In the comments to this post, “Magnat” reminded me of an episode in the Bible where my initial reaction was ridiculous. In I Samuel 4:1-11 we see that the Israelites have a setback against the Philistines, and so try to raise morale by bringing the Ark of the Covenant to the front lines of the battle. (The Ark housed the stone tablets on which the Ten Commandments were written, as well as other extremely significant items. It was incredibly holy and powerful. You may remember that the Nazis all melted when they opened it up in the first Indiana Jones movie.)
But this petulant move by the Israelites–in effect trying to force victory not by seeking God’s counsel, but by bringing in the Ark–led to disaster:
1 And the word of Samuel came to all Israel.
Now Israel went out to battle against the Philistines, and encamped beside Ebenezer; and the Philistines encamped in Aphek. 2 Then the Philistines put themselves in battle array against Israel. And when they joined battle, Israel was defeated by the Philistines, who killed about four thousand men of the army in the field. 3 And when the people had come into the camp, the elders of Israel said, “Why has the LORD defeated us today before the Philistines? Let us bring the ark of the covenant of the LORD from Shiloh to us, that when it comes among us it may save us from the hand of our enemies.” 4 So the people sent to Shiloh, that they might bring from there the ark of the covenant of the LORD of hosts, who dwells between the cherubim. And the two sons of Eli, Hophni and Phinehas, were there with the ark of the covenant of God.
5 And when the ark of the covenant of the LORD came into the camp, all Israel shouted so loudly that the earth shook. 6 Now when the Philistines heard the noise of the shout, they said, “What does the sound of this great shout in the camp of the Hebrews mean?” Then they understood that the ark of the LORD had come into the camp. 7 So the Philistines were afraid, for they said, “God has come into the camp!” And they said, “Woe to us! For such a thing has never happened before. 8 Woe to us! Who will deliver us from the hand of these mighty gods? These are the gods who struck the Egyptians with all the plagues in the wilderness. 9 Be strong and conduct yourselves like men, you Philistines, that you do not become servants of the Hebrews, as they have been to you. Conduct yourselves like men, and fight!”
10 So the Philistines fought, and Israel was defeated, and every man fled to his tent. There was a very great slaughter, and there fell of Israel thirty thousand foot soldiers. 11 Also the ark of God was captured; and the two sons of Eli, Hophni and Phinehas, died. (1 Samuel 4:1-11, New King James Version)
Now the first time I read that, I had a ridiculous reaction. I was really worried, thinking “Oh no! How will the Israelites get it back? What if the Philistines desecrate it?”
But as it turns out, the Creator of the universe doesn’t need a bunch of human bodies to protect His sacred objects. Here’s what happened to the Philistines:
1 Then the Philistines took the ark of God and brought it from Ebenezer to Ashdod. 2 When the Philistines took the ark of God, they brought it into the house of Dagon and set it by Dagon. 3 And when the people of Ashdod arose early in the morning, there was Dagon, fallen on its face to the earth before the ark of the LORD. So they took Dagon and set it in its place again. 4 And when they arose early the next morning, there was Dagon, fallen on its face to the ground before the ark of the LORD. The head of Dagon and both the palms of its hands were broken off on the threshold; only Dagon’s torso was left of it. 5 Therefore neither the priests of Dagon nor any who come into Dagon’s house tread on the threshold of Dagon in Ashdod to this day.
6 But the hand of the LORD was heavy on the people of Ashdod, and He ravaged them and struck them with tumors,both Ashdod and its territory. 7 And when the men of Ashdod saw how it was, they said, “The ark of the God of Israel must not remain with us, for His hand is harsh toward us and Dagon our god.” 8 Therefore they sent and gathered to themselves all the lords of the Philistines, and said, “What shall we do with the ark of the God of Israel?”
And they answered, “Let the ark of the God of Israel be carried away to Gath.” So they carried the ark of the God of Israel away. 9 So it was, after they had carried it away, that the hand of the LORD was against the city with a very great destruction; and He struck the men of the city, both small and great, and tumors broke out on them.
10 Therefore they sent the ark of God to Ekron. So it was, as the ark of God came to Ekron, that the Ekronites cried out, saying, “They have brought the ark of the God of Israel to us, to kill us and our people!” 11 So they sent and gathered together all the lords of the Philistines, and said, “Send away the ark of the God of Israel, and let it go back to its own place, so that it does not kill us and our people.” For there was a deadly destruction throughout all the city; the hand of God was very heavy there. 12 And the men who did not die were stricken with the tumors, and the cry of the city went up to heaven. 1 Now the ark of the LORD was in the country of the Philistines seven months. 2 And the Philistines called for the priests and the diviners, saying, “What shall we do with the ark of the LORD? Tell us how we should send it to its place.”
3 So they said, “If you send away the ark of the God of Israel, do not send it empty; but by all means return it to Him with a trespass offering. Then you will be healed, and it will be known to you why His hand is not removed from you.”
4 Then they said, “What is the trespass offering which we shall return to Him?”
They answered, “Five golden tumors and five golden rats, according to the number of the lords of the Philistines. For the same plague was on all of you and on your lords. 5 Therefore you shall make images of your tumors and images of your rats that ravage the land, and you shall give glory to the God of Israel; perhaps He will lighten His hand from you, from your gods, and from your land. 6 Why then do you harden your hearts as the Egyptians and Pharaoh hardened their hearts? When He did mighty things among them, did they not let the people go, that they might depart? 7 Now therefore, make a new cart, take two milk cows which have never been yoked, and hitch the cows to the cart; and take their calves home, away from them. 8 Then take the ark of the LORD and set it on the cart; and put the articles of gold which you are returning to Him as a trespass offering in a chest by its side. Then send it away, and let it go. 9 And watch: if it goes up the road to its own territory, to Beth Shemesh, then He has done us this great evil. But if not, then we shall know that it is not His hand that struck us—it happened to us by chance.”
10 Then the men did so; they took two milk cows and hitched them to the cart, and shut up their calves at home. 11 And they set the ark of the LORD on the cart, and the chest with the gold rats and the images of their tumors. 12 Then the cows headed straight for the road to Beth Shemesh, and went along the highway, lowing as they went, and did not turn aside to the right hand or the left. And the lords of the Philistines went after them to the border of Beth Shemesh.
13 Now the people of Beth Shemesh were reaping their wheat harvest in the valley; and they lifted their eyes and saw the ark, and rejoiced to see it. 14 Then the cart came into the field of Joshua of Beth Shemesh, and stood there; a large stone was there. So they split the wood of the cart and offered the cows as a burnt offering to the LORD. 15 The Levites took down the ark of the LORD and the chest that was with it, in which were the articles of gold, and put them on the large stone. Then the men of Beth Shemesh offered burnt offerings and made sacrifices the same day to the LORD. 16 So when the five lords of the Philistines had seen it, they returned to Ekron the same day.
17 These are the golden tumors which the Philistines returned as a trespass offering to the LORD: one for Ashdod, one for Gaza, one for Ashkelon, one for Gath, one for Ekron; 18 and the golden rats, according to the number of all the cities of the Philistines belonging to the five lords, both fortified cities and country villages, even as far as the large stone of Abel on which they set the ark of the LORD, which stone remains to this day in the field of Joshua of Beth Shemesh.
(1 Samuel 5-6, New King James Version)
Now for my own take on these things, I actually don’t think the Ark was covered in germs, which is how one might explain these events (if he believed the stories). I think that if a modern doctor had taken the proper measurements and so forth back then, the various forces (such as a growing rat population etc.) would have been in motion in the Philistine population centers to yield such devastation, even before their warriors brought the Ark back from battle. (It’s also possible that the slaughter of thousands of Israelites introduced some new germs on the Philistine fighters who then brought them back to camp.) So to an atheist epidemiologist who had access to all the facts, he would say, “No no, there wasn’t some being in the sky zapping people. I can explain everything with our normal methods. It was just a coincidence that when the Philistines captured this box that had superstitious meaning attached to it, that that was also when the outbreak occurred. It’s not as if all these people just suddenly dropped dead for no reason.”
So for those readers who have grasped my view of God’s design of the universe, the above is just a particular illustration. In the broadest sense, everything that occurs at any time in the universe, is “caused by” events that were set into motion beforehand, and ultimately can be traced back to the very beginning of time. (Even if you think quantum effects make the future indeterminate, it’s still the case that the state of the universe at time t has a huge influence on what the universe can look like at t+1.)
So for me, it’s a meaningless distinction to say, “Oh, did God actually punish the Philistines with His intervention, or was it just a natural outbreak?” (Notice that the Philistines wondered that too, and how much of a non sequitur their “test” was–after all, why couldn’t the cows’ decision of which way to take the cart also just be a coincidence?) Everything in the natural world is in direct accordance with God’s will. Before our sun even existed, God knew precisely when the Philistines would capture the Ark and bring it to their camp. So He had that episode (as well as everything else that would occur in all of human history) in mind, when He designed the physical universe and its laws, and when He designed how cells work, how disease is transmitted, and so forth.
And His design was so incredibly complex and perfect, that it “just so happened” that the Philistine population was decimated when the Ark was in their possession.
I was waiting for my connecting flight to San Fransisco (for tomorrow’s Mises Circle) when I first heard of the awful Jaycee Dugard 18-year imprisonment story. (Here is an opinion piece with a bunch of new facets, both in the piece and the links on the sidebar. I don’t know if they are accurate; I actually am not even clicking on them because this story really troubles me.)
The thing that I don’t understand in this, though, is how did the guy keep someone prisoner for so long, in a regular neighborhood? I can understand if a fairly young child is taken, that the kid doesn’t really get what’s going on and might grow up thinking the abductor is his/her parent.
But this girl was 11 when she was taken. (I’m not using “alleged” since the guy admits he did it. And incidentally, his self-absorbed “this was really a heartwarming story about how I turned my life around” actually horrifies me almost as much as his behavior; it’s another manifestation of the banality of evil.)
Readers, please don’t freak out; I’m not blaming the girl for not running away. I’m just trying to make sense of this. Wouldn’t she tell her children (presumably fathered by the abductor) what their situation was, and that if they ever had an opportunity, to make a break for it to get help?
So it seems that either this guy must have had a standing threat, like, “If any of you tries anything…” or that over time the original victim just accepted her fate.
But again, that just seems impossible to me, since she was in what, fifth or sixth grade when she was taken? Even though to adults, 11 seems tiny, think back to when you were that age. You certainly knew what a kidnapper was, and that if you were taken you would devote your life to killing the guy / escaping.
Well I just had to get that off my chest. I wonder if other people have wondered that too, but were hesitant to bring it up since, again, it sounds like I’m blaming the girl, when that’s not what I’m doing.
This disgusting story just doesn’t make any sense to me. I don’t understand how this is even possible.
This is the first paragraph in a WSJ story–on page A4–from earlier this week:
WASHINGTON — The CIA lacked clear safeguards to prevent abuses in some instances in its network of secret prisons for terror suspects, and some interrogators had inadequate training and oversight, a long-withheld 2004 report found, according to current and former officials who have read the document.
So what does this single paragraph tell us?
(1) The CIA had at least one prison for terror suspects.
(2) The CIA had a network of prisons for terror suspects.
(3) The CIA had a SECRET network of prisons for terror suspects.
(4) The abuses in said network of secret prisons were so rampant that there was actually a report issued on the matter.
(5) The report on abuses in the CIA’s secret network of prisons has been suppressed for five years.
And Matt Yglesias says Hayek’s Road to Serfdom was a “nutty alarmist book.” Hey Yglesias, suppose we were on the road to serfdom? Isn’t this what it would feel like?
Krugman is totally right. (!!) Fama and Cochrane are wrong in spinning out what appear to be tautologies above. And I say this, knowing full well that plenty of free marketeers–myself included–critique deficit-spending using the exact same arguments when writing an op ed or getting interviewed on the radio.
To a first approximation, and especially if you’re dealing with somebody who doesn’t know the first thing about scarcity, then yes I think it’s fine to say, “Every dollar the government spends just means one fewer dollar spent in the private sector.” But that’s actually not correct, at least not in the way most people believe. And it’s also not literally true to say, “If the government creates a job in industry X with a subsidy, then there must be an offsetting job destroyed in industry Y because of higher taxes or interest rates.”
This is actually quite simple: Suppose the government imposes a one-shot head tax on Bill Gates of $1 million, and then uses the revenue to hire 50 people at $20,000 each to work for a year scrubbing graffiti off bridges. Do Austrians really want to say that it’s an accounting necessity that this causes Bill Gates to adjust his behavior such that precisely 50 other people lose their jobs, but only for a year? Of course not–it would be a miracle if exactly that happened because of the new tax on Bill Gates. In fact, no matter how many people are initially laid off because of changes in Gates’ spending and investing, if wages adjust quickly enough, then that excess unemployment can be whittled away.
So does my concession to Krugman mean that he is right to champion government deficits as a way to prop up aggregate demand, to get “money circulating,” to create jobs and start using idle resources?
Of course not. In contrast to the all-clearing-all-the-time view of markets held by Fama and other Chicago School believers in the “efficient markets hypothesis,” Austrians know that it takes time for the market to adjust after the bursting of an unsustainable boom. So yes, during a deep recession, it’s possible for the government to reduce the unemployment rate through various means, especially through printing money. But that doesn’t mean it’s a good thing. The idle period of spare capacity (in both capital and labor) serves a definite purpose in a market economy, and the government sabotages the cleansing process by forcing those resources back to work on any old project that’s “shovel ready.”
In conclusion, free marketeers shouldn’t focus their efforts on trying to prove that the government is incapable of boosting “total spending.” For one thing, that’s a false proposition, so it’s a bad move to try to prove it. But more important, it concedes that boosting “total spending” is a good thing. No, the important thing is for the economy to steer resources to their most efficient uses. If that process requires, say, prices in general to fall–and hence nominal aggregate expenditures–then who cares? You consume goods and services, not a flow of green pieces of paper.
Now what I didn’t say at the Mises blog–for fear that my posting privileges would be revoked–is that Krugman’s post was actually quite impressive. In other words, not only do I agree with almost everything he said, but I enjoy the way he said it (except for the arrogance). In particular, his analogy with international trade was great, and his chart title (“a case of mistaken identity”) was pretty clever as far as econ jokes go.
*sigh* I don’t think I’m turning into a commie, but I really do understand why leftists think they’re so much more clever than their typical opponents: they are. If you doubt me, let me put it this way: Can you possibly imagine any right-wing production zinging its opponents the way Jon Stewart destroys Fox News in the clip below? Inconceivable.
And note that Krugman’s not picking on some associate econ professor from Bob Jones University. No, he and DeLong tackle big guns, some of whom have Nobel prizes. As readers of this blog know, I think Fama and Friends really have said some pretty ridiculous things lately.
|The Daily Show With Jon Stewart||Mon – Thurs 11p / 10c|
|Fox News: The New Liberals|
For some time now I’ve been meaning to document the prices I paid at the grocery store for some staple items. (At least, they’re staples in our house because of our son.) For the record:
* Half-gallon of Silk “Very Vanilla” soy milk, $3.49 on sale for $2.99.
* 32 oz. of Stonyfield’s “Banilla” (sic) yogurt, $6.79. (I had no idea that’s how much those things cost!! They stock them on the bottom of the dairy case, so I’ve never bent down far enough to read the price tag. I think it’s time to introduce the boy to the joys of Saltine crackers.)
* 12 oz. bag of Dole “American” salad, $3.29 on sale for $2.50.
I’m watching you, Ben.
Wow. Chris Martenson was the guy who snooped around bond CUSIPs and realized the Fed bought up 47% of the freshly issued Treasurys from primary dealers the week after the auction. Now on his website he has made available a blockbuster report (that his paying members got a few weeks ago). (HT2EPJ) Really, if I hadn’t been blessed with such a phenomenal ability to speak in public, I would have to work like Martenson and write analyses like this.
I am still checking on some definitions with various experts, to make sure I really understand all the capital flows etc. that Martenson throws around in this thing. But check out this graph and tell me if you aren’t a little more concerned about the strength of the USD. (And note that right now, there is apparently a net outflow of capital from the dollar coupled with a current account deficit. I had thought this was an accounting impossibility, so that’s one of the things I’m still checking on.)
Here are some salient excerpts from the report:
Since the start of 2009 and continuing through the month of May, private investors sold [on net] $364 billion dollars worth of US assets, while central banks purchased $50 billion dollars worth (source is a .csv file available here from the Treasury)…
Here we note that agency bonds peaked in October of 2008 at nearly a trillion dollars but have declined by $178 billion since then. Treasuries, on the other hand, have increased by over $500 billion over that same span of time. A half a trillion dollars! If you were wondering how the US bond auctions have managed to go so smoothly, here’s part of your answer.
What is going on here? How is it possible that central banks are buying so many Treasury bonds, at the fastest rate of accumulation on record?
It would appear that foreign central banks have been swapping agency bonds for Treasury bonds, but that’s not how the markets work. First, they would have to sell those bonds, before they could use the proceeds to buy government debt. So to whom did they sell those Agency bonds in order to afford the Treasury bonds?
Here we might recall that the Federal Reserve has been buying agency bonds by the hundreds of billions.
Martenson is my hero; he has solved the mystery (or at least a big chunk of it). I could not fathom how it was that anybody–even foreign central bankers–could allow CNBC to write a headline today, “Foreigners Snap Up Treasurys Even as US Debt Keeps Rising.” I mean, it just didn’t make any sense. Why would the Chinese and Russians be talking about a new global currency, if they intended to keep on stockpiling dollar-denominated assets?
Well, if Martenson’s right, the answer is the Fed. (That’s probably the only time you will ever see me end a sentence with those 5 words.) I’ll save the punchline for Martenson, as he deserves the honor:
Shell #1: Foreign central banks sell agency debt out of the custody account.
Shell #2: The Federal Reserve buys those agency bonds with money created out of thin air.
Shell #3: Foreign central banks use that very same money to buy Treasuries at the next government auction.
As I read Martenson’s report, I was reminded of Ralphie’s father from A Christmas Story when he beheld his prized lamp and declared, “It’s indescribably beautiful.”
Jeff Tucker passes along this story:
NEW YORK (Reuters) – Americans think the Federal Reserve is doing a worse job than even the much-maligned Internal Revenue Service.
Only 30 percent of Americans think the Federal Reserve’s Board of Governors is doing a good job despite the central bank’s unprecedented efforts to battle a crippling recession, according to a Gallup Poll released on Monday.
That makes the Fed the worst reviewed of nine key agencies — including the tax-collecting IRS — the Gallup poll of more than 1,000 Americans between July 10 and 12 showed. Twenty-two percent of Americans said the central bank was doing a poor job.
Wow, that’s pretty impressive if you poll worse than the IRS. And what’s funny is that the public is right: After all, it takes some effort for the IRS to steal your money. First of all they have to find out that you have it, and then they have to send you letters, make scary phone calls, freeze your bank account, contact your employer about garnishing wages, and finally they have to tap some scarce labor power by sending armed guys to your house.
In contrast, if Bernanke wants to steal half your wealth, all he has to do is press a few buttons.
Federal Reserve Chairman Ben Bernanke is one of hundreds of victims of an identity-fraud ring, according to Newsweek magazine.
The ring is run by a scam artist known as “Big Head,” the magazine said on its website. The ring has been known for stealing more than $2.1 million from consumers and at least 10 financial companies around the U.S.
If you write a post saying “Big Head” is really running monetary policy, turn to page 48.
If you write a post arguing that Bernanke is the “Big Head” of the whole financial system, turn to page 87.
If you write a post wishing that Bernanke had only stolen $2.1 million from consumers, turn to page 95.