What I realized is that since I live here now, I haven't been following the European news as closely. Europe, of course, is the new USSR (as the great Daniel Hannan recently pointed out here), not the United States. The recent Davos economic summit of European leaders snapped me out of my "America-centered-mindset". I read about the summit and watched many news reports about it before coming to the conclusion that European leftists are just the same as their American counterparts, if not worse. Yes, it is possible to be worse than Mr. Obama, Mrs. Clinton, or Mr. Gore. How, a principled American libertarian might ask? Well, American politicians are populists above everything. And the American people still have the American mindset (although it is starting to weaken...). Liberty and rights are still cherished here, even when they are not precisely defined and not actually understood. For example when Mr. Obama realized that the American people are starting to hear the message about deregulation he actually spoke about it positively. He did the same with regard to tax cuts stimulating job growth. He completely flip-flopped 180 degrees on both these issues because if he had not done so he would have been digging his own political grave.
In Europe things are completely different. There politicians are completely not accountable to any constituency. The EU is ruled by 27 Commissars (yes, they are called the same as in the Soviet Union) who form a sizable Politburo. The EU Parliament then just gives the Politburo credibility. No matter how the people vote, these stooges will remain in power. Furthermore, the EU does not even respect the votes of its members - we all remember that when Ireland rejected the Lisbon Treaty they were forced to re-vote on the issue again. I have never seen such an incident in all of the history of democracy; it was a farce plain and simple.
On top of all this was Mr. Sarkozy's Davos speech. He showed how militant European leaders really are (a real modern Robespierre!). In an aggressive speech he completely rejected any opposition to the Euro. He denounced "speculators" and said things like "We will never - you hear me, never - let the Euro collapse" (he spoke of himself and German Chancellor Angela Merkel). He also said that "The disappearance of the euro would be so cataclysmic that we cannot even toy with the idea". Sounds totalitarian to me. Destruction of all other local currencies is imminent, I'm afraid. Let's hope Britain holds out with the pound, at least!
That crazy maniac, Maximilien Robespierre, once said this: "Terror is nothing other than justice, prompt, severe, inflexible; it is therefore an emanation of virtue; it is not so much a special principle as it is a consequence of the general principle of democracy applied to our country's most urgent needs."
Remind you of anyone? I would say maybe... Nicolas Sarkozy?
http://www.bloomberg.com/news/2011-01-26/roubini-says-u-s-risks-train-wreck-if-bond-vigilantes-wake-up-on-budget.html
ReplyDeletehttp://blogs.wsj.com/source/2011/01/27/george-soros-says-eu-may-disintegrate-again/
The liberal economists agree with you.
Just shows you the wrong method can sometimes lead to the right conclusions (if the conclusion is so apparent a 5 year old can see it).
ReplyDeleteIs there still anyone out there who treats Soros as more than a big joke?
It is like what that famous physicist Sean Carrol told us during his lecture about the origins of the universe and time last week. Just because atomist Lucretius came up with a theory that ended up being more correct than modern physicists does not make him a great scientist. He just got lucky because his method struck true with regard to that one question...
So I really don't need modern NeoLib validation of things which Austrian economists have been predicting for many years.
And in your view, either the government exists and ruins the economy, or the government does not exist and the economy always grows upward. At least every other school relies on both a priori and empiricism including econometrics. If I say bail outs create inflation, then that does not help me as an economist, an investor, as a consumer, if the core inflation rate in America nudges from 1.5% to 1.7%.
ReplyDeleteEconometrics and any practical calculation has nothing to do with economic science. It is just the application of economic science. The relationship is like that of civil engineering and physics.
ReplyDeleteIf the government steers the economy it FAILS EVERY TIME. The Soviet Union could never succeed (like idiots like Samuelson predicted). Government management of interest rates ALWAYS leads to problems. If you disagree, prove it. Friedrich von Hayek has already proven otherwise - the government can never have enough information to perform its functions. Inflation never helps anyone, it only distorts the market (making certain activities, which would under normal circumstances be stupid, seem profitable). And Government Central Banks have been the number 1 source of inflation throughout history. Governments used these banks to micromanage the economy and stimulate the sectors their cronies wanted to be stimulated (recently in the USA when the Wall Street cronies directed the government exactly the same as in the Great Depression).
And if you are such an empiricist why don't you look at the predictions and ideas of Gerald Celente who disagrees with all liberal economists and yet is always right.
http://www.trendsresearch.com/gerald.html
Because both of you take the same approach, anything that can go wrong, will go wrong, and anything that hasn't gone wrong, has been adverted, and still will go wrong in the future. Because governments exist and because central banks exist, it must be their failings, otherwise it can only be nobody else's. This is not a way to manage an economy. And if Celente predicts protests in the future, and protests happen in the Arab world against autocrats, then it must be Celente was always right.
ReplyDeleteHayek, who was an Austrian, said the following:
"The successful use of competition as the principle of social organization precludes certain types of coercive interference with economic life, but it admits of others which sometimes may very considerably assist its work and even requires certain kinds of government action"
But no, of course, he must be a socialist too according to Block and Hoppe. And when he denies he's a socialist, he is self-deluding himself with ignorance. This can't be taken seriously anymore.
"Because both of you take the same approach, anything that can go wrong, will go wrong"
ReplyDeleteHmm... and isn't it curious how Celente is always right and neoclassical economists are always wrong...? Maybe this really shows how indoctrinated you are and how scared you are to step out of the box and realize 90% of what you are taught in economics classes is made-up bull?
Hayek is not considered a mainstream Austrian economist - he comes from a different branch. So yes, Rothbard is Mises's heir, not Hayek. And I really don't care that you disagree. If you say that 2+2=5 then all I can do (after you rejected reason) is laugh at you and later laugh when you turn out to be a total failure (like Greenspan and Bernanke).
Also, Hayek did not deny he was a socialist when talking with Austrians. Everyone who is for government is for socialism. For example Milton Friedman acknowledged he was a "road socialist" - he thought the government should build roads.
"and isn't it curious how Celente is always right and neoclassical economists are always wrong"
ReplyDeleteSo it proves that every economist and investor from every other school other than the Austrian is always wrong. Well, that explains why everybody other than Peter Schiff and Celente are broke.
"If you say that 2+2=5 then all I can do (after you rejected reason) is laugh at you and later laugh when you turn out to be a total failure (like Greenspan and Bernanke)."
Wow, now every other economist is in denial of the obvious too. We must really be indoctrinated now. US GDP growth averaged roughly 4% during Greenspan's 19 year term, and the catechism recession averaged -1.9 percent during 2 years of Bernanke's term, and then grew nearly 3.0% during 1 year. And now hyperinflation is coming:
http://www.videonewslive.com/view/288549/peter_schiff_on_20092010_usa_hyperinflation
And the highest quality of life 99% of people enjoy in America is despite of people like Volcker, Greenspan, and Bernanke too, I imagine. Otherwise, America will just entirely collapse and a 14 trillion dollar economy with the world's highest productivity will become worthless. Please.
"So it proves that every economist and investor from every other school other than the Austrian is always wrong. Well, that explains why everybody other than Peter Schiff and Celente are broke."
ReplyDeleteI never knew Celente is a follower of the Austrian School... is he?
Also if you knew anything about economics you would know that Volcker had a totally 180 degrees opposite monetary policy from Greenspan and Bernanke.
And if you really know how GDP works you would also know that ALL the growth under Greenspan was NOT REAL. It was the result of malinvestment caused by bad monetary policy. This is like saying that under Greenspan real estate values rose. THEY DID NOT. This is why we had a bubble. People thought their houses were increasing in value and this was simply not true at all.
You are making the error of looking at some silly numbers which make no sense. If you apply actual economic laws to the events that were happening you would know these numbers can't possibly be real. Just like, for example, it is impossible for rent control to increase quantity or quality of housing. These are economic laws, you can't deny them. You can try to combine all kinds of conditions together to try and get a favorable result - yes. But the government is simply unable to do this for practical reasons. It cannot have the information it needs to micromanage the economy.
"America will just entirely collapse and a 14 trillion dollar economy with the world's highest productivity will become worthless. Please."
You obviously don't see that a lot of that $14 trillion is not actual wealth - just fake things which appear to be worth a lot (due to inflation). Half of the assets the Fed currently holds are not worth a dime. The US has been engaged in serious capital consumption (I'm sure you know what that is) for the past 20-30 years. Wealth cannot go up during capital consumption times. This is an economic fact. Consumer goods do not constitute wealth because they get used up fairly quickly. And of the non-consumer good that exist still in the US very few are valued at real value. Examples: manufacturing (GM, etc) and real estate. If not for protective tariffs (which de fact damage the American consumer's living standards) American indistries such as steel would be long gone too.
The sooner you swollow the bitter pill and realize this the better. Only bankrupcies can salvage whatever is left in the US economy because reckless spending (i.e. more capital consumption or debt) cannot help anyone.
"Also if you knew anything about economics you would know that Volcker had a totally 180 degrees opposite monetary policy from Greenspan and Bernanke."
ReplyDeleteVolcker is also a democrat and was an adviser to Obama for two years with constant contact with Bernanke.
"Wealth cannot go up during capital consumption times. This is an economic fact. Consumer goods do not constitute wealth because they get used up fairly quickly."
You have no idea that we outproduce what we consume, and that a negative trade deficit in no way correlates to a country's productivity the same way it correlates to a country's consumption. And the average American in the labor force produces on a per capita basis 3.7 times more than the average Chinese worker, and that is because we have become an industrialized nation, and they are still developing. And our reduction of our current overconsumption will in no way impede our economic growth.
"It cannot have the information it needs to micromanage the economy."
Matt, a lot of information that was unavailable 10 years ago is now available because other governments have begun disclosing their public finances for the sake of coordination, and the Fed can coordinate with those governments to increase the optimal trade off for both to increase growth. And in economics that is called comparative advantage, where both sides can make trade offs and still gain.
And the way we paid 121% debt to gdp down between 1946 to 1974 where it became around 30% is not because we defaulted, not because we got rid of the gold standard, not because of stagflation or inflation or hyperinflation, its because of a combination of skilled monetary and fiscal policy. If we had reached 121% of debt to gdp with the gold standard, we can still reach it without and yet still pay our way back without having to default or inflate. And our quality of life and standards of living for 95% of Americans still increased exponentially regardless from 1946 to 2010. Your only answer is no government with intervention or no central bank which defines intervention (or moderation) If our currency has lost 98% of its value since 1913, yet the average American's quality of life and average real wages has gone up by more than 135% since the Great Depression, then the loses are erased and you 95% of the population still gains.
Rob, you obviously don't understand basic economics.
ReplyDelete"Matt, a lot of information that was unavailable 10 years ago is now available because other governments have begun disclosing their public finances..."
You missed the whole point of what Hayek and Mises were saying. Past knowledge disclosed by other banks or countries don't matter in the slightest. The government has too limited a scope to gage the CURRENT situation at any given moment in time or to predict the aggregate actions of the entire population.
Currently the quality of life Americans experience is disproportional to that of other countries (developing or DEVELOPED) because the US Dollar is being used as the world's reserve currency. This means that when the US inflates it is US banks and their customers who benefit.
Your problem is that you are proving yourself wrong. The reason Americans gain quality of life is because they were an indistrious capitalist people - not because of clever central banking or government fiscal policy. In fact the American quality of life has increased DESPITE poor central banking and bad government fiscal policy. There was no net gain for Americans in the establishment of the central bank.
Please name one benefit of establishing a Central Bank other than government bosses helping out their banking sector cronies.
I really love the fact you're still living in a bubble thinking US productivity is so high. The US produces very little - it just consumes based on the fact they control the Dollar. But sooner or later running a gigantic trade deficit catches up with you...
"In fact the American quality of life has increased DESPITE poor central banking and bad government fiscal policy."
ReplyDeleteYou keep thinking that then, like you think Ron Paul is the Cicero of modern day. I don't want this to spiral out into 40 blog comments so I'm shutting down and you can just keep calling everyone else wrong for the sake of expediency.
Economics is the science of causal relations. All economic laws tell us that central banks can't produce a good effect on the economy (the only thing a government central bank can do is print money). I would say it is you who has to justify with proof any positive effects. We must have an incentive to pay all these 15,000 Fed employees huge salaries. If they don't produce anything valuable then they are a drain on the economy and I would much rather spend their "earnings" on helping poor families or orphans.
ReplyDeleteSo far no one has been able to prove to me even one positive effect a central bank has. In an economy in which the government doesn't meddle in monetary policy there are no financial crises, there is a negligible amount of inflation, and there is no business cycle.
So why should I want a central bank? To devalue my money and confuse investors? Would you like it if someone kept devaluing your cash holdings (if you had any)? This is what causes endless crazy speculation, booms, and busts...
I recommend this funny video:
http://www.youtube.com/watch?v=d0nERTFo-Sk
That was very funny.
ReplyDeleteI also recommend this one article:
http://www.businessweek.com/magazine/content/10_40/b4197074540076.htm
Well if you can ever prove why it is worth paying those 15,000 Fed fools their salaries, get back to me!
ReplyDeleteThe reason of the Fed and like government, the reason for its existence plainly said.:
ReplyDeletehttp://www.youtube.com/watch?v=9V5OP-VmXgE
"The "paradox" that so confused the Times correspondents is actually natural law – economic law – at work. It is a law that decrees: government intervention, out! In Somalia, or, for that matter, anywhere else."-
This is Rothbard defending Somali anarchy as part of the natural order in "Doing God's Work". I have read about more than a dozen articles by him, and they all come to ridiculous conclusions from very flawed premises that are too numerous too list and could take all night.
You are probably the only person in the Western World who disagees with Rothbard's premises. Even everyone in government agrees with those premises (every human being is free, everyone has a right to life, etc.) - they are just massively illogical people in the implication of those premises. And it is true that government always works to collapse itself - that is indeed a Law. The more oppressive the government the faster it falls, but all governments eventually do become oppressive. Rothbard never defended Somali anarchy or any other form of lawlessness. He only stated obvious facts. If governments didn't have anatural tendency to fall we would be living in the Roman Empire right now. So your argument is just plain silly.
ReplyDeleteYou can't defend the Fed with sending me a little link. The Fed is simply an evil institution created by crony bank families (the Morgans and the Rockefellers) in collusion with the government. They did it to get easy credit and enrich themselves. Shortly after getting this easy credit they created a boom which ended with the Great Depression bust.
I find it quite foolish of you to think the business cycle is not caused by government meddling. Before government meddling THERE WAS NO BUSINESS CYCLE anywhere in the world. Too much easy currency always leads to too much crazy speculation (whether gold standard money or fiat money).
I feel confident enough to debate anyone in the world on this issue using both logical proofs and empirical historical facts.
"You are probably the only person in the Western World who disagees with Rothbard's premises."
ReplyDeletehttp://www.bbc.co.uk/news/world-africa-12285365
So, life expectancy went up from 46 years to 51, and the gdp per capita is still $600. Now you are just being silly.
"Rothbard never defended Somali anarchy or any other form of lawlessness. He only stated obvious facts."
I dare you to type in the word Xeer on wiki. Yes, he does, as do other libertarians in fact.
"Before government meddling THERE WAS NO BUSINESS CYCLE anywhere in the world."
Matt, you need to study economic history, especially the panic of 1837.
And if a bank failed and I had my entire life savings in their, and the private insurer failed as well, then I've lost everything. So fine, I was voluntary. Rothbard doesn't even believe in insurance for banks to back up all of your losses because that would force the insurer under.
"I feel confident enough to debate anyone in the world on this issue using both logical proofs and empirical historical facts."
Matt, you have, like Rothbard, too big of an ego to say this. At least I humble myself whenever you insult me morally or intellectually.
By Rothbard's premises I meant freedom for individuals and rights of life, liberty, and property.
ReplyDeleteI read about this Xeer you suggested and indeed it sounds amazingly moral. If Rothbard endorsed it then I will gladly do so as well. The problem in Somalia, however, is not a moral problem - it is an enforcement problem. Nobody there has the means to fight off Muslim invaders (by the way if you read about any tragedies in modern North or West Africa most of them are caused by Muslims).
"Matt, you need to study economic history, especially the panic of 1837."
Now you're just embarassing yourself (I dare say I see to know quite a bit more about economic history than you do). The panic of 1837 was caused by monetary expansion by the Second Bank of the United States. An astounding amount of inflation was created during that bank's reign. In fact it got so bad that British traders refused to accept US Dollars and requested to be paid in specie only! This is why President Andrew Jackson is famous for hating the bank. I hope I have taught you something new here :)
"Matt, you have, like Rothbard, too big of an ego to say this. At least I humble myself whenever you insult me morally or intellectually."
Debating has nothing to do with ego Rob. In fact I would say that if you are afraid to debate people about your ideas then you are pathetic (no insult intended - that's just how I define cowardly behaviour). Debate is good and anyone should be confident enough to debate anyone else if they feel they have the necessary information and expertise. Also, so far you have never humbled yourself but rather called all my ideas (I quote) "stupid" without giving any reason other than - I can't help to notice - your own ego.
"Also, so far you have never humbled yourself but rather called all my ideas (I quote) "stupid" without giving any reason other than - I can't help to notice - your own ego."
ReplyDeleteBecause can accept Xeer but deny the instability of it. Xeer is moral, but try enforcing. This is the entire instability issue behind anarcho-capitalism.
"Nobody there has the means to fight off Muslim invaders (by the way if you read about any tragedies in modern North or West Africa most of them are caused by Muslims)."
Xeer is Sharia law in Somalia. It is God's natural law. There are no Muslim invaders (as you use a blatantly offensive causation). There are only guns. Plenty of guns.
"Also, so far you have never humbled yourself but rather called all my ideas (I quote) "stupid" without giving any reason other than - I can't help to notice - your own ego."
I give you reason all the time. Look at Somalia.
Somalia has nothing to do with the civilized world my friend and fingerpointing is not what any debater would call a "reason". You saying "look at Somalia" is like me saying "look at Nazi Germany" when you justify existence of the state. We can either keep shouting accusations and levelling assumptions about each other's views or use reason when talking to each other. However, you seem to skip over arguments which are uncomfortable for you and switch topics all the time.
ReplyDeleteLet's settle the central bank issue. Where do you see this business cycle where government meddling is not present?
Switching back and forth from denying economic truths to denying moral truths doesn't make your position any stronger - just the opposite.