Friday, March 18, 2011

Fed Economist in Total Retreat: Is It Because of an Even More Embarassing Post?

Fed Economist Stephen Williamson after taunting me has retreated to the safe haven of discussion amongst his fellow Federal Reserve economists.

In sanctimonious style, after his colleague at the Fed, David Andolfatto, called Ron Paul a pinhead and said Ron Paul's argument was stupid, after Williamson taunted me, after I replied to his email taunt by sending him a copy of my reply along with the sentence "Bring it on!" to which he replied in an email to me: "Sure, you cheap thug", he now writes:
I have just had an experience where two groups of readers met each other, neither appreciated what the other group was up to, and nothing of value got accomplished. So I deleted that post, and wrote it off to experience.
Actually, I think a lot got accomplished. Two Federal Reserve economists were exposed for their sloppy thinking. To this day, although they have taunted me and called me a cheap thug, they have not responded to my arguments against their analysis.

David Andolfatto, Vice President in the Research Division of the Federal Reserve Bank of St. Louis, has still not responded to my argument against his point that a 95% decline in the value of the dollar was not harmful. I wrote:
That's it, the beginning and end of Andolfatto's Fed defense of destroying 95% of the value of the dollar. It all works out in the end, says Andolfatto. But, please, Mr. Andolfatto explain to me how this works out for someone who has been a careful saver of his money and now sees the purchasing power of that money destroyed? Please explain to me how this works out for a retired person on a fixed income who sees the declining purchasing power of that income? Please explain to me how this works out for the rest of the country when Wall Street bankers are the first to get their hands on newly printed Fed money, so that they can bid up all kinds of prices, including rents on apartments, which makes it difficult for anyone but a Wall Streeter to afford to live in Manhattan?

These damages, Mr. Andolfatto, you somehow don't see and even think Ron Paul is stupid and a pinhead for raising questions about them.
Now, it's not a case that Andolfatto hasn't seen my post or thought the post not worthy of reply. He wrote to me in an email:
You ask some good questions in your post and I'll do my best to address them.
Perhaps, we will hear from him down the road with a reply.

But, Willaimson did reply with a post. He included the link in his "cheap thug" email to me:

http://newmonetarism.blogspot.com/2011/03/intellectual-debates.html

This is the post that is now down.  Let me guess as to why it was really taken down. Somebody else at the Fed, who perhaps understands a little more economics than Williamson, saw the post in horror and realized that Williamson, who I emphasize is a Fed economist, continued to totally confuse seignorage  and modern inflation. (He does title his new post, about the removal of his earlier post:Taking Mike's Advice)

 The post was a total embarrassment to the Federal Reserve. I planned this afternoon to take a bigger bite out of  Williamson, with regard to his confusion on inflation. But alas the post is gone. Here's my challenge to Williamson:

Mr Williamson, if you think your post is so logically sound, put it back up for all to see. What can be the harm in that? It is your very own writing, i.e. the analysis of a college economics professor and economist at the Fed. Shouldn't the public know what your thinking on inflation is?

Or should I repeat the words you emailed to me:
....you don't seem to be holding up your end. Intellect feeling down?

UPDATE: Thanks to all of you who have sent me links to cached versions of Williamson's rant. There appears to be several versions, some with more detailed discussions on "seignorage'. I'll respond to the more detailed rant later this week.

19 comments:

  1. Robert,

    I find it hilarious and ironic that a lot of these guys that work at the FED claim and pride themselves as being so-called free market economists, quick to ridicule cranks like Krugman, but fail to realize that they are in the same boat as Krugman when they spew their Neo-Keynesian/Friedman recipes for fixing the mess they caused to begin with. It’s funny that a monetarist will never claim to possibly know what the correct price for a paper clip or for anything, for that matter. Yet, in a heartbeat he’ll say, “I don’t know what the correct price of a paper clip is…only the market can say, but I can give you the correct price for money, the correct amount of it in circulation, and I will give you both price stability and low unemployment. They have the nerve to call Ron Paul a pinhead, because they are omniscient. You see, to be omniscient all you need is a Ph.D.after your name...the lord himself attends the proceedings. Every May through the end of June he bestows it, at commencements across the land.

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  2. Bob:

    Andolfatto has his own blog in which he responded to his original piece on Ron Paul. http://andolfatto.blogspot.com/

    I wrote the following comment on the Paul piece:

    David, I am trying to say this without being insulting, but I could write a book about what you don't know. Your frame of reference is like most of your contemporaries: (neo)Keynesian-neoclassical-econometric. As you know Mr. Paul is a student of Austrian theory economics, something that is often dismissed by the mainstream. I claim the same hertiage as Mr. Paul. Fortunately for me I'm not a politician. We see many criticisms of Austrian theory but 99.9% are from people who have no idea what it is and usually quote the same misinformation that other critics have written (Prof. Krugman, for example). I see that you sort of stepped into a mess here with your article. It is not exactly fair to criticize something which you have no knowledge of. After all many of us Austrian types were taught what you were taught (Samuelson, etc.) but didn't accept what was served to us. I can claim to have read JMK's General Theory, as well as research put out by the Fed. So I can say I "get" what you guys are saying, and I feel able to criticize it intelligently. It would be nice if you did the same. I read your article and just smiled because we Austrians see this stuff all the time. So, before you step into the fray again, perhaps you should read up on what it is that you are criticizing. I can recommend some excellent books on the topic. In fact, I would be happy to send you one, gratis, if you are so willing. At least then, if we disagree, we can intelligently debate the topic.

    Best wishes,
    Jeffrey Harding

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  3. I read a few of the comments on his blog after the initial brouhaha. I remember stopping when I came across this one:

    Q: Can you explain how elderly people on a fixed income have not been hurt by the devaluation of the dollar?

    A: They have not been hurt by the devaluation of the dollar. They have been hurt by their fixed incomes.

    I think it sums up the arrogance of the clowns that work at the Federal Reserve. If you are retired, you mean nothing to them.

    Here is the link:

    http://andolfatto.blogspot.com/2011/03/ron-paul-thing.html?showComment=1299367077795#c8242513958006798454

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  4. Bob, you know better.. Don't clutter the issue with the facts, the facts are irrelevant.

    As Ron Paul says, the FED will end itself.

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  5. RW

    Would you consider running with Ron Paul as VP? Nice one, two punch.

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  6. I've been mocked by acquaintances in the past for dropping out of school just 9 credits shy of finishing my undergrad studies nearly 2 decades ago. Posts like this just confirm my recognition of the worthlessness of the sheepskin they would have conveyed...

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  7. Mr Williamson, if you think your post is so logically sound, put it back up for all to see. What can be the harm in that? It is your very own writing, i.e. the analysis of a college economics professor and economist at the Fed. Shouldn't the public know what your thinking on inflation is?

    I also think he knows he screwed up big time. If it was just about the "two groups bickering," then he could have just posted the article and banned any (further) comments from being made. But deleting the entire article as if it was never made, well, it's pretty obvious.

    His intellect must be feeling down.

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  8. UPDATE: Thanks to all of you who have sent me links to cached versions of Williamson's rant. There appears to be several versions, some with more detailed discussions on "seignorage'. I'll respond to the more detailed rant later this week.

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  9. How does an outsider choose which of two intellectuals has the better case? Imagine I have cancer; in fact I do. One doctor tells me I need a horribly disfiguring operation. The other says chemotherapy will give me the same chance without surgery. Sure, I read all I can but I cannot acquire the knowledge of either side. So I fall back on my people skills. I watch the body language. I watch the eyes. Who welcomes my questions and answers directly? Who is annoyed with my questions and evades them? Who talks down to me and who tries to answer clearly?
    To me, there is no comparison between the Austrians and the Fed. The Austrians are moral, honorable people. The Fed is full of prissy cowards living in their own little world, a pretty boy harem for the corrupt sultan.

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  10. Like I said in an earlier post, Emperor Bernanke stands absolute naked, stripped of any any economic legitimacy. It reminds me of Emperor Hirohito who before the WWII was a considered a god, but after the war was viewed as a mere mortal. Emperor Bernanke and the entire Fed will suffer a similar fate after this economic crisis has run its course. As for economic professors in general, I always thought most clung to flawed concepts and analyses, but Williamson has set a new low in this regard. How he can look his students in the face after this exchange is hard to imagine.

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  11. My stepdad and mom retired around 1980 after building and running a very successful small-town business, which they sold for something north of $350,000 cash. Their home, vehicles, and everything they needed to live on had been paid for for years. They "invested" their after-tax cash with a local bank which, properly as far as I can tell, spread it around in various-term CDs and the like. Their one "extravagance" was a $25,000 Winnebago that they paid cash for. Dad's medical care was completely covered by the Veterans Administration (WW II vet). They lived an extremely frugal lifestyle, spending nothing beyond their needs other than for gas for infrequent cross-country RV trips or the more frequent 4WD drives to the mountains where they loved to hike and prospect. They anticipated living comfortably since the interest on their investments easily covered food, utilities, and other living expenses.

    Dad passed away in 1994 and the principal on the investments had already been seriously tapped due to Mr. Andolfatto's "unharmful" inflation. Today, Mom, who is still healthy and vibrant (she was much younger than Dad), tries to figure out how to make her $800 Social Security checks last a month. She looks forward to days when the Dollar Store has 88-cent day. Can one of the Fed's geniuses explain to her exactly why she should be thrilled with what they've accomplished? Some of us want to know.

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  12. Richard C: Andolfatto and Williamson have been, for expressing their opinions, repeatedly called by the Austrians to be idiots, morons, nitwits, criminals, thiefs, have been attacked for their nationality, and it has been suggested to post their names on toilet stalls. And you say that the Austrians are moral and honorable people???
    You must be kidding, right?

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  13. It IS annoying to see people in what would be otherwise responsible positions in government and Business resort to such cheap and stupid ad hominem attacks against the arguments of their more intelligent and well-informed critics, but look on the bright side:

    They spelled your names correctly!

    We Misesians are now the MAJOR OPPOSITION to this odious corporatist union of Big Business, the American Imperium, and the gangs of lawyers, bureaucrats, and lobbyists who form the day-to-day personnel of the (American) State.

    Nobody knows (or cares) what Marxists have to say any longer!

    In the 1930's, and the 1970's, the major opposition was the Marxists, and they, of course posed problems for advocates of peace, prosperity, and Private property even greater than those Keynesian frauds!

    It is WONDERFUL, in my opinion, to be the primary opposition now to the worsening misrule of such tax-eaters, irresponsible drunk-on-power "regulators" and sundry sociopaths and knuckleheads who form the bulk of this criminal Kleptocracy which is spiraling down toward final self-destruction!

    The tragic thing is a lot of innocent people will be caught in their wreckage, but at least there is a good chance that this time the blame will be where it belongs--on the State, its "banking" and "business" allies, and those who profit so shamelessly from it--NOT the general public (the victims)!!

    PEACE AND FREEDOM!!
    David K. Meller

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  14. Hey Anonymous:
    You realize the difference between "Austrians," as you call them, and Austrian economists?

    If you don't, then you must think that the governor of California is an Austrian economist!

    Obviously, that's NOT the case-- by his accent OR his state's economy!

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  15. I have often found that those who lack lucid and coherent thinking can often argue well without having a good argument. We are surrounded by these types of people. What a disgrace that economics is divided into all types of ridiculous subdivisions, as Hazlitt so adeptly criticized.

    I guess that is part of why we have so many lawyers rather than people who produce useful things.

    Keep up the good fight Mr. Wenzel, because I love to read you here and at Mr. Rockwell's site.

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  16. Unless I am mistaken, there is no example of a fiat currency anywhere in recorded human history, which did not fail (the vast majority failed catastrophically, which led to formidable social unrest). Our Dollar is no different. Sadly, I was in my forties when I learned this. How money truly works was never taught to me in any school by any professor. I learned this by reading Von Mises, Haslitt, Rockwell and many others. It has become quite clear to me in the last decade that it is the Modus Operandi of Government, the mainstream media and special interests to do whatever it takes to keep the general populus ignorant enough that they do not comprehend what is happening, or so distracted that they do not care, because the moment this nation collectively realizes that we have been played by the most gargantuan scam ever perpetrated on a society, then it is game over for all of the perpetrators, who so willfully sold out their own species for self-interest. Unfortunately, I do not see this happening anytime soon. When an entire generation, who has never experienced what it means to truly struggle for anything, expects their govt to fix everything, instead of being the change they want to see in the world, they will ever only amount to debt slaves, bound by their own miserable ignorance. Like the fat, half-clothed woman sitting on the curb in New Orleans, house destroyed by Katrina, wondering when FEMA is going to bring water, we will all be betrayed by our foolish decision to believe the rhetoric on TV, rather than think for ourselves.
    The Fed needs to be eliminated, every Goldman Sachs bank exec jailed and a law passed that makes "Inside Job" required viewing in every high school in AmeriKa. As one reader stated, the Fed will consume themselves. Such colossal hubris insures it. The most awesome experiment in human freedom, squandered by a fascist, cleptomaniacal government hellbent on saving their own...that is, except for one pinhead who knows the game is rigged and is, God willing, running for President in '12.

    May God have mercy on the American people. They have no idea what is about to unfold.

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  17. Inflation, among other things, is one of the biggest boons to the government that issues fiat currency.
    At a "good" or "normal" rate of inflation of 5% per year, the govt makes 5% on the trillions of $'s that make up its money base, without doing a freekin thing. Andd when the inflation rate goes up, wow what windfall.
    All it needs is suckers to use its currency and save it for the future.
    Why would any govt want to throw away that kind of income in exchange for a commodity based currency?
    The driving force of the fed is to rob the work product of everyone involved in the US$, just by suckering them all into using it.

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  18. I am always amused when a cheap hooker tries to intimidate a gentleman with non-sensical, occasionally hysterically baseless claims. I am not surprised, though. It is apparent that this babbling twit does not know, and was probably never told in his ivory tower laboratory, of the destructive and futile mistake of printing press prosperity.

    Perhaps one of you with a kinder, gentler disposition than my own will provide this arrogant juvenile a history of the Weimer Republic, and its' experience with Haversteins banknotes, and the complete shredding of civil society exacted by the mercantile economic philosophy he seems to favor.

    As for me, I AM a mere thug, and can hardly wait for that inevitable day of collapse for an opportunity to deal directly with him, and his kind. I will bring my grandkids, too, so they may thank him properly for ravaging their future, and their country.

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  19. Priceless. How FED economists (in fact many others) are constantly kissing the ring of the evil king who continues to spawn them: http://www.huffingtonpost.com/2009/09/07/priceless-how-the-federal_n_278805.html

    The Prosecution Rests

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