Archive for keynesianism
Fear the Boom and Bust: Hayek vs. Keynes
Posted by: | CommentsFor those of you who haven’t heard, this video has been circulating around libertarian circles like crazy the past week. I particularly like the alcoholism-as-printing-money metaphor used. The production quality is excellent, and if you know a bit of econ you’ll understand all the references to, say, aggregate demand and the paradox of thrift. Ha! Enjoy…
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Tags: business cycle, economics, Hayek, keynesianism, money, video
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Mises Circle Houston Recap
Posted by: | CommentsI’ve been reticent to post a recap of Mises Circle Houston because I didn’t have any photos of the event until yesterday. But now, everything is here and I’m happy to tell you a little about it… First off, I need to send a great big THANK YOU to Jeffrey Davis, the conference sponsor, and the entire staff of the Mises Institute for their amazing service – Kristy, Norma, Pat, Chad, and Willard. We love you guys!!!
Our group from the Libertarian Longhorns (and Robert Butler, executive director of LP-Texas) left Austin around 6am on Saturday, January 23, to make sure we arrived in time to get a decent seat. Robert volunteered his vehicle, and so I didn’t have to drive. We talked up the LP’s plans and upcoming events on the drive to Houston and back.
Upon arrival, we had the privilege to meet some really neat people. I happened to run across a few LCC readers as well, like Yvonne Kelly (on the far left of the group picture). Tom Woods said hello as he walked in, and I briefly spoke with Lew Rockwell as well while drinking some coffee.
The theme of the day was "the failure of Keynesianism" — appropriate considering our current political situation, wouldn’t you say? Doug French was the first speaker. For some reason I have lost my notes, but his topic was "Bank Failures in a Keynesian World." What was most interesting to me about his talk was the striking parallels of the circumstances preceding "the lost decade" and the circumstances we are now experiencing in the United States. One can only hope that failed policies would be remembered, but alas and alack it’s politics not wisdom that we deal with.
Tom Woods spoke about "Keynesian Predictions vs. American History." Did you know that as World War 2 was coming to a close, policy makers were concerned that the soldiers coming home would overwhelm the economy and that a new depression would ensue. How wrong they were: 1946 was the single greatest year for the American economy ever. I also enjoyed his ransacking of Paul Samuelson and Paul Krugman.
Before lunch we enjoyed hearing the beloved Congressman Ron Paul. His principal point was simply that a true revolution is philosophic in nature. This is most certainly true, and the Austrian School of Economics is at the forefront of this change. Dr. Paul touched on many topics, but as he likes to do he focused on monetary policy and foreign policy. He made specific mention of the importance of auditing the Federal Reserve. He said that once audited, two well-kept secrets will be brought into the open once again: (1) that the Fed frequently bails out friends via the discount window (Fed short term loans), and (2) that the Fed has many international activities unaccounted for. Thus, we find monetary policy is also connected to foreign policy as well. Call me conspiratorial if you must, but the CIA’s funding goes beyond Congress – it’s tied to the Fed as well. Best quote from Ron: "Quite frankly, in a Constitutional Republic, you would not have a CIA."
Lew Rockwell was our final speaker for the day on "Economics and Moral Courage." He noted that although in many ways we are quite free (such as the freedom of the internet), we are also having much freedom taken away from us little by little. Moreover, as more freedom is stolen from us, people are more frequently not able to envision how freedom actually works. They simply do not have experience in understanding cause and effect. In truth, this is due to the "banality of evil," something small that ekes its way into public life. For example, the acceptance of a wrong premise about the role of government in life can be a first step toward more and more government control, leading finally to totalitarianism. What begins with banality, ends in bloodshed.
Overall, I’d say it was a great day…
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Tags: Austrian School, economics, free market, free society, freedom, history, keynesianism, Mises Institute, Ron Paul
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Paul Krugman: Stop Talking Please
Posted by: | CommentsIf you have been following the news lately, you’ve likely heard a resurgence of the claim that Paul Krugman predicted the housing bubble and the ensuing economic catastrophe. Bill Anderson sets us straight about the facts:
“Paul Krugman loves to remind people that he predicted the housing bubble collapse before others did. (Actually, I think he is confusing himself with Peter Schiff, but I digress.) Well, maybe there is another reason why The Great One did such a good self-described job in “predicting” the bubble: He called for the government to create one.
Now, in Krugman’s defense, he did not demand that the Fed create a new housing bubble; he just suggested it as a good idea to jumpstart more consumption. He wrote back in 2002:
‘To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.’
This, my friends, is better known in my home state of Tennessee as the “hair of the dog,” which is what some of the Good Ole Boys take after a night of guzzling down lots of “Lynchburg Lemonade.” Since the stock market was in the toilet, what better way of trying to “stimulate” consumption without the economy producing anything than to do it in the housing market!
The problem here is not with Krugman’s recommendations, as awful and stupid as they were (and still are). The problem is more basic; Krugman’s Keynesian “economics” is stupid, wrong-headed, and as crude a “theory” as the economics profession could create.
To his “credit,” Krugman actually admits that he wrote that Really Stupid Comment. Furthermore, he does not exactly disown it:
‘Guys, read it again. It wasn’t a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that’s just what happened.’
Uh, sorry. It was advocacy. Bubbles exist because of easy credit and easy money, and Krugman already is on the record as claiming that inflation will give an economy “traction,” which is Keynesian-speak for “stimulating” spending.”
I can’t wait for Anderson’s comprehensive review of this topic, because I’m sure he has more to say.
But for now, it gets even better on the Mises blog, where Mark Thornton demolishes any pretentious nonsense that Krugman did not advocate a housing bubble with a torrent of quotes:
August 14, 2001
http://www.pkarchive.org/column/81401.html
“Consumers, who already have low savings and high debt, probably can’t contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery…. But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates — and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1…. Sooner or later, of course, investors will realize that 2001 isn’t 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.”
Krugman, please stop talking, you are a shill and you know it. You advocated inflation and a bubble economy, period.
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Tags: economics, housing bubble, keynesianism
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