Tuesday, March 29, 2011

Alex Jones' Comedy Hour

There's so much comedy gold on today's Hit & Run thread about Alex Jones, but this bit is probably my favorite.


sevo|3.28.11 @ 8:10PM|

"What quote is this about WW1 history..?"
For starters, it's *WWII*. Just so you know.

Almanian|3.28.11 @ 8:47PM|

"World War II - The Other World War I™"

sevo|3.28.11 @ 8:59PM|

WWII; the "NEW WWI"?

Nipplemancer|3.29.11 @ 12:46AM|

WWI Pt. II

halfdoghalfdeer|3.29.11 @ 11:22AM|

WWII, This time it's personal!


I should really spend more time over there... and if I had the time, I totally would.

And, I'm really not going to spend any time on this, but just so we're all clear. There is nothing remotely "libertarian" about Alex Jones. He's statist to the core.

Sure I might agree with him on a few things, like the importance of ending the Federal Reserve (although that is more of an economics point and doesn't have any direct relevance to libertarian philosophy at all)... but here's a key difference, I don't think that Congress should be in the business of printing a ton of money either!

Jones' positions on most things seem to be a ridiculously stupid mix of anti-historical nonsense with conclusions that generally concentrate power right back in the hands of people he thinks are behind innumerable conspiracies.

So... No, not libertarian, although he's been described that way by people who are equally confused.

Saturday, March 26, 2011

Natural Selection, Market Potpourri

First! A fabulous point on Facebook by economist, Steve Horwitz:
"People need to wake up and know the history: government regulation does not "check" the power of the private sector, it enhances it. The more power you give gov't, the more that the private sector will seek to access that power and use it to their advantage and to the disadvantage of the rest of us. Regulated capitalism inevitably becomes corporatism. And "better people" in gov't won't change this."
And... Also a few excellent comments at Hit & Run (not written by me)... directed at our old "pal" Tony, of course:
"Tony, please understand: just because you believe something, does NOT make it 1) correct, and 2) so correct that it must be imposed upon others at the point of a gun.

You say people don't want the society we're selling...then why are their armed police officers enforcing bogus drug laws on casual users? If everyone wanted your society, they'd all voluntarily stop using drugs, since it's against the law.

Why does the IRS have enforcement agents? If everyone wanted the society you're selling, everyone would voluntarily pay their taxes, no enforcement required.

Here's the thing: you think we mean to impose a stateless vision on you whether you want it or not. Nothing could be further from the truth. If you and a bunch of like-minded folks want to get together, form a community, and agree to taxation in exchange for certain public services, then by all means, feel free.

What we ARE asking is that you stop assuming that you are SO superior to us both intellectually and morally that it is your right and duty to impose your vision upon us whether we'd have it or not. Our vision allows you to form whatever community you want with like-minded fellows. Your vision imposes force upon us to comply with it, because you believe a small number of educated elites know better than everyone else how things should be run, and that they should be granted a monopoly on force in order to enact their dictates. Boiled down, that is what you believe, because that is just a non-PC way of describing bureaucratic government."
More to Tony:
"Your understanding of Darwinian theory is severely limited. It says nothing about morality or even the best surviving, because it lacks qualitative analysis. The only thing that matters is that - just like in markets - cells interact with each other and those cells produce organisms through - as Dawkins puts it - selfish genes. It is not necessarily true that species survive because of selfish behavior as you understand it with your primitive sense of morality. Mammals seem to survive because they work together. As in markets, cells interact with each other at random to produce what looks like a planned whole. Just like the creationist, you assume the market must have a designer, because without one there would be - hold your breath - chaos. In fact, altruism is a good thing for human survival and the market is the ultimate expression of voluntarism and the lack of coercion or even a top-down order. It produces wealth for billions of people without a designer. Your mind is shaped to find a designer, and if you don't, you will impose one upon it. Your problem is you are fighting against Ayn Rand. We are not objectivists. We are libertarians. There are many of us who despise Rand, because she was wrong about altruism.

Secondly, evolutionary psychology shows that voluntary exchange (capitalism) is the very trait that has allowed humans to be the ONLY species to become more prosperous as we have become more populous. You see it as selfish because you have a paleolithic morality, where sharing is seen as the top goal (this works in small units such as the family). But in a market you don't realize that the profit motive is actually benefiting you and everyone around you. You only see the selfish behavior of the store owner, not even realizing that you both benefit from the exchange. Capitalism is the only reason vast swathes of humanity were able to escape abject poverty, not coercion and state power. Otherwise, North Korea would be a bastion of prosperity. You are at war with the very thing that leads to your own prosperity.

Nevertheless, you are right that people disagree with us, but that, as I have mentioned, is a result of having a primitive morality based on a false understanding of the world around. You see zero-sum when in reality it is no such thing.

The fact that you throw around Darwin's name as some sort of emotive term to criticize your opponents is shameful and betrays your ignorance of science. Markets are like evolution. It would serve you well to gain a better understanding of both."
There's a lot to be said about each of these points... But I think that one thing I'd like to talk about more often is the connection between free markets and other spontaneously ordered processes like evolution by natural selection, language & communications, and cultural customs & norms.

It intrigues me somewhat that so much effort has been spent by evolutionary biologists fighting the crude, typically creationist-led description of evolution as "Dog eat Dog" or the notion that there is a spectacularly cut-throat aspect to natural selection... and while many people like Tony may moderately grasp this point in biology (I'm being charitable), they rely on creationist fallacies in their arguments against the market.

When Biologists talk about "survival of the fittest", they don't inherently mean that the animals which survive are the most physically tough or brutal, but rather they mean animals which are best adapted to their given environmental pressures.

In many ways, markets work exactly the same way.

Being successful in business doesn't require you to be the biggest, most ruthless, liberty-violating thieves imaginable. It requires that you are responsive to the values of your customers, and that you find a niche that few other animals businesses are filling.

Think about the Galapagos Finches.

These little birds diverged primarily in terms of beak shape, size & strength. They didn't all just go extinct, because one super-finch developed, they diversified and branched off as some birds became better at eating certain foods, and their cousins better at others. Business environments are similar... Look at my own business.

As a multimedia producer, I am in constant competition with hundreds of other talented people. There's no way I can compete on all levels with all of them... but I do have a few advantages. I care about certain ideas, and I've got a more complete understanding of a few specialized areas of study & philosophy... so I can cater to a particular market that most multimedia producers aren't interested or capable of catering to.

That's worked out ok for me... But unfortunately for people like Tony, their "Zero-Sum" mentality leads them to think the only way to be successful is to take from somebody else.

I suppose nobody should be surprised by this - since their interaction with the world is precisely that.

But now, let's tie this back to Steve's point... Most of the time, using laws to "regulate" the market is as absurd as using law to "regulate" natural selection. Eugenics is one word people have for those kinds of policies in the biological realm, and it produces some pretty bad results too.

Monday, March 14, 2011

There is NO Silver Lining.

Not. Economic. Growth.
I honestly cannot believe that I'm taking the words I'm about to write and committing them to public memory. They should never have to be said, they should not have to be read, written or spoken. They should simply be understood by every single human on the face of the Earth.

Last Friday, as I'm sure you know, a massive earthquake and the resultant tsunami destroyed much of Japan.

Thousands are dead, hundreds of thousands and probably millions are now homeless. The devastation wreaked by these events is epic to the point of being simply incomprehensible. It is impossible to know yet the full extent of the material & human costs of this tragedy.

And just like Paul Krugman did in the wake of 9/11, some impossibly bad economists and a growing supply of tactless reporters have argued that in spite of the damage, this event will probably come with eventual economic "benefits".


In the Huffington Post, editor Nathan Garbels writes;
"But if one can look past the devastation, there is a silver lining. The need to rebuild a large swath of Japan will create huge opportunities for domestic economic growth, particularly in energy-efficient technologies, while also stimulating global demand and hastening the integration of East Asia.

Japan has been wallowing in stagnation for years despite massive government stimulus programs and zero-interest rates because, simply put, in such an advanced, mature economy there was too little demand to generate sufficient returns to attract private investment. Thus the famous "bridges to nowhere" and other projects that amounted to pushing a string."
From Fox Business, Dunstan Prial contributes:
"The earthquake and tsunami that struck Japan on Friday could ultimately spur economic growth as the recovery effort creates demand for goods and services needed to repair and replace devastated industries, buildings and infrastructure.
Now... You might forgive these two guys. Both are just writers and journalists, and perhaps it is just true that neither have thought through the ideas they're putting out very well. But... Prial cites Capital Economics, "the leading independent macroeconomic research consultancy", which is ostensibly a haven for professional (if thoroughly Keynesian) economists, so already we see professionals engaging in fallacious reasoning.

But it gets so much worse...

I don't normally make a big deal of credentials, or talk about people's awards and accomplishments when making points, because an argument is an argument regardless of who it comes from. It's either good or it isn't, and premises & facts are either true or they aren't - the person making the argument is irrelevant to that argument's value... However, I think I need to be clear here.

The person I'm now about to quote was the President of Harvard University. He is currently a professor at Harvard Business School. He was the director of Obama's National Economic Council. He was the Secretary of the Treasury during the Clinton administration and he's worked as an advisor to many sitting presidents and he is widely known and respected among political circles. He was the Chief Economist at World Bank, and he's got more ties to Wall Street and high finance than anyone you've ever met.

He is also winner of awards touting his various skills as an economist and he started college at MIT at the age of 16.

This is a man who has credentials and who is taken very seriously by people who impose their economic policies on all Americans... This man is Larry Summers.

And in this case, his credentials matter... Because, while I can forgive a few writers for making major mistakes in economic reasoning, Summers is a highly decorated pro, and I cannot forgive him for this kind of an error and lack of basic economic common sense. While speaking on CNBC on Friday, he said:
". . . add complexity to Japan’s challenge of economic recovery. It may lead to some temporary increments ironically to GDP as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake Japan actually gained some economic strength."
Now... Seriously stop and ponder the implications of Summers' statement - and those of the other writers mentioned. Ask yourself how the extreme destruction of property can result in a net economic gain to Japan or the world? Ask how that could happen in your own life... I know you know full well that it cannot.

As my friend, Dr. Steven Horwitz - who is Professor of Economics at St. Lawrence University - put it when I asked him for a quote (for an upcoming video project) on this matter:
"The argument that cleaning up from destruction can be a source of economic growth is one of the oldest fallacies in economics. The devastation in Japan is not an opportunity for growth, it's a disaster that has impoverished millions and anyone who thinks there's a silver lining because GDP will rise during the cleanup should offer up his own house for destruction in order to reduce the unemployment rate."
The fallacy is so easy to grasp... so impossible to miss... that I suspect only an Ivy-league professor wouldn't be able to see it, which explains the likes of Summers and Krugman - though it doesn't explain why so many reporters seem to have failed to grasp the obvious here.

Fortunately, not all are quite so bad... As a point of pride, writing for my own brand-new, quite excellent employer, Ryan Young clearly explains what Summers is missing and fills in the gaps that I deliberately asked Professor Horwitz to leave out of his quote:
"Here’s why: if the tsunami had never happened, people would still have all the buildings and cars that they had in the first place. They would be able to spend their money on other, additional goods that they want.

And those new construction jobs the tsunami will create? Every last one of those workers could be making something else instead. They could be producing computers, televisions, almost anything.

People who were construction workers to begin with could be building new factories or new homes, in addition to the ones they already have. Instead, they will be working overtime just to get back what they already had. This is not stimulus, even if it does show up in GDP. It is better to build than to rebuild."
The thing is, Keynesian, broken window fallacy reasoning is everywhere in government... It's been what's kept Japan from escaping its "lost decade". It's why we're still in the shape we're in 3 years after the stock market crash in 2007. It's even why we have gotten increasingly painful boom & busts over the last 30 years.

"For the good of the economy", Larry Summers argument should compel you to take your TVs, your computers, your cars and everything else you own and smash them to pieces, as that would stimulate "economic growth" and "jobs" for TV, computer and car manufacturers.

Maybe that sounds extreme to you, but what in the world do you think Cash for Clunkers (a Larry Summers inspired idea, no less) was all about?

Setting aside the grotesquery of this whole affair, talking about the construction boom to follow in Japan as if that remotely makes up for the pain and suffering that nation is feeling right now, the economic argument employed here is just. plain. wrong.


Yet - like so many other abysmal ideas - it is popular among Keynesian economists because, as macroeconomists, they don't seem to grasp that the economy is not made up of numbers, but of actions & interactions between real human beings and natural resources.

Summers, sitting in his posh Harvard office, will look at GDP and employment numbers from Japan in a few years and he will be "vindicated" that there has been economic "growth" because those numbers may very well go up. He may see this as further evidence that he's the smart guy everyone has always told him he is.

But GDP numbers only factor in money which is being spent. It does not account for property which has been destroyed and it doesn't differentiate between what goods money is being spent on... So if you are looking at GDP, the money you spend replacing stuff you already own is counted as growth, when any sane person would count it as a loss.

Macroeconomists don't look at anything that closely though. GDP is GDP is GDP... Production is production, no matter whether or not what's being produced already exists, never existed, is used to kill people or is used to feed people. This is why people hate economists, though the irony is, it's always the ones who are most favorable towards using government to intervene in everything who are  the most divorced from reality in this way. And their ideas go into supporting all types of destructive programs like Cash for Clunkers, big stimulus packages, make-work programs and worst of all... Wars.

Consider that the idea of using war as a way to improve an economy can be inferred directly from Summers' argument. What's more - we have all been told this very argument in school. Do you remember when your US history teacher was telling you about how we got out of the Great Depression? What's the typical explanation: World War II.

But is that true? Of course NOT!

War, like the broken windows (and families, hopes, dreams and lives) all throughout Japan right now, is destructive. Nobody knows that better than the Japanese, thanks to us.

There is no economic "silver lining". It sets people back decades, and compels a society to shift all of their capital, labor and productive efforts away from improving the standards of living of their people and towards replacing bombs and bullets which have been consumed or exploded, and the homes and businesses blown up by enemy bombs.

All that effort going into replacing capital that got destroyed can never be regained.

This is why not only is all this talk about possible economic benefits to Japan in the wake of an almost unparalleled disaster insensitive, and tasteless, the arguments on display here are literally damaging to people across the globe. There's no silver lining in Japan... No economic benefit of any kind.

Don't - not for even a single second of your life - believe otherwise.

So instead of just waiting around for Japan's construction industry to rebound and save the day by providing "jobs" and "growth", DO SOMETHING. 


America is a fabulously charitable place, and the people here are arguably the most generous on the planet. So now's the time, my friends... Bad economists are everywhere, both amateurs & professionals, so do not let their foolish shallowly constructed views lead you to believe that anything is going to fix itself over there. If you can go to Japan and help, go. If you can give to a charitable organization to help the Japanese, do that.

If all you can do is encourage others to show their support... then... do that. Do whatever you can... Just don't act like this event is - or ever will be - anything but a nightmarish tragedy that has devastated a great country filled with good people.

Wednesday, March 9, 2011

ROOOAAAAADDDZZ!!!

Anarcho-capitalist, Andy Wright, has written something that I've said in various forms & pieces for years and I want to share it in its entirety.

But first... For those who aren't aware, the most over-used, trite, and utterly predictable argument against libertarianism & especially anarchism is that without government we'd have "no roads". We'd also, according to critics, have no schools, no protection from criminals and dangerous madmen, and all those other wonderful "services" that we are forced via taxation to pay for.

That argument is so easily torn apart that it's really not worth going into here, but what all those who always advocate for bigger, more expansive government on those grounds never bother to ask what they're accepting along with those lovely (pot-hole filled?) roads.

Wright nails it [edited slightly and links added for enhancement of the point]:
"Warning: The following comment contains language not suitable for minors or those who are offended easily. So if you don’t like it, don’t read it. Thank you. And now on to my rant.

This government has stolen more than half our income under threat of violence, incarcerates millions of nonviolent people for victimless crimes, puts to death innocent people after denying them access to DNA testing that could potentially have exonerated them, cost tens of thousands of lives with prohibitions, installs cameras in every cop car and on every street corner then arrests anyone who records them, sells off their unborn to foreign countries acquiring trillions of debt, runs Ponzi schemes, admittedly losses hundreds of billions of dollars, prints money, debases it’s currency, never fulfills any of it’s promises, does medical experiments on humans, invades countries who pose no threat and steals their natural resources, bombs innocent families in far away countries, has 1,000 military bases in 140 countries, tasers and brutalizes it’s own people for noncompliance to hundreds of thousands of ridiculous laws, criminalizes “risk”, guards poppy fields, imports drugs and then brutalizes the users, holds suspects without charges indefinitely and tortures those they think might have information. BUT WE GOT F***IN’ ROADS!

I can go on and on. People are being arrested for speech, they did not protect us from attacks (9/11). It does not protect us from criminals. Prisons are a revolving door for rapists and a vault door for pot smokers. We have the worlds highest prison population were 1 in 20 are raped and drugs are easier to get then on the street. So they kidnap people from the street for drug use and put them in a rape cage where drugs are everywhere. They are supposed to protect us from street gangs yet their memberships have increased 25,000 a year for over a decade. Shall I go on?

War on poverty? How’s that going? Victims of Katrina were rounded up and left to die and anyone who tried to escape were executed on the Danzinger Bridge. Judges making money from jailing nonviolent offenders (pot possession). Jury manipulation, politicians and cops getting away with crimes, corruption, murder…the whole damn thing makes me sick! BUT WE GOT ROADS!

You f***ing idiots! If I hear one more comment about our pothole filled, cracked, t-bone causing, head-on collision encouraging, pollution producing deathtraps or any of your other monopolistic and pathetic “services” like your abusive bullies with badges, failing public schools of bullying, propaganda and indoctrination, competition blocking hospitals, mostly volunteer fire fighters, the disgusting fluoride laced tap water, monopoly on the rest of the poorly provided utilities etc I am going to continue this rant and I will not care if it overloads facebook’s servers and shuts them down, which it probably will. And even if the government could provide us with clean water, great schools, cheap energy, affordable health care and beautiful roads, is it worth all the oppression and tyranny of enslavement to debt, violent theft, countless laws, endless wars, overflowing prisons and continued human slaughters?

I apologize for my language. Most of you know me and I rarely, if ever, curse. But this s*** has got to stop! F*** THEIR F***ING, GOD DAMNED, POS, F***ING ROADS!"
Sorry for the redacted language, but as much as I love all manner of language, this has always been kind of a PG13 blog.

Trust me though, not here - but in person - I will gladly use the same language to express this point. Roads aren't a cure-all. Roads can be, have been, and are privately funded, developed & maintained all over the world with no problems. For example... In Sweden:
"The Swedish road network totals about 420,000 km (261,000 miles). Two thirds of this consist of private roads, primarily unpaved forestry roads. Most private roads are open for use by the general public."
And while of course people would think all the private roads would be unpaved, that's not true either. Check out California's 91 Expressway congestion lanes... Also privately owned & operated (and definitely still not what you'd see in a full-on private system). Government isn't needed for roads, and the trade-offs its asked us all to accept just to keep getting force-provided roads are absurd.

I say it's time to drop that ridiculous line of argument and start really asking what we're getting in addition to the roads. Wars? Prohibitions? A fifth of the population in jail?

What Andy Wright said.

Wednesday, March 2, 2011

I knew Krugman fans were sycophants, but...

Here's a Paul Krugman superfan's "view" of how economies work:
"Money goes to business from customers.

Customers without money therefore means less money goes to business.

This is why times of economic expansion as well as economic stability depend on money being available to the poor and middle class.

This is why times of economic recession always follow a lack or repeal of economic regulation.

History. It's good for you."
I was... uh... not impressed, to say the least:
"What in the... Holy god... fail. Jim... That fail was spectacular.

Do it again.
"Money goes to business from customers."
Good lord... I think you believe that what you said up there is actually a coherent view of the economy! I'm not sure whether I'm supposed to laugh hysterically at you or cry for the horrendous failure you've exhibited.

You're right though - learning some real history would be really good... for you.

I might start with "A History of Money & Banking" by Murray Rothbard: http://mises.org/books/historyofmoney.pdf"
This guy, Jim, is incredibly confused because - much like his lover, Paul Krugman - his sense of how economies work is no more developed than that of a small child.

He persists...
"OK, just skimmed your pdf link. Basically it related the Great Depression's causes solely to monetary policy, and specifically banks' "inflating" and "overexpansion" - without even mentioning demand, inequality, or any other huge factors.

This monetary-only view, while apparently very ideologically comforting, is fundamentally unserious. It has been disproven about as thoroughly as such abstract theories can be. Paul Krugman has the most recent debunking. I can't post the link here apparently, but just google the title:

"Was the Great Depression a monetary phenomenon?"

So, if you can tell me how Krugman is wrong there, please do! I'd love to hear it. Sincerely - I like my views to be in step with reality.

And if the response is "Paul Krugman is a librullllll!!" or some such variation - more importantly, Paul Krugman is a liberal who's been **right**. He has repeatedly predicted and diagnosed issues for years before they've shown up, from the housing crisis to the incomplete stimulus that relied too much on tax breaks. He has yet to be proven wrong. Plus he won a Nobel prize, which also indicates he knows what he's talking about.

So, it appears you have some history to re-learn, in order to be in step with reality. Here's hoping you get to it."
By "in step with reality", I think we can all be rather certain that what he meant was to be "in step with the intellectual seepage leaked out of glorious Paul Krugman's tiny little brain"...

Shifty-eyed and slow-witted...
Jim claims to have "skimmed" Rothbard's seminal, "A History of Money & Banking" [PDF] in a couple minutes, in spite of the fact that it is actually 510 pages long, and then concludes that Krugman - in a pitiful, 206 word response on a totally different topic, no less! - "debunks" the whole book.

Here's a little newsflash for Jim... The blog-post he linked me to is Paul Krugman attempting (yet failing miserably) at "debunking" Milton Friedman & Anna Schwartz' view of the cause of the Great Depression in their book, "A Monetary History of the United States, 1867-1960" [alas, not available in PDF format]. It doesn't even begin to address the arguments that Rothbard (or anyone else from the Austrian School) are making.

Honestly... It's kind of hilarious - if not for people like Jim blindly slurping up the drivel Krugman spews out all over the country. Here's Krugman:
"A central theme of Keynes’s General Theory was the impotence of monetary policy in depression-type conditions. But Milton Friedman and Anna Schwartz, in their magisterial monetary history of the United States, claimed that the Fed could have prevented the Great Depression — a claim that in later, popular writings, including those of Friedman himself, was transmuted into the claim that the Fed caused the Depression.

Now, what the Fed really controlled was the monetary base — currency plus bank reserves. As the figure shows, the base actually rose during the great slump, which is why it’s hard to make the case that the Fed caused the Depression. But arguably the Depression could have been prevented if the Fed had done more — if it had expanded the monetary base faster and done more to rescue banks in trouble."
Here's Krugman's "proof", a FRED chart of the monetary base (M0) during that time period.


See Krugman's predictable, yet epic failure yet?

If you, like Jim, can't be bothered to read Friedman & Schwartz... Then I suppose maybe you'd have trouble seeing the flaw. But let me spell it out for you...

Friedman argues that the Federal Reserve's contraction of the money supply at the very beginning of the Great Depression - i.e. late 1929-1930 - caused a chain reaction of bank failures which contributed to the bank runs and mass hysteria we're all familiar with.

Does the St. Louis Federal Reserve chart Krugman supplied contradict that position factually? No. No it does not.

Instead of "debunking" Friedman, he strengthens Friedman's actual argument by showing the FRED monetary base chart... And then he goes on to create a strawman where he claims that Friedman blamed the Fed for the continuation of the Great Depression by deflating the currency still further That was never Friedman's argument - as that obviously didn't happen. I may disagree with Milton Friedman on a number of things, but he was nothing if not a consummate researcher.

Also, Friedman has a lot to say on the prolongation of the Great Depression, much of which I certainly agree with like price controls, tariffs/trade wars, massive public spending initiatives & regime uncertainty (among many other factors), but rest assured - he did not attribute it to non-existent deflationary Federal Reserve policy beyond the initial spark that lit the fire.

Rothbard, however, speaks to an entirely different point.

As a key figure in the Austrian School, and the heir apparent to folks like Ludwig von Mises, F.A. Hayek, and probably more importantly Eugene B√∂hm-Bawerk, Rothbard's view starts long before the proximate causes of the Great Depression and exposes the monetary origins of the boom. Amusingly, I'll quote Friedman & Schwartz here from Page 241 of "A Monetary History":
"1. The Course of Money, Income, Prices and Velocity

The Decline of 1920-21, like earlier severe contractions, was followed by an extremely vigorous expansion. From the reference trough in July 1921 to the peak in May 1923, the Federal Reserve Board index of industrial production rose no less than 63 per cent, wholesale prices, 9 per cent, and the stock of money, 14 per cent (see Chart 16).
...
The next six years, from 1923 to 1929, were years of relatively steady growth... The stock of money grew at a fairly steady rate until early 1928, after which it declined very slightly until the end of 1929 as a result of the restrictive monetary measures arising out of the Federal Reserve System's concern with the contemporaneous stock market boom -- a feature of the period which is not reflected in our chart but which had far-reaching effects on the conduct of monetary policy."
Now... Friedman overlooks the problems associated with vigorous monetary expansion - of the type he highlighted during the "Roaring 20's" years - and indeed, I think that's Friedman's major failing as an economist...

However... By contrast, Rothbard focuses on it.

According to Austrian School Economists - who, unlike Krugman, have amply demonstrated their case over & over with verifiable historical evidence and rational arguments - the expansion of the currency gives rise to mal-investment building up throughout the economy and creates an unsustainable economic boom based not on real savings & investment, but on the artificial creation of new money as debt. This type of boom cannot last for very long, and necessarily collapses painfully in on itself eventually as people's predictions based on the faulty price information supplied by the new money fail to materialize.

There's more to it than that, but that - in essence - is the Austrian Business Cycle Theory.

Krugman has never, to my knowledge, acknowledged or properly accounted for this viewpoint - and he most certainly does not do so in the post above.

But, I mean... C'mon.

Jim claims that Krugman "is a liberal who's been **right**" all the time - so obviously I should be gushing praises of the New York Times' bloviating moron pretending to be an economist.

But here's my question... If Krugman has been "right" so damned often... On what?

As far as I can tell, Krugman has done a fairly decent job of hacking apart his previous writings and pretending/claiming to have been right all along well after the fact, which his sycophantic followers obsequiously lap up with each vapid post, but has he actually been "right"?

No. Not so much...

I keep a great number of reasons why Krugman is a moron on hand constantly specifically to counter idiots like this Jim character.

Here are a few of my Krugman posts:
Possibly my favorite example of Krugman being oh-so-right about everything is when he decided to agitate for a housing bubble shortly after the tech bubble burst and subsequent 9/11-related recession:
“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.”

-Paul Krugman, August 2002
Uhh... Oops!

The real problem here is, as I explained to Jim, Paul Krugman - and really all Keynesian economists - lacks a functioning theory of capital.

They start with consumption (as Jim did) and fail to understand the role of prices & entrepreneurs in market coordination. They also fail to see how various laws actually effect people's behavior, and most importantly, they don't grasp the limitations of their own methodology - and thus they regularly mistake statistics based on weak aggregated data (not to mention predictions based on models incorporating that weak data) with the reality of how people actually act... whereas far better economists don't make that mistake.

Krugman is also regularly guilty of the Broken Window Fallacy, Parmenides Fallacy, Excluded Middle/False Dichotomies, and any number of other serious logical problems - at least in virtually every article of his I've ever had the misfortune of reading... and I've read far more of his writing than I'd care to recall.

...I'm not sure if I really even need to bother touching on Jim's brilliant statement about Krugman having won a Nobel Prize - as if that guarantees that he knows what he's talking about.

Arguments from Authority are pretty crap to begin with, and when the "authority" is Paul Krugman, you should probably just lobotomize yourself right from the start. It will definitely save you time. Note that many of the economists I reference regularly have Nobel Prizes too... F.A. Hayek, Milton Friedman, and James Buchannan for instance (Buchannan I rarely call out by name, but his work in Public Choice Theory comes up constantly in my writing between the lines)... But ya know what? Slavishly believing what someone says because of some awards they've won is stupid, and when people like Jim rely on those ideas, it demonstrates to me that they care more about theatre than about quality reasoning.

More importantly to me, around 163 years ago, Fredric Bastiat perfectly explained the difference between the good economist & the bad economist:
"There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil."
This actually describes Krugman's bad economics pretty much to a T.

So no... My response to Jim isn't; ZOMG "Paul Krugman is a librulllll!!". I don't really care if he's a liberal - except to the extent that his poorly-constructed political philosophy has turned him into a completely worthless hack as an economist.

What I care about is that Paul Krugman is a f**king idiot.

Hilariously, Jim read my response - which included much of the points I've just made - and responded:
"First, you haven't addressed how I entirely debunked your pdf, and it's ludicrous attempt to blame the Great Depression solely on monetary policy. So, you're ditching that entire line of argument means that my original comment still stands.

Second, re: Paul Krugman - you are correct that Krugman suggested creating a bubble in housing to overcome the effects of the dotcom bubble. But what you fail to note, because it destroys your argument, is that Krugman later also correctly predicted the bubble was growing out of control - and wasn't heeded. Spam filter isn't letting me post links, so google "Krugman on the US housing bubble " (youtube video).

Krugman also predicted that Obama's stimulus was too heavy on tax cuts and too light on direct stimulus, and might result in a flat slow growth rather than faster growth needed. google "
Krugman: Obama's Stimulus Doesn't Go Far Enough".

So, I've refuted your statement re: Krugman. Now please refute those two specific statements. Or, kindly get your worldview in touch with reality."
Yes. How thoroughly have I been refuted. Jim's genius knows no limitations... Alternatively... Here's my actual response:
"Huh?

You did nothing of the sort. You lamely pointed to Paul Krugman, who you claim "debunked" "my" PDF. You didn't even read the PDF in question, you didn't address a SINGLE argument made by Rothbard, you didn't cite a single contradiction to his historical analysis, your knowledge of economics is so woefully minute that you wouldn't even begin to comprehend his economic analysis...
...
PS. Krugman only "predicted" the housing bubble was way out of control looooong after other economists (i.e. Mark Thornton) had been saying so for years. And as an added bonus, Mark Thornton never advocated blowing up a bubble in the first place - nor did he pretend, as Krugman has done countless times, to not understand how monetary expansion produces bubbles.

Krugman doesn't get to have it both ways, after all. Either he was right that Alan Greenspan, then chair of the Federal Reserve could create a housing bubble via monetary inflation... OR... He's right that monetary expansion has nothing to do with booms & busts as he also likes to claim. They can't simultaneously be true (and since the first statement is empirically true, then we can be damn sure the second is false).

The other point is that the stimulus "didn't go far enough"? Well... That'd only be true if you fundamentally have no clue how prosperity & economic growth occur - which Krugman has demonstrated multiple times that he doesn't.

"Spending", by which I (and Krugman) mean consumption, does not produce economic growth, government spending least of all. Robert Barro has estimated, and history certainly bears him out on this that the true "multiplier" for government expenditures is about 0.8 - meaning we lose about 20% on all government spending initiatives.

There is no multiplier greater than one as Krugman would have you believe, and more over, there is utterly no logical way that there could be in any circumstance. Government gets its money from taxes only to pay off bureaucrats, favored industries, political allies and buddies, not to mention the army of administrators... long before it uses tax money for so-called "productive" purposes like building roads or what-have-you. Besides which, very little of government expenditures go towards that kind of neutral infrastructure anyway. Most of it goes to bombing brown people or straight out wealth transfer.

ALL of this is based on broken window fallacy reasoning... Krugman's favorite. For example on September 14th, 2001, Krugman wrote:
"These aftershocks need not be major. Ghastly as it may seem to say this, the terror attack like the original day of infamy, which brought an end to the Great Depression ? could even do some economic good.

...So the direct economic impact of the attacks will probably not be that bad. And there will, potentially, be two favorable effects.

First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I've already indicated, the destruction isn't big compared with the economy, but rebuilding will generate at least some increase in business spending."
Unfortunately, I'm going to guess that you haven't got the slightest clue why this is such a retarded comment coming from an economist (especially a "nobel prize winner").

So I'd encourage you to read up on the Parable of the Broken Window, and on the essay from which it was taken, "What is Seen and What is Not Seen".

No, I stand by my original claim that Krugman is a f**king idiot. If you'd like to attempt to make an argument on economics that wasn't propagated by a useless hack, then by all means... fire away."
Unfortunately, Krugman is so far out of step with reality - as discussed on this blog time & time again - that it's not really worth the debate. But here I am "having" the debate with people like Jim because they are ultimately comprise the terrifically ignorant throngs who support all sorts of economically destructive policies.

I've spent too much time reading the comments on Paul Krugman blogs, but I encourage you to go over to one of his posts some time and peruse the user-generated content for a few minutes as objectively as you can.

Here's a sample from "Lloyd" on November 23rd, 2008:
"Wow. Tbat’s the kind of insight that clarifies like Patton in WW deuce!

The kind of insight that might get a guy a Nobel Prize.

Go Krugman!

Go!"
Believe me... This is quite typical, if not even a little above par for the level of critical thinking and intelligence found among Krugman's readership. But Jim... Oh boy... Jim gets on board with a ridiculously stupid premise (i.e. economic growth comes out of people buying stuff - with no thought given to where the "stuff" comes from, where the money comes from or what is being bought) right out of the gate, and then he rams is stupidity home with a banal combination of arrogance and unwillingness to even make an attempt at understanding a non-strawman viewpoint.

I can't be sure whether or not Krugman creates these tools, or if they're just drawn to him like a flies to a bugzapper, but my god they are dumb.