28 Aug 2012

Murphy Responds to Ezra Klein’s Crazy Fed Proposal

Economics, Federal Reserve, Krugman, Shameless Self-Promotion, Steve Landsburg 39 Comments

Steve Landsburg took a swing (and missed! But head up Steve no one bats a thousand) at Ezra Klein’s crazy Fed proposal when I was down at Mises U, just in time for me to incorporate it into my talk that day.

Thanks to Chad Parish for editing. Music by Kevin MacLeod.

39 Responses to “Murphy Responds to Ezra Klein’s Crazy Fed Proposal”

  1. Ken B says:


    I confess I just don’t get everyone’s interest in Klein and Yglesias, who are arrant partisans with — from what I have seen — a tendency to distort and misrepresent. It’s like there’s some kind of bloviating middlebrow leftist pundit bubble …

    • david nh says:

      Totally with you on this. I particularly don’t get it given the (unjustified, in my view) credentialism some people (ahem) sometimes exhibit and Yglesias’ and Klein’s notable lack of credentials.

    • Daniel Kuehn says:

      I agree to a certain extent. It bugs me that they call themselves “wonks”. They’re not wonks at all – they’re journalists. All this stuff is second hand, and some of it isn’t communicated very well second hand.

      The thing that’s tough to get around, though, is that they’re both very insightful. They’re journalists, not economists, and it shows – but they’re insightful journalists that follow the debate much better than most.

      • Major_Freedom says:

        Tomorrow morning, Bernanke could walk in front of a camera and announce that the Federal Reserve intends to begin buying huge numbers of Washington Post stock with the simple intention of bringing the newspaper prices down to about 2.5 cents and holding it there for one year, and one year only.

        The message would be clear: If you have any intention of ever buying a WaPo newspaper, the next 12 months is the time to do it. This is Uncle Ben’s Crazy Paper Sale, and you’d be crazy to miss it.

        • Bob Murphy says:

          Do you mean shorting WaPo stock?

          • Major_Freedom says:

            I meant buying newspapers themselves.

            Yeah,what I said is ambiguous.

      • Ken B says:

        I don’t mind that they are journalists. Honest journalists can do very good things. It’s their partisanship, bias, and (from what some bloggers have demonstrated) low reliability and trustworthiness. Yet the libertarianosphere seems obsessed with them. Cowen can be positively embarassing.

        • Bob Murphy says:

          Yeah FWIW Ken the only reason I even talk about them is because not only Krugman but also Scott Sumner treat them like they’re colleagues. So, I like to keep them humble.

          • Ken B says:

            Yes, you’ve mentioned before how you cannot resist fish in a barrel …

      • Silas Barta says:

        You “don’t get” people’s interest in Krugman, but he’s the modern day Bastiat? Or did you abandon that quixotic crusade?

      • successfulbuild says:

        This depends on if there really is a settled methodology to solve all economic disputes and there is not. Also a degree in public policy administration does not mean you are an economist.

  2. Major_Freedom says:

    Bob, IMHO you’re an excellent orator.

  3. skylien says:

    Great talk.

    By the way there is a very interesting paper from… The Dallas FED. What do you think about this?:

    Title: “Ultra Easy Monetary Policy and the Law of Unintended Consequences*”

    “In this paper, an attempt is made to evaluate the desirability of ultra easy monetary policy by
    weighing up the balance of the desirable short run effects and the undesirable longer run
    effects – the unintended consequences. The conclusion is that there are limits to what
    central banks can do. One reason for believing this is that monetary stimulus, operating
    through traditional (“flow”) channels, might now be less effective in stimulating aggregate
    demand than previously. Further, cumulative (“stock”) effects provide negative feedback
    mechanisms that over time also weaken both supply and demand. It is also the case that
    ultra easy monetary policies can eventually threaten the health of financial institutions and
    the functioning of financial markets, threaten the “independence” of central banks, and can
    encourage imprudent behavior on the part of governments. None of these unintended
    consequences is desirable. Since monetary policy is not “a free lunch”, governments must
    therefore use much more vigorously the policy levers they still control to support strong,
    sustainable and balanced growth at the global level.”

    It gets even better if you go though it.


  4. Jonathon Hunt says:

    Note to Murphy: bomb is funnier than shoot.

    • Bob Murphy says:

      But variety is important too, and ammunition is more logically linked with shooting than bombing. Hence my perfect performance.

      • Ken B says:

        I could almost see you descending from the heavens with your umbrella and carpet bag …

        • Bob Murphy says:

          Are you putting a space before you type out the ellipses? This man is a force of nature!

          • Ken B says:

            I do, as is right and proper. My ellipses are practically perfect in every way!

            • Joseph Fetz says:

              Yeah, I screw that one up every time.

            • Bob Murphy says:

              I will say this, Ken B.: When you furnish a non sequitur to attack a position I don’t even hold, you do so with flair and precision.

              • Ken B says:

                Now Bob, you know non sequiturs are only applicable to positions you do not hold . All the positions you do, have cogent objections


              • Bob Murphy says:

                I’m sure there exists at least one cogent objection to every position that I hold, Ken B. I’m just pointing out that you rarely provide any.

              • Ken B says:

                Bob, I’m just playing along with your premise. The secret to good improv is agree with the premise and extend it.

              • Bob Murphy says:

                Amazing. Ken B.–with confidence–tells Christians about the historicity of their favorite gospel accounts, chastises a Muslim for his erroneous beliefs concerning the Qur’an, and now tut tuts me for screwing up a joke. I forget: On Landsburg’s blog do you ever point out his careless errors in number theory?

              • Ken B says:

                Lemme fix that for you.

                ” Ken B.– correctly–tells Christians about the historicity of their favorite supposed gospel accounts”.
                It’s symptomatic that you seem to think only believers can be confident about the contents of the bible. A convenient way to dismiss questions.

                And if you mean ABT then I corrected him — as he acknowledges — about the HADITH not the KORAN. They are very different things.

                And yes I correct Steve when he errs. The thing you will find hard to credit is Steve appreciates the corrections.

              • Bob Murphy says:

                The movie Dogma was based on the premise that if God could be caught in a contradiction, the universe would cease to exist. I imagine something similar would happen Ken B. if you ever admitted you had overstepped on the Internet.

              • skylien says:

                This can only mean one thing. Ken is God.

                Who would have thought that after a burning bush God now uses more contemporary less conspicuous ways of communicating as some sort of a wise guy commenting on fringe blogs, basically just showing off that he knows everything better?

                Anyone ever tried to see if Ken posts multiple comments at the same moment on different blogs?

                Though I guess it wouldn’t be that easy, would it?

              • Ken B says:

                Joke all you want Bob (and skylien of course), but we have fought our battles on ground of your choosing. I didn’t bring up the woman caught in adultery, or claims about what the hadith say. Perhaps that should shake your blithe confidence in your rightness on such topics.

              • Bob Murphy says:

                And he’s self-righteous to boot! Winner winner chicken dinner.

              • Ken B says:

                You’ve descended to just name calling, you don’t even TRY to answer points anymore.

              • Bob Murphy says:

                I’m out-trolling the troll.

              • Ken B says:

                Ahh grade 3. How I miss the good old days.

  5. Tel says:

    Just to crash in with something completely off topic but how do people feel about what happened with Ron Paul and the convention?

    I’m actually a bit shocked because here are Ryan and Romney giving speeches about freedom (some of them even quite good speeches) but when it comes down to tin tacks and real action they show they are afraid of an old man ready to retire, giving one simple message at their convention. They already knew what Ron Paul was going to say, because he always says the same stuff.

    I kind of don’t get it. No I completely don’t get it. Romney had over a thousand delegates, he could afford a bit of politeness and respect for his fellow party members. Why not go to the extra effort of demonstrating impeccable procedural correctness? Obama with his, “you didn’t build that” comment managed to almost single-handedly throw away the election, but now the Republicans are fighting back by alienating all the Libertarian voters.

    • Ken B says:

      Not being (remotely) a Ron Paul fan I cannot get worked up over this, but I agree. It fits with the standard gripe agaisnst Romney too: that’s he’s a manufactured focus grouped soundbited assembly of positions not a real person with his own ideas and the courage to articulate them. This is another example of massaging and controlling the message, putting on a fixed smile.

      Here’s a joke

      A liberal, a conservative, and a moderate walk into a bar.
      ‘Hi Mitt’ says the bartender.

      • Tel says:

        Even if you are not a Ron Paul fan (and I understand why some people have a problem with him), you should at least be a fan of allowing diverse points of view to have their say. Also, if there’s going to be a vote, you have a straight-up clean vote without jiggering the nominations or screwing around with the process.

        If I was Mitt I would insist that Ron Paul’s name went on the ballot and that he had all the delegates he was entitled to, and that he gave a speech. Mitt already won the nomination months ago, his challenge now is the presidency, so making a real big show of being a real big guy is going to get a lot more people onside than trickery.

        • The Existential Christian says:

          I read somewhere that Ron Paul was offered a speaking slot, but he declined because the Romney camp wanted to approve his message, and it was contingent on him endorsing Romney. Ron Paul of course replied that endorsing Romney would, “undo everything I’ve worked for in the last 30 years”. No one can accuse him of equivocating his position, that’s for sure.

    • Mike T says:

      On the one hand, you’re right about alienating a large voting block. And the disrespect to his delegates was beyond reprehensible.

      However, I can only assume they thought it was worth the risk rather than allowing him to speak at an event with everyone watching as he exposes the RNC and GOP at their own superficial PR rally how they really aren’t fiscal conservatives, concerned about civil liberties, and are unrepentant bloodthirsty warmongers.

      Not to mention, it would be rather funny inviting someone to speak who doesn’t even endorse the ticket. And who makes Paul Ryan look like LBJ on spending.

      Did you also see the token Ron Paul tribute video? It was actually fairly well done (all things considered), but obviously carefully scripted by almost solely focusing on his fiscal conservatism. It was almost like they were saying: “Hey the old man may have been wacky, fringe, and stubborn, but he was right about spending!”

  6. Steven Christopher says:

    “Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates” … Oh crap.


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