Saturday, July 30, 2011

A Few Comments for George Selgin

I had planned to take up a defense, today, of the manner in which Murray Rothbard  discussed wage rigidities in his writings and explain the how the manner in which he did so was not contradictory, as George Selgin charged, below.

However, I find in the comments a brilliant defense of Rothbard by Major-Freedom that covers the topic in the manner I planned and beyond. Enjoy:

Major_Freedom said...
George Selgin:

The theory part of America's Great Depression is in fact one of the things I had in mind when calling Rothbard a "bad" monetary economist. He devotes much of it to arguing that prices are in fact perfectly flexible downwards, so that monetarists and others are wrong in claiming that downward price rigidities tend to cause a collapse of spending to lead to a serious collapse of sales and employment. Then, when he turns to history, he assails Hoover's interventions for deepening the depression by...contributing to downward inflexibility of prices!

That's disingenuous. When Rothbard argued that prices can adjust downward, the context he made that argument is a laissez-faire market, not a government hampered market. If the government enacts regulations that make prices rigid, then of COURSE prices would not be flexible downward. Rothbard devoted a large section of MES to price controls. It would be silly to claim that Rothbard contradicted himself when he said that prices are flexible in a free market, and that price controls make prices rigid.

Your criticism of Rothbard is desperate and reeks of nothing but mindless antagonism.

Naturally when it comes to arguing the harmful consequences of monetary expansion Rothbard doesn't hesitate to take price rigidities for granted, rather than pretending that they were invented in 1930: you can't have the ABCT if prices adjust at once to their equilibrium levels.

Not true. ABCT is not compromised by the existence of price flexibility. ABCT is a theory of how inflation distorts the real capital structure of the economy during a credit financed boom, which, you guessed it, changes relative prices. ABCT relies upon price flexibility. The inevitable bust is also accompanied by, you guessed it, changes in prices.

But who can seriously believe that prices (including wage rates) are less rigid downward than they are upward? Here again Friedman had the more plausible view, which was that downward rigidities were more rather than less important.

Friedman, and apparently you, are ignoring WHY wage earners and other economic actors would be resistant to falling wages. You have no tenable explanation, which is why you chalk it up to "resisting wage declines until starvation", but in reality, it is because of decades of Federal Reserve generated inflation, which has made prices gradually rise for decade after decade, and when people are born into such a system, and live through it, they come to adapt to price increases as a matter of course. Couple that with unemployment insurance, food stamps, and other government "safety nets", and resisting wage declines becomes yet another government creation.

If we lived in a society with a commodity standard, and prices gradually fell over time for decades and decades, and if there were no government safety nets, then resistance to wage declines would no doubt be virtually absent. People would come to expect gradual wage rate declines as money became more and more valuable over time, and as the population increased over time.

Concerning "Koch" economists and such: contemptible ad-hominem arguments like that are another bad Rothbardian legacy. In any event, I teach at UGA, not GMU, and so can't be tarred with that particular brush. Nor have I ever attacked Lew Rockwell. My criticisms have all been aimed at Rothbard and those who thoughtlessly repeat his monetary economics fallacies. I make no apologies for them.

Oh please. Every time you post on Mises.org, you ad hominem all the "Rothbardians" who "have posters of Rothbard on their walls" etc. For you to complain about ad hominem reminds me of a certain kitchen item calling another kitchen item a specific shade.
---

Major_Freedom said...
I no less than Rothbard have always insisted that the only reliable way to have money behave in a fashion consistent with avoiding business cycles is to abolish central banks and otherwise get governments' out of the business of supplying money. Those who characterize me as apologizing central banks and centrally managed money cannot even claim to have paid attention to the titles of my writings!

You have made specific arguments on what the Fed should do, what monetary policy should be, rules based central bank inflation targeting, and a host of other inflationist arguments.

Claiming these are only ideas given the fact that the Fed has to exist, is like advising a murderer or thief on how to efficiently murder or steal, then telling others "well, if the murderer or thief has to exist, then I'm just helping them murder and steal so that they do it "efficiently."

Not all of us have life sized posters of Milton Friedman in our bedrooms you know. Some of us have principles that will not be compromised.

Unfortunately, by the time you self-styled Friedmanite cultists realize the errors of your ways (much like Friedman in his later life, when he came around to Rothbard's position) the damage will have already been done.

Did you know that your name is constantly used as a straw man by anti-Austrian Keynesians and other statists who say things like "Even George Selgin agrees with me."? It's people like you who are hampering change for the better. You compromising fools perpetuate the very systems you claim to be against, and you don't even know it, because you're too busy worrying about tenure and being accepted by the establishment.

31 comments:

  1. George Selgin has the mind of a child. I am almost embarrassed for him. It comes from hiding in a University environment where you don't ever have to grow up and be an adult in the real world so you can spend your life as a freakish governemnt (aka, mommy-n-daddy) worshiper. It sometimes is appealing...Especially with the young coeds.

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  2. Great rebuttal! Glad to see this...especially considering how full of himself Selgin has acted towards the a number of Austrians lately.

    -- Rothbard Cultist

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  3. Selgin is right. It does not matter that the government introduces rigidity in some prices, in a free market the prices exhibit different degrees of rigidity as well.

    And he is right again when he says that ABCT assumes prices have degrees of rigitidy. If they did not adjustments would be instantaneous and there would be no cycle. The market is a process.

    Last, Selgin has always been an ardent supporter of closing central banks and have always exposed the Fed, so its just ridicuous to acuse him of supporting the Fed for suggesting some management policy that in his opinion would reduce the damage it would make. Btw, Selgin is not the first economist that opposed central banking that proposed different measures to make central banking more bereable.

    Lets keep the debate sane.

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  4. "Selgin is right. It does not matter that the government introduces rigidity in some prices, in a free market the prices exhibit different degrees of rigidity as we"ll."

    So, what? Is that some kind of "argument" for additional credit expansion, or what?

    "And he is right again when he says that ABCT assumes prices have degrees of rigitidy. If they did not adjustments would be instantaneous and there would be no cycle. The market is a process."

    Is this some argument against the ABCT?

    "Last, Selgin has always been an ardent supporter of closing central banks and have always exposed the Fed, so its just ridicuous to acuse him of supporting the Fed for suggesting some management policy that in his opinion would reduce the damage it would make."

    You should perhaps simply say "printing money" instead of the vague, elusive terms such as "some management policy" (because that's the essence of Selgin's "management policy" for recessions).

    So, yes, let's keep the debate sane.

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  5. >So, what? Is that some kind of "argument" for additional credit expansion, or what?

    Well the whole argument against Selgin was that prices have rigidity because of the government. And while is true that the government introduces inneceassary rigidity, the reality is that even in a free market prices have different degrees of rigidity.

    >Is this some argument against the ABCT?

    No, the opposite. Because prices have levels of rigidity ABCT is correct. Without it ABCT would make no sense.

    >You should perhaps simply say "printing money" instead of the vague, elusive terms such as "some management policy" (because that's the essence of Selgin's "management policy" for recessions).

    I think you are missing Selgin's point. Money is just a product, that serves one service: being medium of exchange (and from there you derive other utilities like savings and account measure). And like any other good there can be a shortage and excess of this good.

    Free bankers argue that a free money market can autoregulate and set the supply of money correctly. But we live now under a government created money monpolly. This causes distortions and produces excesses and shortages of money.

    And after this introduction the important part: Selgin's theory proves that a free market on money would produce the best outcome. BUT while we dont have a free market in money, Selgin suggests a sets of policy for the central banks for them to mimic what Selgin thinks the free market would do in that situation. And its important to keep in mind that he gives these recommendations while saying that its imposible for the central bank to mimic the free market and that it will never produce the same outcome.

    His recommended policies to the central bank are only trying to limit the damage the central bank does, not justify it. On the contrary, free banking is the definitive theoretical and historical prove of the imposibility of central banking.

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  6. Errores:

    Selgin is right. It does not matter that the government introduces rigidity in some prices, in a free market the prices exhibit different degrees of rigidity as well.

    Any temporary rigidities in a free market are constantly acted against by market forces. They cannot be lasting. Yes, there will be positive periods of time that elapse as new information is spread throughout the economy from economic actor to economic actor. The free market process is one in which new information leads to new prices. Those who fail to update their prices given the new information are punished, and those who do update their prices given the new information, are rewarded. These profit and loss changes are the market forces that constantly act upon all "uneconomic" price rigidities.

    In such a context, to even think that the temporary, fleeting price "rigidities" that take place on the basis of economic actors not yet learning of the new information that would be incorporated into prices, that this somehow constitutes a "market failure," is really to complain that humans are not omniscient Gods capable of knowing what individual entrepreneurs, the economic actors who ultimately drive the price system, expect in their minds and what their plans are.

    No central planner or government bureaucrat could ever transcend the fact that not only is knowledge dispersed and spread out among various economic actors in the economy, but also that new knowledge can only arise out of the catallactic process of exchanges and price formation.

    If the free market contains any attributes that would make it something less "efficient" than the standard of Gods and their creations, then government would be even further away from that irrational standard because they know even less then the totality of information that exists in the market.

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  7. Errores:

    Last, Selgin has always been an ardent supporter of closing central banks and have always exposed the Fed, so its just ridicuous to acuse him of supporting the Fed for suggesting some management policy that in his opinion would reduce the damage it would make.

    Yeah, we could all learn from Selgin's wise position. I've always been an ardent supporter of ending rape and fraud. So I will take time out of my day to think up formulas and rules based rape and fraud targeting, so as to minimize the pain rapists and defrauders cause others. Instead of the rapist targeting young women, I will say that this is destructive, because the rapist should be targeting NGDP, or "national gross domestic population" instead. You see, if I can get the rapist to target the whole population, instead of only young women, then that will minimize the damage the rapist will do, because it's better for everyone to be raped a little, then the same demographic to be raped all the time. After all, by targeting young women only, the rapists will be ignoring the rest of the population, and it is because of sudden shocks of everyone is not getting raped a little that leads to recessions. It is my belief that it's aggregate rape deflation that causes pain.

    Selgin has taught me that it would be silly to accuse me of supporting the rapists. Just look at all my other writings saying that I would prefer a rape free world! But if rape is to exist, then I will get up every morning, and instead of holding an ardent position against rape, instead of being absolutely against HELPING rapists, I will go out of my way and spend my intellectual ability assisting the rapists in how they rape and who they rape, so as to minimize their damage to society. While I am helping them, I will say I want them to stop, but being the morally unscrupulous rapists they are, they will just take my technocrat advice, and continue doing what they do "more efficiently."

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  8. Errores:

    And he is right again when he says that ABCT assumes prices have degrees of rigitidy. If they did not adjustments would be instantaneous and there would be no cycle. The market is a process.

    No, Selgin is not right. ABCT does not require price rigidity, it in fact requires price flexibility, as prices change to the new monetary conditions set in motion by the central bank and the fractional reserve banks. Under ABCT, interest rates will change, relative prices between the upper stage capital goods and consumer goods will change, relative rates of profit will change, the incomes of the owners of original means of production will change, and so on. This is all a context of price changes, not rigidities.

    The reason why you are probably confused into believing that Austrian theory requires price rigidity is the fact Austrian theory contains the general idea that the relative prices between capital goods and consumer goods will change, instead of all increasing equally and identically as is presumed in monetarist and Keynesian doctrines. Keynesians and Monetarists do not even consider relative prices in their frameworks. They both assume that inflation affects all prices equally.

    You probably believe that because Austrian theory presumes a gradually growing discrepancy in relative prices, on account of credit expansion, that this represents some kind of "rigidity" in prices. After all, why don't all prices increase together equally like the Keynesians believe they should? Why the "rigid" difference in relative prices? The reason is because of the change in interest rates. The artificial low interest rates leads to a particular changed relative price structure that is not generated by straight up inflation Straight up inflation will just raise the prices of whatever goods and services the initial receivers of the money spend the new money towards. That is also a relative price change, but not of the type that ABCT explains.

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  9. >Any temporary rigidities in a free market are constantly acted against by market forces. They cannot be lasting. Yes, there will be positive periods of time that elapse as new information is spread throughout the economy from economic actor to economic actor. The free market process is one in which new information leads to new prices. Those who fail to update their prices given the new information are punished, and those who do update their prices given the new information, are rewarded. These profit and loss changes are the market forces that constantly act upon all "uneconomic" price rigidities.

    Yes, I agree. I feel like you are treating me or Selgin as if we are keynesians. We are austrians.

    The problem with what you are saying is how are you so sure that there is never a problem in the money market? How do you know the market would not adjust a part of the disadjustments via a change in the production and price of money?

    I agree that adjustment in the other prices might be necessary. What I dont understand is why deny that adjustments in the money market might be necessary as well.

    Also, the metaphore on raping does not reflect good on you. Trying to theorize on how a central banking could hurt less the people is nothing bad. I dont get it. But anywyas, please lets keep the discussion out of this and in the previous part.

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  10. >You probably believe that because Austrian theory presumes a gradually growing discrepancy in relative prices, on account of credit expansion, that this represents some kind of "rigidity" in prices. After all, why don't all prices increase together equally like the Keynesians believe they should? Why the "rigid" difference in relative prices? The reason is because of the change in interest rates. The artificial low interest rates leads to a particular changed relative price structure that is not generated by straight up inflation Straight up inflation will just raise the prices of whatever goods and services the initial receivers of the money spend the new money towards. That is also a relative price change, but not of the type that ABCT explains.

    Im an austrian. I understand capital theory.

    >No, Selgin is not right. ABCT does not require price rigidity, it in fact requires price flexibility

    Flexibility is the same as rigidity just in opposite direction. If a is more flexible than b, it means that b is more rigid than a.

    What Selgin was saying, as I understand it, is that without price rigidity market adjustments would be inmediate and there would be no cycle.

    I still think this is just side discussions and would like you to answer to the first part of the previous comment.

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  11. Major_Freedom, I wanna greet you for your posts. I also followed your exchange with Dr. Murphy. There you were brilliant, too. Where else do you write so that I can follow you there, too?

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  12. Very amusing and enlightening debate. I know I shouldn't laugh at rape jokes, but damn that was a hilarious rebuttal. Well, since mass-murdering genocidal dictators like Stalin and Chairman Mau are just going to exist, we ought to develop some rules by which they commit genocide so as to minimize the damage they do. Perhaps Selgin doesn't share the same contempt for the banking cartel as Rothbard did, but I believe that Rothbard understood it very well, which is why he despised it so vehemently.

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  13. "Selgin is right. It does not matter that the government introduces rigidity in some prices, in a free market the prices exhibit different degrees of rigidity as well."

    So Selgin is arguing for the existence of the discovery process for dynamic price equilibrium instead of an "efficient market theory." If that is what is meant by price flexibility and rigidity then Austrians recognize the discovery process is better explanation of reality than a magical perfect marketplace.

    Does it matter that government messes around with the discovery process? - Yes. It matters. The rigidity of the government intervention and dynamic discovery are fundamentally different.

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  14. "What Selgin was saying, as I understand it, is that without price rigidity market adjustments would be inmediate and there would be no cycle."

    Selgin is setting up a caricature of ABCT, if he's arguing the way you understand it. There is no magical perfect market in austrian theory. Equilibrium is dynamically approached via entrepreneurial talent, by human action over time.

    The process relies heavily on price signals to direct entrepreneurial efforts. Any intervention to manipulate prices, especially crucial ones such as the cost of borrowing, the interest rate, or the cost of wages, is going to disrupt the process.

    The cyclical nature of the economy has to with price manipulation of cost of borrowing more than the "rigidity" of the market. When cost of borrowing is manipulated low, the economy booms. When cost of borrowing is restored or manipulated high to rein in inflation, the economy suffers a bust.

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  15. Errores:

    The problem with what you are saying is how are you so sure that there is never a problem in the money market? How do you know the market would not adjust a part of the disadjustments via a change in the production and price of money?

    The way to understand money production is NOT from a central planner's perspective, but from an individual money producer's perspective, because that's where market forces reside.

    If in this context you perceive a "problem," that is, a state of affairs where an individual economic actor "should" adjust his plans in order for his actions to be consistent with what you consider to be "optimal" or "efficient," and you can only think of a solution that includes an increase in the supply of money, then you are saying one of two things, depending on what that individual actor does to make money.

    The first possibility is that the individual economic actor being considered is a seller of real goods and services, and desires a higher cash balance. This goal is capable of being achieved on the side of supply, by the actor either increasing his productivity and earning more income (holding consumption and investment spending equal), or earning the same income but consuming and/or investing less in money terms.

    The other possibility is that the individual economic actor being considered is a seller of money, and desires an increased real income. This goal is capable of being achieved on the side of "supply", by the actor either increasing his productivity (of money) and earning more income (in real terms), or earning the same income but consuming less and investing more, so that his future income grows.

    In both cases, there are no barriers preventing an achievement of the goal. The only thing that limits the individual economic actor are his own productive limitations vis a vis other actors in economic competition, which is ubiquitous in a free market.

    The confusion you and other central bank apologists have is that you think like central planners, and you only consider money in terms of aggregates, in total supply type conceptions. You don't understand money production in anything other than through a monopolist framework. Thus, you come up with all sorts of "problems" that gives meaning to and justifies the monopolist control of money, such as "not enough money in the aggregate." You envision scenarios of "everybody trying to hoard money, but there is not enough money to be hoarded." So you pat yourselves on the backs believing that you have "discovered" a reason for the money monopolist to create more money, altruistically, for your benefit, "as a favor" to all the idiots and morons who are self-destructively trying to hoard money but to no avail.

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  16. Errores:

    If we had a commodity standard, then the ONLY reason for why money would be produced, would be if it were profitable to do so. If there is a gold deposit of a certain size at a certain depth, and the total gold costs to extract the gold were less than the gold in the deposit (adjusted for the rate of extraction that would make the rate of profit on capital invested a competitive rate), then the supply of gold will be increased. The limitation in the rate of gold extraction would be concomitant with the productivity of the economy as a whole.

    People need and desire more things than just money. They want all the things money can buy too. This requires capital to be devoted to the production of real goods. This will always limit the amount of real capital available (machines, tools, etc) that can be used for further gold production. As the economy expands in general, as every other good is produced in a sufficient quantity in a specific proportion, according to consumer preferences, there will be more capital available for gold extraction. There won't be more capital available for gold production until people have enough of other goods and thus will not make further real goods production any more profitable. This is how gold production will accompany real goods production in a free market.

    If there is "not enough money", meaning the people "in the aggregate" have enough real goods for now and they want more money for holding, then the rates of profit in real goods production will become relatively lower compared to gold production, and capital will be freed up from real goods production and made available for use in more gold production. Similarly, if there is "too much money", then the rates of profit in real goods production will be relatively higher than in gold production, and gold production will slow down while real goods production "catches up" so to speak.

    Money production, just like potato and shoe production, follows the same economic principles of relative profit and loss and capital redirection.

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  17. Errores:

    I agree that adjustment in the other prices might be necessary. What I dont understand is why deny that adjustments in the money market might be necessary as well.

    When money production is a monopoly, as in our world, then the market forces of profit and loss cannot apply to the monopolist. The monopolist is shielded from the (relative) price system. Thus, they can't even know when they "should" increase money production and when they "should" abstain from it. So they play in their sandboxes and they play hopscotch and hippity hop at the barber shop, in order to come up with a way for them to know when they should produce more and when they should produce less. So they develop "sophisticated" aggregate indexes, aggregate statistics, and other ridiculously idiotic make-believe pretend we're a part of the market thinking, and so we see a myriad of "instrumental variables" masquerading as real substitutes for market forces being spewed out, by the counterfeiting criminals hired intellectual goons, who hope that they can mimic what would happen in a gold standard.

    When you're already in the land of idiocy, then it should not be surprising why there is no consensus on which "target" to focus on in order to produce money. In an absence of market forces, you're just building sandcastles. It's also like astrologers arguing over which stars are "the" stars to look at, and they keep arguing year in and year out, for over 95 years, because nothing ever "works" permanently. CPI? No, that star is no longer any good. It should be the "core CPI" star. Oh, that star is also showing signs of the Gods being angry. Let's look at "wage index" instead. And on and on it goes.

    Also, the metaphore on raping does not reflect good on you. Trying to theorize on how a central banking could hurt less the people is nothing bad. I dont get it. But anywyas, please lets keep the discussion out of this and in the previous part.

    Errores, the central banking cartel ARE hurting people by their very existence. I am using the analogies of rape and murder to put a firecracker under you people's arses, because while you are convincing yourselves to be "helping" people by "reducing the central bank's damage," it is the exact same thing in principle as helping others who hurt people, like rapists and murderers. It's a message to say STOP HURTING PEOPLE. You do that by NOT helping those who hurt others. You do so by helping people like me, who will not compromise on the issue of hurting people.

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  18. Errores:

    Flexibility is the same as rigidity just in opposite direction. If a is more flexible than b, it means that b is more rigid than a.

    If "a" is more flexible than "b," then it means "a" is experiencing a change in economic value relative to "b."

    If you think b "should" change in value relative to a, or relative to some other economic object of valuation, then you have to understand that other economic actors besides you are changing their valuation of "a" relative to "b." If doing so is "wrong", then the free market process will result in those valuing a and b to lead to changes in relative profit and loss. That will signal to the actors that they need to do what errores believes he can know but really can't, which is that losses will be incurred by continuing to change their valuation of a relative to b, and profits will be had by changing the valuation of b relative to a.

    If prices don't change for a day or for a week, it's because the economic actors concerned expect profits to be made by setting those prices instead of some other price. If conditions warrant a change, due to losses being made by retaining the price, then that will lead to the most resistant to change actors to incur most of the losses, and those who change their valuation and their prices, will earn profits.

    The only way Selgin's theory would work is if individual economic actors didn't respond to profit and loss, and didn't change their actions despite knowing it will generate losses if they remain "rigid" in their pricing. In other words, his theory is bogus.

    What Selgin was saying, as I understand it, is that without price rigidity market adjustments would be inmediate and there would be no cycle.

    Selgin doesn't seem to understand that the kind of "immediate" price adjustments he thinks would take place in a "price flexible" market, are the relative prices between capital goods and consumer goods. In ABCT, price flexibility does not preclude relative price changes on account of credit expansion in generating REAL capital capital distortions. The price flexibility Selgin is talking about is not actually price flexibility, but, ironically enough, the alleged requirement that relative prices remain fixed, so that all prices move along together. Selgin believes that price flexibility would lead us to observe credit expansion not changing the relative prices between capital goods and consumer goods. He believes that because the bust is not immediate, because the boom can go on, because relative price changes can persist, it means prices allegedly aren't adjusting and are hence "rigid." But the opposite is the case. It is because prices are changing due to the credit expansion that the real capital structure is changing and thus setting the stage for a bust.

    The credit expansion boom from 2001 to 2007 led to rapidly increasing home prices, as well as the financial securities that were backed by these home prices and cash flows, far in excess of what voluntary real savings would have made possible, that is, far in excess of what abstaining from consuming elsewhere would have allowed to be profitable in housing. Who in their right mind would claim that ABCT requires price rigidities? ABCT is telling you "LOOK AT RELATIVE PRICES CHANGING" when it comes to home prices!

    The cause of the cycle is monetary, the effects of the cycle are contained in real capital.

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  19. TanGeng, yes and yes.

    Selgin is autrian. Im austrain. You are explaining austrian theory. Why would I disagree?

    Seriously, I understand the emotional rejection that comes from Selgin disdain for Rothbard. I felt the same way. I am very rothbardian politcally and got into austrian economics through Rothbard. But if you can manage to read free banking ideas without prejudices you will realize that its an incredible development and that basically is the future of austrian economics in monetary theory.

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  20. Major_Freedom, I tried to be reasonable, but you calling me a central bank advocate goes over the top. I am out of the conversation.

    Also, I know austrian theory, you dont need to repeat it to me. Im sure you think it makes you look cool, but not answering to what I said and repeating theory not directly related and on which I agree, does not make you look cool, just silly.

    Just in case anyone is interested here is professor Selgin blasting the Fed in one of his Mises Institute conferences: http://www.youtube.com/watch?v=yLynuQebyUM

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  21. @Major_Freedom

    I object to your vilifying astrology, a very hoary "craft" by comparing it with the relatively youthful pseudoscience called economics.

    Astrologers do often perform quite accurate psychoanalysis, and a few of them do indeed beat the odds in prediction.

    The same cannot be said of mainstream economics.

    Your entire argument, with which I agree heartily, can be summed up in one line:

    Human actions cannot be studied from outside their individually perceived context through macro theories.

    I thought Wittgenstein settled all this a long time ago. Not to mention Oakeshott.

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  22. Errores, Selgin himself states that he is not Austrian.

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  23. Sorry I haven't followed this argument too closely but a word to Mr. Selgin and other anti-Rothbardians:

    PLease see this short book by Rothbard called "The Case Against the Fed"
    PDF link: http://mises.org/resources/3430

    In it Rothbard makes a case that Federal Reserve was created to solve the problem that free bankers had, i.e. they couldn't inflate (in my opinion steal) their credit together in a coordinated way. Therefore you are advocating once again subjecting people to the same fraud of money/credit creation "out of thin air".

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  24. If Selgin is a good man, but is inconsistent that is forgiveable. If however, he is considers himself Austrian, he would have to first know what Austrian-econ is. If he knows this and then creates a caricature of ABCT (and its understanding as Rothbard had it and explained numerous times), makes false assumptions in order to be-little Rothbard, in my mind, it can only be one of two things or a combination thereof.
    1. He is kidding and throwing anti-rothbardians a bone and watch them jump with joy.
    2. He is serious and has used his expertise to discredit Rothbard (for whatever reason..) using a carefully created caricature, so novices would buy into it.

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  25. Selgin said in another post that he used to be an Austrian in grad school, but no longer considers himself one. I think that points to number 2 being the answer.

    With the arrogance and condescending attitude he has displayed towards Austrians lately, I am not sure if I would call him a "good man." He certainly could have made the same points without all of the insults to fans of Rothbard that were completely unnecessary. I am not sure why this was done other than maybe he harbors some bitterness and hostility towards the emerging fame and popularity of the Austrian school among non-academia.

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  26. Errores:

    Major_Freedom, I tried to be reasonable, but you calling me a central bank advocate goes over the top. I am out of the conversation.

    I'd much rather you not make excuses, but if you can't defend your position, then that's something you have to deal with. I didn't call you a central bank advocate, I called you a central bank apologist. There is a difference. An advocate absolutely supports it. An apologist fails to absolutely reject it. You don't absolutely reject central banking. Thus, you are an apologist.

    Also, I know austrian theory, you dont need to repeat it to me. Im sure you think it makes you look cool, but not answering to what I said and repeating theory not directly related and on which I agree, does not make you look cool, just silly.

    You don't know Austrian theory, because what you are saying betrays Austrian knowledge. You incorrectly claimed that ABCT requires price rigidity, when in reality it is the exact opposite. Second, I did answer what you said. What you said was silly.

    Just in case anyone is interested here is professor Selgin blasting the Fed in one of his Mises Institute conferences: http://www.youtube.com/watch?v=yLynuQebyUM

    Blasting the Fed at the Mises Institute on Monday, developing "optimal" Fed policy on Tuesday, defending fractional reserve banking fraud thus intellectually assisting in the creation of economic bubbles while denying the validity of Hayek's knowledge problem on Wednesday, smearing Rothbard on Thursday, calling for a monetary system that will just create another perceived need for a central bank on Friday, retire and have others incur the damages Saturday.

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  27. Major Freedom has spanked Selgin!

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  28. @Major_Freedom

    Wow. Well done.

    @Lila Rajiva,

    "I object to your vilifying astrology, a very hoary "craft" by comparing it with the relatively youthful pseudoscience called economics."

    If you are referring to mainstream economics then you are correct, it is a pseudoscience. It's more mysticism than anything. But if you are referring to Austrian Economics (the discovery of natural laws that exist in human exchange, discovered through the use of reason) you do not understand what science is.

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  29. When I read the comment, "Nobody is safe from the super committee.", I wonder: does that include Congress, i.e., their own pension plan and health care benefits at taxpayers' expense?

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  30. Major Freedom, that closing paragraph punched me right in the face. WOW! What an uppercut! Bravo! Well done, sir.

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  31. @Zach Bush
    Nonplussed.

    Obviously, I was referring to mainstream economics, because I referred to it!

    And thanks very much, I do indeed know what science is and what it isn't.

    And in so far as empiricism informs it, Austrian economics is not scientific, either, nor does it aspire to be.

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