Friday, March 16, 2012

Wenzel versus Mish and Keen

An EPJ commenter has an opinion:
Mish and Wenzel are nothing alike. Mish is a hack. He's probably reading this site right now looking for ideas. I bet he subscribed to the daily alert too. Comparing the 2 is like comparing the tooth fairy to the dentist.

Debt-deflation threats would be a likely scenario if this world was free of central banks. It's not. The Feds of the world will not allow a debt-deflation scenario to play out. Period. Wenzel realizes this and therefore stands on a sounder foundation than Mish.

In 2008 when the Fed halted money supply growth there was indeed a debt-deflation scenario playing out. How long did that last before the Fed opened the flood gates, exploding the money supply?

Want more evidence this scenario will not play out? Look at Europe and the ECB. There should have been massive debt-deflation and indeed it was going that way until Draghi took over Nov. 1, 2011.

@anon 10:09
I take offense, and likely many others here, to the idea that readers of EPJ also flock to read Mish. I give him credit for sticking to his guns for so long but I think he fails to recognize the folly of government and its choices. I don't know who this Keen guy is, but seeing Keynes associated with him means I won't waste my time finding out.

Seriously, though, I don't read Mish but I am guessing he is not "a hack" and has a theoretical basis for his views. But if he thinks we are headed for a deflation anytime soon with the Fed printing the way it is, I think he is dead wrong.

As for Keen, I had never heard of him. I just took a quick look at his site and his contorted style of commentary is the type that I usually run from real fast, which is what I did.


  1. I think their argument revolves around the fact they don't believe that CBs have the wherewithall to combat deflation, as they see it - and I think MMTers see it for that matter - QE and it's ilk are pushing on a string policies.

  2. Mish has great analyzes and posts as well! I read both of your blogs especially because you have very different viewpoints on this issue.

    But all in all I think you agree on quite a lot... ;)

  3. Robert, thanks for publishing my comment.

    I'd like to add a couple points. Mish is absolutely correct about debt-deflation if we measure goods and services in terms of gold. There's been huge deflation as I've pointed out in other comments on this blog when measured in gold.

    But I stand by the 'hack' description. During his 'feud' with Peter Schiff over the last couple years, Mish has said there will be actual deflation in terms of paper money. I've never met Mish and he's probably a nice guy, but comments like that seem idiotic given taken in light of Fed action (and actions of other CBs).

    Furthermore, I'm pretty sure there's a theoretical basis for Krugman's views too, and we call him a hack all the time.

  4. Keen supposedly predicted the 2008 meltdown, just like Peter Schiff. Of course, their predictions were based on completely different things.

    Also, I think Keen has a following among some non-Keynesians because of this and because his views are very different than Krugman and other shills. Beyond that, I know very little about him.

  5. i'm not following closely enough to determine whether this is about robert mish or mike "mish" shedlock.

  6. i enjoy reading mish,keen and about that.and add bob murphy(except on sundays).it doesnt behoove(sp?) you to dismiss keen because of his style of writing.he is a neo keynesian who insists that marx's labor theory of value hasnt been refuted properly.atleast he takes the effort to try and understand austrian positions.if you are broadminded,you'd read and refute instead of being repelled because of first impressions

  7. Mish has a greatblog and its full of great information. He is a big Ron Paul supporter and not a friend of central banking/planning. Very much in the Wenzel camp there. Yes the two differ when it comes inflation/deflation but so do many of the very respected econ blog writers and even respected hedge fund managers. Kyle Bass and Hugh Hendry both see short term deflationary events that they believe will put the central banks into hyper-drive making money. There is a lot of information out there that suggests this is happening as the world money supply expands. I think the only difference really between Wenzel and MISH has to do with timing.

  8. The first web pages I read every time I surf the net are Mish and EPJ. Calling Mish a hack is a ad hominem attack. I feel that both blogs are the best in economic analysis. True EPJ is inflationist and Mish is deflationist. EPJ feels inflation is here and Mish feels we have exported it to China and developing countries and we are on a path of Japan's 2 decades of deflation. It behooves people to examine both sides of the story. Mish has brilliant analysis of world economic events and defines inflation differently than just money supply but growth of credit. To tell the truth, I really await the future to see who wins the argument on inflation in the US. Both blogs are bullish on gold, Ron Paul, Oil(with different rationales), and negative on Fed, ECB, Euro, banksters, and the over-reaching US gov. I followed Schiff for awhile and he can't hold a candle to EPJ or Mish.

  9. John Goldman wrote, "if we measure goods and services in terms of gold. There's been huge deflation"

    That's not deflation of the money supply, that's a measure of rising prices.

    John Goldman wrote, "Mish has said there will be actual deflation in terms of paper money."

    That seems to be the correct usage of the term deflation.
    Someday there will be deflation of the money supply, but not for a long time.

    It's important for People to understand there are two different meanings given to the words inflation and deflation. The government one, and the Austrian one. Only one is correct.

    Gary North does a pretty good write up of Mish here:

  10. ".atleast he(Keen) takes the effort to try and understand austrian positions"

    Keen has consistently ignored, disparaged or refuted Austrian economics on erroneous claims, by basically ascribing them views they do not have. Although I would call Keen a hack, I would not call Mish one although he is wrong on the call for deflation.

  11. I read both Mish's site and EPJ. Mish has made some good calls, like selling silver around $50. I believe Mish's argument hinges on the banks not lending out money so the supply will not expand by fractional reserve lending. The money supply will also contract as all the bad debt is defaulted on. Wenzel is basically, "Fed is printing, lending is increasing, inflationary economic boom on the way."

    It did surprise me that gold has fallen so much with the improved economic numbers. I guess there were more "safe-haven" buyers than "inflation-hedge" buyers. Investors have shifted back to stocks to catch the higher earnings.

    Here's Gary North on Mises vs Fisher, which explains the debate:

  12. I do not read Mish so I don't know the reasons for his position, but it seems quite logical to me that if we are in a Treasury bond bubble, which I believe we are in and Ron Paul does too, then inflation would push up interest rates which could collapse the bond market leading to many banks becoming insolvent. This could collapse the money supply leading to deflation. So an inflation prediction is reasonable given the money-supply growth but for how long? It seems to me that a little bit of inflation could easily lead to a deflationary collapse. I don't think Wenzel has given serious enough thought to this possibility, but I also don't know if that is the idea behind Mish's reasoning.