Potpourri
==> Don Boudreaux has a good discussion of the claim that Hayek is a liquidationist–not that there’s anything wrong with that. (HT2 von Pepe)
==> Pete Boettke is puzzled that the Austrians seem to be almost alone in thinking “micro” relationships are crucial to understanding macro disturbances. Me too.
==> John Carney sent me his recent article arguing that actually, the natural rate of interest is probably really low right now, meaning Bernanke is not distorting the loan market. My quick reaction is to say no, I still think interest rates should go up when you suddenly realize you are poorer than you thought yesterday, particularly in the context of a financial panic. Yes, you want people to save more, and that’s why interest rates should go up. Just like if you suddenly realize there are fewer engineers than we thought yesterday, we want the price for engineering services to shoot up. We don’t want the price to drop in order to “provide a soft landing” to help us deal with the “negative productivity shock.” (I’m not saying Carney invoked those phrases, but other proponents of low interest rates do.)
==> I actually think Brad DeLong asked Milton Friedman a very good question. It serves to show (in my mind at least) that Krugman is being a bit unfair when he makes it sound as if modern libertarians are wrong to be suspicious of embracing Friedman for his interventionist banking views. E.g. if there were a doctor who amputated people’s legs when they had a headache, I’d be nervous about letting him treat me for the flu, even if he assured me that in his view, amputation was a terrible procedure for the flu. And my reluctance–rather than analyzing each illness and treatment “on its objective merits”–wouldn’t be evidence of ideological bias, it would be common sense.
==> I suppose if I complain about the government revising the GDP figures for the 20th century, I’ll be accused of more Austrian whining.
==> This site claims the Fed has lost $192 billion if it marked-to-market its bond portfolio. I’m imaging them asking Scott Sumner why Treasury yields went up, and him answering, “I have no idea whatsoever.”
==> A federal judge has declared Bitcoin a currency, though the reasoning (at least as summarized in this report) seems goofy.
Bitcoin is “declared” a currency not when some silly state judge says so, but when it becomes universally accepted using the market process.
All the judge did is recommend when the thug department should shoot at peaceful people.
Did Carney get a phone call from a parallel free market universe that enables him to know what the entire natural interest rate structure looks like? Or do “low” and “high” now constitute sufficient premises?
So thanks to DeLong I know now that I also asked the right question since I started “doing” economics all along. And as it seems not only I think that Monetarists can’t really answer that one.
The difference between me and Delong seem to be what we make of this fact..
I think that one remarkable as well:
“US Treasury Finally Admits The Truth: It’s All POMO” or water really runs downward!
http://www.zerohedge.com/news/2013-08-13/us-treasury-finally-admits-truth-its-all-pomo-and-no-one-dares-fight-fed
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Boudreaux on Hayek is just awful: “sucking and blowing” in the same time. Hayek is against easy money but for MV stabilization; he is for liquidation sort of, but not really.