Silence is golden

My comment section has recently gone quiet, and I’m loving it.  Before explaining why, let’s consider this comment from Ryan Avent:

This misreading begins with its assessment of the stance of monetary policy; in the BIS’s view low interest rates are indicative of loose monetary policy. My colleague seconds this view, writing that central banks are determined to “keep monetary policy as loose as possible for as long as possible”. But this doesn’t add up. It suggests, for one thing, that monetary policy was remarkably loose during the Depression and extremely tight during the inflations of the 1970s, which we know is not true. It ignores, for another, that central banks have not remotely used all the tools at their disposal.

Remember the old Mad magazine “Spy vs. Spy?”  Reading Free Exchange sometimes makes me think “The Economist vs. The Economist.” Obviously I agree with Ryan the Economist, but what’s more interesting to me is that I can’t get the conventional wisdom to change its mind on this issue, even though I’ve won every argument.  On other issues I can force a debate.  Take monetary offset. I’ve had lots of debates on this issue, and people have presented me with very good arguments against my point of view.  Arguments that I find hard to refute.  It’s an open question.  In contrast, the conventional wisdom continues to plod ahead with the view that money has been easy over the past 6 years, despite the fact that when I challenge anyone on this issue their arguments collapse almost immediately.  No one has ever put even the slightest resistance to my demolition of the “low interest rates implies easy money” argument.  And I’ve debated dozens of economists.  But I can’t budge the conventional wisdom by one inch.  It’s rock solid.

One response is that it doesn’t matter what we call it, it’s just a question of semantics.  But it does matter, as the people who insisted that money was easy have been wrong about the effects of monetary policy.  Many of them argued we needed tighter money to help savers.  They applauded the fact that the sensible Germans stopped the ECB from going headlong into “easy money” like the British and Americans.  They applauded the eurozone interest rate increases of 2011, even though we explained that tight money leads to LOWER interest rates in the long run.  Well now the long run is here, and the German dominated ECB has just driven interest rates into negative territory. How’s that hawkish German policy working for those thrifty housewives in Stuttgart?

Of course being wrong about everything doesn’t stop them from making the same claims over and over again.  Here’s Ryan, sensibly directing his frustration against the BIS so that things can remain civil at The Economist:

Of course, it is grimly amusing to recall that the BIS wanted tighter policy in 2011 to fend off inflation. Had it pushed for more expansionary policy then in order to get a faster recovery despite””or even because of””the risk of inflationary pressures, then the case for higher rates now would be open and shut (assuming rates had not already begun rising). Though it wishes to cast itself as rising above short-termism in macroeconomic policy, it is strangely blind to the risk that excessively tight policy in the short run might lead to interest rates that are lower for longer than would otherwise be the case.

Now about that quiet comment section.  A few years ago I had near constant debates on two fronts. Exhausting debates.  On the left I faced one commenter after another ridiculing the idea that monetary policy could be stimulative at zero rates.  Ridiculing the notion that the “expectations fairy” could help the Japanese economy.  When the 2% inflation target fairy sent the yen sharply lower, and Japanese stocks sharply higher, and NGDP higher, and RGDP higher, and inflation higher, and unemployment to the lowest level in 16 years, it became a lot harder to ridicule my views.  Even fanatics don’t like to appear absurd, and making liquidity trap arguments in 2014 looks absurd. The monetary offset criticism has also died down, although it’s still a bit more of an open question than the liquidity trap nonsense.  But the failure of Krugman’s 2013 “test” certainly helped our cause.

On the right I was hammered by people who claimed my policies were hurting savers.  I tried to patiently explain that in the long run monetary stimulus was the best way to help savers, the best way to boost nominal and real interest rates.  I pointed out that tighter money would simply cause a double dip recession, as in the US in 1937 and Japan in 2001, and that it would lead to lower rates in the lower run.  The ECB ignored this advice in 2011, had their double dip recession, and German savers are now paying the price.

So there’s really nothing much left to debate.  My comment section has become a snoozefest. Maybe I should be like Krugman, and shift over to the inequality issue.  Like me, he was also proved right about everything, or at least that’s what we both claim.  🙂

PS. Speaking of The Economist, this is a fascinating article.  If we must have governments, why can’t they all be like the Estonian government?  As my commenter Lorenzo says, small is beautiful.


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94 Responses to “Silence is golden”

  1. Gravatar of TravisV TravisV
    1. July 2014 at 05:12

    I sure miss the active comment section!

    Another possible reason it’s quiet: the U.S. economic recovery seems to be on auto-pilot (and stocks are up 6% so far this year).

    http://www.businessinsider.com/chris-rupkey-on-the-economy-2014-6

    http://www.businessinsider.com/janet-yellen-dove-2014-6

  2. Gravatar of Ironman Ironman
    1. July 2014 at 05:29

    The words of Max Planck:

    “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

    Just consider how many people got their basic understanding of economics from Samuelson, and you’ll soon have more insight into the scope of the challenge.

  3. Gravatar of John Carney John Carney
    1. July 2014 at 05:52

    For what it’s worth, I agree that monetary policy has not been loose, much less very loose. A lot of writers just use “loose money” as a short hand for “low rates.” I think that is changing, however.

  4. Gravatar of SG SG
    1. July 2014 at 05:57

    The Fed does seem to be doing a competent job at the moment, though I find myself increasingly paranoid that something unexpected will throw them for a loop and we’ll find ourselves back in 2008.

    There was a recent article in the WSJ about how Janet Yellen’s NIMBY neighbors have gotten in a huff because her security detail has had the gall to wear conspicuous blue uniforms and eat fast food in their georgetown neighborhood.

    What’s interesting, though, is that the commentators on that article were unanimous in denouncing the security detail on the grounds that who cares what happens to the Fed Chair, because (1) who would want to do something to an obscure academic, and (2) Yellen is totally replaceable if something were to happen to her.

    My worry is that number 2 is not at all true. Granted, I don’t have any special knoweldge, but I don’t get the sense that there’s a true consensus on where the Fed should be steering the economy. Rather, it’s because Yellen is putting the focus on unemployment that the Fed is waving off the anti-inflationistas on Wall Street/at the BIS.

    And, of course, it’s the Fed’s reliance on competent leadership in times of crisis that is its greatest weakness. If only there was some policy rule that could be applied consistently to balance the trade-off between inflation and unemployment…

  5. Gravatar of Kenneth Duda Kenneth Duda
    1. July 2014 at 06:20

    Scott, now that you’ve won the debate on your blog, then what are your thoughts around what is actually required to drive three ideas into the mainstream:

    1. The best way for the Fed to serve its dual mandate is to target NGPD or total nominal wages, rather than throw us off course chasing ill-defined “real” aggregates like inflation or unemployment by targeting variables like interest rates only loosely linked to anything we really care about.

    2. The best way for the Fed to target the nominal aggregate of choice is to harness a prediction market to determine the Fed’s open market operations, rather than pulling policy specifics e.g. QE from you know where.

    These are really big ideas, and they really matter. How do we push them forward? I’d love to see posts on your blog (I read every single one) addressing what we can do here, beyond waiting for the old guard to die off as Ironman suggests in a comment above.

    Thank you,

    Kenneth Duda
    Menlo Park, CA
    kjd@duda.org

  6. Gravatar of benjamin cole benjamin cole
    1. July 2014 at 06:22

    Look at all the fat people always on a diet.
    Ergo, a central bank can tighten its way to higher interest rates. Right?

  7. Gravatar of brendan brendan
    1. July 2014 at 06:23

    Yeah, I read you less and comment less because the debate is over. At least on the big questions. You and the MM won, period. The never-ending accumulation of ever more technical supporting facts, the Mark Sadowski specialty, is impressive, but as a non-specialist it makes my head hurt.

    The sane and disinterested are already market monetarists. Further progress requires NGDP futures markets. As Hanson says, you can bitch all day about bias and groupthink, but human nature isn’t gonna change, so change institutions. Once NGDP futures are up and running, and they’re talked about internally by the Fed, then MM gets really interesting again.

  8. Gravatar of Becky Hargrove Becky Hargrove
    1. July 2014 at 06:45

    “Maybe I should be like Krugman, and shift over to the inequality issue.”

    After reading Piketty, I noticed that conversation regarding inequality that did not involve actual market based measures (such as Kenneth Duda and brendan reference) also felt uninteresting. Just as a prediction market and total nominal income target are needed, there also need to be inclusive markets for skills sets and local services redefinition.

  9. Gravatar of James “azmyth” Oswald James "azmyth" Oswald
    1. July 2014 at 06:50

    I used to comment all the time and don’t much anymore. I feel like I’ve gotten a pretty good handle on “What Scott Sumner would say” in most situations. I don’t feel the need to ask any further questions or make any comments.

  10. Gravatar of James “azmyth” Oswald James "azmyth" Oswald
    1. July 2014 at 06:52

    I’ve gotten a good handle on what you’d say in most situations, so I don’t feel the need to ask questions. I used to comment all the time.

  11. Gravatar of dannyb2b dannyb2b
    1. July 2014 at 06:52

    I think money has been loose but not effective. Like a racecar in first gear at 7000 rpm. Just because there is more effective tools out there doesnt mean you werent trying hard.

  12. Gravatar of dtoh dtoh
    1. July 2014 at 07:14

    Scott,
    You haven’t won the debate at all. You haven’t even answered the simple question of

    “How can you monetary policy be effective when the CB triples the money supply and still seven years later we haven’t had a full recovery.”

    And you still haven’t presented a coherent theory on how the transmission mechanism works. How do you expect to change conventional wisdom if you respond to people who ask how it works by saying, “Oh.. the Hot Potato Effect… but you won’t be able to understand it because it’s very complex and not at all intuitive.”

  13. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    1. July 2014 at 07:17

    I think Marc Andreessen won the inequality debate;

    http://www.vox.com/2014/6/26/5837638/the-ipo-is-dying-marc-andreessen-explains-why

    ———-quote———-
    Piketty thinks it’s really easy to compound capital at scale. There’s just a lot of evidence that that’s not true. The shining example of that is: where are all the big companies and the big families?

    If you look at what’s actually happening in the Forbes 400 and the Fortune 500, churn is accelerating. One year it’s some real estate family, and then the next year it’s like, “There’s Larry Page, where did he come from?” Somehow Piketty looks through that to a world where all this change is going to just stop. [He has] this idea that normal is 18th-century feudal France, and we’re going to go back to it.

    He does this other dodge where the 20th century doesn’t conform to his theory, but that’s because of the wars and economic dislocations. And so it’s like the 21st century is predicted to be much more peaceful and calm. I don’t know about you but that’s not what I see happening. I look around the world right now and I see exciting things happening that’s causing a lot of changes.

    It’s not an accident that Piketty named his book after Das Capital. It’s a very “capitalists are evil, it’s all going to roll up to a few rich people” kind of thing.

    The other irony in the book is that on the positive side, [people around the world are] rising up from what we would consider destitution, to what we would consider lower-class lifestyles on their way to middle-class lifestyles. Conversely, Iraq is falling again.

    So I don’t see the world getting less dramatic. I don’t see the world calming down. I don’t understand why that would be the expectation. At what point is all of this progress and change and disruption going to stop to basically let rich people cement their gains and then earn these great returns in perpetuity. When is that supposed to start?

    Maybe that’s what happening in France, but it doesn’t map to anything I see. What’s happening in France is the opposite, which is that all the rich people are leaving, as a consequence of the government he’s advising. The irony here is very deep.
    ————-endquote————

  14. Gravatar of Benoit Essiambre Benoit Essiambre
    1. July 2014 at 07:29

    I agree with others, since we cannot see facial expressions on the internet, victory in an argument usually manifests itself as an anti-carthartic silence from those with opposing views.

    However, there is satisfaction to be had from the real effect this victory has had on the global economy. My impression is that the huge surge in equity prices, and economic velocity around the world are in large part due to the fact that the markets thinks central banks will be influenced positively by these views.

    It wouldn’t be totally wrong to call the rally of the past two years the market monetarism rally or even the Sumner rally.

  15. Gravatar of Major-Freedom Major-Freedom
    1. July 2014 at 07:43

    “No one has ever put even the slightest resistance to my demolition of the “low interest rates implies easy money” argument.”

    Bwahahaha, well when your a priori beliefs make it impossible for you to even understand the arguments being advanced, then of course in your mind you will conclude “nobody has ever put even the slightest resistence”. It is like a blind man saying “Nobody has ever successfully rebuted my demolition of the argument that the sky is sometimes blue.”

    You’re not interested in truth, you’re interested in justifying your monetarist political strategy.

    You’re running around in circles. “Low interest rates” means NOTHING without a standard by which “low” has meaning, and if that standard is also a judgment like “low”, then that standard must also have a standard, and so on, until you are cognizant of the ultimate standard, and it had better be self-consistent / self-evident, or else your whole argument would be groundless.

    Interest rates below some arbitrary standard of say 3% being claimed as caused by “tight” money, apart from whether that statement (once analyzed) is true, at the very least, requires a standard for “tight” (and “loose”) money. If the chosen standard is NGDP growth, then you might make a conclusion that differs from conclusions that follow from other standards, like aggregate money supply. How to reconcile these differences? No, it cannot be taken for granted that the correct judgment of “tight” is the one most closely correlated with output or employment busts. For that would still leave open the question of other, competing theories that explain busts but whose own standard leads to concluding money is “loose” when you claim it is “tight”, or vice versa.

    But as mentioned above, your a priori assumptions make it impossible for you to even understand such competing theories (which are far more accurate and internally consistent).

    The only rational standard is the market process.

    From that standard, money was incredibly loose both soon after the 1929 crash, and soon after the 2008 crash. It was incredibly loose despite the output and employment bust. But how can this be you ask? Shouldn’t loosening money from central banks boost output and employment when both are very low relative to recent history and existing NGDP is falling from recent history?

    That is working exactly backwards. No, we should not find a theory that can enable us to conclude money was “tight” to match up with the output and employment bust. We ought to find a rational standard, and THEN make judgments of prevailing monetary conditions.

    The “market monetarist” conclusions are themselves based on another more fundamental belief: that the government can know what money and aggregate spending ought be, and that any large deviations from what is yet another arbitrary standard, this time of an arbitrary rate of growth in NGDP, is considered not as market push back that is a curative, corrective, benevolent, albeit painful, process, but rather as “government failure”. The government “failed” to adequately and correctly push back against market push back. NGDP “fell too drastically”, and hence the government “failed” to “maintain stability” (ultimately between violence and peace).

    Your fundamental a priori assumption that is blinding you to competing, superior theories is the assumption that the government can know and can act upon the principle that it, and not the market, is to control numerical totals of separate individual expenditures over arbitrary time spans. Pragmatism shmagmatism. It is no answer or justification to this that it’s second best, and what we have to deal with. Second best solutions can and do create incredible havoc and disruption, and if you believe this is the best we can do, then of course you will conclude nobody has any better solutions and nobody has ever rebutted your “demolition” of counter-arguments concerning “tight” money and interest rates.

    Interest rates are only rationally understood as low or high relative to the standard of the market, not your faith based belief that the government knows best on what total spending should be.

    The aggregate money supply and volume of spending fell post-1929 and post-2008 because of market push back in response to previous non-market, excessive inflation. It was not because “the government failed” to hit CTRL-P on the money printing press enough tims to keep the aggregate money supply amd volume of sending rising at historical, accelerating/rising rates. That again assumes the government, not the market process, can know (really it’s the market monerist who claims to know) and should overrule the market push back with more government push back, so that the world looks the way the market monetarist wants it to look like, regardless of the existence of other human beings who have their own plans for themselves. That statement right there I know unsettles and rattles statist minded folks like market monetarists. “What? Allow the individual to determine his own life and allow the aggregates to remain uncontrolled by any single consciousness? Are you crazy? What if some group of super wealthy investor suddenly decide to hoard their earnings? Are you going to just sit back and watch aggregate spending decline causing output and employment to fall? Clearly we need some single mind overseeing everything and everyone so that we don’t eat each other alive in our narrow, selfish minded stupidity.”

    The core difference between you and I is that whenever I think of these potential “problems” of individual, non-aggressive choices and actions, I always try to solve them with more liberty, whereas you try to solve them in ways that cause even more mayhem and destruction because you falsely believe that an absence of a single consciousness overseeing everything and everyone will lead to destruction and mayhem.

    I know better. I know destruction is caused by attempts to control all of society. Every major historical case is consistent with this.

    So how would I deal with the possibility of a group of super wealthy investors suddenly hoarding their earnings thus putting my income at risk in some indirect way? I could ensure that my cash to total assets ratio is sufficiently high to insure my standard of living is provided for, until prices have adjusted downward (any problems of which could also be solved by more liberty). I could purchase insurance tied to my employment status. I could invest in hedge fund securities that pay off when profits decline. People far more intelligent than me could find many, many more solutions that once revealed to society, could be duplicated by me and many others.

    Every concievable social problem caused by the existence of non-violent individual choices and actions, have non-violent solutions.

  16. Gravatar of Major-Freedom Major-Freedom
    1. July 2014 at 07:52

    Market monetarists lost the DEBATE centuries ago. It is easy to grasp that they lost the debate. All you have to do is look at the fact that the only way they can get what they want, is to call for the government to initiate coercion on a massive scale.

    People who relegate their advocacy to initiating violence (Sumner, Krugman, etc), have lost the debate. And yet disturbingly enough, they have convinced themselves that they have won the debate. No, settling on “the government will initiate force to bring about what I want so that I am at peace in my mind”, is not winning the debate. It is CONCEDING the debate and devolving to naked violence instead.

  17. Gravatar of Major-Freedom Major-Freedom
    1. July 2014 at 07:56

    Silence is golden to the traumatized mind full of such contradictory convictions that even non-existence seems to be a respite.

    It is perhaps apropos to mention this article that I implore everyone here to read:

    http://robertlstephens.com/essays/shafarevich/001SocialistPhenomenon.html

  18. Gravatar of Philo Philo
    1. July 2014 at 08:15

    “Take monetary offset. I’ve had lots of debates on this issue, and people have presented me with very good arguments against my point of view. Arguments that I find hard to refute.” I wonder what you mean by ‘monetary offset’. If it is the claim that the monetary authority in a fiat-money regime *could* offset any sort of non-monetary stimulus (or austerity), I’d like to see the “very good arguments” against it. If it is the claim that the monetary authority *would actually* do such offsetting . . . well, I agree that that is doubtful: the results generated by the political process really are hard to predict. But so far as I can recall, your predictions have always been conditional–“if the monetary authority is targeting inflation, or unemployment, or NGDP, or the like.”

  19. Gravatar of Luis Pedro Coelho Luis Pedro Coelho
    1. July 2014 at 08:30

    @dtoh. you wrote “you still haven’t presented a coherent theory on how the transmission mechanism works”

    There is no transmission mechanism, there are several mechanisms and they don’t matter at all. Seriously, they don’t, it’s a distraction.

    Scott likes to compare macro to quantum physics, but it’s a bad analogy. Macro is like thermodynamics: it stops making sense but not if you look at it too closely (what is heat? what’s the price level?). If you try to take it to the level of quantum dynamics, it’s impossible (because we humans cannot comprehend that level of complexity, naturally, it would make sense for a smarter being).

  20. Gravatar of Jason Jason
    1. July 2014 at 08:34

    Scott,

    I should update this title to: Is this what Scott Sumner is referring to? [graph at link]

    http://informationtransfereconomics.blogspot.com/2014/06/is-this-what-noah-smith-is-referring-to.html

    There was a brief rise (of the same scale) in 1997-1998 too. Hopefully this one holds up for the sake of the people of Japan.

  21. Gravatar of Jason Jason
    1. July 2014 at 08:37

    @Luis Pedro Coelho

    Taking that thermodynamics analogy much farther …

    http://informationtransfereconomics.blogspot.com/2014/06/the-macroeconomic-partition-function.html

  22. Gravatar of Greg Ransom Greg Ransom
    1. July 2014 at 08:51

    You’ve stopped saying patently erroneous things about Hayek and Austrian economics — don’t know why — that’s been a change.

  23. Gravatar of Tom Brown Tom Brown
    1. July 2014 at 09:07

    Major-Freedom, I saw you quoted in this post yesterday:

    http://realfreeradical.com/2014/03/09/why-austrian-economics-is-devastating-to-libertarians/

  24. Gravatar of ssumner ssumner
    1. July 2014 at 09:09

    Ah, That got the comments flowing in. Lots of good ones.

    Kenneth, We have to convince the rest of the profession. There is no other way.

    Brendan, Good point.

    dtoh, I can’t help it if monetary economics is harder than quantum mechanics. The world is what it is. I did my best to explain the transmission mechanism in the short course on money. People want “concrete steppes,” but that isn’t going to answer their questions.

    Patrick, That Andreesen post was excellent.

    Benoit, You said;

    “It wouldn’t be totally wrong to call the rally of the past two years the market monetarism rally or even the Sumner rally.”

    Too late, Yglesias made that claim a couple years ago. But where’s my share? Can I have 1/1,000,000th of the gain? Seriously, I’m flattered, but I really think stocks would be up just as much if I’d never been born.

    Philo, I meant my claim that they would actually offset fiscal stimulus, which is controversial.

    Jason. The Japanese experiment has been over for a long time. Nothing that happens going forward can change that fact. The skeptics said they couldn’t depreciate the yen. They can. If they need more inflation they can do it again and again. I have no idea whether they will do it again and again, but no one can claim that they are not capable of depreciating the yen. They are.

    Greg, Austrian economics? Is that still around?

  25. Gravatar of TravisV TravisV
    1. July 2014 at 09:46

    Prof. Sumner,

    Which authors have provided the strongest arguments against your monetary offset view?

    Any particular blog posts?

  26. Gravatar of Gordon Gordon
    1. July 2014 at 10:01

    Scott,

    I took a look at the Estonian digital id. I was heavily involved with such digital id systems at my last company. It sounds great in principle but it comes with a very heavy support cost if you wish to be certain that people are aware their id was lost or stolen. Also, smart cards with digital certificates don’t play nicely with tablets and smart phones. And many of the vendors don’t do everything they should be doing to follow standards in these areas to maintain security. For example, if your id is lost or stolen, then the certificate associated with your id is revoked. But many tech products (even from vendors such as Apple and Google) don’t perform the necessary checks correctly to see if such an id has been revoked.

  27. Gravatar of Rsans Rsans
    1. July 2014 at 10:30

    Prof,
    Loved the post.

    There is one issue that I was hoping you could address. Is it possible that QE has given the public a higher inflation expectation? Or the public will worry that QE will lead to higher inflation (basically inflation expectations will be higher in the near future). I accordance with the NRH, if inflation remains around 2% or lower, there will be higher unemployment. There is panic among QE opposition that money will come flooding out of the bank reserves sometime soon (this can easily be contained by the Fed if that actually happened). However, that idea has many supporters and it has been populated throughout the media quite a bit.

    Any thoughts? I am in favor of a higher inflation target (and of course NGDP targeting).

  28. Gravatar of 123 123
    1. July 2014 at 10:42

    Gordon,
    One million Estonians can’t be wrong.

  29. Gravatar of Sean Sean
    1. July 2014 at 11:00

    As a trader I’d say you’ve helped me make quite a good deal of money interpreting monetary policy and for that I thank you.

    I think I started with MMT trying to figure out what was going on during the crisis before gravitating towards more of monetarist view. I could never quite believe that a central bank could fail to reflate an economy with an unlimited ability to print money and obvious output gaps on the supply side.

  30. Gravatar of dannyb2b dannyb2b
    1. July 2014 at 11:27

    If the fed didnt nothing with monetary policy (zero growth in base and didnt target anything) would ngdp move at all?

  31. Gravatar of John S John S
    1. July 2014 at 12:05

    Tom Brown, what’s your take on the Free Banking/GMU Austrians that I mentioned in that post?

  32. Gravatar of mpowell mpowell
    1. July 2014 at 12:26

    I think the difference between debating monetary offset and the definition of loose fed policy is that when you are talking about monetary offset, you are already talking to someone who understands the terms of the debate. On the other hand there are plenty of writers at respectable news sources that will talk about loose or tight monetary policy without having given any real thought to what they mean by those words or the implications for their arguments. You can’t ever win an argument against that kind of thing. It’s like shouting into the wind. If you read an economic news article from The Economists or WSJ you are likely to hear about ‘loose’ or ‘tight’ policy. But you are much less likely to hear about monetary offset. If someone is using that phrase, they probably have an idea of what they mean at least.

  33. Gravatar of Daniel Daniel
    1. July 2014 at 12:44

    Austrian economics? Is that still around?

    The dreaded “Sumner burn”. Awesome.

  34. Gravatar of Jason Jason
    1. July 2014 at 13:16

    Scott — you said:

    “The skeptics said they couldn’t depreciate the yen. They can. If they need more inflation they can do it again and again. I have no idea whether they will do it again and again, but no one can claim that they are not capable of depreciating the yen.”

    So not only is this claim based on one data point, but future data points are not considered germane to your model of the price level? 🙂

    The latest data from May say that Japan’s price level is only 100.7, up from April’s 100.6. That 2% rise from March (98.6) to April became a 0.1% rise April to May.

    I think it’s a statistical fluctuation with good PR.

  35. Gravatar of Tom Brown Tom Brown
    1. July 2014 at 13:19

    John S., I didn’t read all the comments but I did read the first few (which included some of yours I think). I’m really not qualified to judge, but I think you made some excellent points. However, I don’t even recall what GMU means. From what little I’ve read and seen, I realize there’s a broad spectrum of Austrian thought out there, ranging from charlatans (Schiff?) to… er… what’s the opposite of a charlatan? Non-Charlatan (Selgin?). Somebody like James Caton (commenting here today) is almost certainly *way* more qualified to give you a valuable opinion though (he has quite a few posts on Austrians, from what I can tell)

  36. Gravatar of dtoh dtoh
    1. July 2014 at 15:37

    Scott, you said;

    “I can’t help it if monetary economics is harder than quantum mechanics. The world is what it is. I did my best to explain the transmission mechanism in the short course on money. People want “concrete steppes,” but that isn’t going to answer their questions.”

    That is the whole problem in a nutshell. Monetary economics is not harder than quantum mechanics. Monetary economics is trivial, it’s only hard when you have the causality of the transmission mechanism wrong and have to twist yourself in knots trying to explain it.

    And you still have not explained why tripling the base had very little impact on NGDP. Until you start answering this queston concisely and consistently, “conventional wisdom” will continue to believe monetary policy is ineffective (Hint.. it has something to do with ER).

    You also say, “But I can’t budge the conventional wisdom by one inch.”

    Maybe if you seriously considered that there were some defects in your argument and how your explaining things, that might change.

  37. Gravatar of John S John S
    1. July 2014 at 16:19

    Tom, GMU is short for George Mason University, one of the few major universities in the US which is supportive of the Austrian tradition (a distant second would probably be NYU).

    The Mises Institute–unfortunately the far more well-known wing of “Austrian” economics–really should be called the Rothbard Institute. It’s truly shameful how the MI railroaded White and Selgin out for not agreeing with Rothbard’s insane opposition to fractional-reserve banking. Had White & Selgin assumed leadership of the Austrian monetary tradition, rather than the ghost of Rothbard, the American right’s rhetoric on monetary policy would sound infinitely more reasonable than what we currently have to endure.

  38. Gravatar of Jason Jason
    1. July 2014 at 16:28

    A challenge to macroeconomics: Show me the money (graph)!

    http://informationtransfereconomics.blogspot.com/2014/07/a-challenge-to-macroeconomists.html

    I have a model that says nothing’s changed in Japan over the past twenty years and describes today with equal accuracy to twenty years ago.

    It’s not quantum mechanics 🙂

  39. Gravatar of Michael Byrnes Michael Byrnes
    1. July 2014 at 16:34

    dtoh wrote:

    “And you still have not explained why tripling the base had very little impact on NGDP.”

    Actually, Scott has explained this ad nauseum on this blog.

    First, this base expansion is largely seen as temporary; markets expect most of this liquidity to be withdrawn before it causes any surge in the price level. (If markets expected otherwise, we would already have above-target inflation.)

    Second, the right control group is not available to us: you are implicitly comparing NDGP before the expansion of the base to NGDP today. That’s the wrong comparison. What matters is what NGDP would be today had the base not been expanded. Unfortunately that data doesn’t exist, although you could cheat and look at the Eurozone.

    Third, we have seen no indication from the Fed that they are willing to take the steps needed to generate faster NGDP growth. Until that changes, there will be no faster NGDP growth. Period, end of story. We are getting exactly the recovery the Fed wants, given its willingness to use the tools at its disposal.

  40. Gravatar of John S John S
    1. July 2014 at 16:44

    Scott, I understand your exasperation with Rothbardians (who have unfortunately hijacked the term “Austrian”), but for better or worse, an ever-growing number of Americans on the right are self-identifying as adherents of “Austrian economics.” If you are truly serious about wanting Market Monetarists to speak at CPAC, eventually you are going to have to make nice with these people to some degree.

    I think a good tactic for opening their minds to MM is to introduce them to White, Selgin, and other GMU Austrians who have accepted some form of NGDP targeting as a “second best” alternative to central banking (invoking some of Hayek’s writings would work, too). This would allow them to modify their views while still saving face.

    On the other hand, saying point blank that Austrian economics is completely wrong or silly creates unnecessary hostility. Speaking from experience, I think you would gain a lot more converts by talking up the good points of Austrian economics (emphases on free markets, spontaneous order, entrepreneurship) while limiting your criticism to the bad (namely unyielding insistence on hard money, even in recessions). It’s also not historically accurate or fair to tar all Austrians with the Rothbardian brush when Rothbardianism is only a subset of the much wider Austrian tradition.

  41. Gravatar of dannyb2b dannyb2b
    1. July 2014 at 17:47

    “First, this base expansion is largely seen as temporary; markets expect most of this liquidity to be withdrawn before it causes any surge in the price level. (If markets expected otherwise, we would already have above-target inflation.) ”

    How do you know the markets expect the excess reserves to be temporary?

  42. Gravatar of dtoh dtoh
    1. July 2014 at 20:12

    Michael Byrnes,

    I know that Scott has explained it many times on his blog exactly as you have stated it. The problem is that it’s the wrong explanation. The correct explanations is

    “ER DON’T COUNT!”

    Full stop.

    This is exactly why Scott has not been able to change “conventional wisdom.”

  43. Gravatar of c8to c8to
    1. July 2014 at 20:54

    it took a long time for those aussie quacks to convince the world that ulcers were caused by bacteria – at least they could infect themselves to prove the point.

    i guess we’ll have to wait till sumner gets appointed head of the ECB and ushers in a new era of european prosperity.

  44. Gravatar of Edward Edward
    1. July 2014 at 20:54

    John S,
    Rothbardians are definitely the most irritating and annoying though. (And arrogant)

  45. Gravatar of John Hayes John Hayes
    1. July 2014 at 21:24

    Ken, Scott,

    I think the idea of an NDGP futures market can be useful even without participation of the central bank or the consensus of economists. There’s an implicit indirection of the model: market predicts NGDP, central bank stabilizes NGDP, people write long term contract based on implied stabilized NGDP.

    Why not just write long term contracts relative to market predicted NGDP – similar to LIBOR.

    We’re crossing into micro-economics, but can you find a set of parties interested in stability of long-term contracts to fund a dividend based on accurate prediction of NGDP. In theory this extends to every employer since sticky wages are a de-facto long term contract.

    The central bank is still in the short term medium of exchange business, but not in the long term medium of exchange business.

  46. Gravatar of Ben J Ben J
    1. July 2014 at 22:08

    John S,

    Besides the concept of free-banking, what does non-Rothbardian Austrian economics have to offer? I think Scott’s position is that free-banking is an interesting idea, but he is advocating for the best possible monetary policy framework given the institutional realities that we face, just as Friedman did.

    I mean I’m sure Scott agrees that “emphasis on free markets, spontaneous order, entrepreneurship” is all well and good, but is that really all the non-loony Austrians have to give? I barely know any mainstream economists that would disagree with that… idea… or set of concepts, whatever it is.

    So I trivially agree with that statement, and I’m agnostic on free-banking (it just seems to me more of a historical curiosity given that central banks aren’t going anywhere). Does that make me an Austrian economist? How would my analysis of any major economic problem or topic differ if I put your non-Rothbardian Austrian economist hat on? How would it differ from the kind of Chicago style analysis that Scott might tend to give? Or Mankiw?

  47. Gravatar of Tom Brown Tom Brown
    1. July 2014 at 22:32

    dannyb2b, I think you might be picking up on the same thing that I missed until Jason S. pointed it out to me:

    1. OMOs seem like they should be sufficient, but unfortunately the CBs are missing X.

    2. What is X? It’s defined as the thing that if the CBs had it / did it / etc would allow OMOs to do what you’d expect them to.

    3. How do you know the CBs are not doing / don’t have enough X? Because if they did, then the OMOs would work as expected. Duh!

    Does it matter much what X is? It could be, for example:

    1. Effectively communicating expectations
    2. Being more like Chuck Norris
    3. je-ne-sais-quoi-ishness
    4. Fudgeliciousness (this goes hand in hand with “the Keebler Elf Effect”)

    … Does it matter? X serves the same purpose in the above narrative in all those cases. Just so long as X is impossible to quantify and a person can be written off as being of the “concrete steppes” if they insist on knowing exactly what should be done for the CB to do it or obtain it.

  48. Gravatar of Ognian Davchev Ognian Davchev
    1. July 2014 at 23:50

    sumner said: “Kenneth, We have to convince the rest of the profession. There is no other way.”

    How about an ad campaign similar to the seat belt adoption campaigns. With short clips with infographics, etc. highlighting the MM worldview and aimed at changing the “conventional wisdom” of the public.
    There should be different ads targeted at right and left leaning people. Right leaning ads should focus on CB failures creating the perception that capitalism does not work and leading to statist policies while left leaning ads can focus on unnecessary unemployment and suffering.
    This may not outright change things but it will put enough pressure to accelerate the process.
    I am not sure that the monetary policy madness of the last 6 years is a case of waiting for enough economists to die. Because as you have said multiple times the “conventional wisdom” up to 2007 was very different from what we have since 2008.

  49. Gravatar of Michael Byrnes Michael Byrnes
    2. July 2014 at 02:19

    danny b2b wrote:

    “How do you know the markets expect the excess reserves to be temporary?”

    I should modify slightly. Markets don’t expect all of those excess reserves to be dumped into the economy. The Fed will remove them, or provide greater incentives for banks to hold them (via higher IOR), or even raising reserve requirements (thereby turning excess reserves into required reserves).

    Why do I think this? Because inflation has remained below target throughout the whole process of base expansion. But higher expected inflation means higher prices now as people try to get ahead of the curve.

  50. Gravatar of dtoh dtoh
    2. July 2014 at 03:22

    Michael Byrnes,

    I agree with you. Scott describes it this way.

    “Excess reserves are part of the MB. Increases in MB will cause an increase in NGDP….” and then a very tiny footnote.

    *However depending on expectations for whether the Fed is going raise or lower IOR or do more OMO, or buy back an amount of assets equal to the amount of ER, or whether the market thinks the base expansion inclusive of ER is permanent or not permanent, increases in the base may not actually have an effect on NGDP, but it depends on the weather and whether it’s the third Tuesday in the month… blah blah, blah blah, blah blah.

    For God’s sake why would you ever present an argument that way when you can just say.

    “ER don’t count, should not be considered part of the base money supply and have no effect on NGDP, inflation or anything”… and then a footnote,

    *unless the market expects the banking system to replace ER with other assets in the near term.

    Honestly it’s like Scott tries to deliberately lose the debate in order to preserve some 1960’s outdated QTM framework for making his arguments.

  51. Gravatar of John S John S
    2. July 2014 at 06:20

    Ben J, I think there are two issues here:

    1) How best to proselytize for NGDP targeting among the growing number of “pop Austrians” on the American right (particularly among the Tea Party and religious right)

    2) The merits and/or flaws of Austrian and free-banking theory and research (minus Rothbard)

    On another day, I’d love to discuss the second issue, but for now I want to concentrate on the former. As a purely practical matter, I think it’s best to view Austrians as potential allies rather than “the enemy.”

    In my own personal circle, I’ve already heard a few people self-identify as Austrians, casually denounce fractional-reserve banking, and call for a return to a hard gold standard. Upon hearing comments like these, which of the following approaches would be more effective in persuading such a person to consider market monetarism?

    1) “Oh, you’re an Austrian. (rolls eyes) That hard-money stuff is a bunch of nonsense.”

    2) “Oh, you’re an Austrian! Y’know, there’s a long tradition of great Austrian thought on monetary policy. In the 1930s Hayek advocated stabilizing the total flow of spending in the economy. And in the late 90s George Selgin wrote a great book called ‘Less than Zero’ calling for total spending to grow at the rate of real growth in production. You should check it out.”

    Now I actually think on balance Scott usually goes with approach #2. But occasionally he does veer towards #1, and I frankly can’t see any benefit from doing so. No upside, just an opportunity for a certain segment of the right to tune you out from the get-go.

    The beauty of approach #2 is that it already gets the listener thinking in terms of an NGDP target. Whether that should be 0% (probably *not* Hayek’s view), 2-3% (Selgin), 3% (Bill Woolsey), or 4-5% (Sumner) is a matter of fine tuning, but it at least establishes common ground for discussion by using Hayek, White, and Selgin as an Austrian bridge to MM.

    You stated that Scott is “advocating for the best possible monetary policy framework given the institutional realities that we face.” I completely agree. But we also need to acknowledge the political reality that hard-money thinking still has a strong hold over the right, as Scott repeatedly points out. Like it or not, MM isn’t going anywhere politically without getting some support from this group.

  52. Gravatar of Daniel Daniel
    2. July 2014 at 07:01

    John S

    I don’t know what Austrians you bump into, but the ones I come across are like

    “teh gold standard, hard munny !!!11ONE”

    me – “you do know that would result in a recession, because of sticky wages/debts”

    “you’re a monetary sociamilist ! die, commie scum”

  53. Gravatar of dannyb2b dannyb2b
    2. July 2014 at 07:20

    “… Does it matter? X serves the same purpose in the above narrative in all those cases. Just so long as X is impossible to quantify and a person can be written off as being of the “concrete steppes” if they insist on knowing exactly what should be done for the CB to do it or obtain it.”

    I agree on that.

    The HPE isnt happening much for central bank counterparties because investment returns are too low so their demand for money is really high or infinite at ZLB. The general public demand for money at ZLB is lower so the HPE is in effect at the ZLB because people consume whereas current counterparties do not. Imagine an unemployed person receiving money they would spend it. Banks don’t buy clothes and get haircuts they just look for places to invest money.

  54. Gravatar of ssumner ssumner
    2. July 2014 at 07:37

    travis, The strongest arguments come from those with some sympathy to MM. Andy Harless comes to mind. Perhaps Avent and Yglesias as well. Try searching Harless and monetary offset.

    Gordon, I like their tax system.

    Rsans, No, QE has not led to significantly higher inflation expectations.

    Danny, Yes, NGDP would move with changes in the demand for base money.

    MPowell, It’s not just reporters, it’s economists.

    Jason, You are cherry picking data. Everyone agrees that Japanese inflation has risen over the past year. The yen depreciation followed forward guidance. So yes, in that case one data point is enough to reject the monetary ineffectiveness theory.

    dtoh, You asked:

    “And you still have not explained why tripling the base had very little impact on NGDP.”

    Base demand rose to offset the effect of more base supply. That’s due to expectations that much of the increase is temporary, and/or IOR.

    John S, You said:

    “On the other hand, saying point blank that Austrian economics is completely wrong or silly creates unnecessary hostility.”

    I completely agree. There are many good Austrian economists, lots of them favor NGDP targeting (starting with Hayek.)

    John Hayes, I’ve also argued it can be useful as a stand alone market, w/o being targeted.

    Ognian, I encourage you to do that ad campaign.

  55. Gravatar of dannyb2b dannyb2b
    2. July 2014 at 07:49

    Is affecting the supply of money to entities with very high demand for money or almost infinite demand at zlb not effective? Do people agree that not all entities have the same demand for money and that different entities spend money differently which has consequences for the HPE?

    Individuals on average consume more and banks invest more. At zlb banks have higher demand for money than individuals. Reorient monetary policy so it is conducted through people to increase effectiveness.

  56. Gravatar of Philippe Philippe
    2. July 2014 at 08:31

    Scott,

    “There are many good Austrian economists, lots of them favor NGDP targeting (starting with Hayek.)”

    later in his career Hayek argued that a stable price level was ideal, as in ‘the denationalization of money’ (1976).

  57. Gravatar of Philippe Philippe
    2. July 2014 at 08:37

    Scott,

    “Base demand rose to offset the effect of more base supply. That’s due to expectations that much of the increase is temporary, and/or IOR.”

    Isn’t promising to permanently increase the base basically the same as promising to keep the overnight interest rate low for longer than would normally be the case?

  58. Gravatar of Philo Philo
    2. July 2014 at 08:41

    Only fifty-six comments. Silence!

  59. Gravatar of TravisV TravisV
    2. July 2014 at 08:43

    Excellent exchange between Yglesias and Prof. Sumner on monetary offset on January 16th, 2014:

    https://www.themoneyillusion.com/?p=25914

  60. Gravatar of John S John S
    2. July 2014 at 08:46

    Scott, if indeed the debate on “low rates = easy money” is over, maybe it’s time to shift the blogging focus to IOR. I agree with Glasner here:

    “Although Market Monetarists are all on record opposing the payment of interest on reserves, I don’t think that we have made a big enough deal about it, especially recently as NGDP level targeting has become the more lively policy issue.

    But allowing the payment of interest on reserves to drop from the radar screen was a mistake. Not only is it a bad policy in its own right, but even worse, it has fostered the dangerous illusion that monetary policy has been accommodative, when, in fact, paying interest on reserves has made monetary policy the opposite of accommodative, encouraging an unlimited demand to hoard reserves, thereby making monetary policy decidedly uneasy.”

    http://uneasymoney.com/2012/07/22/blinder-talks-sense-to-bernanke-stop-paying-interest-on-reserves-now/

  61. Gravatar of Major-Freedom Major-Freedom
    2. July 2014 at 08:47

    Tom Brown:

    The author of the article has made a number of errors.

    1. “Austrians” who predict hyperinflation are not dping so as Austrian theoreticians proper. They are doing so as gamblers, as betters. Just because a man called Mr. Smith says he thinks Austrian theory is correct, it doesn’t mean that he is “not allowed” to make predictions and it doesn’t mean the predictions he does make are “in the name of” Austrian economics.

    2. The claim that because Austrian economics does not make predictions of what people will do, nor when they will do it, it therefore proves Austrian economics is a “pseudo science”, is really nothing more than blustering hot air from those who are jealously trying to protect their hubris about being able to predict human actions as on par with physicists and chemists. But would they attack mathematicians or formal logicians in universities the same way? Mathematics is a field of inquiry that does not make predictions. Does this make mathematics a “pseudo-science”? According to this author it would. And yet mathematics as an academic discipline is carried out in the science faculties of virtually every institution of higher education. It is an arrogant, groundless, and especially contradictory to believe that the only valid knowledge we can acquire is through the positivist-empiricist methodology. While the full explanation is more detailed, it can be summarized by saying that the positivist-empiricist theory is itself non-empirical. It self-contradicts. This may sound too far fetched to be true, considering how successful it has been in the hard sciences. But Austrians, the theoreticians among them, know that the non-empirical a priori assumptions grounding empiricist methodology just so happens to match the a priori assumptions of Austrian epistemology. Where empiricists and Austrians diverge is the range of applicability of the a priori assumption of constant causal relations in nature. Austrians will, possibly reluctantly, agree with empiricists that causal constancies in the material, non-acting world is valid, in the sense that Austrians see it as a necessary category of action itself. But where Austrians and empiricists differ is assuming this for human action itself. Austrians have shown that this assumption of constantcy cannot apply to the category of knowledge. Again the full explanation is more detailed, but a summary is that knowledge cannot be regarded as constant even in the method of empiricism that presupposes constantcies in nature. For the empiricist believes to be learning something from experiments. Learning changes us. Learning affects what we do. Empiricists are “violating” the assumption of constancy in themselves as actors. Is it then really surprising that Austrian theoreticians would be really really sure that constancies do not apply to knowledge, considering in part that not even empiricists can assume otherwise sub-consciously? Non-constancy in human is so apodictically true that not even any attempt to refute it can work, because again, all refutations would have to be understood as teaching and learning experiences for the listener, and the “educator” would of course presuppose that the listener’s knowledge is variable. Or else why attempt to teach at all? Knowing that human knowledge cannot be regarded as constant, makes all actions that are affected by knowledge not constant either, and thus cannot be predicted using empiricist style equations that are necessarily constructed with constantcies in relations.

    3. Austrians do make “positive statements”. One such statement is that there are no empirical constants in human actions. That is a true statement about human actions as such. Austrian economics is wertfrei. Austrianism does NOT “start with moral propositions.” It starts with a self-reflective activity, which is positive, not normative. “I ACT.” Or, “I am I.” This is the starting point. Whether or not there are people who whore it out, pro or con, to advance their political agendas, is unrelated to the actual theory of Austrianism. What I can say is that Austrians tend to also be libertarians, due to the fact that both frameworks are based on individualism. Those who “get” one, would likely understand the other more easily, since they’re already thinking in the same terms of methdological individualism. This is the main reaaon why Austrians and libertarians don’t get along, intellectually speaking, with collectivists such as socialists, progressives, and yes, monetarists. Collectivists are going backwards from the viewpoint of Austrianism. Collectivism is grounded on aggregate concepts that lumps every individual into one idea. Each collectivist’s ego is his way for everyone or the highway for dissenters. Each individualist’s ego on the other hand is his way for himself and every other individual for their selves. Don’t impose on other individuals, and other individuals do not impose on the individualist. The exact OPPOSITE of what we were taught in school…by most likely collectivists.

    4. Austrian economics is no more vague than empircism or any other field of inquiry.

    5. Author claims “Austrians make false positive claims”, but provides no examples. Perhaps he is mistaking false predictions for false positive statements, and mistaking Austrians make predictions for Austrian theory is predictive.

    All in all a very poorly written article, that shows the author has not actually read any Austrian textbooks or papers. I mean, this supposed textbook writer is citing “Daniel”…and myself…

  62. Gravatar of John S John S
    2. July 2014 at 08:49

    Daniel,

    Exactly. So don’t you think an approach that emphasizes the “Austrian-ness” of nominal income stabilizing policies would be more effective?

  63. Gravatar of John S John S
    2. July 2014 at 08:54

    John Hayes, I’ve also argued it can be useful as a stand alone market, w/o being targeted.

    Scott, do you by chance remember any specific posts? I’m also very interested in this idea.

  64. Gravatar of Philippe Philippe
    2. July 2014 at 09:02

    “1. “Austrians” who predict hyperinflation are not dping so as Austrian theoreticians proper”

    Did austrians shout ignorant nonsense about hyperinflation because they based their ignorant and nonsensical beliefs on austrian economics, or because austrian economics tends to attract ignorant people with nonsensical beliefs?

  65. Gravatar of Major-Freedom Major-Freedom
    2. July 2014 at 09:04

    Daniel:

    Austrians conclude that staving off recession with funny money dilution will only delay and exacerbate, not eliminate, recession.

    They think it is better to have less pain now, then more pain in the future.

    You can fling spitballs if you want, but at least get the theory of which you are targeting down pat first.

    You are right about the commie scum part though, but that is not as an Austrian, that’s as someone who knows initiating violence is wrong.

  66. Gravatar of Major-Freedom Major-Freedom
    2. July 2014 at 09:10

    Philippe:

    Ask them. Since Austrianism doesn’t make predictions, it will be based on the individual’s own unique beliefs of the future state of people’s knowledge and actions.

    Predicting hyperinflation is not nonsensical. It has happened in history you know.

  67. Gravatar of Philippe Philippe
    2. July 2014 at 09:53

    “Austrians conclude that staving off recession with funny money dilution will only delay and exacerbate, not eliminate, recession.

    They think it is better to have less pain now, then more pain in the future.”

    That is a prediction.

    “Austrianism doesn’t make predictions”

  68. Gravatar of Daniel Daniel
    2. July 2014 at 10:09

    John S

    I find that arguing about politics (and its extension, economics) is about as useful as arguing eye colours.

    People are rationalizing, not rational. They choose the policy they think would benefit them and rationalize its benefits.

  69. Gravatar of Philippe Philippe
    2. July 2014 at 10:25

    http://noahpinionblog.blogspot.co.uk/2014/07/resist-austrian-brain-worm.html

  70. Gravatar of Philippe Philippe
    2. July 2014 at 10:51

    Scott,

    regarding Hayek, here’s a quote from George Selgin summarizing his later views:

    “…Hayek himself eventually came to support a zero-inflation ideal. During the last decades of his career, and after having said little on the matter of price-level policy for several decades, Hayek began to distance himself from the productivity norm: in The Constitution of Liberty (1960, 337) he recommended stabilization of an index number combining prices of both factors of production and final goods–a measure half-way between a productivity norm and zero inflation. Still later, in Denationalisation of Money (1978, 66-70) Hayek joined advocates of zero inflation, quietly abandoning his earlier arguments against such a policy together with the business-cycle theory connected to those arguments: attempts to stabilize the price level in face of productivity changes may lead to forced savings, but the problem is, after all, “of minor practical significance” (ibid., 83; see also White 1998, 17-20). In summary, Hayek came at last to accept a view of optimal price-level behavior that was practically the same as the one he had found wanting in Keynes almost half a century before. As we have seen, Keynes, on the other hand, acknowledged on more than one occasion the merits of a productivity norm, which Hayek had embraced in the early 1930s. The vast chasm that appeared in the 1930s to separate the two economists’ views on the optimal price path seems in retrospect to have been a much smaller rift. A more significant difference between their views had to do, not so much with how the price level ought to behave, as with how best to make it behave as desired. The enduring controversy was, in other words, more about means than ends.”

    George Selgin: ‘Hayek versus Keynes on How the Price Level Ought to Behave’ (p.24)

    http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.202.1035&rep=rep1&type=pdf

  71. Gravatar of John S John S
    2. July 2014 at 10:58

    Philippe,

    I don’t consider Noah to be a great authority on Austrian economics. When told that there are non-Rothbardian Austrian economists who don’t fit the description that he puts forth in that Bloomberg article, he just basically said that since he’s never heard of these Austrians, they don’t exist. That’s not a very good response, since non-Rothbardian Austrians actually publish more in mainstream journals than Rothbardians.

    http://noahpinionblog.blogspot.com/2013/07/do-inflationistas-really-believe-what.html?showComment=1373290556436#c6899784738723844922

    Daniel, if it’s futile to try to change opinions, the entire blogosphere out to pack it in and link to cat videos.

  72. Gravatar of Philippe Philippe
    2. July 2014 at 12:42

    John,

    you’re probably right, but then again most self described ‘austrians’ aren’t great authorities on austrian economics either. What Noah is really talking about is the sort of pompous know-nothing ideology propagated across the internet and the media by people like Peter Schiff and trolls like M_F.

  73. Gravatar of Daniel Daniel
    2. July 2014 at 13:59

    To quote Robin Hanson, politics isn’t about policy. Hell, even Tyler Cowen gets it

    http://marginalrevolution.com/marginalrevolution/2014/06/why-you-should-not-confuse-sympathy-with-policy.html

    Also, you need to consider that extremist ideologies attract a certain kind of personality (the Nazis knew that, they looked for new recruits ammong Communists – for example).

  74. Gravatar of Tom Brown Tom Brown
    2. July 2014 at 14:01

    MF, check that same blog today: the author (Mike Freimuth) has a follow on post on the same subject. You can be the first to comment there (I didn’t read it, so I don’t know if you’re quoted).

  75. Gravatar of Major-Freedom Major-Freedom
    2. July 2014 at 16:08

    Philippe:

    “That is a prediction.”

    No, it is a statement contingent on facts that are themselves not predictions. I don’t know via prediction if the central bank will allow corrections to occur or if they will accelerate inflation. I also don’t know when people will learn of the errors that are made by monetary manipulation.

    Daniel:

    “I find that arguing about politics (and its extension, economics) is about as useful as arguing eye colours.”

    And yet you continue to argue politics and economics with me. You are saying that you purposefully waste your time, which is contradictory vis a vis your actions, because you are choosing to argue politics and economics.

    “People are rationalizing, not rational. They choose the policy they think would benefit them and rationalize its benefits.”

    That explains your approach.

    I know that if I, and by extension everyone, were able to be free from all coercion, including government coercion, by choice, I might incur short term losses since it is possible that my income might be adversely affected as people’s actual values manifest in a different series of cash flows, where my company might have been overextended via malinvestment. I don’t know. I am willing to lose everything in the short term, so that justice prevails.

    Now you might say that even this is “rationalizing”. But what would not rationalizing look like?

    Philippe:

    “What Noah is really talking about is the sort of pompous know-nothing ideology propagated across the internet and the media by people like Peter Schiff and trolls like M_F.”

    I am not a troll, and I am not a know nothing.

    You are just using Noah’s antagonism towards Austrianism to sanction your own hate and contempt towards them. Hence the “what he really means” weaseling that just shows your own beliefs.

  76. Gravatar of Daniel Daniel
    2. July 2014 at 16:20

    And yet you continue to argue politics and economics with me.

    No, I just like to remind you that you’re an imbecile. The sort of imbecile who can say crap like this unironically

    I know that if I, and by extension everyone, were able to be free from all coercion

    Where “coercion”, of course, means what “austrian” sadists choose it to mean.

    If I starve and find myself forced to sell myself into slavery, that’s FREEDOM.

    If the government taxes the rich and gives some of that to me, so I find myself able to live without being a slave, it’s COERCION.

    When the white man kills the natives and takes their land, it’s FREEDOM.

    When a poor man squats in an unused building, it’s COERCION.

    You make it really easy to feel contempt toward your nonsensical and sadistic beliefs, you deranged autistic retard.

    And yes, the time spent typing these words was a total waste. But it’s okay, because I derive utility from insulting morons like you.

  77. Gravatar of Philippe Philippe
    2. July 2014 at 16:25

    “Austrians conclude that staving off recession with funny money dilution will only delay and exacerbate, not eliminate, recession.

    They think it is better to have less pain now, then more pain in the future.”

    That is a prediction. You are saying that if the central bank tries to ‘stave off recession with funny money dilution’ then the only result will be to delay and exacerbate recession.

    It’s like predicting that if the central bank prints loads of money then the only result will be hyperinflation.

    “I also don’t know when people will learn of the errors that are made by monetary manipulation.”

    so you are predicting that ‘errors will be made by monetary manipulation’.

    “Austrianism doesn’t make predictions”

  78. Gravatar of Philippe Philippe
    2. July 2014 at 17:23

    “When a poor man squats in an unused building, it’s COERCION”

    it’s also violence, rape and enslavement of the building owner.

  79. Gravatar of Major-Freedom Major-Freedom
    2. July 2014 at 17:45

    Tom Brown:

    I responded to Free Radical on his blog, if you care to read it.

  80. Gravatar of Tom Brown Tom Brown
    2. July 2014 at 18:13

    MF, I saw, thanks.

  81. Gravatar of Major-Freedom Major-Freedom
    2. July 2014 at 18:16

    Daniel:

    “And yet you continue to argue politics and economics with me.”

    “No, I just like to remind you that you’re an imbecile.”

    …based on your beliefs concerning my political and economic arguments, which you are arguing against.

    You just contradicted yourself. Again.

    “The sort of imbecile who can say crap like this unironically

    “I know that if I, and by extension everyone, were able to be free from all coercion”

    “Where “coercion”, of course, means what “austrian” sadists choose it to mean.”

    Ah yes, the sadistic people who don’t want to initiate force against other people’s persons or property.

    The heathens, lol.

    “If I starve and find myself forced to sell myself into slavery, that’s FREEDOM.”

    I am not at all surprised that you consider life itself as a prison. To not be free of your finite, mortal, contingent body, to have to eat in order to live, has made many weak minded people throughout human history go mentally insane.

    You believe it would be cruel beyond all comprehension to not be able to initiate force against others so that you can live as a parasite. You believe that your mere need to eat somehow grants you a blank check on the lives of others. You need to eat, so screw everyone else. If they dare choose to not give you food for free, then by golly you have a right to shoot them and take the food by force.

    Oh who am I kidding. You’re too much of a coward for that. You want and need thugs to do your dirty work for you. You need government thugs to make sure that if you ever go without food, then guns can be pointed at others, whom you have never even met, so that you can continue living as a parasite instead of dying with dignity, or getting your ass off of the internet and getting a job that pays less than your inaccurate self-image suggests.

    “If the government taxes the rich and gives some of that to me, so I find myself able to live without being a slave, it’s COERCION.”

    Yes, Mr. Solipsistic Insanity. It is coercion, against those who are forced to pay. You dying from starvation is not coercion, unless people take food you earned by production and trade.

    Are you so afraid of dying that you would make others suffer? I am not afraid of dying. Everyone does it. I felt no pain or suffering for billions of years before I was born. Why should I worry about the billions of years after?

    Life is a test. We humans have an incredible gift, but it is finite. It is short. Why worry if you die? You should love life, not fear death.

    “When the white man kills the natives and takes their land, it’s FREEDOM.”

    No, that is also coercion. It is coercion because man initiated force against man.

    “When a poor man squats in an unused building, it’s COERCION.”

    Only if the owner does not consent.

    “You make it really easy to feel contempt toward your nonsensical and sadistic beliefs, you deranged autistic retard.”

    I know you’re scared out of your wits. I get it. Someone or something has surrounded you with such pain or suffering that you are unable to even handle being a human being. It is called an existential crisis. I think we all go through them, to varying degrees of intensity. You are trying to solve it the only way you currently know how, by destruction.

    Starts in the home.

    “And yes, the time spent typing these words was a total waste. But it’s okay, because I derive utility from insulting morons like you.”

    You do realize that your life will likely be a total waste even by your own judgment by calling people morons everyday, right? Yes, you might get a high each time, andnin your mind you can replay that same story of you telling your enemy off. But you have to let go of dogmatism. Find the value in yourself. Get off MoneyIllusion and read philosophy. Existential crises are solvable by self-reflection, which philosophy can help with. We all need philosophy.

    ————-

    Philippe:

    “Austrians conclude that staving off recession with funny money dilution will only delay and exacerbate, not eliminate, recession.

    They think it is better to have less pain now, then more pain in the future.”

    “That is a prediction. You are saying that if the central bank tries to ‘stave off recession with funny money dilution’ then the only result will be to delay and exacerbate recession.”

    It isn’t a prediction because I am not predicting what the central bank will do.

    “It’s like predicting that if the central bank prints loads of money then the only result will be hyperinflation.”

    But I am not predicting the demand for money holding.

    I don’t think you understand the difference between predictions of the one single future that will take place, and abstract if then statements.

    “I also don’t know when people will learn of the errors that are made by monetary manipulation.”

    “so you are predicting that ‘errors will be made by monetary manipulation’.”

    No, I am not predicting future monetary manipulation.

    Austrianism doesn’t make predictions.

    “When a poor man squats in an unused building, it’s COERCION”

    “it’s also violence, rape and enslavement of the building owner.”

    You are likely exaggerating because you want to set up an extreme interpretation of coercion, so that in your own mind you can say “Naw, it isn’t that bad”, so that you can sleep at night.

    But it is still a violation of property rights. I wonder if you would call the cops if homeless people start sleeping in your bed and using your shower without your consent. I guess your house is doubling as a homeless shelter what with all the advertising you’re doing at the local soup kitchen?

    Oh woops, sorry, only rich people should abide by those ethics. Different ethics for you.

    Different ethics for different people huh?

  82. Gravatar of Philippe Philippe
    2. July 2014 at 19:52

    “It isn’t a prediction because I am not predicting what the central bank will do.”

    Yes it is a prediction. It is like predicting that if you drop a stone it will fall to the ground.

    You stated very plainly that “staving off recession with funny money dilution will only delay and exacerbate, not eliminate, recession.”

    You predict that any attempt by the central bank to stave off recession by creating money will only result in more ‘pain’ in the future. No other outcome is possible according to your statement.

    “In science, a prediction is a rigorous, often quantitative, statement, forecasting what will happen under specific conditions; for example, if an apple falls from a tree it will be attracted towards the center of the earth by gravity with a specified and constant acceleration.”

    http://en.wikipedia.org/wiki/Prediction#Prediction_in_science

    “it is still a violation of property rights”

    That depends on how you define property rights.

    “I wonder if you would call the cops if homeless people start sleeping in your bed”

    This is just you expressing your inability to reasonably distinguish between things, yet again. You believe that someone walking across a field without the consent of the legal owner is the same thing as that person intimately touching the owner’s genitals without their consent, don’t you.

    “only rich people should abide by those ethics”

    No, none of the ethics I believe in only apply to rich people.

    Your comments in response to Daniel clearly demonstrate that there is something very, very wrong with you.

  83. Gravatar of Philippe Philippe
    2. July 2014 at 20:20

    “Ah yes, the sadistic people who don’t want to initiate force against other people’s persons”

    You are quite happy to initiate violent, lethal force against ‘other people’s persons’, you liar.

  84. Gravatar of Major-Freedom Major-Freedom
    2. July 2014 at 22:24

    Philippe:

    “Yes it is a prediction. It is like predicting that if you drop a stone it will fall to the ground.”

    But I am not predicting you to drop a stone.

    No, it isn’t a prediction. It is if then statement the if of which may or may not happen by choices being made. If the if happens, then the then becomes a historical analysis of what happened.

    “You stated very plainly that “staving off recession with funny money dilution will only delay and exacerbate, not eliminate, recession.”

    I am not predicting funny money dilution.

    ” You predict that any attempt by the central bank to stave off recession by creating money will only result in more ‘pain’ in the future. No other outcome is possible according to your statement.”

    I am not predicting central banks to stave off recession.

    “it is still a violation of property rights”

    “That depends on how you define property rights.”

    Which depends on logical necessity, e.g. the ethics presupposed by you trying to debunk it, for example stealing my land and claiming it as your own, is itself an attempt to secure exclusive control of property.

    “I wonder if you would call the cops if homeless people start sleeping in your bed”

    “This is just you expressing your inability to reasonably distinguish between things, yet again. You believe that someone walking across a field without the consent of the legal owner is the same thing as that person intimately touching the owner’s genitals without their consent, don’t you.”

    That dodge is just you expressing your inability to establish concrete principles of property ownership.

    That is why you can only speak of land owned by an absentee owner, and a house owned by a hermit, and nothing else. Trespassing is OK for the one, but not for the other. But don’t dare get into the details of precisely how long someone has to not step foot on their land before stesling it is OK. Don’t want to take the power away from your subjective whim and placing it in principled ethics and justice. It is just whatever you feel like that day. True freedom.

    “only rich people should abide by those ethics”

    “No, none of the ethics I believe in only apply to rich people.”

    That is a vicious lie and you know it. Progressive taxation is different ethics for different people.

    You just gave an example of you stealing from rich people to secureenougn food to eat. You did not say stealing food from a poor person who are themselves on the verge of starvation, because you believe that would be wrong. And even if you secretly believe that you should kill the poor person to save yourself, then you would still be believing in different ethics for different people. Food in significantly limited supply rightfully belongs to the stronger and not the weaker, or the one who can successfully elude and kill the other. Not the one who produced it.

    That is your worldview at its core.

    “Your comments in response to Daniel clearly demonstrate that there is something very, very wrong with you.”

    You haven’t shown anything I said is wrong.

    ———–

    Philippe:

    “Ah yes, the sadistic people who don’t want to initiate force against other people’s persons”

    “You are quite happy to initiate violent, lethal force against ‘other people’s persons’, you liar.”

    No, I am not. Using force against another’s person to defend my property is not initiating force. The initiating is the trespassing.

    I’m pretty sure if China landed a million troops on the western seaboard of the US, that you would not consider US army defense as “initiating” force.

    What you narrowly ascribe to countries, I ascribe to individuals.

  85. Gravatar of am am
    3. July 2014 at 03:35

    Freedom of speech but a lot is vicious. I don’t know what the rules are on this site but there don’t seem to be any.

  86. Gravatar of Philippe Philippe
    3. July 2014 at 06:19

    Yes it is a prediction. You predict that under specific conditions a certain outcome will necessarily occur.

    According to you the central bank is currently trying to ‘stave off recession with funny money dilution’. And you predict that the only possible result of such an action will be to ‘delay and exacerbate the recession’. You have made this argument so many times it is simply ridiculous to pretend otherwise. But of course you pretend otherwise because you are a compulsive liar.

    “In science, a prediction is a rigorous, often quantitative, statement, forecasting what will happen under specific conditions; for example, if an apple falls from a tree it will be attracted towards the center of the earth by gravity with a specified and constant acceleration.”

    http://en.wikipedia.org/wiki/Prediction#Prediction_in_science

    “for example stealing my land and claiming it as your own, is itself an attempt to secure exclusive control of property”

    Not necessarily. Besides, that has nothing to do with how to define property rights. It’s not even an argument, just pure garbage.

    “That dodge”

    It’s a description of your moronic belief system, not a dodge. You think that walking across someone’s field is like attacking their body or violently raping them. This is why you call things that aren’t violence “violence”, things which aren’t rape “rape”, and things which aren’t slavery “slavery”. You constantly torture and abuse the English language in a pathetic attempt to generate emotive rhetoric which supports your truly bizarre and morally bankrupt political ideology.

    “It is just whatever you feel like that day”

    That is the definition of your ideology. You just make up whatever garbage you need to to justify your prior beliefs and feelings. You bullshit, dissemble and lie. You have zero intellectual integrity.

    “Progressive taxation is different ethics for different people”.

    Progressive taxation does not imply that a different system of ethics applies to different people. Clearly you don’t even know what ‘ethics’ means, you moron.

    “Food in significantly limited supply rightfully belongs to the stronger and not the weaker, or the one who can successfully elude and kill the other. Not the one who produced it. That is your worldview at its core.”

    That is a totally false statement. All you are doing is expressing your own warped mentality, nothing more.

    “No, I am not”

    You are quite happy to initiate a violent attack on someone else’s person, even if they have done nothing to your person.

    If someone is walking across a field you claim to be your property, they are not initiating force against your person. They are not touching you or using violence against your person. Yet you will gladly violently attack their person.

    What you are doing to pretend that you don’t love initiating violence against people’s bodies, is to pretend that property is equivalent to the property owner’s body. This is why you constantly torture and abuse the English language, calling things which aren’t rape “rape”, things which aren’t violence “violence”, and things which aren’t slavery “slavery”.

  87. Gravatar of Major-Freedom Major-Freedom
    3. July 2014 at 07:44

    Philippe:

    “Yes it is a prediction. You predict that under specific conditions a certain outcome will necessarily occur.”

    But I am not predicting those specific conditions. If they do occur, then the if then statement is a historical one that explains what has happened because of the condition happening. It doesn’t predict anything. If the central bank inflates, then malinvestment occurs, is not a prediction, it is a statement of what is happening as the central bank inflates.

    The if then statements are not temporal predictions.

    “According to you the central bank is currently trying to ‘stave off recession with funny money dilution’.”

    No, avcording to me the central bank HAS tried to stave off recession, and as a result, the economy HAS become distorted.

    “And you predict that the only possible result of such an action will be to ‘delay and exacerbate the recession’.”

    No, I say that if the central bank inflates to stave off recession, then the only result is exacerbating the errors. It is all historical.

    The if then statements are relations, not predicting that if A happens today, then B will happen in the future. If when errors are revealed, Austrianism explains what happened.

    “You have made this argument so many times it is simply ridiculous to pretend otherwise. But of course you pretend otherwise because you are a compulsive liar.”

    No, you are just confused as usual, and in such a traumatized state that you are now accusing me of lying.

    “for example stealing my land and claiming it as your own, is itself an attempt to secure exclusive control of property”

    “Not necessarily.”

    Yes necessarily. You can’t exclude a piece of land from me and then claim you’re not enforcing a private property claim.

    You are ignoring the implocations of your own beliefs.

    “Besides, that has nothing to do with how to define property rights. It’s not even an argument, just pure garbage.”

    I didn’t say it was a definition of property rights.

    “That dodge”

    “It’s a description of your moronic belief system, not a dodge.”

    No, it is a dodge because you did not address the argument.

    “You think that walking across someone’s field is like attacking their body or violently raping them.”

    No, I do not think it is “like” that at all.

    I said that it is a property right violation. Trespassing is of the same class of aggression as theft, and destruction of property.

    Trespassing doesn’t have to be violent against an individual’s person before it is unjust aggression.

    “This is why you call things that aren’t violence “violence”, things which aren’t rape “rape”, and things which aren’t slavery “slavery”.”

    No, I call things that are violent violence, I call rape rape, and slavery slavery, and you have not shown any rebuttal to them.

    “You constantly torture and abuse the English language in a pathetic attempt to generate emotive rhetoric which supports your truly bizarre and morally bankrupt political ideology.”

    No, that is what you are trying to do by calling trespassing non-aggressive activity, where it does not matter what the landowner wants for his land. You want to torture the English language so that your desire to walk wherever you want, is just you exercising your right to spatial freedom, regardless of what happens to other’s utility and well being. To you, it is wrong to identify trespassing as aggression, because you hold a conradictory view of property, covered by your emotional desire for all land to be open to everyone regardless of the conflicting plans, and that people should be forced to abide by the same plan.

    “It is just whatever you feel like that day”

    “That is the definition of your ideology. You just make up whatever garbage you need to to justify your prior beliefs and feelings. You bullshit, dissemble and lie. You have zero intellectual integrity.”

    That is not a substantive argument. That is just an intellectual meltdown.

    “Progressive taxation is different ethics for different people”.

    “Progressive taxation does not imply that a different system of ethics applies to different people.”

    Yes it does. It implies that different people should be robbed by different amounts, where the more a person has, the more they should be robbed, and the less people have, the less they should be robbed.

    And, more importantly, it implies that those who rob (government) ought not themselves be robbed. Those in government can tax others, but others cannot tax those in government.

    That is not equal ethics for all.

    “Clearly you don’t even know what ‘ethics’ means, you moron.”

    You haven’t shown that anything I said about ethics is wrong.

    “Food in significantly limited supply rightfully belongs to the stronger and not the weaker, or the one who can successfully elude and kill the other. Not the one who produced it. That is your worldview at its core.”

    “That is a totally false statement. All you are doing is expressing your own warped mentality, nothing more.”

    No, that is what your beliefs lead to.

    “No, I am not”

    “You are quite happy to initiate a violent attack on someone else’s person, even if they have done nothing to your person.”

    My person is not the only thing that keeps me alive and happy. Humans are a contingent, dependent on the material world animal. To steal the food I earned until I starve to death is an aggression against my body caused by your actions.

    It ia ridiculous to believe that the only aggression that can take place is physical touching.

    “If someone is walking across a field you claim to be your property, they are not initiating force against your person. They are not touching you or using violence against your person. Yet you will gladly violently attack their person.”

    Only if they refuse to leave if I ask them to because I do not approve of them being there.

    It is not necessary that a person physically harm my body for them to be aggressing against my well being that is dependent on justly acquired property.

    “What you are doing to pretend that you don’t love initiating violence against people’s bodies, is to pretend that property is equivalent to the property owner’s body. This is why you constantly torture and abuse the English language, calling things which aren’t rape “rape”, things which aren’t violence “violence”, and things which aren’t slavery “slavery”.”

    No, I am not pretending that at all. No, I do not regard material property as “equivalent” to a human body. And no, I do not call things that aren’t rape rape, nor non-violent things as violent, nor things that aren’t slavery slavery. You have not shown any counter-arguments to this.

  88. Gravatar of ssumner ssumner
    3. July 2014 at 07:47

    Philippe, You asked;

    “Isn’t promising to permanently increase the base basically the same as promising to keep the overnight interest rate low for longer than would normally be the case?”

    No, a permanent increase in the base can lead to expectations of hyperinflation, which means a higher future expected path of interest rates.

    John S. Over at Mercatus I have a paper on NGDP future markets. You can google it. (Don’t confuse it with my other NGDP targeting mercatus paper.)

    AM, I wish people would ignore MF, I do.

  89. Gravatar of Philippe Philippe
    3. July 2014 at 13:58

    Here’s your local cult leader, Bob Murphy on the subject of austrianism and prediction:

    “7. PRAXEOLOGICAL PREDICTION

    Praxeology can make certain predictions about the future, but they are necessarily qualitative. For example, it can tell us that (other things equal) a fall in the demand for apples will lead to a lower price of apples.”

    (p. 47-48).

    (Murphy, Robert P. and Amadeus Gabriel. 2008. Study Guide to Human Action. A Treatise on Economics: Scholar’s Edition. Ludwig von Mises Institute, Auburn, Ala.)

    I guess it’s time for you to shut your lying mouth.

    But I know you won’t, as you are a compulsive liar. So I expect you to write a load of dishonest garbage. I won’t be reading it.

  90. Gravatar of Major-Freedom Major-Freedom
    3. July 2014 at 15:55

    Philippe:

    I disagree with Bob Murphy on this point. That doesn’t make me a liar.

    Sorry, but I am not going to obey your commands.

  91. Gravatar of Ben J Ben J
    3. July 2014 at 19:12

    MF,

    This is just like you/Geoff dancing around ABCT being unfalsifiable. At least Bob Murphy is intellectually honest.

    Prediction is a conditional statement about the future, which is what you made. The fact that you can’t admit a simple misstatement is telling.

  92. Gravatar of Tom Brown Tom Brown
    5. July 2014 at 00:12

    Scott in hell.

  93. Gravatar of Major_Freedom Major_Freedom
    6. July 2014 at 08:49

    Ben J:

    “This is just like you/Geoff dancing around ABCT being unfalsifiable. At least Bob Murphy is intellectually honest.”

    No, he’s just saying what you want to hear on this particular point, and that to you makes him intellectually honest.

    ABCT is just a logical relation between information signals from non-market prices and interest rates, and information signals from market prices and interest rates.

    It does not “predict” that the central bank will or will not do X.

    It only states that IF there are non-market prices and interest rates, then investment decisions cannot be made in line with market preferences.

    Prediction is a conditional statement about the future yes, but nothing in Austrianism takes any “conditional” for granted. And, should any conditional transpire, then Austrianism only makes an argument for what ALSO took place in the past BECAUSE of that conditional. It doesn’t predict anything temporally.

  94. Gravatar of Major_Freedom Major_Freedom
    6. July 2014 at 08:57

    ssumner:

    “AM, I wish people would ignore MF, I do.”

    Ignoring the arguments isn’t going to prove them false.

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