+1 JJ
@Friedmanite
Stephen Adkins:do you have a favorite book on that subject?
I wish I did, but I actually don't know of one in particular. Of course Economics in One Lesson goes into the subject pretty well in Chapter 12 and a little in Chapter 11.
I also have quite a few links to various articles on the subject, including all the back and forth between Schiff and Murphy during that time period when Murphy was disagreeing with him. I could try to find an easy way to relay them to you if you'd like.
I would've knocked Kruggie down in about two points. First, why doesn't the historical data on the disaggregation of the interwar years GDP show private investment increasing until, and why does private investment only increase AFTER the interwar years when the GDP was declining? Second, why did Keynes himself emphasize that savings *must* occur during the boom to even out of the bust (per General Theory)? Those two points would've given the little prick fits for weeks.
"The power of liberty going forward is in decentralization. Not in leaders, but in decentralized activism. In a market process." -- liberty student
And then...
George Mason University economist Tyler Cowen is up with his comments on the Ron Paul-Paul Krugman debate. It's viciously one-sided against Ron Paul. Among other points about the debate, Cowen makes the following (My comments are in italics): [...]
Friedmanite:Inflation is theft!. So is deflation, but you will never hear Ron Paul mention that.
Still waiting on your elucidation of your profound insight that Ron Paul was "owned" by Krugman.
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
John James:Of course Economics in One Lesson goes into the subject pretty well in Chapter 12 and a little in Chapter 11.
For having read through that book some 2-3 times (at least), I don't recall it going into international trade all that much. I'll take a look and see if it jogs my memory.
John James: I could try to find an easy way to relay them to you if you'd like.
Would you? That would be great.
Stephen Adkins:For having read through that book some 2-3 times (at least), I don't recall it going into international trade all that much. I'll take a look and see if it jogs my memory.
The idea that exports ultimately pay for imports doesn't ring a bell? ;)
If I had a cake and ate it, it can be concluded that I do not have it anymore. HHH
ThatOldGUy:The idea that exports ultimately pay for imports doesn't ring a bell? ;)
Yeah it does. I guess I'm looking for something a little more technical. As with basically everything in Ei1L, there are some great principles in there but Hazlitt never goes into much depth on any particular application of his lesson.
Krugman's mad because he slept on Paul and paid for it.
This whole thing is interesting to me because in competitive sports contenders often spend weeks or months in advance studying their prospective opponents.
I know that in the MMA fight game, fighters will often tailor strategies designed specifically to nullify or counter one particular part of one particular opponent's game. I.e. a striker working on stuffing takedowns to avoid having to fight on the ground or a jiu jitsu fighter working on clinching to avoid trading shots.
Does Krugman even know Austrian Economics? Doesn't seem like it. Maybe he should take some time and actually study it if he wants to win debates.
Paul Krugman...with his 3rd? 4th? post about his TV appearance with Ron Paul...
I told you. This guy truly is the epitome of insecure dork.
http://www.thedailybeast.com/articles/2012/05/01/ron-paul-krugman.html
I'll give one example that stuck out to me. In Part 1 of the Mediaite video (at 6:00) Ron Paul argues that there was a lot of economic growth after World War Two because: After World War Two a lot of the debt was liquidated, but guess what else we did. The troops were coming home…big government liberals wanted to have job problems, they weren't put into place. we cut spending by some 60%, we slashed taxes, finally the depression ended. Ron Paul's gloss over history has a grain of truth and a giant problem. The truth is that America did take a step down from having a war-time command economy. The problem is that Ron Paul makes it sound as if government then immediately shrunk. He even says taxes were "slashed". Here is a chart from the Tax Policy Center showing what the historical highest marginal tax rates were. During World War Two, the rate is between 81% and 94%. After World War Two, it is cut down to a low of 82% before being raised back to 91%, which is where it stays till the Kennedy years, during which it drops to a slightly lower 70%.
I'll give one example that stuck out to me. In Part 1 of the Mediaite video (at 6:00) Ron Paul argues that there was a lot of economic growth after World War Two because:
After World War Two a lot of the debt was liquidated, but guess what else we did. The troops were coming home…big government liberals wanted to have job problems, they weren't put into place. we cut spending by some 60%, we slashed taxes, finally the depression ended.
Ron Paul's gloss over history has a grain of truth and a giant problem. The truth is that America did take a step down from having a war-time command economy. The problem is that Ron Paul makes it sound as if government then immediately shrunk. He even says taxes were "slashed".
Here is a chart from the Tax Policy Center showing what the historical highest marginal tax rates were.
I was just about to post that.
Their statistics come from the Brookings Institution. That is all you need to know. The DB gets exclusive interviews with Zbigniew Bzrezinski. Zbig is on the Board at Brookins - they inform Saban Institute, Columbia University, and the CFR. They are a mouthpiece of our basic enemies.
I am not disagreeing with you, but could you provide something more substantial than ad hominem attacks agaist the source?
http://www.europac.net/commentaries/don%E2%80%99t_be_fooled_political_posturing
http://mises.org/Community/forums/t/20597.aspx?PageIndex=1
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
Be careful with Hauser...
http://www.angrybearblog.com/2010/11/hausers-law-is-extremely-misleading.html
A good analysis of the Diocletian part of the debate. http://www.zerohedge.com/news/guest-post-krugman-diocletian-neofeudalism
After reading Kruggieboy's backhanded insult on his blog all I can say is the dude has no academic rigor which he stands on. Seriously, I thought I could be a petty little wench, but this guy makes my emotional musings look downright polite. Wow, just... wow.
@Wibee
I don't know what exactly I would need to give you...It is a series of think tanks that extend into the University system and the policy making section. It is their policies that are under question. Zbig is one of the top U.S. long term geostrategists. The Daily Beast is given pictures of the world that other news media simply is not. This would indicate, to me, that they are basically a globalist-friendly media source and not just a friendly one, but one that goes to bat for its handlers. And not a social/media political partisan think tank like Soros or Koch, but a long term geopolitically interested agenda.
I find no interest in social politics. International economics is geopolitics. There is no way around it. The DB, Krugman, Zbig all seem to be related...in a network of Establishment propaganda efforts. Should I link to some of their publications?
Which Path To Persia? - Compare this document to the PNAC stuff. Notice the people who put this together, CIA, Exxon, Israeli Ambassador, State Dept., Brandis, the crown foundation, people from the 9/11 commission, RAND corp, one of the guys was indicted for espionage with Moussad agents during Bush Jr.'s term.
What Zbig thinks of Russia - DB interview
Here is a funny one from 1959 - This is why NASA always lies about what it has done and is researching, they mention the potential aspects of weather control, politics in space, market research for the public, etc.
When we look at the Krugman suggestions for international relations it is the whole package; the agenda of the realist left.
gotlucky:I agree that Ron Paul did a very good job, but the one thing that really gets me about his debating style is that he rarely goes for the jugular. Krugman left himself open on several points and Ron Paul just didn't go for the attack. What I have in mind here is about the competing currencies part of the debate.
Can you be more specific? What would you consider to be going for the jugular?
What would be a better response to Krugman saying (at 10:08) "do you really think people are only using dollar bills because the government isn't allowing them to use other stuff?".
Government Explained 2: The Special Piece of Paper
Law without Government
As currency, yes, but as a store of value? There's gold, silver, and financial instruments that people use for that.
I was thinking about this debate today and realized.... Did Krugman really say barter was legal? I was under the impression that for any transaction, government needs to collect a sales tax.
For example, if you receive a car as a gift. You have to pay the government a tax based on the Kelly Bluebook value.
Not to mention I doubt I can pay the IRS in baseball cards.
You aren't even allowed to save for retirement (in a retirement plan, anyway) in baseball cards.
@Graham Wright
The problem as I see it with Paul is that he is reluctant to point out that his opponent is ignorant or dishonest. He prefers to talk theory (and support it, which is great). The problem with this is that many people won't care or understand, but if you can point out how your opponent is actually dishonest, well, that's something to remember. It also has the added bonus of flustering an opponent, making him angrier and more anxious. People tend to not want to side with people who lose their cool in debates.
What sprang to my mind when he said that was what happened to the architect of the Liberty Dollar:
http://www.fbi.gov/charlotte/press-releases/2011/defendant-convicted-of-minting-his-own-currency
The Princeton professor may have expected something along the lines of a discussion on why Paul and his supporters continue to wrongly predict runaway inflation, an episode that hasn't occurred. Instead, he found himself responding to criticisms over currency debasement and price controls, which Paul insisted destroyed the Roman Empire.
The article doesn't bash Ron Paul directly, but it seems to paint Krugman in a better light (depending, I suppose, how you perceive the selcetion of quotes). It is a selection of quotes from Krugman that I am questioning. They are from one of his articles where he ad hominems Ron Paul saying, "Ron lacked facts. w/e; book sales. My boook has facts."
I wouldn't expect the "American Banker" to be a particularly friendly organization to Ron Paul either.
Remember in the video around 19:40 or so when Krugman said that it is the "great lie" that the Fed created the Housing Bubble? Yeah...someone else remembered what he said on his blog in '09...
Requesting the fed to create a housing bubble greatly overestimates the Fed's ability to micromanage the economy.
Even if that were true (it's not, but even if it were), it's irrelevant. The point is he said they did. Now he says the idea that they did is "the great lie." Bottom line, Krugman was either lying then, or lying now.
Even if that were true (it's not, but even if it were),
I'm not sure what you meant there.
Across countries during the 2000s, house prices were weakly correlated with central bank policy.
Saying that the Fed can target one particular sector of the economy through the federal funds rate is a stretch. With enough easing you'll get some kind of bubble eventually, but it can't be said where.
But yes, Krugman isn't the best representative for liberals.
"Across countries during the 2000s, house prices were weakly correlated with central bank policy."
Low interest rates correlate with all long term capital intensive investments, of which housing is one.
Krugman isn't the best representative for liberals.
Sure he is...
It depends, because there are counteracting effects. Low or negative real interest rates also discourage savings and investment. Interest rates accounted for maybe a few percent of the increase in house prices.
I can think of some alternatives. Just go through an economics department and ask who's interested.
mustang19: Low interest rates correlate with all long term capital intensive investments, of which housing is one. It depends, because there are counteracting effects. Low or negative real interest rates also discourage savings and investment. Interest rates accounted for maybe a few percent of the increase in house prices. I can think of some alternatives. Just go through an economics department and ask who's interested.
If a great many loans are being made while saving and investment are suppressed by low interest rates, doesn't that mean that the loans must have been made with fresh new central bank and FRB money?
From the article
in the period from 1999 to 2006 house prices rose by more in countries with larger current-account deficits. This negative correlation suggests an important link between the current-account balance and the housing sector, but the direction of causality is unclear.
Low interest rates can correlate to both "larger current account deficits" and housing construction (or any kind of construction). But Bernanke thinks there is something else...hmmmm...
A reduction of 10 basis points in long-term nominal interest rates caused by an expansionary monetary policy shock raises real credit and house prices by about 0.3% and 0.2%, respectively, after ten quarters and real residential investment by about 0.25% after three quarters.
From what to what? A reduction of 10 bases points would net you nominal .2%-.3% results if you are lowering from .17 to .07.
The main result that volatility fluctuations can be of quantitative relevance is robust along numerous dimensions, including alternative calibrations of the model; changes to the parameterisations of the stochastic volatility processes; the central bank rule for monetary policy; and the order to which the Phillips curve was approximated in the model solution. The external habits specification of utility plays an important role in the model because, by raising risk aversion, habit formation increases the importance of the precautionary savings motive, exacerbating ‘policy errors’ that arise from ignoring volatility fluctuations. Consequently, models which are not calibrated to match higher-order risk effects may understate the importance of volatility fluctuations for monetary policy.
This is just a highly technical way of saying that shifting interest rate policy will screw up everyones expectations.
The external habits specification of utility plays an important role in the model because by raising risk aversion, habit formation increases the importance of the precautionary savings motive, exacerbating ‘policy errors’ that arise from ignoring volatility fluctuations.
DUH! Risk aversion (feelings of uncertainty) will certainly change people's habits and increase their "motive" to save (to quell feelings of uncertainty) and will highlight what these assholes call "policy errors", but what austrians refer to as a process of malinvestment; misallocated capital due to bureaucatic (self interested groups) price signals sent by depressed interest rates. But, these teet suckling economists at the Fed and the Peterson Institute don't look at their past work as being the cause. It is always perception of their policies by the profane.
It's funny that people say the Beijing stock market trades on "suspicions of Party policy change" and we mock them for being communists. "Come to the U.S. and worship the priesthood at the Federal Reserve!! Our market trades on suspicions of policy change! All hail the almighty economists!!"
Large derivative (and hence Mortgage backed securities) use can easily be explained by the process of fraction reserve banking and the low interest rate policy of the FED! (See: Maturity mismatching, yield curves, and the term structure of savings) You have to try pretty hard to ignore low interest rates increasing the amount of loans and then combined with government depost insurance and/or loan guarantees what this does for capital investment (or savings) over periods of time. We are talking about habits right, Bernakers?
Just go through an economics department and ask who's interested.
You best checkity check yourself, son.
Some of them were, while other loans are issued by increasing the monetary multipliers. The US economy functions as a fractional reserve banking system. Even if base money stays the same, they can increase loans by increasing the ratio of M1, M2 and M3 to base money as occured in 2005-07. Fractional reserve lending doesn't require base money or deposits to match loans.
who are they?
Large derivative (and hence Mortgage backed securities) use can easily be explained by the process of fraction reserve banking and the low interest rate policy of the FED! (See: Maturity mismatching, yeild curves, term structure of savings)
Fractional reserve systems can exist under free banking unless the government specifically prohibits it. Mandatory 100% reserve systems require government intervention, and, in my opinion, not a good kind.
Maturity mismatching, yield curves, and the term structure of savings are not going to cease being problems if you raise interest rates and take out the central bank.
You have to try pretty hard to ignore low interest rates increasing the amount of loans...
Again, the part played by interest rates compared to fractional reserve banking was quite small. Raising interest rates 200 BP lowers house prices by about 4%.
I'm sorry, come again?
are you saying that m1, m2 & m3 shrank 2005-07 while monetary base stayed the same?