Krugman hits at Austrian economics as having the "psychology of a cult" as if they have access to a truth that "generations of economists have missed," and claims Austrian predictions of mass inflation on the face of unlimited QE have not happened therefore Austrians have a "blindspot":
"And as with all cults, the failure of prophecy — in this case, the prophecy of soaring inflation from deficits and monetary expansion — only strengthens the determination of the faithful to uphold the faith."
So, where's the inflation? Did Austrians predict inflation? Still to come after the loss of so much on-paper money after the '08 crash? Or is inflation already in double-digits (11%) just not being counted like it had been in the past, as some suggest?
I've said it before, Krugman is a paid and conscious propagandist. Facts aren't going to work to debunk him because he (and his readers) will look past them and use the rhetorical device and emotional charge that comes with "cult."
You could say that the monetary inflation:
...sits in banks and hasn't yet been spent
...has been shipped to Libya, Syria, Egypt, China. etc. in the form of aid and debt obligations
...already has come into effect in the cyclical goods markets (food and energy - my energy bill went up 50% from dec 2012 to january 2013 either from taxes or inflation or both)
...is there but not being counted since the CPI gets retooled every now and again.
all of which are true to some extent and all are purposely oveerlooked by Krugman and his ilk. The cult is that which parades itself around calling others cults. Krugman doth protest too much, methinks.
Already dealt with...
and just for fun:
Joe Weisenthal Goes Total Idiot in an Attack on Austrians
Get Your Popcorn Ready: Joe Weisenthal Has Apologized to Mises...
So basically, the value of many loan assets zeroed out, the gov printed tons of money to in theory keep prices stable, this represents a transfer of wealth from those failing assets to the government, and ultimately to whom the government bought bonds from, mainly foreign governments and banks, etc. Thus the act didn't bid up the price of consumer goods, but those goods have indeed seem some significant rise in the last few years nonetheless.
Is his only measure the CPI? Another stupid, useless government metric, just like GDP.
What do people think of alternative measures to GDP such as the Genuine Progress Indicator, or the Index of Sustainable Economic Welfare? Have there been any attempts to produce an Austrian-inspired metric of economic progress?
we have one, it is referred to as "profit."
"Profits, profits, profits! What kind of hippies are you??!"
We need a "happiness" indicator.
Okay, that was sarcasm, but I had to take (well i didn't have to take it, but) a political seminar on happiness and, turns out, that there are economists (Layard cough from the cough London school cough) that actually promote a metric of happiness. i know, i know, i mentioned the logistics of the metric, but it was never addressed by the writers. They simply promoted an optimistic pseudoscientific method of aggregating what makes people happy and people who's brainwaves are at their receptive state will not question it. Use short sentences. Build hope for the future. (Subtext: TAX, REGULATE, VIRTUE ETHICS, COMMON GOOD, DISPASSIOnAte politics, COMMON GOOD, COMMON GOOD) - seriously check out that dumbass richard layard
profits always and necessarily represent an ex ante increase in satisfaction, i.e. happiness.
assuming people have the same definition of happiness.......fast food tastes good and people buy it, but they can be said to have a weakness in the will when they buy it so much they get fat. They might not want to be fat, immobile, gross, etc., and they would not have 'satisfaction' of their appetite in that, purely economic, sense incorporated into their version of happiness.
Profits necessarily reflect an increase in productivity, however. That much is true.
Actually, PPR or Private Product Remaining (also available in real/nominal and per capita forms), is an Austrian measure of a society's economic health.
"Profits necessarily reflect an increase in productivity, however."
thats what I mean. conservation of mass and energy means that "production" must refer to an increase in stuff people want. as for fast food, ultimately I think they could be said to have not profited if they experienced greater (subjective) losses elsewhere, such as in fitness or health.
There's really no need for an alternative to GDP. You only need statistics if you want to plan the economy.
... just as the State has no money of its own, so it has no power of its own - Albert Jay Nock
for fast food, ultimately I think they could be said to have not profited if they experienced greater (subjective) losses elsewhere, such as in fitness or health.
That is my point. Philosophers don't take economics seriously because of (1) the assumed "rationality" of all agents, (2) in some cases, the perfect knowledge assumption, (3) the problems with a priori and a posteriori epistemic methods, (4) and the unsubstantiated correlation between the universal ends of mankind (happiness) with the satisfaction of utility in accordance with proper productive increase.
Meistro: There's really no need for an alternative to GDP. You only need statistics if you want to plan the economy.
Good point. That's what I've suspected as well. You don't really need any indicator of "economic growth."
Isn't that just GNP minus government spending? That doesn't seem to avoid any the aggregation problems that plague the standard measures. Also, is everything a government does bad? Is everything that goes on in the private sector good?
"is everything a government does bad?"
Name something, we'll find something bad with it. Even the things government does that ostensibly have good effect, it does with unethical means, ie: via coerced money. Something like eradicating smallpox or other diseases, could be done similarly with NGOs via donated money, which would preserve ethical means.
Who cares how good the end is if the means are unethical? Our modern slavish devotion to ends while ignoring the immorality of the means is what has resulted in the creep of tyranny again.
People rationalize drone killings because the end is protection from terrorists. They rationalize privacy losses for the same reason. Rationalize taxation and forced legislation for the same reasons.
Government is force and the initiation of coercion is unethical. And in the few scenarios where government has done otherwise ethical things, ie: engaging in defensive coercion rather than aggression, they're still doing so with money and equipment aggressively coerced out of the hands of tax-payers, making it again wrong.
And since government legitimacy comes only from consent of the governed, every time they pass a new law or enforce an existing one, unless they have the unanimous consent of the governed, they enforce a law against people who have not consented to that law. And even if they are one of the people who did consent to that law, the law is enforced with taxpayer-stolen funds. So again, name something the government can do that is good.
The only possible thing the government can do, ever, that would be definitely good is to repeal its own existence. What are the chances that is going to happen??
In 2008, at the height of the oil bubble, Brent crude traded north of $120. I paid one liter of 95RON unleaded 1.445€. Now Brent trades at a little over $95. I pay one liter of 95RON 1.812€. That's a 25% increase in about four years in front of an 18% drop in demand (I lack the data for the last quarter of 2012 but in face of comatose oil values it's probably still contracting). That's price inflation.
In July 2008 a first quality watermelon was 0.49€/kg. In July 2012 exactly the same product (same cultivar grown in the same area) was 0.79€/kg. That's a 61,2% and more increase in four years. That's price inflation.
In April 2008 I paid some first quality tomato plants 1€ each. In April 2012 I paid exactly the same plants in the same place 1,25€ each. 25% price increase in four years. That's price inflation.
I have good memory and I keep careful track of my purchases. The bulk of price increases happened between 2010 and 2012. Remember the famous "green shots" heralding a new age of prosperity for all in that period? Inflation generated.
Krugman either lives in a perfect world where official CPI is the "real" inflation or is refusing to see the truth. Bloomberg recently run a piece in which a South African research institute calculated CPI increases using the same methods as in the '70s. For the US it stood at 7% and the trend was said to be "upward". Still not conventional mass inflation (over 10%) but we are getting there faster than we'd like. China got there last year because of their merchantilist policies requiring them to devalue the yuan more than the dollar. Club Med countries are in about the same conditions as the US and inflation is banging at Germany's doors.
Expect official CPI figures to become even more unrealistic as we get deeper into the ongoing currency war and the mass of pented up liquidity keep on trickling down. Inflation won't boom unlss banks unleash their reserves (and it's not going to happen as long as they are loaded to the brim with junk investments) but there's s much liquidity in the system right now it's bound to creep up, especially given the fact with interest rates so low people have taken to speculating wildly in basic commodities like foodstuff to make a decent return. And when the price of food goes up, everything else follows.
Expect Krugman and people of his ilk to become more assertive and aggressive as the situation worsens.They built their careers on a pack of lies and won't go down without a fight.