Potpourri
Well it’s time to post my various links, because my Firefox browser tabs are now bigger than the Fed’s balance sheet. (Ba-DUMP. Thanks folks, I’ll be here all week. Remember to tip your waitress.)
* For a while now I’ve conjectured that “the big one” could happen when a Chinese finance minister says something at a press conference regarding US Treasurys that gets slightly mistranslated and causes a worldwide stampede for the exits. This is dangerously close to my scenario.
* It really cracks me up when Paul Krugman can only explain hostile commenters as being “paid trolls.” For what it’s worth, I don’t think Captain Freedom is on Christopher Hitchens’ payroll. Daniel Kuehn probably is on Soros’ payroll, but I don’t think DK knows it, and I think his commentary here is off the clock.
* My hats off to Bryan Caplan for looking like a wimp by standing up to libertarian warmongers. I think violence is vastly overrated, and that (for example) the area we call the United States would be much freer today if the Founding Fathers hadn’t resorted to arms, but instead had continued to write and lecture the masses.
* Lew Rockwell links to the list of dangerous professions, and soldier isn’t in the top 20. (I don’t know what the timeframe is for the list; maybe in 1968 the ranking would be much different.) I’m trying to think of something analogous to “freedom isn’t free,” like “cheddar isn’t cheap.” But probably we shouldn’t even go down that road.
* Here’s an interesting analysis from a SF Fed economist on the interest rate risk facing the Fed. (HT2 Bob Wenzel) Even though I was accused of tinfoil hattery for my interpretation of the Fed’s accounting rule change, I think this guy is saying the same thing about the Fed’s ability to preserve its capital in spite of massive losses.
* A hilarious dissection of finance guru Dave Ramsey. For the record, I love listening to Ramsey’s show, I just think he is very naive when it comes to the conventional faith in mutual funds, and of course I disagree strongly with his invective against whole life insurance. The other thing in this video touches on a pattern I noticed during the financial bubble–a lot of the women on CNBC etc. would timidly say, “Should we be worried about these trends?” and the cocksure guys would tell the ladies not to worry their pretty little heads, the big boys had it all under control. Riiiiiight.
* One last point on this “Can You Tax a Rich Man?” stuff: Landsburg quotes from Krugman’s textbook on the distinction between the statutory and economic incidence of a tax. I think that’s fine–I had the same idea–but strictly speaking these are not EXACTLY the same things. If the government levies a $5 per pack surcharge on the people selling cigarettes, the supply and demand curve elasticities could be such that the pre-tax equilibrium price of a pack goes up by (say) $4.75. In that case, even though the retailer is sending a check for $5 to the government for every pack of cigarettes he sells, he’s really only out 25 cents, with the consumer picking up the rest. However, in the case Landsburg was discussing, nobody is denying that the rich guy would be bearing the full monetary brunt of the tax. I.e. the rich guy is going to send in the $84 million to the IRS, and the rich guy isn’t going to raise his prices to be able to shift the tax onto somebody else. Rather, Landsburg was arguing that if the government uses that revenue windfall to increase its own usage of real resources, then those prices will rise and impoverish people other than the rich guy, who (by hypothesis) wasn’t consuming in the first place. So it’s the same spirit, but strictly speaking it’s not exactly the same type of analysis.
* Here’s one rich man that Landsburg wants to tax (not really).
* I don’t endorse this theory, but it’s worth considering. A guy posted at ZeroHedge says that we’re being set up for a deflationary crash.
* Alex Tabarrok points to yet another chapter in our collapsing rule of law.
* Glenn Greenwald busted Obama on the amazing about-face of the “official” reasons we’re in Libya. The flip flop on regime change was so fast it is truly amazing.
* Yet another fantastic blog post by Glenn Greenwald summarizing the two-tiered justice system in America. It’s this kind of post that makes you say, “Ah OK, this is why GG is so huge. That took a lot of work and boy he has to stay on top of this stuff 24-7.”
* If you’ve never thought much about the economics of fuel efficiency mandates (i.e. regulations saying cars and trucks need to get X miles per gallon by year Y), you might like this one I wrote a week or so ago.
* I spell out the problems with the “budget slashing” Paul Ryan plan.
* My interview with a radio host who knew a surprising amount about my career.
* I draw from the Herbert Hoover well yet again, but this time I make my point by quoting from the very article I am criticizing. Really, I think you should check out the absurd non sequitur the Salon writer made when “proving” Hoover relied on free markets and that’s why we had the Great Depression.
Note that Bob Murphy’s Hoover article quotes MMT guru L. Randall Wray:
Our modern Hooverians would like to return to the “good old days” of President Hoover, when the government was smaller and both unwilling and unable to offset the swings of private investment spending. Back then, when investment collapsed unemployment did not go to 9 or 10 percent, it went all the way to 25 percent. Hooverian economics would turn back the clock to ring in another Great Depression with the same old pre-Keynesian ideas that failed us in the 1930s.
So, not only does Wray know no economics, he knows no history either.
I figured the potpourri section was a nice place to post this paradoxical nugget:
David Resler, chief economist at Nomura Securities in New York: “I don’t see the dollar as having a significant intermediate-run effect on the performance of the economy.”
I thought this was a good opportunity to ask you a question I’ve been meaning to ask about Hoover, FDR, and federal spending during the Great Depression. My economics textbook (Hubbard and O’Brien, Macroeconomics 2nd ed.) has a section in the Fiscal Policy chapter called “Did Fiscal Policy Really Fail during the Great Depression”? It mainly discusses the data of E. Cary Brown and Larry Peppers, who published their studies in 1956 and 1973, respectively. (I don’t have access to those articles, but maybe you do or maybe you’re already intimately familiar with them.) There is a table in this section showing federal government expenditures, actual federal budget deficit or surplus, cyclically adjusted budget deficit or surplus, and cyclically adjusted budget deficit or surplus as a percentage of GDP, from 1929 through 1939. The actual federal budget deficit or surplus column shows that the federal government ranged from $1.0 billion in surplus (1929) to $3.2 billion in deficit (1936). However, the cyclically adjusted deficit/surplus column says that there was only a cyclically adjusted budget deficit in 1931. (I don’t know if that’s fiscal year 1931-1932 or fiscal year 1930-1931.) The section concludes by quoting E. Cary Brown: “Fiscal policy, then, seems to have been an unsuccessful recovery device in the ‘thirties—not because it did not work, but because it was not tried.”
You don’t mention Brown or Peppers (or cyclically adjusted data) in your book on the Great Depression and the New Deal, which I bought and read (brownie points please?), and I also haven’t come across their names in your Mises Daily articles, so what do you make of that conclusion? What does cyclically adjusted deficit/surplus even mean? Is it a hand-waving or statistics-manipulating trick to make data fit a hypothesis (in this case or in general)? Why would you say your conclusion, based on actual budget deficits, which ranged from 0.1% to 5.9% according to your 2010 column “Did Hoover Really Slash Spending?”, are more relevant than conclusions based on cyclically adjusted budget surplus/deficits, which were almost entirely on the surplus side, according to Brown and Peppers?
“What does cyclically adjusted deficit/surplus even mean?”
That’s a good question…
“The government is actually borrowing money from the public, but since we’re in a depression, we’re going to treat that as savings”
WTF?
Glenn Greenwald has become one of the first sites I check daily. Its hard to find anyone who puts things so well and documents their proof like he does.
Absolutely. He is a brilliant journalist and his work ethic is second to none.
If people are really being paid to post negative comments on Krugman’s blog, that would seem to refute the idea that the economy is suffering from a demand problem.
Bob, your mutual fund analogy is equivalent to me not reading economics because boy, that Dave Ramsey sure was wrong about the economy… let’s through them all out. Hopefully you are smart enough to realize what a weak comment it was and aren’t simply being screwed over by some stockbroker who sold you some nifty strategy to never lose money.
Also not sure why you trust one financial industry over another, but let’s trust the insurance companies that wouldn’t be around without a bailout and all buy cash value insurance! It’s funny how much they can increase their LTC premiums in a year, and up their annuity costs. Sure, that doesn’t mean they have risk, it’s cash value insurance. Like the kind dad always told us about.
Question. Where do military pilots fall in lews survey? I know they have a higher rate then airlines. That being said I still agree with lews post.
“Well it’s time to post my various links, because my Firefox browser tabs are now bigger than the Fed’s balance sheet. (Ba-DUMP. Thanks folks, I’ll be here all week…”
Uh-oh. Time for a week-long vacation!