20 Sep 2013


Economics, Market Monetarism, Nick Rowe, Potpourri, Scott Sumner, Shameless Self-Promotion 57 Comments

I’m just outside Chicago for the Illinois Libertarian Party annual extravaganza. Some “Freedom Karaoke” tonight, followed by lectures tomorrow. In the meantime:

==> Nick Rowe writes another blog post in which he calmly and methodically destroys the foundation of mainstream central banking theory. (You may recall a few months ago Nick showed in a standard New Keynesian model a large cut in current government expenditures could restore full employment, and Nick claimed that surely Krugman and DeLong would endorse his textbook discussion.) Nick is like some crazy guy playing Solitaire on the deck of the Titanic. You strike up a conversation with him, and he mumbles something about realizing we are headed straight for an iceberg. “Whoa, are you serious?! Shouldn’t we tell the captain or something?!” you exclaim. But Nick just mutters something about it being his mother’s birthday next week, as he stares at his cards.

==> Tom Woods now has his own radio show. Life will never be the same.

==> A long but interesting (we hope!) conversation between Daniel Sanchez and me. The main topic is my upcoming Mises Academy class, but it soon pivots away from an infomercial and turns into some deep thoughts on economic theory.

==> JP Koning knows that bank reserves aren’t ripe avocados, but “the expert” Woodford disagrees. (And where are the coconuts in this model?)

==> Scott Sumner reasons from a price change and hails Ben Bernanke. (I’ll come back to this later, as Scott specifically mentions me in his remarks on interest rates.)

==> I’m not attending, but FYI there is an upcoming Austrian Scholar’s Conference in Toronto, hosted by the Mises Institute of Canada.

==> You hardcore policy wonks might be interested in IER’s comment on the government’s rule on microwave ovens. (Yes, the federal government issues rules pertaining to “Off” and “Standby” modes for microwaves. I think that falls under the “necessary and proper” clause.)

57 Responses to “Potpourri”

  1. Tel says:

    Yes, the federal government issues rules pertaining to “Off” and “Standby” modes for microwaves. I think that falls under the “necessary and proper” clause.

    It does shit me that devices have a high standby power for no good reason. With modern electronics if your standby power is more than 1W for any appliance, then it’s just laziness on the part of the designer.

    That said, the federal government should mandate that the standby power be clearly printed on the device, and it should fall under the “weights and measures” clause. If consumers choose to buy devices with high standby power, that’s their choice.

  2. Major_Freedom says:

    Sigh, unfortunately Nick Rowe does not understand Say’s Law.

    • Daniel Kuehn says:

      MF lecturing Rowe on Say’s Law.

      Thanks buddy – I needed a good laugh today.

      • Bob Roddis says:

        Glenn Greenwald bothers me in a really deep, genuine way…

        Posted by dkuehn at 10:10 PM

        …and I’m always a little shocked that a lot of people don’t see it that way.


        • Daniel Kuehn says:

          I have this image of you quoting me on that at the breakfast table or in casual conversation in the super market. Not sure why… it just seems plausible.

          • Anonymous says:

            It’s about the fifth time I’ve seen him quote it, like it’s somehow a point scored. It isn’t.

          • Bob Roddis says:

            It’s therapy in lieu of thinking all day “How can he possibly believe THAT?!”

            I can quote the above and the world makes sense again.

            • Ken B says:

              Bob R,
              Can you understand why this tactic for most of us not pre committed to an Austrian position undercuts not DK but you? And it has nothing to do with agreeing with GG or not.

              • valueprax says:

                Nice backdoor accusation of “being an ideologue”. You’re a really “flexible” thinker while the rest of us are “pre committed to an Austrian position.”

                I wonder if you ever listen to yourself? We all have to, you should try it sometime.

              • Ken B says:

                When have ever hidden my belief that a lot of you here, you included, are ideologues? There isn’t even anything wrong with being ideologically committed. But someone as smart as Bob R should be able to see that JUST being ideological or boosterish undercuts oneself.

              • Major_Freedom says:

                I for one thinks it undercuts DK, not Roddis.

                But that’s because I’m not committed to the same ideology as you.

              • Bob Murphy says:

                Ken B. wrote:

                Bob R,
                Can you understand why this tactic for most of us not pre committed to an Austrian position undercuts not DK but you? And it has nothing to do with agreeing with GG or not.

                Only Austrians like Glenn Greenwald? Or only Austrians repeat themselves on the Internet?

              • Ken B says:

                You guys are fixating on the Austrian part. But it applies to any group. Bob R’s repeating this over and over only appeals to the antiDK crowd who on this board are the Austrians.
                Now Bob R does a similar thing with LK and economic calculation. I think he’s wrong but at least that is pertinent . If it were true it would matter to the evaluation of his judgment of economic history and issues. Disliking GG though?

              • Bob Murphy says:

                Ken B. wrote:

                You guys are fixating on the Austrian part.

                You’re too funny Ken B. Hey everybody, Ken B. has sex with squirrels. Whoa whoa whoa, why’s everybody freaking out? You’re focusing on the “squirrels” part. I’m just saying, Ken B.’s not a virgin. You guys don’t even know how to parse an argument.

              • Major_Freedom says:

                $100 says Ken B makes a bad joke about your mentioning sex with squirrels, instead of addressing the logic of your post.


              • Joseph Fetz says:

                Wow! That was fucking hilarious, but also true (in context).

                I would have thought that you’d go the “bonobos” route, but no, you went with squirrels.

                I owe you a beer.

              • Ken B says:

                This is really simple guys and its revealing you don’t get it. Roddis repeats whenever he disagrees with DK this irrelevant quote. If you don’t see the crazy obsessive uncle in the attic aspect you don’t. But don’t wonder why people tend to ignore you either.

                A stock fool in comedy, going back to before Plautus, is the guy who says the same thing in every situation.

              • Bob Murphy says:

                This is really simple guys and its revealing you don’t get it.

                Ken B., you think I don’t “get” what your problem with Roddis is? You think it’s odd that he often reproduces a quote from Daniel about Glenn Greenwald, which in some cases isn’t even related to the controversy at hand, and furthermore without any commentary from Roddis about why that quote from Daniel is such a big deal.

                OK, now that I have proven I am a human being, do you understand why it seemed weird to us that you cited this as evidence that Roddis was in an Austrian cult, when Glenn Greenwald considers himself a progressive who favors a lot of economic interventions by the gov’t? What are you talking about Ken B.? It’s like you can say whatever insult pops into your head about us, and then further insult us when we point out you’re completely out of line.

              • Ken B says:

                Ok Bob M you’d clearly be happier if I restate. I’m a cooperative guy.
                Bob R do you understand why this tactic makes those of us not pre committed to a belief about DK as saying more about you than him?

              • Dan says:

                “But don’t wonder why people tend to ignore you either.”

                If only you ignored us.

            • Bob Roddis says:


              • Ken B says:

                Because Bob one can be uncomfortable with any journalist without that being evidence one is a fool or knave. So endlessly that quote against DK as if you think it discredits him makes you look like a cultist, a fool, or someone with no substantive objection, just a dislike of DK that impairs your judgment.

              • Major_Freedom says:

                Roddis wasn’t proposing the universal argument you attribute to him.

                He wasn’t talking about each and every journalist.

                He was talking about specific things that a specific journalist made, and DK’s reaction to those statements.

                I trust you are having an off day such that you are able to realize a trivial truth.

              • valueprax says:

                Ken B,

                Make up your mind about DK already. That’s the real problem you’re struggling with this.

                By the way, what was it that led Bob Roddis to be “pre committed” in his viewpoint about DK? Any idea? Wouldn’t happen to be things like the quote he brings up endlessly, would it? No, he must’ve just been born that way. Something genetic about his anti-DK ideology.

              • Ken B says:

                If it *was* that quote then that’s risible. But I don’t think it was.
                Anyway I don’t need to “make up my mind about DK” beforehand. I can judge his arguments one at a time.

              • Ken B says:

                Incidentally, if DK is reading this I’m not ducking. I have a fairly firm opinion of DK: he’s a very smart, serious, thoughtful guy with whom I often disagree but whom I respect vastly more than most commenters here.

      • Major_Freedom says:

        I didn’t lecture Rowe. I posted this comment here.

        Besides, you don’t understand Say’s Law either, so you’re no credible judge about my comment either.

        • Ken B says:

          Explain what Rowe thinks and why it’s wrong.

          • Bob Murphy says:

            Ken B you forgot the magic word.

            • Ken B says:


              • skylien says:

                I thought “taper” was the magical word currently. Bernanke uses it to let the stock market rise and fall…

          • Major_Freedom says:

            I posted a summary of this on his blog.

          • Matt Tanous says:

            Rowe thinks, and I quote, that “Say’s Law is false in a monetary exchange economy”. Which is wrong, as Say was describing a monetary exchange economy.

            “In a monetary economy that produces only apples and bananas, it is perfectly possible to have an excess supply of both apples and bananas.”

            Uh, no. There is no such thing as an “excess supply” of a good. If there is an “excess demand” for money, then prices fall – all of them. But this does not invalidate Say’s Law. People still want the money for what it can buy, which is the heart of Say’s Law….

            • Ken B says:

              He’s talking about influencing behavior though, hence his true but trivial remark. He’s is arguing that sometimes coordination problems cannot be solved quickly enough to matter.

              • Major_Freedom says:

                That isn’t a “true but trivial remark.”

                It’s strictly incorrect. Say’s Law is NOT invalidated in a monetary exchange economy.

        • Richie says:

          Besides, you don’t understand Say’s Law either, so you’re no credible judge about my comment either.

          I’ve never known a Keynesian that does understand Say’s Law.

          • Major_Freedom says:

            That’s likely because wheras vulgar Keynesianism (the dominant Keynesianism) is based on consumptionism, Say’s Law is based on productionism.

            If one adheres to consumptionism, the logic behind Say’s Law is clouded.

            • voodoo says:

              I think yours qualifies as *the most idiotic* blog comment I have read today.

              • Richie says:

                I think yours qualifies as *the most idiotic* blog comment I have read today.

                I shall pat myself on the back for that great honor! Thank you.

              • Major_Freedom says:

                Oh, well by that rigorous rebuttal, I guess I will reverse my conviction.


          • Tel says:

            I’ve never known a Keynesian that does understand Say’s Law.

            I disagree, the whole thesis of Keynes was a declaration that Say’s Law does not exist. They know it well enough, they simply choose to ignore it.

            • Major_Freedom says:

              How can they “know it well enough”, when the founder of Keynesianism bungled it?

            • Tel says:

              Say declared that people do not collect money just for the sake of money.

              Keynes declared that they do.

              I’m pretty sure Keynes never thought he was agreeing with Say.

              • Major_Freedom says:

                If he agreed or not, it is separate from whether Keynes understood Say’s Law. He didn’t. He didn’t even correctly describe it, let alone disagree with whether or not people seek money for its own sake, or for some other purpose.

  3. anonymous says:

    Here is a monetarist critique on praxeology

    • Major_Freedom says:

      Horribly confused post.

      • Dan says:

        No kidding

        • Ken B says:

          Post:”the theorems you prove depend on the axioms you accept. Several different plausible axioms are possible.”
          MF: “Confused!”


          • Major_Freedom says:

            That statement is not what I had in mind, even though it is also confused.

            To address the quote you posted:

            The author does not seem to realize that the praxeological axioms are presupposed by his own attempt to critique it. When he CRITICIZES praxeology, he is ACTING. All the theorems are present in his confused denial of their necessity.

            But like I said, this statement is not what I had in mind. There are even worse statements.

            • Major_Freedom says:

              In other words, there is no “choosing” of what is implied in acting, when acting.

              You want to choose axioms? You want to prove something using those axioms? OK, fine, do so. But the fact remains that all the axioms of action are present.

              One can choose mathematical axioms. One cannot NOT choose action axioms when choosing axioms.

          • Matt Tanous says:

            So instead of refuting the action axiom, he just ignores it as a “choice” instead of recognizing it is a necessary fact inherent in action. He runs into the same performative contradiction as anyone else here….

            • Major_Freedom says:

              I think that is due to the tendency among Keynesians (who are almost all positivists) to only look “outward”, at observable data, which biases them against self-reflection and looking “inward”, which is necessary in order to grasp whether one’s supposed “refutation” of praxeological axioms are in fact a refutation instead of what they really are, which is a performative contradiction.

              If one doesn’t think about what one is doing, and one only thinks about that which is “out there”, then is it really surprising that one would more likely make statements that contradict one’s behavior in making those statements?

              Keynesians are either oblivious, scared, or hostile towards Rationalism.

              A good piece of advice for them is to always think about not only the “external” topic of discussion, but themselves as well.

              “Am I saying something that contradicts my activity?”

              “Am I practising what I am preaching?”

              “Are the principles I am relying upon when communicating my argument as true, consistent with the content of my argument, or do they contradict the content of my argument?”

  4. Bob Roddis says:

    I mention DK’s Greenwald quote for the reason I stated above. There’s also this from DK:

    In the comment section of this post, Bob Murphy says that I have “unusual preferences when it comes to the president being able to blow up Americans with flying robots and no judicial review.”


    The real concern around “creating new terrorists” for me is the entire war in Iraq, as well as the fact that we are so deep in Afghanistan now because we did not crack down hard in the tribal regions on the border back in 2002 and 2003. It seems to me that if you’re concerned about “creating new terrorists”, the drone strikes are getting back to minimizing that problem after a decade of counter-productive (and in the case of Iraq, entirely unprovoked) conventional warfare.

    The Greenwald types never seem to have an answer to this. Of course drone warfare isn’t pretty. But instead of just talking about how warfare isn’t pretty, let’s compare it to the counterfactuals.

    There is another counter-factual, of course. We could just drop the whole thing.

    We could leave Iraq to Islamist parties, and leave Afghanistan to whatever militants, tribal leaders, or warlords can hold a certain territory. We can leave al Qaeda – an enemy that launched the first strike on U.S. soil in sixty years – entirely unharassed in Pakistan, Yemen, and elsewhere. Will this be less terrorizing for these populations? Will less terrorists be created in these situations? Would Americans be safer?

    I can’t see how.


    I’d readily admit that there are terrorists today that would not have been terrorists if it weren’t for the drone attacks.

    I’m guessing the problem would be even worse under the libertarian or Republican counterfactual.


    Watch it in the comment section. If you’re an asshole to me or anyone else your comment is going to get deleted. Believe it or not, I really don’t enjoy getting told that I’m a statist or that I don’t care about human suffering or the Constitution.


    Further, I claim EVERY anti-Austrian fails to understand economic calculation. I think most Austrians fail to emphasize it enough, just like they fail to emphasize the theft of purchasing power that is the backbone of funny money emissions. When it comes to LK, the fact is that he still does not understand economic calculation. However, the contortions he goes through to “refute” it are truly funny. Ha ha.

    I was thinking that claiming everyone engages in economic calculation is like saying that everyone puts on their pants one leg at a time. Is that a priori or empirical?

  5. Bob Roddis says:

    1. This started with DK’s nasty comment to MF.

    2. Here’s some recent DK:

    I do despise, of course, this impulse in the second paragraph to equate being pro-free enterprise with being anti-state. That’s a category error that saturates almost all libertarian writing. But I get his meaning on Hayek

    [But there is no meaning because of the category error:

    To characterize Hayek (or, indeed, earlier libertarians like Bastiat and John Stuart Mill) as a “lukewarm” supporter of market because he understands that markets require the right amount of public-sector support is to be a clown…..


    I still think mentioning the Greenwald quote is a nice way of basically just walking away.

    • Major_Freedom says:

      “I do despise, of course, this impulse in the second paragraph to equate being pro-free enterprise with being anti-state. That’s a category error that saturates almost all libertarian writing.”

      DK despises a truth then. Being pro-free market means to be pro-private property rights. To be pro-private property rights means to be anti-violation of property rights. To be anti-violation of property rights means to be anti-state.

      It’s not a category error. DK adheres to categorically erroroneous premises. Big surprise there.

  6. Scott Sumner says:

    Bob, Are you ever going to spend the time to figure out what I mean by “reasoning from a price change?” Or are you content to go through life not knowing?

    • Major_Freedom says:

      Stocks up sharply . . . but wait, all the experts say QE doesn’t matter at zero rates. Pushing on a string. Perfect substitutes, etc, etc.”

      Reasoning from a price change.

      Bond yields down. Yes, that goes against the view that the income and inflation effects usually trump the liquidity effects for long term bonds. But consider:”

      “a. The level of the 10 year is still around 2.8%.”

      Reasoning from a price change.

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