09 Jul 2012

Move Paul’s Book

Humor, Krugman 125 Comments

125 Responses to “Move Paul’s Book”

  1. Keshav Srinivasan says:

    Bob, when did you first hear about Krugman discussing the debate on the radio show?

    • Bob Murphy says:

      Bob Delaney sent it shortly after it happened. I was traveling a lot and couldn’t get the YouTube going until last week.

  2. Robert Fellner says:

    I don’t think Krugman will be debating anyone after this debacle: http://www.zerohedge.com/news/ultimate-krugman-take-down

    • Joseph Fetz says:

      Pedro for President!

    • Tel says:

      Man it’s like everyone is out there taking Krugman down these days. I can’t even keep up with all the takedowns.

      Used to be this little cosy club, we had a formula for it, we did our “have a go a Krugman” schtick, got a bit righteous, had a belly laugh over MMT, and everything was cruizy.

      What’s that? The Spanish are into it now? No way, that’s too much. The Spanish can get their own Swedish Bank Prizewinner to hack on. This is outsourcing at its worst. I blame Bush! And Obama! And Romney and Bain!

      • Tel says:

        I just got to the bit where he says that 10 year Spanish bonds are at 6.25% and “that’s a very expensive cost of borrowing… that’s not acceptable”.

        That guy doesn’t want to go anywhere near my mortgage then, because I’m paying more than that and I put myself forwards as someone a damn site more determined to pay it back than the Spanish government. I pay in Australian dollars too, which have so far been a lot more solid than either the Euro or the USD. Come on dingbat investors, don’t lend your money to governments, lend it to me!

        Funny how the real world of flesh and blood people doesn’t even ping the radar in such discussions.

    • Christopher says:

      You guys actually think Krugman got taken down in that debate? Have you even seen the video?

      • Ken B says:

        Check the House Rules for this blog:
        17) Krugman loses all debates.

        • Bob Murphy says:

          Wrong as usual, Ken B. The House Rules go like this:

          16) Ken B. is always wrong. Even if he agrees with Murphy, he does it for the wrong reasons.

          17) Krugman loses all debates, unless he is debating Ken B.

          • Tel says:

            You da man!


            You da house!

          • Ken B says:

            I stand corrected.

            • Dyspeptic says:

              This kind of humility (so appropriate) is truly inspiring. Bottle it and send some to Krugman.

          • Ken B says:

            RPM: “The House Rules go like this”

            I looked them up! Here are the first few:

            1. FDR was always wrong. Even about Lend Lease.
            2. FDR caused WWII.
            3. FDR caused the depression.
            4. FDR had crappy suits.
            5. Jesus loves you. Unless you’re FDR.

            Interesting stuff.

            • Bob Murphy says:

              What’s funny is, I gather you think it is self-evident that Lend Lease was a great idea.

              • Ken B says:

                We discussed Lend-Lease at great length and acrimoniously before Bob. Memory is the second thing to go.

              • Bob Murphy says:

                If by “we” you mean, you and other people on my blog, then yes Ken you’re right, we’ve argued extensively about Lend Lease before.

              • Ken B says:

                If by ‘other people’ you include yourself then you are right. Like on this thread http://consultingbyrpm.com/blog/2012/05/clarification-on-the-krugman-kampaign.html There was at least one other such discussion you were party to.

              • Bob Murphy says:

                Sorry Ken, you’ve once again hit the magical number of times in a thread where I have to decide I am no longer speaking to you. For anyone else who’s interested, follow Ken B.’s link. That is what he’s describing as the two of us having a debate over Lend Lease, such that in today’s thread, he chastised me for forgetting that we’d argued about it before.

              • Major_Freedom says:

                Haha, there is only one person who mentioned lend lease in that thread, and it wasn’t Murphy.

                I’m convinced Ken B is a closeted theist.

              • Ken B says:

                Fine with me Bob. But let’s look at just your comments here. You were trying to mock me. For what though? There are only 2 real possibilities: for not being aware the L_L was controversial in some quarters, or for disagreeing with you. On this thread you have now admitted you know I had discussed L-L at length. So you cannot logically be mocking me for not knowing of the divergent views. That leaves only one choice, and if you think that reflects well on you I say bring it on!

      • Tel says:

        I just finished listening to it, drank up on Bluestill, went back over it pausing and checking the references. Pedro nailed it perfectly, even his ever so slightly broken English could have been an accident but almost might have been sarcasm, “I’m very honoured … with such a distinguished, errrr, economist …” casual humour, almost accidental (I loved it) but on the issues he absolutely down the line:

        * They got us into this mess, so now we have to sacrifice our principles so we can get out of this mess.

        * The Euro was used as a political banner, it was meant to unite us … the job was not very well done.

        * We can go on chugging with this money that we have invented.

        * Redeploying resources that are somehow (somehow, we don’t know why, who? who did it?) somehow made idle in this depression, which is inexplicable…

        * [Because France and Germany asked for it] … that means we in Spain had too low interest rates […] so what inflated the bubble is going to remedy the blow-out.

        * It is homoeopathic medicine of the worst kind your ailment comes from excessive demand and you use excessive demand to cure your ailment.

        * Growth comes from increased resources, good institutions and new knowledge. All of these sources of growth (short and long) need individuals to set aside savings (saving is good, saving is not the kind of thing that is presented by Keynes and by Krugman as a mistake because when you save to much then the whole thing sinks)… savings so entrepreneurs and firms will invest them, and with the help of a solid currency, banks and capital markets will intermediate. Now this is the model that we want to go to and we don’t need central banks who bring their interest rates low when there is a boom… we in Spain thought that money was there for the having and we spent too much on the wrong thing.

        * Expanding aggregate demand only works in the short run, when wages and prices are rigid.

        * How to create a free society with a well functioning market where savings are not a mistake, nor a sin, and where savings are passed on to people who invest them, and there’s new knowledge and there’s real growth?

        * [Keynesian theory only led to stagnation and indebtedness in Japan]

        * How is the US doing? Well, not very well.

        And now Krugman’s response? Let me quote this:

        It’s been exceedingly disappointing to see show many people on one side of this debate have resorted to attempts to pull credentials.

        WTF? The only credentials that Pedro even mentioned were Krugman’s credentials, he didn’t even give a tiny glance at his own credentials, I don’t even know that he has any. Krugman is flailing for a line here.

        Krugman’s only other answer is that hand-wavingly the evidence is not in Pedro’s favour, although no particular evidence is mentioned. Frankly, that’s a seriously crap answer, although I accept that Pedro was locked and loaded and Krugman probably had no idea what was just thrown at him.

        Let me point out that Manuel Conthe hits Krugman just as hard (while pretending to be conciliatory in dulcet diplomatic tones) when he points out “internal devaluation is not unthinkable” he effectively is saying that all of Keynes is a crock.

        • Christopher says:

          Whether you agree or disagree with someone in a debate has nothing to do with the question who won. If debates were always won by the party who had better arguments, the world would be a better place.

          BTW: Of course he talked about credentials. He basically said Krugman was not qualified to talk about the issue because it wasn’t his primary field of study (= had no credentials for this topic).

          In any event, in the end, Krugman made him look like a cranky old guy who was on the defense on all fronts. If we want to be very kind to Pedro, we could call it a draw.

          • Bob Murphy says:

            Christopher, out of curiosity, did you agree with Krugman going into the debate? I.e., your lecturing would be more compelling if you actually hate Krugman’s views, but think he won the debate with the Spanish guy.

            FWIW, I watched the first 10 minutes and thus far I can see why Krugman would think, “I’ve answered every one of these points, numerous times, on my blog. This guy doesn’t even know my position.”

            I haven’t watched the rest of it yet, but I am prepared to say, “Krugman won that debate.” Don’t get me wrong, I’m not yet declaring this, because I have to see what Krugman says in response.

            (I didn’t volunteer this because it would look so petty. “Oh boy, this guy knocks out Krugman first, and now Bob is jealous.”)

            • Christopher says:

              I wouldn’t say I “hate” Krugman’s views but I certainly don’t share them. As a matter of fact, I find Keynesianism disturbingly implausible.
              I like Hayek, I like Hazlitt, I liked your sushi story… so no, I am not saying this because I adore Krugman.

          • Ken B says:

            “Of course he talked about credentials. He basically said Krugman was not qualified to talk about the issue because it wasn’t his primary field of study (= had no credentials for this topic).”

            Actually this is right. I wasn’t sure what Kruggers was referring to, since Pedro said many nice things about him, but this has to be what PK was talking about. And Krugman is right on the substance too.

            Maybe that’s why Murphy says PK won the debate.

    • Major_Freedom says:

      Krugman keeps making the erroneous claim that since price inflation hasn’t increased much over time since 2008, that somehow the large deficits and large increases in money inflation are somehow beneficial, and that Austrian theory which (allegedly) predicted hyperinflation has been falsified.

      The problem with this claim is that it assumes history has to be repeated, or at least serve as the standard light bearer from which to compare today’s prices, such that if prices have nominally risen by 1% or 2% since 2008, that the deficits and inflation are not as disruptive, not as inhibiting, indeed, are presented by people like Krugman as needed.

      But what if pre-2008 consumer prices were too high relative to a standard that is not history, but a free market? In other words, what if consumer prices would have fallen by 5% per year had there been a free market in money production, but because of central bank inflation, prices rose by 2% per year instead? Then we ought not consider price inflation as “modest”, but much, much too high.

      As Austrians have shown about the 1920s, even the “modest” intertemporal consumer prices inflation rate was associated with an inflationary bubble, because consumer prices would have otherwise declined much more than they did on account of the relatively high productivity.

      Consumer price deflation rarely if ever enters the minds of Keynesians, who have almost been swept away into believe that 2-3% consumer price is “normal”. Well what if during the last 30 years there has been such an increasing worldwide productivity growth, that in a free market (e.g. an economy with a free market in money production) there would have been consumer price deflation of 10% per year? It would paint the 2-3% consumer price inflation in a whole new light. Far from consumer prices “modestly” increasing, which then deludes people like Krugman into believing that the main problems reside elsewhere (for example insufficient inflation), the 2-3% consumer price inflation could represent far too much money printing and too high government budgets deficits, and the economy is in a bubble that hasn’t fully corrected yet.

      Schwartz is right. Krugman isn’t digging deeper and he is thinking too superficially. Just because consumer price inflation hasn’t been 20%, 30%, 50%, i.e. there hasn’t been “hyperinflation”, it doesn’t mean Austrian theory is wrong. Krugman is ignoring the credit deflation that has offset the Fed’s printing, which of course means the money supply is not increasing as fast as the Fed is increasing base money.

      Krugman believes Austrian theory is summed up in Peter Schiff’s prediction of hyperinflation. It’s a caricature. Austrian theory proper isn’t about making scientific predictions based on constancy in relations. Schiff’s prediction of hyperinflation based on the Fed’s money printing doesn’t stem from Austrian theory, it stems from his own opinion.

      • Tel says:

        Most of the smackdown in the USA happened in real estate, because most of the balloonistry happened in real estate, except that the banks have not marked to market, and they don’t have to mark to market because there has been a temporary suspension in mark to market accounting.

        That’s temporary meaning four years ago or basically as soon as prices started to go down, or in other words: crisis => bullshit is OK => do what you like => not my fault! => more crisis => rinse, repeat, profit.

        Seriously, we are that deep in crap right now.

      • Bob Roddis says:

        We have to face the fact that the Keynesians, monetarists and various other statist schools are never going familiarize themselves with either basic libertarian (NAP) or Austrian (economic calculation, ignorance/problems of knowledge) concepts much less be able to apply them in even a unsophisticated manner. While this means that we are never going to convince them of anything, it also means that they will be totally defenseless if our ideas ever begin to catch on with a significant plurality of the public. Frankly, I’m astonished at the complete ineptitude of our opponents. No complex indecipherable response from them. Just claims of over-prediction of the CPI or accusations that we should go to Somalia. They always instantaneous telegraph that they are clueless.

        I’ve noted that Major Freedom daily exposes Mr. Sumner as someone with no familiarity of Austrian analysis.


        • MamMoTh says:

          For the very same reason astronomists will never familiarize themselves with astrology.

          • Daniel Kuehn says:

            Calling them “astronomists” doesn’t help your case. It makes you sound like some old-timey guy with a handlebar mustache.

            • MamMoTh says:

              what’s wrong with my moustache?

              • Daniel Kuehn says:

                To be honest, I always wished I had the balls to grow one.

              • Major_Freedom says:

                “To be honest, I always wished I had the balls to grow one.”


                must…have discipline….


            • Ken B says:

              Gee-willickers Daniel, that’s just balderdash.

          • Bob Roddis says:

            Yes, Mam-mouth, there’s always a good reason to not learn Austrian Economics.

            • Ken B says:

              Learning a bit of Austrian theory lets you follow good articles like this one http://econfaculty.gmu.edu/bcaplan/whyaust.htm

              • Major_Freedom says:

                Major problems with Caplan’s criticism of Rothbard and Mises.

                Just one:


                Caplan writes:

                “A utility function is just a short-hand summary about an agent’s ordinal preferences, not a claim about “utils.””

                But there is a claim about utils! How can one present utils as “a summary”, even if it is a summary of ordinal utility, and then say one is not making claims about utils? If one says “1 apple gives me 7 utils, and 1 orange gives me 8 utils”, and this is supposed to be a “summary” for “I prefer an orange to an apple”, then, the obvious question becomes why use utils at all? The answer of course is so that neoclassicals can “manipulate” variables in (monotonically transformed from ordinal utility) cardinal utility functions and claim to say something true about a person’s ordinal preferences.

                OK, but the problem here is that individuals don’t actually think in their minds “Gee, this apple gives me U=a*ln(quantity of apples)+(1-a)*ln(quantity of oranges) = 7 utils, whereas an orange would give me U=a*ln(quantity of apples)+(1-a)*ln(quantity of oranges) = 8 utils.

                People instead think “I prefer an orange to an apple.”

                Furthermore, people’s actual ordinal ranking schemes are typically far too complex to even be written down in neoclassical formulaic precision. If I told you my actual ordinal ranking scale, and you tried to form a mathematical equation using various constants and operations that produce the same order of preferences as the one I actually have, it would be hopelessly complex.

                Because of this, the typical utility functions used by neoclassical economists are so simplistic that they do not ever represent anyone’s actual value scale as good as a straight up list of ordinal rankings of preferences would.

                For example, if my ordinal list right now at this moment is 1 orange, $0.50, 2 oranges, $0.90, 1 apple, 3 oranges, $1.00, 1 hamburger, $2.00, a walk in the park, 1 hour of leisure, $200, 4 hours of labor, playing catcher at a pick up baseball game…

                How would you put this ranking in an equation? People just don’t think of mathematical equations when making choices, so I think Caplan should admit that Rothbardian ordinal scales are superior to cardinal scales that “summarize” ordinal scales.


                There are many others.

      • Raja K says:

        I am beginning to like you Major_Freedom!

  3. Richard says:

    In fairness to Krugman (I never thought I would say that) he does have a point about the predictions of hyperinflation that have been made by some Austrians. Perhaps it will happen eventually but the impression given over the past few years is that thanks to QE, hyperinflation would rear its ugly head very soon.

    • Tel says:

      (I never thought I would say that)

      You should make the small effort to keep up appearances.

      That’s probably the one thing that distinguishes us from our opponents.

      I will be fair and admit that I predicted QE3 a lot sooner (given that anyone who knows how to search can prove it anyhow), and QE3 hasn’t materialised yet; however they managed to sneak in a kind of QE2.5 creeping asset growth which has been surprisingly effective and yet restrained at the same time. Maybe the Fed really are trying their best to manage the situation, and they might even read this blog from time to time. I mean, it would kind of be in their interests to get something right for a change… not completely impossible that they actually want to get it right.

      I’ll even go a step further and say that I expected once the US dollar started to devalue and once China stopped their expansion into US treasury bonds, it would be nasty freefall time. That hasn’t happened either, they have managed to get a workable US dollar devaluation without hitting a massive slide. Not a bed of roses, but… not as bad as it could have been.

  4. jjoxman says:

    Um… were those Austrian econ groupies or liberty groupies? Or nieces (in which case, never mind…)?

    • Bob Murphy says:

      jjoxman they are sisters who are Austro-libertarians. I imagine they are somebody’s nieces, but not mine.

      • Anonymous says:

        Well if I wasn’t convinced of the moral superiority of Austro-libertarianism before, I certainly am now.

    • MamMoTh says:

      They look hot and cheap, like fiat money during hyperinflation

  5. joeftansey says:

    Krugman has a legitimate point. When is this hyperinflation going to hit?

    • Ken B says:

      The day after Murphy pays up to Henderson.

    • Bob Murphy says:

      joeftansey, does it matter that I have never called for hyperinflation (to my knowledge), and that I explicitly criticized Marc Faber for using that reckless term in 2009? Details here.

      Seriously guys, which actual Austrian economists have explicitly predicted hyperinflation? I don’t remember any of them doing it. I for sure didn’t (unless someone can point to a comment I made on a blog post maybe, in which case I will amend my denials). All I remember is that Krugman has been accusing of us saying it for years, but I don’t remember Gary North, Salerno, Thornton, Tom Woods, or anybody like that saying “we are going to have hyperinflation, hold your hat.”

      Krugman has linked to a google search of “peter schiff hyperinflation.” Did Schiff actually predict it? The fact that Krugman says he did, doesn’t clinch it for me. Krugman also implies that right-wingers predicted Europe would be great now, because of the slow-down in spending aka “brutal austerity.” Again, no Austrian I know of, ever said any such thing. Maybe George Will or David Broder said something stupid like that.

      • Ash says:

        Here’s Schiff in 2009 explicitly saying that he doesn’t expect hyperinflation in the next 2 to 3 years. But he does say he expects high inflation (double digits) in that time frame, and believes that hyper inflation would only come about as a result of how the government reacts to that inflation.

        Skip to 7:00

        • RFN says:

          And he is 100% correct in regards to the higher inflation, too. That is according to way they used to measure inflation.

      • Ken B says:

        Wasn’t your bet 10% not hyper? Jft has overstated but the point is a strong one nonetheless. We have a prediction, we have its failure.

        • Major_Freedom says:

          According to private sources, inflation did hit over 10%

      • joeftansey says:

        You wrote in a 2009 article http://mises.org/daily/3488:

        “Even though federal policies will reduce labor productivity, and even though Obama’s pro-union policies will exacerbate “wage stickiness,” over the next few years I predict large price inflation that will tend to mitigate these factors.”

        “But if and when the dollar collapses and we see 20+ percent price inflation, I think people will look back at the above chart and wonder, “How in the heck did we manage to convince ourselves to worry about deflation?””

        In another 2009 article http://mises.org/daily/3933/A-Case-for-the-Inflation-Camp:

        “I want to acknowledge that earlier this year, I was warning of large rises in consumer prices […] obviously I was too alarmist in my predictions. So I should at least explain what I think went wrong.”

        “So once it’s clear that CPI has been rising at a decent clip for a full year, the spell just might be broken and dollar holders might run for the exits. If and when that flight from the dollar begins, the banks will want to follow suit with their more than a trillion dollars in excess reserves, and then Bernanke will have some weighty soul-searching to do.”

        In 2011 http://mises.org/daily/5574/On-the-Brink-of-Inflationary-Disaster:

        “Although the trend could reverse, data from the past two months suggest that the inflationary big one may be upon us.”

        “These trends might turn out to be a blip — only further observation will show — but we soon may see the Fed’s “exit strategies” put to the test.”


        So, you don’t outright say “I predict hyperinflation”, but you predict “serious stagflation”, “large price inflation”, and think it’s only a matter of time before “20+ percent price inflation”. You identify and warn about mechanisms that could lead to massive inflation.

        I’m definitely willing to be charitable and recognize that this doesn’t pin you down to a particular forecast, but you can see that Krugman doesn’t have to stretch the truth very far.

        And yes, there are tons of mises.org articles talking about impending hyperinflation. We both know I don’t need to check LRW.com…

        • Bob Murphy says:

          Holy cow Joe, I have been the first to admit I was wrong in my specific forecasts of (price) inflation. You might be new to this blog (I’m not being sarcastic), but I went out of my way to say I’m wrong on that stuff.

          I am asking, did any professional Austrian economist every actually call for hyperinflation? I don’t think they have. You write:

          And yes, there are tons of mises.org articles talking about impending hyperinflation.

          OK, if there are tons, then show me two, and ideally from writers I’ve heard of. I am genuinely curious.

          • joeftansey says:

            “You might be new to this blog (I’m not being sarcastic), but I went out of my way to say I’m wrong on that stuff.”

            Yes. I know. That’s why I quoted you admitting you had been wrong. But this is a red herring – Krugman claims you guys have been predicting hyperinflation, even if you acknowledge you made a mistake.

            “OK, if there are tons, then show me two, and ideally from writers I’ve heard of. I am genuinely curious.”

            There Will Be (Hyper)Inflation, Thorsten Polleit, http://mises.org/daily/3390 And many more by Polleit. He is an adjunct scholar of LvMI.

            Store ’em If You Got ’em, Doug French http://mises.org/daily/3653

            “the Fed, the Treasury, and bank regulators are fighting valiantly to keep the fractional-reserve-bubble machine operating, with the ultimate result likely to be inflation and possibly hyperinflation”

            Monetary Freedom and Its Opposite, Mark Thornton http://mises.org/daily/3196

            “I can only conclude one of two things. Either they “plan” to resort to hyperinflation to pay for this mess, or they are collectively dumb as a sack of horse manure.”

            And not to be conspiratorial, but you sound awfully confident. Is there a policy at mises.org that they’re not going to make any doomsday predictions?

            My next step would be to search the blog posts of prominent Austrians, but I did say “mises.org”.

            • Bob Murphy says:

              Joe wrote:

              And not to be conspiratorial, but you sound awfully confident. Is there a policy at mises.org that they’re not going to make any doomsday predictions?

              Now I’m confused. Are you saying you’ve found evidence of failed doomsday predictions, or not?

              • joeftansey says:


                No one said “In 2011 there will be hyperinflation”. But you can read the quotes above and see how close they are toeing the line.

              • LvM says:

                There’s really no indication they have a specific time frame in mind. You’re seeing what you want to see.

              • joeftansey says:

                Oh, are you really from LvM?

                I didn’t claim they had a specific time frame. But saying “the next few years” or “the inflationary big one may be upon us” sounds like a prediction to me.

                It’s not an exact date, but Krugman isn’t stretching it too far when he says the Austrians have made failed predictions.

              • Bob Murphy says:

                Joe wrote:

                It’s not an exact date, but Krugman isn’t stretching it too far when he says the Austrians have made failed predictions.

                Right Joe. Again, I was complaining that people have been saying we’ve been calling for hyperinflation, when I know I haven’t, and I didn’t realize (until today) that the word had actually been used at Mises.org. I honestly never saw those articles. If you read them, the discussion is more nuanced than the titles (which were given by the editor, not the author), but I’m not going to weasel out of it that way.

                Since I have repeatedly admitted that Krugman has made better forecasts than me, regarding price inflation, I didn’t really think I needed to go over that again. By the way, I’m bald, in case people didn’t realize. And I’m Irish.

              • Joseph Fetz says:

                …and he used to play soccer. (gasp)

        • Major_Freedom says:


          “I’m definitely willing to be charitable and recognize that this doesn’t pin you down to a particular forecast, but you can see that Krugman doesn’t have to stretch the truth very far.”

          Now that’s what I call going out of one’s way to defend one of Krugman’s falsehoods.

          Pull the Austrian claims as close to Krugman’s assertion, as possible, then say “Hey guys, Krugman is like, only a hop skip and a jump away from the truth here. Give him a break.”

          You should be his PR manager.

          • joeftansey says:

            Krugman’s words from the OP:

            “[T]he Austrians have been spectacularly wrong through this crisis. They’ve been predicting high inflation just around the corner, year after year, for 4 years running”

            So when Bob says “the inflationary big one may be upon us”, is that not EXACTLY what Krugman is talking about?

            • Major_Freedom says:


            • joeftansey says:


              • Major_Freedom says:


              • joeftansey says:


              • Major_Freedom says:


            • Ken B says:

              It is. I too have expected high inflation for a couple years now, and still (more tentatively) expect high inflation in coming years. But so far my expectation has been wrong, and that gives me pause.

              • Major_Freedom says:

                Remember to always look at money aggregates, rather than only the Fed’s base money.

                A substantial majority of the money supply is composed of credit expansion, which has the potential, once increased, to decrease later on.

                It’s possible for $1 trillion of money creation by the Fed to accompany $2 trillion in credit collapse, thus reducing the money supply by $1 trillion, and leading to falling prices.

                Of course, huge monetary bases have the potential for influencing much larger credit expansions later on.

      • Daniel Hewitt says:

        I’m going to have to go back and look now. I seem to remember, around 2009-ish, reading article after article on mises.org and LRC predicting hyperinflation. Maybe it was just Schiff and Faber????

        I also remember a speech that you gave a couple of years back, and your opening joke was something along the lines of “I can’t simultaneously be worried about hyperinflation and my 30-year fixed mortgage”.

      • Daniel Hewitt says:

        I did find this.

        There Will Be (Hyper)Inflation
        Thursday, April 02, 2009 by Thorsten Polleit

        But to my surprise, dozens of articles predicting hyperinflation did not pop up right away when I searched mises.org, that goes to show how bad my memory is…

      • Gene Callahan says:

        Bob, Krugman doesn’t say “hyperinflation,” he says “high inflation” (I listened twice just to make sure), which you certainly did predict.

        • Bob Murphy says:

          Right Gene. Do you see me anywhere saying, “Krugman was unfair in that recent snippet?”

          Joe brought up the term hyperinflation, and Krugman on his blog several times has mentioned hyperinflation as being predicted by Schiff and “right wingers.”

          • Ken B says:

            No. I did see you pulling a Krugmanish stunt though. Jft overstated with hyper. You ran with hyper. You talked about Krugman and hyper. You mocked hyper. Now when Gene points out it was high you say “Oh I knew that I was just correcting jft.” Well the best way to correct jft is Gene’s. This is like the stuff you nail Krugman on routinely. Who’s the professional economist here for pete’s sake. Landsburg or Henderson would never try to score points this way.

            • Bob Murphy says:

              Ken B., I made a freaking video responding to what Krugman said. I listened to that clip about 40x in the last 3 weeks. I had to choose which video clip to feature in response to what Krugman said. Gene in no way played a gotcha here. He didn’t catch me off guard; I knew exactly what Krugman said.

              Now it seems that YOU are playing a Krugmanesque response. Listen to what you are saying Ken. Here is your position:

              “Bob, you are being ridiculous for complaining that Krugman and other critics accuse right wingers of predicting hyperinflation. After all, Krugman didn’t say that in this video. So what if he has said it at least 3 times on his blog? It should only bother you, and you can only complain about it, if he said it within the last calendar month, otherwise the statute of limitations runs out.”

              • Ken B says:

                You were responding to jft. He made a simple error. You could, like Gene did, have corrected it. You could have addressed his point. Instead you riffed on hyper, ignoring the substantive point. Riffing is fun, pwning is fun, but don’t pretend it’s a serious answer.

            • Bob Murphy says:

              Let me try it this way, Gene and Ken: If I actually didn’t listen carefully, and I thought Krugman was accusing the Austrians (and specifically me, since he was explaining why he wasn’t debating me) of predicting hyperinflation for the last 4 years and being wrong, then wouldn’t it have made more sense for me to bust him on lying?

              But no, I couldn’t do that, because what Krugman said was perfectly legit. So the best I could come up with, was to make it look like I was the equivalent of William Shatner in the famous Twilight Zone episode. Everyone else thinks he’s nuts, but he really sees the danger and has to save the day.

              So you can say I’m a bad economist, say I make videos that aren’t funny, say I had to pay those girls to take a photo with me…but please don’t think you’ve somehow caught me mishearing Krugman in that clip. My gosh.

              • Ken B says:

                “you can say I’m a bad economist,”

                Thanks for the permit! But if you look back you will find not one comment on any thread where I have said any such thing. The frustrating thing about you Bob is that you seem to have a good, tough analytical mind for economics. And perhaps only for economics. I blame ‘god’ — the meme not the imaginery being.

              • Mike Sandifer says:


                I rarely read this blog, but a couple of questions come to mind.

                1. What sorts of changes are occurring with respect to your view of economic cycles, given how wrong you’ve been about inflation, etc. during this(and perhaps every) cycle?

                2. What sorts of views do you have on economics apart from business cycles? I haven’t seen many posts about non-cyclical issues.

                I find it “interesting”, to be kind, that you have religious posts on what seems to purport to be a professional website. I suspect some segment of the market for your services would be turned off by such posts.

              • Bob Murphy says:

                Mike Sandifer wrote:

                I find it “interesting”, to be kind, that you have religious posts on what seems to purport to be a professional website.

                Should I make it clearer that it is my personal website? Perhaps a notice along the top? (ba-dum)

                I suspect some segment of the market for your services would be turned off by such posts.

                Right, but if I hid my religious faith in order to make more money, I would feel kind of “interesting.”

              • Tel says:

                Is it better to pretend to be something that you are not, in order to make yourself more marketable?

                Or is it better to just do the best job you can of selling what you have, and be honest about what you are?

                I’ve seen both approaches used and either can succeed or fail, but personally I lean to the latter.

  6. Ken B says:

    There is a rich irony here. I think these two videos and the discussion *bolster* Krugman’s case for spurning a debate with Bob. Krugger’s complaint, oft repeated, is that snappy responses and better debate prep shouldn’t decide serious issues. I think watching Pedro he does get the better of Krugman in a serious way. But as someone noted PK was a bit side-swiped and clearly not expecting this kind of thing. And PK did after all make a strong substantive point: where’s the big inflation. RPM can seize on Tansey’s misstatement to avoid it, but Kruggers has scored a point and it needs a serious rebuttal.

    Krugman also does not want to lend credibility to people he does not consider serious. Now, he is clearly willing to appear with Pedro. So why not with Bob? He doesn’t see Bob as a serious guy like Pedro. Now look at the video Bob links here. I find it kind of funny but if you are PK, and you already see RPM as a misguided crank cum huckster … you’ll just roll your eyes won’t you?

    • Bob Murphy says:

      Ken B. wrote:

      He doesn’t see Bob as a serious guy like Pedro. Now look at the video Bob links here. I find it kind of funny but if you are PK, and you already see RPM as a misguided crank cum huckster … you’ll just roll your eyes won’t you?

      Ken, it is clear that Paul Krugman will never in a million years debate me, unless he gets a bunch of money from it. The genesis of the Krugman debate was that a college girl (I think) emailed me, saying she had seen Krugman at a book signing and asked if he would debate an Austrian. He said no, because they are not a serious school of thought. So since he wasn’t taking us seriously, I decided to ham it up in the video and make the goofy debate challenge.

      Now, since he is ridiculously trying to take the moral high ground, and say he won’t give a platform to Austrians (even though he did it 3 weeks earlier to hawk his book, as he himself admitted), of course the “correct” thing for me to do is make another ridiculous video.

      If you think the reason this debate isn’t happening, is that I am handling the situation wrong, then your perception of reality is odder than even I realized.

      • Ken B says:

        This is a faintly odd response Bob. That tale of the girl suggests that PK really does see Austrians as cranks who are not serious. And I think *that* is the reason the debate will never happen. PK quite sincerely believes that.

        But note what I actually said was ironic: this bolsters Krugman’s *case* for spurning the debate. Case, case, case. Say someone — and Daniel Kuehn seesm to have done so on this blog — puts it to Krugman that he should debate. Someone PK cannot or will not just ignore with a shrug. “After all Paul you do this sort of thing in Spain for cash.” Now PK is actually a serious man with a serious reputation to protect. He will want to be able to give a reason — make a case — to say no. You might think it a pretext, as might I, but just having one matters in these things. And another goofy video serves him well. It was, in other words, one thing to make an eye catching video when he was all ivory tower above it all, but once you caught him in flagrante dignifying Austrians, *that* was the time to be serious. When the only case he had left was your alleged frivolity it was weak rhetoric to be frivolous.
        That’s why it’s ironic.

        • Bob Murphy says:

          Ken, you’re acting like I’m not aware of these deep insights. Krugman was never going to debate me. So there’s no point in worrying about how I’m hurting Daniel Kuehn’s attempts to get him to change his mind.

          It’s like you went up to Larry David and said, “You know, it’s ironic. In a lot of Seinfeld episodes, George tries to be a jerk and a cheat to get ahead, but it ends up backfiring.”

          I think Larry David would be as nonplussed by such a comment, as I am by yours.

          • Ken B says:

            Think about the audience then Bob to see the point. Your challenge was theatre right? Not to inveigle PK into a debate but to make a point? For the benefit of those of us watching who are neither Krugmanites nor Austrians. Well, aimed at that audience the ongoing frivolity is a a small mistake. When we hear PK beg off it’s very different if Kruggers can point to silly videos and say, ‘see, like I told you, not serious.’

            • Dan says:

              What difference does it make? Krugman isn’t going to debate Murphy anyway. If Murphy put up a serious video challenging Krugman it would not make one bit of difference. If Krugman isn’t going to debate him anyways then Murphy may as well have some fun with the guy.

              • Major_Freedom says:


      • Bob Roddis says:

        Krugman’s latest excuse to avoid live debates is that the format of live debates is all wrong. Well then, PK, what is the correct format?

        Even though many of us have problems with Hayek*, he did win the quasi-Noble Prize in Economics and in 2011, the American Economic Review (specifically Kenneth J. Arrow, B. Douglas Bernheim, Martin S. Feldstein, Daniel L. McFadden, James M. Poterba, and Robert M. Solow) named its top 20 articles of the last 100 years. Included therein was:

        Hayek, F. A. 1945. “The Use of Knowledge in Society.” American Economic Review, 35(4): 519–30.


        The use of knowledge in society is a core or the core Austrian School concept about which Krugman is oblivious. There is no excuse for a self-proclaimed serious thinker in economics to be unfamiliar with basic Austrian School concepts especially after these awards** been given to Hayek. Krugman is not familiar with and does not understand Austrian concepts and that’s why he is afraid of any debate.

        *For example, his love of the minimum wage, social welfare and General Pinochet

        **I don’t claim that these awards necessarily make Hayek right on the merits but there is no excuse for unfamiliarity with his BASIC ideas

      • Bob Roddis says:

        A few years back, I purchased an old, used pamphlet entitled “A Discussion With FRIEDRICH A. VON HAYEK”. Held at the American Enterprise Institute on April 9, 1975.

        The “money quotes” are found here:


        There is no excuse for the anti-Austrian to be unfamiliar with these basic Austrian themes.

      • Bob Roddis says:

        I scanned the entire 1975 Hayek discussion here:


  7. Bob Roddis says:

    Pursuant to this government chart, the CPI base was 175.1 in 01/05, 211.143 in 01/09 and 229.815 in May, 2012. I don’t see those changes as trivial.


  8. UnlearningEcon says:

    I’m sorry but the attitude (moreso your commenters than your’s, Bob) of these Austrians just makes me think half of Austrian fanboys are angsty 15 year olds who think a debate should be like CS where somebody gets ‘pwned.’

    Krugman is absolutely right about the ‘public circus’ approach to economics. I’d be all for a written Keen/Krugman style debate with the Austrians (where Krugman didn’t exactly cover himself in glory), or even better, a Cambridge Capital Controversies styles one in journals (although this was was already done between Austrians and Keynesians in the 30s, at least Hayekian ones).

    But ultimately this approach just strikes me as childish.

    • Ken B says:

      I just want to note that Unlearning’s shrewd comment is a good answer to this (rhetorical, alas) question from Dan to me. http://consultingbyrpm.com/blog/2012/07/move-pauls-book.html#comment-41216.

    • Dan says:

      I’m sorry but the comments of people like Unlearning and Ken makes me think they are clones of this guy. http://www.youtube.com/watch?v=f4zyjLyBp64&feature=youtube_gdata_player

      I’d call for a debate like between Murphy and Smith.

      • UnlearningEcon says:

        Dan, that would be better. But as Daniel Kuehn posted some times ago, not much would come from a debate like that. Neither side is particularly well informed of the other’s positions.

        I don’t know what you mean by that video but if it is an ad hom I can assure you that I am nerdy, though I don’t wear glasses.

        • Dan says:

          I was saying you guys are boring. I assume everybody who frequents economics sites is at least a little nerdy.

          • UnlearningEcon says:

            I’m boring and serious when it comes to economics, certainly.

            • Ken B says:

              I find you interesting actually, but I also listen to mass more often than most priests so caveat emptor.

    • Major_Freedom says:

      UnlearningEcon is clearly afraid Krugman will get pwned, so he pretends that the people thinking of pwnage are the angsty Austrians.

      Krugman is absolutely right about the ‘public circus’ approach to economics.

      Krugman is very clown-like in his blog. He doesn’t represent any sort of sophisticated, reserved and high mindedness.

      I find it endlessly entertaining how Krugman’s defenders and apologists seem to have all bought into this “Krugman is too prestigious and high class” line for why he won’t debate.

      Krugman is a man child. He’s not above circuses.

      • UnlearningEcon says:

        ‘UnlearningEcon is clearly afraid Krugman will get pwned’

        Thank you for confirming my point.

        I’m actually not a fan of Krugman’s tendency to label his opponents with things like ‘mystic’ and treat them like 12 year olds either.

        • Major_Freedom says:

          Thank you for confirming my point.

          Thank you for confirming mine.

          • Ken B says:

            Get a room guys.

            • Major_Freedom says:

              Ohhhhh, that’s the source of your frustration.

  9. RG says:

    Hyperinflation did happen and was widely reported by the internets and many other medias. QE is by definition inflation and the QEs since 2008 were massive and hit the system at high velocity. Hyper seems an understatement.

    The fact that FRNs have largely been sitting on the sidelines is irrellevant. They are there and we’re all in Jonestown, PA.

  10. Bob Roddis says:

    I looked up synonyms for the word “swiped”.

    abducted, captured, carried off, carved out, ensnared, gathered up, gotten hold of, hauled in, obtained, pulled in, seized, snagged, snatched , embezzled You get the picture.

    Bob Wenzel posted a video of Krugman being asked if inflation was theft by a Spanish woman. I cut out the first minute of her question and reposted the shortened video. Watch Krugman shake his head at this most excellent question.


    Krugman has now unambiguously admitted that purchasing power is being snatched away by the purposeful policy of inflation but that it’s not really “theft” because the snatching is done for an allegedly noble purpose. (This is all done, of course, without due process of law in any event by a bureaucratic agency). I transcribed the master’s words from the video.

    Beautiful Spanish Woman: Don’t you think inflation is theft?

    Evil Krugman: Inflation is only considered theft if you consider anything that people didn’t expect that affects some people for the worse theft – I mean there is no promise – a Euro note does not promise on it that it’s gonna have a fixed purchasing power in terms of goods –that was not part of the deal. UUUUhhhhh, a bond, there are bonds where you are protected against inflation and there are inflation-protected bonds and people pay a premium for that. It’s not theft in any legal sense, and if you are worrying about people who are not responsible for the crisis paying the price for the crisis, how about the 25% of Spain’s labor force who are unemployed? How many of those people caused this crisis? What is actually happening is that an enormous price is being paid by unemployed workers all across the western world. If a little bit of inflation, no one is talking about Zimbabwe, no one is even talking about 5%, if 3% inflation is way to get some those innocent victims out of their misery, I would think that is something well worth doing. It seems to me a strange kind of morality that is desperately concerned that people who bought bonds might be somewhat surprised by a modest erosion of the value of those bonds, uhhh, that’s a terrible sin, but having people who did nothing wrong be unemployed and have their lives destroyed as it’s just part of the way the capitalist system is supposed to work.

    Does anyone else think it odd that Krugman never addresses the Austrian position* that the money dilution is what causes the unemployment in the first place so that the result of Krugman’s program is theft PLUS unemployment? No wonder Krugman won’t debate Bob Murphy. In a debate setting, Krugman is likely to make admissions that are fatal to the Keynesian hoax.

    *Seeing that Krugman had just been smacked to the ground by the Austrian economist Pedro Schwartz

    • Tel says:

      … a Euro note does not promise on it that it’s gonna have a fixed purchasing power in terms of goods –that was not part of the deal.

      Other than that Maastricht thingy which is merely words on paper with some signatures on it. Errr, perhaps a bit contract-ish I guess. Might be a sort of a promise, or something or other.

  11. Mike Sandifer says:


    Okay, it doesn’t purport to be a professional site, but it effectively is. You comment on economics here and when I google your name, an entry from this blog comes up second, and is the first search result associated with you.

    Some of your comments seem to indicate you’re new to religion. If so, do you think your adoption of a religion is related to your anti-scientific view of economics?

    • Dan says:

      Mike, have you stopped beating your wife?

    • Richard Moss says:

      Some of your comments seem to indicate you’re new to religion. If so, do you think your adoption of a religion is related to your anti-scientific view of economics?

      Only if you believe the atheists who show up here and criticize Bob’s religious views, yet subscribe to ‘Austrian’ economics and view it as scientific, rescue it from your claim that it is *not* science.

    • Richie says:

      More physics envy from a wanna-be mathematician.

    • Joseph Fetz says:

      Maybe it’s me that is the crazy one, but what exactly does Bob’s religion have to do with his position on economics? Are all economists atheists?

      Bob has a personal blog where he posts a religious post every Sunday (as an atheist, I don’t see that as being too bizarre), but during the rest of the week it is essentially all economics (with a little politics and entertainment for good measure). This is pretty much standard fare for the personal blog of a doctor of philosophy.

      Further, how is his view of economics anti-scientific? As far as I can see, much of what is Austrian econ is what forms the core of all of economic science. So, are you saying that economics as a whole is unscientific, or just Austrian economics? It is true that Austrian economics doesn’t use a positivist methodology and favors a deductive methodology, so are you saying that logical deduction is unscientific? And if so, how can you support this claim without falling into a contradiction?

      Essentially, you’re making claims, but you aren’t supporting them with any facts. Is that “scientific”, or are you just being an asshole?

      • Tel says:

        Economics always starts to drift into politics and then morality. Once you start discussing morality, religious assumptions are impossible to hide any more (even amongst atheists you see a lot of religious presumptions, generally followed by excuses) so kind of drawing a line across that lot and moving it to Sundays makes it all work better as far as I’m concerned.

      • Ken B says:

        @Joseph Fetz:
        Bob is a ‘heterodox’ economist. He rejects sentral parts of mainstream econ, and adheres to a form of Austrianism. Myself I rather like that, but I’m not an expert. Many people will be uncertain if they can trust his judgment or if he’s a flake. Especially since he identifies with Ron Paul. Due to some unfortunate past behavior, and some recent crazy uncle behavior, many see Ron Paul as a flake. Economists like Krugman, widely respected in the field, call Austrian flakes. So say like Mike Sandifer you are uncertain if this guy is serious or a flake. Now does a concern about Bob’s lack of skepticism (and poor reasoning) about his new religion make sense?

        • Joseph Fetz says:

          Yes, I understand that Austrian econ is a heterodox school of thought, but that is primarily on the basis of its methodology and conclusions, not necessarily the core laws and theories that make up the school.

          With the exception of some Keynesians, I don’t think that most economists (heterodox or mainstream) would argue that prices aren’t determined by where supply and demand intersect, or that all actors don’t seek increased utility, that markets prices don’t clear the market, etc. Indeed, much of what makes up the core of Austrian economics is what economics was up until the Keynesian revolution. That most economists today are Keynesians is not a reflection on the history of economic thought, it is more an indication that Keynesians are often engaged in activities that cannot be considered economics.

          • Ken B says:

            I’m not attacking Austrianism, which pace Krugman I do think is serious. I’m pointing out why people like Mike Sandifer are given pause by Bob’s relgious approach.

            Look at it this way. Some chemist who likes making Youtube videos in his boxer shorts tells me that VSEPR theory is all wrong. I know enough to be skeptical, and enough to know this is a pretty heterodox idea in chemistry. But I cannot on my own judge. All I know is he seems smart but nearly every other chemists thinks he’s nuts. Then I notice he’s also a scientologist … Tell me this wouldn’t color your judgment?

            • Dan says:

              Come on Ken. The guy came on here and made two comments that were nothing but hostile. Both on his religious and economic views. He’s just suffering from a case of being a prick.

              • Ken B says:

                Oh I grant you the drive-by prick aspect (I’m a squatter prick; just ask Bob). I’m not saying he’s right, as I’ve said I like Bob’s economics. I’m just pointing out this BornAgain – The South Will Rise Again – Pearl Harbor Hoax – nexus can and to many does make his econ look a bit dodgy.

                Similarly I am one of the few libertarian-leaning folks who thinks Ron Paul is *bad* for libertarianism, because he looks unsavoury and kooky frequently enough. I am always struck by how many Paulines cannot see it.

              • Joseph Fetz says:

                A lot of people owe their move to libertarianism to that “kooky” guy, and he’s certainly created a large movement in the US and the world. So, you my not like him, but you certainly cannot make the statement that he’s bad for libertarianism, because he’s probably done more to get people into the libertarian fold than anybody ever has.

              • Dan says:

                No kidding, Joseph.

              • Richie says:

                Who has said that Pearl Harbor was a hoax? That’s a first for me.

      • JFF says:

        Joe, some from column “A” and some from column “B.”

        The “anti-scientific” quip is a throw-away attack usually leveled by snarky English majors and others who only know “science” – and thus, economics, philosophy, logic, etc. – from the watered-down, lowest-common-denominator works that populate the New York Times Best-Seller List.

        • Ken B says:

          Sorry, that’s a hard sell on this blog. We have quite a few tough minded STEM folks here. Plus Landsburg took a firendly shot this morning on his blog. Bob’s religious postings are full of special pleading. Just the other day he cited ‘healings’ after someone prays as evidence. You may not agree with our shots, but they are hardly snark from English majors.

  12. Bob Roddis says:

    We don’t even have to pay these people to show up. I’ve been complaining that all Yglesias, Krugman, Barro, Frum, DeLong and the rest know how to do is to call us names while refusing to engage our arguments, ideas, or concepts.

    And Sandifer shows up to prove my point. It’s like a miracle.

  13. Mark says:

    Macroeconomics is difficult and incentives matter. Selectively reading the comments verifies these last two points.

    1. M=kPY. Holding k and Y constant, Higher M causes higher P. Those that suggested a higher rate of inflation didn’t/couldn’t predict the effect that Fed policy had on excess reserves.

    2. We don’t know the unseen/counter-factual. Holding M constant, what would have happened to P? Would it have fallen by 10%?

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