Sumner on Predicting the Great Recession
Today Scott Sumner writes:
There’s a reason most economic forecasters were not predicting a recession as of June 2008; net worth models are useless. The huge decline in house prices between 2006 would not be expected to cause a major recession, and indeed would not have caused one had NGDP not declined.
OK so there are two things here. First, although I have yet to be vindicated in my warnings about price inflation, here’s what I wrote in a Mises Daily that ran in early October 2007, based on analysis I had actually done in July 2007 for a client:
On September 18 the Fed cut its target for the fed funds rate by 50 basis points (0.5 percentage points), from 5.25% to 4.75%. The move surprised many analysts who had been expecting a more modest cut of 25 basis points.
For those versed in the Austrian theory of the business cycle, as developed by Ludwig von Mises and elaborated by Friedrich Hayek, the aggressive Fed “stimulus” is ominous indeed. Not only will it pave the way for much higher price inflation than Americans have seen in decades, but it will also exacerbate what could be the worst recession in twenty-five years.
…
Looking back at the chart above, we can see why the worst may be yet to come. In (price) inflation-adjusted terms, the early-2000s levels of the actual fed funds rate is the lowest since the Carter years. And many readers may recall the severe recessions of 1980 and 1982 that followed that period.In the Austrian view, the boom-bust cycle is caused by the Fed’s maintenance of artificially low interest rates, which causes businesses to expand, hire workers, buy other resources, and so forth, even though these projects are not justified by the true supply of savings in the economy. The greater the “stimulus” the worse the malinvestments.
From 2001–2004, the Fed kept (real) rates at the lowest they’ve been since the late 1970s. One of the consequences that has already manifested itself is the housing bubble. But a more severe liquidation seems unavoidable. The recent Fed cut may postpone the day of reckoning, but it will only make the adjustment that much harsher.
So Austrian business cycle theory certainly equipped an analyst to think a really bad crash was coming. And I didn’t pull “the worst in 25 years” out of a hat; in the article I explain why I said that.
But what of the second part of Sumner’s quote, where he says: “The huge decline in house prices between 2006 would not be expected to cause a major recession, and indeed would not have caused one had NGDP not declined.” ?
I still say there’s something really screwy about this approach. Absent huge swings in the price level, a recession is the same thing as a drop in NGDP.
I’ve asked this before, but I don’t think I got a great answer. What if we outdid Sumner, and said the Fed should target, not NGDP, but the unemployment rate? Or, actual RGDP as a percentage of potential RGDP? You would find those things tracking recessions and booms like hand-to-glove. I could say stuff like, “Market monetarists think the doubling of the reserve ratio in 1937 led to a double-dip depression, but actually it was the spike in unemployment. If policymakers had simply kept unemployment at 4% like I keep telling them they should, there wouldn’t have been a double dip in 1937. But, they had added insufficient Murphy Sauce in the economy, as evident from the fact that unemployment was above 4%. They confused the doubling of reserve ratios with inadequate Murphy Sauce. This happens a lot among macroeconomists.”
I am exaggerating a tad, because I can anticipate what the first round of replies would be from Sumner et al. on the above. But still, I think it’s good for me to occasionally spell out why I think he’s totally wrong.
To quote Scott Sumner: “Targeting Employment is a really, really bad idea!!” A Fed target needs to be a nominal rather than a real variable.
Bob Murphy: “Recessions caused by inadequate demand really, really suck!” Now I just made the case for gold.
I’m sure this is a devastating response, but it’s gone way over my head.
You are merely quoting Scott saying he’s against full employment targeting, without explaining why my reductio ad absurdum doesn’t work. So, if you were to critique my support of gold by saying it would lead to demand-side recessions, I can just state that I am against those bad things, and shore up my position.
Sumner would probably reply that a gold standard cannot guarantee non-declining demand, whereas NGDP targeting can guarantee non-declining demand.
Of course, the problem with that is that it presumes NGDP to be an engine of employment, when both temporally and logically, wage payments precede NGDP, so effectively, NGDP targeting is indirect wage payment targeting, with the caveat that a higher or lower NGDP could consist of an increase or decrease in prior non-wage payments.
You are merely quoting Scott saying he’s against full employment targeting, without explaining why my reductio ad absurdum doesn’t work.
Got it. The problem with targeting unemployment is that the Fed can’t control a real variable, whereas it can control a nominal variable.
Like they controlled price inflation as promised, amiright?
What method do you use to determine whether something is real or nominal, that results in the unemployment rate being real?
Why can’t it be nominal?
What method do you use to determine whether something is real or nominal, that results in the unemployment rate being real?
Why can’t it be nominal?
I will say this for Silas, the guy certainly is inventive.
I don’t follow. Is there something I’m missing? Why is the unemployment rate real rather than nominal?
Furthermore, why can’t the Fed control it like it can control NGDP (at the cost of rendering it meaningless)? If credibly promising to print and spend a ton of money will (through the “expectations channel”) scare people into spending more even if no money is actually printed, couldn’t the Fed, say, “scare people” into hiring more workers by threatening to snatch them off the market, perhaps to work in those big Reserve banks?
That’s very interesting Silas. I never even thought of that–the Fed could just print money and hire workers. Holy )(#$# I never even thought of that; I was just being fanciful for an analogy.
But what Blackadder meant is that by definition, unemployment is a real variable, not a nominal one. Wage rates could be nominal, expressed in current dollars. But unemployment is a “real” thing.
Wait, what definition are we talking about? “That which has units of dollars [or other currency] is a nominal variable; all else is real”?
Okay, but by that definition NGDP growth rate isn’t nominal either — its units are percent per year. And you can trivially come up with a nominal counterpart to unemployment — say, dollars spent on unemployment benefit and income security programs.
May God help us all if the Fed targets that…
Heh OK you’re right that it’s trickier than I realized, but I think the answer is, “Sumner wants to target a transformation of a nominal variable that doesn’t have a loose joint. Targeting, say, the change in unemployment would still be a ‘real’ variable, by this criterion. However, targeting dollars spent on unemployment would be targeting a nominal variable, not a real one. There is no constant relationship between the unemployment rate and dollars spent on unemployment.”
Murphy:
That’s very interesting Silas. I never even thought of that.
grumble..
http://consultingbyrpm.com/blog/2012/10/sumner-on-predicting-the-great-recession.html#comment-46141
“In other words, rather than have some American citizens work solely for the benefit of other American citizens who receive newly printed money first, which is not well controlled and not guaranteed to ensure full employment and output, why not have every American work solely for the benefit of the money printers themselves, who can have more control over the revenues received by each firm, and thus prevent demand side unemployment at the firm level? We can have 100% employment and 0% output gaps.”
Well, now you know the cost of your word inflation, MF. I told you about 3 years ago that if you posted novellas in the comments, I wasn’t going to be able to read them. But you decided to write for people 50 years from now who, at that time, are apparently going to read all of your comments.
That still doesn’t get you out of the woods, Bob. If you’re allowed to count transformations on nominal variables as nominal, then you can find a transformation of “dollars spent on income security programs” which tracks the unemployment rate (or the employment rate, or any other such thing).
For example, the Fed could target the ratio of dollars spent on income security to dollars spent by employers on employees. Surely that metric is related to the unemployment rate, and, being a nominal variable, the Fed can still control it, even if it means inflating away the value of e.g. welfare benefits while wage payments catch up (partially) with this inflation.
Now, Sumner might object, “But at that point, this nominal metric no longer relates to the kind of unemployment we actually care about!”
And in doing so, he’d win a chutzpah award. Because that’s the exact critique I’ve been making of NGDP targeting all along! Specifically, that at the point where you artificially target it by Fed operations, it completely decouples from the phenomenon you want to control!
Silas wrote:
For example, the Fed could target the ratio of dollars spent on income security to dollars spent by employers on employees. Surely that metric is related to the unemployment rate…
Nah, that doesn’t work. It’s not directly , mechanically related the way “growth rate of NGDP” is related to “NGDP.”
Maybe I should back up: I am prepared to agree with you, Silas, that if we pushed harder on Sumner’s reasons for thinking “targeting a real variable is a bad idea,” then we would end up getting reasons sounding very similar to what you (and I) are saying is a bad idea about NGDP (growth rate level) targeting.
But here, you are trying to reach that neat-o conclusion by saying there’s not really any essential difference between targeting real vs. nominal variables, and I don’t think that’s right. Or at least, you haven’t convinced me.
Murphy:
Well, now you know the cost of your word inflation, MF. I told you about 3 years ago that if you posted novellas in the comments, I wasn’t going to be able to read them. But you decided to write for people 50 years from now who, at that time, are apparently going to read all of your comments.
Touché.
If only I could convert my posts into paintings. They would be worth a thousand words each.
I think I get what you are saying Silas. As soon as even a tiny bit of government intervention is introduced to “control” any variable, then that variable (and all others closely related) instantly become nominal.
So for example, no interest rates are real, none. They are all nominal variables.
Even given that as a background, some variables (such as money printing) are completely and totally nominal (i.e. they can arbitrarily be adjusted unrelated to anything in the physical world), while some variables such as employment do require some physical participation, somewhere.
The unemployment variable is so easily tinkered with it just isn’t funny, but that’s another story.
Goodhart’s law… you didn’t have to remind me this time!
“And in doing so, he’d win a chutzpah award. Because that’s the exact critique I’ve been making of NGDP targeting all along! Specifically, that at the point where you artificially target it by Fed operations, it completely decouples from the phenomenon you want to control!”
Right. It is just like the heating system (equipped with a PID controller) doesn’t work properly for some reason and it is getting cold in the room. Instead of letting people look for the problem (bad debt), some smart guy the Central Heating Chairman uses a lighter to heat up the thermometer. Sure this will magically repair the heating system (make bad debt good)…
In any case the PID controller (market process) cannot work, and the problem is not fixed but aggravated. At best you have a “short” lived euphoria because the public believes the manipulated thermometer.
Absent huge swings in the price level, a recession is the same thing as a drop in NGDP.
Isn’t Sumner’s point that it would have been a good idea to cause a huge swing in the price level in 2008.
“I still say there’s something really screwy about this approach. Absent huge swings in the price level, a recession is the same thing as a drop in NGDP.”
I will again interpret Sumner for FA. Silas will say I am putting words in his mouth. When Scott says I have him exactly right, Silas will say, “But Sumner himself doesn’t know what he is saying!” So here goes:
I believe Sumner thinks like this:
In Year 1 (Y1) we have an economy going along nicely, RGDP growth (R) = 3% and NGDP (N) growth = 5%.
In Y2 there is a supply side shock, dragging R down to -1%. But the Fed does its job and, with 6% inflation, keeps N at 5%.
Because of the Fed’s action in Y2, in Y3, the economy rebounds, with R = 4% and N = 5%. If the Fed had allowed N to drop to 1% (if inflation had stayed the same) or even lower (if the shock had upped liquidity preference) then the economy might have been mired down for several years.
Once again (although this will almost surely be ignored), I am merely *explaining* what I think Sumner means, and not (here) proposing this theory!
Oh Gene, right. I agree that that’s exactly what Scott is thinking. But my trouble is when he says, “And, to see how right my model is, look throughout history. You can see that all of these other explanations of recessions don’t get the timing right. Only my model shows the close connection between a collapse in output and a collapse in NGDP. And absent a meteor strike, I think we’d not have many recessions if the Fed just kept NGDP growth stable. After all, all of the major recessions are associated with a slowdown in NGDP.”
Here would be counter-evidence: Find a time when NGDP plunged but RGDP kept chugging along, e.g., NGDP growth drops from 5% to 1%, but RGDP stays at 3% and inflation is at -2%.
Or, find a time when the Fed boosted inflation enough to keep NGDP up, but RGDP continued to fall.
In 1871, nominal GDP decreased from 7,737 to 7,592 (millions). Real GDP, however, measured in millions of 2005 dollars, rose from 112,276 to 117,618. See: http://www.measuringworth.com/datasets/usgdp/ and input 1870-1890 as the range. Such an event is typical of the period.
So… I disproved it. I feel like a real economist, and not a software engineer right now.
“Or, find a time when the Fed boosted inflation enough to keep NGDP up, but RGDP continued to fall.”
I can do that too! See:
Year NGDP (millions) RGDP (mil. 2005 $)
1973 1,382,300 4,917,000
1974 1,499,500 4,889,900
1975 1,637,700 4,879,500
Or does stagflation “not count” either, Callahan?
LOL
Or RGDP stayed depressed.
And clearly the slow, steady deflation that sometimes occurred under the gold standard won’t do the trick: good counter-evidence would have to consist in a sudden drop in NGDP that didn’t hurt RGDP very badly.
Oh, come now. You gave an example where the nominal value didn’t even shrink, but just slowed in growth. No fair ignoring all the times it actually happened. That’s not objective empirical statistics but mere fancy. If you are going to base things in statistics, you have to actually account for the statistics.
Hahaha!
In other words, you want evidence of falling NGDP and rising RGDP, but we cannot show periods of falling NGDP and rising RGDP under the gold standard.
This is like a fold bug asking a fiat bug to show evidence of rising inflation and rising RGDP, but they cannot show periods of rising NGDP and rising RGDP under a fiat standard.
Another trouble is how he doesn’t apply Goodhart’s Law to NGDP targeting.
He claims that history shows a correlation between NGDP and recessions, and so NGDP is a candidate variable to control so as to indirectly control the variable with which NGDP is allegedly associated. Yet Goodhart showed that once a previously non-targeted variable, once controlled by the state, loses the information content (i.e. “if this variable is stable, then stable employment and output”), that originally qualified it to play that role in the first place.
As an analogy, if I observe that sickness is associated with paleness of skin, then should I begin to “control” people’s skin tone directly, and keep people’s skin color flush, hoping to prevent sickness, then skin color will no longer communicate the state of people’s health, since healthy or sick, people will not be pale skinned.
For NGDP targeting, market monetarists will be prone to glossing over economic problems associated with NGDP targeting, because to them, NGDP is controlled ergo unemployment and output gaps are minimized down to non-monetary causes.
Silas will say, “But Sumner himself doesn’t know what he is saying!”
If it’s anything like last time, I’ll certainly say that, “Scott is using words that mean something completely different, thus equivocating in a way that assumes away the very debate he’s trying to participate in”, sure.
Wait, what’s the joke?
Bob, I can’t speak for Sumner, but I define a recession as a drop in RGDP. A depression is a drop of RGDP of 10% or more, If you read Sumner more carefully, many times he does say targeting unemployment or RGDP is a REALLY bad idea, (because money is neutral in the long run, and because there is a large supply side element that the Fed has no direct control over.)
” I have yet to be vindicated in my warnings about price inflation…”
You will never be vindicated, Bob. Never. How many times will the inflation hawks cry wolf before they finally give up, Sheesh! You have the wrong model.
“How many times will the inflation hawks cry wolf before they finally give up”
They’ve been proven right in the past. Certainly, it was not the Phillip’s Curve that predicted the staglfation of the 70s.
What if I want to consume less in the present? Am I in recession and should someone print money for me to prevent my current consumption from falling?
I don’t get it. Why is it that during periods of time when people purposefully increase their cash preference purposefully decrease their consumption, that rather than letting those relative pricing and spending signals get communicated to investors who will then reduce investment in the production of present goods, thus allowing for the economy to adjust to the new market preferences, market monetarists instead advocate that the central bank print money to offset this rise in cash preference and decline in “spending”, which will send totally different signals to investors since newly printed money is uncontrollable and can potentially raise spending anywhere, which will change relative spending in ways totally apart from those who increased their cash and reduced their consumption?
Why do market monetarists prefer employment and output, over employment and output directed towards satisfying actual market preferences? Do MMs believe that employment and output are ends in themselves, rather than means to ends? If so, then why not advocate that the Fed stand ready to purchase present goods to whatever degree is necessary to ensure that every single employment and resource allocation remains nominally profitable?
In other words, rather than have some American citizens work solely for the benefit of other American citizens who receive newly printed money first, which is not well controlled and not guaranteed to ensure full employment and output, why not have every American work solely for the benefit of the money printers themselves, who can have more control over the revenues received by each firm, and thus prevent demand side unemployment at the firm level? We can have 100% employment and 0% output gaps.
Of course, employment and output will be directed not towards market preferences, but rather towards non-market Fed agent preferences, but then who cares? MMs are more concerned with employment and output, rather than employment and output directed towards market preferences, which can occasionally fluctuate and be associated with decreased current output and employment.
Just trying to help make MM more honest.
Okay, that previous post sounded a LITTLE harsh! Let me just say, Bob Murphy, that you are my favorite Austrian. You seem like a nice guy, not a nasty, angry sort (who post regularly on Scott Sumner’s blog) It’s just a pity you are misled by rothbardian nonsense.
I am continually impressed at the emptiness that prevails in the box that allegedly contains all these market monetarist and Keynesian refutations of Rothbard.
I mean, I hear about this box being full all the time, and yet every single time I ask the owner(s) to show me what’s inside, they never do.
exactly Gene!. Austrians make the reverse error of Keynsians like Krugman. While the Keynsians are reluctant even to admit the possibility of good deflation (supply side), the rothbardians either confuse the two (deflation is not so bad, look at the 19th century!) or worse, INTENTIONALLY mislead others into thinking the two are the same. For me the two are WORLDS apart!. Good deflation is very good, it has no effects on debtors, and the gains to cash holders are justified by a real productivity boost to other non cash holders For example, lets say RGDP is growing at 6% the supply of money in circulation at 3%, then deflation would be 3%. (Roughly) But that three percent would be no problem for the rest of the economy, because its real productivity surpasses the rate of deflation.
On the other hand, bad deflation is VERY bad. It robs from debtors to give to cash holders (from creditors too, because their bonds lose value as debotrs go bankrupt) a deflation rate of 3% while the real economy is CONTRACTing at 6% is an UNFAIR gain to cash holders. Oh and demand deflation also has nasty expectations effects that good deflation doesn’t have, ( a shout out to MF over a post I did on the MONEY ILLUSION)
Bad deflation is unrelated to previous inflation. It isn’t like a druggie detoxifiying. Its a person with no food starving to death
But… even If you use the logic of a cocaine withdrawal to explain D-deflation, the solution prescribed by fanatics like Major freedom would kill the patient. To go from being deeply addicted to detoxifying COLD TURKEY as MF or Rothbard presumably would have liked (I’m hypothesizing here… MF has an absolutist worldview regarding inflation.. none whatsoever) would kill the addict not cure him. The proper method would be to gradually, dimish the drug that one is addicted to.
(By the way none of this means I believ in the “druggie” analogy. that premise is wrong. I’m just saying that even IF the premise WERE right, the conclusion drawn by MF Rothbard and utter fanatics of their ilk would devastate an economy, or a drug addict on the route to recovery.)
“Bad deflation is unrelated to previous inflation.”
Except that is precisely what it is. No such shrinking of the money supply can possibly occur under a 100% reserve gold standard. It can only occur when one has inflated the money supply and thus distorted the economy, with the money supply shrinking back as those distortions are necessarily liquidated.
To be accurate Matt, it’s not inflation per se that makes deflation possible, but a specific form of inflation: credit expansion.
The money supply probably would not decline if every dollar printed was hard currency. But it can decline if credit (which circulates as money) is defaulted on, paid back, etc.
Where are the writings that show Austrians “confuse” good deflation with bad deflation? I think you are conflating the Austrian argument that falling spending is not a bad thing that needs central bank reversals, with them claiming that falling spending is inherently a good thing. I think you are taking your own view that falling spending is inherently a bad thing, and then, faced with Austrian disagreement, you incorrectly infer that Austrians put good deflation (what you agree with) and bad deflation (what you disagree with) into the same bin.
This is not so.
The actual Austrian position is that inflation does not confer GENERAL benefits the way voluntary trade of private property at the individual level confers general benefits. Austrians hold that inflation benefits the initial receivers at the expense of later receivers in the short term, and in the long term reduces overall productivity and thus harms everyone.
Where are the writings that show Austrians are purposefully misleading others that good deflation and bad deflation are the same? That is a serious charge, one that you should have at least the intellectual honesty to supplant with just one single quote. The absence of any substantiation can only make you appear to be intentionally misleading of others, which is its own special kind of hypocrisy.
Bad deflation does not “rob” from debtors or creditors. If you spend less money, and my cash balance rises in exchange value as a result, then I am not robbing from either debtors or creditors. In order for me to be called a robber, you have to show how I am consficating the legitimately acquired property of others, against their consent.
You are being extremely sloppy with words, and it is clear that your contradictory worldview requires you to attack the VICTIMS of your inflationary advocacy and paint them as evil, so that your harmful advocacy can be painted as a gain, a cure, a benefit to those allegedly exploited by the evil people who spend less than you, as if your cash preference is not too high, and those who hold more cash than you (relative to income) are holding too much cash.
A while ago you were corrected by yours truly about your fallacious claim that cash hoarders are exploiting, or stealing from, or robbing, or gaini at thr expense, of those who hold less cash and spend more. Yet here you are repeating the same convictions, as if those corrections don’t even exist, which only tells me you are not interested in the truth, but in advancing an agenda.
It is precisely you inflationists and your ilk who are devestating an economy. You just don’t understand it because your worldview is myopic and based solely on history, rather than economic reasoning. For you, you need to have reality bite you in the ass before you wake up and understand that your advocacy is destructive, dangerous, and harmful to innocent people.
Cold turkey is not ehat I advocate. I don’t have to advocate for cold turkey if I disagree with your central economic plan of inflation used to keep “spending”, any kind of “spending”, up. I advocate for legalizing monetary competition, and allowing THE INDIVIDUAL to “wean off” the monopoly inflationary system. You have no right nor privilege to demand or enforce other individuals to remain in the fiat system solely because you want to avoid problems incurred by others should individuals leave the fiat system voluntarily.
By your logic, if we had universal slavery, and sudden cold turkey slave emancipation would “devestate” many slave owners, that this is in itself a valid justification to maintaining slavery, as if the lives of the slave owners are more important than the lives of the slaves.
if a creditor or debtor is currently benefiting from the inflationary fiat system, than how dare you hold these people’s lives as a blank check on the lives of those who are primarily harmed by inflation and who would stand to cease being harmed should inflation be abolished, or should they cease being threatened with violence in order to be kept in the inflationary system.
You have a lot of nerve to claim that I am the bad one, the monster here, when I, contrary to you, want individuals to be free to make their own monetary decisions, and be free to OPT OUT of the coercive system that currently benefits others at their expense. You weep and shed crocodile tears over the plight of debtors, as if them taking on debt is the same thing as others taking on their debt such that they have to pay for it through depreciated cash balances.
Tell me, do you have outstanding debt you owe, and is your rant on this blog nothing but an agenda to prevent sound money that might bankrupt you? What gives you the right, and what gives debtors the right, to externalize the costs of their debt on others who don’t take out debt, hmm?
You are on the moral low ground, and I am on the moral high ground. Your attempt to paint me as the bad guy has utterly failed, and it is precisely you who is the bad guy.
sorry for the spelling errors, i typed this quickly, and not on my own computer!
“You think that’s bad? I’ve seen worse. Like that one time I was typing on an iPad with Burt Reynolds in a disco.” – Peter Griffin
Matt Tanous,
A 100% gold resrve standard would be repressive, coercive and would not be free market money. Just saying. If youre a liberatarian, this can be a problem. In fact that was a primary reason why I stopped being an Austrian. Look at American history a gold stanadrd was established in the 1890’s by fiat, With many silverites angry.
“They’ve been proven right in the past. Certainly, it was not the Phillip’s Curve that predicted the staglfation of the 70s.”
True, but Milton Friedman was no inflation hawk. Inflation hawks are mindlessly against inflation, everywhere, all the time. They see inflation where none exists. Doves are just as bad. In fact they enable the hawks to come to power. Inflation owls are the best. Owls are wise, and look at the evidence. Milton was against inflation in the seventies, but he was FOR inflation in the 30’s. And he would be for inflation, now.
Inflation owls. I like it.
Because they’re predators…
A state enforced 100% gold reserve system would be no more repressive or coercive than the current state enforced fractional reserve fiat system.
How hypocritical is it for a person who supports state enforced fiat money, to attack 100% reserve gold standard advocates on the basis that it is not free market? Are you for real?
Based upon the above statements by “Edward” in this single post, it is clear that he has no comprehension of the non-aggression principle, nor basic common law concepts of private property, contract, theft and/or embezzlement. Further, everything he has written indicates that he is unfamiliar with the basic Austrian concept of economic calculation and miscalculation (what else is new?).
I have grave doubts about the implication that he was ever an Austrian despite his assertion that he “stopped being an Austrian”. The box that MF described is sure empty.
Matt,
On the subject of falling NGDP but rising RGDP in the 1870’s:
These figures are unreliable… They should be taken with extrem caution and a grain of salt.
if the data went the other way, I highly doubt you would be saying that.
“Where are the writings that show Austrians are purposefully misleading others that good deflation and bad deflation are the same? That is a serious charge, one that you should have at least the intellectual honesty to supplant with just one single quote. The absence of any substantiation can only make you appear to be intentionally misleading of others, which is its own special kind of hypocrisy.”
“When do Nominal Changes have real effects” The Money Illusion.com
You wrote:
“This is false. Buyers do not postpone their purchases until a floor has been reached. They don’t do this for electronics, and that is pretty much our only empirical sample. (Housing?, furniture, cars?) Do you think it’s a coincidence that for the only example of systematic price deflation, that consumers are very eager about them and do not wait forever for their prices to fall, and do bite the bullet and pay the presently higher price, as opposed to a future lower price.”
I assumed at the time that we both knew what we were talking about, that we were talking about demand deflation solely. Electronics productivity is an example of SUPPLY side good deflation; not bad deflation. You didn’t differentiate between the two when you wanted to refute the “expectations effects” argument of bad deflation:” The fault is partially mine, because I should have said I believed that the expectations problem ONLY applies in a credit meltdown. But its also partially yours, because you’re smart enough to understand the difference yet dishonest enough to ignore it for argumentative purposes
In order for me to be called a robbber, you have to show how I am consficating the legitimately acquired property of others, against their consent.”
I am using “robbing” In a METAPHORICAL sense, just like you, you use emotionally loaded terms when describing the effects of money inflation regarding first receivers of printed money versus last receivers. Of course cash hoarding doesn’t “rob” debtors really, neither printing money “rob” last receivers of new money to give to first receivers. With steady expectations, all parties can plan so they don’t get “robbed.”
“Cold turkey is not ehat I advocate. I don’t have to advocate for cold turkey if I disagree with your central economic plan of inflation used to keep “spending”, any kind of “spending”, up. I advocate for legalizing monetary competition, and allowing THE INDIVIDUAL to “wean off” the monopoly inflationary system. You have no right nor privilege to demand or enforce other individuals to remain in the fiat system solely because you want to avoid problems incurred by others should individuals leave the fiat system voluntarily.
By your logic, if we had universal slavery, and sudden cold turkey slave emancipation would “devestate” many slave owners, that this is in itself a valid justification to maintaining slavery, as if the lives of the slave owners are more important than the lives of the slaves.’
John Brown didn’t free the slaves, LIncoln’s war.. did. (Even though that was not his original intention.)
And slavery is not the same thing as inflation. Even so, Would you, in the ancient world, advocate full emancipation, in a society where slavery was regarded as normal, natural, even part of the “good! Or would you have advocated laws protecting slaves from getting, killed, limiting slaveholders “rights” and getting more people used to the idea, and THEN going full throttle towards emancipation?!
The problem with you is you have zero strategy to get from point A to point B. How would a free market monetary system work? What of debts denominated in fiat money? What would happen to confidence to the stock market. Does free market money ONLY depend on anarchism, in which case it would be bound to excite no ones interest, or is their a taxation system that a minarchist state can use. What of our allies? Heck what of progressives, non libertarians who exist too, you know! NGDP level targeting may not be perfect, but its gaining momentum and even regard from non libertarians It solves problems and is less coercive that inflation rate targeting discretionary fiscal policy and price level targeting. I’m interested in practical workable solutions for more liberty in the REAL WORLD! I’m not interested in discussing how many angels dance on the head of a pin.
What gets me so annoyed with people like you is that you are libertarianism’s biggest enemies. By showing no inclination whatsoever to reasonable compromise, to gradual steps in the right direction, you turn off, prospective “convert” with your angry fanaticism.
“What gets me so annoyed with people like you is that you are libertarianism’s biggest enemies. By showing no inclination whatsoever to reasonable compromise, to gradual steps in the right direction, you turn off, prospective “convert” with your angry fanaticism.”
You don’t like libertarianism, but you are annoyed that we aren’t better at spreading our philosophy?
According to Edward, we’d be better spreadwrs of libertarianism if we cease adhering to libertarian principles.
Don’t ask me how that could possibly make sense.
Yeah, some people believe that in order to achieve liberty, you must support a policy that goes against it, but doesn’t go against it as much as the other policy. It doesn’t make sense to me, but libertarians are constantly asked to support these kind of measures, and are regarded as being stubborn mules when they say nuts to that.
Now, if you hear a libertarian not supporting a reduction of everyone’s income taxes by 50% because it should be zero, then I can see calling that person a stubborn mule. I just don’t get when people are thinking we are being stubborn because we don’t care to choose between two options, when we abhor both of them.
The anti-libertarian tactic you are referring to is called anchoring bias.
Hey Major Freedom can you email me? I want to ask you something.
Major_Freedom isn’t me, if that’s what you were going to ask…
It reminds me of a Gary Larson cartoon where the Devil is prodding a person to choose one of two doors, one marked, “Damned if you do”, the other, “Damned if you don’t”.
Another problem with compromise is that if the policy fails, the free market will get blamed regardless. At least if you stick to your guns you can say, “Well, that’s not what i was talking about”.
You must admit that the “Do as I say, not as I do,” creed has worked surprisingly well for statists and central planners over the years. I’m regularly shocked at how many people just shrug and suck that one up, time and again.
Also, you asked a lot of questions about what our strategies are to return to a free society. Are you under the impression that libertarians haven’t written anything about transitions back to a free market or how the free market system would work? If so, that says more about your knowledge of libertarian philosophy and Austrian economics than it does about us.
<I am using “robbing” In a METAPHORICAL sense, just like you
I think purposeful money dilution is real theft of purchasing power, not METAPHORICAL theft.
You wrote:
“This is false. Buyers do not postpone their purchases until a floor has been reached. They don’t do this for electronics, and that is pretty much our only empirical sample. (Housing?, furniture, cars?) Do you think it’s a coincidence that for the only example of systematic price deflation, that consumers are very eager about them and do not wait forever for their prices to fall, and do bite the bullet and pay the presently higher price, as opposed to a future lower price.”
I assumed at the time that we both knew what we were talking about, that we were talking about demand deflation solely. Electronics productivity is an example of SUPPLY side good deflation; not bad deflation.
You didn’t differentiate between the two when you wanted to refute the “expectations effects” argument of bad deflation:” The fault is partially mine, because I should have said I believed that the expectations problem ONLY applies in a credit meltdown. But its also partially yours, because you’re smart enough to understand the difference yet dishonest enough to ignore it for argumentative purposes
Except it’s not even universally true for “credit meltdowns” either. If it were true, then credit meltdowns will be one time large drop in prices. It is impossible for prices to gradually fall over time UNLESS there are buyers on the way down. Prices that gradually fall necessarily implies there are buyers buying before the price hits a floor. It’s why we see price trends going down at something other than vertical angles on charts.
You are accusing me of being dishonest, when all I am doing is arguing for what I consider to be true economic propositions, in response to your claims that I consider to be false economic propositions.
It is false to assert that buyers wait for price floors before they buy goods, even in the most dramatic credit and monetary deflation meltdown imaginable.
So, do you or do you not concede that it is incorrect to claim that buyers wait for price floors before they purchase goods?
You have to take into account time horizons (which market monetarists don’t do). I may be willing to buy a good that I expect to fall in price in the future (due to ANY reason), if I want to benefit from the good in the real sense, in the present, and I am willing to pay the existing price.
Your caveat of credit meltdowns is simply irrelevant. Even in a credit meltdown, people will not wait for food to hit a floor before they buy food, if the expected floor is too far into the future such that they will starve in the present. For other goods, not necessary for biological survival, the principle is similar, the main difference being instead of purchasing to live in the present, it is purchasing to be happy in the present, regardless if prices are expected to be zero at a far enough time into the future.
“In order for me to be called a robbber, you have to show how I am consficating the legitimately acquired property of others, against their consent.”
I am using “robbing” In a METAPHORICAL sense, just like you, you use emotionally loaded terms when describing the effects of money inflation regarding first receivers of printed money versus last receivers. Of course cash hoarding doesn’t “rob” debtors really, neither printing money “rob” last receivers of new money to give to first receivers.
Except my usage of the term robbery in inflation is NOT “metaphorical”, but literal. When people are forced to pay taxes to the state in US dollars, regardless of what commodities they trade in, such that to avoid physical violence from the state for failure to pay they go out and find US dollars in the marketplace, during which time the very same state prints and devalues said currency and therefore the purchasing power of that taxpayer’s cash balances, that is in fact theft. Bernanke himself called inflation a tax, and for libertarians, taxation is theft.
It would be like Microsoft threatening you with violence if you don’t pay them 35% of your salary in Microsoft stock, such that to avoid said violence you go out and accept Microsoft stock in exchange for your goods or labor, during which time Microsoft dilutes their equity by issuing more shares to their preferred friends (not you), then the reduced purchasing power your Microsoft shares experience is violence based reduction of the value of your property. Microsoft would indeed be robbing you.
You are not logically permitted to equivocate between my usage of the term robbery, and your usage of the term robbery. My usage is not misleading, yours is. Yours makes innocent, PEACEFUL people out to be aggressors. My usage does not mislead, because I am correctly identifying aggressive state actions concerning the fiat monetary system. I am not calling innocent people aggressors. You are.
With steady expectations, all parties can plan so they don’t get “robbed.”
This fallacy keeps coming up time and time again. No, the mere “expectation” that something is going to happen to you, does not necessarily prevent that action from being violent or aggressive. The mere fact that a victim expects to be threatened time and time again does not mean that such actions against them cease being violent.
Violence is based not on correct expectations, but on involuntary, aggressive actions towards one’s person or property. I don’t care if you promise me, and make good on the promise, to take 2 or 3% of my property each and every year. It’s still theft.
“Cold turkey is not ehat I advocate. I don’t have to advocate for cold turkey if I disagree with your central economic plan of inflation used to keep “spending”, any kind of “spending”, up. I advocate for legalizing monetary competition, and allowing THE INDIVIDUAL to “wean off” the monopoly inflationary system. You have no right nor privilege to demand or enforce other individuals to remain in the fiat system solely because you want to avoid problems incurred by others should individuals leave the fiat system voluntarily.”
“By your logic, if we had universal slavery, and sudden cold turkey slave emancipation would “devestate” many slave owners, that this is in itself a valid justification to maintaining slavery, as if the lives of the slave owners are more important than the lives of the slaves.”
John Brown didn’t free the slaves, LIncoln’s war.. did. (Even though that was not his original intention.)
Red herring. You are not addressing the argument I am making concerning your tacit premise about why I am to be continually forced to remain in the inflationary system, and you are instead making a claim about something else altogether, which is clearly a desperate plea for me to praise state power, as if Lincoln’s inadvertent abolition of slavery makes up for his genocide that in the end left over 600,000 people killed in an unnecessary war over independence that Lincoln did not tolerate, as if he had the right to prevent states opting out of the union by threats.
And slavery is not the same thing as inflation.
I didn’t say it was. I was using your logic in another scenario in order to show you it is flawed. I wasn’t trying to claim equality.
But there is a common link between inflation and slavery. They are both based on initiations of force against innocent people, they are both exploitative, and both entail some benefiting at the expense of others in the true sense, not in the fake sense you want to insinuate with voluntary cash holding of one’s legitimately acquired earnings, as if people have a duty to “spend”.
Even so, Would you, in the ancient world, advocate full emancipation, in a society where slavery was regarded as normal, natural, even part of the “good! Or would you have advocated laws protecting slaves from getting, killed, limiting slaveholders “rights” and getting more people used to the idea, and THEN going full throttle towards emancipation?!
You statists always say that. You always claim to be moving a step towards freedom, after which the next generation is allegedly tasked with the responsibility of that you deny having, and yet, the direction has been the exact reverse, precisely because that tactic does not work. To reduce the state, RADICALISM is necessary. Conceding the fundamentals of state power, will only make the state grow. It’s why the minarchist US state, has grown to be the largest state ever. It is because people thought like you did, of granting state power in principle, and claiming that the state can limit itself if only it is given a friggin piece of paper to obey.
The problem with you is you have zero strategy to get from point A to point B.
False. Rejecting my strategy is not the same thing as showing I have no strategy. My strategy just doesn’t include the state. To you, that means no strategy.
My strategy is to legalize currency competition. That’s it. Stop taxing people in US dollars if they don’t trade in them. There is a bill to pass this. Why not get behind it, instead of granting continual monopoly power to the Fed, which has no kernel of abolishing it?
How would a free market monetary system work?
Read free market in money textbooks. Really, it works.
What of debts denominated in fiat money?
Let people continue to borrow in them if they want. Just don’t force others into the dollar system against their will.
What would happen to confidence to the stock market.
We’ll see just how valuable it is at current prices.
Does free market money ONLY depend on anarchism, in which case it would be bound to excite no ones interest, or is their a taxation system that a minarchist state can use. What of our allies?
Consistent libertarianism IMPLIES anarchism. If you want to lick the boots of a state, then be my guest. Again, just don’t advocate that others be forced under the same boots. Let people opt out voluntarily, and let them accept the consequences.
Heck what of progressives, non libertarians who exist too, you know!
Educate.
NGDP level targeting may not be perfect, but its gaining momentum and even regard from non libertarians It solves problems and is less coercive that inflation rate targeting discretionary fiscal policy and price level targeting.
What does something “gaining momentum” have to do with its validity, soundness, morality, efficacy?
I’m interested in practical workable solutions for more liberty in the REAL WORLD!
I am interested in ECONOMICS for the REAL WORLD. I leave the politics to the politicians.
I’m not interested in discussing how many angels dance on the head of a pin.
Oh that’s cute Mr. Serious.
What gets me so annoyed with people like you is that you are libertarianism’s biggest enemies.
I am libertarianism’s ally. I get annoyed at people who don’t understand it, claiming that others are friends or enemies.
By showing no inclination whatsoever to reasonable compromise, to gradual steps in the right direction, you turn off, prospective “convert” with your angry fanaticism.
You can’t compromise with evil. Compromising with evil eliminates any chance of having the good.
Thanks Murphy!
Further, MF is constantly posting excellent, forceful but fair critiques of Sumner on the Sumner blog. Sumner expressly and purposefully ignores him while most of the other commenters constantly engage in nothing more than calling him names without demonstrating any understanding of Austrian concepts.
What is the point of compromise with people whose main objection to your proposals is derived from a total refusal to think them through?
Honestly, I am posting on Sumner’s blog for posterity reasons, so that future readers can see both sides of the issue, and so that nobody can excuse themselves as not knowing any counter-arguments. I don’t expect to convert anyone there, since they have demonstrated themselves as not willing to compromise.
Edward is asserting that his extremism in monetary matters, of insisting on the continuance of the Federal Reserve coercive monopoly, and claiming that advocating for a mere change in the rate at which Bernanke hits CTRL+P is somehow a “compromise”, he is trying to make it appear that anyone who disagrees with HIM is an extremist who won’t compromise.
Where is Edward’s compromising? If I am against the Fed, and he is for the Fed, why does compromise consist of continuing the Fed?
He picked up from Sumner the tactic of dressing his coercive radicalism in moderate sounding rhetoric, such as pragmatism, compromise, etc. The neocons use the same tactic. I know better. It won’t work on me.
“converts”..
Edward, I hope you will accept the following: none of your arguments against my arguments are original. Please don’t presume that what you are saying are novel, final nail in the coffin type arguments. I will let you know that every single argument you have offered above, from writers more informed than either of us, have been closely scrutinized by other writers also more informed than either of us, and they have been thoroughly debunked and shown to contain inconsistencies.
I am not asking you to take my word for it, I invite you to read libertarian literature: Murphy, Rothbard, Hoppe, Hulsmann, Spooner, the Tanehills, Friedman (David), Bastiat, and for the economic implications of libertarianism, I recommend George Reisman (who while being a minarchist, nevertheless offers arguments relating to the statements you bring up). There are others of course, but these can at least give you an intro to libertarianism from ORIGINAL source material. What you are saying shows that you don’t yet grasp libertarianism and its implications. I am not saying you have to agree with it, just at least understand it.
MF,
“Except it’s not even universally true for “credit meltdowns” either. If it were true, then credit meltdowns will be one time large drop in prices. It is impossible for prices to gradually fall over time UNLESS there are buyers on the way down. Prices that gradually fall necessarily implies there are buyers buying before the price hits a floor. It’s why we see price trends going down at something other than vertical angles on charts.
You are accusing me of being dishonest, when all I am doing is arguing for what I consider to be true economic propositions, in response to your claims that I consider to be false economic propositions.
It is false to assert that buyers wait for price floors before they buy goods, even in the most dramatic credit and monetary deflation meltdown imaginable.
So, do you or do you not concede that it is incorrect to claim that buyers wait for price floors before they.
purchase goods?
You have to take into account time horizons (which market monetarists don’t do). I may be willing to buy a good that I expect to fall in price in the future (due to ANY reason), if I want to benefit from the good in the real sense, in the present, and I am willing to pay the existing price.
Your caveat of credit meltdowns is simply irrelevant. Even in a credit meltdown, people will not wait for food to hit a floor before they buy food, if the expected floor is too far into the future such that they will starve in the present. For other goods, not necessary for biological survival, the principle is similar, the main difference being instead of purchasing to live in the present, it is purchasing to be happy in the present, regardless if prices are expected to be zero at a far enough time into the future.”
Except in a credit meltdown, people DON”T HAVE THE INCOME EVEN TO BUY WHAT THEY THOUGHT WAS THE MOST BASIC OF GOODS. You’d be surprised what people will do under economic duress. Luxury and necessity are in the eye of the beholder. Maybe in the most desperate of circumstances they’ll buy the lowest quality garbage food imaginable, and not wait for it to get cheaper. Or else they’ll riot, or steal it. Maybe they’ll build Hoovervilles and slowly starve because businesses won’t hire them at any wage because of unemployment bigotry and prejudice.
Another thing, its false to assert that “Prices that gradually fall necessarily implies there are buyers buying before the price hits a floor” A seller who cuts his price in a staggered fashion from $20 dollars for x to 15 to 10 to 5, it doesn’t necessarily mean that he gets his asking price during any of the stages, all of them can be mistaken prices, at least in regards to what the buyer is willing to pay. Look at the stock market, there’s the bid, there’s the ask, and there’s the last price traded. So.. wrong again
“It would be like Microsoft threatening you with violence if you don’t pay them 35% of your salary in Microsoft stock, such that to avoid said violence you go out and accept Microsoft stock in exchange for your goods or labor, during which time Microsoft dilutes their equity by issuing more shares to their preferred friends (not you), then the reduced purchasing power your Microsoft shares experience is violence based reduction of the value of your property. Microsoft would indeed be robbing you.
You are not logically permitted to equivocate between my usage of the term robbery, and your usage of the term robbery. My usage is not misleading, yours is. Yours makes innocent, PEACEFUL people out to be aggressors. My usage does not mislead, because I am correctly identifying aggressive state actions concerning the fiat monetary system. I am not calling innocent people aggressors. You are.
First I am logically permitted to do whatever the soundness and validity of an argument dictates. Let me alter the scenario a little, suppose ” (the United States, as it were) Apple” does the same as microsoft, but in return you get a whole lot of good things for your tax. Also what reason is there to believe you won’t have enough “shares” to live comfortably in Apple’s “domain” Also, many other corporations are a million times worse than “Apple” so “Apple’s extortion hardly counts as a horrifying injustice.
“This fallacy keeps coming up time and time again. No, the mere “expectation” that something is going to happen to you, does not necessarily prevent that action from being violent or aggressive. The mere fact that a victim expects to be threatened time and time again does not mean that such actions against them cease being violent.
Violence is based not on correct expectations, but on involuntary, aggressive actions towards one’s person or property. I don’t care if you promise me, and make good on the promise, to take 2 or 3% of my property each and every year. It’s still theft.”
It isn’t theft, its extortion. :-). The analogy doesn’t hold because you are looking at only one side of what the state does, and not what it gives you in return. Even Ludwig von Mises believed that the state does give valuable things, like police protection, protective societies, and law courts. At least that is the case in liberal democracies, which even you must admit are much closer to the an-cap ideal.
Bottom line, legal tender laws are a separate issue. If you believe (wrongly) they enable money printers to “rob” from cash savers because one party, the first receivers, benefits while another party does not, than it follows that when the money in circulation contracts, the cash savers “rob” debtor creditors, stockholders and workers. Of course this whole premise is bogus, just because one party benefits, and another loses, does not mean one party “robbed” from the other
“To reduce the state, RADICALISM is necessary.” Sometimes radicalism IS necessary when the situation calls for it, when momentum and public opinion is on your side. But let’s face it, libertarians are in the MINORITY. When one is weak, one can’t afford to be radical, one has to advance one’s agenda by stealth.
“False. Rejecting my strategy is not the same thing as showing I have no strategy. My strategy just doesn’t include the state. To you, that means no strategy.”
Rightly so, Because states exist in their current form for the moment. Good luck in cloud cuckoo land. Any viable strategy has to deal with the state in order to minimize it., to restrain it to its night watchman functions”
Because it has no chance of success. Ron Paul is behind it, and because of that, I’m sorry to say the majority of Congressmen and women, and even the majority of the American people won’t support it.
I feel sorry for Ron Paul. He’s a little like Cato the Younger in the Roman Republic. But just like Cato was his own side’s worst enemy when it came time for the optimates to make peace with Caesar, so to it is with Ron Paul. (By the way even Cicero said, when exasperated by Cato intransigence, that Cato behaved as “if he were living in Plato’s Republic and not in the Roman one!)
“I am interested in ECONOMICS for the REAL WORLD. I leave the politics to the politicians.”
Economics without politics is like food without water.
“By showing no inclination whatsoever to reasonable compromise, to gradual steps in the right direction, you turn off, prospective “convert” with your angry fanaticism.
You can’t compromise with evil. Compromising with evil eliminates any chance of having the good”
Wow, Evil huh. Its illustrating to note what you have in mind when you speak of evil. Not murder, not torture rape, slavery genocide, fascism, Soviet Style communism, but….. credit expansion to help those in need.
You are pathetic.
Edward:
Except in a credit meltdown, people DON”T HAVE THE INCOME EVEN TO BUY WHAT THEY THOUGHT WAS THE MOST BASIC OF GOODS.
THEY CAN ACQUIRE THE INCOME IF THE FED JUST STOPS MESSING WITH THE MONETARY SYSTEM AND STOPS DELUDING INVESTORS INTO MAKING MALINVESTMENTS THAT LATER RESULTED IN THE VERY CREDIT MELTDOWN THAT YOU ARE NOW UNABLE TO SOLVE WITH ANYTHING OTHER THAN MORE OF WHAT CAUSED IT TO OCCUR IN THE FIRST PLACE.
You’d be surprised what people will do under economic duress. Luxury and necessity are in the eye of the beholder. Maybe in the most desperate of circumstances they’ll buy the lowest quality garbage food imaginable, and not wait for it to get cheaper. Or else they’ll riot, or steal it. Maybe they’ll build Hoovervilles and slowly starve because businesses won’t hire them at any wage because of unemployment bigotry and prejudice.
You’d be surprised what people can do in monetary freedom, or what they can do with a given stock of fiat money.
You would seem to also be surprised what BAD decisions can be made in monetary inflation, which makes clear how asinine monetary inflation as a solution really is.
Another thing, its false to assert that “Prices that gradually fall necessarily implies there are buyers buying before the price hits a floor” A seller who cuts his price in a staggered fashion from $20 dollars for x to 15 to 10 to 5, it doesn’t necessarily mean that he gets his asking price during any of the stages, all of them can be mistaken prices, at least in regards to what the buyer is willing to pay.
Absolutely, unequivocally false. Prices are manifested by actual exchanges. I am not talking about bid or ask prices. I am talking about PRICES. When you observe a chart of past PRICES, even during a credit meltdown, and you notice that the price trend goes from $100 to $95 to $90 to $85, and so on, you are observing EXCHANGE PRICES having been made; you are observing sellers AND buyers making exchanges on the way down. You are not observing merely asking prices. You are observing actual prices between sellers and buyers.
Just consider house prices for example, during the housing bust. Buyers did not wait for asking prices to hit a bottom before they bought houses, even during the declining price trend. When you look at a chart of historical housing prices, from 2007 to 2010, you are observing MILLIONS of buyers buying houses ON THE WAY DOWN, before the bottom was reached.
When you look at stock market indexes, and you notice a collapse over time, you are observ stocks being SOLD at lower and lower and lower prices over time. That of course implies BUYERS were there every step of the way.
Look at the stock market, there’s the bid, there’s the ask, and there’s the last price traded. So.. wrong again
Un-friggin-believable.
Yes, LOOK at the stock MARKET. Look at stock PRICES. If you observe stock prices declining over time, during a credit collapse, then you are observing a series of sellers and buyers trading stocks at lower and lower prices, which of course implies there are buyers who are buying stocks BEFORE they reach their bottoms. So…WRONG AGAIN.
PS When you say “wrong again”, does that not presume you showed I was wrong a first time? Serious question: When did that occur?
First I am logically permitted to do whatever the soundness and validity of an argument dictates. Let me alter the scenario a little, suppose ” (the United States, as it were) Apple” does the same as microsoft, but in return you get a whole lot of good things for your tax.
Let us alter the scenario? How about you first address my scenario, then we can talk about your modified one.
Suppose I never consented to these “good things.” Suppose for the sake of argument (LOL) that you have no idea what I consider to be “good” for ME as an individual. Sort of like how I am hubristic enough to presume to know more than you about what is good for you…only the exact opposite.
Suppose I take $1000 from you against your consent, and then I send to you a block of cheese that you typically buy, because I believe it is “good” for you, and you accept the cheese, because heck, if you’re out $1000, you might as well get something back, even if it is a net loss for you. Does this mean that what I did was justified? Does this mean that I can take your response to mean you have agreed for me to continually take $1000 from you in exchange for cheese in the future?
Suppose I don’t consider torturing brown people and killing innocent families is a “good”. Suppose I don’t consider bailing out corrupt businessmen at my expense a “good”. Suppose I don’t consider what you claim is “good” for me, to actually be “good” for me.
Now answer my question about Microsoft (analogy of the state) doing what it is doing in my scenario, and stop presuming to have knowledge about me that you don’t actually have.
Also what reason is there to believe you won’t have enough “shares” to live comfortably in Apple’s “domain”
Oh I don’t know, how about the fact that threats of violence against those who are peaceful makes me “uncomfortable”? That I am not “comfortable” with being threatened with violence into accepting toilet paper that is purposefully depreciated to benefit others at my expense? Suppose I am not willing to accept it and desire to opt out. Should I be continually threatened with violence in your worldview? Should I assume you are a cold hearted bastard? Or should I assume that you find it repulsive that friggin VIOLENCE is being used against otherwise innocent people to maintain an exploitive monetary standard designed by bankers and politicians FOR bankers and politicians?
Also, many other corporations are a million times worse than “Apple” so “Apple’s extortion hardly counts as a horrifying injustice.
Ah yes, I was waiting for the ad hominem tu fallacy to make its ugly, yet expected, appearace. What took you so long? It’s been almost 5 posts.
It isn’t theft, its extortion.
Oh, so I was wrong to consider it naked aggression and unjustified then…
The analogy doesn’t hold because you are looking at only one side of what the state does, and not what it gives you in return.
That is because a violent act must be judged in and of itself, not what occurs after. If I take $1000 in dollars or purchasing power away from you, then my action does not become unjustified or unjustified on the basis of what I may or may not do subsequent to that action. It is justified or unjustified in and of itself, vis a vis your consent at the time.
Even Ludwig von Mises…
…would avoid appealing to authority.
believed that the state does give valuable things, like police protection, protective societies, and law courts. At least that is the case in liberal democracies, which even you must admit are much closer to the an-cap ideal.
And Rothbard believed the state does not give valuable things to those forced to pay for it. Does that mean you must agree? What’s your point?
Mises’ beliefs about the value of the state was HIS valuations. Those valuations are not MY valuations, nor anyone else’s. He would agree that value is subjective, and that I am not obligated to value what he values. He pioneered modern subjective value theory!
The state is one of the things I consider Mises to have been incorrect about. It is because Mises was a utilitarian, which in its traditional, most common form “the greatest good for the greatest number” invariably leads to statism. I do not agree with utilitarianism. I would be against the killing of all redheads if that would make the greatest number happy, whereas a consistent utilitarian would have to be for it.
Bottom line, legal tender laws are a separate issue. If you believe (wrongly) they enable money printers to “rob” from cash savers because one party, the first receivers, benefits while another party does not, than it follows that when the money in circulation contracts, the cash savers “rob” debtor creditors, stockholders and workers. Of course this whole premise is bogus, just because one party benefits, and another loses, does not mean one party “robbed” from the other
Again, you are making a false equivalence. It is not true that if I hold the fiat system leads to theft of money printers against cash holders when there is inflation, that to be consistent I have to hold that a fiat system leads to theft of cash holders against money printers when there is deflation.
Again, by your logic, if I said that slavery leads to masters gaining at the expense of slaves during a spread of slavery, that to be consistent I would have to hold that slavery leads to slaves gaining at the expense of masters during a reduction of slavery.
Your problem is that you are fallaciously claiming that cash holders are making unfair gains during deflation, when really they are not. They are making gains that they should have had all along, and then some. Similarly, it would be wrong to claim that a reduction of slavery, and the gains that accrue to slaves, is “unfair” because some other people (masters) incur losses.
The gains that accrue to individuals when freedom advances is NEVER “unfair”. For that would imply that the gains made by some during the oppressing of freedom are “fair”, when they are really not fair at all, for those gains are based on coercion, not consent.
Sometimes radicalism IS necessary when the situation calls for it, when momentum and public opinion is on your side.
What the flying monkey f$&k do you think I am doing? Being a radical is how these ideas get spread throughout society so that they in fact become “public opinion”. Ron Paul is a radical. Do you honestly think that the spread of libertarianism would have been greater if instead of Ron Paul there was only Paul Ryan, or some other “moderate”? Don’t make me laugh. Intellectual revolutions are ALWAYS founded on radicalism. You will never see a revolution on the basis of a 5% or 10% improvement. When I look at the last 250 years of history, I don’t see gradual liberty advancing. I see the exact reverse. Why? Because the world abounds with moral capitulation, opportunism, middle of the road policies, and corruption.
See, you need radicals to do what you for whatever reason refuse to do. While real change is made on the basis of radicalism, you are busy claiming that QEternity is somehow something other than fiat money going through an inevitable evolution of fiat money regimes that, you guessed it, radicals already expected.
Today is as good as any to be a radical, because the situation does call for it. The Fed is literally destroying the economy, and not because it isn’t inflating enough, but because it is inflating in the first place.
Do you know the average lifespan of pure fiat money regimes? I’ll give you a hint. They last on average about the age of the fiat regime that currently oppresses people.
But let’s face it, libertarians are in the MINORITY. When one is weak, one can’t afford to be radical, one has to advance one’s agenda by stealth.
False. It is precisely when one is in the minoroty that radicalism is most needed and most effective. Do you think the Marxists were stealth when they began? The progressives during the early 20th century? The neoconservatives from around 1960 on? They were all in the minority at first, and they were all radicals.
You would probably know zilch about libertarian names if it weren’t for your attentionsmbeing grabbed by the radicals.
“False. Rejecting my strategy is not the same thing as showing I have no strategy. My strategy just doesn’t include the state. To you, that means no strategy.”
Rightly so, Because states exist in their current form for the moment.
Libertarianism is different that statist doctrines that need the state in order to advance.
See, you have things backwards. You take the state as a given, and THEN you mold your ideas in terms of statism, of how the state can be used to promote your idea. This necessarily filters out all non-state ideas and changes, leaving you with the false impression that if it isn’t statist, then it cannot ever exist.
Good luck in cloud cuckoo land.
Trust me when I say this, that is the biggest compliment a statist could ever give to me.
Any viable strategy has to deal with the state in order to minimize it., to restrain it to its night watchman functions”
Or to its night corpse function.
What the heck do you mean “deal with” the state? Do you mean advocate for an inherently statist ideology? How in the world can that lead to anything other than permanent statism?
You don’t seem to fully appreciate just how different libertarianism is from every other ethic. It is the only ethic that contains a universal prohibiton against inititions of force. You have to understand that such an ethic simoly cannot be advocated via taking the state for granted, and thus fighting FOR initiations of force.
Maybe you are just unable to grasp philosophical principles through anything other than the rather dull, status quo lens you have armed yourself with, but your criticisms against libertarian tactics would have libertarianism cease being libertarianism. You are asking me to sacrifice my principles for the sake of your principles. You want allies, but I refuse to ally myself with those who advocate for some to initiate violence against others.
I think that my radical approach has been very successful, and I am not just saying this because of any cognitive dissonance. I chose to remain anonymous, and I think I leave an impression, good or bad, wherever I post. If I can get people so pissed off that they are energized into reading the material I often refer to, in order to put me in my place, so that they can show me they know more about Mises and Rothbard than I do, then that is a success in my mind, because they did what I hoped they would choose to do, which is read the actual material!
Knowledge can be spread via nice ways (Murphy), and they can be spread via mean ways (me). If statists consider Murphy to be a respite from “internet Austrians”, if they consider him to be how we all should emulate, then holy crap is that a benefit to our cause, because the assholes have made a libertarian who wants to cut Medicare appear like a nice guy. Imagine Murphy giving a libertaran speech to a mainstream crowd 20 years ago, without that crowd being riled up by libertarian assholes prior. Then imagine that crowd just finishing a series of debates with me. They would be much more open to what the nice libertarian is saying, don’t you think?
But the main reason why I am caustic with folks like you, is that my words have to compete with violence advocates who do not feel repulsed at the notion of harming innocent people. I consider you to be bullies who typically won’t really respond honestly unless you are bullied back.
Because it has no chance of success.
Keep the faith Nostradamus.
If it weren’t for the radicals, libertarianism would not even be on the radar.
Ron Paul is behind it, and because of that, I’m sorry to say the majority of Congressmen and women, and even the majority of the American people won’t support it.
I don’t believe you are sorry at all. I think you are thankful, and releived. I think the majority don’t have to support something before it is worth fighting for. I don’t care if I don’t convince a single individual. I will die knowing I had the knowledge and wasn’t afraid to back down from it. I will die a man of principle. If that means I will have fewer vacations and sports cars, fewer followers, fewer citations in journals, fewer popularity votes, then I really don’t give a shit, seriously. I am an incredibly happy and fulfilled person. My mind is my Utopia. I am fine with being unknown by name. Can you not infer this from the fact that I choose to remain anonymous? I don’t want what you want. I don’t feel emptiness by not being popular. I don’t feel inferior, or self-doubting, or inadequate, ever. Libertarianism is an individualistic ethic. It’s up to the individual, and that is sufficient. If I am a libertarian, that is enough for me to live by. I succeeded. I made myself a better person. I am not looking to gain acceptance.
I feel sorry for Ron Paul. He’s a little like Cato the Younger in the Roman Republic. But just like Cato was his own side’s worst enemy when it came time for the optimates to make peace with Caesar, so to it is with Ron Paul. (By the way even Cicero said, when exasperated by Cato intransigence, that Cato behaved as “if he were living in Plato’s Republic and not in the Roman one!)
Not that I personally desire this, but the very factmthat you are citing cato the Younger as an analogy to Ron Paul might be an incredible compliment to him. 2000 years later and historians are talking about Ron Paul instead of you, and YOU feel sorry for HIM?
Tell me, honestly and no bullshit: Who do you REALLY feel sorry for? That you couldn’t do what Ron Paul did and change the discourse of an entire country? Or maybe you feel sorry for the fact that you judge “success” according to who has the most political power, and those with the most power are to be revered and respected, and you feel guilty about believing that?
“I am interested in ECONOMICS for the REAL WORLD. I leave the politics to the politicians.”
Economics without politics is like food without water.
Economics without politics is like food without rat poison.
“You can’t compromise with evil. Compromising with evil eliminates any chance of having the good”
Wow, Evil huh. Its illustrating to note what you have in mind when you speak of evil. Not murder, not torture rape, slavery genocide, fascism, Soviet Style communism, but….. credit expansion to help those in need.
You are pathetic.
Oh I hold those in mind too. But don’t think that your advocacy can avoid being correctly identified just because there are worse evils out there.
If you want, we can talk about the evil of rape, murder, slavery and genocide, fascism, and communism. I even tried to do that with slavery, but you bit my head offmfor even mentioning it, and now you’re insinuating I don’t consider slavery? That’s rather unfair, no?
You wanted to keep this discussion about inflation and central banking, no?
It’s clear just how intellectually weak your worldview really is. You feel compelled to avoid your advocacy, and claim there are worse evils, as if this absolves your advocacy from criticism.
Plus, you are also insinuating that it is somehow morally justified to help those in need when such help requires harming others. You say credit expansion “helps people”. Well, I will ask you: WHICH PEOPLE?m It doesn’t help everyone, so why in the world should I seek to benefit one group of people at the expense of another group of peope?
if I told you I advocate for slavery to “help people”, then if you said slavery should not exist, then would it make any sense for me to say “OMG! You are against helping people!”
Seem this is a major problem with you philosophical collectivists. You advocate for helping SOME people using state coercion, but you never address those NOT in that privileged group. Thenmyou slyly communicate your advocacy as “helping people”, as if it helps everyone and harms nobody.
Don’t you dare insinuate I am against helping people voluntarily. I am not against helping people. I am against harming B so as to help A. I don’t believe in group rights, group privileges, or group benefits (and non-group losses). I believe in individual rights, privileges, and benefits.
Far from me saying something “pathetic”, you are just desperate to paint me as the bad guy, when it is YOU who is the bad guy. You are the bad guy to the people who are harmed in the course of your advocacy. My advocacy only seeks to remove such exploitation. You respond as if some people in a preferred group have some inherent right or privilege to gain at the expense of everyone else. To you, the preferred group of people are the only real people who exist. Shame.
By the way, legal tender laws are not a “separate issue.”
Without that law, and without taxation laws, it would be impossible for the Fed to compete with free market money, and thus it would be impossible for the Fed to target pigeons, let alone NGDP.
“Where is Edward’s compromising? If I am against the Fed, and he is for the Fed, why does compromise consist of continuing the Fed?”
The compromise is in the monetary regime, you ninny. You don’t seem to grasp, or you don’t think its enough, that NGDP level targeting allows for “good deflation” (One of the diamonds in the Austrian dustheap) without the crappy bad deflation It’s a momentous break from the Fed’s inflation rate targeting.
“You don’t seem to grasp, or you don’t think its enough, that NGDP level targeting allows for “good deflation” (One of the diamonds in the Austrian dustheap) without the crappy bad deflation”
It doesn’t do this. What WOULD do it is a GOLD STANDARD (or silver, etc. – anything provided by the market would work). Why? Because “bad” deflation can only occur through a shrinking of the money supply – which can only occur when someone like the Fed has inflated that by printing lots of money.
That isn’t a compromise you…nanny?
I want to opt out of the dollar system without being coerce by violence.
You want to maintain coercion to keep the individual in the dollar system.
How can your “compromise” be anything other than extremism in your favor? I am not getting ANYTHING I want when you get what you want.
Your compromise is not a compromise at all. A real compromise would be allowing you and anyone else who wants it to stay in the dollar system if you want, and those who don’t want it can opt out of it without being intimidated or threatened with violence.
That is actual compromise.
If I wanted to rob $100 from you, and you didn’t want me to rob anything from you, then it would absurd to claim I have the moral or intellectual high ground by “compromising” and only taking $50 from you, and then, to add insult to injury, claim you are unwilling to compromise because you insist on $0.
Give it up dude. Your rhetoric of “compromise” and “pragmatism” are snake like verbiage designed solely to present your uncompromising worldview as anything but naked aggression.
. MF, Thanks for the invitation though, I did read some of them
“Well, I will ask you: WHICH PEOPLE?”
Everyone!. If they prepare and adapt their behavior to it
Even those whose incomes and cash balances are reduced in purchasing power?
Even those who receive the new money last, and experience proce inflation as primarily rising costs of living, rather than rising nominal incomes?
Even the fact that it makes the financial system built on a house of cards, that leads to unemployment?
You’re rather deluded methinks.
One cannot avoid the harm by merely “preparing” for it. if I prepare for my real income to be reduced, then the harm doesn’t disappear.
Again, you are still committing the fallacy that mere expectations of action X absolves it of being harmful.
”
Reply
Major_Freedom at
Edward:
Except in a credit meltdown, people DON”T HAVE THE INCOME EVEN TO BUY WHAT THEY THOUGHT WAS THE MOST BASIC OF GOODS.
THEY CAN ACQUIRE THE INCOME IF THE FED JUST STOPS MESSING WITH THE MONETARY SYSTEM AND STOPS DELUDING INVESTORS INTO MAKING MALINVESTMENTS THAT LATER RESULTED IN THE VERY CREDIT MELTDOWN THAT YOU ARE NOW UNABLE TO SOLVE WITH ANYTHING OTHER THAN MORE OF WHAT CAUSED IT TO OCCUR IN THE FIRST PLACE.
You’d be surprised what people will do under economic duress. Luxury and necessity are in the eye of the beholder. Maybe in the most desperate of circumstances they’ll buy the lowest quality garbage food imaginable, and not wait for it to get cheaper. Or else they’ll riot, or steal it. Maybe they’ll build Hoovervilles and slowly starve because businesses won’t hire them at any wage because of unemployment bigotry and prejudice.
You’d be surprised what people can do in monetary freedom, or what they can do with a given stock of fiat money.
You would seem to also be surprised what BAD decisions can be made in monetary inflation, which makes clear how asinine monetary inflation as a solution really is.
Another thing, its false to assert that “Prices that gradually fall necessarily implies there are buyers buying before the price hits a floor” A seller who cuts his price in a staggered fashion from $20 dollars for x to 15 to 10 to 5, it doesn’t necessarily mean that he gets his asking price during any of the stages, all of them can be mistaken prices, at least in regards to what the buyer is willing to pay.
Absolutely, unequivocally false. Prices are manifested by actual exchanges. I am not talking about bid or ask prices. I am talking about PRICES. When you observe a chart of past PRICES, even during a credit meltdown, and you notice that the price trend goes from $100 to $95 to $90 to $85, and so on, you are observing EXCHANGE PRICES having been made; you are observing sellers AND buyers making exchanges on the way down. You are not observing merely asking prices. You are observing actual prices between sellers and buyers.
Just consider house prices for example, during the housing bust. Buyers did not wait for asking prices to hit a bottom before they bought houses, even during the declining price trend. When you look at a chart of historical housing prices, from 2007 to 2010, you are observing MILLIONS of buyers buying houses ON THE WAY DOWN, before the bottom was reached.”
First where’s your evidence that housing prices, for instance were actual exchange prices? Look at the declining amount of sales from the peak to the trough. If there were a few sales here and there even in the midst of the credit meltdown, and those houses were purchased by people with lots of cash. then more power to them I suppose. I guess Austrians would say these folks have ultra high time preference. Do Giffen goods disprove the law of demand? Of course they don’t. Neither to high time preference buyers disprove the effects of unstable deflation expectations.
On the stock market, people DO BUY on the way down, but those people tend to lose money, unless they’re warren Buffet, and or other value investors and can afford to wait. I think Warren is still waiting to recoup his investment in Goldman Sachs. (Maybe I’m wrong)
“THEY CAN ACQUIRE THE INCOME IF THE FED JUST STOPS MESSING WITH THE MONETARY SYSTEM AND STOPS DELUDING INVESTORS INTO MAKING MALINVESTMENTS THAT LATER RESULTED IN THE VERY CREDIT MELTDOWN THAT YOU ARE NOW UNABLE TO SOLVE WITH ANYTHING OTHER THAN MORE OF WHAT CAUSED IT TO OCCUR IN THE FIRST PLACE.”
You seem mad. 🙂
No they can’t, if their income declines faster than their cost of living, since firms are reluctant to cut wages and rely on firings instead.
“Again, by your logic, if I said that slavery leads to masters gaining at the expense of slaves during a spread of slavery, that to be consistent I would have to hold that slavery leads to slaves gaining at the expense of masters during a reduction of slavery.”
You would, that premise is correct! But unlike the inflation example, slaves gaining at the
expense of masters are justified. And more people are “harmed” during (monetary) deflation. Deflation only helps NET cash holders with positive equity and liquidity, it harms creditors, debtors, workers, and stockholders. So the four latter are much closer to the “exploited” than the “exploiter”. Even NCH’s like Warren Buffet would have to wait a long time for their purchases made during a liquidity crisis to make a profit. . Only weirdoes who like wasting money and have no patience at all, are the small exception. The rest of us should suffer to reward these fools?
“I don’t care if I don’t convince a single individual. I will die knowing I had the knowledge and wasn’t afraid to back down from it. I will die a man of principle. If that means I will have fewer vacations and sports cars, fewer followers, fewer citations in journals, fewer popularity votes, then I really don’t give a shit, seriously. I am an incredibly happy and fulfilled person. My mind is my Utopia. I am fine with being unknown by name. Can you not infer this from the fact that I choose to remain anonymous? I don’t want what you want. I don’t feel emptiness by not being popular. I don’t feel inferior, or self-doubting, or inadequate, ever. Libertarianism is an individualistic ethic. It’s up to the individual, and that is sufficient. If I am a libertarian, that is enough for me to live by. I succeeded. I made myself a better person. I am not looking to gain acceptance.”
I do admire your determination. even if it is horribly misguided. :-\
“One cannot avoid the harm by merely “preparing” for it. if I prepare for my real income to be reduced, then the harm doesn’t disappear.
Again, you are still committing the fallacy that mere expectations of action X absolves it of being harmful.”
yes one can if one takes actions to guard against it. And its not even clear than anyones’s real income need ever be reduced! Even NCH’s and their poor counterparts, retirees can sell their stocks bonds and gold for more cash to hold for the next period above the STABLE rate of inflation or NGDP growth. in a minflationary environment (minimal inflation) once Does a B-12 shot beneficial effects get negated on the basis of the monetary sting it brings? What if its not a b-12 shot, but a lifesaving smallpox vaccine? (Let’s assume it is in fact beneficial) Should a child’s or a down’s syndrome adult’s hysterical, irrational fear of needles, prevent a doctor or parent or friend from doing everything possible to save his life?
Successfully guarding against murder attempts does not make those murder attempts voluntary, consensual, and morally justified.
Of COURSE inflation reduces people’s real incomes. It necessarily dilutes the value of the cash and incomes of the later receivers, plus it generates the business cycle, which reduces productivity in the long run, and that hurts everyone who values material gains.
Gold is a good hedge against inflation, but the “gains” of gold are still taxed in US dollars, which coerces people back into the dollar hegemony.
No idea where you’re going with the B-12 stuff.
Delete the once. 🙂
:” real compromise would be allowing you and anyone else who wants it to stay in the dollar system if you want, and those who don’t want it can opt out of it without being intimidated or threatened with violence.
That is actual compromise.”
Its already possible. Go live in in cave somewhere with a militia
. If you have money, you can turn the place into a real Galt’s Gulch.
That is not compromise. That is a blatant “It’s my way or the highway” extremism.
Try again Mr. Self-Professed Compromiser.
Edward:
First where’s your evidence that housing prices, for instance were actual exchange prices?
Wow dude. Your Platonism knows no bounds.
The Case-Shiller Index for example shows a historical house pricing trend, not merely asking price trends. If you are unsure whether or not house price trends are actual prices or asking prices, then connect those prices with the associated housingmsale volumes. You will notice that all throughout the housing collapse, volumes remained above zero, substantially so.
Look at the declining amount of sales from the peak to the trough.
There you go! Look at the DECLINING amount of SALES. Declining sales means sales. Sales means purchases. Purchases mean buyers. That means buyers were there every step of the way down the price trend.
Can we go home now?
If there were a few sales here and there even in the midst of the credit meltdown, and those houses were purchased by people with lots of cash. then more power to them I suppose.
A few? Notwithstanding the fact that this alone refutes universal claim that buyers wait for price floors before purchasing goods, in reality, it was more than 3 sales. It was literally in the millions.
I guess Austrians would say these folks have ultra high time preference.
Actualy, not necessarily.
Time preference to Austrians is the degree to which present goods are preferred over future goods. When somebody buys a house that is nevertheless on a historical pricing decline, their purchase MAY be associated with ultra high time preference, provided they “ultra reduced” their investment relative to their consumption (the house may consumption, or may be an investment, depending on the purpose of the purchase, which is how I differentiate between capital goods and consumer goods, thus adding a further complication).
If someone buys a house and this in combination with their other actions leads to a higher investment to consumption ratio, then the purchase of the house would be associated with a lower time preference.
Austrians are divided on the cash preference issue. For me, I consider cash preference separate from time preference, since a higher cash balance may come about as a result of lower comsumption, or lower investment. The criticism against this from other Austrians is that they consider holding cash to be an investment, in which case a reduction of “real” investment and more cash would mean unchanged time preference. I think my “side” has the upper hand though, because I think the counter side’s position is a consequence of not differentiating between pradeological category of holding cash, and the physical necessity of holding cash for at least a positive period of time before doing anything with it. If holding cash is an act of saving, then because everyone spends out of cash balances, it would mean every good purchase, consumer or capital good, would be financed out “savings”. It would also imply that a central bank can add to society’s “savings” merely by printing more toilet paper money,, and that is very hard for the “cash = savings” side to accept.
At the end of the day though, it’s a relatively minor disagreement.
Do Giffen goods disprove the law of demand? Of course they don’t. Neither to high time preference buyers disprove the effects of unstable deflation expectations.
Do pigs fly? Of course they don’t. Neither do buyers wait for price floors before making purchases, regardless of whether the fall is due to monetary deflation.
High time preferemces are not consequential to your point or mine.
On the stock market, people DO BUY on the way down, but those people tend to lose money, unless they’re warren Buffet, and or other value investors and can afford to wait. I think Warren is still waiting to recoup his investment in Goldman Sachs. (Maybe I’m wrong)
Whether they tend to lose money or not is besides the point. Investors really do buy stocks on downward trends. Indeed, most everything is purchased on downward trends. It is not about having “ultra high time preferences” so much as it about having a time preference at all. Aif I want a particular good now, and I am willing to pay the existing price, and I don’t care if the price is lower next year, then I will go out and buy the good! I do this all the friggin time with electronics. It doesn’t matter if the REASON for the price decline is monetary deflation as opposed to “good deflation”. I make decisions at the margin, at the time I make the decisions, given my preferences at the time. If electronics prices are going down because of “bad” deflation, or because of “good” deflation, I won’t give a shit. I will buy the electronics if I am willing to pay the existng price for getting the goods NOW. This may be associated with higher, lower, or unchanged time preference on my part.
Your position justnsn’t tenable when held up even under modest scrutiny. You were so certain that buyers abstain, and now you’re making excuses to explain the counter-examples of your claim.
Suppose I buy a stock on a downward price trend, because my time horizon extends beyond the actual price floor date. The price is currently $100, and it is expected to hit $50 next year, after which it is then expected to reach $150 the year after. My time horizon is five years.
It would be perfectly rational, from a pure pricing perspective, to buy the stock now. For maybe I plan to make changes at the company that will make the stock price go to $150 in two years.
“THEY CAN ACQUIRE THE INCOME IF THE FED JUST STOPS MESSING WITH THE MONETARY SYSTEM AND STOPS DELUDING INVESTORS INTO MAKING MALINVESTMENTS THAT LATER RESULTED IN THE VERY CREDIT MELTDOWN THAT YOU ARE NOW UNABLE TO SOLVE WITH ANYTHING OTHER THAN MORE OF WHAT CAUSED IT TO OCCUR IN THE FIRST PLACE.”
You seem mad.
Sorry, I was just playing the all caps game you introduced. Is this another example of do as I say, not as I do?
No they can’t, if their income declines faster than their cost of living, since firms are reluctant to cut wages and rely on firings instead.
That will only HASTEN the relative price corrections, which will only hasten the opportunities to make an income in the future.
Firms who are reluctant to cut wages, only do so because they expect wages to once again rise. Get rid of inflation, and you get rid of that expectation. You make it seem like reluctance to cut wages is somehow a free market phenomenon that only inflation can overcome. As usual, it’s blame the free market for destruction from state intervention.
“Again, by your logic, if I said that slavery leads to masters gaining at the expense of slaves during a spread of slavery, that to be consistent I would have to hold that slavery leads to slaves gaining at the expense of masters during a reduction of slavery.”
You would, that premise is correct!
Goodness. Here I was thinking I showed the craziness of the premise, and there you go saying it is correct. This is getting more crazy as it goes on.
But unlike the inflation example, slaves gaining at the expense of masters are justified.
How would the slaves be gaining at the expense of the masters? Suppose a freed slave finally does what he wants, by building himself a farm. His gain does not come at the expense of the master. It comes at the expense of what the costs the ex-slave incurs by way of building a farm rather than doing something else. The loss of the master is not due to the ex-slave exploiting him.
Please don’t tell me that you adhere to the Montainge fallacy that one man’s profit is another man’s loss.
And more people are “harmed” during (monetary) deflation.
Oh, now the old “those whi benefit from explitation outnumber those who are exploited, ergo the explers have a right to continue exploiting” defense.
If masters outnumbered slaves, then slave emancipation would also “harm more people” than it will benefit people. Does that mean emancipation is immoral?
Deflation only helps NET cash holders with positive equity and liquidity
What the heck is a “net cash holder”? Is there such thing as someone who is holding negative dollars?
Deflation helps those who were previously harmed by coercive inflation. That is SUFFICIENT to justifying it.
it harms creditors, debtors, workers, and stockholders.
False. It helps lenders, who get paid back in higher valued money. It helps workers who were made unemployed because of inflation distorting the pricing system. It helps hedge fund investors.
But, it should be noted that I don’t care which specific economic roles deflation and inflation benefits and harms. I care about ceasing initiations of violencemagainst innocent people. If that means some whi peviously benefited are harmed, then so be it. That’s the fault of the exploiters, not those who want to cease it.
So the four latter are much closer to the “exploited” than the “exploiter”. Even NCH’s like Warren Buffet would have to wait a long time for their purchases made during a liquidity crisis to make a profit. . Only weirdoes who like wasting money and have no patience at all, are the small exception. The rest of us should suffer to reward these fools?
The rest of us should suffer to reward the fools who benefit from inflation?
I do admire your determination. even if it is horribly misguided. :-\
I am still waiting for you to show how it is misguided, as opposed to voluntary adopted.
I’m going to suggest that our opponents purposefully avoid thinking rigorously about the implications of the non-aggression principle and, of course, economic calculation and miscalculation because of where the implications of those ideas would clearly lead. There is no other explanation because the concepts are just not that complicated. The MMTers obfuscate and dissemble on these issues all of the time. The off-target response to us is almost universal. It’s bizarre.
http://mikenormaneconomics.blogspot.com/2012/10/tao-jonesing-capitalism-isnt-failure.html?showComment=1349276852628#c677489933061125037
MF,
Sorry if I appear to be nitpicking, but this
“Time preference to Austrians is the degree to which present goods are preferred over future goods.”
is wrong. Time preference IS the preference for end satisfaction in the present over end satisfaction in the future. You are making the same mistake that Prof. Murphy has made. You are mistaking the manifestation of time preference for time preference itself. The higher valuation of end satisfaction now over end satisfaction in the future leads, necessarily, to the higher valuation of present goods over future goods. The consequence of a phenomenon is not the phenomenon itself.
Ah but Bala, to Praxeologists, the concept of time preference, or rather I should say the knowledge of time preference, is derived from demonstrated preferences (actions, which are valuations), not the other way around.
It is wrong to claim that the “concept” of time preference is “manifested” by valuations of present goods over future goods. It is precisely the other way around. The valuation actions is manifested by the logical category (concept) of time preference.
I think what you are doing is trying to interpret Austrian praxeology from a Platonic “ideal” approach, in which the abstract concept is the true reality, and on Earth that concept is “degraded” by the empirical, heterogeneous instances that are but mere reflections of the one true concept. Hence, you say that the concept of time preference is “manifested” by us making valuation actions of preferring present goods over future goods.
For me, the ideal abstract concept is subsidiary to the Earthly observations we make concerning ourselves and other people valuing present goods over future goods. Thus, for me, time preference IS the degree to which present goods are valued over future goods, rather than the fact that present goods are valued at all.
I would agree with you Bala if I was strictly Misesian in this respect. You’re right if time preference is to be understood as a category of action. Then, we would understand that desiring present satisfaction over future satisfaction is the concept of time preference that we observe as the difference in valuations of present goods versus future goods.
I think it’s the Rothbardianism rubbing off on me at times.
“I would agree with you Bala if I was strictly Misesian in this respect”
That’s my point. At the same time, it would, IMO, be incorrect to state that Rothbard deviated from this and to say that your Rothbardianism is leading to the difference. In fact, if you study the value scales (on pages 380 and 381 of MESPM) that Rothbard uses to explain the origin and level of the rate if interest, you will find that it is strictly Misesian in its foundations. I realised this when I understood why the 10 oz in the future forms the absolute floor of this value scale. I realised that that point was the core of the construction of the hypothetical value scales and the subsequent explanation of individual behaviour on the time market.
So to state that your Rothbardianism makes you look at it differently is to misinterpret Rothbard.
I was speaking of epistemology, not value scale constructions/interpretations in particular.
Rothbard and Mises approached the question of the foundation of knowledge from two different paths (which some have argued are not so different after all).
Mises held intuition as the foundation of knowledge, whereas Rothbard held empiricism is the foundation of knowledge.
For Rothbard, if asked, he would say that his knowledge of time preference derives from action which is derived from observation, whereas Mises would say the knowledge of time preference derives from action which is derived from intuition (verstehen).
It is in fact Rothbard that influenced me to consider time preference as observing people value present goods differently than future goods, which can also be thought of as the degree to which these two valuations differ, and then, after this, apprehend the concept of time preference.
Of course, Rothbard held that the value scale for a given individual is itself unobservable, and must be understood as existing rather than observed to exist (inferred from one’s own experiences), so the concept of a value scale is an intuition in the Misesian sense.
However, I still hold time preference as being understood as the relationship between valuing present over future ends (goods), rather than having present desires at all. This is because I diverge from Mises when it comes to understanding action, by being influenced by Rothbard’s empirical approach.
I don’t start with an initial concept of being whereby this being does not act, has infinitely low to zero time preference, is constantly satiated and does not have any uneasiness that is to be eliminated through conscious choices and actions. Instead, I start with what I am looking at, and then understanding what I am looking at by asking the question why some people are minimal consumers relative to investment while others are maximal consumers relative to investment. I consider the concept of time preference to be the relation between consumption and investment, person to person, grounded in observation. I don’t say time preference is the Earthly desire for present ends at all (so as to distinguish it from an ultimate Being that does not have any such desire), but rather, I say time preference IS what you call the “manifestation” of the concept in day to day life.
So Bala, if an Austrian writer talks about “people shifting to lower time preference” and interest rates falling, you think that’s a mistake?
No. To talk in this manner, one should first define the meanings of the terms one is using. “lower” time preference first off all presupposes levels or degrees or intensities of time preference. Once one defines that clearly and in sync with the basic concept of time preference, there would be no reason to call this statement a mistake. It is here that the distinction I am making is important. “Higher” and “Lower” time preferences refer to the intensity of the preference for present satisfaction over future satisfaction. The manifestation of this is the relative ranking of present and future goods on the value scales of the individuals concerned. A person with a lower time preference would rank a future good many more ranks below a present good than would a person with a high time preference. A “lower” time preference implies a lower ranking for future goods vas present goods. Once this is understood, it is easy, meaningful and noncontradictory to talk of time preference as I did and simultaneously of “shifting” time preferences.
It is this error that I see in the 2 senses in which you have interpreted time preference in your thesis. IMHO, both the senses are misinterpretations leading to erroneous conclusions.
I will post more later, but work beckons now. Do bear with me for taking time to reply.
Oops!!! Serious corrections.
“A person with a higher time preference would rank a future good many more ranks below a present good than would a person with a lower time preference. A “higher” time preference implies a lower ranking for future goods vs present goods.”
The rest remains unchanged.
Wait wait wait, if the grounding is how one defines time preference, after which an argument concerning time preference is either right or wrong, then I’m sorry to say, but you argued from definition (argumentative fallacy) when you attacked my understanding of “time preference” before we established an agreement (understanding) of what the definition of time preference is.
You said I was wrong to define time preference as the degree to which present goods are valued over future goods, which of course implies we already established a definition and agreed to it. Yet if I define time preference differently than you do, then your criticism is an argument that suggests I am wrong on account of a definition I used, rather than being wrong about an argument concerning time preference given we agreed to a definition.
You keep saying that the relative valuations of present versus future goods is a “manifestation” of time preference, but that of course implies a particular definition of time preference that you insist can only be “the desire for present satisfaction….period.”
This is why I said you’re right if you’re a Misesian (meaning you use his definition), and why I have a different definition (because I don’t use Mises’. I hold that Rothbard influenced me in this respect, you disagree, but if we’re arguing over definitions, it’s really inconsequential, no?)
Please find my reply below.
My reply below apart, please note that my post just 3 places above which you replied to was a reply to Prof. Murphy’s specific question to me, not my reply to your question. So, it is meaningless to drag my questioning of your definition into this discussion.
The two are unrelated. My reply to your reply to Prof. Murphy concerning definitions was in response to a specific assumption you made that does relate to definitions. See my reply to your other reply below…
“but if we’re arguing over definitions, it’s really inconsequential, no?”
No. Definitions are important. They are definitely more important than you make them out to be.
“that of course implies a particular definition of time preference that you insist can only be “the desire for present satisfaction….period.” ”
It’s not that I am insisting. It is Mises and Rothbard who were insisting. I am just following in their intellectual footsteps. In the process, I am identifying that you are deviating from it. I am accusing you (quite justifiably) of defining it as per your personal preferences.
What you are doing is fundamentally no different from the act of redefining inflation as the percentage change in the price level from the original definition of inflation as the increase in the supply of money and money substitutes beyond the supply of money proper. If you think the latter switch is not inconsequential, I wonder how you justify your switch.
Yes, definitions are important. When I said inconsequential, I meant inconsequential to this discussion, not unimportant in general. Saying they are more important than I make them out to be is a rather meaningless quibble, because we will never mean the same thing even if we use the same word. Definitions are a different rank in my value scale, as it pertains to this discussion, which should have been about reality, not definitions. But since the start, you have argued over definitions more than over reality. If it isn’t a definition of time preference, it is a definition of Austrians.
Yes, you were insisting that time preference can only be defined as such and such. You saying that you are only “following in their footsteps” is just another way of saying “I insist this is the definition, because Mises and Rothbard defined it thus.” You can’t deny your own ideas, even if they don’t originate with you.
My definition of time preference derives from Rothbard’s epistemology (which you then replied in a way that suggests I took his definition), and Menger’s and Bohm-Bawerk’s treatment of time preference in their works.
You tell me that my definition is my own, but your definition is no less your own. You took ownership of “a” definition, as did I. Yours is influenced by literally copying Mises and Rothbard, which is fine, whereas I defined it in a different way, which you understand as a “deviation”, which sounds more like “toe the party line verbatim or else you’re not an Austrian.”
I am not “redefining” time preference. That implies there is such a thing as an objective definition for all time, but definitions are not objective, they are conventions. Rothbard and Mises could be argued to have “redefined” time preference due to the fact that there was already a series of statements written prior to them as to what it means. Yet you don’t consider their definition, and thus your definition, as a redefinition, because you have the rather weird believe that Austrian economics is only what Mises or Rothbard said. If that is the case, then why don’t you consider Mises or Rothbard as “neo Austrians” or something like that, since they “redefined” and updated a whole slew of concepts from Menger and Bohm-Bawerk?
I don’t like your approach. I consider it to be restrictive, and at the extreme, dogmatic.
I did not “switch” anything. I “developed” my ideas. They evolved. If that upsets you, sorry.
“False. It helps lenders, who get paid back in higher valued money.”
unless the debtors making the interest and princpal payments go bankrupt
Credit meltdowns don’t make every debtor go bankrupt.
“Firms who are reluctant to cut wages, only do so because they expect wages to once again rise. Get rid of inflation, and you get rid of that expectation. You make it seem like reluctance to cut wages is somehow a free market phenomenon that only inflation can overcome. As usual, it’s blame the free market for destruction from state intervention.”
Read Akerlof, dickens and Perry as to why employers won’t hire desperate workers offering their labor even at lower wages
Read Akerlof, Dickens and Perry as to why employers won’t hire desperate workers offering their labor even at lower wages…in an inflationary economy, like I said.
“What the heck is a “net cash holder”? Is there such thing as someone who is holding negative dollars?”
Cute. A net cash holder is someone who’s cash hoard increases above the servicing of his debt and his cost of living from one earnings period to the next
So quite the whole American banking system? And why does Bernanke reward them by paying interest on those cash hoards if it is bad what they are doing?
Cost of living is not objective or constant.
Blackadder: The problem with targeting unemployment is that the Fed can’t control a real variable, whereas it can control a nominal variable.
Wait, that doesn’t seem to make sense. NGDP is a function of (real) GDP and (real) inflation. The only way the FED could control NGDP is trough one or both of the real variables involved. If the FED can’t influence the variables GDP and inflation, there is not way it could possible influence the result of these variables.
What am I missing?
Chris-
you are moissing the fact that although NGDP is anominal variable, in the short term, nominal shocks can influence the real economy
No, I don’t think it’s that. It’s not about what NGDP influences but about what influences NGDP.
Bingo.
Nominal shocks are not causi sui phenomena.
In certain cases, nominal shocks are caused by real shocks.
MF,
I am just going to post a few snippets from Man, Economy and State to demonstrate that my understanding of Rothbard’s definition of and position on time preference are correct and your’s are wrong.
Here he is defining the very concept on page 15.
“A fundamental and constant truth about human action is that man prefers his end to be achieved in the shortest possible time. Given the specific satisfaction, the sooner it arrives, the better. This results from the fact that time is always scarce, and a means to be economized. The sooner any end is attained, the better. Thus, with any given end to be attained, the shorter the period of action, i.e., production, the more preferable for the actor. This is the universal fact of time preference. At any point of time, and for any action, the actor most prefers to have his end attained in the immediate present. Next best for him is the immediate future, and the further in the future the attainment of the end appears to be, the less preferable it is. The less waiting time, the more preferable it is for him.”
Then, here he is doing a recap on some fundamental principles of action on page 320.
“(3) Every person prefers and will attempt to achieve the satisfaction of a given end in the present to the satisfaction of that end in the future. This is the law of time preference.”
Finally, here he is explaining a very important point regarding the construction of John Smith’s value scale.
“It will be noticed that there is no listing for less than 10 ounces of future goods, to be compared with 10 ounces of present goods. The reason is that every man’s time preference is positive, i.e., one ounce of present money will always be preferred to one ounce or less of future money.”
Note the use of “will always be” and not “is for all human beings”. From the above, I am only able to infer that to Rothbard, time preference is about the preference for end satisfaction sooner rather than later or now rather than in the future. He also outlines a REASON for 10 ounces in the future to be necessarily below 10 ounces in the present. That reason is time preference being positive.
If you can now show me where Rothbard defines time preference as the higher valuation of present goods over future goods, it will help support your claim. As per what I could cull out, that position is Prof. Murphy’s position and his point of deviation from both Mises and Rothbard.
Sorry. John Smith’s value scale is worked out on page 382.
I think you are misunderstanding my position. I am not saying Rothbard himself defined time preference the way I define it. I am not here trying to argue what definition Rothbard did or did not utilize.
I am saying that I define time preference in a way that is due to Rothbard’s influence on how we come to know the categories of action.
Time preference as Mises and Rothbard defined it does not tell us anything regarding an actual human’s time preference schedule. But using Rothbard’s epistemological approach, I have come to define time preference not in terms of a praxeological category, but as the content of an individual’s actual temporal values.
Time preference defined as a praxeological category is not something I am here saying is wrong, or something that Rothbard did not hold. I am saying I define it differently by using a different approach to knowledge than Mises (which Rothbard picked up when defining time preference himself).
MF,
I am sorry but I am going to insist on quoting you again to reiterate that my initial objection to your post is indeed justified. You said
“Time preference to Austrians is the degree to which present goods are preferred over future goods.”
Clearly, this definition is not an Austrian definition if Mises and Rothbard are Austrians and their definitions are Austrian definitions. You should have said
“Time preference to me is the degree to which present goods are preferred over future goods.”
That would have been a different point altogether and my response would have been that yours is not an Austrian position at all and that you are no longer discussing Austrian Economics. If at all you appear to be, it would be by accident rather than by intent.
My other point is that Prof. Murphy is flat out wrong in his basic objections to the Pure Time Preference Theory of interest. By defining time preference in the 2 senses he has identified in his thesis, he has taken a very non-Austrian definition of time preference and has hence failed to demonstrate weaknesses in the PTPT as understood by Austrians.
I think you are again arguing from definitions, Bala. This time the definition of Austrian.
There are many more Austrians than Mises and Rothbard. If my definition does not gel with either of these two, then you can’t say I am off-base for saying “Austrians” define time preference the way I define it.
For I could say that Menger and Bohm-Bawerk, who defined time preference more like the way I do, are Austrians, and hence my definition is “Austrian”. But that is not my intention nor the foundation of my original comment.
When I said “Austrians” I guess I should have been clear WHICH Austrians, because my usage was rather sloppy.
Regarding your point about the pure time preference theory of interest, I happen to also disagree with Murphy about that, but that is because he integrates an interpretation of money that the original Austrians did not take into account, which is holding money as in itself a factor that influences MONEY rates of interest.
I trust that you understand that the original Austrians did not provide a theory of MONEY interest, as in interest on loans, but rather a “pure” theory of interest, or, why capitalists earn profits all the time, rather than outbidding other capitalists and bidding up factor prices until no profit remains.
Many Austrians subsequent to the original Austrians have shown that the original definition is lacking when the context is money interest specifically, and it is in this tradition that Murphy gave his theory of interest.
“Time preference as Mises and Rothbard defined it does not tell us anything regarding an actual human’s time preference schedule.”
Wrong. It tells us a lot about EVERY actual human’s time preference schedule. It tells us that 10 oz now MUST BE ranked above 10 oz in the future. It enables us to construct hypothetical time preference scales of many individual humans to demonstrate the process by which we can explain the emergence of a market rate of interest. In short, it tells us ALL that we need to understand about the important real phenomenon of interest, especially the point that its level must be positive.
This is incorrect. The definition of time preference as Rothbard defines it (i.e. “the law of time preference”) doesn’t contain a single proposition about the actual content of a person’s time preference schedule.
You say it tells us that 10 oz of gold MUST BE ranked above 10 oz in the future, but the problem with that is that not everyone even has gold ounces on their subjective value scales.
You are making a contingent claim that presupposes knowledge of the content of an individual’s actual time preference schedule, namely, you know that it includes 10 oz of gold somewhere.
My point is that we cannot know the actual content of a person’s time preference schedule from the Misesian definition of time preference. We can only know the FORM of it, the logical structure, but this structure is empty without thymology, without concrete items within the structure itself.
That’s why I said “actual human”, to convey the impression that I am talking about a given, empirical instance of a person.
You call this a reply???? Heaven help you if you don’t realise that economics studies the logical structure of the time preference schedule and has nothing to say about the particular time preference schedule of a particular man except to take it as a given!!!
You call this a reply???? Heaven help you if you don’t realise that economics studies the logical structure of the time preference schedule and has nothing to say about the particular time preference schedule of a particular man except to take it as a given!!!
You call this a reply???? Heaven help you if you don’t realize the contradictory statement you made, where on the one hand you say that economics tells us the logical structure of the time preference scale and has nothing to say about the specific content of it, but on the other hand you say that you can know, via this logical definition, that a specific content, i.e. 10 oz of gold, IS indeed on a person’s value scale.
Can you see how these two arguments cannot both be true?
When you said 10 oz gold, that is an empirical, tangible concept that relates to content of value scales. That is not a logical structure concept.
The reason why I define time preference as the degree to which a person values present goods (ends) to future goods (ends), is because it not only retains the logical structure aspect, but it also begs the question of just what the content of the time preference scale is for a person to whom the question relates, which introduces an empirical aspect (which as I said I picked up from Rothbard) that is lacking in the traditional praxeological form. I say lacking not because it is deficient, but because I find it more useful and more rewarding to talk about both praxeology and thymology, rather than just praxeology. I can tell stories with both.
Lord Buzungulus, Bringer of the Purple Light,
I understand your frustration.
Well aren’t I glad I am having a discussion with someone who is thinking along those lines.
I said I UNDERSTAND his frustration. That only means that I am frustrated to the core by your evasive non-replies and “not a true scotsman” fallacies.
That was for MF
You are frustrated because you thought you had a gotcha moment, when in reality you didn’t, and so you’re becoming exasperated and finding yourself making accusations of “evasiveness” and “no true scotsman”, which tells me that you are maybe too partisan and dogmatic for my tastes, as if I don’t follow Rothbard or Mises to a T, then I cannot use the Austrian words I am using.
My original suspicion that you are only arguing over definitions has intensified, and shows me my original criticism of your replies were justified.
I can call my definition Austrian because it follows Menger and Bohm-Bawerk, and is logically consistent (implied by) Mises’ definition.
Ha! Ha! Ha! Hilarious. My simple point was that making a claim on the definition of time preference, you have deviated from the Misesian and Rothbardian frameworks. That’s all. Beyond that, I have precious little to say. I find the Misesian framework extremely sound because time preference is identified as a category of the concept “action”. Hence, it is a proposition that is apodictically true to say that “Man has positive time preference”. Yours is clearly divorced from the concept “action” and hangs in there as a floating abstraction. Feel free to blow the bugle.
Ho ho ho ho, I never wanted to convey the impression that my definition was right out of Mises’ or Rothbard’s books. This was your tangent, and I was just along for the ride.
I appreciate that you find the Misesian definition extremely sound. As do I. Yes, it is a category of action.
But, BUT, this definition is not USEFUL if one’s intentions is to tell a story, to fill the praxeological boundaries with content, so as to assist non-Austrians, who tend to be empiricists, in understanding the concepts.
My definition is not “divorced” from the concept of action. The definition I used implies action, although it is not an action category. Floating abstraction? What is this? Ayn Rand’s eulogy? No, it is not floating. The definition “degree to which present ends (goods) are VALUED relative to future ends (goods)” is derived from action (valuations are actions), it does not make sense without action, and is, IMO, more helpful in explaining empirical instances of people and how time preference relates to them.
Your definition is empty and hangs there as a logical necessity, but does not tell us anything as to the actual content of people’s time preference value scales.
But please, continue to “object” and argue over definitions, it’s been rather amusing to see you go full circle and finally admit that all you have been arguing over is definitions. Maybe we can do another loop the loop and pretend we talked about something interesting again.
“But, BUT, this definition is not USEFUL if one’s intentions is to tell a story, to fill the praxeological boundaries with content, so as to assist non-Austrians, who tend to be empiricists, in understanding the concepts.”
You could have as well said that you are not discussing economics. It would have been shorter and clearer. The “use” of economic concepts and definitions is not to tell a story but to make it possible to make sense of the story. They do not and cannot help us fill the praxeological boundaries with content but they do tell us what the praxeological boundaries are in the first place. Incidentally, I am having a lot of fun watching you twist and turn and avoid accepting that you are not discussing economics.
And good luck trying to “educate” non-Austrians by telling stories and failing to discuss economic theory. I really hope you succeed because, frankly, it doesn’t matter how the success comes. What matters is the success.
You could have as well said that you are not discussing economics.
Yes, because the content of people’s time preference value scales, the degree of difference between valuation of future goods and present goods, these are all not economics concepts. They are obviously chemistry.
The “use” of economic concepts and definitions is not to tell a story but to make it possible to make sense of the story. They do not and cannot help us fill the praxeological boundaries with content but they do tell us what the praxeological boundaries are in the first place. Incidentally, I am having a lot of fun watching you twist and turn and avoid accepting that you are not discussing economics.
That “fun” you have is probably derived from discomfort, you know, how some people laugh when they are being corrected, or when witnessing some distressing event.
I didn’t say the use of economic concepts and definitions tells a story. I said the definition I use is useful in telling a story. I know the whole “economic history is unintelligible without an a priori economic theory to make sense of it” arguments from Mises. I agree with it. My point is not to contradict that.
And good luck trying to “educate” non-Austrians by telling stories and failing to discuss economic theory.
Thanks, but I don’t need luck. It’s actually pretty successful. I tend to go into more detail on economic theory when the situation requires it. As an introduction, I tell an empirical story they can understand (“Oh OK, I get it, time preference has to do with how much I consume versus how much I save”, etc). If they are more interested, if they ask something like “But WHY is there a degree to which people desire present satisfaction (goods) over future satisfaction (goods)? Why isn’t there all or nothing at either extreme?”, etc, THEN I will go into the theory aspect and ground this in praxeology and show why it is apodictic.
In my experience, I have found that 99.9% of the time, praxeology goes over the heads of non-Austrians. When they have a lifetime of positivism, even if you did approach them with economic theory, they will try to interpret it from an historical-positivist perspective, and in their own minds they will try to tell themselves a story. Well, I do that for them so that they don’t tell the wrong story. Then when their brain gets going, I see if they are able to perform the self-referential “verstehen” that is necessary to grasp praxeology.
I really hope you succeed because, frankly, it doesn’t matter how the success comes. What matters is the success.
To be honest, I don’t think you’re really interested in this. I think you are more interested in ensuring that every statement made is correct (as you see it), regardless of the effect this has on pedagogy. Maybe you are new to praxeology, which explains your idealistic approach, but for me, when I communicate Austrian concepts, I find that adopting SOME of the nomenclature and isms of “their side”, the arguments become more useful. I keep the hard core logic to myself until the situation calls for it.
Just compare your definition of time preference and mine, and then seriously consider a hypothetical situation of talking to a non-Austrian who only knows positivism, and then ask if they will nod more to your definition or to mine.
I also define time preference in a way that is due to Rothbard’s influence on how we come to know the categories of action.