Okay this guy has to be the best thing to ever happen to the Huffington Post. You may remember him from his freaking awesome articles such as this one, this one, and this one.
Well check out what he had to say yesterday:
The first half was excellent. But then he says “Sadly, none of the Austrians lived in a time of fiat money, which changes everything. They should read up on MMT, which will educate them.”
Someone with your amazing command of the discussions here should have no trouble finding threads about MMT, and how deluded it is.
I’m not saying he got everything right…but the guy wrote an article with the term “Austrian Economics” in the title and which included statements like:
“[The Austrian School’s] economists have not only made sense of many of the macroeconomic dynamics we are currently experiencing, but many even predicted the malaise. Austrian Economics is in the ascendant.”
“in the fractional reserve system, private banks create money when they create debt, and by charging interest when they do so, ensure that, over time, real wealth is transferred from productive workers to financiers who produce nothing directly. This too reduces our freedom and prosperity.”
“Austrian economists emphasize the dangers of manipulation by central bankers and governments who can cause bad investments to be made by altering the amount and price of money in the economy. Cheap or excess money leads to credit bubbles, asset inflation (e.g. housing in the USA up to 2007) and mal-investments.”
“…government cannot merely spend money into the private sector without choosing where and how to spend it. And any such choice removes spending power from private citizens and redistributes it just as surely as in the days when the likes of Hayek and von Mises, two of the greatest thinkers in Austrian economics, were doing their best work.”
[his links]
All the while giving an honest, straightforward, and serious summary of the Austrian position. And in case you didn’t notice, he links directly to the “Fear the Boom and Bust” video to boot…in the opening paragraph. And he got all this published on The Huffington Post website.
I think I can look past a little “MMT can inform Austrian theory…if we can synthesize them we would have something awesome”. Especially when he ends the piece with:
I’ll bet, though, that any such synthesis and all future evidence will vindicate Hayek again and again in at least one point:
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.
[again, his link]
The Austrians Were Right
It’s kind of hard to understand that Bachmann may be doing more to the Austrian School than Ron Paul, at least temporarily.
But if you think it further… “Iowa Straw Poll: Disciples of Austrian School and Ludwig von Mises take douple win!” That would have been something!
You have got to be kidding.
This’ll make Dave happy (even more than usual)…this guy clarifies his position:
Austrian Medicine for the MMT Patient -(Huff Post)
“The Influence of the Austrians” - (Washington Post)
This’ll make Dave happy (even more than usual)…this guy clarifies his position:
Austrian Medicine for the MMT Patient -(Huff Post)
I’m glad is heart is in the right place.
He says some insightful things, none of them related to MMT.
It’s all laid out in my blog : http://smilingdavesblog.blogspot.com/2011/08/are-mmt-and-ae-compatible.html
What what
(I’d say a Hazlitt shoutout while dissing Krugman is close enough)…
Paul Krugman and Earthquake Economics:
All of this is a basic economic fallacy, which goes to show that the Nobel Prize in economics is worth about as much as the Nobel Peace Prize these days. This is the Fallacy of the Broken Window.
The fallacy was memorably explained in Henry Hazlitt’s classic introduction to economics, Economics in One Lesson. Suppose a young hoodlum throws a brick through the window of a store. At first this seems like a destructive act, but soon the bystanders reflect that it will create work for the glass-maker who is called in to install a new window. So the young hoodlum has actually “stimulated” the local economy.
Hazlitt points out that a genuine economist, by contrast, would take into account the other uses for the money that will now have to be spent fixing the window.
For more on the Krugman-earthquake issue, see here.
Fox News Sunday with Ron Paul:
http://www.youtube.com/watch?v=6b5fj0eR3sg&feature=player_embedded#!
It starts after 10:30 somewhere.
Rothbard quoted on consumption taxes
(and a shoutout to Say as well)
Try google alerts. It does almost that for you.
Dave,
Just noticed your comment. I wish that I had seen it earlier because I regard it as a misreading of my article.
Nothing in my article said or implied that higher expected prices are a good thing for the economy.
I invite you to re-read it without the assumption that I’m longing for that “magical elixir.” It may help your reading of the piece to know that I am an alum of “Mises U.”
Thanks for the offer John.
I don’t think I’m really “so far away” as you suppose.
Nice of you to respond. I can’t speak for Dave, but let me illuminate why you sound so far off…
“it didn’t work to stimulate the economy. It might have worked to achieve other goals, such as stabilizing the financial system.”
This is misleading at best. I would assume you are aware that your collegues in the media are by and large complete economic illiterates and yet still purport to teach and explain such things to the rest of the public…who knows even less than they do. To imply that printing money out of thin air offers any real net benefit for the economy is, if you’ll pardon me, just rubbish. And as an alum of Mises U I would hope you would know this. And even if you wish to claim that you were simply trying to point out possible short term effects of the Fed’s money printing, I would argue it irresponsible to lead people to believe that any real good can come of it, which is exactly what that sentence does.
"So why has monetary policy become ineffective? The answer is simple: because we all understand monetary policy too well. When monetary inflation is understood and expected, it doesn’t stimulate the economy. Instead, what you get is some version of stagflation.
This is another part that led to the “far away” comment…and where Dave is drawing his complaint. That first sentence implies that if we “didn’t understand monetary policy”, monetary policy would be more “effective” (at creating a more prosperous economy, I have to assume.) The second sentence confirms this by elaborating and essentially saying “if we didn’t expect monetary inflation, it would actually stimulate the economy.” As Dave pointed out, this is total nonsense.
And what’s more, it does more of exactly what I was talking about earlier: implying things that are simply not true and effectively misinforming the public. And one has to assume the goal of an article like this is to educate, as half of it was quoting someone else to show what he was explaining forty years ago…not to mention the fact that the bottom line of the whole article is that “things are sucking right now because we know too much. If we knew less, the things we’re doing would work to make the economy better.” Obviously when the implied solution being offered is “unlearn stuff”, one has to infer the point of the article is to simply inform, not to offer any actual solution or prescription for moving forward.
And my point is this article does not do that. In fact as I said, it does worse than not inform, it actually misinforms. The reason I said you are so close, yet so far away is articulated in my response to Dave: you’re close because you’re citing Hayek to make the claim that essentially what the government/Fed is doing is wrong (or at least ineffective). But you basically jump out of the proverbial frying pan and into the dumbing-down fire by essentially stating that it’s not wrong because it’s economically unsound and fundamentally flawed reasoning, but because we simply know too much about it.
In my opinion this actually harms the overall understanding of economics and our current situation, and therefore contributes to the problem by not only allowing, but encouraging people to believe so much that isn’t so…leading them to continue to favor policies that are not only unethical and against freedom, but that are economically detrimental to everyone, especially the common man. I cringe at the thought of someone reading your article, feeling better informed, and then injecting their newfound wisdom into a conversation about the economy by saying “well the Fed’s only ineffective because their actions are expected, you know. If only we knew less about monetary policy and didn’t expect inflation, what they’re doing would work.” (Which is only a half step away from an argument for more Fed secrecy.)
Yes you imply that the Fed is ineffective, but that can easily be filed under “what else is new?” And yes you quote Hayek. Giving attention to the Austrian viewpoint is the only redeeming part of the article. But ultimately I think the effect of the article as a whole is a net negative, leading to a less informed populace, and therefore more problems in the future.
I’ll tell you what I saw that made me write what I wrote:
You wrote: “It might have worked to achieve other goals, such as stabilizing the financial system.”
That led me to write: But at least we have still have some inflation, [even though everyone guessed it was coming], which may have been responsible for the stabilization of the financial system.
You wrote: “…the traditional mechanisms for stimulating the economy through monetary policy have simply broken down.”
Which led me to write: "Carney is saying, and thinks Hayek is saying, that as long as inflation comes as a surpise then that’s good. By inflation he means of course higher prices, not the Austrian definition. In the old days, he says, this could be done by printing money.
But nowadays, writes Carney, it’s too late."
You wrote: "In the standard, schoolbook model, bla bla. Stimulus!
A slightly more sophisticated version says bla bla, this stimulates business investment bla bla.
But that didn’t happen this time around."
Form which I inferred that it usually works, but not this time. And the difference being that this time we know too much, as you write later.
Which led me to write: “Carney assumes that higher than expected prices are a GOOD THING for the economy. If only we had more and more of that magical elixir. Sadly, we have run out.”
I notice that JJ answered in a simialr vein.
If we have erred, 'tis human.
This was posted in the low content thread (and on the blog), but I figured it would be good here. Again, it’s Ron Paul, so it’s not a total case of mainstream mention, but the Wall Street Journal chose to publish it…
Blame the Fed for the Financial Crisis
“[…] The great contribution of the Austrian school of economics to economic theory was in its description of this business cycle: the process of booms and busts, and their origins in monetary intervention by the government in cooperation with the banking system. Yet policy makers at the Federal Reserve still fail to understand the causes of our most recent financial crisis. So they find themselves unable to come up with an adequate solution.”
He uses the term “Hayekian economics” to keep uniform with “Keynesian”, but still…
(bonus, check out his past segments)