Weisenthal, Again

Here's the latest from that increasingly pro-government intervention web site, Business Insider. Joe Weisenthal writes:

Having watched investors rise and fall over the past several years, we have some advice for anyone in the money management game: Trade Keynesian but speak Austrian.

What does he mean by this? He goes on:

 You see, successful money management involves two things: Making money through good investments is part of it. But before you can make it, you actually have to go out and raise it.How do you raise it? Well there are all kinds of ways, but in the money management business, one popular way to do it is to tell a story. And one of the best stories to tell is the Austrian story that goes something like this....

The government is full of idiots. They confiscate your money and spend it on their crony, corrupt projects. They're ruining your kids future by making you go broke, and they try to stave off this day of reckoning by inflating bubbles and debasing the currency...That's one popular way to raise money: By speaking Austrian.

Well, Joe that's what the government does. Although,  I'm not sure what percentage of the money management industry takes this view. I don't think it is as much. as you imply.

And, Joe, you really don't know what the hell Austrian economics is. You write:

Austrians like Peter Schiff got clobbered in the financial crisis, because his framework couldn't comprehend how when the economy collapsed, gold plunged and the dollar surged. He's been calling for yields to surge, because the Austrian framework predicts that America's sky-high deficits will cause a debt crisis. 

Other investors who have been warning a reckoning for America, like Bill Gross and John Hussman, have similarly tripped up.

Of the three, only Schiff could be classified as close to being an Austrian. As for Gross and Hussman, I have never noticed any strong Austrian tendencies in their views.

Further, the notion that interest rates will push higher if the government issues more debt, is not an Austrian school insight, it is pure mainstream supply and demand economic analysis that is used far beyond the Austrian sphere. The more debt issued, the more upward pressure will be exerted on rates. That's what Gross and Hussman understand, and they are not Austrians.Or, Joe, do you have a theory that there is downward pressure on rates when the government issues more debt?

Oh yeah, Joe, you have this Keynesian theory:

So the game is to trade Keynesian. Government spending isn't a reason to dump bonds. Yes, GDP can improve when the government tries to stimulate. 

When government borrows, it crowds money out of the productive private sector and the money is used on wars around the world and for TSA security theater, real productive stuff, Joe. You should work for the Federal Reserve. Do you really believe that government borrowing for wars and security theater is increasing the productivity of the country?

BTW, your boss, still hasn't taken me up on my offer to institute, at Business Insider, employee rules that I find at various government agencies. If he is so infatuated with government that he is willing to give my money to the government, why isn't he willing to run BI with rules at such government entities.

Joe, I have a stack of government forms you can start filling out right here to see if you are really suitable for BI work. Call me anytime between the hours of 10:00 AM and 11:00 AM on Tuesdays and Wednesdays, if I don't pick up the first few weeks you should just keep trying.

(htAnthonyBerini)