05 Oct 2014

Another Miraculous Post

Religious 47 Comments

Last week we talked miracles. I managed to upset both atheists and Bible-believing Christians, which tells me to persist in this line of thinking.

==> For the standard Christian who gets nervous that I am somehow diminishing God’s magnificence, let me make sure you at least see where I am coming from. In my view, what I’m saying renders God far more glorious and brilliant than the standard interpretation.

At least in the standard evangelical Protestant view, everything that happens is the outcome of God’s will. It’s not as if Nature is chugging along, doing her thing, and then God says, “Whoa whoa whoa, I am going to intervene here to change things so that My desires are satisfied. I was getting a little uncomfortable with how things were going, but eventually I had to act in history, because I just couldn’t take it anymore.”

On the contrary, I think it’s more accurate to say (in the standard evangelical Protestant view) that every single moment of existence in the history of the universe is exactly what God wants to happen, all things (including His preference for a universe where humans have free will) considered.

Now, one of the things God wants (apparently) is for the physical universe to be comprehensible to us. So He made its constituent parts obey (apparently) simple laws, at least in the cases that we have scientifically studied.

So: If God wants, say, Jesus to be born to a virgin mother, there’s no question that He has the power to do it. But I am arguing it would be more impressive if He did so without making the cells involved violate any of the “normal” rules that modern scientists have codified. Yes, it would take a crazy bunch of “coincidences” of the environment (Mary’s DNA, her diet growing up, solar radiation she may have received that caused a mutation…??) in order for this to happen–it’s a miracle, after all–but I think it would actually be more impressive, it would be more an example of God showing off just how ridiculously clever and creative He is, if He could generate such an outcome in the physical universe, without the molecules involved doing anything except obey the “normal” laws of physics.

Consider: If Shakespeare has to tell a wonderful story of court intrigue, is it more or less impressive if he does it in iambic pentameter? If you manage to pull off a feat with more constraints, that makes the achievement more remarkable. It in no way diminishes the grandeur of the Author.

==> For the standard atheist who prides himself on being rational and scientific, let me point something out. Numerous such critics have asked me things like, “But Bob, why do all these miracles only happen thousands of years ago? Why don’t we observe them today, when we can study them?” In response to that, I note:

* I’ve testified that I’ve personally experienced miracles. You guys didn’t say, “Oh gosh, I had always thought miracles were just something that allegedly happened thousands of years ago, and that solidified my atheism. Now that you’re telling me I was wrong, I will be a good Bayesian and update my views.” Of course not. You confidently told me I was nuts and/or erroneously jumping to conclusions about mere coincidences.

* I’ve talked to people who had their faith greatly strengthened when miraculous things happened, such as a loved one having brain cancer suddenly going into remission where the doctors flat out said, “I can’t explain this. But, as of right now, he’s apparently better.” But there’s no point in me even bringing this up; you guys “know” that the people either were lying to me, were confused about what happened, or just got lucky.

* Suppose I could show you an example of a reproducible effect, some action that humans could take that would (say) cure a disease even under conditions of a controlled experiment. Then that would finally give you the evidence of God that you seek, right? No, of course it wouldn’t. You would label the action “modern medicine.”

Now note, I haven’t in the above steps proven that there is a God who loves us and sent His only Son to die for us. No, I’m attempting the much more modest of goal of showing my harsh critics that their position is non-falsifiable. No matter what the evidence is, they would think it lacked any sign of a miracle.

This comment from last week’s discussion was wonderful; it epitomizes the pattern I am describing. According to that commenter, either (A) Jesus’ resurrection cannot be explained by modern science, and so it must not have happened, or (B) Jesus’ resurrection can be explained by modern science, so it is not a miracle. Either way, he “knows” Christianity is false, and he thinks he has come to this conclusion through an empirical investigation. But no, since he has framed the dichotomy in this way, it isn’t an empirical investigation at all; no matter what the evidence is, he already has an “all roads lead to agnosticism” flowchart.

Last thing: I realize it will do little good for me to say it, but let me just make it official: I am NOT here claiming that I have empirically demonstrated anything about the reliability of the gospel accounts. I realize that an agnostic/atheist could understandably scoff at some of the alleged events contained in these books. What I am trying to get the agnostic/atheist to see is that your worldview is far more a priori than you probably realize.

04 Oct 2014

McCarthy on Secession

Foreign Policy 17 Comments

Dan keeps surprising me. Here’s his article responding to libertarians who had hoped Scotland would secede. I have neither the time nor the knowledge of history to do anything more than drop my jaw at this line: “Successful Southern secession would have entailed results even more illiberal than the outbreak of the Civil War, which is saying a lot.”

04 Oct 2014

Potpourri

Bitcoin, Potpourri 8 Comments

==> I realized I haven’t been mentioning it here, but I’ll be speaking in Brooklyn on October 11 with a bunch of other people, including Naomi Wolf and Tom Woods. Here’s the info, and I think if you type in “MURPHY” you get a discount.

==> Bryan Caplan has an interesting post on the internal rate of return on Social Security for various groups.

==> Here is a great Scott Sumner post that makes sense of what at first seem like hard-to-explain market outcomes.

==> Speaking of Sumner, this guy Matt Bruenig’s latest volley is laugh-out-loud funny. His style is like Walter from the Big Lebowski; Bruenig is acting like he’s so outraged at Sumner’s posts. I’m not saying Bruenig is making good points; I think I probably 85% agree with Sumner on the substance. But the post is funny, for this genre at least.

==> Mattheus von Guttenberg took me to the woodshed over my interview with Tom Woods (where we talked about Bitcoin). He sent me this article, and here is (I gather) the part where he thought I was being too wishy washy with Tom:

When I point out that Bitcoin necessarily must have a use value, people will frequently demand to know what it is. What could possibly compel people to spend hard-earned fiat money in exchange for digital tokens? Usually I suggest social purposes. Bitcoin – being a scarce, digital good – is unique in that creation of one requires solving cryptographic puzzles of increasing difficulty. Thus, in the early days, before Bitcoin had either money prices or exchanges – in Menger’s words, “organized markets” – the only way to acquire Bitcoin was from a friend or to download the client and mine Bitcoin directly. The protocol’s newness and its underground nature enabled Bitcoin to become a status symbol. Cypherpunks and hacktivists – those closest to understanding the value proposition it offered – began to acquire them and mine them (and report their electricity/mining costs on message boards), and from there eventually Bitcoin spread to other markets and social groups. That’s it. The regression theorem does not admit of quantitative tests (ie, “how much” value a certain item or commodity requires before mass acceptance) – it simply states the necessity for prior direct value. This social status value Bitcoin acquired is real. It is a value accruing to whosoever desires it. Hobbyists place value on all sorts of bizarre goods many people would never think to acquire. Even objects of pure fads like Beanie Babies offer real, legitimate value: they offer the value of social inclusion or of being “in the know.”

Historically, while this account suffices to describe Bitcoin’s launch into becoming a medium of exchange, it doesn’t quite answer the question as to why Bitcoin units are individually valuable to users. The answer to this is straightforward. Bitcoin as a payment system is valuable; it renders amazing services nothing else can. The only means to use the payment system, however, is through the use of Bitcoin units. Therefore, as the units themselves are scarce, required means of action, they command a market price. Users are willing to purchase digital space on a ledger in order to take advantage of the manifold benefits they enjoy. The network cannot transfer dollars, euro, or yen. It can only move Bitcoin.

Understanding the Bitcoin units in the larger context of utilizing the Bitcoin network brings clarity to confusion. There is no contradiction or paradox in Bitcoin becoming money; it emerged as a scarce, digital item, which became a good (when scores of people began acquiring and discussing them), and then proceeded to become a medium of exchange (when it was used to indirectly purchase pizza). Whether it becomes liquid enough to crowd out the rest and become money to everyone will have to be seen, but it should be apparent that, from an Austrian perspective, there is no problem whatsoever with global Bitcoin adoption.

04 Oct 2014

One More Point on Krugman vs. Gross on QE2

Economics, Federal Reserve, Krugman 11 Comments

I’m like Columbo. I notice just a slight turn of phrase that other investigators would consider innocuous, yet I realize it shines a spotlight on the killer.

Remember: Krugman is now saying that Gross et al. were wrong about QE2 because they suffer “liquidity trap denial” (his actual term lately). That is, these people were just-so-sure that the government’s big budget deficits were going to send interest rates up, that when it failed to occur, they desperately fumbled about for an excuse, and landed on, “Aha! The Fed’s QE programs are holding down Treasury yields!”

Now since this is the way Krugman is framing what happened, you can understand why he himself is now painted into a corner where he has to say that QE2 didn’t have much of an impact on interest rates at all, and that’s why the end of the program didn’t make long-term rates go up. Again, the problem (as Krugman now frames it) is that Gross et al. didn’t realize that long-term rates were low because of the liquidity trap.

That’s why Krugman’s March 2009 post, on the launch of the first QE program, is so revealing. Here are the relevant parts again:

The big policy news this week has been the Fed’s decision to buy $1 trillion of long-term bonds, going beyond the normal policy of buying only short-term debt. Good move — but it’s probably worth pointing out that yes, this does expose the Fed, and indirectly the taxpayer, to some risks…

The Fed is…creating a new liability: the monetary base it creates to buy these bonds. In effect, it’s printing $1 trillion of money, and using those funds to buy bonds. Is this inflationary? We hope so! The whole reason for quantitative easing is that normal monetary expansion, printing money to buy short-term debt, has no traction thanks to near-zero rates. Gaining some traction — in effect, having some inflationary effect — is what the policy is all about.

[I]f and when the economy recovers, it’s likely that long-term interest rates will rise, especially if the Fed’s current policy is successful in bringing them down…

My back of the envelope calculation looks like this: if the Fed buys $1 trillion of 10-year bonds at 2.5%, and has to sell those bonds in an environment where the market demands a yield to maturity of more than 5%, it will take around a $200 billion loss.

I’m not complaining; I think quantitative easing (it’s really qualitative easing, but I give up on trying to fix the terminology) is the right way to go. But we should go into it with our eyes open.

Look at the passages I’ve underlined, and in particular the last parenthetical remark where Krugman complains about terminology. For the Krugman vs. Gross debate, that parenthetical throw-away line is actually the murder weapon.

Why is Krugman complaining about terminology here? He’s arguing that the big deal with QE isn’t how much money the Fed is creating, but rather the assets it is buying with that money. Hence the Fed’s purchases have changed qualitatively, not quantitatively.

With that distinction in mind, go review again the other things I underlined above. Now do you see it?

Krugman is quite clearly saying (my paraphrase of course): “The Fed has bought short-term Treasuries and pushed down short-term rates to zero. That is a dead end; we’re in a liquidity trap, after all. Since it hit a wall, the Fed is going to try buying long-term Treasuries, to push down long-term Treasury rates. This might work, but if it does, there will be risks of capital losses if rates rise suddenly. I’m OK with those risks, but let’s not ignore them.”

Does everybody see that? And so, is it really accurate or fair for Krugman to now be claiming that Gross was in “liquidity trap denial” for thinking that QE2 had pushed down long-term Treasury rates?

NOTE FOR PURISTS: Krugman famously pointed out a theoretical mechanism in the late 1990s by which a central bank could still “gain traction” when short-term rates were 0%, by credibly promising to be irresponsible in the future. However, that is a different mechanism from what Krugman seems to be arguing above. Krugman’s late 1990s advice for the Bank of Japan didn’t involve changes in asset purchases right now, instead it involved credible words right now to convince the public about what the Bank of Japan would do in the future. So please don’t tell me that Krugman’s talk of “inflation is the goal” in the above is an invocation of his Bank of Japan unconventional policy stuff; it’s not.

04 Oct 2014

Theory and Evidence That QE Pushes Down Long-Term Interest Rates

Federal Reserve, Krugman, Shameless Self-Promotion 23 Comments

Thanks to Keshav for the Krugman link I used in the first half of this Mises CA post… Incidentally, if you thought, “Well duh, of course interest rates stayed low, because the Fed did Operation Twist and then QE3!” then you should really read this one. It’s not as open and shut as you’d like it to be. I can especially understand why Scott Sumner thinks the normal thing is for long-term Treasury yields to rise when the Fed buys bonds.

03 Oct 2014

Are the Republicans Good on the Free Market?

Economics, Shameless Self-Promotion 25 Comments

We already know the Democrats aren’t really the party of peace…turns out the Republicans aren’t laissez-faire champions either. I feel so disillusioned. The intro:

In my last post, I challenged the conventional view that the Democratic Party was the dovish one, in contrast to those hawkish Nixon Wage PriceRepublicans. I pointed out that Democrats had been in the White House during both World Wars and the major escalation in Vietnam, and that Barack Obama has utterly repudiated the hope that he would represent a new direction for America after George W. Bush. In the present post, I want to do something similar for the equally popular–but also erroneous–view that the Republicans support the free market.

As I did with the Democrats on war, here let me list some major violations of free-market principles that occurred during Republican administrations:

03 Oct 2014

Statement About Missing Comments

All Posts 3 Comments

Hey everybody,

A few people have been emailing, complaining that their comments aren’t showing up. I don’t know what is causing it, but for some reason I’m not seeing the comments on my end; they are ending up in limbo somehow. Since I don’t know what’s causing it, I can’t give you tips on how to fix it; obviously others are able to post.

(In the interest of full disclosure, yes I have deleted some comments this week, either because banned people came back, or because non-banned people were posting pure insults. Also note, there is a difference between someone earnestly making an unfair analogy about an opponent’s position, versus someone posting a pure insult. Look how much you learn at this blog.)

03 Oct 2014

Can the Central Bank Control Interest Rates?

Economics, Federal Reserve, Shameless Self-Promotion 3 Comments

I argue yes, within limits. The weird thing is that I think everybody in this dispute agrees on the caveats, we just summarize the reality in totally opposite ways (i.e. “yes” vs. “no”).