Internet Death Dealers
I really don’t know what to say. Daniel Kuehn isn’t sure, but he thinks he would suppress secessionists “by force” (his term):
The point is, it’s traitorous and unconstitutional and clearly does not carry a payoff that makes it worth committing treason and violating the Constitution over. A war over it would be terrible, but I think over the very long run it would be better than letting them go.
In the comments I asked if Daniel would allow me personally to leave the US physically without getting shot, and he had no problem with that. Then I asked if everyone in Texas could walk away without getting shot, and at this point someone else in the comment thread objected (to me!) saying that’s not what secession is like. No response yet from Daniel. In a follow-up post though, he did clarify that secession isn’t immoral and might not be illegal, either. So Daniel is willing to kill you for doing things that are neither immoral nor illegal, apparently.
But the real swell thought comes from a wise sage named “mike shupp” who commented:
My memory — which may be mistaken, since I’m real old and all that — is that the issue of whether states could secede from the Federal Union came up once before in American history. I don’t recall all the trifling details except that a President from Illinois was somehow involved.
Could all you experts enlighten me, please?
That is really a blood-curdling comment, which would be horrifying to any decent person if it were in a different context. I had toyed with making an OJ Simpson analogy, but decided that would be too crass. So how’s this Mr. Shupp?
Yes, I vaguely recall that event you’re talking about. But wasn’t this issue of whether it’s a good idea for a President to forcibly put down a secession movement, settled once and for all by John Wilkes Booth in a theater?
Scott Sumner Calls My Bluff on Krugman
Look, if Sumner wants to boast that he knows more about Fed history, or more about ordering in a hibachi restaurant, or more about Swedish apartments, I won’t bat an eye. But in this post (HT2 Daniel Kuehn) he tried to make fun of Krugman…that’s my job. Look at Sumner’s swipe at Keynesians (and he has Krugman in particular in mind):
[Sumner writing:] Each day I check out the major stock markets. This morning I saw that Hong Kong and Singapore were down over 1%. Britain, Germany and France were also down. But the Japanese market, which tends to move with the other Asian markets, was up by 1.90%. That’s a surprisingly large divergence. Is there any news? It turns out that there is news, but only if you don’t believe in “liquidity traps.” Travis Allison sent me the following:
The yen slumped to the lowest in more than six months against the dollar on prospects Japanese elections next month will hand power to an opposition party that advocates more aggressive monetary easing.
. . .
Japan’s currency weakened to almost a two-week low versus the euro on speculation the vote will favor Shinzo Abe, who called for the central bank to provide unlimited stimulus.
. . .
“The leader of Japan’s opposition is coming down quite heavily, saying what he would like the Bank of Japan (8301) to do in terms of easing and that’s pressuring the yen,” said Jane Foley, a senior currency strategist at Rabobank International in London.
…
“The biggest economic problem is prolonged deflation and a strong yen,” Abe, the head of the largest opposition Liberal Democratic Party, said in a speech in Tokyo today. “Markets will only start to react once unlimited monetary easing is conducted.”The Bank of Japan must cut its benchmark interest rate to zero or even lower to boost lending, Abe said. The rate is currently set at a range of between zero and 0.1 percent. Earlier this month, Abe said the BOJ should conduct monetary easing until the nation achieves 3 percent inflation. Consumer prices excluding fresh food fell 0.1 percent in September, declining for a fifth month.
[Back to Sumner’s commentary:] Of course if you are one of those Keynesians who do believe in liquidity traps, then you’d have to conclude that this speech had no impact on the Japanese exchange rate, or the Japanese stock market.
Sumner then goes on to talk about Switzerland, and links to a Krugman post where he and Sumner disagreed about the implications of the liquidity trap for the Swiss currency.
In the comments I was succinct:
Scott, I really don’t get this post. (I hope you were sitting down for that.) You’re saying Paul Krugman has no way of explaining why the promise of future monetary expansion by the BoJ could be expansionary today? How can you possibly say that?
I actually thought that would be the end of it. I thought it would be like Encyclopedia Brown pointing out that things look upside-down when they are reflected in a spoon, and so, “Caught in his lie, Bugs Meany returned the stolen hamster.”
But no, Scott pushes more chips in, with this being his whole comment in response to my concern (and another guy who echoed me):
People should look at my second link if they wish to understand Krugman’s views.
Thanks for the Japan info.
Liberal Roman, That’s possible.
No, Scott, when it comes to how Krugman would explain a promise of future monetary expansion by the BoJ affecting aggregate demand today, I don’t think we should go read your post (“my second link”) on Switzerland. I googled “krugman liquidity trap japan”) and this was the top hit. Take a look at this excerpt:
The purpose of this paper is to show that the liquidity trap is a real issue – that in a model that dots its microeconomic i’s and crosses its intertemporal t’s something that is very much like the Hicksian liquidity trap can indeed arise. Moreover, the conditions under which that trap emerges correspond, in at least a rough way, to some features of the real Japanese economy. To preview the conclusions briefly: in a country with poor long-run growth prospects…the country therefore “needs” expected inflation….
If this stylized analysis bears any resemblance to the real problem facing Japan, the policy implications are radical. Structural reforms that raise the long-run growth rate (or relax non-price credit constraints) might alleviate the problem; so might deficit-financed government spending. But the simplest way out of the slump is to give the economy the inflationary expectations it needs. [Bold added.]
So no, I have to call foul. If Scott wants to argue that Krugman’s views on Switzerland don’t match up with his FAMOUS views on Japan’s liquidity trap, OK fine. Maybe they do, maybe they don’t. But you don’t get to quote a news story about Japan doing what Krugman has said it should do since the late 1990s because they’re in a liquidity trap and then when it “works,” say how this proves Krugman doesn’t understand a liquidity trap.
DeLong Plugs Chink in Krugman’s Armor on Treasury Crash
You may recall that Krugman recently argued that an attack by the “invisible bond vigilantes” (the opposite of the confidence fairy, for those keeping track) would actually be good for the US economy, because it would weaken the USD and thus boost Aggregate Demand. I pointed out the problem with in normal English here. But Nick Rowe has done the same thing within the standard New Keynesian paradigm:
Paul Krugman is right if he is talking about a small attack by the bond vigilantes. It’s a good thing, because it increases Aggregate Demand, which is what the US economy needs.
But too much of a good thing will be a bad thing.
A large attack by the bond vigilantes would be a bad thing, because it would increase Aggregate Demand too much. That would force the Fed to increase interest rates a lot, and that would force the US government to raise taxes and/or cut spending to cover the increased costs of servicing the debt.
If the bond vigilantes suspected that the US government could not or would not raise taxes and/or cut spending to cover the increased cost of servicing the debt, the bond vigilantes would all attack en masse.
If the debt were small, the amount by which taxes would need to be raised and/or spending cut to cover the increased debt service costs would be small too, and it could easily be done. But if the debt were large, the amount by which taxes would need to be raised and/or spending cut to cover the increased debt service costs would be large too, and it could not easily be done.
The longer the US stays in recession, with a large budget deficit, the bigger the debt will grow.
This does not look to me to be a very stable system. And the longer the bond vigilantes wait before attacking, the less stable it looks.
To his credit, Brad DeLong acknowledges that Nick Rowe has a point. But don’t worry, DeLong has a solution:
There is, I think, one thing he misses. Demand for U.S. Treasuries is a function not just of bond market confidence but also of the regulatory structure. The government can regulate to boost the demand for cash and Treasuries: high capital requirements for financial institutions are a very effective way of cooling-off aggregate demand and reducing the burden of servicing the U.S. debt. And capital requirements can, if the government wishes, be made very high indeed… [Ellipsis in original.]
And there you have it! We don’t need to worry about deficits causing investors to lose faith in US government bonds. If they stopped buying it, why the government could just force American institutions to hold the toxic assets. Keynesianism For the Win.
Krugman Has the Conscience of a Liberal So He Can Print the N-Word
You know how I thought it was funny that Krugman was criticizing Wall Street types for voting for a guy who would let them keep more of their money? And then I used an analogy to Medicare recipients to show how ridiculous Krugman’s rhetoric was? Well just to make sure, he himself confirmed today that I was on the right track in my criticism by writing:
Lots of people having fun with Mitt Romney’s post-election diagnosis, which is that President Obama played dirty: he won peoples’ votes by — horrors — actually making their lives better:
[Quoting a news story discussing Romney’s post-election thoughts:] “With regards to the young people, for instance, a forgiveness of college loan interest was a big gift,” Mr. Romney said. “Free contraceptives were very big with young, college-aged women. And then, finally, Obamacare also made a difference for them, because as you know, anybody now 26 years of age and younger was now going to be part of their parents’ plan, and that was a big gift to young people. They turned out in large numbers, a larger share in this election even than in 2008.”
…
“You can imagine for somebody making $25,000 or $30,000 or $35,000 a year, being told you’re now going to get free health care, particularly if you don’t have it, getting free health care worth, what, $10,000 per family, in perpetuity — I mean, this is huge,” Mr. Romney said…[Back to Krugman’s commentary:] Gosh. People who will have health insurance under Obama but would have lost it under Romney voted for Obama. What’s wrong with those people?
And as for the rest of Krugman’s post, well, just go read it. I will just say this: I lived in Crown Heights for a stretch when I was a student at NYU. I’m betting if Paul Krugman walked those streets past 6pm, he would poop his pants.
OK behave yourselves in the comments kids…
Learn the Austrian Take on the Great Depression
Here’s the full infomercial for my class on the Great Depression that starts this Friday. We’ve got Depression-era pricing of only $59 for a 5-week course. I’m excited to teach this so bust out your credit card. An excerpt:
The weekly lectures will run from November 16 through December 14. The first week will provide a background overview of the classical gold standard, as well as Calvin Coolidge’s fiscal policies. We will see that the modern habit of blaming the gold standard for the Great Depression — common among Keynesians but also Friedmanite monetarists — makes little sense.
In week two we will tackle the crucial question of the Federal Reserve’s culpability. The assigned readings will (of course) include large selections from Murray Rothbard’s book America’s Great Depression, which blames the Fed for an unsustainable credit boom in the 1920s. Yet we will also cover the Friedman/Schwartz hypothesis, that it was the Fed’s inaction (or tight money) in the late 1920s and early 1930s that was ultimately responsible for the Depression.
In the third and fourth weeks we will explore the policies of the Hoover and Roosevelt administrations, noting their similarities. In addition to the treatment given by Rothbard, we will review the modern work by UCLA economists who analyze the New Deal as a cartel.
Finally, in the fifth week we will consider the Keynesian theories that the “double dip” depression in 1937–38 can be attributed to premature fiscal austerity, and that the ultimate solution to the Great Depression came in the form of military spending on World War II. Here we will rely on the revisionist work of Bob Higgs, but also the anecdotal descriptions of civilian life published more recently by Steve Horwitz and Michael McPhillips.
Ron Paul’s Farewell Address
This is from Lew Rockwell, FYI:
It seems that the mean-spirited and envious Republicans will finally allow Ron to deliver his eloquent “Farewell Address.” While it is a so-long to Congress and the various crooks, liars, con men, and clowns who comprise it, it is far more important than that. Ron lays out a blueprint of exactly what is wrong, thanks to the rotten government, and how to set about fixing it. He talks philosophy and the most practical matters, too. He also tells us bout the ideas he will be advancing in his freer life post-Congress and post-politics. We have so much to look forward to! Watch this space for the CSPAN schedule, and the YouTube, and prepare to be moved, thrilled, and inspired. (Thanks to Jeff Deist)
UPDATE It looks as if his talk will be at 3:00pm EST today. (Thanks, Jeff)
UPDATE Now it is scheduled for 2:00pm EST. (Thanks to Norm Singleton)
So by my calculations, that’s starting in about 5 minutes as I post this…
Potpourri
==> Silas Barta wants to keep Steve Landsburg honest on disaster economics. (Incidentally Bryan Caplan recently asked his readers to see if they ever find themselves objecting to unfair arguments used against “the other side,” and say what you will about Silas and me, but we often do just that. However, in both cases that I can think of, our noble behavior is indistinguishable from “attacking Steve Landsburg whenever possible.” So we need more data.)
==> This might be stale by now, but I did (two weeks ago) respond to the Center for American Progress on their blueprint for America’s energy future.
==> This reporter at FOX is on to something here: There is a growing push to evaluate the tax code in terms of its climate change implications. Hmm I don’t think that sounds promising.
==> The fate of the American way of life rests in the hands of Grover Norquist and yours truly.
==> Bob Wenzel talks about Bernanke’s game plan regarding inflation targeting.
==> Some poor soul has compiled a list of my various YouTube appearances. (This is much broader than what I personally upload on my channel.)
==> Yikes! This is really old, but before the election The American Conservative ran a symposium of views on voting, including a blurb from me.
==> I’m not sure if this link will work because I’m seeing it as a Free Trial, but anyway in Barron’s Online I review Peter Schiff’s latest book The Real Crash. I was very favorable.
==> On Halloween night I spent an hour on Adam Kokesh’s show. (Warning: He uses salty language and describes adult situations. Viewer discretion is advised.) At least click and watch the opening gag in the first minute. I’m basically the Will Ferrell of economics at this point.
==> I don’t even remember how I stumbled across this old post, but FYI Nick Rowe is as nuts as Scott Sumner.
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