17 Feb 2012

Potpourri

Drug War, Economics, Humor, Religious, Shameless Self-Promotion 8 Comments

* My cousin Frank alerted me to the termination (of his contract, not his heartbeat) of Pat Buchanan. And here I was, thinking I had a shot at the slot after Maddow.

* Dan Carroll, the guy who blogs about counterproductive government foreign-adoption policies, had an exchange with me in the comments of Bryan Caplan’s post. At first it sounded like we were disagreeing strongly with each other, but then by the end I think he agreed with me. But he didn’t seem to think he had changed his position, so I can’t be sure. (I’m not being sarcastic; I really don’t know what the heck happened.)

* I’m pretty sure that Bob Wenzel and I are doing one big running joke on this Metta World Peace thing, but it looks like some of the atheist commenters don’t get it. So anyway, just to avoid confusion, I certainly don’t think Metta’s thoughts rise to the level of a C.S. Lewis work of nonfiction.

* The only thing more complicated than a whole-life policy is a woman, and Nelson Nash has figured out both.

* A fiery list of questions from Judge Napolitano.

* This is why I didn’t talk to girls in high school.

* Are you an anarcho-capitalist? All the cool kids are, nowadays.

* This is awesome! Pete Boettke quotes Samuelson lavishing praise on some Austrians, saying they would have won the Nobel if it had been established earlier. (I think I saw David R. Henderson link to this.)

* The nerdy von Pepe sends along this John Cochrane post on pitfalls in differencing. I told him, “If I had gone to Chicago, I think I would now understand econometrics.” Really, for those of you either in grad school or with an advanced econ degree, I recommend reading the 7-page note that Cochrane links to. I think that would have really given me hope in my 1st year at NYU, instead of the econometrics TA shrugging when I asked, “If you didn’t already know that’s what the answer was supposed to be, how would you have known to tackle the problem set that way?”

* Danny Sanchez explains the mystery of marginal pairs. Now your weekend can officially begin!

8 Responses to “Potpourri”

  1. Blackadder says:

    The Obama Administration really really likes “it pays for itself” arguments. Contraception mandates? They make insurance cheaper. Making you buy more expensive cars? You’ll thank us later. Bailouts? We’ll make the money back with interest!

  2. Robert Fellner says:

    Hey Bob,

    You may want to add Reason.com’s blog post citing your analysis on why high inflation has not arrived yet. I thought it was a pretty good post:

    http://reason.com/blog/2012/02/17/where-dr-pauls-inflation-might-be

  3. Will "take no prisoners" Hart says:

    Say what you want about his views, Pat Buchanan always makes for good television…….And he’s certainly far more affable than Krugman, Schultz, Olbermann, etc..

  4. Blackadder says:

    Bob,

    The article Reason linked to (“On the Brink of Inflationary Disaster” from August of 2011), you note a downward trend in excess reserves that, according to the article, is evidence that the long predicted inflation was around the corner. As far as I can tell, the trend you identified has continued. Yet the inflation still isn’t here.

    Even if you are committed to the Austrian story, I hope you can see why the claims might not seem that credible to an outsider. You have a group of people who say ‘inflation is right around the corner, just wait a few months and you’ll see!’ and then when a few months go by and nothing happens, they say ‘inflation is right around the corner, just wait a few months and you’ll see!’ After a while, it becomes hard to take such claims seriously.

    • Robert Fellner says:

      The paragraph after they link to his Aug 2011 Mises Daily Article reads as follows:

      “Murphy thought back in August that the reserve-leaking was about to start happening in spades, which does not seem to be the case; in fact the latest figures show excess reserves continue to pile up, increasing by nearly 50 percent in the past year, as has the monetary base, by slightly slightly more. So as long as that leakage isn’t actively happening, the inflationary effects predicted by Paul are staved off, goes the story.”

      • Blackadder says:

        Excess reserves at the time Bob wrote his article: $1,601,997

        Excess reserves as of February 8, 2012: $1,535,735.

        The 50 percent increase in excess reserves the Reason article refers to happened before Bob wrote his article.

        Plus, as I understand it, Bob’s argument wasn’t simply that excess reserves were falling, but that required reserves were rising at the same time.

        At the time Bob wrote his article, required reserves were: $81,303

        As of February 8, 2012, required reserves were: $97,558

        All figures are in millions, obviously.

        • Bob Murphy says:

          Blackadder, assuming your numbers are right (I glanced at the FRED graphs and the direction is correct, for sure), here are my weasely answers:

          (1) The particular metric that I had always been using since Bernanke did this stuff, is still the same. Namely, I had been graphing excess reserves versus total reserves, to watch if the gap between them increased. (Looking at excess reserves alone doesn’t tell you anything, because you don’t know if they’re dropping due to new loans being made, or because total reserves are being sucked out by the Fed.) So even before you challenged me, when I read this Reason piece, I looked that particular FRED combo chart up, and said to myself, “Shoot, in August I was wrong for thinking the trend was changing, but obviously it hasn’t.”

          (2) You are right, the particular argument I cited in that August piece was something that Wenzel was harping on at the time. At a 20,000 foot view, I would think that the two approaches should be the same. I.e. when Wenzel’s metric is saying, “inflation inflation Will Robinson!” so should mine. But as you point out, his metric seems to have continued giving off the warnings, but the approach I was using before, looks like everything still should have been stable the whole time.

          So, what to conclude? I’m not sure. It might just be that the particular numbers you are citing, aren’t that huge in the grand scheme, and that’s why the graphs I was relying on originally, don’t reveal anything alarming to the naked eye. Or, maybe there is something in the technical definition of “Required Reserves” that Wenzel and I are misunderstanding.

          I think M1 has indeed been rising the whole time, which suggests to me that we were correctly interpreting what the Required Reserves number meant.

          I am no longer confident in my interpretation of these data. I have admitted that for a while. The problem is that M1 might have grown in the summer and through now, because people are freaking out about Europe and want to switch the composition of their wealth into FDIC-insured deposits. So that would show up as an increase in the stock of M1, even as price pressures fell. It’s tricky with fractional reserve banking to keep that kind of stuff straight.

          Even in a commodity money world, you could imagine something analogous. E.g. suppose a panic breaks out so everybody wants to hold more gold. This makes the prices of everything (quoted in gold) start to drop. The owners of gold mines then see their profitability go up, so they hire more workers, run more shifts, etc., to extract gold at a faster rate. The measured stock of gold money held by the public would start rising at an unusually high rate, and an economist might say, “Holy cow, expect CPI–quoted in ounces of gold–to start going through the roof, because of all the monetary inflation!” But that guy would be reversing cause and effect.

          He might even have a blog called Free Advice.

          So at this point, I’m not sure if I’m that guy, or what. But yeah, you are right to treat my discussions on this matter with a grain of salt.

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