Krugman Sends Love Note to Sumner
These two need to get a room:
I think I now understand the otherwise weird resurgence of paleomonetarism in the midst of a prolonged liquidity trap. It’s not really about analysis, it’s about morality.
You see, if you’re the kind of person who views being taxed to pay for social insurance programs as tyranny, you’re also going to be the kind of person who sees the printing of fiat money by a government-sponsored central bank as confiscation….
And this is also why politically conservative economists arguing for something like nominal GDP targeting, and pleading with their perceived political allies to stop talking nonsense, are going to be disappointed.
Sorry Scott, that’s the closest you are ever going to get to a compliment from Krugman. But remember, when he pulls your hair, puts a frog in your lunchbox, and blogs that the Fed will never target NGDP…it’s because he really likes you.
O’Driscoll on Inflation
If I were a medical resident, I would concur:
Global output of key crops such as corn, soybeans and wheat is down, and their prices are up, respectively, 94%, 51% and 80% from June lows. Today’s PPI report has wholesale prices up 1.1% in December after rising 0.8% in November. The Journal reminds us that in 2008 high food prices sparked riots around the world.
Meanwhile Fed officials tell us they don’t expect inflation. It is not an issue of expecting inflation, but of observing it here and now. The Fed prefers, of course, to look at “core” inflation rates, which are much lower. A former Fed colleague explained to me the central bank does so on the theory that people do not need to drive to work and can stop eating.
In our global economy, easy US monetary policy has thus far mainly affected commodity prices (including now food), real-estate in Asia and now broader price measures in Asia. It is implausible that the US would remain unaffected. Food, energy and clothing prices are all rising. I don’t think many households are presently gripped with a fear of deflation.
In the Mises/Hayek theory of economic fluctuations, the transmission of monetary shocks works through producer prices and incomes, and only later consumer prices. No measure of consumer prices, and certainly not a subset of consumer prices, is an adequate gauge of inflation.
BTW, check out the PPI report. Besides the humongous monthly jumps, the year-over-year increases are the following:
Finished goods +4.0%
Intermediate goods +6.5%
Crude goods 15.5%
===> FYI, as regular readers have no doubt noticed, I have been really swamped with work lately. I actually decided last Sunday would be my last Facebook foray until the 8-week Anatomy of the Fed Class is over. I went through withdrawal the first 48 hours, but now I can’t believe how much more time I have in the day. If you need help, call 1-800-I-UNLIKE.
Potpourri
* You know how it wasn’t the Fed that caused the housing bubble, but those Chinese savers? Well Paul Krugman tells us it’s the same story with rising food prices–not the Fed’s fault, but those Chinese eaters.
* Lew Rockwell has a really nice historical and psychological analysis of right-wing warhawks. (I.e. he offers plausible theories as to why they ended up with their current views, despite the non-interventionist Old Right tradition.)
* David R. Henderson points out the irony of DeLong’s latest “Stupidest Man Alive” nominations.
* Mark your calendars! On February 11 Glenn “Kane” Jacobs and some of us from the Mises Institute will be in Knoxville for an introductory seminar. There will be no matches because all the steel cages were rented for that day.
* Bob Wenzel has another piece of evidence that your pension funds are not safe from the feds.
* I don’t have time to go through this myself, but check out the excerpts Wenzel pulled from Bernie Sanders’ proposal to reform the Fed.
* Viresh Amin sends along his pick for the next George Carlin. (Apparently PhD economists are not eligible for this award.) Warning: some naughty words.
* Seriously, this is a touching story. A homeless guy claimed to have a Golden Voice, and he ended up getting a job with the Cleveland Cavaliers. (HT2 somebody at LRC, but I can’t remember who…)
* You know how they can’t keep drugs out of prison? Apparently they can’t keep out smartphones, either. You know what, kids? If and when they round up all the bloggers who want a smaller government, at least I’ll be able to write one heck of a journal article. I’m shooting for the QJE.
* Here’s today’s Mises Daily, in which I take on Scott Sumner. However, I think this is more like the famous EPR objection to (a certain interpretation of) quantum physics. I think Sumner will read this and say, “Yes, I admit my explanation for your scenarios sounds strange, but that just shows the power of my model. That is in fact what would happen, and it’s why I would be coasting smoothly through such a weird situation, whereas you Austrians would be fumbling all over the place.” HINT: The photo at the top is the best part of the article.
Last Call for “Anatomy of the Fed”
Just a reminder, the first class of my “Anatomy of the Fed” online course begins tonight. Here are the details.
Murphy on FreedomWatch: the Myth of the Myth of Big Government
Here’s the YouTube of Friday night’s appearance with Judge Napolitano:
Some inside baseball for ya: Despite appearances, I am not actually hovering amid the downtown Nashville skyline. (It’s true that I have what could plausibly be described as super powers, but I am not yet ready to reveal them to the world.) That’s actually just a poster hanging behind the chair where I’m sitting.
So there I am, all made-up and with a lapel mic and earpiece in, listening to the show. The Judge tells his viewers what’s coming up in later segments, and he mentions my spot. So it’s possible that I’m after the next commercial break; I’m not sure.
At that moment, the people at the Nashville studio are talking to each other and realize that the paperwork from Fox was wrong (or at least they claim–who knows the source of the snafu). In any event, the problem is that they had put the daytime poster behind me, even though the show will air at night. So they are quickly moving sandbags etc. to swap out the background, as I’m listening to the Judge come back from the break.
Don’t worry kids, everything turned out fine. They had another segment–where he reads from the Freedom File I think–before coming back to my spot. But I want you to appreciate my cool composure all the more so.
The Cycle of Hurt, and the Power of Forgiveness
One of my favorite scenes in A Christmas Story is when Ralphie realizes his new Li’l Orphan Annie secret decoder ring has been used to send him a “crummy commercial.” Unfortunately, all of the clips on YouTube end before my favorite part of the scene–when the narrator says something like, “I left the bathroom and went back downstairs, wiser.”
As they say, “It’s funny because it’s true.” We can all remember how naive we used to be. And what matured us–what made us wiser–was not the mere passage time, nor even the reading of books or watching of documentaries. No, what really showed us what people–including ourselves–were capable of, was directly experiencing it in our personal lives.
(If you want me to cite authorities on this, I give you Carly Simon and Richard Pryor, who said in his autobiography something like, “You’re not a man until a woman really breaks your heart.”)
This is the truth behind the sometimes corny “cycle of violence” diagnoses of social ills. Think about the worst things you have ever done in your life. Now isn’t it true, that you had “a lot of stuff going on then”? Weren’t there extenuating circumstances? If people saw a video of those events, and were going to judge what kind of person you were, would you rather they saw a 1-minute bloc focusing on the event, or, say, the previous year of your life to get the context?
None of this excuses what you (or anybody else) does, but it makes it comprehensible. I remember when I was in junior high, I was very afraid of home invasion. I actually told me friends never to throw me a surprise birthday party in my house, because I might stab them. (Seriously.) At the time, I can remember thinking that there were normal, rational, moral people in the world, and then there were crazy nutjob druggies who go around breaking into houses and killing people.
Needless to say, my view of the world is much more nuanced now. I’m not nearly as afraid of home invaders at this point, because (a) I’m stronger than when I was in junior high but also (b) I know that they are human beings too, who have friends etc. and–if they are breaking into my house–are probably in the midst of doing the stupidest and most reckless thing they had done all month. And if it turned out that it was some gang member who shoots me, I guarantee you it was not the first shooting he had ever experienced. In his background, “that’s how life is.”
Forget violent crime for a minute. Some readers may relate to something related to “the game of love.” Think of the most hurtful things you have done to others, in this category. I imagine many of you would say, in your defense, some version of, “Well the reason I did that is because I was protecting myself from XYZ… OK sure, I shouldn’t have done that, but that’s nothing compared to the stuff that [girls/guys] have done to me. Believe me, I tried being nice and honest, and it didn’t work. You either go into a single’s bar with a bullseye on your back, or a scope on your own gun.”
Or consider your career. It’s most obvious in cutthroat industries like Hollywood and Wall Street, but it applies to academia and boring offices as well. The pattern there is the same: Every year, a fresh crop of innocent newbies come in, only to be subjected to abuses that they had no idea were coming. They learn to protect themselves, some becoming cynical and withdrawn, others becoming aggressive themselves, and all becoming wiser. After years of receiving unexpected treachery, and seeing just how ruthless the business “really is,” some of the survivors in turn assume the reins of power and proceed to abuse and scandalize the next crop of innocent newbies.
Sounds pretty bleak, doesn’t it? It seems there is no way to stop the cycle of hurt. Except there is one thing you can do, to completely eliminate it from your own life, and to ensure that you do not contribute to the problem:
You can forgive the people who hurt you.
You can do this even if they express no remorse at all. In fact, if you can summon the power to do that, their own power over you withers away.
You can’t change what someone did to you 15 years ago. But if you forgive the person–even if just in your own heart–then that event need not affect your current life anymore.
As in so many matters, our perfect teacher and role model in this is Jesus.
Thoughts on the Arizona Shooting
I’m sure most readers have heard about this tragic event. Whenever something like this happens, I know a lot of anti-government people (who would never personally engage in violence except in direct self-defense) sympathize with the assailant. Let me point out some things, not because I am a fount of moral wisdom, but because it’s important to state the obvious:
* Whatever you think of this guy’s motives, he killed a 9-year-old girl. Game over. He is a murderer and has committed a very serious sin. We can try to understand what motivated it, just as we can try to understand suicide bombers. But no self-described libertarian should be secretly thinking this guy is a hero.
* It IS NOT TRUE that stuff like this “keeps the government at bay.” No, this actually strengthens the government. You know how I know? Just wait: extreme conspiracy theorists (and I don’t use the term pejoratively) will say that this was setup, to justify a gun ban, or to stall the Republicans’ efforts to rollback ObamaCare. (“We can’t drop coverage for pre-existing conditions now–do it for Gabby!”) So the hardened anti-government types can’t have it both ways: If you think this is just the type of thing the CIA would do, then you can’t also think it helps in your battle against the CIA.
* It is true that the actual people in Congress will be more afraid to go out in public now, than they were last week. But that is a far cry from saying they will vote to reduce the federal government’s power. Under no circumstances should we ever think that America would be devoid of people willing to assume positions of power in DC.
* The government is very good at using violence. If you try to fight it head-on with guns, you will lose. If you think the government in DC is oppressive, the best thing to do is convince others of your beliefs. That sounds cowardly and defeatist and hopeless, but here are other ways to describe this strategy: practical, pragmatic, effective, and moral.
P.S. Don’t recommend anything illegal in the comments. If you do I’m going to “censor” you. If the government ever does arrest me, I want it to be for something I said, not a hothead on my blog.
Murphy, Anti-Freedom Fighter Tonight
Tonight I’m going to be on Judge Napolitano’s show, discussing Obama, Krugman, and the raising the debt ceiling. (Am I for or against? I’ll give you a hint, the answer is the same for all 3, though you’ll have to tune in to see which way I come down.)
BTW I call myself an anti-freedom fighter, in deference to George Carlin who said, “What do firefighters do? They fight fires. So what do freedom fighters do?”
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