14 Jan 2011

Krugman Sends Love Note to Sumner

Federal Reserve, Krugman 6 Comments

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.

6 Responses to “Krugman Sends Love Note to Sumner”

  1. Yancey Ward says:

    If a counterfeiter could produce $100 bills completely indistinguishable from Fed notes, would Krugman not agree that was confiscation of value?

  2. Blackadder says:

    If a counterfeiter could produce $100 bills completely indistinguishable from Fed notes, would Krugman not agree that was confiscation of value?

    If someone made and passed off counterfeit bills that would be fraud, but I can’t say whether it would be confiscation of value because I don’t know what that means.

    If I grow some wheat and sell it (thus reducing the value of everyone else’s wheat) is that confiscation of value?

  3. Daniel Hewitt says:

    I interpret the term “confiscation of value” to mean that force, or implied force, is used. In the first example, the counterfeiter is relying on the government’s coercion to make others to use Federal Reserve notes in their exchanges. Fraudulently claiming to have the government’s coercion backing the $100 bills produced qualifies as implied force, I believe. Not strongly though…I am open to being convinced that it is just plain fraud and nothing more.

    The second example of selling wheat, assuming that you acquired the land, labor, and capital inputs through voluntary exhange is not “confiscation of value” since force was not used.

  4. Bob Roddis says:

    The creation of funny money out of nothing by the banking system is theft of purchasing power from those holding the existing money stock. That is the prime engine of the Keynesian Hoax, along with the surreptitious lowering of prices and wages resulting from money dilution to spur the boom.

    BTY, Krugman tends to print my comments when I insult him in a nice way:


  5. Daniel Hewitt says:

    Yeah, I concur that government doing it makes it confiscatory, since they issued the fiat in the first place.

  6. BadKaty says:

    @ Blackadder Since “confiscate” refers specifically to the seizure of property via force, a personal decision to enter the wheat industry obviously has nothing to do with the confiscation of anything…Unless of course you develop your own strain of wheat and have the government declare it illegal for other wheats to be grown; while at the same time promoting yours to every bakery in the world and having each one agree to using only your wheat in their baking. That could probably be categorized as “confiscation of value” or “coercive fraud” or what have you.