"Money goes to business from customers.I was... uh... not impressed, to say the least:
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."
"What in the... Holy god... fail. Jim... That fail was spectacular.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.
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"
"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.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"...
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."
|Shifty-eyed and slow-witted...|
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.Here's Krugman's "proof", a FRED chart of the monetary base (M0) during that time period.
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."
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 Böhm-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 VelocityNow... 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...
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."
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:
- Krugwatch 2009: An Exposed Fraud
- History Lesson: Paul Krugman
- Conscience, What Conscience?
- Paul Krugman's Appeal to Mediocrity
- Krugman PWN3D Again!
- Krugman's Stupid Just Won't End
“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.”Uhh... Oops!
-Paul Krugman, August 2002
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.This actually describes Krugman's bad economics pretty much to a T.
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."
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.Yes. How thoroughly have I been refuted. Jim's genius knows no limitations... Alternatively... Here's my actual response:
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."
"Huh?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.
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.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 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."
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."
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!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.
The kind of insight that might get a guy a Nobel Prize.
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.