He writes:
Consider, in particular, the contrast between supply-side economics and Ron-Paul-style monetary crankdom.
Inflation paranoia — the constant assertion that we’re going to turn in Zimbabwe any day now owing to the evils of fiat currency — is a form of nonsense that’s completely immune to evidence. But why does it persist? Is it in the interests of powerful people to oppose expansionary monetary policy and promulgate crank monetary theory? It’s not at all clear why. Yes, rentiers benefit from low inflation or deflation, and are hurt by low yields, but on the other hand they benefit from higher asset prices, and overall the distributional implications of monetary policy are complicated.
So my sense is that monetary crankdom is more of a grass-roots phenomenon, driven partly by libertarians warped because they read Ayn Rand instead of Tolkien, and by the quasi-moral sense of old white men that they earned their money and printing the stuff must be destructive.
First of all, Rand was not an economist and had extremely limited discussion of money in her novels. If he wants to look at someone that did warn about monetary printing and inflation. he should take a look at the commentary of his fellow Nobel prize laureate, F.A. Hayek.
One might say that Krugman's view was warped because early on he read Keynes instead of Hayek.
But what's this about an anti-inflation stance being the cause of old white men?
Somehow I find it difficult to believe that Krugman has forgotten about the time he was confronted about inflation by the young, mysterious, beautiful and Spanish-born, Livia Elena Araujo Pérez,
We've reached the ultimate inversion. Advocates of sound money and the idea that wealth doesn't come from a printing press are the monetary "cranks." This approaches the surreal if anyone has ever read the history of the subject. But, "it's different this time" they say... BTW, Rand's non-fiction work, "Capitalism, the Unknown Ideal" , which is a collection of essays and speeches she describes as a lengthy "footnote" to Atlas Shrugged has some succinct but outstanding discussions of monetary policy, inflationism, gold, etc. She quotes Mises quite a bit in it. It's definitely more accessible to the layman than the lengthier works of Mises, Hayek, etc.
ReplyDeleteYou children really suck
ReplyDeleteHonestly, more Austrians should be clear about the fact that our fear of monetary expansion has to do with the misallocation of resources and the boom and bust cycle which causes unemployment and economic chaos. Price increases (hyperinflation and such) are simply one possibility in *some* contexts. But we always get blamed for predicting hyperinflation because of all the hyperinflationist fear mongers who like to jump aboard the Ron Paul bandwagon. But in reality, they don't know what the Austrian School even teaches. Austrians should not be confused with the Zimbabwe-echo-chamber.
ReplyDeleteIt is the technique of the establishment to relate kooks to their intellectual opposition so that the masses disregard the whole thing. People take lazy shortcuts so the establishment makes the shortcuts.
DeleteBut the Austrians are clear on this, are they not? Without the same Krugman mega-phone (ie NYT or similar), the actual Austrian Monetary Theory will never get out.
DeleteWhat to do, when the gatekeepers keep the gate?
"Yes, rentiers benefit from low inflation or deflation, and are hurt by low yields, but on the other hand they benefit from higher asset prices..."
ReplyDeleteSo ZIRP is thanks to "low inflation"...but causes "higher asset prices"...which are not inflation? And rentiers "benefit" and are "hurt" at the same time. Thank you for clearing that up, Mr. Nobel economist.
Krugman's dance around Austrian business cycle theory is turning into a full blown Cirque du Soleil production.
Krugman is either an idiot or he's evil. I'm always torn between these two.
DeleteHis preferred policy of "print off a ton of money and give it to my buddies" is sound, if you believe that all your friends deserve to benefit at everyone else's expense.
Wait. "Please explain to me how a piece of paper can make society richer."
ReplyDeletehttps://youtu.be/QJwmMu15Exc
I love how he refers to it as "Ron Paul economics/ crankdom" as if Ron Paul just made this stuff up. He is either being disingenuous or is totally unfamiliar with the huge scholarly works of Austrian economics. I bet he is familiar with it but doesn't want to really study it as he is afraid he is wrong and he has a good thing going now.
ReplyDeleteAlec, I don't think he doesn't want to study it because he's afraid he is wrong. I think he doesn't want to study it because he sees no point since he's so certain he's right.
DeleteKrugman believes himself to be an intellectual giant. These types seldom question their own knowledge of anything.
The most striking thing to me about the Austrian economists I've read is that they all seem incredibly intelligent, yet most of them are aware of the limits of what they can or do know. This is a rare trait.
Krugman is disingenuous. It's incorrect to take what he says at face value. He writes like this so his audience - somewhat thinking white middle aged professional "liberals" - can safely write off Ron Paul as a kook whose ideas should not be given the time of day.
ReplyDeleteThis serves a specific purpose: to maintain support for the scientific expert class who like brave captains steer the ship admirably in tumultuous weather. These people deserve our support and chicken little critics with no real ideas deserve our scorn. It's the same rationale that allows Democrats to support the Ex-Im bank and not fear losing their next election.
The most dangerous questions to the status quo that one of Krugman's readers can ask themselves are: What if this is wrong? Is there an alternative? Doubt is powerful. Therefore, white middle aged professionals who skew liberal can never get a taste of the lucid Austrian position on monetary theory. Instead, give them a spiked version so even if they come across the real thing, they have preconceived notions of "goldbugs," "cranks," "fringe," and "debunked."
A popular acceptance of ABCT would radically change the economic structure of the country, even if these "liberal" white well educated professionals still support welfarism and mandates.
Aside from this, Krugman has more egg on his face than the Chicken Littles of the world:
"By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's." http://web.archive.org/web/19980610100009/www.redherring.com/mag/issue55...
"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html
Stick a fork in that old, white man, he is done.
ReplyDeleteI do object to his contention regarding reading materials. I read Tolkien as a yute and I'm still warped.
She's smartiful.
ReplyDelete... Beautifart?
Hell hath no fury like an economic fool scorned. Ron Paul pounds Nobel Laureate Paul Krugman into a Keynesian greasy spot: Bloomberg: https://www.youtube.com/watch?v=jEmKIRqz9AI
ReplyDeleteA teacher I have is very vocally anti-economist. Specifically mainstream ones like Krugman. He is originally from China. I have disagreed with Krugman since my early 20's. So much for Krugman's "Old White Man" hypothesis".
ReplyDelete