04 Feb 2013

Dean Baker Is Not Very Creative

Economics 263 Comments

I’m on the road all week, so blogging will be sparse. Yet I couldn’t let this one go.

In this post, Dean Baker lectures Joe Scarborough for attacking the Obama stimulus package. Baker writes:

The best evidence here is the assessment of the Congressional Budget Office (CBO) from March of 2009. The reason this analysis is useful is that it is a look at what the economy was expected to do and the impact of stimulus at the time it was passed. CBO was looking at the actual stimulus as passed. It also in an independent agency with no motive to cook the books. [sic!]

Here’s the picture that CBO drew compared to what actually happened.

There are two points which should jump out at anyone. First, even as late as March of 2009 CBO hugely underestimated the severity of the downturn. The actual drop in employment from 2008 to 2009 was 5.5 million. The predicted drop was just 3.8 million. In other words, CBO underestimated the initial hit from the downturn by 1.7 million jobs, even after it was already well underway.

If anyone wants to blame the greater severity of the downturn on the stimulus they would have a hard story to tell. Most of the hit was before a dollar of the stimulus was spent. Employment in March of 2009 was 5.4 million before its year ago level. [Bold added.]

It’s one thing for Dean Baker to say he disagrees that the stimulus was what made the economy suddenly get worse than what even the nonpartisan straight-shooters at the CBO saw coming. But to say it’s a “hard story to tell”? Like, he can’t even imagine how one might entertain this notion?!

How about: The government announces a $700 billion stimulus package, and rich people realize their taxes in the future are going to be higher to pay for it? Is that really so crazy that Baker can’t even come up with that theory? That should be the baseline theory, and the burden of proof should be on Baker to explain why people are idiots and think government borrowing money today, won’t have any future consequences.

BTW, I’m not advancing full-blown Ricardian Equivalence. But Baker is doing the opposite mistake.

In case you’re not seeing my point: Suppose the government announced in January 2009, “In 5 months we are going to ban ammunition.” Then ammunition sales go through the roof in the 1st quarter. Would it make sense to say, “It’s hard to even tell a story that the government announcement had anything to do with the ammo sales, since not a single bullet had been confiscated by this point” ?

263 Responses to “Dean Baker Is Not Very Creative”

  1. Keshav Srinivasan says:

    Bob, Krugman has written numerous posts criticizing the notion that private spending offsets temporary government spending, even assuming full Ricardian equivalence. For instance, look at this post:
    krugman.blogs.nytimes.com/2009/04/06/one-more-time/
    “Here’s what we agree on: if consumers have perfect foresight, live forever, have perfect access to capital markets, etc., then they will take into account the expected future burden of taxes to pay for government spending. If the government introduces a new program that will spend $100 billion a year forever, then taxes must ultimately go up by the present-value equivalent of $100 billion forever. Assume that consumers want to reduce consumption by the same amount every year to offset this tax burden; then consumer spending will fall by $100 billion per year to compensate, wiping out any expansionary effect of the government spending.

    But suppose that the increase in government spending is temporary, not permanent — that it will increase spending by $100 billion per year for only 1 or 2 years, not forever. This clearly implies a lower future tax burden than $100 billion a year forever, and therefore implies a fall in consumer spending of less than $100 billion per year. So the spending program IS expansionary in this case, EVEN IF you have full Ricardian equivalence.”

    How would you respond to his argument?

    • Yancey Ward says:

      Not expansionary overall- only for the early years.

  2. Lord Keynes says:

    “The government announces a $700 billion stimulus package, and rich people realize their taxes in the future are going to be higher to pay for it? Is that really so crazy that Baker can’t even come up with that theory? … BTW, I’m not advancing full-blown Ricardian Equivalence.”

    Yes, you are. You are assuming accurate knowledge of the future, and assuming away uncertainty. Utterly embarrassing for a man who claims to be an Austrian economist and who is supposed to take fundamental uncertainty (in the Knightian sense) seriously.

    You are also assuming that all rich people think like deluded New Classicals or Austrians.

    In fact, recent evidence shows that over half of the rich voted Democractic – partly because they think stimulus helps the overall economy even if taxes increase:

    In the aftermath of the 2008 presidential election, exit polls showed that 52 percent of voters who make $250,000 a year or more voted for Barack Obama. …

    In an election in which most voters said the economy was the most important issue, some wealthy individuals who tend to vote with their wallets, saw an Obama presidency as better for their long-term financial interests — and America’s — and were willing to overlook the immediate tax increase that is coming their way.

    http://economix.blogs.nytimes.com/2008/11/11/how-did-rich-people-vote-and-why/

    And as for the really ultra-rich – multimillionaires and billionaires – there is clear evidence that a good proportion of them voted for Obama too:

    http://www.cnbc.com/id/49726054/Obama_Wins_8_of_the_Nationrsquos_10_Wealthiest_Counties

    Maybe it does not enter your mind that a good number of the rich are in fact so rich that they probably don’t care that much about tax increases.

    • Richie says:

      “Maybe it does not enter your mind that a good number of the rich are in fact so rich that they probably don’t care that much about tax increases.”

      I don’t doubt this for a second, mainly because those same ultra-rich are usually tied, in some way, to ultra-rich politicians that give them special political favors or tax loopholes buried deep in some obscure bill that passes.

    • Matt Tanous says:

      “You are assuming accurate knowledge of the future, and assuming away uncertainty.”

      Ridiculous. One does not have to be certain to act upon a belief, and it is a very logical belief to see that taxes might go up in the future if government dumps a bunch of money now.

      “Maybe it does not enter your mind that a good number of the rich are in fact so rich that they probably don’t care that much about tax increases.”

      Right. Marginal utility just doesn’t exist anymore. Once you get to a certain level of rich, your actions are not constrained at all by tax proposals. They could tax your income 100%, and you would still do it just because “Hey, I’m rich!” Utterly absurd, even for you.

    • marris says:

      LK, before you write comments, you should take a deep breadth and (maybe) eat some nachos. While chewing, figure out whether you’re initial, highly emotional reaction missed some real-world subtleties.

      One way in which Bob is not advocating full RE is that he’s not saying that the drop in spending *matches* expected future taxes. It could be some small fraction of the expected tax increase. And what’s this nutty “you’re assuming away uncertainty” ? It’s possible to add uncertainty to what Bob said (as another component of why investment falls).

      And I’m not sure what the voting point is supposed to be. There are plenty of high-income folks (e.g. lawyers, lobbyists) who would be OK with whatever BamBam wants to do. They’ll probably come out ahead.

      BTW, do you have data on small business owner voters? [Just curious, I'm not asking because I think they are a hotbed of Republican or libertarian support.]

    • Major_Freedom says:

      LK, what a ridiculous post, even for you.

      Saying that some rich people may have expected their taxes to go up isn’t the same thing as Ricardian equivalence, because Ricardian equivalence assumes perfect foresight from everyone.

      The presence of uncertainty does not in any way imply that there are absolutely no probability informed decisions that can be made by anyone, which may have a dampening effect on stimulus.

      The way you babble makes it seem like everyone doesn’t change any of their future plans in response to current stimulus. As if people are as empty headed as you and your role models, which of course makes Keynesian management all the more attractive and needed, right?

      52% of rich people voted for Obama. So what? Are you saying the other 48% have absolutely no impact on economic statistics that could dampen the “effectiveness” of stimulus?

      The only reason you’re saying wealthy people don’t care much about taxes is because you don’t want them to care about taxes, you want them to believe it’s their duty to be soaked, you want to believe that taxes don’t much affect their investment behavior. Why? It’s obvious. It’s because you need rich people, you need to have them looted so as to finance your self-interested goals and ends.

      Just total ignorance from top to bottom in yet another emotion-laden rant from LK.

      • Lord Keynes says:

        (1) “The presence of uncertainty does not in any way imply that there are absolutely no probability informed decisions that can be made by anyone, which may have a dampening effect on stimulus.”

        Correct. But there is little evidence for this “dampening effect” on stimulus. If it had any really serious “dampening effect ” then why did the recession end in 2009 and real output growth resume?

        (2) “52% of rich people voted for Obama. So what?”

        It is significant datum. Only an idiot cannot see that this datum undermines Murphy’s argument.

        (3) “Are you saying the other 48% have absolutely no impact on economic statistics that could dampen the “effectiveness” of stimulus?”

        No, I am saying there is very little evidence for it.

        (4) “The only reason you’re saying wealthy people don’t care much about taxes is because you don’t want them to care about taxes,” etc,etc.

        No, it’s because this is a significant datum. Have a tantrum about it if makes you feel better: that a good percentage of the rich don’t think like Austrian fools.

        • Major_Freedom says:

          “But there is little evidence for this “dampening effect” on stimulus.”

          Tell me how you can observe the effect of stimulus turning what could have been a 5% growth at that particular time, into a 3% growth that is observed at that time because of partial dampening.

          “If it had any really serious “dampening effect ” then why did the recession end in 2009 and real output growth resume?”

          What makes you conclude the increase was due to the stimulus, rather than the increase occurring despite the stimulus (where the increase may have been even larger had it not been for the stimulus)?

          You’re arguing from ignorance (not an insult, just my way of saying you’re appealing to an argumentative fallacy). You can’t prove your theory correct by putting the onus on me to explain the growth, and if I can’t explain it in a way that you approve of, that my failure to convince you somehow means your theory is proven right. Your theory can’t be proven right or wrong on that basis.

          Please explain how you know for certain that observing A being followed by B necessarily implies that A caused B, and that B did not occur despite A, and may have been even larger in the absence of A.

          “It is significant datum. Only an idiot cannot see that this datum undermines Murphy’s argument.”

          Again, I don’t much care for your emotion-laden rhetoric or your commentary. I am only concerned with the economics.

          Yes, 52% is significant. But so is 48% That 48% is a large enough number such that partial Ricardian equivalence may have a significant, non-zero effect on the economy. You made it seem like the effect of 52% completely overrules the effect of 48%, and also, you made it seem like even the entire 52% did not “dampeningly” alter their plans because of the stimulus. Just because they voted for Obama, it doesn’t mean they’re friggin robots who welcomed more taxes and did not dampeningly alter their behavior in any way. THAT would be idiotic to believe.

          “No, I am saying there is very little evidence for it.”

          And what evidence are you referring to? I’ve already shown that merely pointing to positive growth is insufficient, because it is possible that the growth may have been even larger without the stimulus, we just couldn’t observe it because we didn’t live in a non-stimulus world at that time.

          “No, it’s because this is a significant datum. Have a tantrum about it if makes you feel better: that a good percentage of the rich don’t think like Austrian fools.”

          It’s not as significant as you think. Remember, only around 40% of the population votes, and out of that, 51-60% determined the victor, which means roughly 21-30% of the population voted for Obama. And, out of those people who voted for Obama, there was probably a positive, non-zero portion who dampeningly altered their behavior because of the stimulus.

          Moreover, if 52% is a “significant datum”, then so is 48%. It’s only an 8% difference (4% x 52%)!

          You’re putting far too much weight on voting between A and B. Voting for Obama doesn’t mean the person is a card carrying tax increase advocate who will not decrease their investments or consumption in some way because of the stimulus. That’s just silly.

          • Lord Keynes says:

            (1) “What makes you conclude the increase was due to the stimulus”

            This idiocy is effectively the equivalent of saying “what makes you say that the increase in G in 2009 in GDP was due to G?”

            It’s quite easy to break down the GDP figures from 2009 to see where the surge came from: the government sector and then to the private sector with the multiplier.

            E.g., Steve Keen has proven actually how it was the government stimulus that allowed Australia to avoid any actual recession when it was slipping into a serious real output collapse in 2008-2009:

            http://www.debtdeflation.com/blogs/2010/08/18/giving-the-bird-to-the-stimulus/

            (2) “That 48% is a large enough number such that partial Ricardian equivalence may have a significant, non-zero effect on the economy.”

            It might have. There is little evidence that it did.

            Certainly the absurd “robotic” Ricardian equivalence view of the rich is false – and a view not dissimilar to the one asserted above by Murphy.

            • Major_Freedom says:

              “This idiocy is effectively the equivalent of saying “what makes you say that the increase in G in 2009 in GDP was due to G?”

              Again, I am not concerned with your emotion-laden rhetoric or your commentary. I am concerned with the economics.

              My question is not like that, because the G in the C+I+G sum MAY be accompanied by one or more of the other variables changing, leading to a change in GDP that you THOUGHT was caused by G, but really wasn’t.

              But you’re ignoring my argument, and choosing to road of insults instead. That just proves to the world you can’t answer the question and you’re getting flustered.

              Again, all I am asking you is how do you KNOW that the increase in economic output was due to stimulus, rather than an alternative explanation, such as the increase occurring DESPITE the stimulus? It shouldn’t be a controversial question. If it’s so easy you should be able to answer it decisively. Why can’t you answer it?

              “It’s quite easy to break down the GDP figures from 2009 to see where the surge came from: the government sector and then to the private sector with the multiplier.”

              How is it easy to see?

              “E.g., Steve Keen has proven actually how it was the government stimulus that allowed Australia to avoid any actual recession when it was slipping into a serious real output collapse in 2008-2009:”

              Ah, so you choose the route of deferral to others, because you can’t do it. You hope that by linking to Keen’s work, I’ll busy myself for enough time so you don’t have to answer my simple question yourself.

              Keen PROVED that stimulus worked? How did he prove it? In your own words please.

              “(2) “That 48% is a large enough number such that partial Ricardian equivalence may have a significant, non-zero effect on the economy.”

              “It might have. There is little evidence that it did.”

              There is just as little evidence of what you’re saying regarding the 52%. You just claimed that 52% is “a significant datum” without a shred of evidence, but then when I said virtually the same thing as you, but using the 48% instead, you claim there is very little evidence off the seat of your pants, as if you actually have full knowledge of all the relevant evidence. You can’t possibly expect me to believe that you have read all the relevant literature on this score.

              Anyway, if you say there is very little evidence of what I proposed, then there is just as little evidence of what you proposed, since the data sets are virtually the same.

              52% isn’t much different from 48%. You can’t possibly claim that there is a cornucopia of evidence from the 52%, but very little from the 48%. We’re talking about a difference of roughly 4% x 40% = 1.6% of the total population (since there is a 4% absolute difference between 52% and 48%. and around 40% of the population votes).

              “Certainly the absurd “robotic” Ricardian equivalence view of the rich is false – and a view not dissimilar to the one asserted above by Murphy.”

              “Not dissimilar”? You just couldn’t say “the same as” could you, because you know it isn’t the same. Murphy did not propose perfect fully informed Ricardian equivalence.

              He just proposed that it isn’t crazy to suggest that rich people adapt their behavior by reduced investment and consumption in the short term, because they expect higher taxes in the long term. He’s not saying they all did, or that everyone did, but that it isn’t something that should be identified as totally out of the question.

              At any rate, the rather large cash holding times that have persisted since the stimulus COULD be in part caused by some of the more sophisticated investors holding onto their money because they expect that their taxes are going to go up, and sure enough, they did go up.

              It is highly likely that a positive non-zero number of people in the economy, many of whom are large scale investors, “dampeningly” altered their plans somewhat after learning of the stimulus. It would be absurd to suggest that nobody did anything differently and are all going to get completely caught off guard with higher future taxes because they had no idea that they would ever go up because of the stimulus they knew took place.

              The whole reason the theory of Ricardian equivalence even arose is because people really do think about how current government spending and borrowing tends to be correlated with higher future taxes. Ricardo came up with the theory because he thought of it, his contemporaries thought of it, we’re now talking about it.

              It can’t possibly be nothing but a figment of people’s imaginations. I myself expected taxes to eventually go up after I learned about all the increased borrowing and spending by the government. I really did choose to cut back on my investments and consumption SOMEWHAT. Are you saying I had no intellectual basis for making this determination? That I just got “lucky” that taxes really did go up?

              Who in their right mind would seriously claim that government stimulus today is totally uncorrelated with people planning for future tax hikes today? It’s lunacy to believe there is zero correlation.

              • Lord Keynes says:

                “Who in their right mind would seriously claim that government stimulus today is totally uncorrelated with people planning for future tax hikes today?

                Again, there was no suggestion that it might never happen.

                What is being asserted is that a majority of rich voted as though they supported stimulus and that is little evidence that of any significant “dampening” caused directly by the stimulus.

              • Major_Freedom says:

                “Again, there was no suggestion that it might never happen.”

                One, what do you mean “again”? You never said anything relating to this before.

                Two, I didn’t say you said there was no way it could happen. I asked that rhetorical question not because I thought you said otherwise, but because it is important not to ignore the fact that people, not everyone of course, really do reduce their current spending on consumption if the government engages in large scale stimulus because they expect a positive probability of increased future taxes.

                There is no observational evidence that can prove this one way or they other, because we cannot observe a counter-factual world where stimulus did not occur at that same time, at that same place, and concerning those same people.

                So it would be wrong to say “there is very little evidence of the dampening effect” and it would also be wrong to say “there is lots of evidence for no dampening effect.”

                What you mean by “evidence” really means by “my theory for understanding the single set of stimulus affected data.”

                “What is being asserted is that a majority of rich voted as though they supported stimulus and that is little evidence that of any significant “dampening” caused directly by the stimulus.”

                No, voting had nothing to do with the argument you were responding to. You brought voting up as if it has anything to do with it. You said that because 52% of eligible (wealthy) voters voted for Obama, that this somehow tells us something about their economic activity in response to a large scale government stimulus, specifically, that 52% of wealthy voters did not reduce their consumption spending because of the stimulus and expecting higher taxes.

                Do you actually believe that if some wealthy businessman votes Democrat, that they are or are not going to reduce their consumption because of the stimulus and behave like you think they should act as supporters of left wing politicians? Don’t make me laugh.

    • Major_Freedom says:

      Also, it is obvious why you accuse Murphy of making a case for full blown Ricardian Equivalence. It’s because you need him to be make that case, so that you can respond and say “Derp! Ricardian Equivalence!!!! Wrong!” so that you can then get a psychological fix believing the opposite must be true, i.e. that stimulus has ONLY positive effects on the statistics you believe are important.

      You want to be at one extreme, and so you need others to be at the opposite extreme, even though they are actually not, which is the case here with Murphy. Facts be damned. You need a radical extremist counter-part to argue with, even if they’re not at that extreme in that way, so that you can justify in your own mind that your extremism is needed.

    • Major_Freedom says:

      And you seem to have avoided responding to these questions/concerns:

      http://consultingbyrpm.com/blog/2013/02/more-on-krugmans-tale-of-two-economics.html#comment-57084

      • Lord Keynes says:

        (1) “Explain why an individual market actor’s “interventions”, e.g. purchasing $10,000 worth of goods, does not turn a “non-ergodic stochastic system” that is the free market into an ontologically different process and outcome”

        Just another decentralised consumption decision in a decentralised market system, in, for example, an economy scuh as the US like the one you think of does not stabilise market systems in the way, say, controlling the Fed funds rate does, or providing unemployment insurance. This is a ludicrous example and question.

        (2) the rest of the comment is based on nothing but a straw man:

        Your link does not address that question of how an initial intervention is to be planned, on the basis of constructions of trends, given that you have stated elsewhere that there are no trends that can be induced from observing past “no Keynesian interventionism” data.

        Since I have never argued that “there are no trends that can be induced from observing [the] past ” in market economies, your prolix nonsense refutes nothing and raises no points of substance.

        • Major_Freedom says:

          “Just another decentralised consumption decision in a decentralised market system, in, for example, an economy scuh as the US like the one you think of does not stabilise market systems in the way, say, controlling the Fed funds rate does, or providing unemployment insurance. This is a ludicrous example and question.”

          As a preliminary, I don’t much care for your emotion-laden rhetoric, nor your commentary. I am more concerned with the economics. I know that’s hard for you to do, but please try.

          Explain why an individual’s decision to spend $1000 on goods is a “centralized” or a “decentralized” decision based on whether that individual happens to be a Keynesian policymaker or a market actor, and also, explain why a Keynesian policymaker spending $1000 on goods has a different fundamental effect on the “non-ergodic, stochastic” nature of the economy as compared to a market actor spending $1000 on goods.

          “Since I have never argued that “there are no trends that can be induced from observing [the] past ” in market economies, your prolix nonsense refutes nothing and raises no points of substance.”

          Again, just to be clear, I don’t much care for your emotion-laden rhetoric nor your commentary. Just the economics.

          You say you never argued that there are no trends that can be induced from observing past market data. Please reconcile that with these comments you made in one of your blogposts:

          “The concept of radical uncertainty applies to such systems, like medium term weather events, financial markets, and economies, and other natural systems studied in physics.”

          and then

          “In these systems, past data is not a useful tool for predicting the future state of the system and the problem of induction is particularly acute.”

          • Major_Freedom says:

            “The system” is NOT a “particular stock price or rate of interest on a specific maturity loan, but the economy as a whole, so you have to explain why you said to me you never said you can’t make trends using market data, given that you said in your blogpost that you can’t make trends of the market “system” using past market data.

          • Lord Keynes says:

            (1) any individual act of private investment or private consumption is obviously one of many decentralised, individual decisions in a market system. No one act per se on the scale you imagine in a large modern economy will affect the overall market system in the way a large-scale government intervention will, such as a central bank rescuing the banking system form collapse by providing liquidity or controlling base rates, or large scale changes in tax policy or spending on a scale able to reduce unemployment. E.g., a central bank’s control of interest rates and policy announcement of its policy for, say, a year does reduce uncertainty.

            (2) “You say you never argued that there are no trends that can be induced from observing past market data. Please reconcile that with these comments you made in one of your blogposts:” etc.

            Because the quotes you cite are referring to specific economic variables in market systems: Its meaning is that you cannot construct an objective probability score for the likelihood of certain specific market outcomes in the future, e.g, the price of certain stock x in 10 years time, the returns on an specific investment 4 years from now, etc, etc.

            That does not exclude identification of general trends or underlying regularities in economic life.

            http://consultingbyrpm.com/blog/2013/02/more-on-krugmans-tale-of-two-economics.html#comment-57058

            http://consultingbyrpm.com/blog/2013/02/more-on-krugmans-tale-of-two-economics.html#comment-57064

            • Major_Freedom says:

              LK:

              “any individual act of private investment or private consumption is obviously one of many decentralised, individual decisions in a market system. No one act per se on the scale you imagine in a large modern economy will affect the overall market system in the way a large-scale government intervention will, such as a central bank rescuing the banking system form collapse by providing liquidity or controlling base rates, or large scale changes in tax policy or spending on a scale able to reduce unemployment. E.g., a central bank’s control of interest rates and policy announcement of its policy for, say, a year does reduce uncertainty.”

              So if it’s the scale that is the decisive factor, then why doesn’t large scale market activity constitute an intervention that turns an otherwise “non-ergodic stochastic system” into a…uh…ergodic non-stochastic system?

              “Because the quotes you cite are referring to specific economic variables in market systems: Its meaning is that you cannot construct an objective probability score for the likelihood of certain specific market outcomes in the future, e.g, the price of certain stock x in 10 years time, the returns on an specific investment 4 years from now, etc, etc.”

              Wait, which quotes that I cited are you referring to here? I cited you saying you can’t construct reliable past data based trends for specific outcomes such as stock returns, and I cited you saying you can’t construct reliable past data trends for aggregated outcomes such as “economies” and “systems”.

              Since now you’re saying “the quotes” I cited are referring to specific outcomes, then I am assuming you are referring to your comments on this blog, where you referred to specific outcomes like stock prices.

              But again, I was asking you about the comments on your blog. I was asking you to reconcile your comments on this blog with your comments on your blog where you wrote:

              “The concept of radical uncertainty applies to such systems, like medium term weather events, financial markets, and economies, and other natural systems studied in physics.”

              and then

              “In these systems, past data is not a useful tool for predicting the future state of the system and the problem of induction is particularly acute.”

              These passages are not about specific outcomes for stocks. Rather, they are for whole economies, systems, etc.

              Can you reconcile these passages of which I bolded some of the words, with your comment on this blog where you said that you CAN construct reliable trends using past market data?

              I am seeing two mutually exclusive sets of arguments. On this blog, you say you can construct reliable trends using past market data. But on your blog, you say you cannot construct reliable trends using past market data.

  3. Daniel Kuehn says:

    Ricardian equivalence kills the chances of long-run stimulus, not short-run stimulus.

    Garrison taught me that even the Austrians think that in the short run fiscal stimulus should increase GDP. I agree with Baker – it is a hard story to tell. I’m not sure how I’d tell it. The reconsideration of the counterfactual is a much easier story to tell.

    • Bob Murphy says:

      Daniel, I would think the baseline Chicago School approach would have this result–that the credible announcement of a policy that would definitely, within the world of the model, “hurt the economy” once it started–would begin “hurting the economy” right away. You disagree with that?

      I.e. it seems Baker is focusing on the timing, not the idea that someone could possibly think a big government stimulus plan might weaken the economy. Do you agree that was his focus?

      • Daniel Kuehn says:

        I didn’t get the impression that timing was the focus of the post, but it’s definitely in there.

        I tend to think that Chicago is fairly sensitive to “long and variable lags”, but maybe not. It seems much easier to make arguments about immediate response in financial markets than in real economies.

    • skylien says:

      “Ricardian equivalence kills the chances of long-run stimulus, not short-run stimulus.”

      Please explain how it kills long-run stimulus but not short-run stimulus.

      “Garrison taught me that even the Austrians think that in the short run fiscal stimulus should increase GDP”

      What is so special in thinking that? Or who doesn’t think that, except people who believe in 100% Ricardian equivalence?

      • Daniel Kuehn says:

        Nothing is special in thinking that – that’s my whole point. That’s why I think Baker is justified in thinking that it would be hard to blame the severity of the crisis on the stimulus.

        Ricardian equivalence works of of a permanent income assumption. We optimize against lifetime wealth, when there is an assumed shock to that wealth (e,g. – higher taxes in the future to cover debt) we change our consumption decisions to account for that lower level of wealth.

        The thing is, assuming a permanent income theory of consumption means that in response to a life-time wealth shock we reduce our consumption at each period by only a little bit, which adds up over our lifetime to cover the reduced wealth level. That means that in the short run we have a big positive stimulus effect and only a small Ricardian equivalence effect. Ricardian equivalence only hurts the case for stimulus as a long-run benefit. Ricardian equivalence forces you to justify stimulus as a business cycle smoothing mechanism rather than an absolute growth mechanism.

        Insofar as we value income smoothing, of course, it could still be a welfare enhancing policy even with full, naive Ricardian equivalence.

        • William B says:

          It really depends on your definition of “severity”. From an Austrian perspective, if the economy isn’t allowed to restructure due to constant stimulus propping up the old structure, then certainly we can blame the slow and difficult recovery (if you can call it a recovery) on the stimulus.

          • Daniel Kuehn says:

            Kind of awkward that the stimulus ended a while ago, don’t you think?

            I find this ABCT line of argument particularly unconvincing. The state will never be doing what they like (or they’ll change their definition of what that is), so they can always play that card.

            Sometimes it gets PARTICULARLY embarrassing. We all know what guys like Tom Woods thinks of Harding I trust, right?

            He did not increase spending, so the economy recovered “quickly” (if you can call an 18 month recovery “quick”!). And yet somehow everybody has a problem with Hoover and thinks Hoover’s measures prolonged the depression.

            Never mind the fact that Hoover’s biggest spending year was lower than the federal budget in 1921!

            So when Hoover spends less than Harding, Hoover is preventing recovery. When Harding spends more than Hoover he’s Woods’s favorite president of the twentieth century and he ushered in a quick recovery.

            It’s nonsense. Federal policy has a lot less of an impact on the economy than people think. The best we can hope for is (1.) prevent the bottom from falling out, and (2.) improve the situation relative to the counterfactual. I don’t think a quick recovery was ever in the cards – not if you put Krugman in charge, not if you put Sumner in charge, not if you put Murphy and Woods in charge.

            • The Narrator says:

              very interesting.

            • Major_Freedom says:

              “I find this ABCT line of argument particularly unconvincing. The state will never be doing what they like (or they’ll change their definition of what that is), so they can always play that card.”

              You just explained pretty much why Austrians find Keynesianism unconvincing. If the economy improves, stimulus worked. If it doesn’t, not enough stimulus.

              Keynesians are always playing that card, even after making bad predictions. “Oh my, the economy is worse than we thought!” versus “See that? See how powerful just a little stimulus can be? The multiplier had to be in double digits on that one!”

            • guest says:

              In 1921, the government was spending less than what came in:

              1921 Federal Budget vs 1932 Federal Budget
              http://federal-budget.findthedata.org/compare/23-34/1921-vs-1932


              Year || 1921 || 1932
              U.S. President || W. G. Harding & W. Wilson || H. Hoover
              GDP ($) || – || 67600000000
              Total Receipts ($) || 5,571,000,000 || 1,924,000,000
              Total Receipts as % of GDP || – || 2.80%
              Total Outlays ($) || 5,062,000,000 || 4,659,000,000
              Total Outlays as % of GDP || – || 6.90%
              Total Surplus Or Deficit ($) || 509,000,000 || -2,735,000,000
              Total Surplus or Deficit as % of GDP || – || -4%

              Source: The White House Office of Management and Budget

        • skylien says:

          I would blame the severity of this crisis not on the current stimulus but on the stimulus done after the DotCom crisis.

          The current stimulus rather will cause a new crisis later, which is not here yet. The current stimulus though may prolong the depressed economy if it fails to convince the people that all is well and fine…

          Regarding R.E.: Ok if you assume that while people will smooth out their decrease in spending until the government finally will increase the taxes say ten years later, yet government will blow all the stimulus in a short time say within the first year after issuing the bond, then you are right. However then you have after the stimulus is blown, less demand than you otherwise would have, which is ‘anti-stimulus’.

          Net-stimulus aggregated over 10 years is still zero. So how would you know that the first stimulus somehow ignites more production than the anti-stimulus kills the other 9 years?

          Or I rather guess your position with 100% R.E. there only can be a false short boom that finally is killed by R.E.,right ?

          • skylien says:

            “Nothing is special in thinking that – that’s my whole point. ”

            Ok, then I misread you there. Sorry.

          • Daniel Kuehn says:

            re: “However then you have after the stimulus is blown, less demand than you otherwise would have, which is ‘anti-stimulus’.”

            Right.

            re: “Net-stimulus aggregated over 10 years is still zero.”

            Yes – IF you believe strict Ricardian equivalence. We probably shouldn’t be so firm on that, but it’s a good first approximation.

            re:“So how would you know that the first stimulus somehow ignites more production than the anti-stimulus kills the other 9 years?”

            Well in an idealized Ricardian equivalence world they should be the same. But since we know there’s slack in the stimulus years and Ricardian equivalence probably doesn’t perfectly hold you’re probably OK on this. But even if we assume strict Ricardian equivalence in a naive world with no slack, this is still likely a good policy if for no other reason than that we have concave preferences. We prefer a modest amount of income in year 1 and a modest amount of income in year 10 to a little income in year 1 and a lot of income in year 10, even if the present value of that stream of income is the same.

            re: “Or I rather guess your position with 100% R.E. there only can be a false short boom that finally is killed by R.E.,right ?”

            No, I would not use those words.

            • skylien says:

              “No, I would not use those words.”

              Well what do you mean then exactly with this:
              “Ricardian equivalence kills the chances of long-run stimulus, not short-run stimulus.”

              And lets just assume for the sake of the argument 100% R.E. It is not what I believe to exist but I want to find common ground we agree on to build from that..

        • Transformer says:

          I think Bob’s point is that contrary to Baker’s statement it is not too hard to find a story that would explain how expectations of stimulus may cause employment levels to decline.

          Expectations that the stimulus would prevent a correction in real wages and increase future taxes may lead business to cut back on investment in the short term and cause a decrease in employment.

          I do not believe that this is what happened but the point is that it is not hard to find a logically consistent story that connects the stimulus to the decline in employment.

          • Daniel Kuehn says:

            You find that more logically consistent than I do. See Ricardian-equivalence-does-not-invalidate-stimulus discussion.

            I think it’s a really hard case to make no matter what position you’re coming from.

            You have to believe that a dollar of federal spending crowds out more than a dollar of private spending (presumably due to inefficiencies?). I think Baker is right that that is a REALLY hard argument to make no matter what perspective you’re coming from.

            The best you could hope for is arguing that it did nothing.

            The second best you could hope for is that it did something but it’ll come back to bite us in the ass later.

            It is very hard to make anything resembling a convincing argument that it hurt. I can’t think of one. I don’t think you’ve offered one.

            • Transformer says:

              Baker makes the point that “Most of the hit was before a dollar of the stimulus was spent”

              so if expectations cause investment to take a hit BEFORE stimulus even starts then the crowding out argument doesn’t apply.

              Even after the stimulus starts one could have a model where (say) the stimulus causes 1m jobs to be created, but leads (because of concerns over future govt debt levels for example) animal spirits to dampen so that private investment drops and 1.2m jobs are lost.

              • Daniel Kuehn says:

                It seems like it would be an odd model indeed that would have contemporaneous dampening of private investment exceeding the benefits of stimulus by 20%.

                But if it’s easy perhaps you could lay it out. That seems hard for me to conceive of.

                Remember – future debt levels are associated with the funds appropriated for stimulus (so, about 1 million jobs worth in your example). Anything resembling a PIH is going to spread out that negative hit over a long period of time (and that’s even if you believe in strict RE). So you’re already spreading the negative impact of the 1 million jobs worth of future taxes pretty thin. But you’re proposing that it would EXCEED a cost of 1.2 million jobs lost in the current period?

                That would imply that a dollar of federal spending scares the crap out of many multiples more in private spending so that it would lead to a contemporaneous loss of 20% more.

                The less you believe in Ricardian equivalence, the less senses it makes.

                And it already started out making no sense.

                Baker is right. It’s very hard to explain how stimulus caused the unexpected severity of the recession. It’s hard if you’re an Austrian. It’s hard if you’re a fundamentalist Ricardian equivalentist rational expectationist.

                I can’t personally figure out what the argument would even look like. You’d have to invoke things well beyond stimulus (like expectations of Obama fascists nationalizing production). True, some people are worried about that sort of thing – but you’d have to make a case that investors are equally paranoid.

              • Transformer says:

                As I said above I don’t believe that expectations of the stimulus caused unemployment to rise in 2009 However I think your are overstating the case to say that a model that did show this is inconceivable.

                A proposed stimulus of $700B could conceivably have spooked business sufficiently that the stimulus has a net negative effect on employment. To deny this possibility seems to be assuming that Keynesian models are correct without having to bother proving that the assumptions they are bases upon are valid.

              • Daniel Kuehn says:

                re: “To deny this possibility seems to be assuming that Keynesian models are correct without having to bother proving that the assumptions they are bases upon are valid.”

                NO – this is why I’ve been making a point of highlighting that new clasiscal Chicago thinking and Austrian thinking also draw this sort of conclusion.

                If you think it’s so easy, then give me the model.

                Just saying “you could conceive of a $700 B stimulus causing a net fall in employment” does not provide a model whereby $700 B stimulus could cause a net fall in employment.

                Come on – if you it’s so easy explain it for me.

                Stimulus critics have a few arguments at their disposal:

                - Ricardian Equivalence (Chicago/New Classical)

                - Prevention of readjustment (Austrian)

                - Crowding out (Neoclassical with a full employment assumption.

                The first two WILL NOT get you a stimulus that makes the recession more severe. The third would but it’s highly implausible. I don’t know anybody that thinks resources are fully employed right now. And if you want to choose that one for your model then I would agree with Baker’s characterization of that as a “hard story to tell”.

                You have to go well beyond talking about stimulus to say that the government made the recession more sever than we thought it would be in January-March 2009.

              • Transformer says:

                A $700B stimulus would cause a huge degree of uncertainty

                Uncertainty about the future will cause the demand for labor curve to shift to the left, and with sticky wages this will cause unemployment to rise.

                Some of the stimulus money was spent on “safety net” programs that caused the supply of labor also to move to the left. . Again this would cause unemployment to rise more.

                Put these things together and there is your model.

                $700B is a huge some of money. It should have covered the cost of many millions of jobs being “created” even before one takes into account the alleged multiplier.

                The fact that AARA co-coincided with an increase in unemployment surely should cause Keynesians to be looking more carefully at their model – rather than just rejecting any alternative model as “inconceivable” and concluding that the stimulus just wasn’t big enough.

    • William B says:

      How could fiscal stimulus NOT increase GDP in the short run? GDP includes government spending in the measurement…

    • Major_Freedom says:

      Partial Ricardian equivalence (meaning only some people change their existing behavior, using only imperfect foresight, etc) dampens the effect of short run stimulus.

      Maybe each stimulus has…gasp!…different degrees of partial Ricardian equivalence dampening. Maybe the $700 billion stimulus had particularly acute partial Ricardian equivalence dampening, whereas other, less well known and publicized stimulus programs (pork projects, etc) have less acute dampening.

      There seems to be too much oversimplification in this topic.

      • Lord Keynes says:

        “Maybe the $700 billion stimulus had particularly acute partial Ricardian equivalence dampening,”

        And yet the recession ended and real output growth resumed in 2009.

        No doubt that had nothing to with countercyclical fiscal policy!

        • Dan says:

          If the recession ended, then why are DK and PK saying we are still in a depression.

          • Daniel Kuehn says:

            Same reason why we were in a depression but not a recession after ’33.

          • Daniel Kuehn says:

            Depression is certainly a squishy, subjective word.

            But one thing it is definitely not is a synonym for “recession”.

            • Major_Freedom says:

              “The Great Recession is more than four years old—and counting.”

              Found in book description for this book.

              Krugman seems to agree we’ve not left recession.

              • Daniel Kuehn says:

                Well “the Great Recession” is the name for the whole episode.

                This is stupid. “Recession” is a shrinking economy. You’re bringing up a proper noun to make an argument about a technical term.

              • Major_Freedom says:

                Hey, I’m just the messenger. Don’t hate me for showing you that Krugman is using the term recession to characterize the current economy.

                What’s stupid is how you’re trying to pin this on me, as if I am actually making an argument by citing Krugman.

              • Daniel Kuehn says:

                He’s using a proper noun that is widely used by people to describe the situation we’re in. I’ve used it in that way too.

                That’s not how you’re using it.

              • Lord Keynes says:

                “Hey, I’m just the messenger. Don’t hate me for showing you that Krugman is using the term recession to characterize the current economy.”

                No, you’re just too stupid or, more likely, too dishonest to admit that a word can be used in more than one sense:

                (1) technical sense of real output contraction.

                (2) a more popular sense of aftermath of a real output collapse where unemployment is still high.

              • Major_Freedom says:

                Or, you can’t stand it that you have to explain away Krugman’s butchering of the English language, to save face, and you do that by psychologically projecting your feeling like an idiot onto me.

              • Lord Keynes says:

                Since M_F has also used “depression” in the sense of the aftermath of a real output collapse where unemployment is high (but where real output growth has resumed), as, e.g., the 1933-1939 period, he must also be a guilty “butchering of the English language”.

                Or just an Idiot.

              • Joseph Fetz says:

                Here we go again. I know that most economist love to look to GDP to place a “recession”, but ultimately the words depression and recession mean the same thing, the terminology changed. However, in my own definition, both words simply mean shitty economy. You can certainly have GDP rise for many reason (e.g. money printing), yet still have a completely crappy economy. This is why I don’t put too much emphasis on GDP, because I don’t believe that it gives us any conclusive answers as to the state of the economy.

              • Lord Keynes says:

                ” You can certainly have GDP rise for many reason (e.g. money printing” etc.

                No, QE in which the Fed simply buys assets and banks park their excess reserves at the Fed does not increase GDP per se.

                And curiously the only Austrian measures of real output ever devised are just GDP with G stripped out (Rothbard’s Gross Private Product), or GDP plus intermediate input (Mark Skousen’s “Gross Output”).

                http://socialdemocracy21stcentury.blogspot.com/2012/01/austrian-substitutes-for-gdp-they-are.html

              • Major_Freedom says:

                LK:

                “Since M_F has also used “depression” in the sense of the aftermath of a real output collapse where unemployment is high (but where real output growth has resumed) as, e.g., the 1933-1939 period, he must also be a guilty “butchering of the English language”.

                Nice try, except I don’t consider 1933-1939 as a time where real output growth had resumed. I don’t define government goosed statistics as real recovery.

                If I really did consider that time period as real recovery, then you can fault me for butchering the English language in calling it a depression.

                If I agree with you that depression is related to falling real output, but I disagree with you as to when real output is falling or not, then you can’t say I am butchering the meaning of depression.

                “Joe: You can certainly have GDP rise for many reason (e.g. money printing” etc.”

                “No, QE in which the Fed simply buys assets and banks park their excess reserves at the Fed does not increase GDP per se.”

                That isn’t the sole meaning of printing money. Joe obviously meant a situation where printed money is SPENT.

            • Lord Keynes says:

              Daniel,

              Right.

              Krugman and others are using “depression” in the sense of the aftermath of bad real output collapse where there is still a high level of unemployment and other underlying economic problems (e.g., private debt crisis, banking problems) .

              • Major_Freedom says:

                Hilarious that you are totally fine with Krugman “redefining” terms like that.

                I recall you having a near meltdown insisting on holding fast to only certain definitions for recession (one of your blog posts way back when).

              • Lord Keynes says:

                He’s not refining terms – as you yourself admit above, fool.

                And as for the previous debate we had, that reinforces my point:

                Recession/depression can be used in more than one sense:

                (1) technical sense of real output contraction.

                (2) a more popular sense of aftermath of a real output collapse where unemployment is still high.

              • Tex Avery says:

                Lord Keynes has done plenty of good exposing the hackwork of Major_Freedom. I have come to the conclusion that Austrian economics is nothing but a fraud so you people can peddle your gold products. LK gets 20 points just for that slam dunk post alone. Admit defeat now.

              • guest says:

                I have come to the conclusion that Austrian economics is nothing but a fraud so you people can peddle your gold products.

                It’s the “paper gold” products you need to worry about, rather than physical gold.

                These may interest you:

                Manipulation of the Gold Price
                http://lewrockwell.com/thomas-jeff/thomas-jeff10.1.html

                The manipulation is made possible due to the fact that what has been sold does not exist. The regularity of manipulation is unlimited, as the bank is only buying a fraction of the gold it sells. As long as the bank’s clients are willing to invest in “paper” gold, the price may always be driven down, due to new “sales.”

                Of course, this charade cannot go on forever. Eventually, the buyers realise what is being done and will then demand delivery of their gold. This will bring about two major events: a crash in the paper gold market and a dramatic increase in the price of physical gold.

                Peter Schiff was Right: Goldline – The Peter Schiff Show
                http://www.youtube.com/watch?v=5gkq9hfjql4

          • Ken B says:

            The election is past?

            • Major_Freedom says:

              I don’t much appreciate your posts, but this one was something I liked.

              • Ken B says:

                We agree MF, you don’t appreciate my posts!

                English; so many traps for the unwary!

              • Major_Freedom says:

                Guess we can add reading comprehension to your list of skills you got from the back of cereal boxes.

                I said I don’t much appreciate your posts, Ken. I’ll leave it to you to parse out what is excluded and what is included in that comment.

        • Major_Freedom says:

          Uh LK, do I really have to point out to you that post hoc ergo propter hoc is a logical fallacy?

          The recovery could have been LARGER had the stimulus NOT taken place, a stimulus which may have put a dampening on activity through partial Ricardian equivalence.

          You can’t just point to the growth and say partial Ricardian equivalence did not take place. It may have taken place, in the sense that instead of 5% growth, we had “only” 3% growth or whatever.

          Also, to echo the other response, if the recession ended in 2009, then why has Krugman been saying “End This Depression Now!” since 2012, and that “the great recession is more than 4 years old”?

          • Lord Keynes says:

            “The recovery could have been LARGER had the stimulus NOT taken place…,”

            Cite me one example of a nation affected by the great recession that undertook no stimulus where real output growth resumed quickly after a severe recession. Any empirical evidence to back up this lazy claim that zero fiscal intervention led to a quick recovery better than way the US recovered in 2009?

            • Major_Freedom says:

              You’re dodging the argument being presented to you.

              You can’t possibly challenge my argument by demanding that I utilize the very same principle that you used of which I challenged!

              “Cite me one example of a nation affected by the great recession that undertook no stimulus where real output growth resumed quickly after a severe recession. ”

              First, as alluded to above, even if there were countries that showed growth after no stimulus, these would not constitute proof that no stimulus makes growth larger either.

              For then it could be that a presence of stimulus would otherwise have made that growth even larger, it’s just that we can’t see it because the world was a no stimulus one.

              The market is a non-ergodic, stochastic system, LK. It doesn’t always respond in the way you think it does with spending $X.

              Second, if I don’t even accept the notion that observing growth after no stimulus does not prove that a lack of stimulus caused the growth, then it would be absurd to demand that I accept that the notion that observing growth after stimulus proves that stimulus causes growth.

              “Any empirical evidence to back up this lazy claim that zero fiscal intervention led to a quick recovery better than way the US recovered in 2009?”

              What I am saying isn’t lazy. What you are saying is lazy. It takes extreme laziness to conclude that B following A implies A caused B.

              It takes unlazy thinking to understand that observing the economy going from A to B after stimulus S doesn’t necessarily imply that stimulus S had a positive rather than a negative effect.

              It also takes unlazy thinking to understand that observing the economy going from A to B after no stimulus S doesn’t necessarily imply that no stimulus had a positive effect rather than a negative effect.

              • Lord Keynes says:

                In other words zero empirical evidence for the scenario required for your own arguments.

                No surprises there.

              • Dan says:

                “In other words zero empirical evidence for the scenario required for your own arguments.
                No surprises there.”

                With responses like this, I’m really not sure why anyone wastes their time responding to King Keynes.

                Well, now that I just wrote that I realized there is the fact that responding to him causes him to lose all credibility for having intellectual honesty when he responds back. But that seems like such a small prize considering people can just read his previous comments to see that.

          • Tex Avery says:

            Major_Freedom, all LK is asking from you is empirical evidence to your claim. Provide some GDP numbers or something. It’s not that hard. Even a 5th grader can do it.

            • Dan says:

              You are either as intellectually dishonest as LK, or the point of MF’s comment went straight over your head. And if it went over your head then that is sad because he further clarified his point in the next comment.

              • Tex Avery says:

                All I saw was a bunch of rambling. No data.

                Try again and don’t give me any rants about the “gold standard.” Like the economy will be better if currency was “backed up” by a commodity. Austrian economics is a scam so the plutocrat bankers can take gold away from the people. Social democracy will win in the end.

                Keep trying, angry right-wing crazies.

              • Dan says:

                Oh, sorry, I didn’t realize there is no chance at all of having a rational discussion with you. Don’t worry, though, I won’t make the mistake again.

              • Tex Avery says:

                It’s only “irrational” when someone doesn’t buy your brand of libertarian anarchism or whatever the hell you call it. Libertarianism is a cult, pure and simple.

              • guest says:

                Like the economy will be better if currency was “backed up” by a commodity.

                We don’t want paper that is backed up by a commodity;

                We want to use commodities, themselves, as money.

                Why the Greenbackers Are Wrong
                http://www.tomwoods.com/blog/why-the-greenbackers-are-wrong/

                No Phony Gold Standards
                http://www.tomwoods.com/blog/no-phony-gold-standards/

            • Anonymous says:

              Do you fools not realize M_F is making a logical argument, not an empirical one?

  4. Ken B says:

    Hmmm, Bob’s bullet analogy. Not bad! Actually, excellent.

    It’s like say a man is elected president on a platform that involves stopping the spread of slavery, and then some slave states decide they want to secede, and someone arguing that “Of course the decision had nothing to do with slavery. Why that man was not even inaugurated when it started.”

    • Dan says:

      Man, you really love that sociopath Lincoln.

      • Major_Freedom says:

        Ken loves Lincoln because Lincoln didn’t arrogate himself to any “purity test” that would have discouraged him from bringing about the deaths of almost 600,000 people, defenseless women and children included.

        He was “cool” in that way. Feared, so less likely to be made fun of. Ken B pokes fun at Murphy all the time because Murphy, the pacifist, ISN’T a Lincoln type.

        How’s this for irony? If Murphy acted like Ken B’s hero, Ken B would probably be dead, or enslaved, if it meant Murphy could prevent Ken B from declaring political independence from Murphy.

        • Dan says:

          It just gives me the willies seeing someone who has heard of all the horrible things Lincoln did and said, but still idolize that monster.

          • Major_Freedom says:

            Blame parents, teachers, books, movies, and other pop cultural influences that have actually succeeded in convincing impressionable people like Ken B of what kind of a person Lincoln was.

            Ultimately, I think it is the fault of bad philosophy (Hegelianism, Marxism, irrationalism, etc) corrupting the field of historical research, which has lead many historians to conclude what a marvelous person Lincoln was, and that filtered throughout the population, finally getting to Ken B’s eyes and ears, and he lapped it up.

            Good thing we have folks like DiLorenzo unmasking the lies and myths. The fact they’re reviled is all the more suggestive that they’re right and upsetting the paradigm of Lincoln worship.

            Just the other day I had to let my mom down by explaining who Lincoln really was. She just saw the movie that came out and was bloviating on how wonderful of a man he was. Guess she just needed a hero. But the hero has got to be honest. Oh what am I saying. She just loves stories and feeling good.

            • Jason B says:

              MF, here is a list:

              1)Imprisoned vocal oppositioners
              2)Deported political foes
              3)Waged war on his fellow countryman
              4)Instituted military conscription
              5)Institutionalized Tax Bureaucracy and massive money printing

              If one asked, “what head of state performed these atrocities?” you could easily answer “Stalin” or “Hitler” and no American would think you’re crazy because they would agree. But if you answer “Lincoln” you’re all of a sudden an unstable lunatic who should be verbally marginalized and denounced as a conspiracy nut or a neo-confederate.

            • Dan says:

              I get why people initially like Lincoln. For the first 25 or 26 years of my life I was a diehard Clinton loving liberal. I thought Lincoln was one of the few great republicans back then. I wasn’t even aware of the terrible things he did and said.

              What I don’t understand, at least not completely, is how people can still admire the guy after they learn the truth about him. It wasn’t easy for me to go from liberal to libertarian, but it was pretty easy to give up on people like Clinton and Lincoln once I learned about all the innocent blood on their hands.

              Thankfully, I’ve found that most people quickly abandon Lincoln once they know what he did. In fact, the majority of my co-workers and acquaintances that I’ve brought to libertarianism were started down that path by The Real Lincoln. Whenever I give out that book people tend to finish it and come back for more. I was able to convince one co-worker to become an ancap just from Chaos Theory, though.

              • Major_Freedom says:

                “What I don’t understand, at least not completely, is how people can still admire the guy after they learn the truth about him.”

                Cognitive dissonance.

                Same reason many liberals still love Obama, and why many conservatives still loved Bush, even after they learned of the horrible things their hero did.

      • Ken B says:

        You guys are funny. I make a remark about the canting hypocrisy of Southern apologists and you fulminate on Lincoln. Lincoln could be even worse than you imagine him to be and it’s still bullshit to pretend that secession wasn’t fundamentally baout slavery.

        • K.P. says:

          Is it really bullshit to say that the causes of the war were very complicated? I mean, that generally seems to be the case with most other wars.

          • Ken B says:

            It’s bullshit to say it wasn’t about slavery just because it wasn’t nothing is ever about one thing. It’s bullshit to say the Holocaust wasn’t about anti-semitism just because it was also about theft.

            • Ken B says:

              Deletion failure . Delete second ‘it wasn’t’

            • K.P. says:

              Then I’m confused, as I’m not familiar with any Southern apologist who completely dismisses the role of slavery. Most I know (myself included) say it was about several things, and the importance of which varies by state/region. Perhaps we’re just reading/listening to the wrong people though.

              But saying something was “about X” and leaving it at that, comes off as misleading and disingenous if you acknowledge that it was also about Y and Z.

              • Ken B says:

                Then you need to read some old FA threads.

                Just kidding, I wouldn’t wish that on anyone, but if you hunt back you’ll find comments and links on point.

              • K.P. says:

                I’ll take your word for it but Dan (below) raises an objection

        • Dan says:

          Yeah, but considering you are talking to a bunch of anarchists who hate all governments your comments are just ridiculous. I can’t think of something more ignorant than to call an anarchist an apologist for any State. Some of the things you like to attack us about make me question whether you even have a basic understanding of our views.

          • Ken B says:

            No Dan (& KP) you are assuming said anarchists are models of consistency. Pull the other one.

            Plus of course many have a natural tendency to cheer for the guy who is on your side in the current fight, enenmy of my enemy is my firend, and leave the differences for later. I applaud some of Gene’s contributions here for instance, and he some of mine. In general though we sharply disagree on most stuff.

            Just read the stuff and see if you don’t find apologetics or excuses.

            • Tex Avery says:

              Thanks for exposing the racism and hatred of black people from these idiotic right-wing fools. These anarchists are just Republicans in sheep’s clothing. Four more years of Obama, people. Get over it.

            • K.P. says:

              Now I’m really confused, while I’ve never seen anyone here defend slavery, what’s wrong with defending a position?

              • Tex Avery says:

                Tom DiLorenzo sounds like a propagandist for the extreme right-wing Lew Rockwell smear machine and you have drank the Kool-Aid. This is why your pseudo economics will never be taken seriously in current governments. Gold prices have been stagnating for weeks. What does that say about Austrian economics?

              • Ken B says:

                If this is addressed to me you are changing what I said. I said there were *apologists*. That’s not the same thing.

                Apologists fall into two broad types: those minimizing a fact, and those using esoteric speech to avoid saying something imprudent.

              • K.P. says:

                You just said “apologetics” – which is the same thing. I really can’t see anything necessarily wrong with apologetics.

              • Tex Avery says:

                I wasn’t addressing the comment at you, Ken, and I would completely agree with you too. I’m just frustrated at how this Austrian nonsense is being passed off as real economics. Koch Brothers have bought out much of the libertarian movement. They are just as corporatist as the Republicans, so that’s why I brand them as such.

              • K.P. says:

                Tex,

                Are you saying the libertarian movement associated with Lew Rockwell and Co. have been bought out by the Koch’s?

              • Ken B says:

                KP, you don’t see anything hypocritical about apologetics to deny or minimize slavery as a motivation for secession, from those lauding secession as standing up to tyranny?

                As another example, you wouldn’t see anything hypocritical about someone defending FDR as a pillar of anti-racism while simultaneously denying there was any racial prejudice at all behind the internments?

              • Tex Avery says:

                Look up the Cato Institute and Murray Rothbard’s involvement in the beginning. The libertarian movement is tainted.

                I am a proud supporter of the Democratic Party and a social democrat.

              • K.P. says:

                Oh, no, Ken, I certainly do.

                However, that doesn’t necessarily negate it’s usefulness, rightfulness, or legality altogether.

              • K.P. says:

                Tex,

                Why was he only there at the beginning?

            • Dan says:

              Ken, I’ve been reading the stuff on this site for a lot longer than you’ve been commenting here. That is why I think your position is asinine. Sure, there are libertarians who make incorrect arguments about the civil war and other issues, but you like to throw Dr. Murphy, and all the rest of us in with the lot of a few. The vast majority of libertarians coming here are nothing like the BS you try to paint us as.

              See, you like to think of yourself as this expert on every issue under the sun, but all I see is someone who nine times out of ten can’t even accurately explain the position of his opponents. You’re aren’t as bad as this Tex Mex guy, but your understanding and pronouncements about what libertarians believe tends to leave a lot to be desired.

              • Ken B says:

                Dan, please indicate where I named you, or Murphy in this matter.

                You just admitted there are libertarians who match what I am criticizing, and I didn’t even specify Libertarians.I criticized the apologists, which is not the same as all libertarians. It’s a criticism of the few. You are conflating me with Tex Avery.

                You lecture on understanding the other guy and read my comment as a paen to Lincoln.

              • Tex Avery says:

                Thank you for the compliment Dan and exposing yourself as a libertarian fool.

                Ken B, are you trying to insult me or something. I clearly stated that I’m an anti-plutocratic social democrat. I’m also a huge fan of the blog that Lord Keynes writes and was trying to defend him.

              • Richie says:

                “See, you like to think of yourself as this expert on every issue under the sun, but all I see is someone who nine times out of ten can’t even accurately explain the position of his opponents.”

                He also tries to be a comedian, but falls flat on his face.

              • Dan says:

                Ken, let’s not play games. Your first comment was a dig at Dr. Murphy. You constantly take digs at libertarians about the civil war and slavery. In fact, when I just pointed out that it was absurd to call a bunch of anarchists apologists for any State, you simply said we weren’t all consistent. You didn’t deny that your dig was at us, you reinforced it.

                If it makes you feel better to pretend your snide ass comments are directed at some unnamed commenters here that aren’t libertarian, fine. But don’t expect us to swallow that line of crap.

                Heck, if your snide remark wasn’t directed at libertarians that comment on this site, then why don’t you enlighten us as to who you were referring to. Not the unnamed apologists, but the actual commenters who are guilty of being apologists for the south.

                Otherwise give it a rest. I think we are all tired of your BS attempts to paint people as defenders of slavery. You might find it funny, but I find it extremely distasteful.

              • Ken B says:

                No Dan, my comment was a dig but not at Bob Murphy. It was a dig at some of the commenters, I forget who, who went all weak in the knees at the thought of the confederacy.And one or two well known commenters whose name I need not mention but which are not spelt Murphy.

              • Dan says:

                No, Ken, they do need to be mentioned. You keep bringing slavery and the Civil War into these posts that have nothing to do with it. Let’s see who these unnamed commenters are supposed to be. A couple of them are apparently well known, so you can at least start there.

                Let’s settle this nonsense. That way when you want to make a snide comment about slavery or the Civil War it won’t be written in such a way that people misinterpret it to be a swipe at Dr. Murphy and libertarians.

                I mean, you have no problem attacking Dr. Murphy specifically on plenty of issues. Same goes for MF, Callahan, etc., but when it comes to your attacks of “apologists” of the South you suddenly become very vague on who is supposed to be guilty of this charge. Why is that? Do you not want the accused to be able to defend themselves from your absurd charge?

              • Ken B says:

                OK Dan. DiLorenzo, and I think also Tom Woods. Some of their acolytes here too, but as I said I cannot remember exactly which. Not MF. Not Murphy.

              • Dan says:

                Well, now that I know the people you believe are apologists of the South I’ll give my response in defense of them.

                Considering you are talking about a bunch of anarchists who hate all governments your comment is just ridiculous. I can’t think of something more ignorant than to call an anarchist an apologist for any State. Some of the things you like to attack us about make me question whether you even have a basic understanding of our views. Check that, considering you are calling Dr. Woods and Dr. Dilorenzo apologists for the South, I know you don’t have even a basic understanding of our views.

          • Tex Avery says:

            He obviously got into a dispute with Ed Koch and then left and created the cultish Mises Institute, which has left a heavy scar on economic discussions. That’s why Paul Krugman won’t debate Bob Murphy. There would be nothing to be gained. He has bigger fish to fry like the monetarists.

            • K.P. says:

              It seems like bringing up the Koch’s is out of place then.

            • Tex Avery says:

              Not really. The Koch Brothers are still a very powerful presence within the libertarian movement. FreedomWorks and the Heritage Foundation are in on the scam too. Goldbugs are profiting from scamming people into buying gold and silver. Glenn Beck included.

              • K.P. says:

                So what? All you hear around Rockwell quarters is scathing indignation of the Koch’s and related acts.

                You’re preaching to the choir, so to speak.

              • Tex Avery says:

                Explain this article.

                http://www.bloomberg.com/news/2013-02-06/natixis-sees-industrial-metals-climbing-as-gold-begins-decline.html

                Libertarianism is truly an asinine political philosophy bent on scamming the people.

              • K.P. says:

                That has 0 to do with the political philosophy of libertarianism, or the Kock/Rockwell relation, or anything we’ve been talking about.

              • Tex Avery says:

                But I’ve heard ideologues like Tom Woods whine about the gold standard. Gold prices are on the decline. I suspect that certain people are using libertarianism as a way to advance corporate interests.

              • Richie says:

                If you’re going to troll, at least be original. Is that too much to ask?

              • Tex Avery says:

                Richie, this is what I really believe and I wanted to have a forum to defend my positions. How is that trolling?

              • Jason B says:

                “How is that trolling?”

                You don’t even know you’re trolling !?!?!? I think we’re done here.

              • Ken B says:

                ” Is that too much to ask?”

                Apparently.

              • K.P. says:

                Tex,

                The current price of gold has nothing to do with the Gold Standard.

                Gold stock being down for a month says nothing about the long-term.

                And people may be using libertarianism to advance corporate interests, but that may also be true (and absolutely is) of socialism, social democratism, and the Democratic party.

              • Tex Avery says:

                I agree wholeheartedly, Ken. The comments here are almost as bad as the ones on Mike Norman’s YouTube videos, particularly the Schiff defenders.

              • Tex Avery says:

                That may be true, K.P. I am also opposed to corporatism in other political parties, but I am not the only one who has doubts about the validity of gold commodity prices. Lauren Lyster of Capital Account asked Peter Schiff the same thing.

              • K.P. says:

                Tex,

                You don’t have to use or buy gold if you don’t want to – at least if libertarians had their way.

              • Tex Avery says:

                That also means a fiat money system or fractional reserve system can be established in this libertarian society, yes?

              • K.P. says:

                Totally.

              • guest says:

                … gold prices will start to decline on mounting confidence the global economy is recovering, Natixis Commodity Markets Ltd. said.

                … the Federal Reserve signaled it will maintain its stimulus program to sustain a recovery.

                The economy is not recovering. It’s an illusion created by new Fed notes:

                Dow at 14,000? Not a Big Deal
                http://www.youtube.com/watch?v=8N2wLJnUKOQ

  5. Adrian Gabriel says:

    According to the numbers for all previous recessions, it looks like the most recent recession does not bout well as far as recovery. More than looking at Ricardian Equivalence, which is a huge generalization in itself, the other side that feels a boost in consumer demand with government intervention is indeed making the same assumption Scarborough is being blamed of making, and which Professor Murphy points out. All government intervention is hindering time preference, and to a huge degree. Employment figures are also affected by unemployment benefits that are scattered about by the very stimulus that was intended to boost the economy. Market recalculation is something that can be seen to be getting more and more difficult (if you like using government numbers like statists do) as the years pass. This of course has a lot to do with the further government intervention that has been abounding as time passes. The Fed is the culprit indeed, but also government hand outs and laws that boggle not only the entrepreneur, but human action in general. Here is a graph depicting this very process of the lengthy busts since the 1950s:

    http://danieljmitchell.files.wordpress.com/2013/02/feb-2013-minn-fed-employment-recovery-data.jpg

  6. David says:

    Bob,

    What are your thoughts on the “crowding-out” argument with regards to government spending, as advocated by economists John Cochrane and Eugene Fama, for instance? As you know, government must first remove a dollar from the private economy before it can spend a dollar. Any discussion of a “multiplier” seems to overlook that fact. I’d be very curious to get your take on that argument.

    Thanks, I enjoy your posts!

  7. Tex Avery says:

    The Real Lincoln is nothing but a made-up right-wing fairy tale. Read the first review on Amazon.

    http://www.amazon.com/The-Real-Lincoln-Abraham-Unnecessary/product-reviews/0761526463/ref=cm_cr_pr_hist_1?ie=UTF8&filterBy=addOneStar&showViewpoints=0

    Glibertarian fail. Just admit you’re a bunch of racist Republican hicks trying to defend a world where the plutocrats would have even more power.

  8. Ken B says:

    Just to be clear, before anyone blows yet another gasket, Tex may agree with me, but that does not imply I agree with Tex.

    • Jason B says:

      I think if he read some of your positions, Ken, he’d throw you in with the rest of us: that we’re all racist republican Kochtopusian hicks who love slavery.

      • Tex Avery says:

        I would like to know more about Ken’s positions. You sometimes have sided with Daniel Kuehn and Gene Callahan on certain issues.

      • Ken B says:

        It just happened in a comment a few momenta GAO Jason. But perhaps that just means MF has realized I won’t bite at his lure, and has changed tactics?

        • Tex Avery says:

          You’re seeing things again Ken. MF is nothing but a kook to me.

  9. Tex Avery says:

    I share the same sentiments as Ken. I don’t like how he isn’t being harder on flawed libertarian ideas.

  10. Ken B says:

    “Libertarianism is truly an asinine political philosophy bent on scamming the people.”

    Actually, speaking as one who is broadly libertarian in outlook (just not a fetishist), I gotta say you nailed me. You know what keeps me awake at night, and wakes me from my slumbers with my heart racing? The thought of ways I can leave adults alone. Ohh the rapture Tex! The many many ways! I’d let them smoke what they want! I’d let them eat what they want! I wouldn’t try to stop them have sex, with or without rubbers or with or without rubber chickens! I wouldn’t care what they read, what they watch, what color ties they wear. I can’t tell you I’m haunted by the thought of how I can leave people alone.

    And why? To scam ‘em!

    • Tex Avery says:

      FOX News and the Republican Party have been slowly embracing libertarianism. It seems very suspicious to me. I was reading Reason.com the other day and the comments from libertarians were pretty brutal. It was about that snake oil salesman Rand Paul.

      Based on your comments, I thought you were a critic of Dr. Murphy like Daniel Kuehn and Lord Keynes.

      • K.P. says:

        Tex,

        Are you saying the Republican Party and Fox News are embracing this?:

        “I’d let them smoke what they want! I’d let them eat what they want! I wouldn’t try to stop them have sex, with or without rubbers or with or without rubber chickens! I wouldn’t care what they read, what they watch, what color ties they wear.”

        • Tex Avery says:

          Well Greg Gutfeld, Andrew Napolitano, and John Stossel have been prominent figures over at that network. They have had Peter Schiff on several times.

          • K.P. says:

            Andrew’s show was recently cancelled, was it not?

            • Tex Avery says:

              I believe so, but he still does work for FOX.

              Glenn Beck recently had an idea for “Independence, USA.” He is trying to infuse libertarianism into the most right-wing portion of the Republican Party.

              • Richie says:

                FOX just hired Dennis Kucinich, so they are embracing socialism.

              • K.P. says:

                Glenn Beck left Fox years ago.

              • Tex Avery says:

                Dick Morris was recently sacked from FOX News. He was the hack that thought Romney would win by a landslide.

                Despite the hiring of Kuchinich, FOX still has an overall right-wing agenda. Libertarianism has more in common with wingnut conservatism than anything else.

              • Tex Avery says:

                K.P., true, but he’s not making you guys look too good with his latest antics. I’m scoffing at the idea of a Glenn Beck libertarian network.

              • K.P. says:

                And with just a cursory glance at libertarianism, particularly of the Rockwell strand, would reveal that he’s never represented “us”.

                So it doesn’t matter.

              • Tex Avery says:

                The Rockwell types seem more extreme than the Glenn Beck people and have gotten plenty of well deserved criticism for their natural rights based anarcho-capitalist views.

              • K.P. says:

                Indeed.

                Beck really has more in common with the your typical Democrat than that of Rockwell or any anarcho-capitalist, rightly or wrongly.

                Although they all – Beck, An-caps, democrats – seem to have an affinity for “natural rights.”

              • guest says:

                Beck is not a libertarian, he’s a neocon.

                And he believes in Supply Side Economics, not Austrian Economics.

                He was really good, though, at exposing the Marxists and the Obama Administration’s ties to them.

      • guest says:

        FOX News and the Republican Party have been slowly embracing libertarianism.

        That’s because Ron Paul was able to correct enough Republicans on free market and foreign policies to lose Romney the election.

        They have to seem like they want to include free market ideas. It’s a lie though.

        They violated their own Party bylaws to try to keep Ron from gaining momentum.

        Then, as Ron was rising, the sellout Rand gave the neocons the excuse they were hoping for to write Ron off as “unelectable”: “Even his own son won’t vote for him, so you all should vote for Romney”.

        Hell, no:

        Romney Obama the Same
        http://www.youtube.com/watch?v=sVvAoE6b4w4

        The Ultimate Mitt Romney Flip-Flop Collection
        http://www.youtube.com/watch?v=2x2W4GhSLlQ

      • Ken B says:

        Tex, I’m a critic of Bob on many things, but not the same as LK or DK. I also a critic of the kind of libertarin who (IMO) gives libertarianism a bad name. You think those represent all libertarians, and I don’t. I also think your crazy on the conspiracy stuff and the Kochs, but conspiracy types fit in well here at FA.

        • Tex Avery says:

          That’s good to hear. You seem like a Sumnernite.

          I’m not going insane over the conspiracies. Koch Brothers have had a piss poor track record which you can look up online. They are criminals.

          • Ken B says:

            More evidence “You seem like a Sumnernite.” Since I have never actually discussed Sumner, this just looks like another attempt to inveigle an agreement.
            FWIW my main tussles with Bob have not been over economics (aside fromt the OLG stuff he promised replies on, still missing) but religion, pacifism, and conspiracy theories, or misreading others. The areas where Bob is clearly less than rational. Even when I think his economics is mistaken I never think his economics is less than rational. Indeed I have praised him on that.

            • Tex Avery says:

              I didn’t see your comment until now, but thank you for clarifying your position. Yes, Murphy went overboard in trying to suggest there was a conspiracy about the “establishment” stealing Ron Paul’s chances at winning Iowa. I also don’t understand how an economist over 30 can believe in religious fairy tales. Both valid points.

              I have a problem with Bob because he is advancing the Austrian manifesto which is to plunge America back to the 1800s.

  11. Flashman says:

    Am I the only one suspecting that Tex Avery is in fact the multi-pseudonymous Major Freedom trying (and succeeding in getting a rise out of KP, Ken B and others?

    • Tex Avery says:

      That’s sheer nonsense. I was defending Lord Keynes and Kuehn and agreed with what he was saying. Major_Freedom’s views are completely different than the ones I hold.

      I even saw someone call LK a troll, so your assertion is invalid.

      • Flashman says:

        In the past MF has labeled accusations that he posts as Pete et al as sheer nonsense. Being a hypocritical, deceptive old coot myself I can heap opprobrium on such poltroonery in others even while appreciating MF’s wit, panache and resourcefulness in supporting his noble cause from whatever tack and persona he might choose.

        Some of you will remember a faux Lord Keynes posting a message with “irrelevant citations and added rhetorical flourishes” (this is not an exact quote as I’m too lazy to track it, but it is close and true to the original spirit) — a delightful send-up of LK’s typical contributions. And, yes, I have strong suspicions as to the source of that entry as well. Whoever Tex (Warner Bros.) Avery might be, whoever MF and his stable might be, they have earned my admiration. Thank you.

        • Tex Avery says:

          Even though you are highly wrong and delusional on every front, I appreciate your comment.

          If you are familiar with William L. Anderson’s blog, you will see that LK has posted consistently under his handle despite a few times where he has posted under anonymous. He has way more economic knowledge than any of you put together I might say.

          • Flashman says:

            And that is why Lord Keynes should be master of us all. But you have your place too, in bringing the gladsome tidings of his and Kuehn’s wisdom here to us — the benighted, ignorant Austrian savages.

            Have I got it right now?

            PS. You are clearly much wittier than the ponderously knowledgeable LK.

            • Tex Avery says:

              LK reads Austrian school texts and cites his sources consistently. Your economics is seen as a joke throughout the academic world. Even the monetarists don’t buy your Human Action voodoo.

              • Flashman says:

                Your tightly reasoned arguments and implacable whimsy know no bounds.

              • Tex Avery says:

                Thank you for your sarcastic compliment! To quote Marlow from Heart of Darkness:

                The horror, the horror!

        • Tex Avery says:

          Yes, my name is a reference to the Warner Bros./Termite Terrace director Frederick “Tex” Avery. I was wondering when anyone here would have caught the reference. I could have easily posted under a Joseph Stiglitz or Krugman inspired pseudonym if I wanted to, but I thought that name would set me apart from the rest.

          • Ken B says:

            More of a Chuck Jones guy myself, but fwiw I recognized the allusion from the get-go.

            • Tex Avery says:

              Jones was great but devolved into cynical cuteness later on in life with his work. Avery stayed consistent in comparison.

              • Ken B says:

                The whole Warner’s cartoon department was wonderfully creative for a very long time. If I have favourites they are Rabbit Season, the one where the cartoonist draws Daffy, the singing frog, the portable hole, and What’s Opera Doc?

              • Tex Avery says:

                I share the same sentiments. I was talking about his work after Warner Bros. fired him. It just became too pretentious and not funny.

                Warners had the most life in the 40s when Avery and Clampett were doing their thing, but Avery’s MGM work is top notch too.

              • Ken B says:

                OK folks, he’s definetely NOT MF. No way would MF have such good taste.

                :)

              • Tex Avery says:

                Of course not. MF, like the fool that he is, thinks you got your sense of logic from a cereal box!

                As for me, I am genuinely tired of the Paultards constantly clamoring to “End the Fed” and I thought many of them would be posting at this blog. The Federal Reserve does not need to be abolished at all and they need to look towards PK solutions.

              • Major_Freedom says:

                The fact that you are tired is a signal your brain can’t comprehend the intellectual justification of that which you choose to criticize.

              • Tex Avery says:

                What MF? Plunging the global economy into a primitive 1800s environment with all those unstable free banks and that confounded gold standard? What kind of asinine idea is that? Something that you got out of a cereal box? No wonder you butthurt anarchists don’t have any clout in the academic world with the kinds of asinine stuff you write.

              • guest says:

                What MF? Plunging the global economy into a primitive 1800s environment with all those unstable free banks and that confounded gold standard?

                Life With the Fed: Sunshine and Lollipops?
                http://www.lewrockwell.com/woods/woods169.html

                Moreover, the post–Civil War panics in the United States were due in large part to the unit-banking regulations in many states that forbade branch banking of any sort. Confined to a single office, each bank was necessarily fragile and undiversified. Canada experienced none of these panics even though it did not establish a central bank, DiStefano’s trusted panacea, until 1934.

                Or, here is a video in which Tom Woods elaborates on this subject of instability before the Fed for about 9 minutes after the following time-stamped link:

                Answering the Same Old Arguments Against Sound Money | Thomas E. Woods, Jr.
                http://www.youtube.com/watch?v=h-PxMzSyujw#t=9m50s

    • K.P. says:

      I had a somewhat similar suspicion: perhaps it’s someone trying to embarrass the “other side” by agreeing with them while looking very unstable. Much like I few libertarian posters are really just sock-puppets of said “side.”

      But I’m probably thinking too hard here.

    • Ken B says:

      Too grammatical.

      • Tex Avery says:

        More fallacious, preposterous assumptions about me that you cannot prove. I’m just speaking for millions of Americans who don’t buy the right-wing, small government malarkey that you people try to shove down our throats.

        • Tex Avery says:

          and I was replying to K.P…

        • Richie says:

          Wow, you are the sole representation of those millions of Americans? Now THAT is a bold statement, Tex Mex.

          • Tex Avery says:

            How do you explain Obama’s landslide reelection? Liberalism is here to stay and there’s nothing the cronies over at FOX News can do to stop it and certainly not you glibertarians.

            • K.P. says:

              Was his re-election more of a run-away than his election?

              (I genuinely don’t know)

              • Richie says:

                “Was his re-election more of a run-away than his election?”

                Heck no. He lost approximately 4 million votes from 2008. He crushed McCan’t in 2008.

            • Richie says:

              Landslide? 51.02 percent of the vote of those that actually vote is hardly a landslide.

              • Tex Avery says:

                In terms of electoral votes, Obama’s victory was a landslide.

              • K.P. says:

                Tex,

                Didn’t he receive less electoral votes than previously though?

              • Richie says:

                Oh, so now the electoral college is relevant, but when Bush won, libs were screaming to do away with it LOL.

              • Richie says:

                “Didn’t he receive less electoral votes than previously though?”

                Yes.

        • K.P. says:

          See, what I mean?

          The over-the-top rhetoric and tone coupled with the non-sequitars, it just helps my case.

          • Tex Avery says:

            I didn’t see my comment as being “over-the-top.” Maybe you’re seeing things that aren’t there.

            • K.P. says:

              “fallacious, preposterous assumptions ”

              In response to a claim that didn’t present any assumptions.

              “I’m just speaking for millions of Americans”

              Millions, right.

              “who don’t buy the right-wing, small government malarkey that you people try to shove down our throats.”

              Coming onto an obscure libertarian blog mostly frequented by anarchists and calling them right-wingers who try to shove something (anything!) down your throat has to be the definition of over-the-top.

              • Tex Avery says:

                Anarchists? That’s even more inane than Ron Paul ever becoming president of this country. That’s even more over-the-top to be honest.

              • K.P. says:

                Okay, okay, you’ve already done a great job establishing my areas of concern as being more than poor inference, no need to overdo it.

              • Tex Avery says:

                Point taken. As a social democrat, I am highly opposed to anarchism of any kind. Market socialism and the Third Way are the way to go.

              • K.P. says:

                Right, Hayek was even a Social Democrat, your tent is clearly big enough as it is.

              • Tex Avery says:

                You must have been reading one of Hoppe’s Mises.org articles when you called Hayek a “social democrat.”

              • K.P. says:

                Actually, here is the one I was looking for.

                http://socialdemocracy21stcentury.blogspot.com/2012/01/hayek-evil-socialist.html

                It’s pretty good stuff.

              • Tex Avery says:

                What do you know? Hayek supported a brutal dictatorship! In the words of LK, tell us another fable.

              • Tex Avery says:

                Glad you actually read LK’s blog. Certain people here dismiss it as nonsense or think Lord Keynes is a “lying bastard.”

              • K.P. says:

                That he may be, but from what I’ve seen he does a good job taking Hayek apart, so I appreciate it all the same.

              • guest says:

                This will interest you guys:

                Why Mises (and not Hayek)?
                http://www.economicpolicyjournal.com/2012/12/why-mises-and-not-hayek.html

                My thesis is essentially the same one also advanced by my friend Ralph Raico: Hayek is not a classical liberal at all, or a “Radikalliberaler” as the NZZ, as usual clueless, has just recently referred to him. Hayek is actually a moderate social democrat, and since we live in the age of social democracy, this makes him a “respectable” and “responsible” scholar. Hayek, as you may recall, dedicated his Road to Serfdom to “the socialists in all parties.” And the socialists in all parties now pay him back in using Hayek to present themselves as “liberals.”

                Now to the proof …

  12. Ken B says:

    “Certain people here dismiss it as nonsense or think [he] is a “lying bastard.” ”
    A succinct summary of too many on this blog, no matter whom the ‘he’ refers to.

    • Dan says:

      If only everyone here could be as snide and condescending as you.

      • Major_Freedom says:

        Condescending is the wrong word, because that would imply some sense of actual intellectual superiority.

        Perhaps desperate is a more apt term.

        • Tex Avery says:

          You’re pretty condescending yourself.

  13. Ken B says:

    Who was it suggested Tex Avery was a provocateur, possibly MF? Anyway I think now this is probably right. Consider the evidence:

    For a newcomer. Tex knows a lot about feuds and groups here, like a regular reader. Tex has been a wallflower?
    Tex knows about very specific failed squibs by MF, like the cereal box thing. I barely remember that, but Tex has it shot back in a comment very fast.

    He really does seem intent on drawing some people out, especially a couple of people of interest to MF. Me certainly.

    Tex is way over the top, and in a rote and repetitive way. This is what you’d expect from a put up job.

    And there’s the name. First, Looney Tunes. So a leftist stereotype is … looney tunes. And of all possible Looney Tunes names we get the one which is an anagram of “Every tax” or “tax every” thing.

    • Tex Avery says:

      Complete rubbish. I sense that you’re trying to make a straw man argument out of things I’ve been saying. I was giving Major_Freedom a taste of his own medicine.

      By your own logic, Mike Norman fans on Youtube like SchittReport are leftist stereotypes too, is that right? Is Philip Pilkington a provocateur because he doesn’t comment on this blog but acknowledged Bob Murphy in this latest post?

      http://www.nakedcapitalism.com/2013/02/philip-pilkington-the-fear-industry-austrian-school-propaganda-and-the-gold-market.html

    • Tex Avery says:

      No, a right wing stereotype is loony in my eyes. Just like how the Labour Party in the UK was branded as this loony party back in the 1980s, I am dishing similar insults back at the Ayn Rand obsessed losers on the right.

    • Tex Avery says:

      I call anyone obsessed with Mises nonsense, Rothbard cult, Reaganomics, that scoundrel Milton Friedman or Ayn Rand’s selfish philosophy part of The Loony Right.

      • Major_Freedom says:

        If you and someone on the “loony” right disagreed over who should have the exclusive right of control over your body and what you believe to be your material property, then who should cease and desist imposing his body and or property on the other?

        • Tex Avery says:

          In reality, such a discussion would never happen. The right continues to encourage a plutocracy that has to be abolished. That’s why I support economists like William K. Black and Stephanie Kelton. They are doing the Lord’s work.

  14. guest says:

    And of all possible Looney Tunes names we get the one which is an anagram of “Every tax” …

    Your anagrams are showing, Doctor.

    :D

    • Tex Avery says:

      I believe my comments are still in moderation, but I linked to an important article on Naked Capitalism by Philip Pilkington which exposes Austrian fearmongering for what it really is.

  15. Flashman says:

    My, you are slow if you’re just now coming to realize Tex is MF. Thirty or forty posts ago when I prodded Tex he wrote my notion was “delusional” and “sheer nonsense” when those are the same words MF used to deny he was Pete and several others at another blog site. I’m an old scoundrel myself and easily recognize humbug in others – unlike you naive, innocent young pups.

    Tex tried to mislead a little bit in drawing a parallel with LK being called a troll and posting as Anonymous at Anderson’s site, implying he was LK slumming. I might have suspected LK, as Tex got the “supercilious commentary, gratuitous insults, irrelevant citations and rhetorical flourishes” right. (The quote is admittedly inexact from MF’s impersonation of LK on this cite some months ago, and my favorite MF caper — up until now, anyway. See earlier posting above.) But Tex’s commentaries were entirely too over-the-top (as Ken B and others have noted) and too frolicsome (in the Avery/Jones digression) to possibly be the turgidly humourless, one-note Lord Keynes.

    Lads, if you will just keep your noses tuned to possible mischief, you just might have as much fun and make your points as well as the odious villain, MF.

    • Flashman says:

      Above to Ken B

      • Ken B says:

        Plus there’s a conservation law at work here. Count the words per day in Tex and MF combined and it,’s a constant!

      • Ken B says:

        Well Flashman, I thought you might be right, but was new to Tex at that point. As the evidence emerged I decided you are probably right.

        Now I live in fear of learning MF really likes Warner cartoons. At least the chances are slim he likes Stravinsky!

        • Tex Avery says:

          What part of I’m a Mike Norman fan don’t you understand? I clearly spelled it out several times. Now you two make up some inane conspiracy theory about me. Bob Murphy fans are the strangest people I have ever had a debate with.

          • Ken B says:

            Bob will be amused to read that I, of all the regulars here, am called a fan!

            • Tex Avery says:

              Not you exactly, but the kooky anarchists who came up with such a conspiracy theory. I can’t believe you fell for it. Check out some of the comments on Mike Norman’s videos and some of them get “over the top” too when defending him, and rightfully so. I can’t stand libertarian Schifftards.

        • Flashman says:

          Ken,

          He strikes me as a Danny Elfman, Meat Loaf kind of guy.

    • Tex Avery says:

      I am neither. Just a frustrated Mike Norman fan who is appalled by what Peter Schiff has been doing and encouraging, resulting in cultish websites like this. Austrian economics is dangerous for all of humanity and needs to be stopped.

      • Major_Freedom says:

        The butthurt over Schiff making Norman look like a fool on national television is strong in this one.

        • Tex Avery says:

          Yes indeed. Schiff isn’t even a real economist and yet he has plenty of zombies praising him for anything he does. The guy is a scam artist as you can see from the many people who have lost money from his Euro Pacific Capital operaton. People on YouTube like minethis1 have spread the truth about MMT and PK econ.

          • Major_Freedom says:

            Extremely butthurt.

            • Tex Avery says:

              But Mike Norman still has his blog and is still releasing YouTube videos saying he was right. I even saw some comments from people who had thought he was nuts before and coming around to his ways and realizing that he was right! He’s done a great job warning about the economic elites in Davos perpetuating the great austerity myth. William K. Black was on The Real News to warn about it too. University of Missouri Kansas City has economics right better than anyone else.

              • guest says:

                He’s done a great job warning about the economic elites in Davos perpetuating the great austerity myth.

                The Myth of Austerity
                http://mises.org/daily/6289/The-Myth-of-Austerity

                First of all, is there really austerity in the eurozone? One would think that a person is austere when she saves, i.e., if she spends less than she earns. Well, there exists not one country in the eurozone that is austere. They all spend more than they receive in revenues.

                In fact, government deficits are extremely high, at unsustainable levels, as can been seen in the following chart that portrays government deficits in percentage of GDP.

                Conclusion

                Public austerity is a necessary condition for private flourishing and a rapid recovery. The problem of Europe (and the United States) is not too much but too little austerity — or its complete absence.

            • Tex Avery says:

              If Schiff is so smart, then where’s the hyperinflation? Where’s the devalued and debased currency? He was talking out of his ass. Deflation is our greatest threat and it’s the same for Japan.

              I don’t see any problem. Job growth is coming back and the U.S. debt is not a problem because of how much we have in assets. We need to continue to spend and lower taxes as Stephanie Kelton put it on HuffPo Live the other day.

              • guest says:

                Where’s the devalued and debased currency? He was talking out of his ass. Deflation is our greatest threat and it’s the same for Japan.

                The definition of inflation is an increase in the money supply.

                When people ditch Treasuries and all that money comes back to the US to buy real wealth, the inflation will result in price inflation.

                Here, Tom Woods deals with the deflation issue for about 9 minutes past the following time stamped link:

                Answering the Same Old Arguments Against Sound Money | Thomas E. Woods, Jr.
                http://www.youtube.com/watch?v=h-PxMzSyujw#t=18m59s

                And then right after the issue of deflation, he deals with the sticky prices issue.

              • Tex Avery says:

                Paul Krugman and Irving Fisher explained why deflation is a bad thing here.

                http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/

                Keynesian economics 101.

              • guest says:

                Paul Krugman and Irving Fisher explained why deflation is a bad thing here.

                The article mentions (among a couple other things, which I’ll address):

                So first of all: when people expect falling prices, they become less willing to spend …

                … And when that happens, the economy may stay depressed because people expect deflation …

                Finally, in a deflationary economy, wages as well as prices often have to fall – and it’s a fact of life that it’s very hard to cut nominal wages — there’s downward nominal wage rigidity.

                These are dealt with in the Tom Woods video I mentioned.

                The ones that aren’t covered in that video (which are actually the same issue) are:

                … anyone considering borrowing, even for a productive investment, has to take account of the fact that the loan will have to repaid in dollars that are worth more than the dollars you borrowed.

                A second effect: even aside from expectations of future deflation, falling prices worsen the position of debtors, by increasing the real burden of their debts.

                In the first case, the solution is to just not borrow, since your purchasing power will be increasing, anyway.

                (“Full employment” is not a noble goal; Some people want to stop working and enjoy their wealth, and it’s up to the owner whether he wants to employ more people, so a lack of full employment is not a problem for anyone to solve.

                (Further, Minimum Wage laws price out unskilled labor, thereby causing some of the unemployment.)

                In the second case, there are lower prices, so your nominal debt burden is relieved by lower costs.

        • guest says:

          The guy is a scam artist as you can see from the many people who have lost money from his Euro Pacific Capital operaton.

          Mish Shedlock Exposed
          http://www.schiffradio.com/b/Mish-Shedlock-Exposed/-99733001115235480.html

          The piece, that circulated widely in the press and on the Internet, focused on how the foreign stocks and currencies I favored had fallen sharply in 2008 while the Sitka Pacific strategy prevented huge losses during the crash. By ignoring long-term data in favor of highly selective short-term performance, the piece tempted people to bail on positions that were poised to make sharp upward moves and lured them into a strategy that has been a long-term disaster for investors.

          While the ‘Peter Schiff was Wrong” campaign was a great marketing success for Shedlock, it was a disaster for any investors taken in by the rhetoric. Despite his criticism of my performance, his own performance is undeniably horrible over the long term. Just about the worst investment decision one could have made was to send money to Shedlock’s firm in January 2009. Since then, global stock markets and foreign currencies have rebounded sharply and Shedlock’s clients have completely missed the gains. By following Shedlock’s advice to sell near the lows, investors converted temporary paper losses into permanent realized losses!

          • Tex Avery says:

            How do I know that Peter wasn’t making this up? I saw the post on Mish’s website and it seems like Schiff agreed to the debate and then chickened out.

            Free marketeers love their unverifiable anecdotes!

            • guest says:

              … it seems like Schiff agreed to the debate and then chickened out.

              Schiff offers an explanation:

              The problem is that Shedlock threw down a gauntlet that he knew I was legally prohibited from picking up. At that point Euro Pacific Capital was simply a brokerage firm, while Shedlock’s firm was a Registered Investment Advisor (RIA). As Shedlock well knew, the rules governing the two structures are very different and so there was no realistic way that I could have accepted his challenge and remained compliant with these rules.

              But you’re right: I can’t know who’s telling the truth on this one.

              Maybe Schiff chickened out; Maybe Mish is pulling a fast one on us.

            • guest says:

              … Also this:

              The only reason I decided to revisit this topic is that Shedlock is at it again. As a result of his unethical “Peter Schiff was Wrong” advertising campaign, I decided long ago not to dignify him by doing any joint interviews. Not realizing this, a new member of my staff agreed to a request from RTV to host an informal inflation/deflation debate between Shedlock and me. As soon as I found out, I politely told RTV that I preferred not to appear with Shedlock. I suggested that I would be happy to debate respected “deflationist” voices such as Harry Dent or Robert Prector. In the end they decided to book me for a solo interview.

              Shedlock then circulated another blog post that was picked up by numerous web sites, in which he accused me of backing out of the debate, presumably out of fear. Even though I informed Shedlockthat I never agreed to debate him, he refused to revise his post.

            • guest says:

              I want to say something about this one, too:

              Paul Krugman said:

              What this means is that in general economies don’t manage to have falling wages unless they also have mass unemployment, so that workers are desperate enough to accept those wage declines.

              What Krugman is describing is a situation that occurs during the correction phase of the boom/bust cycle.

              The REASON there’s so much unemployment with falling prices, in this case, is because so many malinvestments need to be liquidated.

              But it was artificial credit expansion that caused the phony boom in the first place.

              People have to leave their jobs at businesses that were artificially stimulated; Capital and goods that were created because of the stimulus have to be sold at a loss.

              But deflation WITHOUT having first had an artificial boom does NOT result in mass unemployment.

              As Walter Block notes in his book Defending the Undefendable, in the chapter, The Importer, people who have gone to school to get a skill are investers – and sometimes they invest poorly.

              Also, as Tom Woods notes in the Deflation portion of the video I linked to, above, there was no Long Depression in the late 1800s. The falling prices raised the standard of living.

              In a different video, “Smashing Myths and Restoring Sound Money”, Tom Woods references this article (which is not Austrian) regarding the so-called Long Depression:

              Freakoutonomics
              http://www.nytimes.com/2006/06/02/opinion/02morris.html

              Historians long attributed the turmoil to a “great depression of the 1870′s.” But recent detailed reconstructions of 19th-century data by economic historians show that there was no 1870′s depression: aside from a short recession in 1873, in fact, the decade saw possibly the fastest sustained growth in American history.

              But why did people feel so miserable? Partly they were confused by prices, which were dropping sharply. Farmers thought falling grain prices meant they were getting poorer, without noticing that the price of everything else was falling too. Farmers’ terms of trade — the price differences between what they sold and what they bought — actually racked up solid gains in the 1870′s.

      • guest says:

        Just a frustrated Mike Norman fan who is appalled by what Peter Schiff has been doing and encouraging …

        For what it’s worth, I appreciate that sentiment.

        Here’s Peter Schiff addressing the inflation issue (recent video):

        Inflation Propaganda Exposed
        http://www.youtube.com/watch?v=pwI3Nya5L9g

        • Tex Avery says:

          Incredible! Only 33 dislikes for Petey’s video. I wonder why. Over 2,000 people have drunk the cult Kool-Aid.

          • guest says:

            Over 2,000 people have drunk the cult Kool-Aid.

            The CPI is rigged, the way it’s currently measured; It’s logically unsound:

            The Illusions of Hedonics
            http://mises.org/daily/1873

            Most of what appears like an objective standard of measurement in economic statistics is a deeply flawed endeavor to measure the non-measurable. As the price statistician must admit, there is no meaningful way to measure the “price level”. At best, it is changes of the price level that can be constructed. But even with these changes, the measurement is flawed, because one cannot measure something, when both, the measurement rod and the object of measurement, are subject to change.

            The price statistician constructs a basket of products in order to measure the changes of the value of money. He claims that this basket is representative. But he cannot ignore the fact that the composition of this basket changes over time. Some products become obsolete, other products get modified and new goods and services appear. So he will change the composition of the basket. By this procedure, however, he implicitly changes also the units of measurement.

    • Major_Freedom says:

      Don’t be ridiculous. We’re not the same person. “Sheer nonsense” is the kind of stuff Lord Keynes says.

      • guest says:

        Aha! …

      • Ken B says:

        Cue the Life of Brian scene, ‘only the divine deny their divinity’.

        • Tex Avery says:

          I doubt MF even has a bit of knowledge about the economics work that the UMKC and Warren Mosler have done. They are the future.

          • Major_Freedom says:

            Accounting tautologies in a centrally planned money system are the past. Distant past. Like 300 AD Rome past.

      • Flashman says:

        That settles it for me; no one does a better LK impression!

        • Tex Avery says:

          Well, I’m out and I’m done spreading the word about MMT. Good night. You people are a highly resilient bunch.

  16. Tex Avery says:

    Here’s something to ruin the pathetic Austrian’s day.

    This.

    http://socialdemocracy21stcentury.blogspot.com/2013/02/remember-this.html

    Philip Pilkington:

    “It’s a scam. There’s no other way to put it. Every single one of these people flogs gold. Coincidence? Nope.

    Do they believe their own BS? Sure. But that doesn’t matter. This is a scam plain and simple. And until the Austrian School “economists” come out and clearly and publicly distance themselves from these cranks, this is on them.”

    This is exactly the same points I was trying to convey to you people and you called me “over the top.” Have a taste of your own medicine!

    • K.P. says:

      Only to the extent that said “pathetic Austrian’s” value the correct use of words and phrases.

      • Tex Avery says:

        What is that supposed to mean? It still doesn’t refute Pilkington’s point.

        • Major_Freedom says:

          Fiat money is a scam, and those who constantly fear monger about deflation tend to have a selfish interest in perpetuating the fraudulent monetary system that bilks people of their real incomes through deceitful inflation based on aggression against property rights.

          No anti-goldbug, pro-paperbug goon is in any position to criticize Austrians, the gold standard, or anything else economics related. You advocate for a criminal gang to benefit themselves and their special interest group friends at the expense of everyone else.

          And that is precisely why you find it necessary to “refute” Austrian economics and libertarian ethics. You know that you are exposed as criminals and that burns you up.

          • Tex Avery says:

            That doesn’t bother me. The economic elites who promise austerity are the real criminals like the ones at Davos. If there’s a conspiracy theory that’s believable, it would be those pertaining to these austerity elitists and plutocrats.

            • Major_Freedom says:

              Scams don’t bother you when you believe they benefit you.

              Austerity is not the only alternative to inflation. Especially when austerity usually means higher taxes.

              If there is a conspiracy theory that is believable, it would be those pertaining to those inflation elitists and plutocrats who control the money.

        • K.P. says:

          His point is contradictory. If they believe (as he states they do) it then it isn’t a scam. There is, in fact, another “way to put it”: “incorrect,” “false,” or “wrong.”

          (He didn’t go into any details as to why that is in the quote provided so that cannot be refuted or denied)

          Further, saying it’s on the economists for not coming out and correcting “[the] cranks” (Farber) is useless moralizing, like blaming Keynes’ General Theory for the failed policy of a congressman who merely invoke his name.

    • guest says:

      Every single one of these people flogs gold. Coincidence? Nope.

      It doesn’t HAVE to be gold; It just has to be a commodity.

      Why the Greenbackers Are Wrong
      http://www.tomwoods.com/blog/why-the-greenbackers-are-wrong/

      Free-market money, therefore, is commodity money. And commodity money is not “debt-based” money. When a gold miner produces gold and takes that gold to the mint to be transformed into coins, he simply spends the money into the economy. So free-market money does not enter the economy as a loan. It is an example of the “debt-free money” the Greenbackers are supposed to favor. I strongly suspect that many of them have never thought the problem through to quite this extent. If what they favor is “debt-free money,” why do they automatically assume it must be produced by the state? For consistency’s sake, they should support all forms of debt-free money, including money that takes the form of a good voluntarily produced on the market and without any form of monopoly privilege.

      The free-market’s form of “debt-free money” also doesn’t require a government monopoly, or rely on the preposterously naive hope that the government production of “interest-free money” will be carried out without corruption or in a non-arbitrary way. (Any “monetary policy” that interferes with or second-guesses the stock of money that the voluntary array of exchanges known as the free market would produce is arbitrary.)

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