goods in general that people are willing to acquire.”
See even this does more to obfuscate than describe the situation accurately. During a depression, people don’t choose to consume less goods, they have to consume less goods. If someone can’t pay their mortgage that’s not a “choice” not to pay it but an inablity to do so.
It’s not that they’re too many goods but too little money ot pay for them. This is the same silliness whereby it’s declared that people who are unemployed decided to enjoy more leisre time.
That only makes sense for someone who has enough money in the bank to afford all his necessaries in life even after cutting back from work.
When Mitt Romney told that joke that fell flat about he can relate to the unemployed, that’s an example of someone who is not unemployed but enjoying in leisure.
28. July 2012 at 19:38
Hey Morgan, this one’s for you. Miles Kimball-who is actually a close relative of Mitt Romney tells us something about Mitt’s religion as he wont tell us anything.
http://blog.supplysideliberal.com/post/28069868971/will-mitts-mormonism-make-him-a-supply-side-liberal
Miles nails it here:
“Because Mitt has shown a willingness to pander to the electorate in the Republican primaries, saying things in this and his previous presidential campaign that seem at variance with what he has said in earlier campaigns for senator and governor, it is often hard to know what he really believes based on his statements. Therefore, I think it is extremely important to draw on a wide range of resources to try to reveal what might be in his heart. My belief that he believes in Mormonism with all of his heart (as I once did, but no longer do) is my interpretive key.”
29. July 2012 at 04:07
Sax, it is my cherished hope that Mitt Romney’s election extends the workings of gay marriage to legalization of polygamy.
I also hope we adopt my GI plan to Auction the Unemployed.
Note that my agenda is the true and perfect Supply Side Liberal position.
1. Give everyone enough to cover their nut.
2. Auction their labor to bossy bosses – the very same people coughing up the dough to make sure #1 happens.
3. Use said labor to make the cost of delivering public good CHEAPER, ending public employee unions forever.
The thing you need to get about Mormonism is the culturally enforced notion of industriousness.
On MIles, he is
As to Mitt, just understand this, the Tea Party is crazy enough to run a primary challenger in 2016, and Mitt knows it. He’ll tow the line.
My choice was Rick Perry because I am at my heart a states rights guy. So much so that I’d let states become very different places than they are now, and seriously limit the US government’s ability to move money from rich states to poor states, the VERY THING that neo-liberals are now clamoring for in Europe.
29. July 2012 at 04:08
Miles is unwilling to engage any serious argument from my side of the table.
He’s a nimrod right up there with DeKrugman.
29. July 2012 at 05:27
Scott,
I know you are a busy guy, but the comments are starting to degrade in content. The signal to noise ratio in this section is really low and people are just tossing out ad hominems. Is there any way you can fix that?
29. July 2012 at 07:16
please delete Benny lava comments, he seeks to steal from his betters.
29. July 2012 at 08:14
Mike Sax:
Major I had assumed if you were breastfed as a baby it was probably at gun point which is why you have such a bad neurological blog.
What blog?
Unlike your obssessive compulsive blathering people actually want to read my blog.
Funny, since I consider you to be hip deep in obsessive compulsive blathering. What do you call these 5 or 6 posts in a row on this blog that have come from you?
You calling me a nonecononmist sure is calling the kettle black.
I don’t see how. I am an economist. Calling you a non-economist isn’t a kettle calling a pot black.
Morgan now you can’t even answer comments I direct at you instead you mimic Major Unfreedom?
It’s ironic you call me Major Unfreedom, since it is your worldview that results in some people violating the freedom of other people, in the name of “society.”
Although Morgan I always like breastfeeding from the opposite sex, not a she-male like the Major.
So I guess you’re making up for lost time.
Major when are you going to get in on the Treasury bublble?
I already am in the bond “bublblebble.” However I am not short bonds, because it is too limiting. I have investments that closely mimic the payoff of a short bond portfolio, but without the strike date and coupon obligations.
You know the one where Jim Rogers and Bill Gross lost all that money?
Oh my God, investors lost money! You mean those who are bulls due to their faith in the state, are never wrong? Who would have thought it?
I’ll take their investment advice over a partisan blogger any day.
“You can’t observe causality, you can’t observe human action, you can’t observe what it means to make observations. This concepts must be understood. Their validity is not grounded in observation. The meaning and validity of observation cannot be grounded in observation, lest one be engaging in circular logic.”
what is circular logic are the idiotic Theses of that baloney, Methodological Indvidualism.
There is a difference between talking around concepts and of concepts that you don’t understand, and engaging and refuting those concepts. You’re doing the former.
You hate individuality because you find the implications of it intolerable. It makes you feel lonely. I’ve seen it happen before, so it’s not like you’re surprising me. Philosophical collectivists think very similarly.
“What a drama queen” Major you are just another Internet coward. If we ever meet in person we’ll figure out who the queeen is and it’s not me.
And how will we figure that out exactly? What do you intend to do exactly if we met in person? Please be specific.
If you were breastfed as a babay at all it’s the last time you touched any woman.
My girlfriends would disagree with you.
All you progbably have to do is start going on and on in your pompous ignorant babbling and she’ll leave the state.
Nah, I save the education for partisan collectivists who don’t understand economics for people like you.
If you are finally admitting money is not just another commodity it’s about time YOu didn’t say that before.
I didn’t “admit” money is not a commodity. I said money is a commodity. It is a commodity that happens to be quite widely accepted. It’s similar to rice in this respect. The main difference is that the monetary commodity is usually highly valued and durable, so precious metals usually beat out commodities like rice, which are valued relatively lower, and is less durable.
I have no problem with real economsts.
Oh but you do, because what you say is an attack on what they have discovered, and in many cases what they have discovered many, many, many years ago.
Neither you or Bob Roddis are economists.
I am an economist. You are not. You do not have knowledge of the economist’s teachings, nor do you think like an economist. You think like a resentful political collectivist who demands social control because he’s scared of not being able to externalize the costs of his mommy and daddy state on others.
I’m not saying economists are wrong, you are.
No, you’re saying economists are wrong, for you are telling me that what economists are saying is wrong.
“What is the foundation for the a priori claim that the market process inevitably results in the business cycle?”
History.
What history? You keep fallaciously referring to the 19th century US economy as a free market, when economists have shown that it was characterized by state violations of the free market, particularly in the area of money production and interest rates, which had the effect of causing bank panics and recessions. See the work of Selgin and Rothbard. You are not knowledgeable of economic history, which is why you have created the illusion for yourself that the 19th century represents free market data.
So your claim is a priori. It’s not based on empirical data. You are a priori claiming that the free market inevitably results in the business cycle.
“Depressions, contrary to your continued claims otherwise, are NOT periods in which there is too many goods in general relative to the amount of goods in general that people are willing to acquire.”
See even this does more to obfuscate than describe the situation accurately.
I don’t see how. It is a very clear statement that goes against your claim that general gluts are possible. You are incorrectly interpreting recessions as general gluts, when they are periods of partial relative overproduction.
Say’s Law does not say that every single good produced will find a profitable market. Say’s Law has the caveat that investments are in a mutually sustainable relative configuration. What the classicals misleadingly, and with negative consequences, characterized as “equilibrium.”
During a depression, people don’t choose to consume less goods, they have to consume less goods.
First, the word is “fewer” not “less”, and second, that is exactly consistent with the impossibility of general gluts. You just said that during a depression, people don’t choose to consume fewer goods. That’s exactly it. They don’t want to consume less wealth in general, but the problem is that there was a partial relative overproduction of wealth that consumers weren’t ready to make profitable because of a different time preference than the structure of production implied. They wanted more of other goods, at different times, but weren’t produced, precisely because investors were misled by the very “solution” you believe is necessary for the business cycle allegedly inherent in the market, namely, bureaucrats printing and spending money on themselves and their friends.
It is this printing and spending money which misled investors into a partial over-expansion of some investments, and thus a partial relative under-expansion of other investments.
If someone can’t pay their mortgage that’s not a “choice” not to pay it but an inablity to do so.
It’s not because of a lack of money that investments are not in coordination. There is always enough money to clear the entire market, provided relative prices are in coordination. But the state brings about a distortion of relative prices, and thus they bring about a distortion in labor and resource allocation, when then LOOKS like there is not enough money later on.
Total spending is not supposed to keep gradually increasing despite what is happening on the real side of the economy. Only if the real side is in coordination would constant growth in aggregate spending even be warranted. But when it is forced, despite the real side errors, then it only makes the real side errors worse.
It’s not that they’re too many goods but too little money ot pay for them.
That is incorrect. The reason why it looks like some people have too little money to spend is because their prior incomes were derived from malinvestments themselves. A homeowner who can’t pay his mortgage because his income fell, was hired in an investment that should not have been made.
You are viewing the economy far too superficially. You’re only focusing on the immediate moment, the direct person in question, and you’re not considering the long term both before and after the event of not being able to pay a mortgage, and you’re not considering other people who are associated with this one person in the division of labor.
If the person who couldn’t pay their mortgage was never hired in their current job but another job, or never made the investments they did that are no longer profitable that they depended on for income, then they would have been able to pay their mortgage. We should also consider the building of the house itself. Did the homeowner purchase a house that itself represents partial relative overproduction, because consumers in general did not release enough scarce resources and labor to make such an expansion in housing a sustainable one? Perhaps the house would not have been built and perhaps something else would have been built with those resources and labor instead.
You can’t just point to a person who doesn’t earn enough income to pay their mortgage, and then believe the solution is for a money printer to print money for them. For suppose we had a free market where there is universal voluntary free exchange and no initiations of force against person, and no coercive confiscation of wealth either. Suppose in this voluntary society, a person ends up not being able to pay their mortgage. Your worldview, since it is not based on voluntarism, but on violence, would claim that the problem of why this person can’t pay their mortgage, is that they cannot initiate violence against others to steal their money, or coerce them into using that home owner’s issued currency by threatening them with violence if they don’t pay taxes in that currency, after which you just print off the currency you need and then externalize those costs on others.
Clearly, in this thought experiment, the claim that there is not enough money printing for this home owner’s benefit, is exposed as absurd, and it becomes CLEAR that the problem was his choice of work, the investor’s choice of investment that resulted in him being hired, that is, the problem is a localized set of errors made by a few people. This error is not an error that 300 million other people made.
Investors make errors, but it is silly to believe that the general population of investors can make errors all at the same time as a consequence of some alleged problem inherent in free trade itself.
Your worldview is mystical. It contains the belief that for some magical reason, that I and most other investors would all make investment errors at the same time, as if the entire population of humans are chained to an inevitable wave of boom and bust. How can that be when each investor is an individual and each makes choices as an individual? A force external to voluntary production and exchange itself is the culprit. The culprit is the “solution” you propose, which is violating voluntary production and exchange, in favor of a small group of bureaucrats who somehow are immune from what allegedly plagues those who engage in voluntary exchange, as if voluntary exchange is doomed to fail unless there are thieves and violent thugs to correct the entire population of people, lest they are inevitably doomed to futility in solving their own problems voluntarily.
This is the same silliness whereby it’s declared that people who are unemployed decided to enjoy more leisre time.
That “silliness” you describe is a straw man.
That only makes sense for someone who has enough money in the bank to afford all his necessaries in life even after cutting back from work.
Did you ever think of how he earned his money, and whether his income was a product of partial relative over-investment? Of course not, because you’re too busy demonizing free trade as if it is an evil conspiracy.
29. July 2012 at 08:41
MF, is there like a show you do that I can come see next time I’m in the states? I swear you give C.K a run for his money sometimes.
29. July 2012 at 09:58
Saturos:
MF, is there like a show you do that I can come see next time I’m in the states? I swear you give C.K a run for his money sometimes.
I too have seen people laugh in an economics class because they’re drunk, and they believe the professor is oh so funny. I also consider their laughter not to signal anything funny about the prof, but about their dealing with their discomfort at dealing with reality without a clear head, through the medicine of laughter.
It makes the pain go away, but only for a short while. Once the high you have of mocking me wears off, you’ll feel empty again on the inside, yearning to find what it is you are looking for.
29. July 2012 at 12:08
“I don’t see how. I am an economist. Calling you a non-economist isn’t a kettle calling a pot black”
Major Unfreedome, you’re a licensed economist? I’d love to know that school gave out that degree. Probably lose their accreidted status if that came to light.
29. July 2012 at 12:10
“I too have seen people laugh in an economics class because they’re drunk, and they believe the professor is oh so funny. I also consider their laughter not to signal anything funny about the prof, but about their dealing with their discomfort at dealing with reality without a clear head, through the medicine of laughter”
Major the most charitable thing to assume is that you’re drunk when you write all this crazy neurotic blather.
I imagine you in a padded room with no sharp objects.
29. July 2012 at 12:23
Major I call you Major Unfreedom for two reasons
One is that while you have claimed I’m a hyptocrite you are the one who I noitce likes to call people names while calling them a hypocrite when they call you names.
You mock many people like Nagation of Ideology, JV Dubous, Full Employment Hawk, among others giving them unflattering nicknames. So I don’t think it’s hypocritical to call you by a name I pick for you just as you do to others. Ie, Major, as you’re a bully let’s direct some of the name calling your way.
The second reason is that by your own admission you are opposed to democracy. Really I don’t need say anymore though you’re usually very slow to get the point. I notice that you usually require a lot more elaboration to grasp even the smallest pooints.
Basically though, if you are against democarcy you are for taking awa people’s freedom, that is to say you are for dictatorship.
that’s why I have said you ought to move to Saudi Arabia or some place like that as it’s a dictatorship.
Again, this shouldn’t be hard to grasp though I imagine the smoke will be gooing through your ears as you try to comprehend this. You opposse democracy. Saudi Arabia is as far from a democracy as you can get. Ergo, you would love it there.
In your mind only those with money have any rights. So it should be a good fit.
But calling yourself Major Freedom is what Orwell wrote about the flagrant abuse of language where you actually represent anything sooner than anyone’s freedom. What you represent is “screw you, I got mine. I count, you don’t”
That how I know you’re a Repuublican though you pretend otherwise. all Right wingers say they’re third party or “onone of the above” then come election day of course they vote Repug down the line.
If you aren’t Repug name me one postition of theirs that you disagree with?
In short, just as you call Full Employment Hawk, Full Unemployment Hawk, I call you by what you are really about, Major Unfreedom
29. July 2012 at 14:42
Major Freedom:
I know it’s a silly hobby, but in Mike Sax we’ve found someone even more clueless than Daniel Kuehn or “Lord Keynes”. And he has nowhere near the same abilities for spinning webs of deceit and unintelligible BS.
http://tinyurl.com/colnlln
29. July 2012 at 15:00
Bob you’re main talent is declaring victory though you’ve won nothing
29. July 2012 at 15:04
Bob you’re whole asanine Routhbardian apriori tautologies is unintelligble bs.
29. July 2012 at 15:06
And Bob I appreciate you talking up my blog. I checked out yours. What’s clear is that my site buries yours on analytics. You’re site is not even on the map.
So who cares about your silly quibbling? Although no matter how hard you try you’ll never be as silly as Major UnFreedom
29. July 2012 at 15:21
Mike Sax:
“I don’t see how. I am an economist. Calling you a non-economist isn’t a kettle calling a pot black”
Major Unfreedome, you’re a licensed economist?
Licensed by whom? The state? The state doesn’t dole out economic licenses. No, an economist is one who understands economics, thinks like an economist, and studies economics. None of these three apply to you.
I’d love to know that school gave out that degree.
I’d love to keep my person life personal.
“I too have seen people laugh in an economics class because they’re drunk, and they believe the professor is oh so funny. I also consider their laughter not to signal anything funny about the prof, but about their dealing with their discomfort at dealing with reality without a clear head, through the medicine of laughter”
Major the most charitable thing to assume is that you’re drunk when you write all this crazy neurotic blather.
How is it crazy or neurotic? You seem to have a predilection for making smears without every backing them up with actual arguments based on actual knowledge.
I imagine you in a padded room with no sharp objects.
That’s pretty neurotic.
Major I call you Major Unfreedom for two reasons
One is that while you have claimed I’m a hyptocrite you are the one who I noitce likes to call people names while calling them a hypocrite when they call you names.
Except I don’t care when you call me names. I call you a hypocrite because you get upset about being called names, and yet you call people names. I am not a hypocrite for pointing that out.
So being a hypocrite when it comes to name calling makes me an advocate of less freedom? How does that follow?
You mock many people like Nagation of Ideology, JV Dubous, Full Employment Hawk, among others giving them unflattering nicknames.
Are you actually saying that the only reason you’re calling me Major Unfreedom, is that I have changed the names of others to match what I consider to be their actual description? Negation of Ideology is very much advancing an ideology. He might not grasp this, but I can see it, and anyone else who considers his advocacies can see it. For Full Employment Hawk, I noticed that his advocacy for credit expansion and inflation is precisely a factor that brings about unemployment.
I haven’t renamed JV Dubois, so I don’t know what you’re referring to there.
At any rate, if you want to play the rename game, then you have to at least come up with a name that actually characterizes my advocacy.
So I don’t think it’s hypocritical to call you by a name I pick for you just as you do to others. Ie, Major, as you’re a bully let’s direct some of the name calling your way.
I’m a bully? I’m not the one advocating for violence. I am advocating for peace. Bullies initiate aggression. Those who defend victims against such bullies, like you and all the people you named, are not bullies themselves. That makes no sense.
The second reason is that by your own admission you are opposed to democracy.
How is opposing the majority initiating aggression against the minority, an advocacy of less freedom?
Really I don’t need say anymore
Yeah, because you know you can’t back up your claims with actual arguments. That’s why you just assert I am against freedom for being against violence against the minority.
So explain to me. How in the world is being against 51% of the population voting to impose their morality and their plans for means of production, against the minority and their property? You have to back up your accusation.
though you’re usually very slow to get the point.
What point? You’re not making any point. You fallaciously believe that when 51% of the population aggresses against the minority, that this is “freedom.” But that is not freedom. It is not freedom for the 49%!
I notice that you usually require a lot more elaboration to grasp even the smallest pooints.
How can you notice something that is quite clearly the opposite, at least when it comes to the tripe you spew here?
You aren’t justifying your assertion that my being against majority violence is somehow makes me anti-freedom.
Since when did mobs have the right to initiate aggression against those outnumbered?
Basically though, if you are against democarcy you are for taking awa people’s freedom, that is to say you are for dictatorship.
Who’s freedom? The “freedom” of the majority to exploit the minority? That’s isn’t freedom, that’s unjustified aggression.
And you are presenting a false dichotomy. The alternative to democracy is not dictatorship. I know you lack imagination, but another alternative to democracy is private property anarchy at the individual level. See the work of David Friedman to get a clue.
that’s why I have said you ought to move to Saudi Arabia or some place like that as it’s a dictatorship.
It is not the obligation of those in the minority to leave their own property when the mob majority disagrees with the minority when it comes to the minority’s own property and persons.
Again, this shouldn’t be hard to grasp though I imagine the smoke will be gooing through your ears as you try to comprehend this.
That’s an epic projection. You are not making any argument as to why being anti-democracy means one is anti-freedom. You are just hysterically claiming that if you’re against democracy, you’re pro dictatorship. I am against majority dictatorship, which is what democracy is. If there is anyone in favor of dictatorship, it’s you.
You opposse democracy.
I oppose violence against the individual. Democracy sanctions violence against the individual if a majority agrees.
Saudi Arabia is as far from a democracy as you can get. Ergo, you would love it there.
False dichotomy.
In your mind only those with money have any rights. So it should be a good fit.
No, individuals have rights. In your mind, only those in the majority mob have any rights. Those in the minority have no rights.
But calling yourself Major Freedom is what Orwell wrote about the flagrant abuse of language where you actually represent anything sooner than anyone’s freedom.
You haven’t shown how that is the case. You have only fallaciously claimed that being against majority violence somehow makes one pro-dictatorship.
What you represent is “screw you, I got mine. I count, you don’t”
No, what I represent is don’t tread on me. What you represent is “screw you, I want yours. I count, you don’t.”
That how I know you’re a Repuublican though you pretend otherwise.
What is how you know I am a Republican? I am not a Republican. I am against right wing violence no less than I am against left wing violence.
all Right wingers say they’re third party or “onone of the above” then come election day of course they vote Repug down the line.
Oh really? You did research to justify that claim?
If you aren’t Repug name me one postition of theirs that you disagree with?
We’ve already been over this. Your memory as I have explained to you before, is horrible.
I am against any and all right wing policies that are based on initiations of violence. Take your pick. There is no one monolithic Republican list of advocacies.
I don’t see the world in the left-right lens that you do. I support many left wing initiatives that increase individual liberty, such as abolishing the war on drugs, and so on, and I support many right wing initiatives that increase individual liberty, such as what most Republicans only pay lip service to, such as what you understand to be “economic” liberty.
I am against all right wing and left wing initiatives that call for state violence against the individual in the name of “society.” The two ideologies advocate for violence, which is why I am against them.
In short, just as you call Full Employment Hawk, Full Unemployment Hawk, I call you by what you are really about, Major Unfreedom
You haven’t shown how I am against freedom.
29. July 2012 at 15:28
“Except I don’t care when you call me names. I call you a hypocrite because you get upset about being called names, and yet you call people names. I am not a hypocrite for pointing that out”
I don’t call people names. You call everyone names. I call you names but no one else. Just so I’m not a “hypocrite.”
29. July 2012 at 15:30
Bob Roddis:
I know it’s a silly hobby, but in Mike Sax we’ve found someone even more clueless than Daniel Kuehn or “Lord Keynes”. And he has nowhere near the same abilities for spinning webs of deceit and unintelligible BS.
His spelling and grammar are also deplorable. Half the time I spend trying to remind myself that I am not reading something a 8 year old is writing.
Mike Sax:
Bob you’re whole asanine Routhbardian apriori tautologies is unintelligble bs.
I agree you don’t understand Rothbard, for he doesn’t even accept that human action is a priori valid, as he holds it to be empirically valid, and I also agree that you don’t understand praxeology or epistemological reasoning. You’re ignorant of that which you choose to attack.
29. July 2012 at 15:30
“You haven’t shown how that is the case. You have only fallaciously claimed that being against majority violence somehow makes one pro-dictatorship.”
there is only one choice. Either you’re for democracy or your for dictatorship. Not very complicated. I don’t need to show anything beyond the fact that you want to take away the right to vote and give all power to “the people that matter” ie, the rich.
29. July 2012 at 15:31
I don’t call people names.
Yes, you do. You call me Major Unfreedom. I am a person.
You call everyone names.
No, I don’t call everyone names. Just those you listed. That’s not everyone.
I call you names but no one else.
You call others Repugs you liar. That’s name calling.
Just so I’m not a “hypocrite.”
Oh yes you are.
29. July 2012 at 15:31
Mike Sax:
Although no matter how hard you try you’ll never be as silly as Major UnFreedom
You haven’t shown how I am “silly.”
29. July 2012 at 15:35
so that’s the best you have? I sometimes leave typos and don’t bother to correct it? I could go over every word but have better things to do. When I write my postst at my very widely read blog I don’t have any spelling errors.
I can spell I just write fast and have better things to do than to bother to spellcheck. If that’s all you have you are even more bankrupt than I knew.
when do you want to get in on the other side on Treasurys? I never hear back from you on that. You know the coming popping of the “bubble in Treaurys?”
29. July 2012 at 15:37
Major I’ve show it many times and everyone knows it anyway. That you still can’t understand that you’re extremely silly with your neuroticism just shows you’re also very dense. Some things are just self-evident. If you can’t get it by now that’s just another symptom of your many problems
29. July 2012 at 15:39
“as he holds it to be empirically valid”
No he doesn’t. Bob roddis had a link yesterday. I read it and Rothbard admitted that he basically invented his own new meaning of “empirical”
In reality he’s just another tautologist.
29. July 2012 at 15:44
“Yes, you do. You call me Major Unfreedom. I am a person.”
I see no evidence of that. I refuse to accpet that you are actually a person rather than a space alien based on yet another tautology
29. July 2012 at 16:00
Mike Sax:
so that’s the best you have?
No.
I sometimes leave typos and don’t bother to correct it?
I don’t believe they’re just typos. I think you have a problem spelling.
I could go over every word but have better things to do.
Oh, so you treat your spelling and grammar the same way you treat economic science.
When I write my postst at my very widely read blog I don’t have any spelling errors.
Haha, “very widely read.” I guess when nobody else will pat you on the back…
I can spell I just write fast and have better things to do than to bother to spellcheck.
I don’t spell check either, but I can’t compete with the number of errors you make.
If that’s all you have you are even more bankrupt than I knew.
You wish it was all I had.
when do you want to get in on the other side on Treasurys?
Again, this is just evidence that you don’t understand how the market works. You don’t get in by first finding an individual to go the opposite way. The clearing house does that for you.
I never hear back from you on that.
That’s because you didn’t read what I said. I already replied to this.
You know the coming popping of the “bubble in Treaurys?”
I said bond bubble, not Treasury bubble.
Major I’ve show it many times and everyone knows it anyway. That you still can’t understand that you’re extremely silly with your neuroticism just shows you’re also very dense.
You have not shown that at all. You have not shown I am “neurotic”, nor “silly”, nor “very dense.”
And your spelling is still horrible, by the way.
Some things are just self-evident.
Haha, you said you were against a priori propositions, now you’re using them when it suits your agenda. Too funny.
If you can’t get it by now that’s just another symptom of your many problems
You’re like one of my ex girlfriends. “If you don’t know, I’m not telling you!”
“as he holds it to be empirically valid”
No he doesn’t.
Yes, he does.
Bob roddis had a link yesterday. I read it and Rothbard admitted that he basically invented his own new meaning of “empirical”
He did not admit that. You’re just making that up.
In reality he’s just another tautologist.
You don’t even know what that means.
“Yes, you do. You call me Major Unfreedom. I am a person.”
I see no evidence of that.
Hahaha.
I refuse to accpet that you are actually a person rather than a space alien based on yet another tautology
A space alien? Who’s neurotic now?
29. July 2012 at 16:02
Mike Sax:
“You haven’t shown how that is the case. You have only fallaciously claimed that being against majority violence somehow makes one pro-dictatorship.”
there is only one choice. Either you’re for democracy or your for dictatorship.
False dichotomy. There are choices beyond democracy and dictatorship.
Not very complicated.
I think you’re conflating your own simple mind for that of reality.
I don’t need to show anything beyond the fact that you want to take away the right to vote and give all power to “the people that matter” ie, the rich.
You don’t have a right to steal or aggress against those in the minority.
There is no such thing as a right to initiate violence.
29. July 2012 at 16:08
“You don’t have a right to steal or aggress against those in the minority”
Our rights are in the constitution. There is an amendment for the income tax. that’s it. I’m not simpleminded I just get to the heart of the matter.
You on the other hand write books some of your posts are so long and stil don’t get anywhere near the heart of the matter.
It’s either dictatorship or democracy. There are no other choices. You’re claim that there’s some other choice is a lie. Hitler believed the same thing
29. July 2012 at 16:12
“Again, this is just evidence that you don’t understand how the market works. You don’t get in by first finding an individual to go the opposite way. The clearing house does that for you”
Nice try, Unfree. I’ve probably made more money than you have in the market. actually my best period was 2008 during teh crisis.
There are funds that short treasurys. Obviously we would have to bet betweeen us indivudally but it would simply be based on the funds performance or the rates.
Anyway you tried to deny that anyone ever lost money on Treaurys so this shows you are clueless cubed.
29. July 2012 at 16:16
“He did not admit that. You’re just making that up.”
Sure he did. Again you argue empirical reality. If you don’t believe go check the link. I quoted it back to Bob and he couldn’t deny it though he tried to argue that it doesn’t matter.
You always deny reality when it’s easy to decide. I even quoted it back to Bob. It’s there in black and white. If you claim that Rothbard is not a tautologist then you don’t know what it is even though you’re whole intellectual edifice is based on it.
Nothing you say correpsonds to reality. It’s all these tautologies of frauds like Rothbard.
29. July 2012 at 16:19
Mike Sax:
“You don’t have a right to steal or aggress against those in the minority”
Our rights are in the constitution.
The signers of the Constitution had no right to sigh contracts on behalf of the unborn.
There is an amendment for the income tax. that’s it.
Then you have nothing.
I’m not simpleminded I just get to the heart of the matter.
Haha, no you don’t. You’re simple minded and you stay superficial. You didn’t ask from where did the signer of the Constitution have a right to sign contracts on behalf of you, someone born 250 years later.
You on the other hand…
Am asking the deep questions that you ignore.
It’s either dictatorship or democracy.
False dichotomy. There are alternatives to democracy and dictatorship that you are not considering…because you’re simple minded.
There are no other choices. You’re claim that there’s some other choice is a lie.
No, it’s not a lie. It’s the truth.
Hitler believed the same thing
Godwin.
Hitler also believed in state authority.
“Again, this is just evidence that you don’t understand how the market works. You don’t get in by first finding an individual to go the opposite way. The clearing house does that for you”
Nice try, Unfree.
Thank No Sax.
I’ve probably made more money than you have in the market.
You don’t even understand the market. You are not being honest.
actually my best period was 2008 during teh crisis.
Haha
There are funds that short treasurys.
There are funds that require margin calls and collateral. I don’t want any of these limitations.
Obviously we would have to bet betweeen us indivudally but it would simply be based on the funds performance or the rates.
Obviously? Haha, you didn’t even know.
Anyway you tried to deny that anyone ever lost money on Treaurys so this shows you are clueless cubed.
Straw man. I never tried to deny that.
29. July 2012 at 16:21
“A space alien? Who’s neurotic now?”
You are king of all neurotics. It doesn’t surprise me you have so many ex-girlfriends.
Some things are obvious enough. I’ve gone into how nutty you are the way you write this long wordy misssives so all day. I mean you try to turn it around and say I’m simpleminded which like anything else you say of course is just a big laugh. In reality you dont get that part of intelligence is the ability to simplyfy your argument. But you are the opposite-just way too wordy and ponderous.
Even if you were right about anything no one would have the patience to shift through all the crazy.
29. July 2012 at 16:23
“Straw man. I never tried to deny that.”
And this is why aruging with you is such a wastem of time. You simply contradict yourslef like the pathological liar you are. You did deny it. I mentioned that Jim Rogers and Bill Gross lost their shirts and you said “Where? Where?”
29. July 2012 at 16:28
Mike Sax:
“A space alien? Who’s neurotic now?”
You are king of all neurotics.
Then you’re emperor of all neurotics.
It doesn’t surprise me you have so many ex-girlfriends.
You do know that having many ex girlfriends means I have had many girlfriends, right?
Some things are obvious enough.
Like your ignorance?
I’ve gone into how nutty you are the way you write this long wordy misssives so all day.
Where? I don’t see it. All I see are your wordy misssssssssives all day long.
I mean you try to turn it around and say I’m simpleminded which like anything else you say of course is just a big laugh.
How so?
In reality you dont get that part of intelligence is the ability to simplyfy your argument.
That’s what the simple minded say.
But you are the opposite-just way too wordy and ponderous.
You’re jealous.
Even if you were right about anything no one would have the patience to shift through all the crazy.
You do, haha.
“Straw man. I never tried to deny that.”
And this is why aruging with you is such a wastem of time.
Because I refuse to accept unjustified accusations against me as if they’re justified? You consider THAT to be a reason why arguing with me is a waste of time? You’re not even arguing with me. You’re just on your period and you need someone to talk to.
You simply contradict yourslef like the pathological liar you are.
Where?
You did deny it.
Where?
I mentioned that Jim Rogers and Bill Gross lost their shirts and you said “Where? Where?”
Asking you to show me what you claimed is the case, is me denying that people lost money in the Treasury market? You’re neurotic.
29. July 2012 at 16:33
“Are you actually saying that the only reason you’re calling me Major Unfreedom, is that I have changed the names of others to match what I consider to be their actual description? Negation of Ideology is very much advancing an ideology. He might not grasp this, but I can see it, and anyone else who considers his advocacies can see it. For Full Employment Hawk, I noticed that his advocacy for credit expansion and inflation is precisely a factor that brings about unemployment”
You keep saying there’s no examples of you being neurotic and dense. Here’s an example of your density. “Are you actually saying that the only reason you’re calling me Major Unfreedom, is that I have changed the names of others to match what I consider to be their actual description?”
No I didn’t say that, I said it’s one reason. There was the other that you are committed to enslaving others for the benefit of yourself and “those that matter.”
The idea that there is another choice between dictorship and slavery is an old idea. Hitler popularized it. Every expierment has ended in disaster.
29. July 2012 at 16:43
Mike Sax:
“Are you actually saying that the only reason you’re calling me Major Unfreedom, is that I have changed the names of others to match what I consider to be their actual description? Negation of Ideology is very much advancing an ideology. He might not grasp this, but I can see it, and anyone else who considers his advocacies can see it. For Full Employment Hawk, I noticed that his advocacy for credit expansion and inflation is precisely a factor that brings about unemployment”
You keep saying there’s no examples of you being neurotic and dense.
Yes, and you keep saying there are.
Here’s an example of your density. “Are you actually saying that the only reason you’re calling me Major Unfreedom, is that I have changed the names of others to match what I consider to be their actual description?”
How is that dense?
No I didn’t say that, I said it’s one reason.
As I have shown, your other “reason” isn’t even true, so the “No, you” is your only reason.
There was the other that you are committed to enslaving others for the benefit of yourself and “those that matter.”
I am not committed to enslaving others, you are, through majority rule.
The idea that there is another choice between dictorship and slavery is an old idea.
So are false dichotomies.
Hitler popularized it.
Popularized what? The false dichotomy? No, he didn’t.
Every expierment has ended in disaster.
Every experiment in what? Statism? I agree.
29. July 2012 at 16:49
“I am not committed to enslaving others, you are, through majority rule.”
Nope. Majority rule is freedom. You are Major Unfreedom. That;s who you are and you shouldn’t be ashamed to must admit it.
You are commmitted to enslaving others. That’s what your pal Herman Hoppe wants. Indeed he actually says that the optimum social structure is feudalism.
That’s what you also represent.
29. July 2012 at 16:51
“Popularized what? The false dichotomy? No, he didn’t.”
Yes. Hitler popularize the idea that democracy is slavery and authortarianism is freedom. You have the same agenda.
You can try all you might to try to distinguish yourself but the agenda of you and Herman Hoppe is just old wine in new bottles.
29. July 2012 at 16:51
Mike Sax:
Nope. Majority rule is freedom.
No, it is not. Majority rule is not freedom for the minority.
Majority rule is freedom for the majority only. In this sense, it is more akin to dictatorship, since in dictatorship, there is freedom for the dictator only.
You are Major Unfreedom.
You are No Sax.
That;s who you are and you shouldn’t be ashamed to must admit it.
I cannot admit what isn’t true.
You should admit that you want to initiate violence against the millions of people who happen to make up the minority. You are Mike No Sax No Freedom.
29. July 2012 at 16:53
Mike Sax:
“Popularized what? The false dichotomy? No, he didn’t.”
Yes. Hitler popularize the idea that democracy is slavery and authortarianism is freedom. You have the same agenda.
I don’t want authoritarianism. You do. You want authority of the majority over the minority. You are like one of a majority of Hitlers.
You can try all you might to try to distinguish yourself but the agenda of you and Herman Hoppe is just old wine in new bottles.
I don’t have to “try”. It’s inherent in my position. You have to try to paint your violent worldview as “freedom”, despite the fact that 49% are not free in what you advocate.
29. July 2012 at 16:56
Mike Sax:
Indeed he actually says that the optimum social structure is feudalism.
Where did he write that? Oh that’s right, he didn’t.
29. July 2012 at 18:03
Mark, Thanks for the link. It sounds an awful lot like Krugman’s view of monetary policy at the zero bound.
Evan. Yes, another disappointing report, although I can’t say I was surprised. I may post on it at some point, but I think by now almost everyone knows what I think.
Benny, I just ignore the people who comment non-stop. The quantity is usually inversely related to the quality, and they never have anything interesting to say.
I can’t even imagine what it would be like to just sit all day and put one nonsensical comment after another into a comment section that no one reads. Perhaps it’s a sort of mental illness.
29. July 2012 at 22:28
I have been working on an essay/post on how and why the Eurozone Great Recssion is so like the goldzone Great Depression. It covers vaguely similar ground to Ryan Avent’s essay, but concentrating on the economic history, not the history of theory. It is now up. Fairly obviously, it could only have been produced due to me reading your blog and the other MM blogs so assiduously.
http://skepticlawyer.com.au/2012/07/30/broken-by-the-fix/
As I have said before, I am enormously grateful for your blogging because it has made the macroeconomic world around us so much clearer.
30. July 2012 at 05:49
Scott, two people sit and spout nonsense at each other to pass time – that’s what modern humans do, by any measure, regardless of whether it happens in a bar, Seinfeld’s coffee shop or the ether.
also, please delete benny lava comments. he’s un-American.
30. July 2012 at 08:15
“Where did he write that? Oh that’s right, he didn’t.”
Evidently I even know your own heroes better than you do. I’ve read him say it. If you deny it you’re either ignorant or a liar.
30. July 2012 at 08:16
Just like you don’t know what Rothbard said. He admitted he isn’t a real empiricist but in truth a tautologist.
30. July 2012 at 08:47
Major Unfreedom
As you obstinately insist Hoppe doesn’t prefer feudalism while he has stated just that we know you are either ignorant of your master’s words or lying. Let’s presume ignorance for arugment’s sake.
Though it’s not my responibility I will give you the breastfeeding you lack. You aay you were as a child but you still need it evidently. Here is Hoppe:
“History “” the sequence of events unfolding in time “” is “blind.” It reveals nothing about causes and effects. We may agree, for instance, that feudal Europe was poor, that monarchical Europe was wealthier, and that democratic Europe is wealthier still, or that nineteenth-century America with its low taxes and few regulations was poor, while contemporary America with its high taxes and many regulations is rich. Yet was Europe poor because of feudalism, and did it grow richer because of monarchy and democracy? Or did Europe grow richer in spite of monarchy and democracy? Or are these phenomena unrelated?”
http://www.lewrockwell.com/hoppe/hoppe4.html
Here if he doesn’t quite advocate it he suggests it’s preferrable to democracy and monacrchy. He even suggests that given the choice monarchy is preferrable to democracy:
“Theoretically speaking, the transition from monarchy to democracy involves no more or less than a hereditary monopoly “owner” “” the prince or king “” being replaced by temporary and interchangeable “” monopoly “caretakers” “” presidents, prime ministers, and members of parliament. Both kings and presidents will produce bads, yet a king, because he “owns” the monopoly and may sell or bequeath it, will care about the repercussions of his actions on capital values. As the owner of the capital stock on “his” territory, the king will be comparatively future-oriented. In order to preserve or enhance the value of his property, he will exploit only moderately and calculatingly. In contrast, a temporary and interchangeable democratic caretaker does not own the country, but as long as he is in office he is permitted to use it to his advantage. He owns its current use but not its capital stock. This does not eliminate exploitation. Instead, it makes exploitation shortsighted (present-oriented) and uncalculated, i.e., carried out without regard for the value of the capital stock.”
So he thinks the King will “exploit” his property-the nation less-than democratic politicians as they don’t own it they are only “caretakers”
This is just a snippet but I’ve read more about the the book of his “Democracy the God Who Failed” elsehwere and it’s clear he is partial to feudalism
This is logical. If you say that the politicas decisions of a country should not be made by the majoirty, then logicaly you are saying they should be made by a minority. I’ve tried to get you to elaborate on just which minority it is that you have in mind but not suprisingly you’ve been as winsomely coy as a young maiden living in the time of the feudalism you and Hoppe dream of us returning too.
30. July 2012 at 10:04
Mike Sax:
“Where did he write that? Oh that’s right, he didn’t.”
Evidently I even know your own heroes better than you do. I’ve read him say it.
This does not answer my question. If you have read him say it, then back it up with actual evidence. If you refuse, then you’re either ignorant or a liar.
Just like you don’t know what Rothbard said. He admitted he isn’t a real empiricist but in truth a tautologist.
You still haven’t backed that claim up either.
As you obstinately insist Hoppe doesn’t prefer feudalism while he has stated just that
Where did he state just that?
we know you are either ignorant of your master’s words or lying.
You already said this. If you refuse to back up what you said, then either you’re ignorant or you’re a liar.
Though it’s not my responibility I will give you the breastfeeding you lack. You aay you were as a child but you still need it evidently. Here is Hoppe:
“History “” the sequence of events unfolding in time “” is “blind.” It reveals nothing about causes and effects. We may agree, for instance, that feudal Europe was poor, that monarchical Europe was wealthier, and that democratic Europe is wealthier still, or that nineteenth-century America with its low taxes and few regulations was poor, while contemporary America with its high taxes and many regulations is rich. Yet was Europe poor because of feudalism, and did it grow richer because of monarchy and democracy? Or did Europe grow richer in spite of monarchy and democracy? Or are these phenomena unrelated?”
As expected, you are completely misunderstanding what Hoppe wrote.
This is not stating a preference for feudalism. This is a series of hypothetical questions that can be asked, to illustrate the fact that history must be understood and cannot speak for itself.
Here if he doesn’t quite advocate it he suggests it’s preferrable to democracy and monacrchy.
Oh, so you are a liar then. Hoppe doesn’t “suggest” feudalism is superior to democracy and monarchy. He is asking questions.
You are inferring statements that are not there. No wonder you were hesitant to citing passages the first time. You’re lying to yourself and you suspected others would point that out.
He even suggests that given the choice monarchy is preferrable to democracy:
That is true. But then so what? He prefers anarcho-capitalism to monarchy. You can’t say someone is pro-murder for choosing to kill 1 million innocent people instead of 100 million innocent people, if those were the only two choices.
So he thinks the King will “exploit” his property-the nation less-than democratic politicians as they don’t own it they are only “caretakers”
And what is your counter-argument?
This is just a snippet but I’ve read more about the the book of his “Democracy the God Who Failed” elsehwere and it’s clear he is partial to feudalism
Partial how? Where is the non-evidence for that claim?
This is logical.
You’re not logical. You’re emotive.
If you say that the politicas decisions of a country should not be made by the majoirty, then logicaly you are saying they should be made by a minority.
False dichotomy. There is a third alternative that you keep ignoring. Private law society in which there are no decisions made for everyone. There are only decisions that apply to specific parties. There is no central plan in a society where decisions are not made by the majority.
I’ve tried to get you to elaborate on just which minority it is that you have in mind but not suprisingly you’ve been as winsomely coy as a young maiden living in the time of the feudalism you and Hoppe dream of us returning too.
I can’t be coy about what doesn’t exist. I have showed you that wanting to abolish mob rule does not imply that one wants to instill dictatorial rule. You are just unable to think outside the master-slave mentality. You believe statism is inevitable. It isn’t.
30. July 2012 at 12:03
“You can’t say someone is pro-murder for choosing to kill 1 million innocent people instead of 100 million innocent people, if those were the only two choices.”
Actually you’ve accused me of that before. When I explained that law enforcement never expects that there will be no murders or rapes you piously insisted that law abiding people can’t think like that.
Now you are accepting the lesser of two evils argument that in the past you were against. I thought you were a moral absolutist.
30. July 2012 at 12:43
“If you say that the politicas decisions of a country should not be made by the majoirty, then logicaly you are saying they should be made by a minority.”
All political decisions are made by a minority.
The majority must not have unchecked power. Without checks The majority will frequently strip the rights and propery from minority intrests, a.k.a. the tyrrany of the majority.
To protect ourselves from mom rule we have enmerated rights, a three part federal government, separated state, local and federal powers, the power to organize, and dynamic tension between intrest groups. A mosaic of institutions exists to protect the rights minorities and indivuidals.
30. July 2012 at 13:44
Mike Sax:
“You can’t say someone is pro-murder for choosing to kill 1 million innocent people instead of 100 million innocent people, if those were the only two choices.”
Actually you’ve accused me of that before.
Where? Back up your accusation. Oh that’s right, you don’t do that.
When I explained that law enforcement never expects that there will be no murders or rapes you piously insisted that law abiding people can’t think like that.
I didn’t claim that. Another straw man.
You are hopelessly confused.
Now you are accepting the lesser of two evils argument that in the past you were against.
I was never against having preferences and ranking two alternatives. I do not reject the fact that preferences exist. What I do reject is the claim that such evils necessarily must exist such that one can only ever devote one’s intellectual life to promoting the lesser of two evils, rather than the good.
I thought you were a moral absolutist.
I am, and so is Hoppe. He is absolutely against monarchy and democracy.
30. July 2012 at 14:03
“You are hopelessly confused.”
Nope you are either lying or you’re confused, we already know your hopeless. It’s funny how many things you lie about. You keep pretending I said that success is all about luck, though I said no such thing.
Now you’re claining you never affected the stance of a moral absolutist. As you are either a liar, or have a very poor memory it sets back your puny agenda even further-you know of convincing people that freedom=slavery.
You call this slavery, euphemistically enough “anarcho-capitalsim”
You’re buddy Hoppe makes it pretty clear what it’s about and it aint freedom, Major Unfreedom.
30. July 2012 at 14:06
“I am, and so is Hoppe. He is absolutely against monarchy and democracy”
No he isn’t. Neither are you.
If given the choice he would wave a wand and give us Monarchy with the moor responsible Monarch who doesn’t “exploit” as badly as a democrat does.
Just as an aside I have to laugh at your usual macho poise:
“You’re not logical. You’re emotive.”
that’s a typical canard of Rightists. To me the idea of yours that you are above all human emotion is more irrational than anything. As you lack normal human emotions that’s another reason to suspect you are not a person but a space alien.
30. July 2012 at 14:08
Again Major Unfreedom:
“You can’t say someone is pro-murder for choosing to kill 1 million innocent people instead of 100 million innocent people, if those were the only two choices.”
This doesn’t sound like the words of a moral absolutist. It’s sounds like-what’s that word you love to bandy about?-a hypocrite.
30. July 2012 at 14:12
Major Unfreedom
I notice you haven’t supplied the quotes of where I said all success is based on luck either. I won’t hold my breath for them.
Seeing as you made them up.
30. July 2012 at 14:17
Mike Sax:
“You are hopelessly confused.”
Nope you are either lying or you’re confused, we already know your hopeless.
No, you’re confused, hopeless, and you lie.
It’s funny how many things you lie about.
You haven’t shown me to be lying about anything. How can what doesn’t exist be “funny”?
You keep pretending I said that success is all about luck, though I said no such thing.
Again, I didn’t say you said that. I said it is wrong to claim that success is all luck. I didn’t say you said that.
Now you’re claining you never affected the stance of a moral absolutist.
I just said I am a moral absolutist.
As you are either a liar, or have a very poor memory it sets back your puny agenda even further-you know of convincing people that freedom=slavery.
It is you that has poor memory and it is you who is a liar.
I am not trying to convince people that freedom = slavery. YOU are trying to convince me that the majority enslaving the minority is freedom.
You call this slavery, euphemistically enough “anarcho-capitalsim”
It isn’t a euphemism for slavery. Democracy is a euphemism for slavery of the minority.
You’re buddy Hoppe makes it pretty clear what it’s about and it aint freedom, Major Unfreedom.
Mike No Sax, you have made it very clear that you are ignorant.
“I am, and so is Hoppe. He is absolutely against monarchy and democracy”
No he isn’t. Neither are you.
Yes he is, and so am I.
If given the choice he would wave a wand and give us Monarchy with the moor responsible Monarch who doesn’t “exploit” as badly as a democrat does.
Yes, if those were the choices. But humans are not doomed to make such choices. We can make other, alternative choices, by choosing other alternatives.
Just as an aside I have to laugh at your usual macho poise:
Laughter is the best medicine, isn’t it?
that’s a typical canard of Rightists.
That’s a typical spoiling of the well.
To me the idea of yours that you are above all human emotion is more irrational than anything.
I didn’t say I was above all human emotion. I just said what you say is not a product of logic, but emotion.
As you lack normal human emotions that’s another reason to suspect you are not a person but a space alien.
Internet diagnosis FTW again. And again you show your neuroticism.
“You can’t say someone is pro-murder for choosing to kill 1 million innocent people instead of 100 million innocent people, if those were the only two choices.”
This doesn’t sound like the words of a moral absolutist.
Of course it sounds like a moral absolutist. What else can a moral absolutist say when it comes to choosing between 1 million innocent deaths and 100 million innocent deaths?
It’s sounds like-what’s that word you love to bandy about?-a hypocrite.
Yay, you don’t know what that term means either.
30. July 2012 at 14:18
Mike No Sax:
I notice you haven’t supplied the quotes of where I said all success is based on luck either.
I didn’t say you said all success is luck.
I won’t hold my breath for them.
I won’t hold my breath for your citation of me saying you said all success is luck, seeing as how you made that up.
30. July 2012 at 17:05
Thanks Lorenzo, A voice of reason in a sea of inane comments.