I kid you not.
Using Milton Friedman as cover, despite the fact that Friedman was very weak on monetary policy, the piece, written by David Beckworth and William Ruger, states:
Had he been alive, Friedman would have been shocked to see the Fed in late 2008 and early 2009 allow nominal income, as measured by nominal GDP, to experience its sharpest downturn since the Great Depression. He would also be amazed to learn that nominal GDP forecasts are once more headed down.Publishing this kind of regime nonsense makes one wonder just what the Koch funded Cato Institute is all about. Lew Rockwell appears to have nailed it:
Given these developments, Friedman would likely be calling on the Fed again to do a better job stabilizing nominal income...were Friedman alive today, he would balk at the notion that the Fed is out of ammunition. He would remind us that in the early-to-mid-1930s, when the economic environment was far worse and short-term interest rates were near the zero bound, monetary policy easily generated a recovery. Therefore, the Fed could do likewise today.
Friedman would likely make the case today for more aggressive monetary action. It is time for "Helicopter Ben" to earn his nickname.
This is yet another example of how the Koch Brothers operate. While their ideological institutions on public campuses or Capitol Hill operate under a veneer of libertarianism or even Austrian economics, the actual policies they push expand the State: massive money printing (for the big banks and big companies), school vouchers (to deliver private schools into the hands of government), the Ownership Society (every person a homeowner through Greenspan’s housing bubble), Social Security Privatization (a new layer of forced savings on top of the present SS taxes, to benefit Wall Street), etc. Is it any wonder that the Kochs have never, in 28 years, invited Ron Paul—the only public official for honest money—to their annual monetary conference, but instead invite and hail the central bankers who can do the plutocrats so much good?Let's get a few things straight about Milton Friedman, when it came to government licensing of businesses and individuals and when it came to price controls, Friedman could argue with the best of them.
Yet, he was nowhere near the consistent thinker that Ludwig von Mises was. Friedman failed to ground his economics in proper methodology and clearly never understood Hayek's great book on methodology, The Counter Revolution of Science.
And he had no clue about the business cycle. This is clear because he would never have called for Fed money printing, ever, if he understood how such printing distorted the capital structure.
That Cato would allow such a piece to be printed, which hails Friedman's money printing advocacy, indicates that they themselves don't get the business cycle or there are other motives which are ranked higher than economic truth.
As Stephan Kinsella has pointed out, this habit of straying from fundamental libertarian principles is not a one time phenomena for Cato. He lists 17 other cases.
Bottom line: Any organization that is promoting money printing, especially at a time like the present when commodity prices are soaring, is far from a friend of liberty. Money printing pure and simple is theft and gives an edge to those who get the money first. It is most damaging to those on fixed income, like the elderly. Among the beneficiaries are the banking elite and those who hold vast quantities of commodities, such as oil. It's about the evil rich getting more rich and more evil. Beware those that are friends of inflation.
Wenzel,
ReplyDeleteThat's interesting. I was just having a debate with another libertarian via e-mail about how to win more supporters for Austrian econ. This gentleman was appalled that Austrians don't have "a seat at the policy table" and cited Milton Friedman as someone who was successful at "selling" the message of liberty.
I pointed out that Friedman "sold out" on monetary economics and that, given that central banking and fiat money are the central social, political and economic problems of the day (if not of all time), Friedman was an absolute disaster for liberty and not the one whose efforts and achievements should be emulated.
I believe my opponent remains unconvinced. Oh well. Not everybody is going to like the truth. As an Austrian, that's something I've just come to accept. Apparently people like him, and the Cato writers, just can't or won't.
Let's make it very clear: Milton Friedman was never an advocate of free markets, despite the press that presents him in that fashion.
ReplyDeleteI disagree with Anonymous #1 and Taylor Conant. This sounds like Rothbard's old criticisms on the attack. Rothbard is excellent, but he seemed to just want to paint Friedman as some kind of totalitarian, which he wasn't. His attacks on Adam Smith were similarly belligerent and senseless. But Rothbard is imperfect, just like Friedman was-- That didn't make Rothbard any less awesome on other subjects.
ReplyDeleteYes, Friedman made mistakes, but the man *WAS* an advocate of free markets. To say that he wasn't one of the good guys is straight out wrong.
You can make damning statements about Jefferson or Hayek, just like you could about Friedman. All had problems, but all are important. And all are, with a few exceptions, very sound when it comes to free markets and free people. In mean, consider Jefferson wrote some of the best stuff about human liberty, but was a slaver owner! Hayek had some minor socialist tendencies, and we all know the gigantic mountains of bodies socialism created in the 20th Century. Does that make the entirety of Hayek's work useless? I mean come on.
If you don't similarly condemn all of Jefferson and Hayek, why do that to Friedman? Rather, I think it is more sensible to criticize what is bad and praise the good. In my opinion, to do otherwise is just ignorance and belligerence.
Don't take this the wrong way, but Bernanke _isn't_ inflating "enough" in the sense that he's not inflating at all, really. If you go to the St. Louis Fed site you can see that the Fed's balance sheet has been basically flat since May and is at the same level as November last year. The Fed _sold_ assets earlier this year.
ReplyDeleteI suppose the Fed is still buying Treasuries with the interest it gets from those toxic assets, but this is not inflationary.
I think Bernanke is a fool, but maybe he is not as big a fool as we think. Let me explain -- he has already created enough money to bring ruin to the US dollar, in my opinion. However, that has been offset by the banks stocking up their excess reserves.
I think he does understand, in his own way, the dangers of increasing the Fed's balance sheet further. I think that is why he has not been printing money recently.
@Mr. Reeder,
ReplyDeleteBuying Treasuries is NOT inflationary? Where, pray tell, does that money come from?
@Anon re/Reeder: I think what he means is that, while it is inflating the money supply, it won't destroy the dollar until it circulates.
ReplyDeleteHi Anonymous,
ReplyDeletePlease criticize the following analysis.
My understanding is that the Fed's current policy is buying Treasuries with money trickling in on all that crap they bought from the Big Banks. They are not printing money to do this. Inflation = increase in money supply. Buying money with the cash earned by holding the toxic assets is not inflation.
See this chart:
http://research.stlouisfed.org/publications/usfd/page3.pdf
This shows that the Fed has not been printing money in 2010. It actually deflated earlier in the year then held the monetary base stable after that.
Remember there is a trillion+ dollars in excess reserves -- because Bernanke already cranked up the printing presses in 2008 to save all his Big Bank buddies. I think he will wait to print more money until the banks get in big trouble again. He doesn't need to prop up US govt bonds because everyone else is buying them. He doesn't care if there is 10% unemployment as long as his bank buddies are good. If there is a QE2 in the near term, I think it will be very small.
This is outrageous.
ReplyDeleteCATO should issue a retraction and an apology for allowing such total drivel to be released in their name.
This is a total outrage.
It's not an isolated deviation from libertarian/Austrian principles. See http://www.lewrockwell.com/blog/lewrw/archives/29272.html.
ReplyDeleteSK,
ReplyDeleteThat's a great record of CATO-gaffes to send people to anytime they put "CATO" and "libertarians" in the same sentence. Well done!
Cato has been around for what, a little over three decades? What do they have to show for it? A big and getting bigger staff, and a big and getting bigger building. What does the big staff do? They fill up the big building with white papers on how to make government, not smaller, but more efficient. How exactly is this libertarian? Not very. The Koch's co-opted some of the finest minds of two generations and sold them a load of hooey -- and what is the result? The Bush and the Obama administrations! How exactly is this in any way better than in 1977 when Cato was founded?
ReplyDelete