22 Sep 2009


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* Great Lew Rockwell article about Afghanistan. He gives four links to Mises Daily articles that warned about the debacle back in 2001.

* I haven’t listened to him with Scott Horton yet, but I’m sure Daniel Ellsberg is very interesting. I heard him on NPR commenting on the Afghanistan assessment, and he said something like, “I can’t believe that the military commanders are actually telling President Obama that if they get 40,000 extra troops, they will be able to achieve anything that we could call success.” Ellsberg made a very interesting point in his book Secrets. He said that after the nightmare of Vietnam, the conventional wisdom was that the political leaders were out of the loop, that the “reality on the ground” was getting filtered at each level as it went up the chain of command. So (according to the conventional wisdom) the president foolishly pressed on, thinking a few more bombing campaigns and a few more thousands troops would turn the corner. But that was completely false, Ellsberg says. He says that the presidents (JFK and LBJ) would go on TV and say what the generals were telling them, and they would simply be lying through their teeth.

* Speaking of Scott Horton, here I am, speaking with Scott Horton.

* Finally! Jeff Hummel politely tells Scott Sumner he’s nuts.

* Robert Wenzel must have just given himself a paper cut or something when he read this Arthur Laffer piece, which I thought was really good. Sure, Laffer doesn’t subscribe to the Austrian theory of the business cycle, but I bet most people would have predicted that Laffer would be praising Bernanke’s liquidity injections. Not so.

In reference to the 1933 – mid-1937 period, when CPI rose about 15% despite double-digit unemployment, Laffer says: “Inflation can and did occur during a depression, and that inflation was strictly a monetary phenomenon.”

At first I thought he was being coy, by ignoring the Keynesian trump card that things seemed to be going swimmingly when FDR first took over. But Laffer really is making a very good point here: According to the Keynesians–and indeed, according to the WSJ reporters, financial analysts, and the Federal Reserve itself–we are in no threat of rising price inflation now, because of “spare capacity.” So how they heck do these people explain the CPI increase from 1933-1937? Isn’t that supposed to be impossible?

I’m being dead serious. Sure, they can say, “Give me a break, I’d take plummeting unemployment rates in exchange for 5% inflation any day,” but that’s not the tradeoff they’re saying we face right now. They’re saying there is no threat of inflation with a bunch of spare capacity. Are they instead going to refine the argument and make it about second derivatives?

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