26
Feb
2016
That Voodoo, That Krug Do
The punchline from my latest blog post at The Beacon:
Are these really the most outrageous examples of “voodoo economics” to come out of a keyboard in the last few years? Does a projection of 5.3 percent average real GDP growth really deserve three question marks? After all, Krugman is the one who has argued the following:
- The Obama Administration could’ve sidestepped the debt ceiling standoff by having the Treasury issue a trillion-dollar platinum coin. (This was such a palpably absurd suggestion that Jon Stewart saw the comedy in it.)
- The people warning about speculators attacking a nation’s bonds are wrong, because (a) it would never happen for responsible governments like Japan and the U.S. but (b) it would actually be agood thing for their economies if speculators attacked their currencies.
- In 2011, it would have been good for the EPA to force businesses to spend money complying with new environmental regulations, even setting aside and environmental benefit, because we were in a liquidity trap. In Krugman’s words: “This puts us in a world of topsy-turvy, in which many of the usual rules of economics cease to hold. Thrift leads to lower investment; wage cuts reduce employment; even higher productivity can be a bad thing. And the broken windows fallacy ceases to be a fallacy: something that forces firms to replace capital, even if that something seemingly makes them poorer, can stimulate spending and raise employment.”
- Although he was being intentionally provocative with his language, Krugman quite seriously recommended solving America’s long-term fiscal imbalance through “death panels and sales taxes.”
- And of course the masterpiece: In light of Republican obstinancy, a fake alien invasion would have been good economically by prodding politicians into supporting deficit spending (on a nonexistent threat) adequate to restoring Aggregate Demand, and fixing the slump within 18 months.
Looking over the above positions that Krugman has taken just in the past five years, are we really going to take Gerald Friedman out to the woodshed for saying Big Government spending can achieve 5.3 percent real GDP growth? Who’s the real voodoo witch doctor here?
Blurring the line between economics and politics. He’s a policonomist. In hind sight, in an election year, there actually is no blurring at all.
How would a trillion dollar platinum coin be split up among creditors?
The Treasury would just issue a new platinum coin to each of the creditors that is worth their portion of the trillion-dollar platinum coin.
1. As Kroogie constantly reminds us, he’s not one of those” very serious people”. He proves it again. Over and over.
2. The platinum coin adventure should have been the final answer to the questions of a) whether Keynesians are serious about anything; and b) whether “progressives “ have any interest in understanding the historical U.S. Constitution.
Lord Keynes!
Question: Do people have to actually *want* what they spend their money on in order for that spending to be economically beneficial?
As I repeat for the 457th time,
1. The Keynesians cannot and will not point to that magic evidentiary moment in history when the NAP market failed requiring their Keynesian cure.
2. They cannot and will not explain how between 1914 and 1939 they separated and segregated the problems caused by WWI and postwar central bank shenanigans from problems allegedly caused by the NAP market. Krugman has previously given kudos to Daniel Kuehn’s paper which blames the 1920 depression on the government changing gears on Fed inflation and excessive government war spending. Kuehn has admitted that his paper is consistent with the Rothbardian explanation of the facts leading up to the 1920 depression.
3. Despite claiming that they rely solely upon empirical evidence, they ignore the underlying empirical reality of human action, economic calculation, Keynesian price distortions and Cantillon Effects.
4. Despite claiming that they rely solely upon empirical evidence, what evidence do that have to support their theory that the “economy” is like a six year old trying to ride a bike without training wheels? Everything Krugman writes is based on the phony, loopy and totally false assumption that the economy needs a boost and a push like the six year old on his bike to get going. It’s complete nonsense.
5. Our opponents never address our basic concepts. That is evidence that they fear that a fair statement of those concepts could not be refuted. It is better for them to keep those ideas suppressed.
6. I see no difference between a) our opponents’ treatment of us and our analysis; and b) the MSM suppression of the fact that Obama installed real Nazis in Ukraine and seems to trying to start a war with Russia. They both know in their hearts that they would be greatly harmed by the truth.
Can I answer? Of course not.
Here’s an example. Bob wants a bag of cilantro, but all they have at the market is bags of coriander. LK, brute that he is, forces Bob to buy the coriander.
“LK, brute that he is, forces Bob to buy the coriander.”
Uhh … Essentially, yes.
Giving Bob printed money doesn’t increase his ability to pay, otherwise you wouldn’t need to produce anything; You could just print paper.
Something else is going on, then. The printed money in excess of specie – what Mises calls “fiduciary media” – is counterfeiting the value of money-substitutes, which are redeemable on demand.
So, because the printed money isn’t worth anything, and because no new goods were created as a direct result of printing it, the effect of giving Bob printed money is simply to redistribute wealth to Bob without Bob having to give up anything in return.
Bob is paying with nothing. That others *think* it’s worth something doesn’t change that fact.
Keynesian stimulus is fraud.
And since printing money doesn’t effect every industry the same, its result is necessarily cronyism.
Guest:
“the printed money in excess of specie – what Mises calls “fiduciary media””
The whole history of modern capitalism in Western civilisation is build on fiduciary media in excess of specie, e.g., promissory notes, private bank notes, other notes payable, bills of exchange, or bank money.
You know jack crap about capitalism.
Nice to see you call the system that existed “capitalism” when it was not that. Had some features of capitalism – Yes. Was capitalism – No.
Get that, my Lord? Can you see who knows jack crap about capitalism, my Lord?
I just wonder why you think repeating a lie vehemently a 1000 times makes it the truth. ‘Coz that’s what you are doing.
No, Bala, you are the anti-capitalist crackpot. Why? The reason is that your Rothbardian definition of “capitalism” is false and illegitimate because fractional reserve banking is neither fraudulent nor immoral — it is a fundamental part of real world capitalism.
This is mindblowingly hilarious rubbish. First, there is no such thing as “real world capitalism”. There is the real world as it exists. And there is capitalism, an ideal type, as Mises puts it. “Capitalism” is an idea; a concept of a manner in which society could be organised. Real world societies may only tend to capitalism to the extent that they align with the defining characteristics of Capitalism. Any misalignment makes that societal system anything from a mixed economy all the way down to a socialist economy.
Second, that FRB existed in the real world does not make it an integral part of the concept “Capitalism”. It is something that exists in the real world. It is not a feature of capitalism. One can only say that a capitalist society would have its way of dealing with FRB and limiting the emission of fiduciary media. One can then look to the real world and indeed find examples of this phenomenon, commonly called the bank run, bringing down highly inflationary banks.
One can also say that for FRB to inflate the supply of fiduciary media greatly, it needs protection from the market’s limiting process. We can then look to the real world and find that such protection was indeed given to the banks by governments in the form of the special privilege of suspension of their contractual obligation to redeem their notes in specie.
Neither of these, incidentally, has anything to do with capitalism per se. One can very well imagine capitalism without FRB. So if you would please pause to think, it would do everyone a world of good.
“The whole history of modern capitalism in Western civilisation is build on fiduciary media …”
As Bala notes, that’s not capitalism, and the Austrian position is that you should blame fiduciary media, not capitalism, on the so-called “market failures” you’re trying to solve.
So, we’re far from being ignorant of the fact that fiduciary media has been used for quite some time.
YOU, guest:
http://socialdemocracy21stcentury.blogspot.com/2015/10/the-filthy-anti-capitalist-mentality-of.html
From your article:
“1) Opposition to fractional reserve banking
“Rothbardians and many other Austrian libertarians oppose even private capitalist fractional reserve banking …”
False.
We say that it’s fraud, and that the free market should handle this fraud through bank runs.
IOUs are not fraud, but are also not money – they are contracts.
Your first point is false, and I stop for the sake of brevity.
Shall I continue?
My whole argument is that Rothbardians oppose FR banking because they think it is fraud and/or immoral, so clearly you didn’t even read my post.
You suggest lied, Guest.
From your article:
“The Rothbardians argue that fractional reserve banking is fraudulent because it supposedly involves two incompatible property claims to the same money “deposited” in a bank whenever one opens a demand deposit.
“However, this is simply a blatant falsehood, because when you open a demand deposit, you utterly forfeit your property rights to the money and transfer the ownership rights in the money to the bank. The money becomes the bank’s property.”
This is a mischaracterization of the Austrian position.
Joseph Salerno explains:
[Time stamped]
The Economics of Fractional Reserve Banking | Joseph T. Salerno
https://www.youtube.com/watch?v=33RXhv0IuPc#t=49s
[PowerPoint slide:]
“Nature of Fractional Reserve Banking
“Fractional Reserve Banking is an inherently inflationary form of banking that generates boom-and-bust or business cycles.
“It is a hybrid of two forms of banking, neither of which is inflationary in its pure form.
“1. Loan Banking
“2. Deposit Banking.
The money loaned to a bank becomes the bank’s property, but the money deposited in a bank does not.
“… so clearly you didn’t even read my post.”
I didn’t read the entire post at that time because I’ve read your posts before and they often have a lot to say, and I wasn’t planning on responding to each and every point if I didn’t have to.
But I’ve read the whole thing, now.
“You suggest lied, Guest.”
No, YOU suggest lied, LK:
“In its ignorant opposition to fractional reserve banking, Rothbardianism and other Austrian economics following the Rothbardian view are actually profoundly anti-capitalist and (on their own principles!) would require coercive violations of private property rights and free contract to ban fractional reserve banking, if they were to implement their utopian anarcho-“capitalist” system.”
Bank runs are not coercive violations of property rights.
All your base is mine, LK.
Actually, a critical part of the Rothbardian argument is that if it were left to the free market, FRB would never have become as big as it I today. Rothbardians argue that absent special protections given by governments to fractional reserve banks in the form of suspension of redemption of notes and deposits in specie, a contractual obligation, FRB would be an insignificant speck compared to what it is today. I find it interesting that you never engage with this idea and instead ramble on on incidental issues.
“This is a mischaracterization of the Austrian position.”
No, it isn’t, it is used by both Rothbard and Hoppe.
Apart from which, all the other anti-FR arguments are covered and refuted in the list of links in my original post above.
As I said:
“Every stupid and ignorant Austrian argument is dealt with above, from Huerta de Soto’s unbelievable errors on banking and the mutuum contract in ancient Rome to Rothbard’s gross misunderstanding of the court case Carr versus Carr (1811).”
LK,
It is hilarious reading you jump from one flotsam and jetsum to the next, never finalizing any argument you start and never engaging the arguments you reply to.
This is the evolution of your posts here:
1. “The whole history of modern capitalism in Western civilisation is build on fiduciary media in excess of specie” – the words “built on” there is a claim about empirical history of capitalism, which has been pointed out to you is not capitalism. They are also words that suggest cspital accumulation and the private property rights on which it is based somehow depends on credit expansion, without which capital cannot be “built”. What you did here was falsely claim that the mere existence of credit expansion somehow proves it is the foundation of economic progress and somehow proves it is a necessary component of capitalist circulation. None of this is true. Then , rather than even attempt to prove your claims, you sloppily jump to this:
2. “…your Rothbardian definition of “capitalism” is false and illegitimate because fractional reserve banking is neither fraudulent nor immoral”. – This is a ridiculously obtuse claim. You are suggesting that someone’s definition of capitalism can be “false”? No, definitions are neither true nor false. They are choices of words used to refer to something. They are not objective claims of reality subject to refutation or proof. It would be like claiming the definitional word someone can use to refer to unmarried men, e.g. “bachelor”, is “true”. No, the definition chosen to refer to an unmarried man, “bachelor”, is neither true nor false. It is an analytic statement. Then you made the dubious claim that fractional reserve banking is neither fraudulent no immoral. The reason I call this dubious is because historically it has taken place fraudulently and immorally. It really did occur throughout history that depositors thought they were depositing their money for safekeeping, storage essentially, but the banker secretly and without the depositor’s knowledge or consent, lend their money to a third party at interest. What you are claiming is something far fetched. You are trying to convince people that because it is possible, in principle, for EVERYONE to understand and be totally honest with each other when it comes to fractional reserve banking, that this proves it a “foundation” of capitalism and that this honesty, full disclosure and universal understsnding of it actually characterizes all historical instances of fractional reserve banking. This is laughably false. Then you again jumped to another claim:
3. “My whole argument is that Rothbardians oppose FR banking because they think it is fraud and/or immoral” – So, are we to now interpret all your posts here as nothing but what you understand Rothbardians think about FRB? You don’t seem to understand that even if Rothbardians believed it was fraudulent, even if it were enforced, it would not violate anyone’s property rights. It would not prevent people from lending money. It would not prevent depositors and banks being able to agree to lend that depositor’s money. It would however make explicit who owns what, and that is what protecting property rights requires. In other words, what “banning FRB” will look like is not threats of violence against FRB banks. It would force property rights to be protected by way of forcing people from selling or trading the same thing twice such that the same property is owned by more than one owner. In other words, “baning FRB” will not actually ban lending or depositing. It will ban people from victimizing other people by failing to make explicit who owns exactly what. The result of this would be that depositors can be fully free to let the bank lend their money. The depositor and banker just cannot lie to others about who owns what. The depositor cannot lie to another trader that the money balance showing on their bank statement is the property of the depositor. This will not prevent the very lending you say should be allowed to be made, namely, the lending of depositor’s money the ownership of which gets transferred to the bank, and then to the borrower. People could still very well use the bank’s “promise to pay” notes as a medium of exchange. This is not the fraudulent FRB Rothbardians are referring to. They are not arguing that in a world of totally honest and upfront information disclosure, that the mere existence of promises to pay circulating as money, is the fraud. This would be a world where the total quantity of “money” as defined in the wider sense exceeds the total quantity of money as defined in the narrower sense. This is not what Rothbardians are calling fraudulent. They are calling fraudulent FRB fraudulent. They are saying if and when people deceive and lie about who owns exactly what, that is also capable of resulting in FRB, and that is the fraudulent immoral activity. Perhaps you just have trouble understanding the difference between lying and honesty?
“So, are we to now interpret all your posts here as nothing but what you understand Rothbardians think about FRB?”
No, idiot. It is based on their **actual** beliefs backed up with chapter and verse evidence. But you of course know virtually nothing about Austrian economics — except the bizarro world version you invented 5 minutes ago.
“They are not arguing that in a world of totally honest and upfront information disclosure, that the mere existence of promises to pay circulating as money, is the fraud. “
Yes, they are. Because they are guilty of pathological stupidity in conflating the mutuum with the bailment – repeatedly.
You — of course — know hardly anything about what Austrian economists say.
Bala
“a critical part of the Rothbardian argument is that if it were left to the free market, FRB would never have become as big as it I today
Another buffoon who knows virtually nothing about Austrian economics The primary Rothbardian argument against FR banking is that it is fraudulent and immoral, and that it should be banned.
LK,
The very fact that you use terms like “fraudulent” and “immoral” to describe the Austrian position on FRB reveals very clearly that you know jack crap about the Austrian position. What you describe above is the libertarian position as articulated by various key figures of libertarianism. Austrian School economics is value free and does not dabble with morality or the fraudulent nature of specific transactions.
Someone with their head as mixed up as you should think ten times before opening their trap.
LK:
“Yes, they are.”
Profound response.
OK then, NO THEY ARE NOT.
Rothbardians do not and have never written anywhere that two people voluntarily trading a promise to pay for a real good, to be fraudulent.
What they are calling fraudulent is the presentation of ownership claims that are impossible to realize.
Bailments and Mutuums are a red herring. The fraud is not the fact that money being returned to lenders is not the exact same notes or whatever else was deposited.
The fraud occurs when the ownership titles that relate to the trade, are presented in such a way that they are duplicated.
An unsustainable boom can in principle occur if ownership titles to money are sufficiently vague and misunderstood, either by fraud or by ignorance, that the quality of the communication between saving and investment is corrupted. Of course, there is no tendency of this occurring in a world that prohibits purposeful corruption of communication as exists in today’s world. In a world where leading is possible on the basis of the corruption becoming known, the tendency is for the malinvestment to tend towards zero.
What you are trying and utterly failing to do is to present the “FRB = fraud” position as explained by Rothbard as anti-capitalist or contradictory to private property rights. No, banning FRB is not a banning of anything to do with free markets. It is a banning of impossible property titles that are presented as legitimate. That’s it. That’s all it is.
Rothbardians are not calling for the ban on promises to pay circulating as a medium of exchange. They are calling for a ban on the fraudulent presentation of the property titles.
“The fraud occurs when the ownership titles that relate to the trade, are presented in such a way that they are duplicated.”
We know contracts were historically NOT presented in this way. In fact for most of its history, FR banking was mostly done by business people who were savvy about what they were doing.
An early example of a goldsmiths note is one issued by the London banker Feild Whorwood in 1654:
“Recd, ye 16th [December] 1654 of Sam Tofte the some of Twenty five pounds w[hi]ch I promise to repay upon Demand I say R[eceived]
P[er] me*
Feild Whorwood
interest of both £2-05-0.” * = by me.
The nature of the contract entered into by Sam Tofte (the holder of the FR bank account who handed over the money) and the banker Feild Whorwood is made perfectly clear to us by the words of the banker: “I promise to repay upon Demand …”. That is, MUTUUM, not bailment.
“The nature of the contract … is made perfectly clear to us by the words of the banker: “I promise to repay upon Demand …”. That is, MUTUUM, not bailment.”
Umm …:
Mises, in Human Action:
“If the debtor—the government or a bank—keeps against the whole amount of money-substitutes a reserve of money proper, we call the money-substitute a money-certificate. The individual money-certificate is—not necessarily in a legal sense, but always in the catallactic sense—a representative of a corresponding amount of money kept in the reserve. The issuing of money-certificates does not increase the quantity of things suitable to satisfy the demand for money for cash holding. Changes in the quantity of money-certificates therefore do not alter the supply of money and the money relation. They do not play any role in the determination of the purchasing power of money.”
LK:
“We know contracts were historically NOT presented in this way.”
False. There is documented proof of many examples of having been presented in just that way. We have records of FRB fraud dating back to at least ancient Greece.
See
Isocrates, “Discourses I”
And
Demosthenes, “Against Olympiodorus, for Damages”
To claim they have NEVER been presented that way is clearly a desperate attempt by you to salvage a totally and completely misguided attack on what Austrians are actually saying about FRB.
You believed, falsely, that the Austrian critique of FRB could be refuted by pretending that historical cases of FRB are a component of capitalism, and thus it is self-contradictory for supposed free market advocates to attack it.
Such rubbish.
You clearly do not know enough history to make such a universal claim of “never”.
You remain unabashedly ignorant.
” That others *think* it’s worth something doesn’t change that fact.”
It is very humorous to see someone quoting Mises in a comment that throws the subjective theory of value right out the window! He must be rolling in his grave.
Alternatively, what if Bob wants a bag of cilantro, doesn’t find any, but doesn’t buy the coriander, either?
Is that economically beneficial?
Spending spending spending is generic, don’t you know? Just do the math applying the multiplier to spending $89 trillion on providing country music two-step dance and classical French Horn lessons for inner-city youth.
Spending spending spending is the boost that society needs. And best of all, it’s a pure math function. Empirical evidence proves it.
I wonder what Keynesians would say to the fact that there’s plenty of spending going on in online games.
Where’s the multiplier effect from *that*? Maybe if they just considered online money as part of the money supply, we could end this recession now / shut them the hell up.
From that old 1977 TV show “Mr. Hayek Explains it ALL“:
You’re perfectly right, but I’d like to add one thing. You see, another political element was that, of course, politicians just lapped the argument and Keynes taught them if you outspend your income and run a deficit, you’re doing good to the people in general. The politicians didn’t want to hear anything more than that – to be told that irresponsible spending was a beneficial thing and that’s how the thing became so influential.
https://www.youtube.com/watch?v=N364sN5E0hQ
The first thing the politicians did with their new found spending power was buy more economists. Win / Win deal for all concerned… hence Pareto improvement!
That is just the old idiot Hayek making crap up and pathologise his opponents as evil.
Austerity was tried in a number of countries, e.g, Weimar Germany, Austria, Australia, New Zealand etc. It didn’t work.
Eventually policy-makers — who really did care about their citizens — realised this, and tried something different.
“That is just [Krugman] making crap up and pathologise his opponents as evil.”
Fits well! I think LK’s consistent contribution here is a stream of ad hominem and insults. Awwww 🙁
Oh yes, the old idiot Hayek. The previous Hayek quote comes after his detailed explanation of the problem in the 1930s of high British wages which had been induced and exacerbated by previous central bank shenanigans.
http://bobroddis.blogspot.com/2014/02/being-polite-to-keynesians.html
LK and the statists refuse to identify that alleged specific historical event which demonstrated the NAP free market failure which caused this problem. They continue to refuse to explain how, while allegedly employing historical evidentiary facts, they have separated and distinguished between those alleged NAP market events and the various violent interventions that also existed throughout the period leading up to the problem.
They insist upon employing violent intervention but they cannot and will not justify it.
LK,
You call Hayek old and an idiot and yet you have historically cited his theories favorably as a means to promote other beliefs you have.
When Hayek says something that promotes your beliefs, he is quoted favorably, using such words as “even Hayek understood that…”, but when he says something that contradicts your beliefs, he is old and an idiot.
Austerity does work. You just have a warped understanding of the meaning of working.
An old idiot is perfectly capable of saying something true now and then. The fact that Hayek thought empiricism is the right method for economics is true not because Hayek said it but because there are strong arguments in its favour.
Even a bizarrely ignorant fool like you might occasionally get things right.
“The fact that Hayek thought empiricism is the right method for economics is true not because Hayek said it but because there are strong arguments in its favour.”
Maybe it’s true *this time* because Hayek said it?
Just check the empirical data you based your assertion on, and make sure.
“An old idiot is perfectly capable of saying something true now and then.”
Ah yes, the credible sources called old idiots the citations of which totally strengthens one’s arguments.
“The fact that Hayek thought empiricism is the right method for economics is true not because Hayek said it but because there are strong arguments in its favour.”
Strong arguments? You have a funny way of defining “self-contradictory”. The structure of empiricism presumes truths about knowledge and actions that are incompatible with the ostensive purpose of empiricism.
Neither you nor anyone else has ever discovered any constants for human knowledge and actions the way physicists and chemists have done for for non-acting, non-learning matter. You’re just engaging in nonsense.
“Neither you nor anyone else has ever discovered any constants for human knowledge and actions the way physicists and chemists “
That is not a claim of moderate empiricism, certainly not in economics. Even Keynes knew this very well and before Mises ever wrote Human Action:
“I also want to emphasise strongly the point about economics being a moral science. I mentioned before that it deals with introspection and with values. I might have added that it deals with motives, expectations, psychological uncertainties. One has to be constantly on guard against treating the material as constant and homogeneous in the same way that the material of the other sciences, in spite of its complexity, is constant and homogeneous. It is as though the fall of the apple to the ground depended on the apple’s motives, on whether it is worth while falling to the ground, and whether the ground wanted the apple to fall, and on mistaken calculations on the part of the apple as to how far it was from the centre of the earth.”
Keynes, J. M. 1938. Letter: J. M. Keynes to Harrod, 10 July
http://economia.unipv.it/harrod/edition/editionstuff/rfh.34a.htm
LK,
“That is not a claim of moderate empiricism, certainly not in economics.”
Yes, it is. To even say a test “falsified” or “confirms” any hypothesis, implies that not only do such constants exist, but they are also knowable to mankind through the empiricist method.
Keynes’ theory is NOT empirical, by the way. It is as a priori as you can get. His theory is an a priori critique of laissez-faire capitalism.
You presuppose these constants exists and are knowable when you make such claims as “Government deficits during recessions reduces employment and increase output”. This claim is based on the belief in a CONSTANT relationship between aggregate demand changes and employment changes.
Finally, the quote you posted from Keynes is really just further proof that he wasn’t an economist. A moral science? That’s rather amusing, considering how upset you get when Austrians are moralizing instead of being scientific.
If you agree economics really is a moral science, then you just admitted all of your examples of Keynesian theory ” predicting” recessions and recoveries is nothing but gobbledygook.
Once again we see you know jack about Austrian economics: the Austrian position is that there are no universal quantitative constants as in the natural sciences, not that there are no qualitative constants or generalised truths.
If the latter were true, then the law of demand would be totally false, the view banks that reduce the interest rate below the natural rate and cause Austrian business cycles would be false. The view that work generally carries disutilty would be false.
““Government deficits during recessions reduces employment and increase output”. This claim is based on the belief in a CONSTANT relationship between aggregate demand changes and employment changes.”
No, it is based on an empirical, qualitative generalisation that this is what, generally speaking, happens in the real world.
It is not a statement that there is some universal **quantitative** constant here — which is what Mises objected to.
You, Major_Idiot, are a clown who knows practically nothing about Austrian economics. The nonsense you pass off as Austrian economics is what you just invented in your head 5 minutes ago.
Just as your insane nonsense here:
Major_Freedom statement 1:
“There are no predictions in Austrian economics. None. Zero. Nada. …. Austrian theory makes no predictions of what humans will learn and do in the future. In fact, it is precisely Austrianism that argues it is impossible.”
http://consultingbyrpm.com/blog/2014/03/potpourri-188.html#comment-301632
“All predictions of what humans will do in the future are ass pulls”
http://consultingbyrpm.com/blog/2014/03/potpourri-188.html#comment-301508
—-
If there are no predictions in Austrian economics of any kind, then you cannot have any rational reason to think that the law of demand will operate tomorrow. Or the disutility of labour. Or the ABCT.
You just totally destroyed any Austrian economics you cretin.
LK,
“the Austrian position is that there are no universal quantitative constants as in the natural sciences, not that there are no qualitative constants or generalised truths.”
The empiricist method as used by Keynesians in practise DO presume such quantifiable constants exist with human action and knowledge.
All the claims about predicting numerical “multipliers”, employment rates, deficit amounts, GDP growth rates, aggregate demand, zero bounds, the list goes on and on and on, all of these methods that use empiricism are absolutely making the presumption that quantifiable constants exist for human actions and knowledge. That is why you see today’s Keynesianism being almost exclusively mathematical, numerical. All Keynesians in practise are in their methodologies, whether they realize it or not, searching for and presuming the existence of these constants.
” If the latter were true, then the law of demand would be totally false, the view banks that reduce the interest rate below the natural rate and cause Austrian business cycles would be false. The view that work generally carries disutilty would be false.”
But Austrians do not derive these theories using the empiricist method that assumes quantitative constancy!
The law of demand is not derived from experience. It is derived from what action itself consists. The law of demand is related to the law of marginal utility which is itself derived from action.
“Government deficits during recessions reduces employment and increase output”. This claim is based on the belief in a CONSTANT relationship between aggregate demand changes and employment changes.”
“No, it is based on an empirical, qualitative generalisation that this is what, generally speaking, happens in the real world.”
No, the Keynesians talk about percents. They talk about the amounts of deficits needed in order to bring about a particular percentage change in employment and output.
You don’t even know the difference between quantitative and qualitative do you?
Wow.
“all of these methods that use empiricism are absolutely making the presumption that quantifiable constants exist for human actions and knowledge.”
No they don’t — because, e.g, multipliers aren’t eternally constant at all, they change. If you weren’t a halfwit you’d understand a basic fact like fact.
And who ever said that quantitative predictions about the size of GDP growth or employment are eternally constant? Bloody idiot.
“But Austrians do not derive these theories using the empiricist method that assumes quantitative constancy!”
I already said that Austrians don’t regard them as having a quantitative constancy, you bloody idiot.
As for the disutility of labour axiom, it is explicitly empirical:
“The disutility of labor is not of a categorial and aprioristic character. We can without contradiction think of a world in which labor does not cause uneasiness, and we can depict the state of affairs prevailing in such a world …. Experience teaches that there is disutility of labor.” (Mises 1949: 65).
So once again: either you are pathological dishonest or don’t know what you’re talking about. Which is it?
“No, the Keynesians talk about percents”
…which are not universally constant you dumb sh*t.
But the empiricist method assumes they are. That is what it means to say an theory has been falsified or confirmed. It is assuming there is a quantifiable constancy in the relations of the variables.
In every mathematical regression this is assumed.
If there were no such constants, if they were regarded as non-existant for human actions and knowledge, then you and all other Keynesians would never consider your theory to ever be confirmed. You could only say B followed A in the past, and nothing else follows.
You have in the past claimed many times that Keynesian theory was vindicated and Austrian theory falsified on the basis of certain patterns in numerical GDP, employment, and so on. This all presumes universal numerical constants between government deficits, aggregate demand, employment and output.
Could the reason you have devolved to worthless insults is you coming to grips with the fallaciousness of your own beliefs? That you recognize you have for many years believed that the empiricist method, which presumes quantitative constants, does not and cannot apply to human actions and knowledge, and thus your years of rants of pro-empiricism has been a total waste of time and effort, not to mention an ambrrassmnt for you?
“already said that Austrians don’t regard them as having a quantitative constancy”
You say this like we don’t already know. I already told you that it is precisely empiricism which does regard them as having a quantitative constancy.
“As for the disutility of labour axiom”
What do you mean as for? I never mentioned it.
“The disutility of labor is not of a categorial and aprioristic character. We can without contradiction think of a world in which labor does not cause uneasiness, and we can depict the state of affairs prevailing in such a world …. Experience teaches that there is disutility of labor.”
And?
“So once again: either you are pathological dishonest or don’t know what you’re talking about. Which is it?”
Um, how about you don’t know what you’re talking about? Where did this disutility of labour enter any of my arguments on this thread?
Regardless of whether the disutility of labor is empirical or a priori, it has nothing to do with anything I said above.
See here
http://socialdemocracy21stcentury.blogspot.com/2014/03/no-constants-in-human-behaviour.html
“See here”
From your article:
“The meaning of this passage can cause confusion, since in fact Austrian economics precisely assumes a number of constants in human behaviour:
“(1) the constant that all conscious human action by non-mentally ill human beings has a purpose in view; …”
You’re using the word “constant” wrong.
A law is not a constant in the sense that Mises is using it.
Think of laws as permitting variables, and constants as precluding them.
Also, even mentally-ill people act with purpose.
Their actions are goal-oriented.
That’s true of everyone. Deliberate actions imply the existence of goals.
I just don’t understand the value of all this name-calling. I understand that most of the people commenting on this site have extremely heterodox views that most economists strongly disagree with. But even assuming that Roddis, MF etc, are just hopelessly wrong about the way societies actually operate, what is to be gained by these degrading taunts? Personally I find it very hard to read and it obfuscates the points you are actually trying to make.
“I find it very hard to read and it obfuscates the points you are actually trying to make.”
What point…
That was actually supposed to be a reply to LK.
LK, you might stop and consider that Keynes admired Hayek, and that he would have agreed with Hayek’s diagnosis here.
Keynes apparently admired Road to Serfdom on the need to avoid communist command economies, but I am not sure what you mean here. That Keynes held the view that governments turned to fiscal stimulus only because evil politicians wanted to go on a spending spree? No, that is not true.
Avoid command economies? They cannot be made illegal if 51% vote for it.
Then socialist democracy for the 21st century becomes what it always was at its core, Marxist socialism for the 20th century.
Then the Communists can use Keynes’s general theory as an intellectual cover. Keynes said his theory is best suited to command economies like Nazism and Communism.
There is nothing in your ethics, LK, that could prevent command economy style Communism. If Democratic voting slowly and gradually eroded economic freedoms bit by bit, you would have absolutely nothing in your ethics that says any particular single step towards Communism was “unethical”. Every time a step was made, you would remain silent.
There is no specific moment in time during any gradual, Fabian style Communication, that your ethics helps anyone realize “Hey now, we just passed the “predominantly capitalist” step. That one specific article on the 15th page of the most recent bill that was passed, tipped us over the edge from “predominantly capitalist” to “predominantly no longer capitalist” that my ethics says is immoral.”
In short, your ethics WELCOMES totalitarian dictstorships, provided it is achieved gradually and democratically. In fact, it doesn’t even have to be gradual. If there was a democratic vote favoring a forcing of Communism over a 5 year period, you LK would have not only nothing to say against it, not only would your bag of stale chips contain nothing to say that what has transpired was immoral, but you would have to be positively vocal in favor of it given that it occurred democratically. You would also be compelled to attack and ridicule any dissidents who dare refuse to obey the majority.
Going even deeper, at the core of your ethics, LK, is totalitarianism.
M_F statement 1:
“Then socialist democracy for the 21st century becomes what it always was at its core, Marxist socialism for the 20th century.”
M_F statement 2:
““All predictions of what humans will do in the future are ass pulls”
http://consultingbyrpm.com/blog/2014/03/potpourri-188.html#comment-301508“
So how could you make any predictions of any kind about what humans will do in the future if all predictions are “ass pulls”? Did you just pull that prediction out your ass?
That was not a prediction. It was what social democracy allows for, and WOULD have to welcome if it were voted by the majority.
The reason social democracy is Marxism at its core is because it views “society” as ruler and ultimate decider of your property. The only reason why social democracy would not look like Marxism is if the majority just so happened during this time to not want to vote for Marxist politicians. The law of social democrscy still allows for Marxism should for whatever reason 51% of the voters agreed to it.
Individuals being anti-democracy and pro-individual rights is the only thing stopping it.
“There is nothing in your ethics, LK, that could prevent command economy style Communism”
False. The imposition of Nazism or totalitarian communism would be straightforwardly immoral by consequentialist principles. Any liberal democracy where that even began to become a serious problem could ban Nazis and lunatic communists as subversive — just as the Nazi party was banned in Germany after WWII. Once again we see that you are simply an idiot.
False. Consequentialism does not have any list of a priori thou shalt nots.
If the majority voted for Nazism or Communism, and brought it about using state power, consequentialism only tells us that whatever arbitrary judgment you come up with, it has to be based on the outcomes. If you say “Since the outcome results in murder and theft increasing, the voting for Nazism is therefore unethical”, that will not come from either democracy or consequentialism. It will come from your actual a priori humanist natural rights theory, which is to say your a priori theory of states.
At any rate, if the majority voted in favor of Nazism, you would have no legally justified reason to use force to stop it. You would be advocating that a minority rule the majority, which is antiethetical to democracy.
Once again your claims are refuted.
“There is no specific moment in time during any gradual, Fabian style Communication, that your ethics helps anyone realize “Hey now, we just passed the “predominantly capitalist” step.”
Exactly right:
An excerpt from
They Thought They Were Free
The Germans, 1933-45
http://www.press.uchicago.edu/Misc/Chicago/511928.html
“”To live in this process is absolutely not to be able to notice it—please try to believe me—unless one has a much greater degree of political awareness, acuity, than most of us had ever had occasion to develop. Each step was so small, so inconsequential, so well explained or, on occasion, ‘regretted,’ that, unless one were detached from the whole process from the beginning, unless one understood what the whole thing was in principle, what all these ‘little measures’ that no ‘patriotic German’ could resent must some day lead to, one no more saw it developing from day to day than a farmer in his field sees the corn growing. One day it is over his head. …”
“… “You see,” my colleague went on, “one doesn’t see exactly where or how to move. Believe me, this is true. Each act, each occasion, is worse than the last, but only a little worse. You wait for the next and the next. You wait for one great shocking occasion, thinking that others, when such a shock comes, will join with you in resisting somehow. You don’t want to act, or even talk, alone; you don’t want to ‘go out of your way to make trouble.’ …”
“… Outside, in the streets, in the general community, ‘everyone’ is happy. One hears no protest, and certainly sees none. …”
“… In the university community, in your own community, you speak privately to your colleagues, some of whom certainly feel as you do; but what do they say? They say, ‘It’s not so bad’ or ‘You’re seeing things’ or ‘You’re an alarmist.’
“And you are an alarmist. You are saying that this must lead to this, and you can’t prove it. These are the beginnings, yes; but how do you know for sure when you don’t know the end, and how do you know, or even surmise, the end? On the one hand, your enemies, the law, the regime, the Party, intimidate you. On the other, your colleagues pooh-pooh you as pessimistic or even neurotic. …”
“… If the last and worst act of the whole regime had come immediately after the first and smallest, thousands, yes, millions would have been sufficiently shocked …”
“… But of course this isn’t the way it happens. In between come all the hundreds of little steps, some of them imperceptible, each of them preparing you not to be shocked by the next. Step C is not so much worse than Step B, and, if you did not make a stand at Step B, why should you at Step C? And so on to Step D.“
Your own Rothbardian/free market cult requires that you support the right of private billionaires to build pyramids or bridges to nowhere:
http://socialdemocracy21stcentury.blogspot.com/2013/02/libertarians-support-pyramid-building.html
In a deep recession/depression, would a private billionaire who build a pyramid actually provide **some kind** of economic benefit to unemployed people and the economy at large? Of course he bloody would.
But the point is: this is not really the kind of spending a sensible person would want.
” that you support the right of private billionaires to build pyramids or bridges to nowhere”
>greedy evil billionaires!
>investing in things that won’t make them any money
… ?
“In a deep recession/depression, would a private billionaire who build a pyramid actually provide **some kind** of economic benefit to unemployed people and the economy at large?”
No, no … Not “to unemployed people and the economy at large”.
That wasn’t the question.
The question was: “Would it be economically beneficial”?
The fact that you believe private billionaire spending on their playthings in a deep recession to be unsensible *means* that you do, in fact, contrary to your previously stated position, believe that billionaires are spending on the “wrong” things.
As I said, Keynesianism reduces to producers – and by extension, laborers – being upset that consumers aren’t buying their stuff.
*Stop producing what consumers don’t want, and your products will sell.*
If consumers want pyramids for themselves, *do not* expect to be employed producing other things.
No stimulus necessary. Produce the right things, which are what consumers want.
Another way of saying this, LK, is that the definition of a healthy economy is *not* that production is happening “for the benefit of everyone”, but for the benefit of the specific parties to any given trade.
Why? Because only individuals economize. And so there can not logically be an economic benefit to spending that ignores individual preferences.
That would be *un*economical. Spending that attempts to benefit everyone at the expense of individual preferences necessarily destroys the economy.
Look, scarcity is a *function* of consumer demand relative to supply – which means it’s not a problem to be solved; If everyone wanted pyramids, but there was a scarcity of labor and materials to build them, *you* would be the one arguing that more pyramids should be built.
Oh, and by the way:
I’m pretty sure private pyramids are worth less than $1 trillion …
“I’m pretty sure private pyramids are worth less than $1 trillion …”
Yea but that’s only because the general population of people are too stupid and too corrupted to value it higher.
If only such spending on the pyramid can be forced. Just imagine all the multiplier “benefits” that would result! Haha, don’t tell me that there are no idle resources right now. Of course there are! There always is! And don’t tell me it would be a gain if a private mercenary army forced the spending either. Only if a state forces it will there be a gain! Hitler, Obama, doesn’t matter. They just have to be what LK wants: a “powerful institution capable of managing aggregate demand”. That is the psychological fix right there. Oh ya, can you feel it? Mmmmm, power….
“As I said, Keynesianism reduces to producers – and by extension, laborers – being upset that consumers aren’t buying their stuff.”
Nope: at its core is a description of a collective action problem. Until you get that, you should stop saying anything about what Keynesianism is.
It’s hard to pick the most eye-rolling comment on Keynesianism on this blog, but a strong contender must be Tel’s comment where he took you to task for “collective action problem.” He googled and found nothing about Keynesianism as a solution to a collective action problem. That proves apparently that you are guilty of thinking for yourself.
On the bright side, we won’t have 8000 comments debating quaestio publica.
Yes, it is better to clinch on whatever statist fad of the day as a means to promote Keynesianism.
There is no such thing as a “collective action problem” in individual liberty.
What you are really doing when you invoke such concepts is arrogating your own personal value judgments for what others ought to do with their own persons and property, over and above the individual’s value judgments for themselves, by arbitrarily defining your personal preferences as increasing “social gains” and minimizing “social losses”.
The closest thing to a “collective action problem” are the specific problems the “collective action problem solvers” introduce into other specific people’s lives by trying to solve a non-existent problem designed specifically to justify the interests of the problem solvers and their political supporters.
LK,
“In a deep recession/depression, would a private billionaire who build a pyramid actually provide **some kind** of economic benefit to unemployed…”
You just smuggled in a value judgement that employment is more important than producing what people want to consume.
Economic benefit? The way you want such benefits to come about is at the expense of innocent people, at gunpoint.
“You just smuggled in a value judgement that employment is more important than producing what people want to consume.”
I did no such thing. That a private pyramid would provide an unemployed man with a money wage and employment and means to buy goods with utility and thus is an economic benefit in this sense is straightforwardly true.
But not when you’re Major_Crackpot and you think words can have any meaning you choose.
No LK, you are ignoring the benefit the pyramid itself offers to not only the unemployed person, but all other consumers.
It is possible that the benefit to the unemployed, in their own judgments not yours, is reduced with the pyramid as opposed to something else.
The law of opportunity costs.
What you are doing is pretending that the mere observation of pyramid building and wage payments is totally sufficient to making the blanket assertion that the unemployed benefitted.
Only if the pyramid itself is valued higher than alternative outputs as judged by individual sovereign preferences can you make the claim that the pyramid represents a benefit.
The value judgment you smuggled in is the mere fact that unemployment was reduced. That’s it, that’s all you focused on and called a benefit.
Reduced unemployment may or may not be associated with increased economic benefits to the unemployed. It depends on other factors, such as how the unemployment was reduced.
It is possible that the benefit to the unemployed, in their own judgments not yours, is reduced with the pyramid as opposed to something else.
As I accepted all along, Mr Idiot: “this is not really the kind of spending a sensible person would want.” This is also explicitly stated in my post.
Yeah, stop defending LK, MF!
My plate is full with LK, and then Murphy and Fetz on bitcoins.
Et tu, Brute?
😀
(Suck it, Fetz. Hah.)
Tut Tut LK, you again just smuggled in your own value judgment by saying “sensible”.
Keep digging that hole…
It is not a value judgement to say that unemployed men, generally speaking, want employment and income to spend on commodities and that this gives them utility. That is **empirical fact.** Ask the unemployed, idiot.
But then your grasp of empirical facts is virtually non existent.
No LK, you keep ignoring the resulting consumer goods, and the value attributed to the money and goods by the individuals. Saying “generally speaking” is just a sloppy attempt to deny the connection between actual individual preferences for consumer goods, and the labor that is therefore needed to produce those goods.
It is not enough to merely be employed. People seek employment because they want to buy goods that they want, which you can only observe empirically in a free market that respects individual preferences for goods!
You are being anti-empirical. You are claiming to know a truth about employment and consumption that is not at all derived from experience. You don’t want individuals to show you this data via their revealed preferences. Your claims are a priori.
You’re not asking people, LK. Your theory put into action prohibits individuals from showing you what they want to do by virtue of their free trading and consumption choices that would manifest the very empirical data that your supposed empirical framework requires. For many years you have refused to even ask for such data to exist, indeed you have called repeatedly for such data to be destroyed and replaced by the production outcomes and thus employment needs that result from suppressing individual preferences.
To say that “generally speaking” unemployed men prefer employment, does NOT imply that the specific employment that results from your theory put into action by state coercion causes no losses whatsoever.
You fail to grasp the simple economic fact that losses exist in the world despite the fact that labor went into the process that we know is a loss.
It is as if you equate increases in employment with absokute increases in net utility, where there can be no net losses when “employment” goes up.
It is indeed YOUR value judgment, not theirs, LK. YOU are claiming that any and all increases in employment are net gains and never losses to the very people you’re talking about.
You remain utterly ignorant of basic economic concepts of gains, losses, and utility.
Keynes, the self-professed anti-economic science, pro-moralist, has lead you as a follower to be as ignorant as he was.
“You’re not asking people, LK.”
I’ve met plenty of unemployed people and know precisely what such people I’ve met think.
Apparently in your insane, retarded world, no human being has ever asked an unemployed person whether they would like to work or stay unemployed, and whether they prefer employment to unemployment.
My advice: enjoy the lunatic asylum in which you apparently live.
“I’ve met plenty of unemployed people and know precisely what such people I’ve met think.”
You will have to ask every single one because what you advocate includes them all and affects them positively by the law.
“…no human being has ever asked an unemployed person whether they would like to work or stay unemployed, and whether they prefer employment to unemployment.”
This is not the only factor involved LK. You are being willfully ignorant. No, it is not enough that someone merely has a job. People seem jobs as a means. The ends are what you are completely failing to engage in any detail. To you, it is sufficient to end with “…and then they buy consumer goods”.
You have never even addressed how the choices of what is consumed and what is desired to be consumed in particular, affects the value of labor.
You have the false belief that employment with no consideration of the output is the end all and be all of economic life. That the ONLY thing that matters to people is earning money doing a job. That what their money can buy is totally and completely unimportant. It is just assumed to be optimal, with never any losses.
Your theory upon inspection is becoming more and more crude and incomplete.
“Tut Tut”
That’s funny.
“Apparently in your insane, retarded world, no human being has ever asked an unemployed person whether they would like to work or stay unemployed, and whether they prefer employment to unemployment.”
If I were rich I would most certainly like to be, and stay, unemployed.
Nice try, Wheatley.
So there are no poor people unemployed who would like employment and an income?
“So there are no poor people unemployed who would like employment and an income?”
Really? You believe people can be *that* short-sighted?
No. I was speaking to MF’s point that the *kind* of labor actually matters; that laborers are not entitled to a paycheck simply because they need a job.
If they aren’t laboring as part of a production process that is catering to consumer demand, then they should not expect to be employed.
Here’s what MF said:
“The ends are what you are completely failing to engage in any detail. To you, it is sufficient to end with “…and then they buy consumer goods”.
“You have never even addressed how the choices of what is consumed and what is desired to be consumed in particular, affects the value of labor.”
He is right about you.
“No. I was speaking to MF’s point that the *kind* of labor actually matters …”
Put another way, if consumers are willing to stop spending because they’ve already bought what they can afford of existing goods with their scarce resources, if there’s still unemployment – even massive unemployment – it is *not* because consumers refuse to spend.
It is because producers – and the laborers that are hired by them – are not producing what consumers are willing to buy.
There is no such thing as a lack of aggregate demand, because consumer demand *begins* every extension of profitable production (increasingly higher-order production processes).
There *is*, however, a lack of paying attention to consumer preferences so you can know what will be profitable to produce.
But that’s kind of a difficult thing to pay attention to when the government keeps destroying information about individual preferences.
So, instead of seeing “price gouging” as information that individuals *really* want that good, and it would be profitable to produce it, government prevents people from making a profit off of them.
And remember, scarcity is a *function* of consumer demand relative to supply.
So, the high price, per se, isn’t evil. It’s just an unfortunate fact of reality that people are poor in this particular instance, and the prices simply tell you how much these poor people want that particular good.
They are *willing* – voluntarily – to pay the high price. Because they value it that much. Because they’re poor.
*DON’T MASK THE HIGH PRICING INFORMATION THAT IS TELLING PRODUCERS HOW BADLY THEY NEED THAT GOOD.*
LK:
“So there are no poor people unemployed who would like employment and an income?”
REAL income. Real income depends on real production. Real production is only valuable if it is valued by individuals.
Your politics consists of individual valuations being destroyed.
You are not asking the individuals about what they want for themselves in terms of their goals. Employment is a means, not a goal. You keep saying “do unemployed people not want jobs?” as if the job itself is the goal. Then you say “do unemployed people not want an income?” as if incomes were now the goal. Neither jobs nor incomes are goals. Goals are consumption activities. We work and earn an income as means to achieve our individual goals. Those individual goals are what your ethic seeks to destroy, and be replaced by goals set by the state.
You might as well say unemployed people will be happy getting a job that pays them in salt, or pays them in dollars that can only buy salt. According to your logic, that is the goal of people currently unemployed. To be able to get a job that allows for the purchase of more salt. The particular goal is not important. As long as they are working.
“That a private pyramid would provide an unemployed man with a money wage and employment and means to buy goods with utility and thus is an economic benefit in this sense is straightforwardly true.”
Is your understanding that employment is the economic benefit, or acquiring goods with utility?
Because if it’s the latter, then shouldn’t you be in favor of having to spend less for what you want?
Hopefully, that’s what you want, is for people to be at ease, rather than spend, per se.
Precisely. LK is falsely assuming that the goods the newly employed can buy are not reduced at all, or consists of exactly the same type of goods, by virtue of the fact that that the pyramid was built.
It is as if the goal of economic life to LK is to work on “something”. Doesn’t matter what it is.
There is obviously zero respect or consideration for actual consumer preferences in LK’s worldview.
I don’t think Rothbard is in a position to require anything of me. However given the option of having some government committee that needs to approve any billionaire expenditure, I’d skip that thank you.
The government approvals committee is unlikely to significantly improve decision making, and they are an unnecessary cost and obstruction. Besides that, it’s one more potential for corruption.
I long ago resolved the “arguments” of “Lord Keynes” about FRB. All of this ridiculous debate about FRB ignores the simple fact that the problems of FRB concern the drafting of contracts and the use of plain language. Banks notes are just written contracts. There is no contract without a meeting of the minds. People can use fiduciary media to their heart’s content if both parties to the transaction know and understanding the nature of their agreement.
I will assume that the problems in FRB with the contract between the banker and depositor can be resolved between those parties. The main problems of fraud arise between the payee of an FRB note and the bank. I make the following distinctions:
1. A real “dollar” is a coin containing 371.25 grains (troy) of fine silver.
2. A firm can issue a warehouse receipt for a specific real dollar.
3. A firm can issue a bearer note for any real dollar in storage with 100% reserve.
4. A firm can issue a bearer note for any real dollar in storage where the issuer knowingly does not have 100% reserves to cover all of the notes issued.
5. Note #4 (which is really nothing more than a written contract, like the others) must state on its face that it is not the equivalent of #2 or #3 so that the payee is not misled. If such “truth in FRB notes” are accepted for use by the public, they would necessarily pass at a discount from #1, #2, and #3. Regardless, there would be no fraud.
6. Historic FRB has passed off #4 as the equivalent of #1, #2 and #3. That is both misleading and fraudulent because those notes are improperly called and treated as “dollars”. Whatever you might want to call #4, it should not be called a “dollar”. In fact, #2, #3 and #4 should not be called a “dollar”. Each item would probably have a different market value so that prices stated in each type of note would be different, and thus not misleading.
7. If the payees of these notes (the public) understood the difference between these very different items, I do not think most people would accept Note #4 for payment for anything. If they did so with eyes open, that is their problem.
I’ve tried posting this to LK’s blog, but it never appears.
That is because you still — after all these years — know jack about the difference between bailment and a mutuum.
You’re ignorant of basic economic concepts.
You forgot Depositum and most importantly Depositum Irregulare for fungible commodities such as grain or money.
https://en.wikipedia.org/wiki/Real_contracts_in_Roman_law
Of course, you don’t like talking about those… have to pretend they never existed.
Depositum irregulare is the equivalent of the mutuum. Don’t fooled by the name.
And Huerta de Soto utterly mangles Roman law.
http://socialdemocracy21stcentury.blogspot.com/2012/09/huerta-de-soto-on-banking-in-ancient.html
http://socialdemocracy21stcentury.blogspot.com/2012/09/huerta-de-soto-on-justinians-digest.html
http://socialdemocracy21stcentury.blogspot.com/2012/08/chapter-1-of-huerta-de-sotos-money-bank.html
http://socialdemocracy21stcentury.blogspot.com/2012/08/huerta-de-soto-on-mutuum-contract.html
That’s just flat wrong. Wikipedia has it correct.
We use exactly this concept for grain elevators. The grainery merely holds the grain for safekeeping… and does not pay interest, obviously.
Banks still say they are accepting “deposits” but they have dodged the traditional depositum contract and swapped it for mutuum. The contracts are not in any way equivalent, under mutuum the ownership does transfer, under a true deposit contract ownership does not transfer. Ridiculous to claim these are equivalents.
A “Depositum irregulare” (= **irregular / abnormal / unorthodox** deposit) is legally different from plain depositum. You simply don’t understand the Latin expression and concept you’re talking about. See below.
What part of “I will assume that the problems in FRB with the contract between the banker and depositor can be resolved between those parties” do you not understand? I did not dispute the possibility of an FRB account contract between the banker and depositor.
I focused instead upon the relationship between the person using the notes for payment (the payor) and the person who might accept it as payment (the payee). The fraud problems regarding that relationship could be resolved but probably at the cost of no one wanting to accept the notes. But maybe people will accept the notes.
I learned about frb in grade school. Who doesn’t know this stuff? So Bob Roddis’s claim of fraud, weak on its face, collapses utterly when this is taught in public schools, universities, online courses, in books, and by bankers themselves if you ask them.
1. The fact that people call Note #4 a “dollar” and value it as such is strong evidence that they do not understand the differences.
2. Heck, 96% of the public thinks inflation is a mysterious inexplicable force of nature.
3. If EVERYONE already understands the differences between the various types of notes (which is nonsense), making those differences explicit on the face of the note is at worst redundant and harmless.
“2. A firm can issue a warehouse receipt for a specific real dollar.”
AND it can issue an IOU or debt instrument — that is, a mere promise to pay. This happens in mutuum contracts for banking and is the very basis of banking in Western civilisation.
Confusion surrounding who owns exactly what is not at all a foundation for anything productive. It is a hampering.
What they usually teach is that all deposits are safely guaranteed by government and the industry is regulated so it’s all under control.
That didn’t help the deposits in Cyprus.
What happens when the banks attempt to impose negative interest rates on deposits? Everyone gonna be happy about that you think?
Gee it’s good to have LK back (and his faithful sidekick Craw)… the craziness, the hijinks!
Plus the demonstration that you know jack about Austrian economics. Always a pleasure, Tel.
From the man who still does not understand economic calculation. From the man who still does not comprehend that the concept of economic calculation is applicable to both socialist price prohibition and Keynesian price distortion. From the man who says that Austrian analysis does not allow for removal of products from the market for the purpose of getting a better price later (because EVERYONE is compelled to conduct a fire sale). From the man who thinks that “mark up pricing” refutes Austrian analysis.
http://socialdemocracy21stcentury.blogspot.com/2013/12/post-keynesian-price-theory-101.html
Wow. It never dawned on me that an entrepreneur would ever try to charge more for his product than his costs of production. Who knew?
I’m sure we all get a big head every time we realize that “Lord Keynes” is the best our opponents have.
From the man who thinks that during the bubble there were market clearing prices for 20 years:
“I still maintain that economic calculation has absolutely nothing to do with ‘a price vector that will clear all markets’ and neither does the Hayek quote you constantly present. A 20 year unsustainable Keynesian boom would have had ‘market clearing prices’ for 20 years right up until the bottom drops out.”
“I still maintain that economic calculation has absolutely nothing to do with ‘a price vector that will clear all markets’ and neither does the Hayek quote you constantly present. A 20 year unsustainable Keynesian boom would have had ‘market clearing prices’ for 20 years right up until the bottom drops out.”
http://mikenormaneconomics.blogspot.com/2013/01/lord-keynes-debunking-austrian.html?showComment=1359199941427#c5328116548878528365
Show that quote to Bob Murphy.
A 20 year unsustainable Keynesian boom would have had “market clearing prices” for 20 years right up until the bottom drops out.
An unsustainable auto boom will have had “market clearing prices” in autos right up until the bottom drops out.
That says it all. Let’s see all your pals here endorse and defend that sheer idiocy.
Does anyone else think that the last “Keynesian boom would have had “market clearing prices” for 20 years right up until the bottom drops out”? … that is, demand and supply equilibrium in all markets for 20 years? Do tell.
The computer you are using to write your fallacies and illogical nonsense is the direct physical outcome of more than 20 years of capital accumulation awaiting in the productivity of labor.
Errors of investment spread across a sufficiently large population and a sufficiently large division of labor can certainly last decades, but all that is associated with the bust being that much more acute.
In other words, not even you will endorse the monumental stupidity of Bob Roddis above. Instead, you need to desperately change the subject. It doesn’t matter how stupid Roddis’ comments are, you’d never admit that he or anyone here is ever wrong.
That is a sign of pathological dishonesty.
No, you’re just unable or unwilling to understand the very real possibility, totally consistent with Austrian theory, that a categorically distinct bubble has been building since the 1970s, apart from all the smaller ones since then.
I am not necessarily agreeing with what Roddis said. And I am not paying sides if that is what you believe.
LK, you can never deal with our analysis in context. A particular line of product (such as autos) could be regularly selling out at “market clearing prices” over a long period of time due to being subsidized by funny money loans until the end of the boom at which point the market disappears. The same goes for housing.
That is all I am saying. Give up. Go away.
All LK is able to do is take Austrian statements out of context and then beat them to death. The context of my statement was in explaining why I do not particularly like the term “market clearing prices”. One reason is because it opens the door for scoundrels like LK to claim that Austrian analysis precludes taking unsold goods off the market temporarily until conditions improve [and yes, that’s what LK believes]. Another reason I do not like the term is because it does not distinguish between goods that are selling on their own accord vs. those that are selling temporarily due to artificial credit expansion.
That’s the only point I was ever making. And LK goes on and on and on and on.
The Austrians have won the debate and we know it. We do not need LK’s endless hysterics to constantly remind us.
” A particular line of product (such as autos) could be regularly selling out at “market clearing prices” over a long period of time”
lol… so there was a demand and supply equilibrium in autos for… 20 years?l
Was there a demand and supply equilibrium in houses from 2001-2007?
“One reason is because it opens the door for scoundrels like LK to claim that Austrian analysis precludes taking unsold goods off the market temporarily until conditions improve [and yes, that’s what LK believes].”
What? Why?
When the seller takes it off the market, *he becomes the highest bidder*!
Market cleared! What’s the problem?
You do wonder how anyone can get through life paying so little attention to what happens in regular retail stores. Doesn’t LK ever shop for discounts? Didn’t LK ever work a supermarket job in high school, changing price tags, putting things in the “bargain bin”?
Does this guy know anything about what happens in the real world?
He still thinks the secret to unlimited wealth is taking out loans then only paying the first year of interest.
“and his faithful sidekick Craw”
It’s Ken B.
It sure is Ken B.
http://consultingbyrpm.com/blog/2014/02/court-intellectuals-hit-back-at-whistleblowers.html#comment-223985
LK said… And please — before we get into acrimonious debates, I appreciate MMT very much. This is not about MMT-bashing. I have defended MMT from idiot Austrians on numerous occasions on libertarian blogs. I am probably the most brutal critic of Robert Murphy, you;ll find, for example. MMT has excellent insights on the history of money. I am on your side. I am offering *constructive* criticism here.
February 27, 2016 at 3:53 PM
http://tinyurl.com/z6al6ox
I thought I was the most brutal critic of Robert Murphy.
LK also said:
“”On the other hand, net imports are beneficial to the economy and nation at full employment. ”
“But are they always beneficial?
“But I am afraid this does not follow. What if an aggressive mercantilist is dumping cheap imports and wiping out your manufacturing sector?”
Bahahah!
Doesn’t he realize he’s an advocate of cronyism?!
What a tool!
(Just kidding, LK. I don’t think you’re a tool. I just wanted in on the mud slinging.
(You’re a really swell guy. But, you know, you talk a lot on your blogs, so …
(But if it makes you fell better, I don’t read all of Mises or Rothbard, either.
(I hope you have fun in your life when you’re not being an awesome target for us. Heh.)
Well Bob, you do do the most to discredit his ideas.
Bala:
“a critical part of the Rothbardian argument is that if it were left to the free market, FRB would never have become as big as it I today. Rothbardians argue that absent special protections given by governments to fractional reserve banks in the form of suspension of redemption of notes and deposits in specie, a contractual obligation, FRB would be an insignificant speck”
False. Your utter, contemptible bloody ignorance of what Rothbard believed speaks volumes about your sheer ignorance of Austrian economics.
Actually, Rothbard thought that bankers have a strong tendency to engage in fractional reserve banking even in a free market and that a libertarian society needed to make it illegal with severe punishments:
“Indeed, a ‘free market’ necessarily implies total respect for and protection of private property. But this means that rights of private property must always be preserved. This implies not only a cracking down on assault and murder, but also on all forms of theft and fraud, including counterfeiting. Counterfeiting must be prosecuted fully by the law and, more than that, must be scorned and condemned by public opinion. As an advocate of 100 percent reserve banking, of full gold backing for all bank notes and deposits, I recognize that it would be difficult for government to police the banks, banks being notably ingenious in discovering market ways of getting around government regulations. One hundred percent banking must be enforced, not by administrative regulations, but by the legal system. While investigative snoops can hunt down counterfeit warehouse-receipts, it would be far simpler and more effective to crack down immediately and totally on any failure of a bank to pay in full on demand. … But, second, these fractional-reserve bankers must be treated not as mere entrepreneurs who made unfortunate business decisions but as counterfeiters and embezzlers who should be cracked down on by the full majesty of the law. Forced repayment to all the victims plus substantial jail terms should serve as a deterrent as well as to mete out punishment for this criminal activity.
I envision the free-market world of the future, then, as one of purely metallic worldwide money. Increases of bank money will not be tolerated and will be treated as the counterfeiting and the invasion of property rights that they really are. The money supply, then, will grow only slowly, concomitant with the slow growth in the stock of the world’s gold.”
Rothbard, Murray N. 1992. “The Present State of Austrian Economics,” Working Paper from the Ludwig von Mises Institute, November 1992, pp. 39–40.
https://mises.org/library/present-state-austrian-economics
LK,
I really wish you would read what you plan to post before you hit the submit button. You cited Rothbard as follows.
“Indeed, a ‘free market’ necessarily implies total respect for and protection of private property.”
Is this incorrect in any way? If not, I wonder why it is there.
” But this means that rights of private property must always be preserved.”
Do you think preserving the rights of private property contradicts the principles of a free market of voluntary exchange?
“This implies not only a cracking down on assault and murder, but also on all forms of theft and fraud, including counterfeiting.”
Do you think acting against theft, fraud and counterfeiting is contrary to the principles of a free market of voluntary exchange?
“Counterfeiting must be prosecuted fully by the law and, more than that, must be scorned and condemned by public opinion.”
Do you think prosecuting counterfeiting fully by the law is contrary to the principles of a free market of voluntary exchange?
“As an advocate of 100 percent reserve banking, of full gold backing for all bank notes and deposits, I recognize that it would be difficult for government to police the banks, banks being notably ingenious in discovering market ways of getting around government regulations.”
This is a recognition of an aspect of reality. Do you thing this is contrary to the principles of a free market of voluntary exchange or to capitalism?
“One hundred percent banking must be enforced, not by administrative regulations, but by the legal system.”
Do you think that it should be handled outside the legal system?
“While investigative snoops can hunt down counterfeit warehouse-receipts, it would be far simpler and more effective to crack down immediately and totally on any failure of a bank to pay in full on demand.”
Do you think enforcing contracts is contrary to the principles of a free market of voluntary exchange or to capitalism?
“But, second, these fractional-reserve bankers must be treated not as mere entrepreneurs who made unfortunate business decisions but as counterfeiters and embezzlers who should be cracked down on by the full majesty of the law.”
Why, just why is it contrary to the principles of a free market of voluntary exchange or to capitalism to crack done on counterfeiters and embezzlers?
“Forced repayment to all the victims plus substantial jail terms should serve as a deterrent as well as to mete out punishment for this criminal activity.”
Oh! Do you mean that forcing those failing to fulfil contractual obligations to fulfil them is contrary to the principles of a free market of voluntary exchange or to capitalism?
It is indeed hilarious to see you doing all this handwaving.
He cited the passage not as an example of error from Rothbard but to show Rothbard said something different from what you claimed. So if there is hand waving here it is from you, because you don’t address whether you got Rothbard wrong the first time.
I forgot to add one point. So here it is.
All this does not in any way contradict my point that the way Austrian economics (as against libertarian legal theory) views FRB as a system that the market controls through bank runs and that the way governments prevent the market from keeping FRB under check is by suspending redemptions of notes and deposits in specie, even when it happens en masse. Much the same can be deduced from the fact that even Rothbard talks only of enforcing contractual obligations on banks attempting to default on them as a means to get rid of FRB. I am presuming that “getting rid of FRB” is a stronger way of saying “keeping FRB under check”.
So, you have successfully shown that Rothbard is essentially saying what I have been saying. Unfortunately, before I could come and add this, Craw had to jump in and demonstrate his inability to comprehend this point.
So.. in other words you agree with me Rothbard regarded all forms of fractional reverse banking as fraudulent and immoral and wanted them to be illegal in his anarcho-capitalist world because it is likely bankers will have a tendency to engage in it and so they must be punished severely? Good for you, Bala.
Except all the Austrian arguments against FR banking are pure nonsense, incompetence, ignorance, and illogic. The long list of evidence for this in the posts here:
http://socialdemocracy21stcentury.blogspot.com/2015/10/the-filthy-anti-capitalist-mentality-of.html
You have not shown how the Austrian argument is wrong.
I am not going to bother reading your rubbish, but your title is extremely hilarious coming from a person who has no clue that Capitalism is a abstract concept and keeps talking of nonsense such as “real world capitalism”.
You said:
“Hayek – to his credit – admitted that if one were take his absurd business cycle theory seriously, we are stuck with the view that capitalism is inherently flawed and doomed to produce endless endogenous business cycles:”
But then you quote him as saying otherwise. Read your own quote, again, LK.
He says that that the business cycle comes …:
“… from the very nature of the modern organization of credit. So long as we make use of bank credit as a means of furthering economic development we shall have to put up with the resulting trade cycles. They are, in a sense, the price we pay for a speed of development exceeding that which people would voluntarily make possible through their savings, and which therefore has to be extorted from them.” (Hayek 2008: 102).”
What banks are doing *now*, which is what we are, indeed, asking them to do, BUT WHICH IS NOT CAPITALISM, causes the business cycle.
He’s saying what *we’ve* been saying, all along.
Game, set, match, Bean.
The quotation does not show Hayek as a Rothbardian at all: even Rothbardians take it as evidence of Hayek’s defence of FR banking:
“Despite his accuracy in identifying the source of fluctuations,
Hayek suggests that we must continue to use fractional reserve
banking in order to spread the development of technical and
commercial knowledge.”
Block, W. and Garschina, K. M. 1996. “Hayek, Business Cycles and Fractional Reserve Banking: Continuing the De-Homogenization Process,” The Review of Austrian Economics 9.1: 77–94, at p. 85.
https://mises.org/library/hayek-business-cycles-and-fractional-reserve-banking-continuing-de-homogenization-process
And even after the passage you cite Hayek defends FR banking as providing benefits (precisely as Block and Garschina say):
“And even if it is a mistake—as the recurrence of crises would demonstrate—to suppose that we can, in this way, overcome all obstacles standing in the way of progress, it is at least conceivable that the non-economic factors of progress, such as technical and commercial knowledge, are thereby benefited in a way we should be reluctant to forgo.” (Hayek 2008: 101–102).
You are utterly clueless.
Tedious and slippery as always, aren’t you? Now please show which part of what Rothbard said falls under Austrian Economic theory and which part falls under libertarian/anarcho-capitalist legal theory. My point simply is (and has been) that my original point was the part that falls under Austrian economic theory as it pertains to FRB while Rothbard’s point (which you have faithfully and uncomprehendingly copied) combines that with libertarian legal theory in the area of FRB.
Separating the two too tough for you, is it?
Your claim:
““a critical part of the Rothbardian argument is that if it were left to the free market, FRB would never have become as big as it I today”
FALSE. I just showed your the evidence why — from Rothbard himself, saying that FR banking needs to be made illegal by the private law code of an anarcho-capitalist society and FR banking punished severely: this is the primary way he wanted to stop it
Go and reflect on your deep ignorance.
And I identified that Austrian economics is value free and does not dabble in legal matters. This point of Rothbard’s is a part of his work on libertarian legal theory, not Austrian economics.
I wonder why this is so difficult to grasp. Or is it that you do not want to grasp it?
While what LK is doing is inexcusable, it is understandable.
Utilizing a wertfrei theory of individual action makes it so easy to conflate it with individualism as an ethic.
As Thomas Woods pointed out, once you understand Austrian theory, of what causes many of the problems we experience in “the economy”, it almost feels self-evident what the right thing to do is going forward. LK probably realizes as his mind gods from methodological individualism to libertarianism, that Austrianism must be identical to Libertarianism. So he ends up using them interchangeably.
I do understand it and have seen a lot of people doing it, but I also thought that is a big mistake he is
making and hence that it needs pointing out.
LK said: “So.. in other words you agree with me Rothbard regarded all forms of fractional reverse banking as fraudulent and immoral”
No, prevention of bank runs is immoral. FDIC is immoral.
There is nothing Rothbard said there that is inconsistent with my above analysis which you continue to ignore. You shouldn’t be using a #2 note in a #4 situation.
http://consultingbyrpm.com/blog/2016/02/that-voodoo-that-krug-do.html#comment-1649649
You – like Rothbard — can’t even explain the difference between bailment and mutuum.
And YOU….. still can’t address the point Rothbard makes that FRB would never have grown as much as it has today if government had not protected banks from bank runs by legalising the contractual default of failing to redeem notes and deposits in specie on demand.
B.S. I am fully aware of his arguments there. You just refuse to accept his major view was that even in even in a free market FR banking needed to be made illegal because bankers have a propensity to engage in it.
Also, the so-called “option clause” (to suspend specie payments temporarily) was used freely in private FR banking contacts in Scotland from 1730–1765, Sweden from 1864–1903 and Canada during the 19th century (Selgin 1996: 247). The banks offered these contracts freely to customers.
The option and discretion to create an option clause in a bank’s FR contract gave the bank the right, in some circumstances, to suspend payments temporarily until it was able to obtain the liquidity needed for meeting obligations (Barth et al. 2001: 30). When its customers accepted such a contract, this was a perfectly voluntary and successful example of free contact: a “wicked” or “evil” government was not needed to enforce temporary suspensions of specie payment in such a case. So even here the free bankers like Selgin have shot Rothbard and people like you down in flames.
“bankers have a propensity to engage in it.”
No they don’t, and you have no evidence, biological, praxeological, or otherwise, of this.
All you’re doing is making the blanket assertion that humans with money have some inner force overruling their reason compelling them to lend whatever is given to them regardless of the contract.
You classify praxeology as evidence now?
Self evident, undeniable and ubiquitous.
Craw,
The burden of proof lies on the one making the positive assertion. In this case, that is LK. MF is only identifying that which is not logically necessary.
Craw,
Evidence implies the categories of action.
Praxeology is more fundamental than evidence.
Actually, MF, it’s worse than that for LK. Rothbard is calling for action only against FR Bankers, that too only when they default on their contractual obligation to redeem notes and deposits in specie on demand. How LK takes this to imply that Rothbard assumes that bankers as a class have a tendency to engage in FRB beats me.
LK,
What proportion of bank notes and deposits emitted were covered by such an “option clause”? Be specific and region-wise. In particular, were bank notes emitted by banks in the US under this category. Were notes emitted by banks in the UK in the 17th-19th centuries covered thus?
I ask because you mentioned 3 examples only – Scotland, Sweden and Canada, that too in specific time periods. So please do answer with specifics.
This was me:
http://consultingbyrpm.com/blog/2016/02/that-voodoo-that-krug-do.html#comment-1649713
I am not discussing the banker/depositor contract. You are just changing the subject.
Coming from the guy who insists that a deposit for safekeeping is really a loan for consumption, as he says above:
Hardly qualified to instruct others on basic concepts such as title transfer.
No, Tel, you dumb smuck. The ancient Romans defined the “Depositum irregulare” (which means “irregular or abnormal deposit”) as a contract that is just a kind of a mutuum. We see this clearly in the legal texts of Roman jurists and their legal codes.
Note carefully: the very expression “depositum irregulare” wasn’t even used by the Romans: it was coined by legal historians in the 15th century.
Depositum irregulare simply arose when a customer left money as a bailment, BUT explicitly agreed verbally that when the banker wanted to the banker could THEN convert the contract into a mutuum so that the money would become the banker’s property and he would interest paid on it.
The key to understanding this is in the very expression the later medieval legal historians coined for it: their expression is **irregular / abnormal / unorthodox** deposit (= Latin depositum irregulare).
We see this clearly in the Roman jurists. E.g., the Roman jurist Paul (2nd–3rd century AD), who states:
“If I have deposited with you money which I have given you permission to use, it is regarded as a loan [mutuum] rather than as a deposit [depositum], and consequently its loss will be at your risk.”
See Hyamson, Moses. Mosaicarum et Romanarum Legum Collatio: With Introduction, Facsimile and Transcription of the Berlin Codex, Translation, Notes ad Appendices. Oxford University Press, London and New York. p. 109.
I.e., even if you pretend it is a deposit and hand over money sealed up (the normal procedure) but give **explicit verbal permission** for the banker to use it, then Roman law says it is legally a loan (mutuum). This is all the depositum irregulare was.
I suggest you go and read the modern experts on Roman law, not Huerta de Soto — because he hasn’t any bloody idea what is talking about when makes statements about Roman law.
E.g.,
Buckland, William. 1963. W. A Text-book of Roman Law from Augustus to Justinian. Cambridge. p. 470
Schulz, Fritz H. 1951. Classical Roman Law. Oxford. p. 520.
LK regardless of whether Tel’s right or wrong, please refrain from the insults and name calling. This is Murphy’s blog and many months ago he’s already asked you to refrain from doing that.
Show some respect.
But I like the insults.
With all due respect guest, it is up to Murphy.
See also Reinhard Zimmerman, 1990. The Law of Obligations: Roman Foundations of the Civilian Tradition. Cape Town.p. 216.
“While investigative snoops can hunt down counterfeit warehouse-receipts, it would be far simpler and more effective to crack down immediately and totally on any failure of a bank to pay in full on demand.”
Umm … this implies that not paying in full is a failure from the perspective of the banks’ customers.
So, where it is understood that the note they hold is not backed 100% by specie, it doesn’t qualify as fraud.
Rothbard is not saying what you think he’s saying.
It is pretty obvious from reading all of this, Lord Keynes believes in a religion called fractional reserve socialism and nothing will ever change his lack of objectivity, his illogic and his irrational brain. DD err I mean LK, is a faithful serf.
It’s interesting that LK comes in here just to hurl insults. He seems to fancy himself a scholar (or at least a critic of scholars) but his only outlet is his blog/echo chamber and he prefers anonymity. Absolutely everything he says is laced with rudeness and as hominem. Certainly unbecoming of a scholar.
As a disclaimer, I agree with him that FRB is totally levitate and is likely a preferable system as Larry White and others have demonstrated. I don’t think it requires state interference though. LK, for your own sake and the sake of your position, grow up.
I think this is an important point regarding any coherent discussion. I simply don’t understand LK’s ad hominem attacks. As I noted earlier the views of Rothbardians and Austrian economists (at least as practiced today) are extremely heterodox, and most practicing economists and social theorists reject them — many consider them ridiculous. However, those writing and considering such views on this blog obviously do not, and this blog is fairly clearly a place for serious consideration of unorthodox economic ideas. It seems to me that coming to this site and hurling a barrage of schoolyard insults only calls into question the substantial force and prevalence of more orthodox economic positions. I just see it as counter-productive.
Serious consideration? Little of that here. Even the participants admit they just repeat themselves.
I have never seen a rebuttal to my point: there is no fraud without deception, and there is no deception in FRB, baseless claims about grams of silver not withstanding. So it is not a fraud. Latin and Roman law are irrelevant.
Indeed the very language of a modern banking statement is of “debits” and “credits” — the language of debt-credit relations, not bailment.
When you open a bank account does anyone tell you: “We are going to lock your money up in the vault and it will always be there!” No.
Debits and credits are found on non-debt related T-accounts all the time.
Their part of double-entry accounting.
No necessary relationship to debt, in the use of the terms.
“No necessary relationship to debt” — a statement of sheer stupidity. Does nobody ever use the words “debit” and “credit” of debt transactions? Are you really that ignorant?
“Does nobody ever use the words “debit” and “credit” of debt transactions?”
Can you read?
Yes, people *do* use those words of debt transactions.
But they also use them in non-debt-related T-accounts.
Er go, there is no *necessary* relationship to debt in its use.
Your statement is one of sheer Britain-ery! Bloody, even!
Dare I say …: Bean-ish!
*Takes a bow*
Every transaction has a debit and a credit: even stock movements, even cash transactions, even when paying with a handful of gold coins.
Incidentally John, is ‘Krug’ a sign of serious discussion, or petulant disdain? Do fish rot from the head?
“Do fish rot from the head?”
Proof that “Craw” is Ken B. Ken B. used this phrase describing this blog.
Levi Russell:
LK has missed both of my points regarding FRB.
1. I long ago conceded his point about the mutuum contract which is a contract between the bank and the depositor.
2. FRB is nothing more than a business model which requires good contract drafting. I think it is a waste of time to argue about whether people somewhere else and in another time will be able to make it work or not while using my “truth in bank notes” ideas. Without the explicit language, the entire FRB project remains problematic.
3. Since the pro-FRB people claim that FRB is essential to a functioning economy, I thought I had addressed all of the “fraud” concerns of the various Austrians by insisting upon explicit language as to its precise nature on the face of each FRB note. If this is superfluous, it is also harmless.
4. I have been waiting for weeks for LK’s evidentiary historical proof of when exactly the NAP free market failed and how he was able to extract and differentiate those free market activities from the various violent central bank interventions that occurred between 1914 and 1939. If the free market did not fail and the problems were caused instead by central banks, Keynesianism makes no sense at all.
When you open a bank account does anyone tell you: “We are going to lock your money up in the vault and it will always be there!”?
“I have been waiting for weeks for LK’s evidentiary historical proof of when exactly the NAP free market failed …”
It really is tragic, but the bulk of economists and interested laymen have a Pigovian understanding of market failure and externalities. They haven’t read, much less absorbed, any of the criticism of Pigou by Demsetz, Coase (you have two read the *entirety* of The Problem of Social Cost, not just the first 15 pages, as McCloskey has pointed out), and others. Moreover, they haven’t taken to heart Demsetz’s critique of the Nirvana Approach and still ignore the work of Buchanan, Tullock, and others on Public Choice issues and the problem of gov’t failure. It’s fine to point out that real-world markets (distorted though they may be by intervention) don’t live up to some platonic ideal, but it gets us nowhere to do so. Demsetz pointed this out and has basically been ignored. Sad.
This is just absurd. Coase’s is the ruling approach. His paper is the most cited paper in economics.
coase I what is taught everywhere.
Sorry, Craw, that’s not true. What *is* taught is Stigler’s “Coase Theorem” which is taken from about 4 of the first 15 pages of “The Problem of Social Cost.” Coase himself said “The Coase Theorem” isn’t about his work: https://www.youtube.com/watch?v=04zFygmeCUA
Further, Deirdre McCloskey has, I think, the appropriate interpretation of “The Problem of Social Cost.” I discuss the issue and reproduce the key parts of her column on the subject here: http://www.farmerhayek.com/2015/12/mccloskey-on-coase-theorem.html
Sorry, Craw, that’s not true. What *is* taught is Stigler’s “Coase Theorem” which is taken from about 4 of the first 15 pages of “The Problem of Social Cost.” Coase himself said “The Coase Theorem” isn’t about his work.
Further, Deirdre McCloskey has, I think, the appropriate interpretation of “The Problem of Social Cost.” I discuss the issue and reproduce the key parts of her column on the subject here: http://www.farmerhayek.com/2015/12/mccloskey-on-coase-theorem.html
That argument against the NAP doesn’t require Pigou, so you’re just talking nonsense.
It’s relevant to any discussion of market failure.
Here’s your claim
“the bulk of economists … haven’t read, much less absorbed, any of the criticism of Pigou by Demsetz, Coase”
Nonsense. Coase’s paper is one of the most cited, most assigned papers in economics. And economists haven’t read it?
hahaha… This is like the time I pointed out that Hayek’s paper “The Use of Knowledge in Society” is one of the most cited papers in the “American Economic Review” stats, and as Gene Callahan said its ideas are taught in microeconomics courses everywhere.
The response on this blog’s comments section was: no non-Austrian in human history has ever read that paper or understands its content!
I already clarified this for you trolls, but I guess I’ll do it again.
Sorry, Craw, that’s not true. What *is* taught is Stigler’s “Coase Theorem” which is taken from about 4 of the first 15 pages of “The Problem of Social Cost.” Coase himself said “The Coase Theorem” isn’t about his work.
Further, Deirdre McCloskey has, I think, the appropriate interpretation of “The Problem of Social Cost.” I discuss the issue and reproduce the key parts of her column on the subject here: http://www.farmerhayek.com/2015/12/mccloskey-on-coase-theorem.html
Now, take your whig theory and throw it in the trash can where it belongs. It’s a good thing you’re both anonymous trolls, otherwise you might actually have to own up to the fact that you don’t actually read anything.
Just because a paper is cited doesn’t mean *everyone* who cites it reads the whole thing and is referring to the entire content of the paper. It’s like I’m talking to anonymous trolls who don’t take responsibility for what they say.
oh, wait…
Ever seen the like LK?
Coases’s paper, from the Journal of Law and Economics, is the single most cited article in any law review. Coase won the Nobel Prize in economics, and the prize citation named the social cost paper. But we are told, by a man who present no evidence at all, that “the bulk of ecomists … haven’t read … Coase” and that we are trolls for suggesting they have.
Is there a term that comes to mind? I hope it’s “internet Austrian.”
Ken B (aka Craw)
Go ask your favorite economist what “The Coase Theorem” is. Then watch the short video I linked where Coase explains where “The Coase Theorem” came from. Then read McCloskeys article I linked to that explains more fully what Coases article is about. Then realize that large groups of people can get something wrong.
Please, Ken, say something other than just repeating yourself. I might get the impression that you’re not a troll.
Funny that youre calling me an internet Austrian when 1) I’m using my real identity and 2) almost none of my academic work has anything to do with Austrian economics. Since you and LK have no academic work at all, it’s a little silly for you to be hurling this particular insult.
The NAP is B.S. because it is derived from Rothbard’s B.S. natural rights moral theory. Don’t waste my time.
http://socialdemocracy21stcentury.blogspot.com/2014/06/rothbards-argument-for-natural-rights.html
“The NAP is B.S. because it is derived from Rothbard’s B.S. natural rights moral theory. ”
LOL! Yeah… Rothbard came up with natural rights theory. You really do live in an echo chamber.
Rothbard **relied on** a B.S. natural rights moral argument. I did not claim he invented natural rights theory. Don’t things up.
LK, utilitarian ethics is BS. Ironically Rothbard has one of the best critiques of it:
https://mises.org/library/utilitarian-free-market-economics
Also, it is interesting that every state law you believe is based on utilitarianism, is from a system of laws that have utilitarian grounded activity being illegal when civilians do the same thing.
The utilitarian argument “It is moral to steal from one rich person to help 1000 poor people” is illegal to act upon, unless you wear a badge. In other words, utilitarianism is not an ethic for human beings, it is an ethic for states only.
No, consequentialism is the only sensible ethical theory,. Rothbard’s natural rights ethics commits gross logical errors even in its opening argument as has been demonstrated by Feser.
No, consequentialism is not even an ethic.
Slipping in the word “sensible”, which you have clearly proved can be massively abused to defend aggression against innocent people, does not constitute an argument that consequentialism is in any way superior to natural rights.
As mentioned, comsequentialism is not even an ethic. It does and cannot even tell us what we can and cannot do here and now. The structure of it requires us to suspend our judgment and claim to knowledge, permanently, to the future, which is when outcomes always occur. And once the future comes to pass, then there is no criteria within consequentialism by which we can say that what occurred was ethical or unethical. If someone was killed, consequentialism has nothing to say on whether the killing was ethical or not. Again we would have to play wait and see.
An ethic must tell us what we can do here and now based on, obviously, what is true here and now. If you say we cannot know here and now, that we have to wait and see until the future, then whatever it is you’re offering, it certainly is not an ethic. It is failing to tell us what we can and cannot do, all the time, every second, minute, hour, day, week, year, that passes, never is there any any explanation of what anyone can do at any given moment in time.
The last time you repeated the same nonsense you conceded that your understanding of consequentialism was fully dependent on people’s expectations of what might happen. That the expectation of what follows an action is itself the determinant of whether the action was ethical or unethical. This of course does not address the criticism. To have an expectation of what will occur if A steals from B, does not answer whether what A did was ethical or unethical.
This is why consequentialism always is accompanied by yet another series of flawed assumptions called utilitarianism, which ironically Rothbard demolished.
Feser did not refute Rothbard’s natural rights. He showed he didn’t even understand it. His critique is riddled with misunderstandings.
I rely on the Internet to read this blog. I am not Al Gore and do not claim to have invented it.
Hey Ken B., care to respond to my post about the Coase Thm?
LK wrote: “No, consequentialism is the only sensible ethical theory,. Rothbard’s natural rights ethics commits gross logical errors even in its opening argument as has been demonstrated by Feser”
See, now we learn what LK I is all about.
“The ends justify the means.”
So how do you determine what is “good”?
So how do you prevent the abolition of the individual?