20 Sep 2012


DeLong, Economics, Federal Reserve, Krugman, Potpourri, Rothbard, Shameless Self-Promotion 26 Comments

==> Joe Salerno replies to George Selgin regarding Krugman’s challenge to the Austrians on MMMF. I actually think both Joe and George are wrong: They both use the phrase “could care less” when, in context, it is clear that they meant “couldn’t care less.” (Joe uses it in the post, George in his second reply, which I can’t seem to link to specifically.)

==> Oh, if you wanted a serious comment, all I have to say on this stuff is my treatment in the Liberty Fund paper linked here. If you go to the section on maturity mismatching, I summarize the Austrian arguments on both sides of the issue, without taking a stand on on it myself because I’m really not sure about it. (I am definitely in the 100%-reserve camp, but I’m not sure yet if that translates into an objection to maturity mismatching in general. So that’s where I personally am, which is not a comfortable position.) For sure, Joe (Salerno) is definitely right that Krugman (and DeLong!!) aren’t genuinely curious about the Austrian position on this. They aren’t asking in the way I might say, “What do physicists think about multiple universes?” No, they are asking in the way I might say, “Was DeLong born being this unfair to his opponents, or did it take years of practice? I really want to know.”

==> He obviously doesn’t come out against fractional reserve banking, but Larry White has a surprisingly forceful call to End the Fed in this Mercatus video.

==> Earlier this month the Freeman ran my tribute to the 50th anniversary of Rothbard’s Man Economy and State. However, you may want to read the “reprint” that Mises.org did, because they put in an image of Figure 41 that I spent several paragraphs discussing (it’s hard to see what I’m talking about without the diagram in front of you). Also, Joe (Salerno) gave some additional commentary on my article, so read that to get a better picture of what Rothbard thought he was doing. (I never got to meet Rothbard even once, so obviously Joe and others need to tell us little nuances like this before the “history” is written down…)

==> Krugman has clarified and dug himself deeper in an op ed on the iPhone 5 thing. Now I am quite sure that he has things bass ackwards.

26 Responses to “Potpourri”

  1. Justin G says:

    Have any Austrians written a response to Krugman’s “The IPhone Stimulus” post?

    • Bob Murphy says:

      I think Bill Anderson did. I might do something eventually on it, because I think it’s a really “timeless” issue.

    • Mike T says:

      I recall reading that Krugman IPhone stimulus article and wondering if I was missing something obvious or seeing things. He seemed to be making a fairly straightforward supply-side argument to somehow defend govt stimulating AD.

    • Bob Murphy says:

      Jake, an even better spot would be in the post above. 🙂 (I.e. I linked to it, right?)

  2. Major_Freedom says:

    Come on Murphy, put your hat into the ring and give your thoughts on this latest FRB debate.

    • Major_Freedom says:

      What I mean is, the debate over people’s characters, not the topic itself. Isn’t that was this is really about anyway?

      • Bob Murphy says:

        Not sure what you’re asking, MF. I have lightly made fun of George on this very blog before, for his tendency to go ballistic on people in the comments of blogs. Is that what you mean?

        • Dan says:

          I think he was just joking. Sarcastically suggesting you throw yourself in the mud and attack people’s character rather than take the moral high ground. I could be wrong though.

          • Major_Freedom says:

            Dan’s got it.

            Yeah, I’m not exactly stand up material.

  3. Dan (DD5) says:

    What a great article on MES.

  4. skylien says:

    Very nice video of Larry White!

    It really pains me to read exchanges as this one between Selgin and Salerno… It really is obvious that nobody is interested in even attempting to deescalate the tone.

    I just try to ignore this and concentrate on the actual arguments on both sides…

  5. Martin says:

    Hey Bob, on the DeLong/Anti-Semite/FRB debate, I just wanted to point out, that the IMF had published a paper on 100 % reserves backing in a DGSE model of the Chicago plan. I believe that Pete Boettke posted this a while ago too http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf.

    From the abstract:
    “It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100%
    reserve backing for deposits. (…) We study these claims by embedding a comprehensive and carefully calibrated
    model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher’s claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy”

    I don’t know nearly enough about this issue whether 100% of the Chicago plan is close to what you’re advocating, but this would give you some mainstream credibility for the points made. Further, I’d like to point out that Thomas Sargent discusses this issue somewhat here as well: https://files.nyu.edu/ts43/public/research/phillips_ver_9.pdf

    • Bob Murphy says:

      Dang, the hatred of minorities is more widespread than even DeLong realized.

  6. Christopher says:

    Wait. So producing and selling new stuff without any government intervention just based on peoples desires is Keynesianism now?

  7. Joseph Fetz says:

    “They both use the phrase “could care less” when, in context, it is clear that they meant “couldn’t care less.”’

    This must be one of your pet peeves, because I remember that when I wrote that guest post for you a while back that that was the only real edit that you made to my draft. There were a few other small mistakes that were missed, but that one you caught immediately.

    • The Existential Christian says:

      I read once that the original phrase was “I could care less, but that would require an effort”. It was popular enough that people eventually shortened it, and apparently it’s old enough for it’s history to be forgotten as well. I actually rather like the full phrase, it’s really snarky.

      • Joseph Fetz says:

        Right, but it requires context. If you “can” care less has a much different meaning than if you “can’t” care less. Most people go with “can” or “could”, when what they really mean is “can’t” or “couldn’t”.

        Of course, when you present the second part to the phrase, the actual intent becomes much clearer. But, most people aren’t even aware of the second part, and thus don’t mention it. We’re only left with the first part, and the context in which it finds itself.

        I see what you’re saying, though.

  8. Lawrence H. White says:

    Hey Bob, thanks for plugging my video. But why did you say “surprisingly”?

    • Joseph Fetz says:

      Dr. Lawrence H. White,

      Granted, I am not the person that you addressed the question to, and I’m pretty much just some guy on the internet, but I think that this might stem from the question, “can an FRB institution be sustainable without a lender of last resort?”. Of course, this also brings along questions about deposit insurance, legal tender laws, and the like. However, I think the root is the efficacy of FRB without a central bank.

      I could be wrong– it happens.

    • Bob Murphy says:

      Hi Larry,

      Oh, just because the stereotype is that the Auburn crowd is rowdy and likes to get the common folk riled up, whereas the GMU (/Mercatus) crowd is real subdued and likes to appeal to tenured professors over brown bag lunches.

  9. senyoreconomist says:

    Dr. Murphy,
    Gene Callahan attacked Rothbard’s MES critique of Keynes on the multiplier. Have you seen that critique and if so have you considered countering it? Thank you.


  10. senyoreconomist says:

    Dr. Callahan did this on his blog on Wednesday, July 11, 2012 in a blog entry entitled, “Rothbard’s Critique of the Multiplier”. I would just post the link, but I don’t know what the rules are regarding that. Thank you.


    • Joseph Fetz says:

      There are no rules, Senyore. If you want to post a link from Dr. Callahan, just do it! I’m fairly certain that Dr. Murphy won’t restrict you.

  11. Lawrence H. White says:

    Got it. Apparently I did manage to get some of the common folk riled up (see You Tube comments) by calling the Fed a government agency. That wasn’t intended to be a provocative statement.

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