Sunday, February 3, 2013

Paul Krugman Fails the Hans-Hermann Hoppe Challenge

Well, now we know Paul Krugman is aware of the Hans-Hemann Hoppe's challenge. This challenge:



In a post, Krugman links to a Mish article that contains the above. So does Krugman answer Hoppe's challenge? Of course not. As Hoppe predicted, he can't, no one can.

Krugman writes this instead:
Aside from the silliness of the exercise, this little exchange is another illustration of a point I’ve noticed before: the way hard-right commentators assume that the other side must be their mirror image. They insist that no government intervention is ever justified; so liberals must support any and all government interventions. They want smaller government, as a principle; liberals must want bigger government, never mind what for. They believe that deficits and printing money are always evil; liberals must be for deficits and money-printing under all circumstances.
But no answer to Hoppe.

75 comments:

  1. Of course there is and will be no response to Hoppe's question or even the slightest engagement of our concerns. The Magic Money Tree orcs can't answer the question either:

    http://mikenormaneconomics.blogspot.com/2013/02/paul-krugman-despicable-me.html

    They can't answer us and won't answer us. We've won.

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    Replies
    1. Really, we've won? Hmmm, I've won things before, and this doesn't seem like winning.

      We're trying to win a property rights argument with armed thieves and liars. Logic and reason are poor weapons against men with guns intent on getting their way.

      Delete
    2. I agree with you, Bob, that we're on the correct side of reality. But I also notice you keep saying we've "won". No. No we have not. It's difficult to quantify this is terms of winning and losing, but I can most assuredly say that we haven't won. We'll have won when Krugman and his similars are believed by most to be a gang of grand lunatics as we know they are.

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    3. didn't DeLong answer it by saying the gold standard uses too much labor?

      Delete
  2. Hoppe vs Krugman

    That's like Mike Tyson vs a toddler

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    1. hoppe vs krugman

      libertarian ideologue vs traitorous evildoer. A well known libertarian warned us 2 years ago, here:

      http://toqonline.com/archives/v11n1/TOQv11n1Lote.pdf

      Hoppe is at least internally logical, krugman is just a clone of bernanke, greenspan, arthur burns etc.

      where do these clones come from? somewhere in middle-east?

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    2. I looked at that article you posted. So libertarians are aligned with neo-cons now? Maybe the Cato ones, but the mortal enemy of the neo-cons is the austrians associated with the mises group. They attack them with rage even more than they do people like Obama.

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    3. its a very intense article. "looking at it" wont cut it.

      you need to read it several times to understand it.

      the author of this article is a well known libertarian.

      But he has used a pen name to protect from murderous thugs.

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    4. White supremacist and legitimately anti-semetic drivel.

      I can't see any "well-known libertarian" of any note writing this.

      Pass.

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    5. a point of clarification, "patriot." The article was written by an EX-libertarian.

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    6. JFF. you need to read ron paul's liberty defined.

      it has a chapter on demagogues, and you are indeed a flaming demagogue.

      You are so hostile to western peoples and western civilization.

      http://toqonline.com/archives/v11n1/TOQv11n1Lote.pdf

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    7. "White supremacist and legitimately anti-semetic drivel."

      LOL! Here we go....AGAIN! Racist! Neoconfederate! Do you simple minded pieces of shit EVER come up with anything beyond the talking points of the religion of political correctness? It's TIRED and BORING.

      At least TRY something else. What a #1 class grade-A moron.

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    8. from page 47:
      "This belief assumes that a sufficient mass of people can actually be persuaded to accept Libertarianism simply based upon the theoretical soundness of their argument. Their ideology assumes that most human beings are rational and can therefore be persuaded that their interests are best served by accepting the libertarian ideal. This blank
      state theory of human nature in which all behaviors and values including political values can be programmed pre-supposes that humanity itself can be readily socially engineered to share the same values and sentiments in favor of individual rights that our small cabal of
      Libertarians care so much about."
      Literally the entire paragraph, as he lays out his understanding of libertarianism, is wrong. Endogenously and exogenously. That he adopts a class/culture framework doesn't help in the least.
      Sentence one could be corrected by changing "theoretical soundenss" with the proper understanding that "outcome of human actions" which provide a touchstone to the real world is something that libertarians advocate. Carrying on to the second sentence, the necessity of the rational actor is not purposeful. The fact that humans, rational or not, exist in a social nexus of feedback, actions, consequence, etc. obviates the need for the assumption.
      At this point, it is obvious that anyone holding a belief in libertarianism founded on the understanding presented in this paper would not long persist. Frustration will force his adoption, probably, of something he will now call socialism that actually comes out more like AnCap.
      Would you persist in "libertarian" thought if you believed it meant as the author presented???

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  3. Equivocation is the delight of those in power defending the regime and peddling economic ruin.

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  4. '...I’ve noticed before: the way hard-right commentators..."

    Yep, Krugman can't answer the question because everyone will know he believes in the tooth fairy among other things.

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  5. You guys are kidding right? The guy on the video sounded like a moron.

    "Don't get bogged down in the technical details" ??? The technical details are the answer to his question.

    If you want to ignore fact for fiction go ahead. Thankfully there are few enough of you at the bottom of the IQ curve that your ignorant opinions are merely a rounding error. Go play in your remedial sandbox and leave the real work for the big boys

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    Replies
    1. Obfuscation isn't going to cut it Anon. What is the answer to the question?

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    2. "Go play in your remedial sandbox and leave the real work for the big boys"

      "Don't get bogged down in the technical details" ??? The technical details are the answer to his question."

      Well, I suppose you're going to have to go over and bash Krugman now Anon:

      "And you don’t have to use highly abstruse reasoning to see this, either; all you need to do is think in terms of some kind of model, not necessarily of the mathematical kind. "

      http://krugman.blogs.nytimes.com/2013/02/04/money-wealth-and-models/

      Copy/pasting your comments above might make it easiest when you head on over to his blog. Although, unlike Wenzel...Krugster probably won't post your observations.

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    3. Easy fella's. Maybe they didn't cover this in Anon's Harvard econ classes. See Anon, it is not the pieces of paper that make a society wealthy. It is the goods and services available in a society that determines its wealth. The pieces of paper are only used as a means of exchange and a store of value.

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    4. Is there some level of detail that would cause you to dismiss, say, gravity? If I could offer several technical ways in which gravity could be momentarily "defeated", would you begin to think gravity was "fiction"? Another of those big talkers who is wearing a barrel when his "details" fail him.

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    5. Oh boy. Another shithead moron who can't see beyond his nose. Next....

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    6. Alright lads, here we go. In order:

      1 - Larry - conveniently, Nick posted part of the answer. Stimulus, in this case monetary, is effective when the economy is operating below capacity. That is why it works in the US and other regions that are currently depressed, and not in an economy that is operating at its current productive capacity. Most poor countries do operate at their productive capacity, its just that they are not productive. What they need to do, to start, is to move their less productive resources (ie agri) into more productive areas (ie industry). That's generally been the way low-income economies have grown into middle income countries. Further growth can be achieved by reforming economic and political institutions to make them more inclusive. If you'd like to read more about basic stimulus, I'd suggest just about any intro econ text - in fact, Krugman wrote one with his wife. For economic growth, start at Solow's 1956 and 1957 papers, then move forward from there. Darron Acemoglu (who has a textbook that most grad econ students use) and James Robinson have also written a great book on growth that is a nice read.

      2 - Nick - I do read 'Krugger', but I'm not sure if you do? Read a bit more thoroughly and you'll see that he often supports his arguments with data, or even something as simple as IS-LM models. If you want to see his detailed supporting arguments, which you would probably need a decent understanding of math to grab, I'd suggest you read his CV and grab some papers that he's written. But he is generally able to offer pretty good proof with data from FRED to back him up. Not that the guy gets everything right, in fact I do disagree with him when he said that he thinks that economics has become too much about mathematics (although again, he did make some valid points) - I see math as the structure that supports economic theory, although it can be construed to make false, or biased arguments.

      3 - Mic - Hmmmm although a piece of paper does have an intrinsic value to it, but that's not the point is it. Yes, I do believe that is the definition of fiat money, thank you. But I do believe what Glenn Beck forgot to teach you in your economics classes was what QE actually is. If its tough to understand, wikipedia it.
      And you shouldn't chirp Harvard. Even the three protagonists in Ayn Rand's (who by the tone of your comment I'm assuming your a fan of - correct me if I'm wrong) Atlas Shrugged, and the protagonist in The Fountainhead, went to the Nation's best universities.

      3 - Anonymous (not me, you)- Well, if you can, go for it, but physics really isn't in my bag. If you'd like to raise an economic argument, I'd be happy to debate it with you. Would you like to present an example of when the above doesn't work? And if you're going to say stagflation, please don't, because your wrong.

      4 - Mike - Oh boy. Not sure how to respond to this one. I guess this is what Krugman means when he says that he can't argue with people like you? Happy to debate a point if you'd like to make one.

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    7. "in fact I do disagree with him when he said that he thinks that economics has become too much about mathematics (although again, he did make some valid points) - I see math as the structure that supports economic theory, although it can be construed to make false, or biased arguments."

      Well, it seems to me you want to have it both ways. You whine about Hoppe focusing on the axiomatic question of how the creation of paper pieces(and in this case I'm going to assume his context was "more" paper) creates wealth/prosperity for society and in doing so setting aside mathematical models for a moment....YET...when Krugman does the same you "kind of" rush to his defense by saying, "Yea, well he uses math in other areas".

      Honestly, you argue both sides of the issue and have in essence argued nothing. Even further, if I took your "argument" and used it in the same manner in regard to Hoppe I can make the same bullshit defense you made. "Hoppe uses math too, just not in this case."

      See? Unfortunately that does not answer the question as to the creation of (more)paper pieces and its relation to societal wealth.

      What you've effectively done is argued nothing my friend. You've taken both sides of the issue. You've attempted to discredit the question because it sets aside mathematic arguments....yet try to defend Krugman when he just did the same.

      In fact, not only have you not presented an argument(or taken a definitive stance) as a result(though you claim to "disagree" with Krugman, despite defending him)-but you've kind of painted yourself as a hypocrite.

      Of course, if you head over to Krugman's blog and let him know you don't appreciate him setting aside math for this philosophical issue then you will at least no longer be a hypocrite.

      Unfortunately the question of monetary expansion via the creation of additonal paper pieces still remains.

      Delete
    8. Thanks for the reply 5:28. My economics training consists of 2 semesters at Purdue studying P. Samuelson's text in 1981. That left me confused. Then recently I read Hazlett's "Economics in One Lesson" and Rothbard's "What has Government Done to Our Money" which were not confusing at all. I also learn from the daily articles I receive from Mises.org and Wenzel's articles such as his conversation with his caddie. Now I understand things like malinvestments, ABCT, marginal utility, moral hazards, and the role prices and price competition play in determining what gets produced. I think Glenn Beck is as big a fraud as Paul Krugman. I've never read Ayn Rand, but what I have read about her suggests she was a racist, but I don't know. I did see the movie "The Fountainhead." I don't remember her highly educated protagonist sucking off the productive sector recommending policies that destroy wealth rather than create it.

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    9. Nick - yes, I know it may be a surprise to you, but it is actually possible to agree with a person's view on one thing, and disagree on another. In this case, I agree with Krugman's opinions on fiscal and monetary stimulus. I'm not some disciple waving a Krugman flag around, but I do think that he is right about stimulus, even if I don't agree with everything he says. Tough concept I know, but try to wrap your head around it.

      I did in fact answer the question, in my 5:28 response to Larry, who asked me to. Feel free to go back and read that, and if you would like to challenge it go ahead, I'll be more than happy to respond in kind. Better that than the confused ramblings you've managed to post so far.

      Mic - Quite welcome. I would encourage you to revisit Samuelson, he is probably the, or at the very least in the top three, greatest 20th century American economist. With 'Principles of Economics' he literally wrote the book on economics. It might be helpful to read a few other things as well, such as the General Theory, Road to Serfdom, etc etc - books from both liberal and conservative economists, to get a fuller picture. I'm afraid Hazlitt offers a very narrow view of economics and disregards much of them - but don't trust me, see Brad Delong's comments here:

      http://delong.typepad.com/sdj/2005/04/economics_in_on.html

      Understanding what you've listed is a good start, but you also need to consider things like barriers to entry, externalities, co-ordination games, etc etc to name a few. Then you might see where both Glenn Beck (who apparently is quite a good historian - haven't read him though) and Paul Krugman are basing their respective arguments.

      No worries about Ayn Rand, clearly I was wrong about that. I have no idea if she was a racist, and I was referring to the book of "The Fountainhead" - I wasn't aware that there was a movie.

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    10. "What they need to do, to start, is to move their less productive resources (ie agri) into more productive areas (ie industry). That's generally been the way low-income economies have grown into middle income countries. Further growth can be achieved by reforming economic and political institutions to make them more inclusive."

      If this is your "answer" to Larry, it's the most meaningless dribble I've read in explanation of how central planning can create a "productive" economy. You'd think with the last crop of central economic planning failures, ie. the housing bubble, people like yourself would have the slightest degree of humility surrounding the complexity of an economy with untold years of specialization/DOL at hand in your assessment of what would "fix it".

      Seriously, I'm starting to think that the issue surrounding those championing the continual intervention/central planning economics(like yourself) is not megalomaniacal tendencies(though it's there), but more so that you simply are not not sane.

      "Nick - yes, I know it may be a surprise to you, but it is actually possible to agree with a person's view on one thing, and disagree on another."

      See, that's the thing, your reading comprehension is suspect. I never argued your above statement. I argued that you are a hypocrite in how you apply your criticism about Hoppe as being "remedial" because he chose to focus on the philosophical issue of fiat money creation while setting aside the math for a moment.

      In doing so, I pointed you to Krugman's own statement(in which you have stated you disagreed-fine) and suggested you head over to his site to let him know that the great "you", Mr. Anonymous economics blog commenter, find his work "remedial"-as Hoppe's, so as to at least not make you a hypocrite. If you want to say that you aren't a Krugman flag waver in response, so be it-but have the decency of being applying your reasoning equally to both of them for the same "flaw" you claim.

      In the mean time, when you can actually answer how the creation of more paper pieces(as Hoppe put it) creates wealth in a succinct manner yourself, you will certainly have everyone's attention here-that I can assure you.

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    11. Well said Nick. I, too, believe Anon's "answer" was, in reality, a non-answer (as I suspected it would be).
      Let's face it: No adherent to any form of Keynesianism can answer Hoppe's question without resorting to mere sophistry.I'm not impressed.

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    12. Haha alright Nick. I guess your understanding of simple economic principles must be more basic than I thought. I'll try to explain a bit more simply, see if you can follow along.

      Economic growth is characterized as being influenced by three variables: capital (human and physical), labour (people), and tech, or multifactor productivity, however you'd like to call it. It gives you a concise cobb-douglas formula to measure growth by these three dependent variables ie. Y=f(A,K,L) which reads that output, or GDP (Y) is a function on the level of tech (A), capital (K), and labour (L). If you'd like to dispute the details of this, see Solow's 1957 paper, or any of the countless empircial proofs. This is how you compute growth.

      Moving on. One of the phenomena that has occurred post-WWII is that poor economies have experienced sustained spurts of fast growth to 'catch-up' to rich economies. This was the case for places like Japan, the Asian Tigers (Hong Kong, Singapore, Korea and Taiwan) etc etc., as well as for Russia, who experienced remarkable growth from the mid 1950's to the mid 1970's. Most emerging markets have experienced similar growth as well. However, the reason that these countries have been able to experience high growth rates relative to the rich world, is that their initial output was very low. Namely, their output was labour-intensive, ie they used a high degree of labour at low productivity levels. They grew, quite quickly, by importing technologies and shifting labour-intensive resources to capital intensive. Think of it like farmer Joe switching from a horse-drawn plow to a john deere. So in the above, the exponents in the cobb-douglas shift so that Y is weighted more on K than previously. In addition, these economies accumulated huge amounts of capital (think, factories) through various means, centrally planned or otherwise. This increases the level of K in the economy. Its pretty apparent that this will both cause GDP (Y) to increase and GDP per capita the capital-labour ratio to increase (K/L).

      Now this growth is essentially bounded on a per capita basis, so after the poor countries do a certain degree of catching up to the rich ones, they will start to slow (the above being cobb-douglas it is pretty apparent that it exhibits decreasing returns). As was the case with the Asian tigers and Japan, as will be the case with the BRICs. To continue growing, the country must look to increase A, or tech/multifactor productivity. To increase this - to continue growing at any significant rate - economies need to adopt policies that nurture innovation, including inclusive economic institutions, etc etc. Russia didn't do this, and look where they ended up. China is trying to do this currently, but the success of their reforms have yet to be seen.

      That is long term growth. That is a general framework to how to increase wealth in poor countries.

      Continued below

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    13. Continued from above

      Now what you, Hoppe, and it seems like a few others have gotten confused about, was the differences between short, medium and long term growth. Namely, the purpose of QE is to provide a temporary stimulus to the economy, not alter its long-run growth path. Basically, the US economy is preforming before its capacity, ie, what it should be preforming at if we had full employment. Increasing the money supply through QE provides a platform of liquidity to encourage lending, which through the multiplier, stimulates the economy by increasing investment yadda-yadda-yadda. You do understand the monetary transmission mechanism, correct?

      Consider it a 'jump start' ie when your car battery runs out you get a jump, then when you have enough juice in the battery, you remove the jump. Same idea, but the US really drained its battery, and needs a pretty big jump.

      To use the above analogy to explain why it doesn't work on poor countries, consider the US, and other rich countries, a Ferrari and the poor countries a Ford Pinto. You cant just keep a Pinto plugged in to an external battery and expect it to turn into a Ferrari, you have to do a lot of upgrades (ie. K,L,A). But a Ferrari with a dead battery isn't of much use now, is it? Even if it does takes a lot of juice to get that Ferrari running again.

      Larry - I'm not sure you'll understand any of the above, so I'll look forward to reading more of your nonsense to follow. Feel free to comment on the issues being debated at any time though.

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    14. Anon, I understand obfuscation and obscurantism (and Hoppe's question, which is what is in question here) quite well, thank you. I just prefer to spend most of my time on more productive efforts these days.

      P.S. Your Ferrari/Pinto analogy is flawed.

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    15. Which one of your equations told Ben to increase QE from $45B per month to $90B per month? Does this lack of demand occur in a vacuum? Animal spirits, perhaps? Was it central planning that created the tractor that farmer Joe purchased? Have you read Rothbard and Mises?

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    16. Wow, two whole pages. I feel honored to have such a great mind devote such energy to answering the question of how the expansion of paper pieces contributes to creating wealth for society.

      "Now what you, Hoppe, and it seems like a few others have gotten confused about, was the differences between short, medium and long term growth. Namely, the purpose of QE is to provide a temporary stimulus to the economy, not alter its long-run growth path. Basically, the US economy is preforming before its capacity, ie, what it should be preforming at if we had full employment. Increasing the money supply through QE provides a platform of liquidity to encourage lending, which through the multiplier, stimulates the economy by increasing investment yadda-yadda-yadda."

      Has it ever occurred to that the dilution of currency is actually working against "productivity"? If I am only able to sell 10 apples @ $1 each when the previous year I could sell 15 for the same price....and some genius comes along trying to make me "more productive" and decides to triple the monetary base(sound familiar?), handing out the extra money to his favorite people who then can come buy my apples has he made me more "productive" or has he simply picked my pocket over time as the expansion over time adds to my costs?

      Maybe the market will only bear 10 apples/year for other reasons....but a short term "stimulus" is certainly not making me more "productive" long term. In fact, it may dupe me into investing to produce 15 apples a year(for less money each!) which is criminal and possibly not sustainable.

      Further, "short term" is subjective. We've had ongoing stimulus in a variety of ways non stop since 07'. Is this your definition of "short term"? All arguments aside from the moral implications of money creation, if you see no issue with theft by dilution for what I assume you to consider the "greater good"....you have to acknowledge that there is no clear model to establish how much money printing you can/need to do to "stimulate", or even further when a loss of confidence may occur destroying the whole currency.

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    17. Larry - put up or shut up. Either provide a meaningful argument or don't, but stop polluting this debate. Its easy to say something is flawed, you can do that for anything. Time to say why junior.

      Mic - there are a few, but if you want the simplest answer to how increasing the cash base can provide stimulus check out the monetary transmission mechanism. Or you can wikipedia monetary base or monetary velocity for pretty reasonable explanations. I'm not sure why it would be relevant who purchased the tractor for Farmer Joe - but if your referring to whether a centrally planned economy is beneficial for growth I would say two things:

      1)For the capital accumulation stage of growth it doesn't really matter, so long as the changes happen. As the economy is importing technology and redistributing resources, it doesn't matter. There is some debate as to whether centrally planned economies do this more/less efficiently, but I don't think that's what you were asking.

      2) For the next stage no, because fostering innovation is dependent on inclusive economic and political institutions. Centrally planned economies haven't performed well here. Its why Russia surged for two decades, then subsequently stagnated and collapsed.

      Familiar with both, agree with parts but think there is gross oversight in their analysis. A lot of it totally glosses over and ignores things like price and labour stickiness, co-ordination failures, externalities etc etc that makes much of it disconnected from the real world. Was there a specific bit of their theories that you'd like to bring up?

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    18. Nick - ok, so what you're worried about is inflation? (ie. the price of your apples goes from $0.66 to $1 as in your example over the course of one year) If we weren't in a liquidity trap, this may have some merit. But as you've said, QE has been ongoing for awhile now and - still no inflation. You can chart it on FRED. Last 5 years there has been no inflation. That's what the data says - so there is no proof of your argument, it is null.

      As for the loss of faith in the currency, this isn't anywhere near happening. Again, lets turn to the data. Your right when you say the paper alone has no value. Its Fiat, the implicit guarentee of it as a store of value by the US government is what makes it worth something. So if there was a loss of faith, or if people were even a bit nervous about the currency bond yields would jump. US bond yields are at all time lows, in fact the real rate of return on T-bills is negative. If there was even the slightest loss of confidence in the US these should rise as people flee the currency or hedge their bets. But look at the data, its just not happening.

      Your responses show that you're totally out of touch with realities. None of what you say that is happening is showing up in the data, not even hints of it. There is no proof to back up what you're saying. Its a fairy tale.

      Keep up the sarcasm though. It makes you seem so brilliant, eh?

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    19. No, Anon, I will not. Quite frankly, you bore me. I will give you a hint though: What of the actors in your analogy?

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    20. Like I said Larry, if I'm so boring than just shut it. Or say something relevant. Do you have an argument for/against QE or are you just going to mooch off other people's comments with your little peanut gallery comments.

      No? That's what I thought.

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    21. Anon boy, the fuck you on about?

      Are you one of those kool-aid drinkers who think there is no effect from monetary inflation on asset, equity, commodity and real estate markets? If so, why? What is a "liquidity trap"? Why does this make creating currency out of thin air a "good idea"? Seems like you're the one out of touch with reality, smarmy little cunt.

      Also, please speak to me in mathematics.

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    22. "I would encourage you to revisit Samuelson, he is probably the, or at the very least in the top three, greatest 20th century American economist. "

      How did the "greatest" economist's predictions re the USSR pan out?

      Liar.

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    23. Krugman is right about monetary and stimulus matters, which is why his predictions and triumph about Argentina have proven to be correct. Oh, wait....

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    24. Oh Inquisitor you poor thing! Did I upset you? I didn't mean to make you cry lil'baby.

      Monetary inflation has an effect on the broader macroeconomy when it results in price inflation. It hasn't, and there are no signs that it will. End of story. A liquidity trap is when interest rates are near zero (which they are) and increasing the monetary base has no significant effect on the price level. In other words, a liquidity trap is what the US has been in for the last two years.

      Currently, monetary inflation has bolstered equity markets, and has stopped the downfall in real estate markets as it should have, without having a significant effect on commodity markets.

      See above for why QE is a good idea, I don't think I need to repeat myself at length. In short, because it provides a temporary stimulus to the economy. Thats why.

      Speak to you about what in mathematics? About what? Math in general? Please speak to me in proper English.

      And yea, PS blew the call on the USSR. Big time. But he also literally wrote the book on economics, and made huge contributions to all areas of econ, particularly macro. Some would argue more than any other American economist of the 20th century. So yes, I do think he is in that class.

      If I hurt your feelings with this post I'll make sure to give you some tissue. I'm very sorry, I had no idea you were so sensitive.

      Also, who says I'm a boy?

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    25. Out of curiousity - does anyone on this thread have any alternative monetary policy recommendations to QE? Realize most of you are against it, but would like to know what you think a reasonable alternative would be...

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    26. 11:55 Anonymous (just so we all know that this is a diff. person than the one doing the other postings) - is this the blog posting from PK that you're talking about?

      http://krugman.blogs.nytimes.com/2012/05/03/down-argentina-way/

      If so, basically what he is saying is that currency pegs are a bad idea for a lot of places, which, they are. Especially when it encourages accumulating a large amount of debt in the foreign currency you are linked to - read the Argentine financial crisis in 2000, or the one in Mexico ten years earlier.

      But regardless, you making that point about the above has nothing to do with this thread, since we are talking about currency pegs. Unless your logic is, well Krugman's been wrong once, so he must always be wrong. But if thats what you're saying, then you'd just be a dumbass.

      Is that what you're saying?

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    27. "Monetary inflation has an effect on the broader macroeconomy when it results in price inflation. "

      Yeah.

      "It hasn't, and there are no signs that it will."

      Except asset, equity, treasury and commodity markets disprove this nonsense. I can only assume you're relying on the very selective, flawed CPI. If you measure inflation by the way the government used to do it, we're looking at closer to 6%, and that is just from the goods the CPI measures.

      " End of story. A liquidity trap is when interest rates are near zero (which they are) and increasing the monetary base has no significant effect on the price level. In other words, a liquidity trap is what the US has been in for the last two years."

      Sorry. Whose fault is it, exactly, that interest rates have been pushed near to 0? I also argue that you're talking nonsense. There are several areas of the economy that have seen rising prices and continue to see them. Just because core CPI is so horrendously flawed as to not capture them, does not mean they're not occurring. Lets further posit that technological progress should be leading to falling prices, not rising ones. In that case, how can you possibly argue there is no inflation, because... what, liquidity trap? At present banks that should have failed are sitting with billions that the government is effectively paying them to sit on out of fear for inflation.

      How is the Fed going to contain this when this money has already for the most part been released into the economy, both domestically and abroad?

      "Currently, monetary inflation has bolstered equity markets, and has stopped the downfall in real estate markets as it should have, without having a significant effect on commodity markets."

      Ah of course. This is how you dimwits get away with the effects of inflation on those markets where it is at its most pernicious It "bolsters" equity markets. LOL

      By keeping their prices artificially high? No.

      "See above for why QE is a good idea,"

      I can't see any rationale offered. Why should the banks not have collapsed, out of curiosity? Lets even say the government could manage their gradual bankruptcies. Why was it a "good" idea?

      " I don't think I need to repeat myself at length. In short, because it provides a temporary stimulus to the economy. Thats why."

      I think you do need to repeat yourself, out of a need to indoctrinate yourself to believe such abject tripe.

      "Speak to you about what in mathematics? About what? Math in general? Please speak to me in proper English."

      Since "real" economists use math, speak to me in math man, come on.

      "And yea, PS blew the call on the USSR. Big time. But he also literally wrote the book on economics, and made huge contributions to all areas of econ, particularly macro. Some would argue more than any other American economist of the 20th century. So yes, I do think he is in that class.
      "

      He wrote a book on Keynesian econ, interpreting the god Keynes. Big deal.

      "If I hurt your feelings with this post I'll make sure to give you some tissue. I'm very sorry, I had no idea you were so sensitive."

      I think you should reserve it for yourself, for when your economy eventually comes collapsing.

      Delete
    28. @ anon 3:56

      "But as you've said, QE has been ongoing for awhile now and - still no inflation. You can chart it on FRED. Last 5 years there has been no inflation. That's what the data says - so there is no proof of your argument, it is null."

      Hmmm...well your data is different from other sources, Shadowstats being one...but really there's more than just him claiming inflation in selected areas-including Wenzel who correcty predicted the uptick in housing. So on that basis I reject your argument, mine has merit.

      "So if there was a loss of faith, or if people were even a bit nervous about the currency bond yields would jump. US bond yields are at all time lows, in fact the real rate of return on T-bills is negative"

      Let''s examine why that is, shall we? The last auction resulted in the US buying 2/3 of its bonds on the open market. They've had to increase their buying as demand has been dropping off to keep the rates artifcially low, or the whole thing blows apart if rates crest 6%. You think that shows "faith"?

      "Keep up the sarcasm though. It makes you seem so brilliant, eh?"

      Intellectual arguments aside, you started off with an insulting attitude of condescendance from the get go. Obviously I'm not the only one with that opinion, so either everyone here has problems with social interaction, or just you.

      If you stick to the arguments instead of the "smarmy comments" as one poster described, you'd get a lot farther.

      Delete
    29. Inquisitor - glad you could string together some sentences without profanity. Ok, so seems that we agree that the problem would be price inflation. We just don't seem to agree that it exists.

      I'm using the CPI figure from the FRED database, which is what is reported. I have no idea what you are looking at, but it seems that your using a dated basket of goods. The reason these baskets are updated is because they are no longer accurate. But more than anything, that figure just seems made up. Where did you get it?

      And how are asset mkts and the rest disproving this? The Dow and S&P are only now back to pre-crisis levels. Its nice that you are saying these things, but normally proof and a well structured arguments to back them up. Otherwise, they are just baseless claims - which there seem to be a lot of here.

      So we aren't in a liquidity trap? Who's fault is it? I'm not sure that you understand what a liquidity trap is yet. I'm saying that there being no inflation means that we are in a liquidity trap.

      You fill the rest of the paragraph with more banter of how horribly flawed CPI is and how prices are rising without offering any proof. I think I now understand what you are: a conspiracy theorist.

      How is the Fed going to contain what? This runaway inflation that hasn't happened yet? Its apparently been 'just around the corner' for years - still not here, but apparently you're seeing it... somewhere.... just not specifying where. Amazing what this does for credibility.

      Just out of curiosity, you know the Fed can both create and destroy money, right?

      As for the banks collapsing, this much has always interested me - what do you think would've happened if they did collapse? If the banks, and why not include the automakers, were allowed to fail, what do you think would've happened? Would the tooth-fairy would have joined forces with Santa and saved us all? I think it was a good idea that they were rescued because what you see now is a drop of water compared to the flood that would've happened if they weren't.

      Good job on the big words, but I'm still not going to repeat it. See my 12:56 post.

      And by the way - does this mean that you're not a real economist? Because I don't see any math. A=B and B=C then A=C, right?

      But if you really want to read some, and maybe learn something about monetary policy and how economies act when in recession - here's a piece from NBER

      http://www.nber.org/chapters/c11007.pdf?new_window=1

      And he didn't just write a book on Keynesian economics. He wrote the best selling economic texts of all time. That's not even his most impressive achievement, which was the application of thermodynamics to economics. He also made fundamental contributions to international econ, welfare econ, consumer theory and public finance. And was the first American to win the Nobel. Say what you will about his contributions, but it says something about your classlessness to slander a man who has accomplished more than you could ever hope to.

      Delete
    30. Nick - hmm shadowstats eh? You mean the company that charges you to tell you what you'd like to hear about CPI? How do they calculate their CPI bucket again? Are you trying to argue with me or sell me snake oil?

      I agree, the housing market has improved. I also agree that people, like Bill McBride, did predict it. McBride's analysis was sound, I'm not sure about Wenzels, I've not read it. But this doesn't imply that there is inflation, it means that the housing market is recovering. So no, your argument does not have merit.

      What your doing is trying to use one thing (housing uptick) to prove something else (inflation) with no evidence of how the two are related. Your saying that A=B so therefore A=C without explaining how B=C, you see?

      As for the T-bills, where did you those sources? Even so, you know how QE works right - they buy bills, so it really shouldn't be a surprise that they bought a lot of them. Again, there is no sign that real rates are going to hit 3%, let alone 6%, so I'm not sure what this has to do with anything.

      In fact, there is still high demand for T-bills, largely do to uncertainty elsewhere. Look at when the US was on the verge of default last year - yields went down as investors rushed into treasuries despite the default ie when by all accounts they should be the opposite. This will probably continue until there is a more stable global economic outlook, but since that depends by in large on the US, then by the time that happens unemployment will be down and QE will have been wound down. So yes, that does shows faith.

      Delete
    31. Just found this one which explains much of what this thread has been asking:

      http://noahpinionblog.blogspot.hk/2013/02/how-to-win-arguments-by-pretending-to.html

      Or you could skip right to the two key links to answer the questions:

      https://server1.tepper.cmu.edu/Phd/DCA/samuelson.pdf

      http://www.slate.com/articles/business/the_dismal_science/1998/08/babysitting_the_economy.html

      but to summarize, here is the best line from the first link:

      This little bit of extra time and thought allows us, after listening to Triple H [Hans Herman-Hoppe] and Michael Shedlock, to say: "Wait...Simply refusing to exert the mental effort to understand Krugman does not constitute a rebuttal of Krugman. 'I am dumb, therefore you are wrong' is actually a pretty silly thing to say."

      Delete
    32. "How do they calculate their CPI bucket again? Are you trying to argue with me or sell me snake oil?"

      They calculate using older metrics by our own government. Also, you don't need to "pay" to get it, you simply need to visit their website.

      It's not "snake oil", it's simply a different perspective.

      "But this doesn't imply that there is inflation, it means that the housing market is recovering."

      In the context that an "organic" market can not sustain higher prices, it is absolutely an indication of inflation. What you call a "recovery" was referred to as an "asset bubble" not long ago.

      "In fact, there is still high demand for T-bills, largely do to uncertainty elsewhere."

      Look, the gov't having to buy 2/3 of its bonds is no indicator of "faith" in my mind. I'm not sure we can reasonably discuss this issue if you feel it is.

      Delete
    33. So they are using a basket of goods from before 1990 and 1980? Don't you think that the consumer basket would have changed since then? Typewriters and walkmans may have gotten more expensive, but that's just because no one makes them anymore. What was the rate of computer and internet penetration in the late 80's? On what basis should we go back to using a dated basket of goods?

      What exactly is the context of an "organic market?" And if you look at a housing price index, say, Shillers, than you'd see that prices are nowhere near to their pre-recession highs. So no, at present, there is not a housing price bubble. Or inflation.

      No, I'm saying that the gov buying 2/3 of bonds is policy - thats how QE works. It's not the gov trying to fill demand - if it was then yields would rise, and with real returns negative, that's just not happening.

      Delete
    34. "So they are using a basket of goods from before 1990 and 1980? Don't you think that the consumer basket would have changed since then? Typewriters and walkmans may have gotten more expensive, but that's just because no one makes them anymore. What was the rate of computer and internet penetration in the late 80's? On what basis should we go back to using a dated basket of goods?"

      These are all good questions. Williams(shadow stats) is using metric's from ealier methodologies but adjusting them to reflect modern necessities. If nothing else, I think you and I can agree that when "fuel & food" were adjusted OUT of the CPI that it lost much of its relevance to the average human living in the US.

      So the question you ask directly relates to the "good faith" one has toward what institution or individual is doing the number crunching to determine "price increases", since technically speaking the "inflation" has already happened(tripling + of the money base).

      To me it is obvious, gov't/The Fed would like to show low price increases(some call inflation) to keep the rates of borrowing low as well and trick people into believing such. If you do not feel that way, so be it. It's all a matter of where you put your faith.

      "Shillers, than you'd see that prices are nowhere near to their pre-recession highs. So no, at present, there is not a housing price bubble. Or inflation."

      Have you considered that before Wenzel's predicted house price increases that the equilibrium leve/market clearing should have been the prices before the recent increase? In this area, you and I will have to wait and see what happens long term to housing prices to determine if they are sustainable.(i have my doubts)

      "It's not the gov trying to fill demand - if it was then yields would rise, and with real returns negative, that's just not happening. "

      I would completely disagree with you here, gov't is CLEARLY filling demand...with newly created money(theft via inflation). The act of interest rate suppression is occuring as a result of the money creation, this really isn't debated by anyone on any side of the debate as I understand it.

      This is not "faith" as you put it, it is a short term manipulation, filling demand while not paying attention to the structural longer term issues....it is why it will have to be QE forever now until one day the price increases cause massive capital flight from bonds or outright destruction of the currency. This 2/3 purchase as "policy" as you put it, is a smokescreen for the fact there aren't enough buyers.




      Delete
    35. Nick, if its just food and oil that aren't included in your measurement of CPI then you aren't using earlier metrics, your just using headline CPI rather than core CPI. The reason core CPI has adjusted food and fuel out is because the prices of those commodities are exogenous, ie they are set outside the US by producers such as OPEC etc etc. In other words there is very little any policy - whether it is Classical, monetarist, Keynesian, Libertarian or otherwise can do to change those prices.

      But regardless, if you look at headline CPI, the levels are nowhere near 6%. At best, in the past 5 years it almost hit 4% once in 2011 when oil prices peaked. See, here:

      http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=CPIAUCSL&s[1][transformation]=chg

      Or if you look at it sequentially, there is even less inflation:

      http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=CPIAUCSL&s[1][transformation]=chg

      And if you look at core, which is the more relevant figure, even less (first one is annual, second sequential):

      http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=CPIAUCSL&s[1][transformation]=chg

      http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=CPIAUCSL&s[1][transformation]=chg

      You can really see from the above two comparisons how dramatically price swings, particularly from oil (which is set by OPEC) affect the CPI. But regardless, still nowhere near 6% in either case. And both charts pre-date QE by a couple of years, so the inflation hasn't already happened either. So yes, I think here you have been sold snake oil.

      As for the government/Fed putting bias into the rates, I'm not going to get into a conspiracy theory debate. Happy to talk about serious economic issues, but not going to waste my time speculating about big brother.

      And here is the rate on T-bills:

      http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=DGS10&s[1][range]=5yrs

      Again, goes back to before QE. You'll see that as the recession commenced there has been a flight to safety in T-bills. Returns were low before QE began. And they were low inbetween boughts of QE as well:

      http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=DGS10&s[1][range]=5yrs

      You can see this pretty clearly in that chart. And even more to the point - this chart shows that the Fed now holds substantially less holdings than between 2000-2008 (note that the chart starts from the early 80's):

      http://research.stlouisfed.org/publications/es/13/ES_5_2013-02-01_chart.pdf

      And here is everything altogether:

      http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=DGS10&s[1][range]=5yrs

      So you see? Inflation has gone down (the line includes food and fuel as well). This whole argument is a red herring, its not what I think or what I feel, its hard data.

      But anyways, I'm off on vacation so I'll see what there is here when I get back next week. Happy Year of the Snake.

      Delete
    36. If you're not willing to discuss the possibility that the government, which loses out massively from accurately representing inflation, is willing to fudge it, it's you who shouldn't be considered worth anyone's time.

      As for headline CPI, don't think anyone here takes that figure seriously anyway. Volatility isn't equivalent to a good NOT being affected by money inflation; if anything, that feature of the good could exacerbate it.

      Delete
    37. "The reason core CPI has adjusted food and fuel out is because the prices of those commodities are exogenous, ie they are set outside the US by producers such as OPEC etc etc."

      I have a couple of issues with this statment, but let me focus on the major one:

      That we would adjust OUT two major costs in the CPI because they are not produced in the US is the "red herring" as you put it further below in and of itself. CPI is simply supposed to track the cost of living-PERIOD.

      Further, the issue of "food" and it's exogenous status you give it is up for reasonable debate. Let us also remember that the notion of fuel as such is much more complex as well. Most of the oil refined for use may start off in other countries, but ends up here for refining...so internal costs are definitely impacted on the total price. That's not withstanding natural gas for example, which mostly comes from inside the country.

      "So you see? Inflation has gone down (the line includes food and fuel as well). This whole argument is a red herring, its not what I think or what I feel, its hard data. "

      The above poster got it right, you didn't use the right metrics in any of your links. Here's the "hard data", STRAIGHT FROM THE BLS:

      http://data.bls.gov/cgi-bin/surveymost?cu

      Tick off the first three boxes for yourself, look at the data, & weep.(all items, 82-84, all items 67', all items less fuel & food...you can compare them all)

      "As for the government/Fed putting bias into the rates, I'm not going to get into a conspiracy theory debate. Happy to talk about serious economic issues, but not going to waste my time speculating about big brother."

      Well then, by your same logic you should have no problems not speculating on the intentions of Shadowstats-John Williams.

      You should simply accept his data.

      Listen, regardless I played it your way and presented you with the #'s from the BLS...the poster above has it right.

      Delete
    38. "This little bit of extra time and thought allows us, after listening to Triple H [Hans Herman-Hoppe] and Michael Shedlock, to say: "Wait...Simply refusing to exert the mental effort to understand Krugman does not constitute a rebuttal of Krugman. 'I am dumb, therefore you are wrong' is actually a pretty silly thing to say." "

      Where has Krugman a) evinced an understanding of the ABCT b) evinced an understanding of economics in general and c) answered this simple question?

      Please don't resort to the liquidity (clap) trap to save him, he needs to explain why more debt and credit based inflation will increase wealth and reverse current stagnation. He has come on record stating he agrees with Goldman Sachs's guesstimate of $10t being required to bring the economy back in line (who knows with what.) Hoppe is asking him an easy question. I think it is a very reasonable one. If he cannot answer it, he should admit it.

      Delete
    39. "We just don't seem to agree that it exists."

      And that is because one of us is blind.

      "I'm using the CPI figure from the FRED database, which is what is reported. I have no idea what you are looking at, but it seems that your using a dated basket of goods."

      Seems Nick already covered this.

      "And how are asset mkts and the rest disproving this? The Dow and S&P are only now back to pre-crisis levels. "

      Yes, the question is why the hell should they be there in the first place? What in the economy has improved to a sufficient degree to warrant them being there? Nothing.

      "Its nice that you are saying these things, but normally proof and a well structured arguments to back them up. Otherwise, they are just baseless claims - which there seem to be a lot of here."

      Mostly yours.

      "So we aren't in a liquidity trap?"

      "I'm not sure that you understand what a liquidity trap is yet. I'm saying that there being no inflation means that we are in a liquidity trap."

      I understand what it means. I reject the implication that the only way to escape this bogeyman is sustained inflation, which again Krugman has failed to explain how it will increase real wealth and thus goods in the economy, and also that government spending, which is based on debt, theft or inflation, is the "solution" to a problem caused by the central banks pushing interest rates down into the abyss.

      " I think I now understand what you are: a conspiracy theorist."

      No, I simply understand that many welfare payments are indexed to official inflationary measures and that GDP is discounted by inflation. Hence each administration has very strong incentives to under-report it.

      "This runaway inflation that hasn't happened yet?"

      Seems quite willing to pay banks to sit on reserves. I wonder why. The only reason it hasn't "happened" yet is because the Fed and morons like you think the official headline CPI is all there is to it.

      "Amazing what this does for credibility."

      Simply because you are blind and perhaps a little stupid doesn't mean that the monetary inflation has not seeped into asset markets and prevent restructures in the market that were necessary for its efficient operation.

      "Just out of curiosity, you know the Fed can both create and destroy money, right?"

      Quite aware.

      "As for the banks collapsing, this much has always interested me - what do you think would've happened if they did collapse? "

      I believe there would be a realisation that a lot of wealth in the economy is artificial, and that absent the banks, the welfare promises of politicos would be unsustainable moonshine. I also believe many banks would collapse and that their assets, to the extent that they are real, will be passed into hands more competent in owning them. However, the nordic countries did not have much of an issue with letting their banks fail. Here in the UK, and in the US, we are stuck with zombie banks with trillions in assets, that are being paid to sit on these assets out of fear that they may eventually flood the economy with them. The banks are, however, lending: to the government. They are keeping the price of government debt low by exercising a demand for it. These same banks and institutions connected to them are pouring money into foreign markets, commodities and reignited housing markets.

      Delete


    40. "But if you really want to read some, and maybe learn something about monetary policy and how economies act when in recession - here's a piece from NBER"

      Thanks, quote anything you think of it is of value in this discussion.

      "He wrote the best selling economic texts of all time. "

      Please, spare me the appeals to authority. How much of what he wrote actually advanced our understanding of economics, and if so, how? I do not dispute that he was probably a very gifted and intelligent man. So what?

      http://bastiat.mises.org/2013/02/2646/
      http://bastiat.mises.org/2013/02/recreating-the-asset-bubble-the-feds-plan-for-economic-recovery/#comment-1716

      http://bastiat.mises.org/2013/01/the-great-moderation-where-was-the-inflation/
      http://www.economicpolicyjournal.com/2013/02/4-brs-29750-month-story-of-inflation.html

      I could stop at DJ 14k, that alone is sufficient to show that without any underlying improvement in the US economy's fundamentals, the market is flooded with cheap credit by investors chasing returns as savings and bonds show pitiful returns.

      Delete
    41. "Most of the oil refined for use may start off in other countries, but ends up here for refining...so internal costs are definitely impacted on the total price. "

      Lets not forget the US has a host of client states and markets that accept its debauched currency, either out of fear, desperation or because they know no better. So when it prints and buys their products, that inflatonary effect cannot simply be discounted. Regardless of where the goods are produced.

      Delete
    42. Man, Nick, I give you a week and this is what you came up with? I gave you way too much credit.

      Ok so apparently you don't know the difference between the price level and inflation. Inflation is the change in the price level, usually measured year on year. So if you look at the data in your link in percent change on year-ago figures, which is how inflation is measured, then you'll see that your chart is the same as mine. Here I'll lead you through it:

      1. Go select your charts as you told me to do.
      2. Click more formatting options.
      3. Click 12-month percent change.
      4. Click retrieve data... and....

      Voila! The exact same graph as FRED!! It must be magic! Or... should it not be a surprise, as FRED uses data from the BLS? You decide.

      Still, looking at your graph, inflation has held at 2% or less for about a year now, and wasn't much higher before.

      And no, some dude who runs a website is not as reputable as several federal agencies held to account by checks and balances. As this site has proven. So if all you plan on doing is to argue some tinpot conspiracy theories, take that tinfoil hat off your head and take them elsewhere, please.

      Delete
    43. Inquisitor, more drivel, more drivel. See my response to Nick about inflation and the BLS, and then learn how to use a database.

      You actually did get it right that the banks are being paid to sit on assets - they collect interest for their accounts at the Fed that they open up for QE. However because interest rates are so low they are paid very little. So your argument to raise interest rates is actually an argument to give the banks more money for doing nothing - is that what you'd like to do or did you just not understand how the banking system worked?

      And for Paul-Samuelson, all you need to do is wiki him. Here is a condensed list of his achievements:

      -Lindahl–Bowen–Samuelson conditions
      -demonstrated in 1950 the insufficiency of a national-income index to reveal which of two social options was uniformly outside the other's (feasible) possibility function
      -optimal allocation of resources in the presence of both public goods and private goods in public finance
      -Balassa–Samuelson effect, and the Heckscher–Ohlin model (with the Stolper–Samuelson theorem).
      -overlapping generations model as a way to analyze economic agents' behavior across multiple periods of time -revealed preference approach, which is a method by which one can discern a consumer's utility function, by observing their behavior.

      Those are just a few, copied straight from wiki, so even a layman can get an idea of his achievements.

      And cut it out with the conspiracy theories. I mean really, enough is enough.

      Delete
    44. Anon @ 15-Feb @ 8:53

      Read the rest of your post. Here's the answer in two varying degrees of difficulty.

      https://server1.tepper.cmu.edu/Phd/DCA/samuelson.pdf

      http://www.slate.com/articles/business/the_dismal_science/1998/08/babysitting_the_economy.html

      There you go junior. You're welcome.

      Delete
    45. By the way - jan inflation was just reported as 0.0, and ex-oil and food at 0.3. Nick - that means the fall in oil and food prices offset inflation.

      Either way, still no inflation

      Delete
  6. You should see the shithead responses in the comments section of the video. I'm never seen so many dumb asses in one spot in my life.

    ReplyDelete
  7. A total cop-out. Kruggy-poo is just reframing and projecting, yet humorously accusing any and all critics of doing these very things... unconvincingly. The total sycophancy of the comments from his fans is comparably mind-boggling.

    ReplyDelete
  8. Krugman felt compelled to further expound on his notion that money printing can solve issues, but he qualifies it as being "under certain conditions":

    http://krugman.blogs.nytimes.com/2013/02/04/money-wealth-and-models/

    Threre are SEVERAL stunners to me in this post of his:

    1. The "certain conditions" clause he uses as an example is "inadequate demand". YET HE CONCLUDES: "Aggregate demand won’t solve a problem of low productivity, or inadequate productive capacity, or for that matter extreme inequality due to technology or market power. But it can solve certain problems, which happen to be the problems we have now."

    Does he name those problems? Of course not. Should he at least be spouting something on the infamous "liquidity trap"? I guess that would be too close to a circular argument for Krugster, right?

    2. "And you don’t have to use highly abstruse reasoning to see this, either; all you need to do is think in terms of some kind of model, not necessarily of the mathematical kind."

    Is this not the most stunning admission that the great Nobel winning pontificator has ever made? Has it been years that his kind(Keynesians) have lamented that Austrian economics is "mired" in praxeology and uses axiomatic "models" at times? Yet here we have Krugman doing the very same thing?!?!! Hypocrite, thy name is Krugman!

    3. Last, we have this brilliant synopsis from Krugman:

    "Recessions happen, and any halfway plausible story about how they happen is likely to suggest that non-fundamental government interventions, like printing money, can make things better."

    So what is this? Has he abandoned all his "mathematical models" now? I guess after years of stimulus, with increasing limited effect on unemployment for example(as just one metric)...it's time to throw all his mathematic models out the window and just go with "cause' I said so" so that the math doesn't start disagreeing. Pay attention to the wording folks, I don't think Krugman is so "sure" of things anymore: "CAN make things better" and "likely" isn't exactly positivist.

    I'm not even going to touch the baby sitting coop, because Wenzel has already blown that out of the water....what I think is most important to note though is that he's brought it back up in the context of Austrians. He's paying attention folks.

    ReplyDelete
  9. Krugman- (and no I am not kidding:)

    1. The way to wealth is to destroy it. He sees a silver lining in natural disasters, fires, as in Japan a couple years ago.

    2. We have a debt caused problem, but nothing that A MOUNTAIN OF EVEN GREATER DEBT can not solve. He advocates massive increases in spending by the goverNMEnt. He even states that it does not matter what the money is spent on. Ergo, paying folks to dig holes and fill them up is creating wealth. Yep. I believe that.

    3. PRINT MONEY AND DROP IT FROM HELICOPTERS IF NECESSARY. Hoppe is correct, Dr. K believes in massive counterfeiting. Why can I not do the same, why would I go to jail, and Al Greenspan and Ben are treated as heroes?


    Reduced to its simplest terms it is easy to see that Dr. K is a witch doctor and has even less credibility

    KP

    ReplyDelete
  10. " An ignorant man is so blind that he takes understanding for ignorance and his own ignorance for the ultimate knowledge. For him, darkness is bright and harm is useful. Living morbidly, more dead than alive, unaware of his real condition, his arguments are devious and false, twisting reality and bringing misfortune."

    Ptah-hotep 2500 BC.

    ReplyDelete
  11. Wow, check out the comments on Krugman's NYT articles:

    http://mikenormaneconomics.blogspot.com/2013/02/paul-krugman-despicable-me.html (112 comments so far)

    http://krugman.blogs.nytimes.com/2013/02/04/money-wealth-and-models/ (46 comments so far)


    Out of 150+ comments so far its nearly unanimous: Only a child like fool would ever question the practice of using the tips of the bayonets of government soldiers to impute value for these paper pieces into the subjective minds of individuals.

    That's their only response to Hoppe besides a few who ventured an answer along the lines of, "well derivitives are paper pieces too and nobody is questioning why the creation of these paper pieces don't generate wealth and diminish poverty."

    That's it. That's the extent of their intellectual curiosity and honesty right down to nearly the last commenter.

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    1. Your citing of the derivitives response is interesting because their purpose is to create wealth by risk and inherently not the free market response to retaining wealth(versus risking it).

      It's an interesting argument the commenters that mention it make anyway, just not relevant from my perspective as "money" is supposed to be liquid and a safe store of wealth....derivitives are neither.

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    2. A derivative "paper piece" is a contract (when not fraudulant) between 2 parties, just like a Federal Reserve NOTE used to be.

      Hence a non-fraudulant agreement between two parties should mutually benefit both and allow both actors to achieve higher ends and therefore "create wealth".

      The Federal Reserve repudiated "notes" (actually un-notes) that Hoppe discusses are another matter.

      Non-fraudulant money substitutes such as Federal Reserve NOTES are actually derivatives. Federal Reserve Un-Notes are merely "stay out of jail tokens" which no one would value without tax and legal tender decrees enforced at the points of the soldiers bayonets.

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    3. "A derivative "paper piece" is a contract (when not fraudulant) between 2 parties, just like a Federal Reserve NOTE used to be.
      Hence a non-fraudulant agreement between two parties should mutually benefit both and allow both actors to achieve higher ends and therefore "create wealth"."

      Let me state first, I'm not "arguing" with you...just discussing with you so I have things clear in my mind and better understanding.

      1. As asset backs up a derivative, unlike a Federal Reserve note(currently), though the argument would be the "good faith, services" etc. that the note with no backing currently purchases.(and I'm not agreeing completely)

      The derivative assets may go down or up in valuve, but they are tangible assets none the less AND can be owned by multiple people...not just two parties as they are clustered. They are not NOT LIQUID for the duration of the contract.

      2. A Federal Reserve note used to be instantly redeemable for silver, or indirectly for a variety of other goods.(and still can even though it has no backing) In that regard I believe it trumps derivatives in liquidity.

      If we were going to regard something as "money", I reject the derivative notion on the basis of liquidity.

      On the other hand, if the asset value can be arbitrarily changed by the issuer(or party) of the contract(Fed) then the "currency" is obviously fraudulent. I agree it is the barrel of the gun enforcing its use.

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  12. " An ignorant man is so blind that he takes understanding for ignorance and his own ignorance for the ultimate knowledge. For him, darkness is bright and harm is useful. Living morbidly, more dead than alive, unaware of his real condition, his arguments are devious and false, twisting reality and bringing misfortune"

    Ptah-hotep 2500 bc.

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  13. Krugman is such an idiot. He basically said on his ABC appearance that we have police to protect us, so the public did not need firearms.

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  14. Useful video. Got to know something useful.

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  15. Is this a serious challenge? It must be. So, it's no surprise that no Keynesian worth his salt legitimized such a silly question by answering it.

    Me, being a salty dog and with no pretensions of academia, will offer this:

    Net deficit spending by the state does not by itself create new, real wealth (additional money is additional *financial* wealth). Keynes never claimed otherwise, and keynesians neither. Anybody who posits the question as Hoppe does shows complete ignorance of what Keynesian macroeconomics says.

    Net deficit spending is aimed at providing the private sector with the means, e.g. restoring aggregate demand, of increasing its production of good and services, i.e. of making the real economy grow. The recipe comes with an array of conditions and parameters.

    Whether this is a correct approach is, as we know, a matter of deep disagreement between classicals, monetarists, and austrians on the one hand and keynesians on the other. But it is simply false to claim that Keynes or his acolytes claim that "printing money creates wealth".

    By the way, Hoppe, like most people ignorant on (or dismissive of) Monetary Economics, makes the typical confusion between "money" and "paper money". The amount of paper money in an economy usually represents some 5-10% of M.

    Essential reading: Godley & Lavoie "Monetary Economics".

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