What does Bernanke really believe? Part 376.

In the never-ending search for what Bernanke really believes about monetary policy, we have Ryan Avent tweeting that Bernanke recently testified:

I’d be much more comfortable if Congress would take some of this burden.

Last year I had this to say:

The real problem is either that Bernanke lacks the votes, or Bernanke’s become more conservative, or Bernanke prefers the Fed not mess around with unconventional stimulus, and wants fiscal policymakers to do the dirty work.  I’m not a mind reader.  But believe me, Bernanke doesn’t believe the Fed is doing all it can to raise AD.  Not a chance.

Ryan’s tweet supports the “wants fiscal policy to do the dirty work” hypothesis.

HT:  Matt O’Brien


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68 Responses to “What does Bernanke really believe? Part 376.”

  1. Gravatar of foosion foosion
    7. June 2012 at 07:31

    Rephrasing “wants fiscal policy to do the dirty work”: Given the choice between reducing the human suffering of high unemployment and institutional issues, Bernanke cares more about the institution.

  2. Gravatar of DW DW
    7. June 2012 at 07:38

    Bernanke believes that he can only do what he thinks the median politician would approve of.

  3. Gravatar of Morgan Warstler Morgan Warstler
    7. June 2012 at 08:07

    Bernanke wants SHORT TERM FISCAL STIMULUS and LONG TERM STRUCTURAL REFORM in debt.

    That ONLY means tax cuts now, preferably with future spending cuts attached.

    We can also do tax reform, but that takes longer.

    We know Fiscal Spending doesn’t work quick enough, and we know that Employer side tax cuts do.

    Ben REITERATES his position by warning off the Fiscal Cliff… message is same as Clinton’s, DO NOT let Bush Tax cuts expire.

    —–

    I think it is very hard to read it any other way.

  4. Gravatar of Morgan Warstler Morgan Warstler
    7. June 2012 at 08:08

    Also, folks please remember to click the ad links you see at right and top of Scott’s blog.

  5. Gravatar of marcus nunes marcus nunes
    7. June 2012 at 08:16

    Bernanke believes in being in a state of “constant readiness”. But he still doesn´t see the enemy (“crawling behind his back”).

  6. Gravatar of dwb dwb
    7. June 2012 at 08:25

    honestly after about 1,000,000,000 years of listening to greenpan and bernanke talking out of both sides of their mouth, I don’t care what they say or what they believe, only how they act.

  7. Gravatar of Mike Sax Mike Sax
    7. June 2012 at 08:35

    “Also, folks please remember to click the ad links you see at right and top of Scott’s blog.”

    Morgan that goes doubly for people who visit my blog-I’m pretty sure I need it more than Soott does.

  8. Gravatar of bill bradbrooke bill bradbrooke
    7. June 2012 at 08:38

    In a global economic environment in which skillful debt management and effective stimulation are becoming increasingly necessary, I thought these remarks from the UK were particularly interesting:

    Ambrose Evans-Pritchard, Daily Telegraph’s international business editor, in a Q & A interview with Szu Ping Chan of the Daily Telegraph comments as follows on the present role of the ECB:

    “The ECB has existing powers under Maastricht to safeguard financial stability and to purse a much more expansionary policy.

    It does not need treaty change to do this.

    The M1 and M3 money supply are both contracting. So is private credit. The ECB is massively missing its own M3 target. Policy is too tight and aggravating the crisis. It should slash rates to the zero-bound immediately and launch 1 trillion Euros of QE.

    Yes, print, print, print and print until nominal GDP is growing safely again at 5%.

    It doesn’t need new power to do this. It just needs the guts to outvote the Bundesbank council members. Such guts are lacking.

    It really is time to say “boo!” to these 1930s pre-modern Hayekians.”

  9. Gravatar of Lorenzo from Oz Lorenzo from Oz
    7. June 2012 at 09:15

    bill b: Ambrose Evans-Pritchard is right. But the point of the euro was a Deutschmark for everyone, making the Bundesbank the “keepers of the sacred”. And to change course would be to admit fault. While everyone is blaming the Greeks, the Spanish, the … the ECB members have their reputations protected.

    And I can just see the “clever” rationalisation of how a higher level of Union could be built out of the crisis–never let a crisis go to waste! Moreover, the EU is built on unaccountable power. Taking “risky” responsible action is not in the mindset.

  10. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 09:20

    Bernanke said a few months ago (in response to Krugman of all people) that he is against raising price inflation (which is necessary to increase AD) because he doesn’t want the Fed to lose the credibility it’s fought hard to acquire the last 30 years (don’t laugh!).

  11. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 09:28

    I think Bernanke doesn’t believe AD is too low.

    NGDP growth looks pretty stable to me

    I think market monetarists have to be honest and say that they are now getting what they wanted. Yes, it’s not level targeting, but I would argue enough time has passed to adjust the entire price level, of wages, factor inputs, and outputs, downward from where it otherwise would have been had level targeting persisted.

    The economy has had de facto NGDP targeting of around 4-5% since early 2010.

    Maybe it’s the Dr. Jekyll NGDP targeting side of Bernanke who is saying to Congress that the ball is in their court now?

  12. Gravatar of MikeDC MikeDC
    7. June 2012 at 09:35

    Is Bernanke saying
    1. If Congress cuts spending and balances the budget, thereby avoiding the fiscal cliff, the Fed is ready to ease the path with monetary policy.

    or…

    2. The Fed prefers Congress to dramatically increase spending in a fiscal policy effort, and it stands by to monetize that debt in the most horrific way possible, but it won’t do that unless they’re serious about bankrupting us in a fit of old-school Keynesianism.

    Or is he saying something else?

  13. Gravatar of Saturos Saturos
    7. June 2012 at 09:36

    Actually Ryan has had a whole slew of excellent tweets lately.

  14. Gravatar of ssumner ssumner
    7. June 2012 at 10:07

    Foosion, I think he’s well intentioned.

    DW, But with 1/2 of the pols being Dems, and 1/2 being GOP, what is the median?

    Morgan, I agree he doesn’t want tax increases now.

    And yes, everyone must keep clicking those ads!

    Marcus, I agree.

    dwb, Good point.

    Bill, Yes, AEP is right as usual.

    MF You said;

    “I think market monetarists have to be honest and say that they are now getting what they wanted.”

    You’ve been here for years, and you’ve learned NOTHING? You still don’t even have a clue, do you? Levels, levels, levels, levels . . . .

    MikeDC, He’s saying the Fed will do stimulus if Congress doesn’t, but he’d feel more comfortable if Congress did.

  15. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 10:27

    ssumner:

    “I think market monetarists have to be honest and say that they are now getting what they wanted.”

    You’ve been here for years, and you’ve learned NOTHING? You still don’t even have a clue, do you? Levels, levels, levels, levels . . . .

    It might seem like years to you, but it’s actually been less than one.

    Yes, I know full well you talk about levels. I said so in the very next sentence:

    “Yes, it’s not level targeting, but I would argue enough time has passed to adjust the entire price level, of wages, factor inputs, and outputs, downward from where it otherwise would have been had level targeting persisted.”

    It is silly to argue that if there was a level drop years ago, after which time prices have adjusted, that somehow an “overcompenating” inflation today, to get some historical level back up, is going to do anything that current demand isn’t already doing.

    It would be like saying if there was a drop in NGDP in the year 1931, and for argument’s sake there has been 5% NGDP growth since then, we’re not going to let bygones be bygones, no, we’re going to boost NGDP by 20% this year in 2012, to “make up” for the lost NGDP in 1931, so that we can see a nice 5% level growth during that period on paper.

    After enough time has passed, and I argue it has (you can disagree with me on this), stable NGDP growth eventually has the economy “forgetting” the 2008 drop, after prices and costs adjust to the new monetary growth path.

    So the only way you can argue against what I said about market monetarists getting what they want, is by you presenting a counter-argument that not enough time has passed to allow prices and costs to adjust to the existing more or less stable NGDP growth path that has been in place since 2010.

    In other words, you’re going to have to make a case that entrepreneurs and investors have not adjusted their prices and costs yet to match the new NGDP growth path, that there is still price stickiness 2 years later.

    Let me make this easier: How many years have to pass in your judgment, before the economy “forgets” the 2008 drop in NGDP, given the assumption that NGDP annual growth persists at 4-5% like it has since 2010? It’s been 2 years already. Is 2 more years is necessary? Or how about no explicit number of years, so that you can always have a fall back that stable NGDP growth works, we just need to make up for the loss of 1931?

  16. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 10:33

    ssumner:

    Have you learned NOTHING? 90% of the time you respond to my post, you only read up to a particular sentence, then you ignore the rest, despite the fact that your criticism is unwarranted since I wrote about it in the very same post?

    I mean I know you like to skim read everything you read, which is why your arguments tend to be rather superficial, but come on, you say I don’t get that you want levels, and yet in the very next sentence, I specifically mentioned levels.

    Here I am understanding NGDLT, and there you are saying I don’t get it, which is an accusation derived from you totally ignoring what I wrote.

    What else do I have to do? Praise you like Krugman’s acolytes praise him? THEN you’ll actually read the comments?

  17. Gravatar of Morgan Warstler Morgan Warstler
    7. June 2012 at 10:40

    MikeDC, the first one.

  18. Gravatar of Saturos Saturos
    7. June 2012 at 11:10

    So I guess the Sumner Critique doesn’t hold if the head of the central bank is actually asking you to do fiscal stimulus ???

  19. Gravatar of Morgan Warstler Morgan Warstler
    7. June 2012 at 11:53

    TAX CUTS are only called Fiscal Stimulus by mistake.

    Instead we should just say Govt. Spending is Fiscal Stimulus and it NEVER works.

    And then we should call Tax Cuts “tax cuts” and say they promote growth.

  20. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 11:59

    What happens if a very large group of investors, for example all of the primary dealers, invest in a foolish enterprise, which later goes bust.

    Should they be rewarded for this, as would occur with NGDP targeting giving the primary dealers more money in exchange for their garbage securities and assets, money that they could not have otherwise acquired in the open market?

    Or should failure be an integral part of capitalism?

    Someone who supports market monetarism tell me why I should support a system where if I fail as an entrepreneur, I don’t get money from the Fed in exchange for my garbage securities and assets, but when politically connected bankers fail, they do get money from the Fed in exchange for their garbage securities and assets.

  21. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 12:02

    And don’t tell me “get politically connected then”, loan money to the government and so on, because not everyone can do that, not everyone wants to do that, nor should they be obligated to do that in order to minimize their exploitation. Poor people who don’t invest at all, or who invest only in CDs for example, can’t all become t-bill investors who can sell their t-bills to the Fed.

  22. Gravatar of UnlearningEcon UnlearningEcon
    7. June 2012 at 12:02

    Scott, was my earlier comment removed or did it not go through?

  23. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 12:15

    I ate it. It was rather uninspiring.

  24. Gravatar of Morgan Warstler Morgan Warstler
    7. June 2012 at 12:24

    (burp)

  25. Gravatar of Jim Jim
    7. June 2012 at 12:25

    I think Major Freedom asked a good question — when do you give up on making up for lost nominal income from the past? I believe Scott has said it’s too late to make up the entire gap since 2008, but beyond that I don’t know.

    As for MF’s failure argument — think of it this way, isn’t a free banking system supposed to act as if it is stabilizing nominal GDP?

  26. Gravatar of ssumner ssumner
    7. June 2012 at 12:35

    MF, If you understand our proposal, then respond to what we are proposing, not what you think we should propose.

    Saturos, You said;

    “So I guess the Sumner Critique doesn’t hold if the head of the central bank is actually asking you to do fiscal stimulus ???”

    It still holds. The Fed doesn’t feel “comfortable” making up for Congress, but will do so if necessary.

    UnlearningEcon, I didn’t remove it–but don’t feel bad I’ve recently had my own comments removed!

    Jim, I’ve never seen a convincing argument as to why free banking would target NGDP, inflation, or any other variable.

    I’ve address your other question many times, if MF doesn’t know the answer by now he’s hopeless. BTW, contrary to what he claims NGDP has not been growing at 5%, indeed in recent quarters it’s below 4%. If it had been growing at 5% we’d have a much better recovery.

  27. Gravatar of SG SG
    7. June 2012 at 12:47

    It seems to me like Ben Bernanke is giving up on one of the foundational principles of central banking, namely independence. If he’s asking Congress to do something that the Fed could otherwise just do on it’s own, I think it’s because he’s conceded that CB independence is an ideal, not a reality. In a world where Ron Paul can convince people to vote for him, the central bank is not actually permitted to enact optimal stabilization policy

  28. Gravatar of Eric G Eric G
    7. June 2012 at 12:49

    Well, we know what he’s really saying
    http://economywatch.msnbc.msn.com/_news/2012/06/07/12107344-bernanke-to-congress-its-your-turn-to-act?lite

    So, does this mean that the Fed is handicapping fiscal policy? Seems so.

  29. Gravatar of Jim Jim
    7. June 2012 at 12:54

    Selgin and others argue that in a free banking system, increased demand for money would mean banks can and would issue more currency. Do you find their arguments unconvincing?

  30. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 13:07

    Jim:

    I do, because there is a difference between demand for purchasing power, and demand for loans.

    Banks don’t dole out money without strings attached. They give money expecting to be paid back.

    A rise in the demand for money holding is not the same thing as a rise in the demand for loans which have to be paid back.

    Selgin seems to be conflating the two.

    If I want to hold more money, the last thing I will do is seek out loans. For simply holding that money will incur me a loss as interest is accrued. I will instead seek out to earn money and then not spend it.

    Selgin I think is trying to cater to the inflationists by saying “Oh don’t worry, when the demand for money goes up, the banks will be there to create more!” as if banks are even in the business of satisfying people’s cash balance preference changes.

  31. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 13:14

    ssumner:

    MF, If you understand our proposal, then respond to what we are proposing, not what you think we should propose.

    I am responding to what you are proposing. You are not proposing that the Fed do business with everyone. You’re saying they should buy t-bills primarily, then other securities like bonds and stocks. I asked about this before, but you never gave an answer. You just said something like “I don’t expect the Fed having to do anything other than buying t-bills”. I asked from whom, you didn’t answer.

    So make it clear what you are proposing then if you changed your mind. Why should the Fed buy t-bills from only a select group of institutions? That’s the only the way they CAN operate, short of buying and selling securities with every single income earner in the country, the way the IRS taxes and refunds with every single income earner in the country.

    If you’re embarrassed that your proposal is necessarily elitist, then I recommend you be upfront about it, so that you don’t have to evade and posture about it so much.

  32. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 13:18

    Jim:

    I think Major Freedom asked a good question “” when do you give up on making up for lost nominal income from the past? I believe Scott has said it’s too late to make up the entire gap since 2008, but beyond that I don’t know.

    I remember Sumner saying that as well, which is why it was highly strange to see him imply that more inflation now is justified, despite the fact that we’ve had stable NGDP growth for some time now.

    Will Sumner answer this? He hasn’t even after reading your question (or skipping over it as he tends to do).

    As for MF’s failure argument “” think of it this way, isn’t a free banking system supposed to act as if it is stabilizing nominal GDP?

    Free banking would minimize the real distortions that would lead to large sudden changes in NGDP, so free banking works from the other direction, so to speak. Instead of treating the symptoms, it gets closer to treating the causes (but doesn’t cure it because it allows credit expansion).

  33. Gravatar of Morgan Warstler Morgan Warstler
    7. June 2012 at 17:31

    Jim and MF,

    Scott will ACCEPT 4.5% NGDPLT starting today with no make up.

    He will admit that.

    What he doesn’t want to do is lay out WHY it still works pretty damn quick without the make-up, even though he believes it.

    It is one of the proofs that Sumner is trying to play politics, he’s just not very good at it.

    —–

    MF, it is about the LEVEL, I can’t say this enough, imagine it like Robocop is telling yo to throw away your litter.

    In every single circumstance, you drag ass a little bit, and he’s kind but firm, you don’t stop right there, and he escalates to scary noise, you still don’t believe and you get screwed into the ground head first.

    Suddenly anyone with any expectation other that 4.5% STOPS having those expectations.

    This is why I say everyone THEN see 4.5% a PIE, and the question is WHO gets to use it up??

    We want it to be all RDGP – and if we can get 6.5% NGDP with 2% deflation ALL THE BETTER.

    And since we don’t want it to be hire prices, so pay raises for public employees are out, and so are regulations on commodity extraction.

    A hard brutal cap on growth turns us ALL into NGDP watchers.

    Imagine every single Congressional Bill as being scored for inflation buy CBO!

    Suddenly EVERY SINGLE LAWMAKER has to try and PROVE that the government is better spending money it already meant to spend better… that’s deflationary.

    Right now we have a “pay for” mindset – pay for X buy cutting Food Stamps etc.

    Under NGDPLT, we view new govt. spending based on does it increase or decrease inflation?

  34. Gravatar of Major_Freedom Major_Freedom
    7. June 2012 at 17:56

    Morgan:

    MF, it is about the LEVEL

    I realize that, Morgan. I specifically mentioned levels in the very first comment I made, the one that Sumner made it seem like I had no idea about levels.

    Scott will ACCEPT 4.5% NGDPLT starting today with no make up.

    He will admit that.

    Really? Because I have seen him saying many times “we can use more inflation.” Is he saying what he doesn’t mean, or are you mistaken?

    What he doesn’t want to do is lay out WHY it still works pretty damn quick without the make-up, even though he believes it.

    It is one of the proofs that Sumner is trying to play politics, he’s just not very good at it.

    I don’t have this talent you have of reading his mind.

    And since we don’t want it to be hire prices, so pay raises for public employees are out, and so are regulations on commodity extraction.

    I don’t see how that follows. The government has taken a bigger and bigger piece of the NGDP pie with decades of de facto NGDP targeting. I don’t see how making official what has already been taking place, somehow constitutes a barrier on government spending.

    Fixed aggregate spending won’t constrain the state. Only ideology will.

  35. Gravatar of Morgan Warstler Morgan Warstler
    7. June 2012 at 18:23

    “Is he saying what he doesn’t mean, or are you mistaken?”

    He has said it. He doesn’t think it is optimal, but he’ll take it. He’d like 5 or 6% make up, but if he doesn’t get it, NGDPLT will still work.

    Dude, it sin’t an excuse for more inflation now. It isn’t.

    BUT, the day we adopt it, the next month we’re going to come down on one side or the other.

    And THAT decides the Fed action. Not the Fed.

    So if things are really bad, and suddenly we are down .5%, the actions taken will be immediate (there’s the inflation).

    And if we come in over NGDP, we’re raising rates. BAM! No matter what the Dems say.

    No granted a futures market for retail investors to get the new printed money is better, so we should demand that.

    But the expectations are suddenly this year, next year, and the next… 4.5%.

    Now Fiscal Stimulus is not only off the table (Scott says this).

    But cutting govt. spending = lower rates for the private sector

    —–

    MF, this CLARITY where we see new govt. spending AS INFLATION it is 10 rapes instead of 20 – and since no rapes is not on the table, you eventually have to be glad we’re at least down to 10 rapes.

  36. Gravatar of Saturos Saturos
    7. June 2012 at 19:20

    Scott, I mean that you surely don’t expect the Fed to offset another round of fiscal stimulus if it’s done on Bernanke’s advice…

  37. Gravatar of Saturos Saturos
    7. June 2012 at 19:21

    And Lars Christensen seems to be under the impression that NGDPLT is good precisely because it approximates a free-banking scenario…

  38. Gravatar of Essayist-Lawyer Essayist-Lawyer
    7. June 2012 at 20:10

    What he’s saying is that he is willing to tolerate more inflation, but not to create it. He wants Congress to share the blame.

    PS to MikeDC: The fiscal cliff everyone is so afraid of is not a sudden increase in the deficit. It is a sudden decrease. That is what he is warning against.

  39. Gravatar of Saturos Saturos
    7. June 2012 at 20:14

    Justin Wolfers agrees with me: http://twitter.com/justinwolfers/status/210802775230124033

  40. Gravatar of Liberal Roman Liberal Roman
    7. June 2012 at 21:05

    I just wanted to point out thatthe amount of MSM attention on Bernanke right now has led to an onslaught of “Monetary policy is useless now” articles. Incredibly depressing.

    Like the last 3 years of posts on this blog haven’t happened.

  41. Gravatar of Cameron Cameron
    7. June 2012 at 23:18

    Think about it from Bernanke’s perspective: He wants easier monetary policy immediately and the best he can do is advocate not-a-chance-in-hell expansionary fiscal policy to keep expectations down (by dampening expectations of easier monetary policy) and allow more action in the coming meetings. It also makes him sound less inconsistent, denying the need for easier policy today while being forced into it tomorrow.

  42. Gravatar of Bonnie Bonnie
    7. June 2012 at 23:33

    Liberal Roman:

    The MSM might be nearly correct because the FOMC wasted so much time on doing QE based on calendar end dates with set amounts instead of conditions-based. It’s as if they were bridging to something, but never very clear to what. A bridge to nowhere. Now, QE has so much stigma attached to it that even having it on the table is nearly equivalent to torturing babies in the public mind. The only real way out of this monetary quagmire is to move to NGDPLT, or something like it, to get out from under all this epic fail because eventually there will stop being a response to rumors of QE, knowing they’ll be taking losses when it’s all over with.

  43. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 01:53

    Evidently Ryan Avent is right

    Bernanke says monetary poicy no panacea

    http://diaryofarepublicanhater.blogspot.com/2012/06/bernanke-is-not-market-monetarist.html

  44. Gravatar of ssumner ssumner
    8. June 2012 at 05:40

    SG, That could be.

    Eric, It’s hard to know what he means.

    Jim. I think it’s plausible they’d issue more currency, but they’ve never explained (to my satisfaction) how free banking would target NGDP, or inflation, or any other variable.

    Saturos, I do expect the Fed to offset further fiscal stimulus. And I’m not convinced that free banking would deliver MM results.

    Essayist-Lawyer, You said;

    “What he’s saying is that he is willing to tolerate more inflation, but not to create it. He wants Congress to share the blame.”

    The deeper you get into monetary theory, the less clear the distinction between the Fed “doing” and “allowing.”

    Liberal Roman, The mainstream media doesn’t understand monetary economics. But neither do 90% of economists, so this really shouldn’t surprise us.

    Cameron, You might be right.

    Mike. If Ryan is right, then I was right a year ago.

  45. Gravatar of ssumner ssumner
    8. June 2012 at 05:47

    Saturos, I’d love to see this “very clear” quotation from Bernanke. Does Wolfers provide it in his blog?

  46. Gravatar of Major_Freedom Major_Freedom
    8. June 2012 at 05:51

    No granted a futures market for retail investors to get the new printed money is better, so we should demand that.

    What about non-investors? What about poor people?

    Should they lose for not investing, even though they are earning money?

    In a free market monetary regime, where the growth in supply of goods almost always exceeds the growth in supply of money, a unit of currency increases in value over time, so those who don’t invest, and poor people, not only do not lose, but they will gain if they earn money.

    This gain is not ill-gotten, despite what the “progressive” haters of the poor inflationists want to believe, because they are not gaining at the expense of anyone. It makes no sense whatsoever to get so angry at the poor making real returns by earning a wage in a free market monetary standard, that you respond to it by calling for investors to be given newly created money so that they can gain at the expense of the poor, so that the poor are denied the gains they would have made.

    It’s like an ugly investor looking at a beautiful poor person, and getting jealous that the poor person gets more head turns than they do, so the ugly investor thinks “That poor person isn’t working hard to look good at all! It isn’t fair! I am going to pour acid on their face so that they don’t get such positive attention anymore. Then the world will be more fair.”

    If a free market results in fixed income earners, wage earners, and poor people, getting a modest real return for simply earning money and holding a portion of it, then isn’t that something we should all welcome? More goods at lower prices, which benefits everyone? Nobody is getting “free” wealth, because EVERYONE has to earn money and hold it to get the real return. Investors will get a real return as well. Property rights are not being violated. Progressives have no reason to think something in unfair. Yes, it means poor people can make gains by not lending the awesome state. But why should the poor be held hostage to the emotions of the resentful?

    But the expectations are suddenly this year, next year, and the next… 4.5%.

    Not quite. Sumner said recently that he thinks NGDPLT should GROW over time, to “accommodate” for population growth. So it’s not even a fixed growth rate. Special interest groups will constantly clamor for the NGDPLT target to rise, for one excuse or another.

    What assurances do you have that can prevent the Fed from printing more money than a particular status quo NGDPLT would justify? Suppose it starts at 4.5%. Then problems arise, as I say they would, precisely because of the inflation distorting economic calculation. The problems build up over time, and it’s NOT because of any change on the “fiscal” side. The problems arise BECAUSE of the 4.5% targeting. I know it’s hard for you to accept that problems can arise BECAUSE of the inflation, and that you’ll try to find a way to blame the fiscal side of things, but as someone who knows Austrian theory, I know of problems of inflation that maybe you can’t see.

    So while you’re sitting back, laughing at the progressives while they fall over themselves blaming each other for why the economy isn’t recovering, little do you know, and little do they know, that the problems are building up BECAUSE of the inflation.

    So assuming that’s the case then, I will ask you why would the powers that be settle on 4.5%, when they are in control of the money printing press, and can subsidize, give grants, give research funds, to economists who are open to raising it to 5%, then 5.5%, then 6%, and so on?

    Now Fiscal Stimulus is not only off the table (Scott says this).

    But cutting govt. spending = lower rates for the private sector

    Lower rates for the private sector doesn’t mean the private sector is necessarily better off. Interest rates are not a barrier. They are a signal. Interest rates signal people’s propensity to invest relative to their consumption. The fall in interest rates that accompany a fall in government spending, given an aggregate spending, won’t make people more wealthy and prosperous. The fall in government spending is what does it. Even if interest rates didn’t fall, the private sector would still be better off. That they do fall, doesn’t make them BETTER better off.

    High interest rates that accompany high government spending is a nominal phenomena, and what causes that nominal phenomena is the same thing that causes the reduction in standard of living. When the government spends more, by taxing saving related income, what happens is that out of total spending, there is relatively less investment spending, and relatively more of all other spending. This makes aggregate costs fall relative to aggregate revenues. That makes pre-tax profits rise, and THAT is what makes interest rates higher. But it isn’t the higher interest rates per se that hurt the private sector. It’s what caused the higher interest rates that is hurting the private sector. There is relatively less investment spending brought about by more government spending.

    So when government spending is reduced, thus allowing for more investment spending, that increases aggregate costs relative to aggregate revenues. Nominal profits then decline (but real profits go up because productivity is higher), and THAT is what puts downward pressure on nominal interest rates. What is it that raises standards of living? It’s the fact that there is more investment spending relative to aggregate spending. It’s NOT that interest rates have fallen. Interest rates are a SIGNAL, not a barrier or fetter standing in the way of more prosperity.

    MF, this CLARITY where we see new govt. spending AS INFLATION it is 10 rapes instead of 20 – and since no rapes is not on the table, you eventually have to be glad we’re at least down to 10 rapes.

    Yeah, but unlike you I’m not SETTLING on 10 rapes a week. You seem to be happy with 10 rapes a week, because heck, it’s better than 20 right? Well, how can you claim to really be against rape when you’ll settle for 10, because you have the misguided belief that we’ll never get it less than 10, or better yet zero? Why would anyone devote their lives trying to justify 10 rapes a week, and then telling the “Utopian” no-rape advocates that they are naive and useless?

  47. Gravatar of dwb dwb
    8. June 2012 at 06:01

    i listened to the testimony yesterday and i did not hear Bernanke say he would accommodate fiscal expansion, what i heard was basically “first do no harm” which was basically a plea to not make his job harder than it already is (my interpretation of course).

    The FOMC is really a 17 headed Hydra. I have no doubt the FOMC *could* offset the fiscal cliff (for example, by threatening direct debt monetization). However, i think that because the Fed is mindlessly focused on the mechanical details of how QE works, rather than just setting a goal and doing it (“lets see, to move forward, i need to contract this muscle then that muscle, geez how am i ever going to get 10 steps”), I think they truly believe that the goal is politically impossible.

  48. Gravatar of Saturos Saturos
    8. June 2012 at 06:08

    Scott, I dunno, it seems clear to me that the quote in the Ryan Avent tweet (“Father, take this cup from me”) is Bernanke asking Congress to boost AD with fiscal stimulus so that the Fed takes less flak for inflationary money printing. Of course the same inflation will result from fiscal stimulus, but then Bernanke can claim that that’s an exogenous inflation spike associated with the stimulus, which is Congress’ fault, and clamping down on it would be bad for the economy (again, relying on the fact that no one understands that the Fed boosting spending and Congress boosting spending is the exact same thing) and he leaves with his head on his shoulders. And if Bernanke is asking for more stimulus, then he’s not going to go ahead and offset it … unless he’s really cynical, and he just wants to be seen supporting stimulus to look like he cares about the unemployed, whilst clamping down on any rise in spending and inflation so the Fed keeps its “credibility”. Let’s hope not.

    Indeed, a severe tightening of fiscal policy at the beginning of next year that is built into current law–the so-called fiscal cliff–would, if allowed to occur, pose a significant threat to the recovery.

    From the transcript of the opening remarks, http://www.forextv.com/forex-news-story/full-transcript-ben-bernanke-economic-outlook-and-policy-delivered-to-u-s-congress

  49. Gravatar of Saturos Saturos
    8. June 2012 at 06:34

    Here’s the fuller quote from Lars’ blog:

    “Monetary policy is not a panacea, it would be much better to have a broad-based policy effort addressing a whole variety of issues…I’d be much more comfortable if, in fact, Congress would take some of this burden from us and address those issues.”

    btw Lars care to respond to Scott on free-banking (he doesn’t think it works like NGDPLT)?

  50. Gravatar of Lars Christensen Lars Christensen
    8. June 2012 at 07:28

    Saturos,

    I do indeed think Free Banking (done in the proper fashion) would deliver a stable NGDP. I think George Selgin has demonstrated that very well. Scott and I disagree on that. I think Bill Woolsey and David Beckworth (partly) could be considered as Free Banking Market Monetarists as well.

    It is a long discussion but have a look at this post of mine: http://marketmonetarist.com/2011/10/23/scott-sumner-and-the-case-against-currency-monopoly-or-how-to-privatize-the-fed/

  51. Gravatar of TallDave TallDave
    8. June 2012 at 08:54

    Bernanke is a Keynesian? How depressing, I prefer to believe he’s just lazy.

    Interesting piece Lars, thanks for sharing.

  52. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 10:24

    “Yeah, but unlike you I’m not SETTLING on 10 rapes a week. You seem to be happy with 10 rapes a week, because heck, it’s better than 20 right? Well, how can you claim to really be against rape when you’ll settle for 10, because you have the misguided belief that we’ll never get it less than 10, or better yet zero? Why would anyone devote their lives trying to justify 10 rapes a week, and then telling the “Utopian” no-rape advocates that they are naive and useless?”

    Major tell me the major city where there are no rapes. In real criminal justice you can’t get 100%.

    In the 90s Guliani brought the crime rate down in NY. But was there no murders after he was finished? No. So then it was a waste of time? There’s no choice for zero murders so dlecaring piously that’s what you demand is meaningless

  53. Gravatar of Major_Freedom Major_Freedom
    8. June 2012 at 12:50

    Mike Sax:

    “Yeah, but unlike you I’m not SETTLING on 10 rapes a week. You seem to be happy with 10 rapes a week, because heck, it’s better than 20 right? Well, how can you claim to really be against rape when you’ll settle for 10, because you have the misguided belief that we’ll never get it less than 10, or better yet zero? Why would anyone devote their lives trying to justify 10 rapes a week, and then telling the “Utopian” no-rape advocates that they are naive and useless?”

    Major tell me the major city where there are no rapes. In real criminal justice you can’t get 100%.

    Why city? Why not neighborhoods? Why not my house? Why in the heck do I need to show you a rape free city, before you’ll advocate for no rape? Does the existence of murder mean we should set the murder rate at 10 per 100,000 per year, all nice and smooth on paper, so that economics professors with nothing else better to do can use them for pedagogical purposes to justify their taxpayer financed income?

    In the 90s Guliani brought the crime rate down in NY. But was there no murders after he was finished? No. So then it was a waste of time? There’s no choice for zero murders so dlecaring piously that’s what you demand is meaningless

    You piously and sacrosanctly and religiously and dogmatically and spiritually and self-righteously declaring that we should advocate for a stable crime rate, such that if crime falls below it, a group of elite people should engage in more crime, and when crime rises above it, that group of elite people should engage in less crime.

    Because hey! We can’t abolish crime completely you pious demagogues! Bring on the SWAT teams when there is too much evil peace!

    Mike, I mean this sincerely, you’re a fool.

  54. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 12:59

    “You piously and sacrosanctly and religiously and dogmatically and spiritually and self-righteously”

    Major talk about an overdone fragment. And you have the gall to call someone a fool after overdoing it this much?

    Not that your opinion is worth much anyway other than maybe in a lab experiment about how people who have been hit many times by lightening think.

    “declaring that we should advocate for a stable crime rate, such that if crime falls below it, a group of elite people should engage in more crime, and when crime rises above it, that group of elite people should engage in less crime”

    So in other words you have the name of major cities with no crime? You feel that if only we can get Major Freedom to use enough pious superlatives in one sentence this will mean there’s no crime?

    The only reason we have any crime is because we don’t declare like the Major that we will tolerate not a bit of it.

  55. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 13:00

    By the way Major I’m only going along with your ovewrought analogy that inflation is on the moral level of rape. In reality it’s an absurd comparison and maybe even insults the real victims of rape.

  56. Gravatar of Mike Sax Mike Sax
    8. June 2012 at 13:42

    Incidentally Major, I wrote a post dedicated just to you a few weeks ago don’t know if you got to read it yet. Here it is in case you haven’t

    http://diaryofarepublicanhater.blogspot.com/2012/06/fun-with-austrains-major-freedom-and.html

  57. Gravatar of ssumner ssumner
    9. June 2012 at 18:54

    Saturos, I think it can be read in a variety of ways, I don’t think there is any “fact of the matter.” Bernanke himself probably hasn’t really thought through the issue.

    Lars. I agree that NGDPLT can co-exist with free banking, and I’m not against free banking. I just don’t think free banking automatically gets you NGDPLT. And I have read Selgin’s argument.

  58. Gravatar of Major_Freedom Major_Freedom
    11. June 2012 at 11:39

    Mike Sax:

    “You piously and sacrosanctly and religiously and dogmatically and spiritually and self-righteously”

    Major talk about an overdone fragment. And you have the gall to call someone a fool after overdoing it this much?

    Oh I’m sorry, I was still laughing at your usage of the word “piously”.

    Not that your opinion is worth much anyway other than maybe in a lab experiment about how people who have been hit many times by lightening think.

    Chicks love lightening scars.

    “declaring that we should advocate for a stable crime rate, such that if crime falls below it, a group of elite people should engage in more crime, and when crime rises above it, that group of elite people should engage in less crime”

    So in other words you have the name of major cities with no crime?

    So in other words you have the name of major cities with no crime?

    You feel that if only we can get Major Freedom to use enough pious superlatives in one sentence this will mean there’s no crime?

    I am not expecting no crime. I am just not advocating for more crime. You are. That’s the difference.

    You cannot grasp the difference between accepting crime will occur, and advocating that a minimum rate of crime occur such that any gaps are made up for by a group of criminals?

    The only reason we have any crime is because we don’t declare like the Major that we will tolerate not a bit of it.

    The only reason why we have as little crime as we do, rather than more, is precisely because of a mentality to eradicate it, rather than not only tolerating it, but calling for it the way you are doing.

    If everyone thought like you, society would collapse.

    By the way Major I’m only going along with your ovewrought analogy that inflation is on the moral level of rape.

    Inflation backed by guns is morally equivalent to rape. Both are based on initiations of violence, or the threats thereof.

    I was taking the logic in your argument, and applying it elsewhere, to show you that your logic is inconsistent even in your own worldview. Which means of course that your worldview is sloppy and wrought with fallacies.

    In reality it’s an absurd comparison and maybe even insults the real victims of rape.

    Tell that to the victims of inflation. I think you minimizing that is an insult to them.

    But I prefer not to get into a game with you on which crimes are better than others. That’s your thing, not mine.

    Incidentally Major, I wrote a post dedicated just to you a few weeks ago don’t know if you got to read it yet. Here it is in case you haven’t

    Sorry, I don’t read partisan hack blogs.

  59. Gravatar of Mike Sax Mike Sax
    11. June 2012 at 12:19

    “Chicks love lightening scars”

    You Major but they don’t like self righteous pomposity and a guy who never lets anyone get a word in edge wise-which is what I imagine living with you is probably like. Your very verbose in case you weren’t aware.

    “If everyone thought like you, society would collapse.”

    The more you share your thoughts on society the more astonishing it is. If you talk to any police chief he’ll tell you the same thing. So no it wouldn’t collapse. And I thought you said there’s no such thing as society-that only the individual is real?

    “Tell that to the victims of inflation. I think you minimizing that is an insult to them.”

    The usual Major game of “I know you are but what am I!” I’m sure most women think the inflation rate rising from 2 to 3 percent is the same moral level of being beaten up and raped.

    “But I prefer not to get into a game with you on which crimes are better than others. That’s your thing, not mine.”

    No any sane person thinks that phyiscal rape is far worse on a moral scale than slighlty higher rate of inlfation.

    If some wealthy bondholder sucks a little less interest out of a borrower that’s on the level of real rape? MF you should run for office and then tell me it’s only my thing.

    Again chicks love scars but not a guy who thinks that a credit card company losing a percent of interest is just as grevious as a woman being raped.

  60. Gravatar of Mike Sax Mike Sax
    11. June 2012 at 12:21

    “Sorry, I don’t read partisan hack blogs.”

    Yeah Major this form the last living member of the Birch society.

  61. Gravatar of Mike Sax Mike Sax
    11. June 2012 at 12:39

    And likely a proper follower of Herman Hoppe to boot.

  62. Gravatar of Mike Sax Mike Sax
    11. June 2012 at 12:40

    The Herman Hoppe comment is directed at you Major.

  63. Gravatar of Major_Freedom Major_Freedom
    11. June 2012 at 13:34

    Mike Sax:

    “Chicks love lightening scars”

    You Major but they don’t like self righteous pomposity and a guy who never lets anyone get a word in edge wise-which is what I imagine living with you is probably like. Your very verbose in case you weren’t aware.

    Chicks disagree with your sentiment.

    “If everyone thought like you, society would collapse.”

    The more you share your thoughts on society the more astonishing it is. If you talk to any police chief he’ll tell you the same thing. So no it wouldn’t collapse.

    Police chiefs are held back and society is prevented from collapsing into a police state precisely because enough people think like me in enough areas of their lives.

    The fact that you are taking the words of a police chief as gospel, only reinforces my suspicion of what kind of a person you are.

    And I thought you said there’s no such thing as society-that only the individual is real?

    I define society as the division of labor. I do not define society the way you do, which is akin to an organic blob that experiences gains and losses, under which individuals are to be selected as sacrificial victims in the name of promoting it.

    We’re talking apples and oranges.

    “Tell that to the victims of inflation. I think you minimizing that is an insult to them.”

    The usual Major game of “I know you are but what am I!” I’m sure most women think the inflation rate rising from 2 to 3 percent is the same moral level of being beaten up and raped.

    As usual, you don’t understand the full implications of inflation.

    No you pedant. I am talking about inflation leading to wars that would never have been afforded otherwise, which results in the killings of entire families, and it also leads to physically unsustainable capital structures, which results in periodic bouts of unemployment, which can and does increase the number of suicides, which also destroys families.

    So while inflation is helping finance otherwise politically unfeasible wars, which in the case of Iraq has resulted in almost 100,000 to die, you have the gall to tell me that I am insulting rape victims for likening inflation to rape? YOU’RE insulting the hundreds of thousands of family members and friends who have died because of wars the extents of which only inflation could have been made possible.

    I am talking about far more than merely paying 2% more for gas. While you piously seek to belittle inflation, price increases is only once consequence of inflation, and your inability to think of anything other than rising prices is the very reason why I define inflation in the original way, of an increase in the quantity of money (specifically an increase in the quantity of money beyond the increase in production of precious metals, which would almost certainly be money in a free society).

    “But I prefer not to get into a game with you on which crimes are better than others. That’s your thing, not mine.”

    No any sane person thinks that phyiscal rape is far worse on a moral scale than slighlty higher rate of inlfation.

    No sane person believes initiating force against innocent peaceful people is OK as long as it takes specific forms.

    You’re insane for putting instances of rape above 100,000 dead people, and hundreds of thousands more grieving family members.

    The fact that you continue to attempt to derail the argument about the violence behind inflation, into criticizing me for using your own crap logic in the case of rape, only shows strong evidence to me that you would rather not address the inconsistency of your own advocacy.

    If some wealthy bondholder sucks a little less interest out of a borrower that’s on the level of real rape? MF you should run for office and then tell me it’s only my thing.

    It doesn’t just suck a little less interest out of LENDERS (you incorrectly said borrower. In inflation, borrowers pay back their debts in depreciated currency, and the lenders receive depreciated currency. That is a gain to borrowers and a loss to creditors. Just more of your ignorance about basic economics), it also sucks out of EVERYONE who happens to receive the new money last, typically poor people, and those on fixed incomes, like, you know, lenders.

    It also sucks the biological life out of innocent people, to the extent that inflation finances wars.

    Again chicks love scars but not a guy who thinks that a credit card company losing a percent of interest is just as grevious as a woman being raped.

    Chicks love guys who fight to protect families from all enemies.

    Yeah Major this form the last living member of the Birch society.

    I am not a member of the John Birch society.

    And likely a proper follower of Herman Hoppe to boot.

    I agree with much of what Hoppe writes, but I disagree with some of his statements concerning homosexuality.

    The Herman Hoppe comment is directed at you Major.

    I thought that was obvious.

  64. Gravatar of Mike Sax Mike Sax
    11. June 2012 at 14:01

    “The fact that you are taking the words of a police chief as gospel, only reinforces my suspicion of what kind of a person you are.”

    Sure you have an idea of the kind of person I am-truly you are delusional I suppose I should take your words on police work rather than a poice chief. Next I will ask you a medical question rather than the doctor. Because I can’t vouch for a prosfessional but some bloviating gas bag who calls himself Major Freedom.

    “While you piously seek to belittle inflation”

    There you go again Major. You keep trying to hang the “pious” card on me because I called you pious in a previous post. It’s another game of Major Freedom’s “I know you are but what am I?”

    Next up I call Charles Manson a homicidal maniac and he comes back with “I know you are but what am I?”

    When I call you pious there’s an actual basis in fact. You’re just mimicking me. Let’s face it Major. I certainly am belittling inflation or at least your as Jimmy Carter would put it “inordinate fear” of inflation.

    I mean now you’re trying to claim that inflation is respnosible for war. Sure, elminate inlflation and no more war. Why doesn’t Noam Chomksy stop all his protests and just demand no inflation?

    “No sane person believes initiating force against innocent peaceful people is OK as long as it takes specific forms.”

    Cmon Major your attempt to speak of “force” in such a broad brush way drains it of any meaning. This is because you are a fanatic a moral absolutist which is why you don’t undrstand the nature of police work, how society works or much else for that matter.

    “you incorrectly said borrower. In inflation, borrowers pay back their debts in depreciated currency, and the lenders receive depreciated currency. That is a gain to borrowers and a loss to creditors. Just more of your ignorance about basic economics”

    Yes that’s what I said. Inflation helps borrowers and hurts lenders. If you pay 5% interest but the inflation rate is 4 percent you really only owe 1%.

    “I agree with much of what Hoppe writes, but I disagree with some of his statements concerning homosexuality.”

    How about what he says about democracy?

  65. Gravatar of Major_Freedom Major_Freedom
    11. June 2012 at 15:02

    Sure you have an idea of the kind of person I am-truly you are delusional I suppose I should take your words on police work rather than a poice chief. Next I will ask you a medical question rather than the doctor. Because I can’t vouch for a prosfessional but some bloviating gas bag who calls himself Major Freedom.

    Yes, because only police chiefs can answer questions concerning social affairs, such as politics, ethics, and economics.

    “While you piously seek to belittle inflation”

    There you go again Major. You keep trying to hang the “pious” card on me because I called you pious in a previous post. It’s another game of Major Freedom’s “I know you are but what am I?”

    Oh, I just adopted it, the same way you have adopted all the other words in your arsenal. You didn’t originate any of the words you are using, so what, should I say that you are hypocritically engaging in the “I know you are but what am I?” in yet another meta-level?

    Next up I call Charles Manson a homicidal maniac and he comes back with “I know you are but what am I?”

    That analogy would work if you were piously calling others homicidal maniacs. As it turns out, you’re just piously calling me pious, so really, if you don’t like to piously do things, then might I suggest you realize you’re piously doing them first?

    When I call you pious there’s an actual basis in fact. You’re just mimicking me.

    That’s false. Piousness implies some sort of devout religious belief. The fact is that I am an atheist. So in actual fact you’re just mimicking others who have used that word when they critiqued others who may or may have not been “pious.”

    Either than or you have no clue what the word “pious” even means, in which case you’d only be piously mimicking others using words that piously sound like they are fun to piously say. So you piously took the word pious, thought it would piously be fun to say to a non-pious person that you cannot actually successfully convince.

    Let’s face it Major. I certainly am belittling inflation or at least your as Jimmy Carter would put it “inordinate fear” of inflation.

    I don’t own Jimmy Carter.

    And I don’t need to be told to face it. I am the one who told you that you are belittling inflation. You are belittling that which has played a crucial role in allowing the slaughter of tens of thousands of innocent people in the middle east, plus countless millions more around the world from various governments who have used force to monopolize money production, and have used the printing press to engage in unspeakable horrors that an informed public would never willingly finance through borrowing and taxation.

    The people who felt “limited” in a gold standard are separated into those who felt limited in killing more people by being financed by borrowing and taxation alone, and those who felt limited in being able to sell their products at prices in accordance with the costs they are capable of achieving. Those who can innovate to lower their costs, can outcompete those sellers who cannot, because of the “limited” revenues available.

    It is people like you that want to release the constraints the founders put on the state for very good reasons, and it is people like you that are intellectually responsible for the deaths of millions of people around the world, because you’re not just abstaining from giving your opinion. No, you’re positively calling for the destruction in the name of the children.

    I mean now you’re trying to claim that inflation is respnosible for war.

    That’s a straw man. I didn’t say inflation is responsible for war. If you had bothered to properly read that which you choose to criticize, you know, yet another one of your incredible hypocrisies, you would have known that I specifically said inflation leading to wars that would never have been afforded otherwise. I didn’t say wars as such.

    It’s the extent of the wars. With inflation, states can more easily afford unpopular wars, and within the context of those wars, they can wreak more havoc than they otherwise could.

    Sure, elminate inlflation and no more war. Why doesn’t Noam Chomksy stop all his protests and just demand no inflation?

    I didn’t say eliminating inflation will eliminate wars. Eliminating inflation will put a huge barrier on the extent and number of wars. Of the wars that will be fought, they will tend to be wars that are just, that are for self-defense, that have the support of the taxpayers. With inflation, the ability of the people to curb the state is seriously compromised. Of course people like you WANT to release all constraints on the state, so you welcome inflation and protect it with straw manning jealousy.

    “No sane person believes initiating force against innocent peaceful people is OK as long as it takes specific forms.”

    Cmon Major your attempt to speak of “force” in such a broad brush way drains it of any meaning.

    It’s not broad. It’s specific. It’s force initiated against property owners, who have acquired their property through original appropriation, production, or trade. That’s pretty much it. If one violates such property rights, they are initiating force against person and/or property. It’s that simple.

    You only WANT the issue of force to remain cloudy, so that you can slip in government violence through the back door, since after all, if we start exposing state violence, how will your precious state exist in the long run? We have to make the issue of force a nebulous one, so that it’s clear when citizens initiate force, but not when those in the state do it.

    This is because you are a fanatic a moral absolutist which is why you don’t undrstand the nature of police work, how society works or much else for that matter.

    I don’t understand the nature of police work? I didn’t make any arguments concerning the nature of police work. Oh I get it, you have a very close family member who is in the police force, don’t you? You imagined me to be making arguments about the police force, because you yourself thought of the police force when I was making my non-police force arguments. Now it makes sense. So who is it? Your husband? Your brother? Your father? Your sister in law? You? Who are you protecting from being identified as a beneficiary of violence against innocent people?

    Yes, I am a moral absolutist. That’s what morality entails. You are a moral absolutist. You believe state violence is moral, because the state says so. You believe taxation is not theft, period. You believe inflation that allows wars that could otherwise not be afforded, is somehow nothing but taking purchasing power away from wealthy capitalists who themselves exploit others, so screw them.

    “you incorrectly said borrower. In inflation, borrowers pay back their debts in depreciated currency, and the lenders receive depreciated currency. That is a gain to borrowers and a loss to creditors. Just more of your ignorance about basic economics”

    Yes that’s what I said. Inflation helps borrowers and hurts lenders.

    No, you said inflation “sucks a little less interest out of a borrower.”

    Inflation sucks a little interest out of LENDERS, not borrowers. Lenders receive interest, not borrowers. If any interest is to be “sucked away”, then it will be sucked away from those who receive interest, namely, the LENDERS.

    I simply cannot believe how ignorant you are. You’re ignorant about so many things I am just at a loss of words to describe someone in your position.

    If you pay 5% interest but the inflation rate is 4 percent you really only owe 1%.

    Hahaha, then that “sucks a little less interest away” from LENDERS, not borrowers. If you pay 5% as a borrower, and inflation is 4%, then you owe 5%, but you’re paying back the lender in depreciated dollars that are only worth an additional 1% to the lender in real terms. The LENDER is having “a little less interest”.

    “I agree with much of what Hoppe writes, but I disagree with some of his statements concerning homosexuality.”

    How about what he says about democracy?

    What about it specifically?

  66. Gravatar of Mike Sax Mike Sax
    11. June 2012 at 15:15

    Major how about specifically here:

    “we’ll probably have to experience national bankruptcy spreading through Portugal, Spain, Italy and ultimately on to Germany. Only then, I fear, will it become clear to everyone what many people already suspect now: that the EU is nothing but a gigantic machinery of income and wealth redistribution, from Germany and the Netherlands to Greece, Spain, Portugal, and so on. But that’s not all. It will also become clear that the same insanity, the same mess, exists even within each individual country: redistribution from Bavaria and Baden-Württemberg to Bremen and Berlin, from Little Town A to Little Village B, from one company or industry to another, from Smith to Jones and so on – and always following the same perverse pattern: redistribution from the more productive countries, regions, places, companies and individuals to those that are less productive or not productive at all. Bankruptcy will bring all of this to light in a dramatic fashion.”

    “And perhaps then, finally, will come the realization that democracy – in whose name all these dirty tricks have been done – is nothing more than an especially insidious form of communism, and that the politicians who have wrought this immoral and economic madness and who have thereby enriched themselves personally (never, of course, being liable for the damages they have caused!), are nothing more than a despicable bunch of communist crooks.”

    http://diaryofarepublicanhater.blogspot.com/2012/06/my-major-freedom-herman-hoppe-thesis.html

  67. Gravatar of Major_Freedom Major_Freedom
    11. June 2012 at 15:30

    Mike Sax:

    Major how about specifically here:

    “we’ll probably have to experience national bankruptcy spreading through Portugal, Spain, Italy and ultimately on to Germany. Only then, I fear, will it become clear to everyone what many people already suspect now: that the EU is nothing but a gigantic machinery of income and wealth redistribution, from Germany and the Netherlands to Greece, Spain, Portugal, and so on. But that’s not all. It will also become clear that the same insanity, the same mess, exists even within each individual country: redistribution from Bavaria and Baden-Württemberg to Bremen and Berlin, from Little Town A to Little Village B, from one company or industry to another, from Smith to Jones and so on – and always following the same perverse pattern: redistribution from the more productive countries, regions, places, companies and individuals to those that are less productive or not productive at all. Bankruptcy will bring all of this to light in a dramatic fashion.”

    Other than the declaring bankruptcy part (since the EU central bank can print its own money and bail out any country it wants), I pretty much agree. The EU is indeed nothing but a giant bureaucratic mechanism of income and wealth redistribution on a massive scale. The German and French peoples are being looted for the sake of deadbeats in the lower part of the continent.

    No go run to your blog and say “ZOMG! Major_Freedom AGAIN agrees with something and disagrees with something Hoppe said!”

    “And perhaps then, finally, will come the realization that democracy – in whose name all these dirty tricks have been done – is nothing more than an especially insidious form of communism, and that the politicians who have wrought this immoral and economic madness and who have thereby enriched themselves personally (never, of course, being liable for the damages they have caused!), are nothing more than a despicable bunch of communist crooks.”

    I basically agree, but with an important caveat: It is not just the statesmen themselves that are crooks. Statesmen have many friends in the market who can be just as, if not more, despicable than the statesmen themselves. After all, statesmen originate from the general population, and are non-statesmen before they are statesmen. Some remain non-statesmen and team up in a fascist way with the state. So I would say Hoppe should have said democracy is a watered down version of communism and fascism, not just communism. Other than, I agree.

    “ZOMG! Major_Freedom did it again!”

  68. Gravatar of My Major Freedom-Herman Hoppe Thesis Confirmed | Last Men and OverMen My Major Freedom-Herman Hoppe Thesis Confirmed | Last Men and OverMen
    24. April 2017 at 02:05

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