You Say Communism, I Say the Ism That Made Me Rich

Denver Post columnist and friend o' Reason David Harsanyi celebrated his Christmas Eve by publishing a little pushback to the bizarre, if popular, meme that the economic crisis we're experiencing now repudiates the entire case for laissez-faire capitalism.

Celebrated progressive doyenne Arianna Huffington recently penned a brilliantly absurd piece titled "Laissez-Faire Capitalism Should Be as Dead as Soviet Communism."

Huffington argues, in effect, that communism and "laissez-faire" (minimal intervention) capitalism are equivalent ideological extremes.

Sure, one of these philosophies spurred the murder and misery of hundreds of millions worldwide; the other promotes liberty and innovation and welcomes foreigners to lounge around in expansive mansions paid for by their former oil-baron husbands.

So, we can agree, there is no such thing as a flawless ideology.

For you dartboard enthusiasts out there, Huffington's column is here.

I dare not speak for Planet Laissez-Faire, but one thing about the Huffington/lefty critique that baffles me (I mean, aside from the Veronique De Rugy-uncovered and Harsanyi-quoted fact that George W. Bush was much more of a regulator than Bill J. Clinton), is that it presumes/pretends that all enthusiasts of capitalism prefer no rules at all in the functioning of markets.

Take former Securities and Exchange Commissioner Paul Atkins, who Nick Gillespie and I interviewed earlier this month. Though derided by Business Week as some kind of crazy-libertarian "Dr. No," hell-bent on blocking every key "reform," Atkins has actually spent years backing the creation of a clearinghouse to count up and value over-the-counter trades of such instruments as credit default swaps. It was five years ago, and not last week, that Reason published a piece on derivatives advocating more stringent regulation on their use by Fannie Mae and Freddie Mac. As our anarchist readers will happily complain to you, these are rules, not a free-for-all. Those of us who aren't quite ready to abolish the state tend to be in favor of a more limited, and much more smart, set of clear rules that are based largely on transparency, cost-benefit-analysis, and fairness (i.e., so that the system can't be gamed to favor certain large investment banks or quasi-governmental entities that lard the politial system with campaign contributions).

We have been examining the effect of rules (and lack thereof) on the financial markets since long before the crisis was upon us; here's a more recent piece on the subject by Katherine Mangu-Ward from our January issue. But it appears that many of those commentators who, broadly speaking, were on the side that won the election in November are much less interested in talking tangibly about smarter rules than they are in pulling the camera way back, mis-describing what little they see, and prematurely eulogizing a philosophy whose scattered application has liberated more human beings than a thousand FDRs. It's genuinely curious.

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  • ||

    Wow, makes sense to me. I think you may be on to something here.

    jess
    www.anonymity.at.tc

  • </||

    here's a more recent piece on the subject by Katerine Mangu-Ward from our January issue.

    When you leave the "h" out of her first name it sounds like she is some sort of exotic Teutonic temptress.

  • ||

    "exotic Teutonic temptress"

    Katarina Witt can tell you the difference between capitalism and communism.

  • Nigel Watt||

    Those of us who aren't quite ready to abolish the state tend to be in favor of a more limited, and much more smart, set of clear rules that are based largely on transparency, cost-benefit-analysis, and fairness (i.e., so that the system can't be gamed to favor certain large investment banks or quasi-governmental entities that lard the politial system with campaign contributions).



    And those of us who are recognize that there is no system with a monopoly on force which can't be gamed.

  • ||

    As our anarchist readers will happily complain to you, these are rules, not a free-for-all.

    You have joined the oppressors, Matt. And I used to think you were cool.

    On a more fun note, I snorted a lot of tramadol yesterday. Got me more speedy than wasted.

  • ||

    Huffington is just one in a long line of lefties who are rich through no effort of their own, and have no idea what it actually takes to create the wealth they enjoy.

    -jcr

  • ||

    Some of us want rules to limit the economic damage caused by self-aggrandizing politicians.

  • ||

    Some of us want rules to limit the economic damage caused by self-aggrandizing politicians.

    We used to have something along those lines in the USA. It was called the "rule of law".

    -jcr

  • Nigel Watt||

    We used to have something along those lines in the USA. It was called the "rule of law".

    I thought it was called "tarring and feathering".

    "Rule of law", when the laws are created by politicians, is rule of the politicians.

  • Bingo||

    Whatever, Obama will fix all the crap that Bu$h did to us!

  • Fluffy||

    What I find stupefying is that I read many lefty commentators and pseudoeconomists who do quite a good job describing the roots of the current crisis, but are either inept or deluded when it comes to assigning a label to what they have described.

    Joe likes to act like I'm the only one who sees the real estate bubble as primarily caused by overstimulus by the Fed and by Bush's deficit spending, but I'm not. Some observers dress that basic narrative up a little by talking about things like the effect of China's trade policy on the price of US government and GSE debt.

    What I can't understand is how people can make these observations, but then turn around and say, "...and this proves that laissez-faire capitalism is a failure!"

    I have chosen to call the disease that makes lefties do this "Kunstlerism", in honor of one of the original sufferers, who wrote a quite detailed and entertaining book that pretty much proved beyond a shadow of a doubt that state planning in land use was an utter failure that had destroyed communities and devastated the landscape of almost an entire continent - but then concluded that we desperately needed even more state planning in land use, because capitalistic real estate development was a failure.

    I just don't get it. It would be easy to explain this if we assumed that the world was full of moustache-twirling Ayn Rand villains, but I don't think that's what's going on here. It's something else, and I don't know what.

  • Nigel Watt||

    concluded that we desperately needed even more state planning in land use, because capitalistic real estate development was a failure

    I'm in Houston, so I'm getting an extra kick out of that. This city is so convenient, you'd think it must have had a genius of a planner - until you realize it has no zoning, at all.

  • ||

    I don't think that's what's going on here. It's something else, and I don't know what.

    Does the term "universal public education" ring a bell?

    -----

    Meanwhile, those rabid laissez-faire free market ideologues who hijacked our government have (on Christmas eve, no less) stuffed General Motors Acceptance Corp into their magic hat tarp, waved their magic wands over it, and declared it to be, henceforth, a "bank holding company".

    Because that's what laissez-faire means.

  • ||

    It would be easy to explain this if we assumed that the world was full of moustache-twirling Ayn Rand villains, but I don't think that's what's going on here. It's something else, and I don't know what.

    Ideology, Fluffster. Ideology. To leftists, words like "free market" and "capitalism" are boogeymen. They, like any conspiracist, assume everything wrong in the world has to have been caused by their particular bugaboo. So no matter what, the free market is to blame, even if it had nothing to do with anything. Observe Naomi Klein's abject distortions of Freidman--it makes no sense, because it's not about analysis. It's about witch hunting.

  • Nigel Watt||

    Episiarch - I've seen Friedman blamed for the Rwandan genocide.

    Klein's interview with Lew Rockwell is, if nothing else, interesting for how goddamn slimy she comes off as.

  • ||

    Nigel, this entire bailout episode is an example of projected blame. The fact that people can actually say that deregulation (!) caused this mess is so abjectly moronic that it's stunning to see the assertion made...yet it is made constantly. It's the equivalent of the Salem witch trials. The devil free market caused it! SATAN!

  • James Fulford||

    You have "George W. Bush was much more of a regular than Bill J. Clinton"--should be "much more of a regulator."

  • MNG||

    I think to be fair you have to see all this in terms of comparisons and continuums. We don't have some "real" free market system in history or in the world so all we really have are nations that are "less" or "more" free compared to other real world examples, as measured by some ideal type like "Libertopia."

    So it strikes me that the average person or leftie is not being crazy to look at a period when policies which were or are touted, often loudly by their proponents, as ones of "less goverment", "less regulation" or "more laissez-faire" as another, then looking at the consequences, and then making conclusions about how good laissez-faire policies are. If we get to a point where proponents of laissez-faire can just duck any consequence of any period sold as less government by saying "well, that wasn't REALLY laissez-faire" then we are in a position very similar to commies who, when confronted with the failures of communist nations simply say "well that wasn't REALLY communism" (I can't think of any communist system that did not have some capitalist features and policies...).

    A few years back a lot of people passed laws dealing with things that are tied up with our current woes and these people loudly proclaimed they were promoting "laissez-faire, capitalism, less government, market based approaches" policies etc. Don't get mad at us lefties if we then take the consequences of their policies as rebukes of such philosophies; get mad at the loud folks that started it. This is like blacks getting mad at cabbies for being hesitant to pick up young black men. Get mad at the (minority to be sure) of young black men who shoot cabbies and create that unfortunate mindset.

  • MNG||

    Klein is a really stupid person and yes very slimy btw. As a leftie can I say that this woman is not like on our A list?

    It reminds me of a story of a leftist professor of mine. We were talking about constitutional law and I, not very leftist at the time, began to disparage the views of Catherine Mackinnon. He looked at me funny and said "well of course she's silly but why talk about her?" I said "well isn't she the left's big constitutional scholar?" He lauged and said "Oh surely not, I dare say she's not much of a constitutional scholar, in fact not much of a scholar for that matter."

  • ||

    Hey Fulford, you're sort of at the wrong website, considering you and VDARE are so stringently anti freedom of movement...whoops, I mean anti-immigration.

  • Nigel Watt||

    MNG, we did get mad at the people who falsely claimed their policies were "laissez-faire" at the time, and we're still mad at them, but that doesn't mean we can't defend ourselves from the Left attacking us based on the falsehoods of the Right.

  • ||

    Klein's interview with Lew Rockwell is, if nothing else, interesting for how goddamn slimy she comes off as.

    Nigel, are you confusing Naomi Klein with Naomi Wolf? Or is there also a Klein interview out there I was unaware of?

  • ||

    A year ago Ron Paul was predicting a lot of this, and everybody was thinking he was crazy. So much for being a free market loon.

  • ||

    MNG, what we are taking exception to is not some "laissez-faire has never been tried!" objection, but rather that people are claiming that we in fact do have laissez-faire and it caused all our problems.

    It's like saying that Jerri Blank is a virgin, and that's what caused Drake to spread rumors. It's just not true from the get-go, no matter what.

    Jerri Blank: Why did you spread those vicious lies?

    Drake Rogers: Because you didn't spread those vicious thighs.

  • ||

    Get mad at the ... young black men who shoot cabbies

    Not the point of your post or anything, but I thought the whole Cabbies v Danny Glover hubbub was because they were poor tippers. Never heard the line that they were all potential assassins.

    BTW, way to pick your battles, Sgt. Murtaugh.

  • Nigel Watt||

    Nigel, are you confusing Naomi Klein with Naomi Wolf? Or is there also a Klein interview out there I was unaware of?

    Fuck.

  • MNG||

    Epi
    I kind of see what you're saying, but I think then actually it's both the lefties and you libertarians that are kind of doing the same thing.

    The lefties are crazy if they are saying "see we had laissez faire and it did not work" but I don't think its helpful for the libertarians to say in response to criticisms of any policy which aimed to make for less (though perhaps still a level more than a libertarian would want) intervention "well, that wasn't "really" laissez-faire or libertarian so of course it did not work."

    The only way we can make libertarian claims falsifiable and therefore meaningful is to speak of policies and periods with "comparitively less" or "more" government intervention.

    And that's a funny SWC quote which I will now have to look up because I can't remember anyone ever wanting Jerri to spread her thighs (much as she might have offered)...

    And please tell me you are not working today. We really need to get you a union bro. Sit down strikes and everything.

  • ||

    I don't think its helpful for the libertarians to say in response to criticisms of any policy which aimed to make for less (though perhaps still a level more than a libertarian would want) intervention "well, that wasn't "really" laissez-faire or libertarian so of course it did not work."

    Well, what I am saying at least is "don't fucking call this shit laissez-faire in order to distract from your interventionist failures, assholes". While I personally believe true laissez-faire is the best option, I realize it will obviously have down sides as well (there is no perfect solution). I don't want to get into a "real laissez-faire has never been tried" discussion, because that's not what this is about. It's about people claiming that what we have had is laissez-faire, which is outright bullshit.

    And that's a funny SWC quote which I will now have to look up because I can't remember anyone ever wanting Jerri to spread her thighs (much as she might have offered)...

    The Virgin Jerri, dude. One of the funniest episodes.

    "What's the difference between being married and in love and being horny and in the back of a car?"

    And please tell me you are not working today. We really need to get you a union bro. Sit down strikes and everything.

    I'm sitting at my desk, high on Vicodin, hung over, and getting nothing done. But I have to be here! Don't worry, I'm quitting. See? That's a laissez-faire solution, no union necessary.

  • Nigel Watt||

    I'm working today too, but I'm an intern trying to get extra ammo money over winter break.

  • ||

    The worst part about this thing is that the anti free market meme has gained traction. It's more than "genuinely curious," it's genuinely dangerous.

  • ed||

    Nobody really means "laissez-faire capitalism" when she says it, unless she is astonishingly ignorant. The closest we ever came to it was over a hundred years ago. Their gripe is over the mixed economy. They are unhappy about those freedoms that still remain with us.

  • MNG||

    "Peter Gibbons: Well, I generally come in at least fifteen minutes late, ah, I use the side door - that way Lumbergh can't see me, heh heh - and, uh, after that I just sorta space out for about an hour.

    Bob Porter: Da-uh? Space out?

    Peter Gibbons: Yeah, I just stare at my desk; but it looks like I'm working. I do that for probably another hour after lunch, too. I'd say in a given week I probably only do about fifteen minutes of real, actual, work."

  • ||

    Honestly, dude, I have gotten very little work done lately, but that was made possible by the incredible productivity I produced before I got bored. I'm quitting partly because of stupid shit like having to work today, but also from lack of challenging work.

  • MNG||

    It could be worse Epi; I now have to go play with my step kids.

    Did you know in the wild bears devour their step kids? Let's just say if I was on the bear jury for that I would vote for not guilty no matter the evidence...And then I would scatch my butt on a tree for a half an hour...

  • ||

    It could be worse Epi; I now have to go play with my step kids.

    I'll take working over that. I'm going to go get some sushi and take more Vicodin. Man, I wish I could play GTA IV here.

  • robc||

    Six* years ago Ron Paul was predicting a lot of this, and everybody was thinking he was crazy. So much for being a free market loon.

    FTFY>

    *probably more.

  • ||

    I'm going to go get some sushi and take more Vicodin.

    Don't open the trunk!

  • Chubulor Corpulens II||

    A year ago Ron Paul was predicting a lot of this, and everybody was thinking he was crazy. So much for being a free market loon.

    Ron Paul wasn't predicting this. He was predicting runaway inflation...and on a side note, if you predict imminent economic collapse for 30 years you'll probably be right eventually.

  • robc||

    MNG.

    see we had laissez faire and it did not work

    I think I would make the argument that the market did work. It destroyed people who did idiotic things (and all those who didnt stay out of the way of the idiots). That is its job.

    It didnt WORK the way we wanted it to, but that isnt its job.

    The reason people and hanger-bys got destroyed was due to government action, but inefficient investments that seem efficient due to government fiddling are still (fundamentally) inefficient investments and will eventually be shown as such.

  • robc||

    When you are self-employed, you are always working, even when you are wasting time on H&R.

    I got some good billable hours in this morning with no one around to bother me. Talked to a client (who was at home) and set up a series of billable work over the next few weeks too. Good day to be working.

    Happy Boxing Day everyone!

  • robc||

    Ron Paul wasn't predicting this. He was predicting runaway inflation

    Actually, while he may have predicted runaway inflation (give it time), he specifically predicted a boom/bust of massive proportions in the housing market due to Fannie/Freddie/Fed action. In 2002 and 2003 he proposed a bill to remove the Fannie/Freddie guarantees - which would have popped the bubble before it went insanely crazy.

  • Ron Paul from 2002/2003||

    Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

    Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

    Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

  • robc||

    July 16, 2002 is the earliest date of the speech above that I could find. It probably wasnt the first time though.

  • ||

    The Fed's approval ends weeks of uncertainty for GMAC. The company said that it needed 75 percent of its bondholders to agree to change the terms of their investments, but many had balked at the proposed concessions. The company also said that it needed additional investments from other sources to meet the Fed's requirements for the amount of money a bank must have on hand.

    A company spokeswoman declined to comment yesterday on how the company had met those capital requirements.

    The Federal Reserve Board granted GMAC's application on an emergency basis, shortening its normal review process. Emergency approval has become the Fed's routine practice this fall as it offers shelter to companies including investment banks Goldman Sachs and Morgan Stanley and credit card lenders American Express and Discover Financial Services.

    In this case, as in the others, the Fed said the reason was the economic crisis.



    WaPo

    Laissez-faire, baby!

  • ||

    The free market is working just fine.

    Stupid banks are getting burned by bad loans. As they should. Irresponsible borrowers are losing their homes. As they should. Inefficient companies are going out of business. As they should. Unnecessary jobs are getting eliminated. As they should.

    The trouble is that in general the public can't tell the difference between productive labor and pointless make-work anymore, so they feel that when UAW jobs get eliminated that's some kind of "market failure". "OMG, what , people losing their jobs? The horror! "

    Or when home prices go down, that their entitlement to equity preservation has been violated, so that must be a "market failure" too. Or when the stock market declines, etc.

    Where in laisse-faire philosophy is it written that the stock market always goes up, nobody ever loses their job, and housing prices always rise?

  • ||

    Lefty: this was a caused by a lack of regulation on real estate derivatives.

    Libertarian: Gargle bargle you bastard! How dare you blame this on laissez faire capitalism? Don't you know we have a central bank, and the Federal Code is really, really big?

    It's a testimony to the unassailability of the liberal critique here that it provokes such a silly straw man reaction.

  • robc||

    joe,

    Gargle bargle you bastard! How dare you blame this on laissez faire capitalism? Don't you know we have a central bank, and the Federal Code is really, really big?

    The 11:23 post doesnt look anything like what you just wrote.

    this was a caused by a lack of regulation risk assessment on real estate derivatives.

    Fixed.

  • robc||

    I left out a "in part" in my fix.

  • Nigel Watt||

    joe, you're very good at arguing against the libertarians in your head.

  • ||

    As a leftie can I say that this woman is not like on our A list?

    You know if we let you do that, we have to let the right-wingers disavow Rush Limbaugh, right?

    -jcr

  • robc||

    JCR,

    I think Ann Coulter would be the proper trade off.

  • ||

    Observe Naomi Klein's abject distortions of Freidman

    What? You mean Milton wasn't flying down to Chile for polo games with the heads of political prisoners with Augusto every other weekend?

    -jcr

  • ||

    I think Ann Coulter would be the proper trade off.

    Coulter is a troll. Limbaugh is an idiot.

    -jcr

  • ||

    Quite possibly the stupidest article I've read since the election.



    No one doubts that the former bodybuilder and no-holds-barred straight talker, who famously called state legislators "girlie men" during a round of budget negotiations, has created a unique niche for himself in the Republican Party. After leaping from Hollywood to the governor's office in a hotly contested recall election in 2003, Schwarzenegger has emerged remarkably intact from a series of early, high-profile stumbles. Two years after he took office, voters rejected much of his reformist agenda, turning down his proposals to curb state spending and redraw the state's political map.

    Still, the governor seemed to learn his lesson from the experience, and since winning re-election, he has largely reinvented himself as a wholly original blend of global warming advocate, social liberal, and fiscal conservative-a political template, many experts say, that other Republicans would do well to follow.

    In the past few years, Schwarzenegger has steered clear of both major controversy and political orthodoxy. He sued the Bush administration's Environmental Protection Agency over its refusal to allow California to impose cuts in greenhouse emissions and stared down the Big Three automakers when they refused to make their cars more fuel efficient. In 2006, he signed landmark legislation that required California, in the absence of any federal global warming regulation, to lower its carbon emissions to 1990 levels by the year 2020-a 25 percent reduction.

  • ||

    joe, you're very good at arguing against the libertarians in your head.

    joe has many voices in his head. Only a few are libertarian. The clozapine doesn't help.

  • robc||

    Coulter is a troll. Limbaugh is an idiot.

    Proving my point.

    Maybe.

    Klein seems more trollish than idiotic to me.

  • douchedispenser||

    From an earlier posts, in all his hidieous glory:

    Joe:

    And, of course, it wasn't the cheap-money-inflated housing bubble that actually sent the economy into this deep recession, but the MBSs that turned the popping bubble into a cascade of failures throughout the financial system. Funny how it wasn't the Austrian ideologues, but rather the regulator pragmatists, who saw the danger in those.


    My answer:

    According to the arch-sage joe, who has commented on the Austrian School at length, and given the sage, knowledgeable opinion at length that the Austrian School economist are a fringe group of ideologues, that, according to joe, this school of thought has nothing to say about banks being leveraged at a 50 to 1 ratio with the use of modern financial instruments. He has read the literature of Austrian oriented economist, financial gurus and the like, and this subject has never come up. Never.

    What is the Austrian School most known for? I'll give befuddled joe a hint, a critical regard of a little matter with the initials, FRB. The first word being 'fractional', the second word being 'reserve', and the third word being 'banking'. So, according to joe, the Austrian School has nothing to say about a matter very similar, the misapplication of material ownership used in leveraging modern financial instruments, and according to joe, the Austrians have never warned anyone of the problems inherent in the current Wall Street set up. Bravo joe, bravo.

    BTW, you can't really completely parse out the housing bubble from MBSs(mortgage backed securities) now can you? Dumbass.

  • Fluffy||

    The lefties are crazy if they are saying "see we had laissez faire and it did not work" but I don't think its helpful for the libertarians to say in response to criticisms of any policy which aimed to make for less (though perhaps still a level more than a libertarian would want) intervention "well, that wasn't "really" laissez-faire or libertarian so of course it did not work."

    Lefty: this was a caused by a lack of regulation on real estate derivatives.

    Libertarian: Gargle bargle you bastard! How dare you blame this on laissez faire capitalism? Don't you know we have a central bank, and the Federal Code is really, really big?


    MNG and Joe:

    No, that's not what I'm talking about.

    I'm talking about people who themselves acknowledge the impact of monetary policy and fiscal policy on the bubble, but then say that the current crisis is the fault of laissez-faire capitalism.

    If someone says, "This crisis is the fault of evil speculators! The Federal Reserve had nothing to do with it! Fiscal policy had nothing to do with it!" they have made an internally consistent statement.

    If someone says, "The Federal Reserve helped cause this crisis by lowering interest rates too far after 9/11! And the Bush Administration helped cause this crisis by running massively stimulative deficits! Damn you laissez-faire capitalism!" they have NOT made an internally consistent statement.

    If laissez-faire capitalism caused this crisis, it did so by some means other than the magic of compound French verbs. If, while searching about for a cause of the crisis, you specifically highlight the role of non-laissez-faire institutions, it is absurd to then proclaim that laissez-faire was to blame.

    I'm not saying that every single critique of laissez-faire capitalism can be dismissed in this way. I'm singling out the critiques that purport to be of laissez-faire, but even by their own internal standards are not about laissez-faire at all.

  • douchedispenser||

    my favorite part:

    Funny how it wasn't the Austrian ideologues, but rather the regulator pragmatists, who saw the danger in those.

    That old trope seventy years and running from the black ink stained set of the earnest regulator
    as boy scout.

    Junior Scout Regulator: I'm back from the trenches, sir!

    Eagle Scout Regulator: You look pretty banged up there, fella. Did you run into some high priced, corporate lawyers.

    Junior Scout Regulator: Yes, sir! The bent my arm back 'til it broke, but I remembered my lessons from my First Aid Merit Badge studies and made a sling!

    Eagle Scout Regulator: Good job, young man. You've earned another badge for sure.

    As if anyone here has never dealt with property and housing inspectors. Smuck.

  • ||

    Fluffy,

    I will give you $1000 for every example you can find in the archives of me poo-pooing the idea that Greenspan's cheap money Fed policy helped inflate the bubble. There you go, towards the top right of the page. Have at it.

    At the end of the day, I'm going to be on the hook for zero (0) dollars, because not only I have never, ever, not even once, made such an argument, but I have in fact stated, on multiple occasions, exactly the opposite. In fact, liberals like me were talking trash about Greenspan years ago, when Reason was lionizing him as the great maestro who understood free markets, was an acolyte of Ayn Rand, and held back those terrible, terrible regulators in Congress, who might have made the financial services industry less dynamic. (ohnoes!)

    There is nothing remotely contradictory about saying that the Fed's cheap money policy helped inflate the housing bubble, and saying that a lack of regulation on mortgage lending mortgage securitization helped bring on the financial-sector collapse. What you did upthread is exactly what Welch is accusing Huffington is doing - dividing up the world simplistically into laissez faire conservatives and pro-government liberals, without taking into account reality and complexity.

  • ||

    Nigel,

    I'm also very good at arguing against the libertarians on my monitor. Such as Episiarch, who's Nigel, this entire bailout episode is an example of projected blame. The fact that people can actually say that deregulation (!) caused this mess is so abjectly moronic that it's stunning to see the assertion made...yet it is made constantly. It's the equivalent of the Salem witch trials. The devil free market caused it! SATAN! was the inspiration for my comment.

  • ||

    Obsessed troll is obsessed.

    Funny how it wasn't the Austrian ideologues, but rather the regulator pragmatists, who saw the danger in those.

    Now, let's zoom back a little further, and see what the word "those" refers to:

    And, of course, it wasn't the cheap-money-inflated housing bubble that actually sent the economy into this deep recession, but the MBSs that turned the popping bubble into a cascade of failures throughout the financial system. Funny how it wasn't the Austrian ideologues, but rather the regulator pragmatists, who saw the danger in those.

    Yep, there I am, talking about reserve banking. Oh, wait.

    Dishonest cultist is dishonest.

  • a voice in joe\'s head||

    There, now I can have my cake and eat it too. That'll show fluffy!

  • dhex||

    unrelated thought experiment:

    if we removed the joe v. [people who cannot resist getting into dickfights with joe] series of exchanges from hit and run, would it improve or damage the comments section? or would it simply make the section smaller and result in less hits?

    my guess: it would be less vitriolic, but also less dynamic. it would also possibly serve as more of a lightning rod for inter-fringe dickfights, i.e. rothbardians v. whomever or whatever taste tribe subsets are punching each other in the balls that particular week.

    that said, i don't fucking get it.

  • ||

    Regulators forseeing the crisis, quashed by ideologues:

    http://www.slate.com/id/2182709/

    Bond rating manager on the failure of the private-sector ratings system, that Dishonest Cultist wishes to see implemented for the food supply.

    http://oversight.house.gov/documents/20081022102804.pdf

  • ||

    a voice in joe's head | December 26, 2008, 2:54pm | #

    There, now I can have my cake and eat it too. That'll show fluffy!


    I trust that a counterargument would have been made, if you were capable of putting one together.

  • ||

    What about the Federal Reserve? Reach into your pants and find your long lost testicles, then you will realize it is possible to critisize the monetary system as a caust of booms and busts.

    Until libertarians can get over their inferiority complex over Keynesian eocnomics we will get nowhere fast.

  • ||

    Noted left-wing liberal Christopher Cox joins noted left-wing liberal Alan Greenspan in acknowledging that the cult's belief system is in tatters:

    Voluntary regulation doesn't work, SEC's Cox says
    By Rex Nutting
    Last update: 10:32 a.m. EDT Oct. 23, 2008Comments: 13
    WASHINGTON (MarketWatch) -- Financial regulators made "fateful mistakes" that helped drive the global financial system to the brink, said Chris Cox, chairman of the Securities and Exchange Commission, in congressional testimony Thursday. Cox said he and other regulators have learned many lessons, chiefly that "voluntary regulation does not work." Cox urged Congress to fill "regulatory gaps" that are still putting the economy at risk. "The lessons of the credit crisis all point to the need for strong and effective regulation, but without major holes or gaps." Cox said Congress should appoint a select committee to address the challenges of regulation on a comprehensive basis

  • douchedispenser||

    joe thinks quoting himself makes his spacious argument appear even better! It doesn't get any more awesome that that.

    Cox and Greenspan? Can you spell C - Y - A?

  • ||

    http://www.nytimes.com/2008/10/09/business/economy/09greenspan.html?pagewanted=4&bl&ei=5087&en=ce240ad3162ac5ac&ex=1223697600

    This one is the killer. It names the people and agencies who proposed regulations on mortgage derivatives, and those who helped to kill it.

    You would really have to go out of your way to understand that there was a conscious decision made not regulations MBSs, but there are none so blind as those who will not see.

  • ||

    joe thinks quoting himself makes his spacious argument appear even better! It doesn't get any more awesome that that.

    Still no counter-argument, which can only be taken as an acknowledgment that yes, you did misrepresent what I wrote.

    BTW, are you the same silly cultist who insisted, over and over again, that Keynesians believe in running deficits during economic boom periods? It's tough to tell, because you have so much confidence in your own honesty and the strength of your arguments that you won't use the same handle twice.

  • douchedispenser||

    With the Slate and Cox/Greenspan articles, joe is going over old well treaded grounds we have reduced his arguments to shambles in many, many previous threads. He is desperately trying to waste our time while he waits for the BostonGlobe/NYT/NPR tell him what his next step will be.

  • douchedispenser||


    This one is the killer. It names the people and agencies who proposed regulations on mortgage derivatives, and those who helped to kill it.

    You would really have to go out of your way to understand that there was a conscious decision made not regulations MBSs, but there are none so blind as those who will not see.


    Joe, why were those mortgages securitized in the first place?

  • ||

    You think I'm making this up?

    ref | December 23, 2008, 4:20pm | #

    Not missing anything, this school of thought, the hardcore religious Keynesians, really does believe you can roll (debt) over into perpetuity.


    Yep, same guy, thinks that Keynesians oppose paying off debt, regardless of circumstances.

  • douchedispenser||

    BTW, are you the same silly cultist who insisted, over and over again, that Keynesians believe in running deficits during economic boom periods? It's tough to tell, because you have so much confidence in your own honesty and the strength of your arguments that you won't use the same handle twice.

    Yes, and please reiterate your argument supporting what our German friends call 'zee vulgar Keynesianism'.

  • ||

    Joe, why were those mortgages securitized in the first place?

    Because it was believed that doing so would reduce exposure to the risk of individual mortgages defaulting. How do you manage not to know this on your own?

  • ||

    "BTW, are you the same silly cultist who insisted, over and over again, that Keynesians believe in running deficits during economic boom periods?...

    Yes,"

    LoL. There you have it.

    Buh bye, son.

  • robc||

    I still dont think the MBSs were a problem. People over valued them, they were wrong, they failed*. Why did we need a regulation when the market handled it perfectly?

    *you know, if they hadnt been bailed out. The only problem in this whole thing is the government getting involved, seems like a little more laissez-faire would have handled this the right away.

  • ||

    You don't know why mortgage were securitized, and you don't understand Keynesian economic theory well enough to even realize that paying down debt during boom periods is fundamental to its definition, but you consider yourself to be some sort of expert on economics?

    You are a very silly person.

  • robc||

    joe,

    Just to be picky, "rolling debt into perpetuity" != "running deficit during boom".

    There may be more context to the quote, but the bit you quoted doesnt say that.

  • ||

    Why did we need a regulation when the market handled it perfectly?

    Because cascading failures across the economic system sending the economy into a depression is not something most of us consider an acceptable outcome.

  • ||

    robc,

    Just to be picky, "rolling debt into perpetuity" != "running deficit during boom".

    First, that's why I asked him, just to make sure that's what he was saying, and he agreed.

    Second, even "rolling debt into perpetuity" would be a profound misstatement of Keynesian theory. Keynesians believe in paying down debt during boom periods as a stabilizing measure (comparable to Monetarists' support for raising interest rates), and Legend In His Own Mind doesn't even realize that.

  • robc||

    joe,

    Because cascading failures across the economic system sending the economy into a depression is not something most of us consider an acceptable outcome.

    There is no such thing as an unacceptable outcome, only unacceptable means.

    Depressions might be part of the natural business cycle. Not as common as recessions but probably still necessary.

  • douchedispenser||

    oh, what would a good joe thread be without his sop of selectively quoting others -- here is the quote in full:

    Not missing anything, this school of thought, the hardcore religious Keynesians, really does believe you can roll it over into perpetuity. If Krugman believes otherwise, it is funny he has never let on by showing how debt will eventually get paid down. But he won the Nobel Prize, never mind the details!

    Later on I explained how the Keynes means of managing debt is a vicious cycle even if their intention is to pay down a debt during an upturn.

    So, who is being dishonest?

    You really want to go back to a thread where you had your ass continually handed to you day after day? Oh, joe, silly, silly, joe.

  • Irulan||

    And always, he fought the temptation to choose a clear, safe course, warning "That path leads ever down into stagnation."

  • alan||

    joe | December 26, 2008, 3:30pm | #
    You don't know why mortgage were securitized, and you don't understand Keynesian economic theory well enough to even realize that paying down debt during boom periods is fundamental to its definition, but you consider yourself to be some sort of expert on economics?

    You are a very silly person.


    You don't think anyone sees through your cheap rhetorical stunts? That is actually why I think you are so much fun.

    I was asking you if you knew because a correct answer destroys your thesis.

  • ||

    Ha ha, "alan."

    Whoopsie.

  • alan||

    and yes, that was on purpose because someone else asked if I was the one screwing with you.

  • ||

    So, who is being dishonest??

    You are being dishonest. As your full quote demonstrates, you really, really were saying that Keynesians believe in constantly running debt and not repaying it, and I was in no way distorting your point. No, you don't even understand what Keynesian economics is, and you presume to lecture people about it.

    BTW, Paul Krugman, like just about everyone with the slightest connection to Keynesian economics, spent the 1990s talking about paying down debt, and calling for the surpluses to be spent that way. Once again, how does somebody who conceives of himself as being something of an expert of economics not know this?

    You really want to go back to a thread where you had your ass continually handed to you day after day? Oh, joe, silly, silly, joe.

    Um, yeah, you mean the one where VM, the guy who teaches economics at the college level, says you don't know what you're talking about? I'd love to go back to that thread. You took an awesome pounding, and did it with your usual lack of grace.

    "alan."

    heh

  • ||

    And so, we have alan the troll, getting caught misrepresenting what I wrote earlier, and being proven wrong. Then, we have him claiming that I misrepresented what he wrote, and being proven wrong about that, too.

    I wait with baited breath to see how he tries to come at me next.

    Best. Punching bag. Ever.

  • robc||

    joe,

    With as many keynesians in the congress and white house as we have had the last 50 years, how come they havent paid down any of the debt? There have been plenty of boom times during that period.

    They may CLAIM that they would pay down the debt (and I have no doubt Krugman was saying that during the 90s), but they dont do it. Sort of like the GOP CLAIMING they favor small government.

  • ||

    Paul Krugman, December 22, 2006:

    Basic fiscal principles tell us that the government should run budget deficits only when it faces unusually high expenses, mainly during wartime. In other periods it should try to run a surplus, paying down its debt.

    Duh. Krugman's a Keynesian. Anybody with a even a passing familiarity with economic theories knows what he would say about public debt, and when we should run deficits, and when we should repay them.

    But the mindset of a cultist isn't like an ordinary person. It's the fundamental nature of a cultist to be very highly informed about the cult's belief system, but immensely, because deliberately, misinformed about everything else.

  • alan||


    BTW, Paul Krugman, like just about everyone with the slightest connection to Keynesian economics, spent the 1990s talking about paying down debt, and calling for the surpluses to be spent that way. Once again, how does somebody who conceives of himself as being something of an expert of economics not know this?


    Paying off the debt during the boom would have done what, joe? When those
    consequences are reached what would the Keynesians have us do right over again?

    I never said the Keynesians didn't believe they had a means of accomplishing a pay off of debts.

  • ||

    robc,

    With as many keynesians in the congress and white house as we have had the last 50 years, how come they havent paid down any of the debt? They paid it down to the tune of a quarter trillion dollars in the late 1990s, and Al Gore was proposing to use 1/2 of the projected surpluses to pay it down further.

    As for why that is the sole example, Johnson got us into a large and expensive war that prevented surpluses from materializing, and Reagan decided to pass an enormous tax cut during his good times, rather than adopt the deficit hawkishness that Keynes recommended.

  • alan||

    Krugman is talking about doubling down on our current debts which is consistent with his theoretical model, explain to us, how he plans to have that paid off?

    You can't. Thus the giant burning hole in your dear leader's plans.

  • ||

    alan,

    Paying off the debt during the boom would have done what, joe??

    Asking that question is an implicit acknowledgment that you realize you were wrong about Keynesianism, but since you've been a such a cocksucker to me, I want you to make it explicit before I'll answer you.

    Are you now acknowledging that you were wrong, and that Keynesians actually do support paying down public debt during economic booms?

    You answer my question, and then I'll answer yours.

  • alan||

    But the mindset of a cultist isn't like an ordinary person. It's the fundamental nature of a cultist to be very highly informed about the cult's belief system, but immensely, because deliberately, misinformed about everything else.

    Yeah, you are just a freakin' genius at psychology as you are economics. How do we handle such a powerful detractor.

  • Kolohe||

    To be fair between Sep 30, 1998 ($3,733,864,472,163.53) and Sep 29, 2000, ($3,405,303,490,221.20), $328,560,981,942.33 of public debt was retired.

  • ||

    Krugman is talking about doubling down on our current debts which is consistent with his theoretical model, explain to us, how he plans to have that paid off?

    Actually, there's a very simple and obvious answer to this.

    And when you answer my question, I'll let you know what it is.

  • alan||

    What I thought, you are stumped, nice little squirm maneuver I grant you.

  • ||

    robc,

    I'll also point out that we haven't had Keynesian's in office for the past fifty years; we've had politicians. Some of them have followed more Keynesian policies than others, but they've all been more in thrall to political motives than to adherence to a set of economic principles.

  • Kolohe||

    Al Gore was proposing to use 1/2 of the projected surpluses to pay it down further.

    IF you look at FY2001 budget docs (the last provided by the Clinton adminisration) most of those surpluses were vaporware from the get go, based on one-off cap gains from the tech boom and unrealistic economic forecasts (2-3% growth ad infinitum)

    And I'll be suprised if we can ever go twenty years without getting into a small to mid sized war ever again. (we haven't for the entire history of the US)

  • ||

    OK, the wife wants to play with the new Wii, so I'm going to have bring this little session of slapping alan silly to an end.

    alan, your implicit acknowledgment that you're full of shit, that you don't understand what Keynesianism is (nevermind having a meaningful critique of it), and that I accurately pointed out your intellectual failure will have to do, since you obviously don't have the class to lose graciously. Let this be a lesson to you; keep a civil tongue in your head, and don't go out on a limb when you don't really understand the subject matter.

    So, to answer your questions:

    Paying off the debt during the boom would have done what, joe? It would have reduced the public debt, lowered the long-term cost of interest on that debt, freed up bonding capacity for future downturns, and served as a brake to prevent the economy from overheating, much like raising interest rates is intended to do.

    When those consequences are reached what would the Keynesians have us do right over again? Since the business cycle is an eternal, integral part of how a capitalist economy operates, he would have us engage in deficit spending as a stimulus matter during the next downturn, because - once again - the fundamental principle behind Keynesian economics is that the government should run deficits to stimulate the economy during downturn, then pay down that debt during boom times.

    Krugman is talking about doubling down on our current debts which is consistent with his theoretical model, explain to us, how he plans to have that paid off?

    By running surpluses during the boom times which will follow a recovery, and using them to bring the debt under control.

  • ||

    dhex,

    The seasoned here speak their piece and move on when dealing with joe. He's smart, he's a good and devious debater, and he's a righteous prick. There is no point in arguing with him because he will never concede the other guy has a point, even when the other guy does.

    As for his favorite tactics- "that's not what I said, why don't you try responding to what I said, that's not what I want to talk about, that's not what I'm talking about, stop being so dickhurt you fucking little douchebag (and by the way your mom blew me last night)-" there's no point in responding. He says things around here that he knows will piss people off- in fact, sometimes it's like he calculates exactly the angle that he needs to take in order to milk the most venom from people here who already hate him for being H&R's resident attention whore for the past half decade.

    He never capitulates, he never admits mistake or misstep or defeat, he never acknowledges points of view other than his own as valid, and he's a genuine misanthropic son of a bitch with infinite time to argue on the Internet. I've been a regular lurker here for years, and I honestly just killfilter him, because he's ruined more threads than I care to recall since 2004.

  • alan||

    Okay joe, I'll go first. Debt is never paid back in the Keynesian scheme, it is monetized instead. Otherwise any attempt to pay it back through taxation
    hits the economy. Krugman does not distinguish himself from other Keynesians in this respect.

  • ||

    Heh, just saw alan's 4:00 comment.

    Ha ha.

    Uh, yeah, dude who doesn't know that Keynesians like to run deficits during slowdowns and pay down debt during booms: I'm just too intimidated by your impossible questions to answer.

    Except, the opposite.

    Gotta go suck at cartoon bowling now.

  • alan||

    oh gee, all that effort at flattering me, joe, you truly didn't have to do so when a simple truthful answer would have been enough.

    It would have reduced the public debt, lowered the long-term cost of interest on that debt, freed up bonding capacity for future downturns, and served as a brake to prevent the economy from overheating, much like raising interest rates is intended to do.

    Love it, love it. The fantasies of the Keynsian mind that they could accomplish all of this without train wrecking the economy. He even added that favorite buzz word 'overheating' into the mix, such a doll. Since Keynesians consider savings to be mere 'leakage', they never consider the possibility that people may pocket the excess cash for a rainy day or to build an enterprise at a future date of viability, nor the deflationary (in the common sense) effects of increased productivity, but never mind, they have a full proof model. Get joe to argue continuously and berate anyone who disagrees with them.

  • robc||

    robc,

    They paid it down to the tune of a quarter trillion dollars in the late 1990s, and Al Gore was proposing to use 1/2 of the projected surpluses to pay it down further.

    Wrong!!!! We have not had a single year in which the national debt decreased since the 1950s. Clinton got close. He even got a projected surplus, but he did not pay down $250B. He didnt pay down a single dollar.

    Repeat after me (and I will go grab the numbers to prove it if you dont believe it - the Clinton surplus myth pisses me off, he tried, but failed):

    EVERY year of the Clinton presidency the federal government ran a deficit.

    Come on you can do it.

  • robc||

    joe,

    they've all been more in thrall to political motives than to adherence to a set of economic principles.

    We are in 100% agreement there.

    It applies to all kinds of principles.


    Power >>>> Principle for most of those bastards.

  • robc||

    Kolohe,

    I dont know where you get your numbers, on

    9/30/98 the debt was 5.5T
    9/30/00 it was 5.7T

    I got my numbers from the treasury dept, I think.

  • ||

    and Reagan decided to pass an enormous tax cut during his good times

    Those were good times, economically speaking, in 1981?

  • robc||

    US Dept of Treasury, Bureau of the Public Debt is the source of my numbers.

  • robc||

    The last full fiscal year of the Clinton Presidency, the debt went from 5.656T to 5.674T which is a tiny increase, the smallest since 73-74. A suplus it aint.

  • Kolohe||

    robc-
    I got my numbers from the debt to the penny page. I was looking just at 'debt held by the public' as that's the one congress and the prez have a direct effect on. The unified debt (your numbers) include SS, which is formulatically designed to run a 'surplus' and thus makes the unified budget look a little better (a kludge that has been in effect since Reagan iirc)

    But, you are essentially correct. If you use unified budget #'s FY99 and FY 00 both had surpluses. If you use only discretionary, only FY 00 had a surplus. Part of the decline in public debt in the late 90's was also rolling over high interest debt accumulated in the 80's and prior at the (then) historically low interest rates of the time.

  • robc||

    I was responding to joe at 4:25 not myself. Sigh.

  • robc||

    Kolohe,

    I was wondering if that was what you were using, the numbers were way too small. I also include Intergovernmental Holdings, as they are also federal debts.

    The Dept of Treasury seems to consider the total the "right" number. I go with them.

  • robc||

    http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

    For those wanting to do their own debt research.

  • robc||

    Of course, with GAAP, we didnt come anywhere near a surplus anytime recently.

    But that is a whole other issue.

  • Kolohe||

    debt to the penny page.

    Put in Jan 1, 1998 to Jan 20, 2001. (2000 days is the max searchable period at any given time.). For this period, end of each FY shows the split between debt held by the public and intergovernmental.

  • Whelk in a supernova||

    Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:

    Attn Dept G
    Bureau Of the Public Debt
    P. O. Box 2188
    Parkersburg, WV 26106-2188

  • Kolohe||

    I also include Intergovernmental Holdings, as they are also federal debts.

    Yes, but are basically useless in a "cLinton g0r3 rulz! Bu$h is the sux0r" arguement.

  • alan||

    juris imprudent | December 26, 2008, 4:29pm | #
    and Reagan decided to pass an enormous tax cut during his good times

    Those were good times, economically speaking, in 1981?


    My bathroom reading material for the last three weeks has been Robert Bartley's Seven Fat Years, a good book, I read back in the day, and still recommend it. He documents a lot of the weasel activities of the political establishment, including blaming an '81 downturn on a tax cut plan that had not even passed at that point, but that didn't stop Democrats and NYT from making shit up.

    My favorite chapter is the one on the S&L Debacle and it goes like this:

    1. politically connected business man gets into financial trouble and calls his congress critter to get regulators to back off while also syphoning a bailout from the tax payers.

    2. congresscritter blames Laissez-Faire.

    3. A concert of Washington's Angelical Choir sings 'Amen.'

    DeConcini, Glenn, Frank, only the names change over time.

  • ||

    This conversation is meaningless without numbers.

    I bowled a 149.

  • robc||

    Kolohe,

    Yes, but are basically useless in a "cLinton g0r3 rulz! Bu$h is the sux0r" arguement.

    Nah, I have used my numbers on fark to shut people up a bunch of times. They generally dont know enough to look up details. :)

    Of course, Clinton still looks brilliant next to Bush on those numbers.

  • ||

    Love it, love it. The fantasies of the Keynsian mind that they could accomplish all of this without train wrecking the economy. He even added that favorite buzz word 'overheating' into the mix, such a doll. Since Keynesians consider savings to be mere 'leakage', they never consider the possibility that people may pocket the excess cash for a rainy day or to build an enterprise at a future date of viability, nor the deflationary (in the common sense) effects of increased productivity, but never mind, they have a full proof model.

    Gee, now who thinks it's ok to roll debt over forever without paying it off?

    BTW, it's "fool-proof."

  • robc||

    I bowled a 149.

    Its Wii bowling, you should do better than real life.

    Oh wait...maybe that is.

  • ||

    robc,

    He didnt pay down a single dollar.
    You are incorrect. Kolohe can explain why.

  • robc||

    joe,

    Actually, I think Kolohe agreed with me, sorta. The total number is the "correct"* one. The Dept of Treasury says so. :)

    *its not correct either, but I dont think any two people could agree on the right method for determining the correct one.

  • ||

    149 would be the best real-life game in at least a decade for me.

    Hey, I don't bowl very often!

  • Kolohe||

    Here's another set of numbers:

    Aug 1, 2008 Debt held by public 5,400,553,022,675.36

    Dec 24, 2008 debt held by public:
    6,359,775,642,515.06

    nearly $1 trillion dollars in a little under 4 months without nearly one penny of 'stimulus'

    also overdue:

    "OK, the wife wants to play with the new Wii,"

    You got surgery over xmas? Now *that's* progresssive.

  • ||

    robc,

    The "total public debt" figure includes the same those accounting-fiction "Social Security Bonds" that, in other circumstances, you agree aren't actually assets and, therefore, don't actually represent a debt.

    If you look at Social Security as the pay-as-you-go program it actually is, we ran a brief surplus.

  • robc||

    On 1/1/1835 our debt hit a end of fiscal year minimum:

    $33,733.05

    Here is to Andrew Jackson, you racist fuck. At least he knew how to deal with banks and the debt.

  • alan||

    Gee, now who thinks it's ok to roll debt over forever without paying it off?

    Miss the point in several respects. One, it isn't a good idea to start a cycle of debt in the first place. Number two, the boom times never last so long that the debt can actually be paid off, and committed expenditure for future liabilaties get met.
    Three. Increasing taxes in a boom time will end that boom. Either you are a supply sider who believes that lowering taxes increases revenue (there are limited specific examples of this, but nowhere near what is needed to cover your debt) or most likely you moneterize that debt and negatively affect everyone's spending power.

    I guess Keynesians don't have to worry about the trade offs of economics when they claim you can put it all on the backs of some poor son of a bitch in the future.



    BTW, it's "fool-proof."


    BTW, I don't give a rat's ass.

  • ||

    He even added that favorite buzz word 'overheating' into the mix, such a doll.

    OK, ok, let me get this straight: the "Austrian" guy - a believer in a school of thought who's very raison d'etre is concern about the dangers of debt-fueled economic booms setting the economy up for inflation and eventual crashes - is chiding me for saying that, in a situation in which there is an economic boom which follows the accumulation of considerable public debt, it is wise to pay down that debt, and that curtailing some of that boom is a good thing.

    Good Lord.

  • robc||

    The fact that the SCOTUS and the Treasury treat SS stuff differently isnt my problem. I go with the flow. Legally, the SCOTUS rules. Debt determing, US Treasury gets to make the call. Who Im I to argue with them, just because they disagree. :) After all, you convinced me the other day that groups that get to decree these kind of things. Im just agreeing with you. :)

    But not on the recession, that isnt a government branch. :)

  • ||

    One, it isn't a good idea to start a cycle of debt in the first place.

    Is this the part where I cross myself three times, or the part where I kneel?

    Number two, the boom times never last so long that the debt can actually be paid off, and committed expenditure for future liabilaties get met.

    Three. Increasing taxes in a boom time will end that boom.


    You know, like in the 1990s. Remember all the debt, and the soup kitchens?

    BTW, I don't give a rat's ass.

    Yes, being shown to be wrong (like, for example, about knowing the principles of Keynesianism, or misstating what I write) just isn't something you worry about. You just go blithely along, as if you haven't been proven wrong.

  • robc||

    the boom times never last so long that the debt can actually be paid off

    The guy on the $20 disagrees. Well, he reduced it by 3 orders of magnitude, which seems close enough for me. That is what 99.9% of the debt roughly he got rid of?

  • ||

    Three. Increasing taxes in a boom time will end that boom.

    Under normal circumstances, this following would go without saying, but since this austrian alan we're talking about:

    You don't have to raise taxes for receipts to go up between the trough and boom of a business cycle.

  • robc||

    BTW,

    I have made 2 cool sci-fi quotes in this thread with nary a response. Someone is slacking.

  • Kolohe||


    Three. Increasing taxes in a boom time will end that boom.

    You know, like in the 1990s. Remember all the debt, and the soup kitchens?


    Were there tax increases in 'the boom times?' There were tax increases in '92 (passed in '91) just before the boom and in '93 as the economy was receovering. But iirc, there were no further tax increases; the opposite in fact occured. for instance, the cap gains got cut in either '95 and '96 (and there was the subsequent correlating if not causitive boom). Both Gore and Bush ran on cutting taxes, just differed on who would get cut. (Gore, iirc did not advocate raising taxes)

  • ||

    Peace offering:

    There are some important insights that have come out of the Austrian school - like the tendency of the central banks to constantly overshoot.

    Gas! Brakes! Gas! Brakes! Limiting their discretion is an idea that has a lot going for it.

  • ||

    Kolohe,

    There was a tax increase in 1993. It was - picture Darth Vader's voice here - THE LARGEST TAX INCREASE IN AMERICAN HISTORY.

  • robc||

    joe,

    Limiting their discretion is an idea that has a lot going for it.

    You know what the easiest way to limit their discretion is?

  • alan||

    Krugman is talking about doubling down on our current debts which is consistent with his theoretical model, explain to us, how he plans to have that paid off?

    By running surpluses during the boom times which will follow a recovery, and using them to bring the debt under control.


    Who the fuck believes the debts the congress is stacking up will get paid off?

    I for one don't.

    The actions of German, Chinese and Japanese bankers of late would lend credence that they believe we have reached the end of the line on monetizing our debts.

    I would be interested in how many Reasonites believe this is going to happen.

  • robc||

    When was the last time any nation of reasonable size paid off their national debt?

    And I would include Andy Jackson style close enoughs in that.

  • Kolohe||

    There was a tax increase in 1993.

    yes, i said that. Was it an increase in 'boom times'? Was there in fact, any susquent proposal from either the Clinton adminstration or the Gore campaign to raise taxes to accelerate paying down the debt during the prolonged economic growth from Jan '93 to early 2000?

  • alan||

    | December 26, 2008, 4:58pm | #
    He even added that favorite buzz word 'overheating' into the mix, such a doll.

    OK, ok, let me get this straight: the "Austrian" guy - a believer in a school of thought who's very raison d'etre is concern about the dangers of debt-fueled economic booms setting the economy up for inflation and eventual crashes - is chiding me for saying that, in a situation in which there is an economic boom which follows the accumulation of considerable public debt, it is wise to pay down that debt, and that curtailing some of that boom is a good thing.

    Good Lord.


    Try to reason in a straight line, joe. It isn't difficult. I put at least two qualifying sentences in there so you would not make the mistake that you made. You did anyway, despite my generosity.

  • alan||

    robc | December 26, 2008, 5:13pm | #
    When was the last time any nation of reasonable size paid off their national debt?

    And I would include Andy Jackson style close enoughs in that.


    When was the last time there was a nation as leveraged with debt as ours, and what were the events that occurred after that?

  • ||

    joe sez is chiding me for saying that

    I thought the chiding was more along the lines of "yeah, about like Republicans talk up small govt" - i.e. the delta between words and acts.

  • robc||

    When was the last time there was a nation as leveraged with debt as ours, and what were the events that occurred after that?

    There are a ton of countries right now with a higher debt/gdp ratio than us.

    Some suck, some are doing okay.

  • ||

    Oh, I see what Kolohe's saying.

    I guess you could divide the part of the graph where the line thingy goes up into "recovery" and "boom," and the tax hikes were in the recovery time.

    On a practical level, though, I find it tough to believe that a tax hike when the economy is at its strongest will do more damage than one when it is still getting its feet under it.

  • ||

    Who the fuck believes the debts the congress is stacking up will get paid off?

    I for one don't.


    If you want to go down that road, who believes we're going to abolish the Fed, go to a hard currency, or allow private coinage?

    Methinks the "political realism" test comes down pretty definitively against the Austrians.

  • ||

    On the general point, though, that it's a lot easier to pass stimulus in tough times than to take away the punch bowl when the party's rocking, I'll acknowledge that there's a half a point in there.

  • alan||

    robc | December 26, 2008, 5:23pm | #
    When was the last time there was a nation as leveraged with debt as ours, and what were the events that occurred after that?

    There are a ton of countries right now with a higher debt/gdp ratio than us.

    Some suck, some are doing okay.


    I was thinking Argentina, martial law, Falklands War, but that is probably a better answer given what is occurring in Iceland.

  • alan||

    joe | December 26, 2008, 5:25pm | #
    Who the fuck believes the debts the congress is stacking up will get paid off?

    I for one don't.

    If you want to go down that road, who believes we're going to abolish the Fed, go to a hard currency, or allow private coinage?

    Methinks the "political realism" test comes down pretty definitively against the Austrians.


    I believe there isn't a chance in hell we will see an abolishment of the Fed, hard currency or legal private coinage in our life times.

    However, that phrase, 'we owe it to ourselves.', given demographics and the response of other players to the current crises, the 'we' in that phrase means 'us' and not 'them' who already nursed that cash cow.

  • MNG||

    "Who the fuck believes the debts the congress is stacking up will get paid off?"

    I wonder for the libertarians here, what would be better, a government who cuts taxes while not cutting spending and grows a debt or one that raises taxes and reduces a deficet?

    I know, I know, cutting taxes always results in more actual revenue and so is always the right idea, but let's just, er, "pretend."

  • alan||

    I wonder for the libertarians here, what would be better, a government who cuts taxes while not cutting spending and grows a debt or one that raises taxes and reduces a deficet?

    I know, I know, cutting taxes always results in more actual revenue and so is always the right idea, but let's just, er, "pretend."


    I will take option b) one that raises taxes and reduces a deficet, in that line up of choices.

    The nature of debts and 'crowding out' is probably where Austrians and Supply-Siders disagree most, even though I recommended a Supply-Siders book above, I am not of that school of thought.

  • ||

    a government who cuts taxes while not cutting spending and grows a debt or one that raises taxes and reduces a deficet?

    Why the hell isn't cutting spending* even an option? Just too fucking unthinkable?



    * as in really cutting spending, and not the fake "we cut the estimate of what we were going to spend but still spent more than last year" spending cuts

  • Lefiti||

    There is no crisis. It's just a bunch of crazy lefties dissing captalism.

  • ||

    As a Libertarian, I leave open the possibility that we may need a few rules, but I also think that we have many, many more than we need, and that the vast majority of them were shots in the dark -- never proven to be effective before put on the books, and never required to be effective to stay on the books. I think we have to be fairly ruthless in getting rid of rules that aren't necessary and/or effective. I think many people would be surprised at the amount of self-regulation that would bring "spontaneous order" to truly free markets -- whether of goods and services OR of ideas.

    Nobody wants to relinquish command-and-control thoroughly enough or long enough to really see what the truth might be. The human capacity for denial and for staying in one's perceived "safe zone," however uncomfortable or even dangerous it might actually be on an absolute scale -- is breathtaking.

  • ||

    Trying to distinguish between the dogmatic extremes of the libertarian movement and those who understand that rigid, uncompromising orthodoxy might not work in all cases seems to be quite the problem for anyone associated with the word.

  • Lefiti||

    One thing these halfwit commie refugees never seem to understand is that we don't worship the economic system here. If deregulation dosen't work, we fucking reregulate. We use government intervention as needed because no assinine dogma forbids it. Harsanyi can shove his commie-style economic determinism up his ass.

  • ||

    If I can't get to work because my car is broken, and I borrow $5000 to fix it, I have to pay it back later.

    Those payments, however, don't 'crowd out' spending I would have otherwise have engaged in. If I didn't get my car working, I wouldn't be making any money, and I wouldn't be doing any spending.

    I end up spending MORE during the period of time when I'm repaying the loan, not even counting the loan payments themselves, than I would have done if I hadn't gone into debt, because I am actually making some money.

  • alan||

    Congratulations, you have successfully described the process of a loan.

    I end up spending MORE during the period of time when I'm repaying the loan, not even counting the loan payments themselves, than I would have done if I hadn't gone into debt, because I am actually making some money.

    So, now, with fanny and freddie, joe is too big to fail?

    I guess the other solution, your boss fires you, and he hires someone else to do your job when you fail to show up who puts most of that salary for good use at the local strip joint, the bank lends to someone who is redoing his kitchen to please his wife, and Home Depot gets the loot instead of that crooked mechanic trying to rob you blind, is just too dire in its consequences to contemplate.

  • Fluffy||

    There is nothing remotely contradictory about saying that the Fed's cheap money policy helped inflate the housing bubble, and saying that a lack of regulation on mortgage lending mortgage securitization helped bring on the financial-sector collapse.

    You're right, there isn't. Because saying this makes the current crisis an example of regulatory failure. It's saying, "We interfered in the economy in the wrong way, and it blew up in our faces."

    I realize you think that there was a "right" set of regulations that, had they been in place, would have made everything turn out all right.

    But once you say the words, "...the Fed's cheap money policy helped inflate the housing bubble..." blaming the crisis on laissez-faire capitalism is simply false.

    If you're agreeing with that statement, great. Then we don't have to argue about it anymore. If you want to say "yadda yadda yadda it's really complex" that's fine. We can get into the weeds and discuss the complexities at our leisure. But we'll do so having completely and utterly dispensed with and debunked the claim that the current crisis can be described as a failure of laissez-faire capitalism.

    You would really have to go out of your way to understand that there was a conscious decision made not regulations MBSs, but there are none so blind as those who will not see.

    Joe, you act as if mortgage-backed securities are this deadly cobra venom or radioactive Russian assassination tool that had to kill anyone who was exposed to them, and that's silly.

    Again, the ire that has been directed at MBS is just a smokescreen to cover the Fed's error.

    MBS are only as good or as bad as the mortgages underlying them. [Other than the procyclical effects of the mark-to-market rule, but that's a subject for a different time.] And "bad" mortgages were made and bundled into MBS because the bubble created the statistical illusion that bad mortgages were good.

    I realize that your counterargument here is that, since our central bank exists and will occasionally fuck up, and since fiscal policy will occasionally overstimulate as well, this means we need compensatory regulations to try to stop people from speculating in certain assets during these fuckups. I would say that the problem is that the overstimulus effects can't really be dammed in that way and would simply find a different outlet, and that there's no way for your regulatory scheme to ever be perfect except in hindsight. I would also say that another problem is that this is a Scooby Doo argument, if the Scooby Doo villain was a Leninist: "Our plan to manipulate the business cycle would have worked, if it weren't for those pesky securitizers and their damn talking dog!" Central bankers and Treasury Secretaries and Presidents and other market manipulators shouldn't come around trying to get my sympathy after THEY fuck up and some talking dog decides to engage in speculation using their fuckup funds.

  • ||

    The trouble with government rules, is that they limit the emergence of non-government rules. They're assumed to be the optimal rules so no better rules are able to emerge into the market.

    Why make a motorcycle helmet any safer than what the government requires? Why bother inspecting food any more stringently than the government requires? Why bother setting up a derivatives clearinghouse when the government says you don't need one?

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