15
Jan
2015
Potpourri
==> In my latest Mises CA post, I dig up an old Scott Winship article *defending* Piketty from the FT’s Chris Giles. Hilarity ensues.
==> Speaking of the man, Tyler Cowen links to this interview with Piketty who said of the FT critique: “I have responded in a very precise manner to every point they raised, and anybody looking at my response would conclude that they had an ideological viewpoint, but I let everybody form their own opinion.” I’m beginning to think that when Piketty says “everybody thinks” and “anybody thinks,” what he means is, “This is my strongly held view.” Perhaps there’s some problem with the translation.
==> The astute von Pepe sends us this ZeroHedge piece lauding the prescient Jim Grant, who predicted the Swiss move.
And the most interesting lesson to draw from this is (again), that to be for central banking (no matter if you are Keynesian or Monetarist, except maybe when a monetarist argues for following one simple rule like targeting one NGDP growth path forever) that you HAVE TO LIE.
“From January 12, 2015:
The Swiss National Bank’s cap on the franc at 1.20 per euro will remain its key monetary policy tool, the central bank’s vice-chairman said in a television interview broadcast on Monday. “We took stock of the situation less than a month ago, we looked again at all the parameters and we are convinced that the minimum exchange rate must remain the cornerstone of our monetary policy,” Jean-Pierre Danthine told RTS.
From January 15, 2015:
Recently, divergences between the monetary policies of the major currency areas have increased significantly – a trend that is likely to become even more pronounced. The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar. In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified.
”
http://www.zerohedge.com/news/2015-01-15/so-much-changes-48-hours
When people start to study regular mainstream economics, I think the first thing professors should ask their students is if they are ready to lie, because that is what to job at the helm of the profession would demand of them.
It takes two nominals to make a real, but one of those nominals can be complete bull, just so long as people believe it.
Economics as information processing… including creation of information, propagation of information, and destruction of information.
There’s a whole new branch of economics opening up here: rational amoral economic man.
As someone who generally is quite sympathetic to monetary intervention as a second best policy to free market solutions what I found shocking about the Swiss franc thing is not so much that the Swiss CB changed policy (their balance sheet was getting enormous) but that the Swiss franc increased 30% in value almost as soon as the policy announcement came out.
Seems like years of printing money has changed nothing fundamental about the Swiss economy, which is kind of awkward for monetary disequilibrium theory.
I know what the MMists will say – the Swiss CB has now set expectations about future tight Swiss monetary policy and that why the franc shot up in value – and that probably is mostly right. But my mental model is that following a nominal target for a number of years should mean that the nominal target (in this case the exchange value) should reflect reality and not be something that will swing widely away from the target the moment the policy is dropped.
“Seems like years of printing money has changed nothing fundamental about the Swiss economy, which is kind of awkward for monetary disequilibrium theory.”
On what basis are you making this claim? I don’t really know much about Europe during the Great Recession and I know almost nothing about Switzerland in particular.
“I have responded in a very precise manner to every point they raised, and anybody looking at my response would conclude that they had an ideological viewpoint, but I let everybody form their own opinion.”
Now THAT’S funny! From the way Piketty makes it sound, one would have expected him to simply hand over the keys to his unpublished “do-files” when we invited him to respond to our critiques instead of simply repeating that it’s nothing more than a few “typos”!
For Piketty to pejoratively judge someone as being motivated by an ideological viewpoint, has got to be the winner for the hypocrisy award of the year.
Forget the lukewarm ‘defense’ of Piketty. The most hilarious part is the staged ‘Beautiful Mind’-like picture of Piketty you placed at the top of your article. Every idiot who knows how to draw a line graph slightly better than the average Joe is now photographed in that manner.