Bernanke to Congress: You Are Going to Have to Cross That Fiscal Valley Yourself

While I'm reasonably certain we'll find out he didn't mean it, Ben Bernanke tells Congress the Federal Reserve won't just make dollars to help the U.S. government pay off its debt. From the Washington Times:

Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.

"It's not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee. "It is possible that bond markets will become worried about the sustainability [of yearly deficits over $1 trillion], and we may find ourselves facing higher interest rates even today."

Mr. Bernanke for the first time addressed concerns that the impasse in Congress over tough spending cuts and tax increases needed to bring down deficits will eventually force the Fed to accommodate deficits by printing money and buying Treasury bonds — effectively financing the deficit on behalf of Congress and spurring inflation in the process.

Some economists at the International Monetary Fund and elsewhere have advocated this approach, suggesting running moderate inflation rates of 4 percent to 6 percent as a partial solution to the U.S. debt problem. But the move runs the risk of damaging the dollar's reputation and spawning much higher inflation that would be debilitating to the U.S. economy and living standards.

Yet Bernanke, while not actually yet faced with having to do so, says: Nay!

"We're not going to monetize the debt," Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.

"It is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position."

So, you know, get on that, Congress. Price of gold today: back above $1,100 an ounce.

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  • The Road to Serfdom||

    http://mises.org/books/TRTS/

  • Suki||

    Good Morning reason!

  • PIRS||

    Good morning Suki!!

  • Suki||

    Hi PIRS! What's up with you for the weekend?

  • PIRS||

    Suki,

    I work on Saturday and Sunday and my weekend is Tuesday and Wendsday. I am a librarian so when it is slow I can sometimes have time to respond on H&R Comment threads.

    How about you?

  • MNG||

    A librarian? A (gasp) goverment employee?

    Talking to someone who does not exist?

    TEH PUBLIC UNIONS!

  • Paul||

    Public sector union employees are underpaid and mistreated. So much sacrifice, so little compensation.

  • PIRS||

    MNG,

    No, I work for a private college.

  • PIRS||

    MNG, Are you saying that I do not exist? Or are you saying that you do not exist?

  • MNG||

    Suki does not exist PIRS, well, not as a seperate entity.

  • PIRS||

    MNG,

    On what do you base this claim?

  • Pingry||

    The only way in which the debt will be monetized is if the political process hijacks independent monetary policymaking.

    There is extensive time series and cross sectional evidence to support the widely popular view among real economists that monetary policymaking should be shielded from politicians who have neither the understanding nor the political time frame in maintaining the store of value function of money.

    And yet, Ron Paul's so-called Audit-the-Fed bill (H.R. 1207: Federal Reserve Transparency Act of 2009) is a clear indication that this maniac just itches to hijack independent monetary policy to the point where he is accusing the Fed of having financed Saddam Hussein and Watergate. Hey, if legislative thuggery won't work, then start making wild accusations without any evidence.

    You really can't make this stuff up!

    And if Rep. Paul gets his way, then expect a higher rate of inflation to be embedded immediately without any change in central bank policy.

    Apparently, Ron Paul's Austrian Kangaroo classes somehow missed then whole rational expectations revolution.

    --Pingry

  • The Road to Serfdom||

    "real economists"

    [definition needed]

    Hello squirrels is my shibboleth.

  • Pingry||

    Certainly not the bogus macro perpetrated by Austrian/Liquidationist/Mellonist/Gold Fetishist/Treasury View 'experts' on an unsuspecting public.

    --Pingry

  • The Road to Serfdom||

    Epic. Fail.

  • Pingry||

    Pfff...yeah, okay hombre.

    Good luck trying to make it through a real econ class yapping about liquidating the malinvestment and rejecting math.

    Ha!

    --Pingry

  • ||

    The econometrics jargon at the beginning, not so impressive. Nice effort though, you might have snowballed someone. The argument about separation is ancient, as old as central banking. Anyone with even the most casual understanding of central banking understands this, it's high school economics. That said I'm pretty sure a lot of people here understand both sides of the argument for fed independence and government control, and most here know that what politicians touch goes to hell. Welcome to a libertarian (big or small) board where economics is damn near the only thing they can agree on. Your inflation assumption is removed from the audit of the fed. That is if your argument is the audit will cause inflation and not something outside of what Paul has suggested. If you are suggesting inflation or cyclical movement in money supply due to political influence then you have a point, but that is not what Paul has suggested. You would need some sort of legislative creep to achieve this. For the record I don't agree with Paul, but I don't like the fed. I see the two bodies in collusion as being more dangerous than when they are separate. (even though they already collude)

    Finally, Fuck you and your Austrian dig you third rate wannabe. Apparently you are enjoying your first year econometrics, banking, and macro classes. Wait until applied econometrics when you learn that all your estimated variables approaching the mean of the sample variable goes to hell in a hand basket in the real world. Most use adaptive or some variation there of as the behavioral sciences run into the economics sciences.

    Some of us have made it through a few econ classes.

  • ||

    um I am done with econ classes for my life time but I do know that Keynes solved all of these problems long ago and that we can safely expand the money supply while we are in recession and this will start to create more jobs soon. Real economic wealth is created when we shrink and expand the money supply in just the right way. It really is like a free lunch.

  • ||

    mmmmm free lunch

  • Colonel_Angus||

    1UP Troll!

  • Pingry||

    Wow, you really are a Ron Paul gull!

    Have you actually read HR 1207?

    I have, and I can assure you that it will result in nothing of the sort Mr. Paul has talked about.

    "Apparently you are enjoying your first year econometrics, banking, and macro classes."

    Yeah, that's it.

    You really are an amateur, aren't you?

    --Pingry

  • ||

    Read a few of my past posts. I'm not a fan of RP. But of course making that argument rather than having to back up your bullshit and then trying to dismiss it is pathetic. I am amateur, at least until I can toss those magic letters at the end of my name. I have a feeling I'm closer to the magic letters than you are in both time and content.

  • Pingry||

    Nah, I don't think so.

    I'd let you know who I am and which university I'm at to prove my credentials, but I'd prefer to use an alias for fear of getting death threats and stalkers.

    Those gold fetishists are pretty scary!

    I don't really need crazy people ruining my academic career by harassing the people I work with.

    --Pingry

  • Pedantula||

    Pingry...you are the message board equivalent of that douche who walks around in public places loudly shouting into his bluetooth about big sums money and even bigger "deals".

    Except you don't boast about having money, you boast about having an understanding of money. My guess is you aren't too long on either.

    Also, by your style of argument, I strongly suspect you're under 18 years of age. It's more obvious than you realize.

  • ||

    Holy cow dude...you are paranoid. I am Gabe Harris I live in Scituate Mass there are not any gold fetishists here ...there are people who think that the governemnt should not outlaw certain currencies. There are people who do not think seignorage is morally different than any other counterfeiting and there are people who don't think that a free lunch exists via giving the printing press keys to friends of David Rockefeller so that they can engage in various bouts of expansionary and contractionary monetary policy. There are people here who cannot understand why you think the econometric experts who thought the housing market would never fall by 20% in 2006 are still considered the smartest economist in the world when various other serious people with high IQ's who have studied economics their whole lives predicted exactly what would happen. They had convincing logical argument for why and how it would happen even though the real eastate market hadn't fallen like that before EVER. Many of these austrians have used regressions and applied math techniques for decades, however they also are quite familiar with many qualitative pitfalls that presumptive, naive statistics geeks encounter and they see these pitfalls all over the work of the mainstream economists.

    Anyway...I am sure that nobody here wants to stalk me. If someone is thinking baout feel free to email me and I 'll buy you a beer. It takes a real special class of self-important doofus to actually think they will be stalked because of posts on this web site.

  • ||

    "Wait until applied econometrics when you learn that all your estimated variables approaching the mean of the sample variable goes to hell in a hand basket in the real world. Most use adaptive or some variation there of as the behavioral sciences run into the economics sciences."

    Fez, I have a PhD in economics; I've made my living for many years doing econometrics and I have no idea what you are talking about.

    Pingry is right: Keep Congress off the Fed's back or you will not like the result. At all.

  • ||

    I agreed with keeping the fed independent. The rest of his remarks are what I was speaking to.

  • ||

    IF that confused you or you were unable to understand it maybe it's been a while since you have been through an economics program. Or dealt with econometrics. What I wrote deals with the basic assumptions required for the most commonly used OLS. The first thing you learn in econometrics.

    I'm glad you have a PhD. I don't and neither do two associates that read this, and they got it.

  • ||

    ECONOMIST NERD FIGHT

  • ||

    diet soda all around!!!

  • Colonel_Angus||

    You don't know what you're talking about.

  • ||

    Well, let's see, so far in this thread you've pushed ad hominem, appeal to credentials (better yet, credentials only inferred, not actually stated), goal post shifting, clearing the field, poisoning the well and redefinition in progress. If you think you're making a rational argument, rather than merely a verbal attack, you are as sadly misinformed about rhetoric as you are about economics.

  • Jerry||

    Instead, Bernanke has been buying up one trillion in mortgage based debt over the last year. Good riddance.

  • Pingry||

    That's not necessarily inflationary in the presence of anchored inflation expectations and a channel/corridor system!

    --Pingry

  • ||

    Of course MBS purchases are not inflationary. The FOMC actions are the opposite while the Bush Depression haunts us.

  • William Shakespeare||

    Now stole upon the time the dead of night,
    When heavy sleep had closed up mortal eyes;
    No comfortable star did lend his light,
    No noise but owls' and wolves' death-boding cries;
    Now serves the season that they may surprise
    The silly lambs. Pure thoughts are dead and still,
    While lust and murder wakes to stain and kill.

  • Jerry||

    So how does the Fed calculate the book value of its mortgage portfolio when there is no market for it. Do they have a crystal ball which assures them that future debt payments will be made?

  • ||

    But there is a market for it.

    Merrill sold its MBS for .22c on the dollar to Lone Star Securities in 2008.

    I will do the same.

  • ||

    I have first hand knowledge of this. In reality I have to admit it is more of an art than a science. If my brother-in-laws hedge fund is a on good terms with the Geithner then they get 100%...if not then 0%. It isn't as complicated as some think.

  • ||

    correctomondo. Pingry has a first class education and he is the only one here who seems to fully grasp how beneficial it is to expand the money supply so as to get dumb people over-extended in thier debt and then shrink it rapidly so as to artificially increase the number of bankruptcies. This helps clean out the dumb money and transfer it to the more intelligent people. You can see how in the long term this is much better for the world as a whole.

  • Pingry||

    The only problem is that the money supply has been increased, because there is far less lending then then ought to be.

    --Pingry

  • ||

    but we did engage in a contractionary mentary policy throughout 2006 and 2007 right? and that helped us clean out all the idiots who defaulted afterwards right?

  • Pingry||

    Oh, and below is a link to read about Ron Paul's stupidity.

    Ever since Friedman died, moderate smart, sensible and moderate libertarians have been drowned out by Paul and his ilk.

    http://blogs.wsj.com/economics.....l-reserve/

    Lunatic fringe,
    I know you're out there

    --Pingry

  • ||

    So right on.

    Freidman said Bush and his tax cuts were only be a deficit monger and inflation hog.

    The Bushpigs won - the USA lost.

  • no one||

    If only proper English could win, maybe the Internet would be a more enjoyable place. Maybe.

  • billy-jay||

    Absolutely crazy stuff.

    Of course, since the Fed wasn't involved with any of that, they should have no trouble opening up the books to prove it.

  • prolefeed||

    "We're not going to monetize the debt," Mr. Bernanke declared flatly

    He forgot to preface that with "Read my lips --"

  • prolefeed||

    "It is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the United States government is going to bring itself back to a sustainable position."

    I believe that plan is called "The 2010 Midterm Elections"

    I doubt that plan will do more than staunch the worst of the bleeding, though.

  • Pingry||

    Ron Paul's zombie economics is way too simplistic (look ma, no math!). And it's also a convenient theory for those seeking to justify what they already believed.

    In effect, it's really just a conclusion looking for an argument to support it. And the theoretical argument is always given after arranging the pieces to the puzzle in a way that suits their beliefs.

    Could there be anything more powerful than telling people what they want to hear in highly simplistic (albeit totally bogus) bite-size pieces?

    --Pingry

  • ||

    Did you really just bash simple economics and math and defend aggregate spending without consideration to motivation as a means to "save" us all in the same post? Seriously what the hell?

  • Pingry||

    I bashed bad economics which many people just seem to eat up because it's easy to understand, and it jives with what they already wanted to hear.

    It would be great if it were both easy and correct, but Austrian macro is not correct.

    --Pingry

  • ||

    I agree with pingry. The math deficient paultards are always bringing up silly criticisms, talking about "heterogeneous capital formation". In reality all capital is the same, a Pulte home Mcmansion and a team of sheatrock workers can be transformed into a private school for illiterate poor kids and a group of reading teachers in about 1 day.

  • ||

    Well, if it wasn't for GOVERNMENT zoning laws and GOVERNMENT licensing and permitting laws, you could.

    However, not all capital is the same. The first thing you learn in econ 101 is that the production possibilities curve is "curved" for a reason. Or else it would be a straight line. Can you turn that "mcmansion" into an aircraft? A car? A train? A plane? Completely different resources, completely different expertise required. Maybe when AI's control everything and everything is fabricated by nanotechnology, that line could be straight, but I doubt it even then.

  • ||

    And Keynesian is? As simplistic as my question is that is the other end of the macro spectrum. Unless you are forging a new front yourself.

  • Mike Laursen||

    So, it appears position you are taking can be summed up as, "If it has lots of mathematical equations, it's real science!" You might not want to go around calling other people simplistic.

  • Kant feel Pietzsche||

    Prolefeed: "I believe that plan is called "The 2010 Midterm Elections"

    I love you man..in a totally straight way ;^)

  • Kant feel Pietzsche||

    Pingry: "Ron Paul's zombie economics is way too simplistic (look ma, no math!)"

    I'm just curious...how much math background do you need in order to know you are broke if you have a $1, and you spend $5?

  • Pingry||

    I'm referring to Ron Paul's views about macroeconomics and monetary policy.

    Everyone knows that we're in a giant fiscal mess, but as I pointed out above, as long as the central bank has independence to carry out its policymaking, then fiscal and monetary issues can largely been separated.

    Ron Paul needs to continue talking about ending foreign wars, balancing the budget, etc. He is totally clueless when it comes to monetary policy though.

    --Pingry

  • ||

    It seems to me that we don't have an independent central bank. It is subject to the political winds in a number of ways.

  • Pingry||

    independence can be separated into two parts:

    Policy independence and instrument independence.

    A central bank need instrument independence to appropriately undertake its mission. However, there is not such good evidence for policy independence. Monetary policymakers should usually have the political process determine the policy objectives to which they should be held accountable to follow.

    Now, this is not perfect as you know. There was extensive inflation in the 1970's because the policy independence by Congress allowed them to dictate that the Fed should target a NAIRU far below its actual rate.

    --Pingry

  • ||

    while admit it is good to have someone else here who has read bernanke and Mishkin's work on inflation targeting. I am surprised that you think policy independence is a good idea. Wouldn't that pretty much be what Bernanke claims he is scared of now, that congress will increase the inflation target to too high of a level? I know Bernanke himself said 7% is fine if that is what congress decides, but that doesn't seem to be his tune now. Could it be that he really really relaly just doesn't want us to see the details regarding how much we paid GS and JPM for a bunch of worthless subprime shit?

  • ||

    Bernanke's point about inflation is that the Fed is a creature of Congress and will follow the law, even if the law is unwise -- as would be a 7% inflation target.

    And Bernanke supports Congressional oversight and GAO audits of the Fed with one exception: Monetary policy decisions.

  • ||

    wrong, he doesn't want to reveal the exact securities they are buying and from whom at what price. He also doesn't want to reveal discussions with foreign banks of the IMF.

  • ||

    Say what? NAIRU !

  • Colonel_Angus||

    Yeah, sure, the central bank's monetary policy has absolutely nothing to do with that giant fiscal mess.

  • Pingry||

    If you're implying that monetary policy created the crisis, as many libertarians do, then where is the statistical and econometric evidence?

    Otherwise, the giant fiscal mess, is, well, a fiscal policy issue.

    --Pingry

  • Colonel_Angus||

    So then, monetary policy doesn't play any role in the asset bubble cycle, and continuing to print money is a good idea?

  • Pingry||

    Nobody is denying that monetary policy can create bubbles, but monetary policy didn't create the housing bubble.

    And the Austrians took the Wicksellian Cumulative Process way too far.

    Business Cycles are not defined by asset bubbles. Most non-Austrian economists believe it's a story of aggregate demand in the short-run and aggregate supply in the long-run.

    But ABCT do not form a generalized theory for how business cycles work.

    To believe that an economy needs to liquidate the malinvestment necessarily means that one believes that the invisible hand is strong in a recession and weak at full employment, when just the opposite is true.

  • Colonel_Angus||

    Loose monetary policy through excess credit did contribute to the housing bubble. It wasn't the only factor, but it didn't help. The business cycle is magnified by economic engineering like favorable credit policy and tax incentives. Bad policy right now is being used to prop up the economic failures that were influenced by the exact same kind of policies, when it would make sense to dump the bad investments and allow a natural market correction to progress.

  • ||

    monetary policy didn't create the housing bubble.

    Where did all that currency that was lent come from?

    Most non-Austrian economists believe

    Those would be the morons who were telling us that there was no real estate bubble, right?

    -jcr

  • ||

    Look at Bernanke's speeches on monetary policy and the housing crisis. He points out that there were "housing bubbles" in many countries and there is no correlation between those countries' monetary policies and the housing bubbles.

    If monetary policy was so expansionary, where did the inflation go in 2002-2006?

    (Wait, let me guess: You think the official CPI numbers are made up. Right?)

  • ||

    If monetary policy was so expansionary, where did the inflation go in 2002-2006?

    Um ... Into the prices of houses?

  • ||

    I argue that it was the animal spirits

  • ||

    monetary policy has nothing to do with the economy because rational expectations neutralizes everything. The fed really is irrelevant, but we must protect the secrets of the Fed AT ALL COSTS. RON PAUL IS THE DEVIL FOR TRYING TO GET THEIR HARMLESS SECRETS!!!

  • ||

    I suppose it escaped your attention how low Greenspan and Bernanke kept the interest rates?

    Are you really that dim?

    -jcr

  • Chad||

    Pingry, according to libertarian theory, *some* government policy absolutely and certainly caused this mess, because markets are perfect.

    Don't you understand the ultimate libertarian trump argument? If it looks like the market FUBAR'd something, just blame the nearest government program.

    It is a very convenient argument for the true believers, because it could only be refuted in a world with absolutely no government, which of course will never occur.

  • Mike Laursen||

    Ouch. There's some truth to that. Some libertarians need the government to always be at fault to maintain their religious, rather than rational, belief in liberty.

    Having said that, as a rule of thumb, "*some* government policy ... caused this mess." almost always turns out to be true.

  • ||

    Chad|2.27.10 @ 9:54AM|#
    "Pingry, according to libertarian theory, *some* government policy absolutely and certainly caused this mess, because markets are perfect."
    Two problems here:
    1) Chad wouldn't know "libertarian theory" if it sat on his face.
    And, related:
    2) Given that abysmal ignorance, Chad has no choice but to strawman every argument.

  • ||

    Nice discussion of the Fed and Fed's problems: http://www.econtalk.org/archiv.....n_the.html

    Belongia's paper on reforming the Fed: http://mpra.ub.uni-muenchen.de....._18977.pdf

  • Pingry||

    I have listened to this, and there may be good criticism about the internal politics when Greenspan was in charge.

    But Bernanke is more interested in consensus building and transparency.

    It drives me crazy when libertarians, which I consider myself, make all kinds of ridiculous claims about what Bernanke believes without actually reading his academic work.

    --Pingry

  • ||

    I'm curious why you think that the Bernanke "regime" has changed these sort of practices? Belongia argues - if I recall correctly - that this is something that happened prior to the Greenspan "regime" - namely under Volker.

  • Pingry||

    I never said that Bernanke changed the practices. In fact, I never said that Belongia is right.

    I only know about Bernanke's academic work and the monetary policy strategy he would like to pursue.

    None of us know what goes on inside the Fed any more than we know what goes on inside any given corporation.

    But in the meantime, we must judge the Fed by its actions, and how well they adhere to its mission.

    And on this, I think the Fed has done a pretty good job.

    Let's just be clear about something: All of the 'experts' who claim that the Fed held rates too low for too long have not put forth a shred of statistical and econometric evidence to far.

    So it's hard to claim that monetary policy is to blame when the evidence is just not there.

    Now with that said, let's be clear that the Fed did something much, much worse. I really pity anyone who acts as an apologist for high finance without understanding its major flaws.

    --Pingry

  • Pingry||

    ****Now with that said, let's be clear that the Fed did prevent something much, much worse. I really pity anyone who acts as an apologist for high finance without understanding its major flaws.

  • voxpo||

    Freud did what now?

  • ||

    By much, much worse, I'm assuming you mean bailing out the banks by buying up trouble assets. Right?
    Cause that has ugly implications all over it.

  • Pingry||

    No one is saying that it was popular, but surely the fiscal mess would be much, much deeper if the financial system were allowed to collapse and the government had a massive loss in tax revenues with major expansionary fiscal policy to try to dig out.

    As a practical matter, it was probably cheaper to bail out the FI's then sit aside while the financial system disintegrates.

    Again, nobody wanted to do it, but what was the practical alternative?

    Financial crises do not fix themselves. There is no spontaneous order in a financial crisis. Buyers don't emerge when asymmetric information goes through the roof.

    As for the moral hazard, maybe libertarians should welcome some regulation of Wall Street.

    --Pingry

  • ||

    Financial crises do fix themselves; now whether they do that within politically feasible time periods is another matter.

    There's plenty of regulation of Wall Street; indeed, far too much regulation. That is, regulation is far more complex than it needs to be. It invites all manner of arbitrage and leads to a lot of whack-a-mole.

  • Pingry||

    "Financial crises do fix themselves"

    You can't possibly be serious, can you?

    Do you really believe that this crisis would have fixed itself?

    Ummm... let's see, velocity fell off a cliff..and the financial system was about to completely crumble to nothing.

    And you really think that it would "fix" itself?

    I'm sorry, but you're way wrong.

    And besides, why should innocent people deal with the spillovers?

    --Pingry

  • ||

    More importantly why should the bond dealers suffer? we have families too. Make the taxpayers pay our bonuses we need our yachts bitches!!!

  • ||

    Pingry,

    A big part of the financial crisis was caused by things like mark-to-market rules. Mark-to-market forced the banks to value their MBS securities at market value at a time when the market for them was in a hysterical free fall. That caused their leveraging ratios to get thrown out of wack, since many banks had invested their reserve capital in MBS. This is where the liquidity problem came from. The problem is that the troubled assets weren't actually worth zero. It was just that nobody knew how to value them. So the banks wouldn't sell at market rates, which meant they were overleveraged, according to the federal government accounting rules, and had no liquidity (because they refused to sell their assets at the market rate). Hence the potential for a "run" causing bank failures.

    If the government had (say)temporarily relaxed leveraging requirements and lifted mark-to-market rules, they could have contained the crisis far more easily. The banks would have had the liquidity to rid out the market panic while someone figured out what the MBSes and various derivatives were worth. They would have taken big hits, still, and a lot of people would have lost money, but the situation would have resolved itself.

    Incidentally, the Fed's actions have NOT resolved the situation in general. They only averted the immediate problem of the liquidity crisis in late 2008. The "trouble assets" are still out there, and nobody knows how the heck to value them. And since the federal reserve has been buying them up I'm betting nobody ever DOES.

    Meanwhile, the government continues to artificially prop up the housing market with billions in tax breaks and funding for the GSEs, because all those MBSes are still out there, poisoning the banks, so any more hemmoraging in housing prices is going to trigger still more rounds of bank failures.

    it would have been better to let the big banks take that huge hit, and let someone else buy all the MBSes up on the cheap, make a killing and invest in something else. Instead, we continue to pour good money after bad by propping up housing.

  • ||

    Do you really believe that this crisis would have fixed itself?

    Time for a bit of remedial reality studies for you. Go and find Tom Wood's talk, "why you've never heard of the great depression of 1920".

    -jcr

  • ||

    Pingry|2.26.10 @ 10:59PM|#
    ""Financial crises do fix themselves"
    You can't possibly be serious, can you?"

    So we can presume you've never heard of bankruptcy?

  • ||

    "Again, nobody wanted to do it, but what was the practical alternative?"

    Uhh speak for yourself dipshit, I am certainly glad they did it. I got a fucking 12 million dollar bonus this year and that was NOT happening without the bailout. You fucking geeks are hilarious, you really believe what a fucking PR guy like Gibbs for a bullshit artist like Obama tells you? yor must be about 25 years old in your 2nd year of PHD program somewhere and you are dumb as a fucking bag of bricks. A lot of other people have read all the econ textbooks dipshit, after a few years of banging your head against a brickwall in the real world I will look forwad to talking to you, your IQ is higher than average, perhaps you'd like to do some work for me for me on some infrastructure projects I'm putting together for a World Bank loan?

  • Colonel_Angus||

    "the fiscal mess would be much, much deeper if the financial system were allowed to collapse and the government had a massive loss in tax revenues with major expansionary fiscal policy to try to dig out."

    You say this like its such a bad thing. Anything that speeds up the inevitable at this point. The entitled pussies need to get fucked and I will just sit their and enjoy another beer while it happens.

  • ||

    I never believe any claim without evidence that things would have been worse without some government action. It is claim made in so many areas of public policy that it is so watered down as to make it meaningless.

  • ||

    sounds like a conspiracy nut

  • ||

    I think bernanke did a great job in pretending to have no comprehension of how bad the real estate bust was about to be, that allowed him to keep all he suckers in the game a little longer while i was able to unload a lot of my real estate investments

  • Hacha Cha||

    yeah because Pingry is an economic genious, he is like Paul, a member of the Joint Economic Committee and the Committee on Financial Servicestrolls around internet comment threads.
    sorry but if you want an "independent" douchebag organization to print funny money as real US currency you need to amend the constitution jackass.

  • Pingry||

    Clearly you do not understand the Constitution, Treasury and the Federal Reserve.

    Oh, and by the way, there's no such thing as "real US currency"

    Indeed, it's all nominal. There's no such thing as intrinsic value.

    --Pingry

  • ||

    Well, since you were smacking around Austrians, I'd note that the no intrinsic value concept is an Austrian notion that everyone else has adopted. ;)

  • Pingry||

    Yes, and notice how I diss Austrian macro.

    I have nothing but good things to say about marginalism.

    But let's face it, the Austrians were wrong about so many macro issues.

    There's a reason why so many prominent economists like Frank Knight and Lionel Robbins ended up rejecting it after teaching it in their classes.

    --Pingry

  • ||

    Well, the Keynesians were wrong about so many issues...

    I think a lot of people rejected Austrian macro because it didn't have a very clean narrative for how to get out of an economic slump. That and Keynesianism works a lot like Newtonian physics; which makes it an easy subject to turn into fairly simple math problems.

  • Pingry||

    And I never defended Keynesianism. No one today is really an old-fashioned Keynesian.

    --Pingry

  • ||

    That's right, today they are pseudo-Keynesians who espouse a philosophy that is more like 'the Law of Attraction'. Spending money magically created more money.

    If they were actually Keynesians, they would (a) cut back spending during boom years, and (b) employ people on tasks that are actually productive.

    Their favorite mechanism for creating jobs today is making everyone work less efficiently by forcing them to use "green" energy. If only we can raise the price of energy, more people will be employed producing it!

  • Chad||

    Actually, Hazel, the government SHOULD cut back on spending during the booms, and then use the savings during the busts. Not only would this spread out the pain, but it would ensure that the government was doing most of its spending when labor and commodities were cheap.

    Think about this. In 2006, the government might have had to pay a construction worker $1000 a week plus $200 in benefits to fix a bridge. They would collect perhaps $200 in taxes from this person, but since we were near full employment, the odds are this person would have otherwise been working on a private project and paying similar taxes. So on net, it really is costing the government $1200/week to pay for this work.

    What about now? Well, first, you can probably get the guy to work for only $800 plus $200 in benefits, due to the heightened competition. Second, you are probably taking this guy (or if not him, the person who replaces him at the job he WAS doing) off the dole, saving yourself a very conservative $500 per week ($400 in unemployment plus $100 for the Cobra subsidies). You would also be generating some new tax revenue, perhaps $100, as the guy you hired now has a higher taxable income. So your net cost is now only $400...and this is before any considerations of multipliers or how keeping someone on the job increases their *long term* income.

    You can quibble with the math, but it is hard to come up with an argument where the government would be purchasing this type of work at at least a 50% discount to what it would have been paying a few years ago.

    Some things in life aren't that complicated. For those with cash or access to cheap credit, downturns are the time to buy.

  • ||

    See, the problem with this is that, first of all, the projects the government hire people for have no relationship to consumer demand, and therefore their chances of benefitting anyone economically are essentially random. Secondly, once they are on a government contract it is nearly impossible to get them OFF. They become interenched interests who can simply vote to continue their own contracts. Which has clearly happened with the farm programs from the depression for instance. Government spending never actually shrinks during a boom, because the people who benefit from it become special interests.

  • ||

    entrenched I should say, my spelling is atrocious today.

  • Chad||

    Hazel, you are just full of shit today. Contracts for infrastructure come and go all the time, and you damned well know it.

    And "consumers" don't buy bridges or fix pot holes. When Walmart starts selling Fix-a-Bridge kits, you may well have a point.

    At some point, Hazel, it MUST have shrunk, because we haven't been even maintaining the stuff we built in the past.

  • ||

    A) How do you know that any particular infrastructure project is actually needed?

    B) We have shrunk spending on infrastructure, but have increased spending on other things. Largely, entitlements (SS and Medicare) have been consuming an ever growing portion of the budget, pushing out spending in all other areas except defense.

  • Mike Laursen||

    Wow, five paragraphs of over-explanation of "saving for a rainy day."

  • Chad||

    Hazel, environmentalism is about keeping sure markets are doing their accounting correctly. As long as people can keep certain costs off the books, they will not optimize the total system, but only what they are required to account for.

    No believer in a "free market" should be against Pigouvian taxes.

  • ||

    I would love it if that were the truth. But it's so obviously a lie that it's barely worth responding to.

    Most environmentalists I have met havn't the faintest clue how the economy works, and don't care. They are ardent socialists. And half of the policies they support are to get revenge on the evil capitalists they believe are destroying the earth.

  • ||

    Are you sure about that?

  • ||

    it's pretty much the philosophy of the Obama administration.

    Not that I agree with Keynes. I just think most of the so-called Kaynesians around here have no fucking clue what Keynes actually believed. They pick up a degenerate Keynesianism from airheads on the TV talk shows.

  • ||

    I'll admit, my understanding of Keynes may also be faulty, so if I'm getting this wrong feel free to correct me (Pingry and Cosmotarian Overlord, I"m looking at you two).

    Isn't true Keynesian economics about the government creating a situation that encourages investment?

    If I'm right the two best examples I can think of for Keynesian economics at work are the Internet (originally a DARPA project) and military action (using a sniper rifle to take out a HVI is sooo passe).

  • ||

    CO is my fake dude and sense this seems like a semi-serious Q, i'll answer with my real self.

    Keynsian economics is about coming up half-believable theories to justify massive seinorage. True, the Internet was one good thing that had something to do with some government spending. As Fredoroc Bastiat emphasized, you can't just look at the seen, you also have to think of the unseen, the money would have been invested by people of their free will if the government hadn't taxed...we may have a better educated public, lower crime some other amazing inventions or exactly the same stuff. However, we do know that incentives to work in the legit economy were reduced and incentives to work in the underground economy(smack dealer) or to become a lobbyist or military contractor were increased...these are more often wasteful and on the margin The government taxing wealth is bad for society.

  • ||

    I think the central point is that if you have a central bank, it is *inevitable* that it is going to be used politically. Both to benefit connected interests, and to sway general elections.

    As far as I'm concerned the efforts to influence the fed are unhelpful, precisely because they represent that very desire to seize political control of monetary policy. Paul's bill merely plays into the hands of those who want that power.

    Obama and the Democrats would love nothing more than to influence the Fed, precisely so they can monetize the debt - inflate out way out of it by devaluing the US dollar - rather than cutting back on spending.

    This is the strategy that worked so well in Inodnesia and Argentina in the late 90s.

  • Pingry||

    That's because these countries do not have the kind of independent central banks that other countries do.

    In fact, Argentina still doesn't. Maybe they should take a lesson from Brazil which actually undertook legislation to make their central bank even more independent.

    Bottom line:

    Politicians will always try to hijack the monetary system to their advantage. And they did it with gold too.

    --Pingry

  • ||

    Well, much of this is the reason why I am fond of competing currencies and free banking. It doesn't have to be backed by gold and it can be fractional in nature.

  • Pingry||

    We have competing currencies. It's called the foreign exchange market.

    Thanks to the breakup of Bretton Woods, we now have currencies competing, despite the excessive variability we witness in exchange rates.

    Are you really that sure that free banking would work? That's a world with a lot of bank failures.

    --Pingry

  • ||

    Personally, I kind of like the idea Putin proposed last year of launching a new international currency backed by a basket of bonds, index funds and commodities.

  • ||

    Well, I'd like to see more competition, and for some of those currencies to be private in nature.

    On free banking ... not according to those who have written on the subject; both the free banking in Sweden and Scotland saw very few bank failures (in the single digits) over multiple decade periods they existed (roughly seventy years in the case of Sweden). Free banking has never existed in the U.S.; banks have always been chartered by and regulated by the state (initially mostly at the level of the states obviously); thus you had laws in most states which forbid banks from creating policies which combated runs on the bank (basically, the bank could not create a contract with a depositor which forbid them from withdrawing all of their money at once).

  • Pingry||

    Yes, yes, yes. I'm familiar with Selgin and White's stuff.

    And you don't really think that their work could even be relevant in today's financial system.

    The only way to have the same result would be to regulate depository institutions so that they have the exact same roles as the banks hundreds of years ago. And that's not so free.

    Selgin believes in some crazy stuff, and he even denied to me the presence of financial frictions.

    Seriously, you can't make up this stuff!

    --Pingry

  • ||

    Well, nothing is free, but if it leads to better outcomes it is worth doing.

  • Bill Woolsey||

    Pingry,

    You have to do better than that--for free banking to work, banks must be regulated to do exactly what they did in the 18th century.

    I think many of the developments in banking over the last several hundred years would make free banking work better.

    As for "Selgin believes some crazy stuff," I suppose that might be true.

    However, I don't believe that Selgin believes that there are no financial frictions. By making that claim, you bring discredit to yourself.

    It is hard to know the context of such an insulting, throwaway remark. But I will take it as follows. I believe that there are lots of financial frictions, but that those frictions are not responsible for real world recessions, which are instead due to fluctuations in nominal expenditure. Further, while I can imagine a clever central bank reducing financial frictions, improving the allocation of capital, and allowing for greater productive capacity of the economy, I don't believe that real world central banks will accomplish this.

    And so, I don't favor having the Fed for the purpose of reducing financial frictions. But that doesn't mean that I think financial markets are perfect.

    Libertarian economists (as you claim you might describe yourself) don't argue that markets are perfect. They just don't jump from markets are imperfect to imaginary government regulatory scheme that improves them, to rationalization of real world government operations. And, most libertarian economists focus on how alternative institutional frameworks harness market forces improve human well being.

    Serving as a cheerleader for the Fed, or its current leadership, doesn't cut it.

  • ||

    Anyway, I have a cold and need to get my butt in the bed. *blech* A cold on the weekend. Have a good one.

  • ||

    A world without single large bank failures.

  • ||

    OT: Before I go I now recall that the Belongia interview also discusses the Taylor rule and does a pretty good job attacking it.

  • robc||

    Are you really that sure that free banking would work? That's a world with a lot of bank failures.

    Bank failures would be a sign that free banking is working (and yes, we have a lot of banking failures now - well, unless you consider the FDIC stepping in meaning they arent failing).

    There can be no success without the chance of failures, hence the reason the bailouts were wrong. You were way wrong up above, letting the financial system collapse would have been good. Yes, things would have sucked hard for 2 years, but Im okay with that. As someone else said, that isnt a politically feasible time frame, but thats the problem.

  • Mike Laursen||

    OK, this is one area where I know you're ignorant of the actual history. If you look, you'll find that there were fewer failures and only small monetary losses to investors.

  • ||

    Which is one reason to be against central banking. The whole End the Fed thing has the right idea at heart. It's just stupid to to demand an audit right now with the D's salivating at the thought of direct political control over monetary policy.
    You KNOW it's just going to be used as leverage.

  • Alex||

    What levers of influence on monetary policy will be added by transparency of the Fed that are not already present?

  • ||

    there won't actually be any transparency. The D's will use what they find to blackmail the fed into doing their bidding, inexchange for keeping it quiet.

  • ||

    It is sort of a Catch-22 really; a independent Fed has problems and so does one which is the Congress' puppet.

  • ||

    The one which is congresses puppet is the inevitable evolution, as inexorable as the growth of the state. I'm bemused that the Ron Paul faction seems eager to speed things along though.

  • ||

    The same independent bank that drove rates low to drive the credit bubble that caused the collapse. Your separation illusion is waning.

  • Pingry||

    Ummm...yeah. I think I have mentioned this above.

    Everyone making the claim that monetary policy is to blame for the bubble needs to provide the statistical and econometric evidence.

    And so far, there is nothing but silence on this issue. It's all ideology and emotion.

    After all, if you're going to make a hypothesis, especially one which makes serious accusations, then you should at least try to test them.

    So, it's time to put up or shut up.

    Anyone who believes that monetary policy is to blame, then let's provide some serious statistical evidence.

    And lecturing people about how they have failed to appreciate Austrian macro doesn't count. Nor does busting out with some misguided Taylor Rule graph.

    I made the same argument at many other blogs, including Cafe Hayek, and, of course, nobody took me up on my offer.

    Spit your game and provide the rigorous empirical work.

    Otherwise, you need to stop running your mouth.

    --Pingry

  • Pingry||

    Here's a hint: There is no empirical work to suggest that the Fed created the crisis. It just doesn't exist. There's only empirical work suggesting that they did not.

    Anyhow, I'm off to bed.

    Have fun kids.

    --Pingry

  • ||

    First of all saying "the cause" is simplistic. There is no "the cause" in most credit bubbles. There isn't silence, there just isn't a lot of published work. If you are so familiar with econometrics then you surely know the lag time in publishing for econometrics can be 20 times that of the physical sciences. So screaming there is no data is stupid. There is data, it's currently being modeled to no end. Some works have even made some headway in the peer process. So maybe the undergraduate economist can stop running his mouth. If you dig around you can find more than one model with rates, the rates held low by the fed, as a contributing factor to the inflation of housing prices.

    The funny thing, and what you don't realize, is that there is actually some preliminary data on your side of the argument. At least data that shows things like ARMs and other independent variables had a greater impact on the crash and bubble than things like subprime. The rate issue is still being hashed out, there are some mises articles and at least one floating around Cato. (I think it's cato)

  • Pingry||

    I read the Mises and Cato stuff, and they're wrong. Again, they just bust out with some misguided Taylor Rule, and that ain't worth shit.

    I never said there is no data. On the contrary, there is plenty of data, but the data suggests that the Fed's monetary policy post stockmarket bubble and 9/11 was about right.

    I know of all of the models. And I can assure you that I'm not an undergraduate economist. If I were, I might just have some proclivity (almost certainly if I were at GMU) to espouse a distinctly Austrian view.

    --Pingry

  • ||

    So the data exists but the models you disagree with are just wrong? Or only the models that show no relation or "the cause" are not accurate? Like I mentioned before there is evidence of many variables having a greater impact than the fed's policy. But most of the models that seem to explain the credit bubble include the fed's policy in some form. The misguided taylor rule dig is interesting. So you're saying they don't understand it, use it misleadingly, or that the misinterpret how the fed mysteriously (and behind closed doors) claims it doesn't use it.

    Now a GMU reference and an exclusive 30K a year prep school reference throughout. Any more hints?

    There is no such thing as an undergrad economist. You need the little PhD title to gain the "ist" within that social circle.

  • ||

    what I have been on a island for the last two years, but right beofre I left Bernanke assured me that the debt problems were well contained and greenspan said it was impossible to have a nationwide decrease in housing prices. Are you telling me that in fact they were wrong and the nutjob gladfly was right?

  • ||

    What I find interesting is just how badly orthodox macro did, yet heterodox macro is attacked when it is brought. Orthodox macro made a lot of claims about its ability to curb or even eliminate the boom and the bust that turned out not be true. Right now there should be some reassessment of orthodox macro, but that really isn't the case; it is rally the wagons in a circle time instead.

  • ||

    Pingry was right about one thing. The bonus plan bailout wa a absolute must have. I almost had to tell my mistress she was homeless last year, now I have two or three whores a night. Bailouts have worked wonders for me.

  • ||

    hahahaha

  • Kant feel Pietzsche||

    "It is possible that bond markets will become worried about the sustainability [of yearly deficits over $1 trillion], and we may find ourselves facing higher interest rates even today."

    No. Fucking. Duh.

  • ||

    Show me the empircal evidence for this, doesn't exist...no world reserve currency economy witha dominant military has been in this situation before so the data is not there to show we are likely to have problems. Show me the regressions or shut your pie holes bitches!

  • ||

    Jesus crossed this fiscal valley.
    He had to cross it by Himself;
    O, nobody else could cross it for Him,
    He had to cross it by Himself.

    We must cross this fiscal valley,
    We have to cross it by ourselves;
    O, nobody else can cross it for us,
    We have to cross it by ourselves.

    You must go and stand for reelection,
    You have to stand for it by yourself,
    O, nobody else can stand for it for you,
    You have to stand for it by yourself.

  • ||

    In Neglect

    They leave us so to the way we took,
    As two in whom them were proved mistaken,
    That we sit sometimes in the wayside nook,
    With michievous, vagrant, seraphic look,
    And try if we cannot feel forsaken.

  • ||

    This thread is soft. It's like watcing astrologers bitch slap each other.

  • ||

    Thus is the world of magic macro. Everything works when you can list the number of assumptions into infinity.

  • ||

    Economics is the study of soft math and confirmation bias.

    We might learn more by studying economists and their methods rather than what their methods actually produce. We could call it cognitive meta-economics.

  • ||

    Hey now. It's not that bad. It does have its moments. In a broad and somewhat abstract way I think it has tried to hard as of late to become a physical science and left it's explanatory roots or at least shifted them too far to the mathematical masturbation side.

    just $.02

    Studying economist would actually be an interesting study. Although I'm sure you would meet a resistance at the academic level that rivals D-Day.

  • ||

    The thing about economics is that, as with astrology, the practitioners can use the events that have happened, the present, and future events to confirm their position.

    Think about incentives, no matter what a person, society, or government does you could say it is acting rational, in hindsight. From the perspective of the researcher these rational behaviors can be quantified, and molded to suit a purpose.

  • ||

    I wouldn't argue that there isn't an art to econometrics as opposed to statistics in the physical sciences. I don't know anyone who takes economics seriously that would. On a mirco level a lot of theories have held true under more constrained experiments. The macro world of course gets fuzzier. It's not necessarily the science, it's the use of the science that gets masturbated into something it's not.

  • ||

    Exactly. It is that the theories and prognostications of macro escape the academic environment and run amok in the real world.

    With so much division in economics it would seem that basing government policy and regulation on such sooth saying could lead to disastrous results. Which, and I'm playing the economist here, it has.

  • Chad||

    a mirco level a lot of theories have held true under more constrained experiments

    Including any number of experiments which found that people do NOT behave like the Homo Economicus which inhabit econ textbooks.

  • ||

    To first understand theory you make it simple. Then you remove assumptions and let those learning observe how things change. Rationality is used and for the most part holds true. You can always toss in a lack of information as a broad stochastic error to balance out differences in rationality.

    If you are speaking of entry level textbooks you are absolutely right, the problem is there is more to the field than just that. Kind of like there is more to math than algebra or basic calculus.

  • ||

    My pet theory is that many of our irrationalities evolved to help us overcome situations where the Nash equilibrium is suboptimal. So in that sense, being slightly irrational makes us better economic actors than a strictly homo economicus model.

  • ||

    Nash EQ != Pareto efficient
    (NEQ provides a place from which to bargain from)

    Like

    Pie != cake

    :^)

    (this board needs more happy faces)

  • Jersey Patriot||

    Or theology.

  • ||

    Eww, I got hit by spittle and misspelled watching.
    Pseudo scientists have the least interesting arguments, all heat and no light.

  • Qiadron||

    Economics is a social science.

  • ||

    the Federal Reserve won't just make dollars to help the U.S. government pay off its debt.

    First time for everything?

    -jcr

  • ||

    Yeah, they won't just make dollars, as in print them. They will also create them out of thin air, electronically, in bank accounts.

    The Federal Reserve has been consistently doing this -- creating dollars to help the feds pay off debt -- year after year after year. It's called inflation. And to think that, despite the overwhelming evidence of the last 80 years or so, that the Fed will suddenly quit inflating the dollar, is not consistent with objective reality.

  • The Angry Optimist||

    Really? They inflate the dollar, "year after year after year", always and forever Amen?

    I think Bernanke is saying they will not explicitly inflate the dollar for the purpose of alleviating debt. You saying that they do this anyway is disingenuous.

  • prolefeed||

    OK, name a ten year stretch where the dollar didn't inflate.

    Hell, name a two year stretch where that didn't happen.

    Are you denying that Bernanke has said that the policy of the fed is, and has been, to create inflation?

    He has said that.

    Are you denying that inflation does help the feds pay off debt?

    That is the effect of inflation.

    Are you saying that the Federal Reserve doesn't make dollars (via inflation)?

    They do.

    Or are you saying that they do consistently make dollars via inflation, but the effect isn't to help pay off debt?

    That is the effect.

    This statement is objectively true: The fed will almost certainly make dollars, and those dollars will help the feds pay off debt.

    This is the exact opposite of what Bernanke said, and yet you say I'm being "disingenuous" for pointing out that he's saying something that is objectively not true?

    What would I have to do to be ingenuous?

  • The Angry Optimist||

    This is what you said:

    "The Federal Reserve has been consistently doing this -- creating dollars to help the feds pay off debt -- year after year after year."

    Now, if you want to play semantics, that's fine, but you know what you meant and so did everybody else.

    There is a difference between these two statements:

    The Federal Reserve has been consistently doing this -- creating dollars to help the feds pay off debt

    and

    The fed will almost certainly make dollars, and those dollars will help the feds pay off debt.

    The former makes it sound as if inflation occurs with the specific intent of helping the government pay off debt (something wholly untrue); the second makes it sound as if it's a side effect, which is true.

    Man up and admit what you said and stop playing games.

    Hell, name a two year stretch where that didn't happen

    1927-1933.

    This is the exact opposite of what Bernanke said

    No it very fucking well is not:

    Rep. Brad Sherman, California Democrat, asked Mr. Bernanke directly whether the Fed would consider [running moderate inflation rates of 4 percent to 6 percent as a partial solution to the U.S. debt problem]

    And Bernanke said "Yeah, we're not doing that."

    So you can mischaracterize all you want, but today Ben Bernanke spread some goodness and light, and you'll just have to deal.

  • ||

    As a practical matter, it was probably cheaper to bail out the FI's then sit aside while the financial system disintegrates.

    Again, nobody wanted to do it,

    Actually, a lot of people did want to do it, and then did it, and then pretended that they didn't, hoping that most observers wouldn't understand the concept of "revealed preference".

    but what was the practical alternative?

    Not creating moral hazards. Not stealing from the taxpayers to bail out irresponsible people who ran their businesses into the ground. Letting big businesses fail and having their accounts go to smaller businesses not run by fuckups.

    Financial crises do not fix themselves. There is no spontaneous order in a financial crisis.

    Citation needed.

    Really? All the financial crises that have ever occurred in history have only ended when governments intervened? WTF?

  • Colonel_Angus||

    Economics is not a science like chemistry, physics, or even biology that can be verified mathematically. Its barely a science at all, more like a philosophy. Sure, you can try to show correlations mathematically, that's why fucking Paul Krugman has a nobel prize. You should put less faith in "econometrics". It's not difficult to understand that loose monetary policy contributes to an artificial economy based on politically favored market sectors.

  • MNG||

    "Economics is not a science like chemistry, physics, or even biology that can be verified mathematically. Its barely a science at all, more like a philosophy."

    See, I think these kinds of comments are just goofy. Is economics involved in the study of the actual behavior of actual people in the actual world, or isn't it? If it is then its claims must be falsifiable and open to empirical verification/falsification and we should do that as best we can. Is it complicated to do the measurments and stuff to do that? Sure, but every science has its challenges in that area and they muddle along as best they can. Giving up on it, saying it is "unpossible" is not helpful. That's what postmodernists do, and look how useless that shit is.

  • Kant feel Pietzsche||

    See...the fact that economics studies human behavior, just like psychology and sociology is what makes it a SOFT science. And that's being generous. See..in a hard science you can conduct experiments to test your theories, patiently eliminating variables, until you can arrive at a verifiable conclusion. In the "soft science" voodoo world, 1,000 "experts" make predictions based on past behaviors, 3 of them turn out to be correct, and they share a Nobel. You can't eliminate variables in voodoo science, because that is all there are. Even studying one person, much less 6 billion.

  • MNG||

    And so you prove you know little about either "hard" or "soft" science.

    Yeah, measurements in "hard" sciences like physics are certainly never problemattic!

    As to your evaluation of "soft" sciences", I'm curious as to how your childish invocation of predicting any single case is supposed to invalidate the rather consistent probablistic patterns social scientists find over and over? Yes, it is hard to predict with certainty any one person is a killer, but we can be sure, year in and year out, that most killers will be young, and men, etc.,

    You're a fool.

  • MNG||

    And so you prove you know little about either "hard" or "soft" science.

    Yeah, measurements in "hard" sciences like physics are certainly never problemattic!

    As to your evaluation of "soft" sciences", I'm curious as to how your childish invocation of predicting any single case is supposed to invalidate the rather consistent probablistic patterns social scientists find over and over? Yes, it is hard to predict with certainty any one person is a killer, but we can be sure, year in and year out, that most killers will be young, and men, etc.,

    You're a fool.

  • Colonel_Angus||

    And here comes Mr. Political Science Terminal Degree.

    Are you aware that pretty much anything in chemistry can be predicted nearly 100% accurately mathematically before even conducting an actual experiment?

    Meanwhile, any mathematical calculation in economics can easily be disputed because those numbers are based on someone's opinions about a system that occurs haphazardly. Bullshit like "multipliers" and "externalities". Seriously, the mathematical techniques developed in economics often end up being more beneficial when adapted to other scientific fields than they help to explain economics itself.

  • Charles||

    I think you've got it backwards -- it's the very lack of easily quantifiable results that make the social sciences so much harder than the so-called "hard sciences." I mean, if a math formula is wrong, you can generally test it and see. If a theory about why some countries are poor or some group of people is unsuccessful is wrong, it's much harder to figure out if so and why.

    It's like this: it's really easy to program a computer to do algebra, which is something that's complicated but we can explain. It's impossible to program a computer to understand why a marriage didn't work, or even to be able to take part in a conversation.

    The things that look complicated and quantifiable aren't harder, they're just smaller. A single person can understand why a function in calculus does what it does, and correctly tell what should happen every time, but literally billions of people still don't understand why certain people like other certain people, despite years of study.

  • ||

    i seriously hope this was a funny joke...

  • Kant feel Pietzsche||

    Here, I'll give you a perfect example. I have never committed a violent offense in my entire life.

    Now, try to predict, with reasonable accuracy, the likelihood that I wouldn't snap your snarky little pencil neck like a twig if we were currently face to face.

  • MNG||

    I think for most people what goes on in the fed is something like what goes on in the Chocolate Factory in Willy Wonka, but they are making dollars instead of yummy candy bars.

  • OMG||

    For a few of us with a bit more direct knowledge of the financial system, it is more like the sausage made in a slaughterhouse. Once you get a good look at how its really made, its scary enough to keep one up at nights.

  • MNG||

    I think one reason for concern about the Fed is this: everyone agrees it has an awesome influence on our interests, yet beyond that people have widely varying views of what it does and what it should do. Given that a huge chunk of people must realize that the Fed is involved in something-they-know-not and/or things they disagree with, all admittedly with profound effects on their interests...That should trouble anyone...

  • OMG||

    I think there is only one mission that the Fed ever should have had: keep with money supply roughly in line with the demand for money (which, by its very nature, also implies a stable exchange rate against an index of currencies with the country's major trading partners).

    There is ONLY one reason for the Fed to exist - it is too tempting for economically illiterate and bought and paid for politicians to treat the Fed as a printing press and piss all over the currency (which of course would run contrary to the above mission).

    Hence, the rationale for Fed independence. However, since the Fed has decided to abdicate its independence I find it hard to argue with those who see it as a force of destruction. I just don't know what the alternatives are (as putting control of the printing presses directly in the hands of Congress would be the national equivalent of swallowing cyanide)

  • OMG||

    Of course this whole thread is bullshit.

    What is to talk about here, last year the Fed DOUBLED its balance sheet, now holding a combined $2T in treasuries and MBSs. Since the MBSs are almost all GSE guaranteed, and since those guarantees are backed with an unlimited guaranty by the full faith and credit of the US Govt, it is hard to see how an MBS shouldn't be seen as a Treasury with mortgage backing (even if the government refuses to include those liabilities in its debt calculation - in a move that would have embarrassed Enron's auditors for sheet ballsiness).

    It's easy to say you ain't gonna let any horses out of the barn after you've already kicked down the door and set it on fire.

  • Bill Woolsey||

    The Board of Governors is appointed by the U.S. President with the approval of the Senate. While the 12 Federal Reserve Bank Presidents are chosen by the boards of directors of their banks, and are mostly selected by the bankers in their district, they all much be approved by the Board of Governors.

    If the politicians what to create money to pay off debt, they will appoint central bankers who believe it is a good idea. Without changing the Federal Reserve Act, this would require some time.

    As for Paul's audit proposal, the notion that having an outside review, or reviews, of past policy decisions is an interference with "independence" is absurd. The Fed could use some accountability. The Fed, as an institution, needs to regularly accept that they made errors.

    I think the status quo is very much broken, and it needs to be fixed. I think James M. Buchanan's call for a Constitutionalization of Money is on target.

    I think the approach to policy of slow, gradual adjustments in a target for the overnight lending rate based upon an output gap and aimed at having the core CPI rise 2% each year from where it happens to be, has proven to be a failure.

    The dominant approach to macroeconomics is about promoting the Myth, or perhaps, Nobel Lie, that the Fed can do no wrong and that it is aways the economies fault. Generally, I think modern Macro puts the pieces together much better than Ron Paul's amateur "Austrian" approach. But at least he wants to hold the Fed accountable for its errors.

  • Bill Woolsey||

    OMG:

    Your points about the Mortgage backed securities are well taken. While many may be "toxic assets," the ones held by the Fed are the problem of the U.S. Treasury at this point. As far as the Fed is concerned they are equivalent to long term bonds.

    Anyway, if and when the demand by banks to hold reserves falls back to normal, the Fed will need to sell about $1 trillion in assets, nearly all of which are government bonds and reduce the quantity of the reserves bank to the "normal" level, less than $100 billion. Something like a 95% decrease.

    Bernanke has said that they might raise the interest rates they pay on those reserves, so that the demand for them will not fall. My guess is that they plan to do both, gradually selling off much of the asset portfolio and adjusting the interest rates paid on reserve balances to that the demand by banks to hold them remain equals to the change.

    Either approach means that Congress will not get the fiscal benefit of the Fed holding those assets. Either the Fed sells them, or else the Fed takes the interest in collects from Congress, one way or another, and passes it on to banks.

    Bernanke recently pointed out, correctly, that expectations of a fiscal breakdown in a few decades could turn into government funding problems today. And, if that happens, the current group at the Fed will not inflate today. Or rather, presumably they will continue to inflate at 2 percent rather than at some much higher level needed to solve what could be serious funding problems.

    That's good.

  • robc||

    Does anybody else find it funny that someone who claims to be an academic economist would demand that Austrians produce statistical and econometric proofs?

    Pingry is either an idiot or a troll. Most likely both.

  • Warty||

    Let's say you're an astrologer. You love discussing the minutiae of the influence of Jupiter, etc. You encounter someone who tells you that everything you believe is an elaborate house of cards which are smeared with bullshit. How do you react to him?

  • robc||

    Let's say you're an astrologer

    I cant accept your premise.

  • Kant feel Pietzsche||

    Let's say you're an astrologer. And let's say you're an idiot. But I repeat myself. (Apologies to Samuel Clemens)

  • ||

    +!

  • MNG||

    Hey, Cowardboy, what, Austrians don't have to go by the rules of falsifiability or empirical verifiability? I answered this goofy idea above: if Austrians don't want to make any empirical claims about the actual world, then great. If they do then we are going to expect them to pan out.

  • ||

    I love when the Keynesian side argues that the Austrian side doesn't have an empirical argument. Yet the Keynesians are perfectly willing to proclaim models that have unobtainable assumptions or that just flat out omit dependent variables to make them work are the end all be all to macro theory. One group says heh we get a lot of it, but man that is some complicated shit so manipulating based on the little we get is probably a bad idea. The other side comes out swinging saying we're so smart we get it all and we can successfully manipulate the macro and account for all the variables.

    Personally assuming you are capable of manipulating something so vast, with even the smartest at the helm, is arrogant. Understanding why something happens does not translate into being able to reproduce or alter the event again.

  • MNG||

    So, since all empirical claims concerning economics are hopelessly unverifiable, will the Austrians please STFU about them? I doubt they will myself...This is some laughable shit.

    Oh, and pardon me while I laugh at your juvenile false dilemma (either Austrians or Keynesians). Thanks for letting us know your knowledge about the field called "economics" is minimal at best.

  • ||

    I clarified the two ends of the spectrum up thread. The argument in this thread is generally based on the two while one side is screaming show me the empirical proof and models. So, pardon me while I laugh at your inability to see the manner in which the statements were framed. The thread after all has been one side screaming you Austrians need to show us the money. You yourself named the far point to one side. What is wrong with my naming the farthest point to the other side. Thanks for showing your smugness in assuming that anyone would assume the two are the only and absolute theories out there and that there is nothing in between. Maybe the questioning of understanding should start inward. '

    What is laughable is not assuming that every point along the spectrum and especially the closer you get to each end uses this same argument.

    Thanks for the laugh with respect to your assumptions and the arrogance with which you made them. You never fail to disappoint when it comes to your assuming your own superiority.

  • ||

    He/She is not an economist. If he/she has a PhD in econ I'll eat my hat, your hat, and the hat of the bum that sits down at the bus stop.

  • ||

    damn libertarians... willing to take hats from the homeless. what next?

  • ||

    Yeah Yeah Yeah, promises, promises and more promises. LOL

    Jess
    www.total-anonymity.cz.tc

  • TP||

    I have to agree with Mr. Pingy (above) on one point regarding HR 1207. One only needs to look at the sponsor of the Senate version of the Bill. Bernie Sanders, a Social Democrat. What do you think his intentions are? I think there is a belief among Libertarians (myself included), that an independent audit of the Fed would cause so much public outcry, and expose it for what it really is, that the next step would be to abolish it. But, do you think Mr. Sanders is thinking along those lines? Of course not. I'm not saying I'm against HR 1207, but libertarians need to be very careful who they get in bed with, and be sure not to allow the views of those (Mr. Sanders), to be associated with libertarianism. It's bad enough we're in bed with Alan Grayson on this.

    As far as Pingy's view on Austrian macro, I always thought Austrians believed that all macro is complete bullshit, or pseudoscience, particularly when it comes to central planning, and using something like CPI to actually measure inflation.

    Somebody explain to me again why we need the Fed at all. To be a lender of last resort? I don't think I could even support that antiquated notion of the Fed. In reality, the Fed hasn't stabilized anything, and there's evidence that they actually make things worse. And it was Austrians that predicted this crash in 2006, and were laughed at by people like Mr Reganomics, Art Laffer, and Mr. Nixonomics, Ben Stein. Well, they're not laughing now, are they? Well, actually, they are. Because Austrians are now predicting a crash of the dollar. Those same people who thought real estate could never go down, are the same ones that think the dollar can never crash. God help us.

  • ||

    What do you think Sanders' intentions are? I certainly don't know.

    As far as the dollar crashing, isn't the dollar's value always relative to other currency's? The main currencies in the world are the Euro and the Dollar. I would agree that the dollar is going to crash if not for the fact that the Euro is in even worse shape. Oddly, I don't see how the dollar can crash, if there is nothing for it to crash against. You could say maybe the Chinese Yuan or the Japanese Yen will now rule the world. But I don't see those currencies in that much better shape and both governments have been historically committed to keeping their values low.

  • Warty||

    I would trust Bernie Sanders an infinite amount more than Nancy Pelosi.

  • TP||

    Agreed. But that ain't saying a (w)hole lot

  • TP||

    Agreed, the only reason why the dollar hasn't crashed is because the Euro and Yen are in the toilet, and it doesn't look like either are going to rebound any time soon. That's probably the only saving grace. I guess it's a race to the bottom.

    As far as Sander's intentions, it's fairly clear to me, that he wants the government in charge of all central planning that will benefit the "middle class". That's what Socialists do. However, there are so many definitions of social democracy, it's hard to tell for sure (I guess that's also true of libertarianism). His website is ambiguous, at best. However, he does support single-payer healthcare, and labor unions (broadly defined).

  • ||

    As far as the dollar crashing, isn't the dollar's value always relative to other currency's?

    It's also relative to precious metals and commodities, though. If all the world's govt currencies crash simultaneously, we'll still notice because the price of oil and gold will go through the roof in all of them.

  • Chad||

    I WANT the dollar to crash. Nothing else will create the employment we need here in the US.

    Yes, that will make cheap crap from China more expensive, but we would be better off for it.

  • TP||

    If and when the dollar crashes, the REAL revolution will begin.

  • ||

    Wouldn't it be better of the Yen rose than if the dollar crashed? That's what we've been trying to get the Chinese to do for years. They fix their currency at an artificially low value against the dollar.

  • ||

    er yuan, I should say.

  • Chad||

    We are going to fall against a lot of currencies, not just the Yuan.

  • Warty||

    Jon Stewart once asked Alan Greenspan why we need the Fed. Stammering ensued, as I remember.

  • TP||

    That name is not allowed to be spoken in my house. Please refrain. Thank you.

  • robc||

    JS or AG? A case can be made for either.

  • TP||

    I have no problem with comic relief. I actually like John Stewart. I just wish I could get Comedy Central in HD.

    *Hint*

  • no one||

    Oh please. Stewart is a moron. Just the other day he said something to the effect that small governments have never been shown to be more effective than government intervention. He's a dumbass with a microphone.

  • someone some of the time||

    He's a comedian and as such is a dumbass. Anyone who thinks they are supposed to infer news or truth from an entertainer is idiotic.

  • ||

    Whew. This thread is making my head spin. Makes me just wanna shack up with Warty and a case of Jagermeister.

  • Bill Woolsey||

    Pingry comments suggest a good grasp of mainstream macro. He almost seems like he could be a student of Bernanke. He certainly comes off as a bit of a fanboy.

    Still, some of the comments on this thread seem to be based upon the notion that the only alternatives are vulgar Keynesian economics or else vulgar Austrian economics.

  • ||

    The argument is generally framed that way for the sake of the argument. You can spend all day discussing the minutia of each. Which is more accurate, but the argument then enters into the esoteric forest of economics.

    I don't think anyone assumes the absolute of each the holy grail. But movement along the spectrum from the half way point, where ever the hell that is, would be the argument.

    You should note that it's Ping and MNG that are using Austrian first, and the ones framing the argument in absolutes. Which again isn't wholly wrong since it's the simplest way to discuss the theories. But when they then decry the use of absolutes it's a little funny.

  • MNG||

    Look, if you think only Keynesians demand empirical falsifiability or verifiability, then you are drunk or something. That's what SCIENCE (at least empirical science) demands Sir Goofus, and to the extent any economists, whatever label they fall under, makes comments about empirical phenomena, then them's the rules. Asking Austrians (or whoever) to show us the empirical verifiability of their claims is not some Keynesian trick, it's what's required of any science making empirical claims.

  • MNG||

    Look, if you think only Keynesians demand empirical falsifiability or verifiability, then you are drunk or something. That's what SCIENCE (at least empirical science) demands Sir Goofus, and to the extent any economists, whatever label they fall under, makes comments about empirical phenomena, then them's the rules. Asking Austrians (or whoever) to show us the empirical verifiability of their claims is not some Keynesian trick, it's what's required of any science making empirical claims.

  • ||

    You fucking moron. I said both sides do it. Take that sheep skin and scratch out the science part. You are about as analytical and critical as my decisions on whether to read the paper or a trade mag as I take a shit. Hell I probably put more thought into that alone than you do into most of your daily work.

    The funny thing is I agree with your position, you just want to be so fucking superior and right that you can't even see the agreement. Goddamn team sports mentality from politics leaks into economics enough. Retarded political scientists like you politicizing everything doesn't help the problem.

    Jesus you are an arrogant twat.

  • ||

    Let's call it what it is,pass the buck. Does anyone think Barry or this current congress has the balls to do the right thing? Obama wont last three more years.

  • ||

    I WANT the dollar to crash. Nothing else will create the employment we need here in the US.

    Why do you hate America, Chad?

  • Chad||

    Why does the dollar being over-valued help America? By putting our balls in the hands of the Chinese?

  • ||

    Anybody who believes the fed is currently insulated from politics is not worth listening to.

  • Mad Max||

    'Bernanke to Congress: You Are Going to Have to Cross That Fiscal Valley Yourself'

    Too wordy, how about:

    'Bernanke to Congress: You Are Going to Have to Falkland Yourself'

  • Forrest||

    Wow, no mention of the Chile earthquake today on Reason? I'm not surprised. 500 times more powerful than the Haiti earthquake, but the damage is much less severe thanks to zoning and building codes, which wouldn't exist in libertarian paradise because they violate sacred property rights.

  • ||

    Uh, you sort of left out the difference in wealth, didn't you?
    Why am I not surprised that a statist would focus on one issue and ignore any of the more important ones?
    Go away, gas-bag.

  • ||

    Ya, over 50% below poverty in Haiti and around 20%ish in poverty in Chile is a striking difference. (I think those percentages are close.)

  • ||

    Care to define "poverty"?
    How about with reference to the USD:
    Chilean per capita GDP: $14,900
    Haitian ditto: $1,300.

  • Forrest||

    That's only off by a factor of 10. The earthquake was 500 times more powerful.

  • ||

    Yep, on $1,330/year, why, you'd really be interested in how you could build your hovel to seismic standards, wouldn't you?
    Exactly how dense are you? No, don't bother answering; it'll only make you look worse.

  • ||

    I was just going by a stat I had read somewhere, hence the qualification. The point still stands. One country had the means to solve its problems due to wealth the other didn't. Assigning the reason for the wealth is another story.

  • ||

    Chile has dealt with quakes for decades. They prepared. Attempting to give absolute credit to building code is probably not the most sound argument. Building practices evolving throughout history to adapt due to natural events and human conflicts with and without government isn't uncommon. You can even make the argument that all building codes do are take the best and most proven ideas that are usually already in production and make them known, while it has recently turned into the opposite (not uncommon for government) of taking every single event that occurs and mandating some legislation aimed at stopping rare and or randomly occurring events. (while telling people what to do with their property)

  • TP||

    Technically, Haitian buildings were designed to withstand hurricanes, not earthquakes. Why? Fuck if I know. They do live on a fault line. So, your accusation is wrong. They were built to code. Hurricane code. It was the "codemakers" (planners) that fucked up.

  • Forrest||

    All the libertarians I know oppose both hurricane- and earthquake- inspired building codes.

  • ||

    Right. And the lefties I know favor Stalinism.

  • TP||

    All the libertarians [insert ethnic or racial slur] I know...

    See the problem?

  • ||

    This Hawaii "tsunami" is disappointing as hell. It's like watching the tide go up and down a couple of feet.

  • Mike M.||

    Bernanke is my shepherd; I shall not want.
    He maketh me to lie down in greenbacks.
    He leadeth me beside the still economic waters.
    He inflatheth my dollar.
    He leadeth me in the path of fiscal righteousness in His name.

    Yea, though I walk through the valley of the shadow of bankruptcy,
    I will fear no destitution: for thou art with me.
    Thy prime rates and thy T-Notes, they comfort me.
    Thou preparest a table before me in the presence of my Chinese, Saudi, and Japanese enemies.
    Thou anointest my head with snake oil; my accounts runneth over.

    Surely solvency and low interest rates shall follow me all the days of my life,
    and I will dwell in the House of the Fed forever.

  • PIRS||

    Brilliant!

    +googolplex

  • TP||

    Excellent. I'm stealing it. I'll donate $20 bucks to the Campaign for Liberty, in your name.

  • TP||

    He inflatheth my dollar.

    ROFLMFAO

  • Qiadron||

    Ahahahaha, that is amazing. I love it!

  • Kant feel Pietzsche||

    Chthulu, that was so much fun I have to repost.

    "Economics is not a science like chemistry, physics, or even biology that can be verified mathematically. Its barely a science at all, more like a philosophy."

    MNG: See, I think these kinds of comments are just goofy. Is economics involved in the study of the actual behavior of actual people in the actual world, or isn't it?

    See...the fact that economics studies human behavior, just like psychology and sociology is what makes it a SOFT science. And that's being generous. See..in a hard science you can conduct experiments to test your theories, patiently eliminating variables, until you can arrive at a verifiable conclusion. In the "soft science" voodoo world, 1,000 "experts" make predictions based on past behaviors, 3 of them turn out to be correct, and they share a Nobel. You can't eliminate variables in voodoo science, because that is all there are. Even studying one person, much less 6 billion.

    Here, I'll give you a perfect example. I have never committed a violent offense in my entire life.

    Now, try to predict, with reasonable accuracy, the likelihood that I wouldn't snap your snarky little pencil neck like a twig if we were currently face to face.

  • ||

    The differences are not only construction of experiments versus observing natural events then extrapolating data. It's reproduction. In the physical sciences and even many social sciences you can reproduce your experiment and compare the results. Economics doesn't get the luxury of exact reproduction. This doesn't mean it isn't meaningful, just that there are things to consider when reading an econometric study or economic study compared to reading a physical science study. I think MNG is just trying to say it isn't useless or absolute, although he appears to like using the absolute when referencing spectrum to make his point then turn on a dime and try to use the same use of absolutes to question his position.

  • Chad||

    You would be surprised how difficult it is to repeat your experiments in physical sciences, and how much corporate science boils down to banging your head against a thousand and two sources of variability in your process.

  • MNG||

    This comment is as stupid the second time around as it was the first!

  • MNG||

    "I have never committed a violent offense in my entire life.

    Now, try to predict, with reasonable accuracy, the likelihood that I wouldn't snap your snarky little pencil neck like a twig if we were currently face to face."

    I know you did not intend this to be as hilarious as it actually is, but of course knowledge of something like the lack of a prior criminal record is exactly the thing that would enable any criminologist ("soft social science") to significantly improve a prediction, with reasonable accuracy, of future behavior. And they would be right far, far more than "chance" could explain when applied to a group.

    You're "deconstructing" yourself without knowing it, what a delight...

  • Kant feel Pietzsche||

    Every repeat-offender was a first-time offender once, sweetie. My point is that there are waaaay too many variables in the human sciences to often make authoritative predictions, compared to a "hard" science.

    Oh, and by the way, your use of the term "deconstructing" significantly improves my prediction, with reasonable accuracy, of your future behavior. And I would be right far, far more than "chance" could explain.

  • Charles||

    Here, I'll give you a perfect example. I have never committed a violent offense in my entire life.

    Now, try to predict, with reasonable accuracy, the likelihood that I wouldn't snap your snarky little pencil neck like a twig if we were currently face to face.

    It's just not clear to me why the difficulty of doing something makes it a less valuable pursuit. The "soft" sciences are difficult to measure because they're so vast (taking in, most of the time, some elements of the entirety of human behavior), not because they're not real.

  • ||

    It's just not clear to me why the difficulty of doing something makes it a less valuable pursuit. The "soft" sciences are difficult to measure because they're so vast (taking in, most of the time, some elements of the entirety of human behavior), not because they're not real.


    The problem is often because of this difficulty, pseudo-science can sometimes worm its way in. The field of psychiatry and psychology was founded by people (Freud, Jung, etc.) acting in completely unscientific ways.

    Too often I see appeals to authority ("we have a consensus of 100,000 scientists"), confirmation bias, techno jargon and the pragmatic fallacy ("thank god for the bailouts, as it prevented a horrible depression") passed off as scientific evidence when it's nothing of the sort. Mathematical equations does not a science make.

    The problems we're having with politicized science in many, many fields is that the researchers who have the most success are the ones who tell the bankrollers what they want to hear. That was the biggest reason for Keynes' success, he told the folks in charge precisely what it was they wanted to hear.

    Then this success leads to these people being granted an authority status and that tends to reinforce the idea that they're right.

    And that's not how science is supposed to work. So when someone says "all legitimate economists think Ron Paul and the Austrians are kooks" I find it very unpersuasive. I haven't a clue whether they're right or not, but they're say so isn't enough to convince me of it, particularly when these same people kept assuring us that the crisis that just happened, wasn't going to happen.

  • Kant feel Pietzsche||

    Thank you for taking the time to elucidate on my point. I was tired and cranky.

  • MNG||

    I'm not sure Freud was acting in "completely unscientific ways" but perhaps you can convince me of that.

    Also, pseudo-science creeps into the hard sciences quite a bit too, especially in periods, like that in which Freud worked in relation to psychology, where the discipline is in its early development.

  • ||

    There was a funny bit on Cheers where Frazier starts to analyze someone's problems by quoting Freud, and his wife Lillith says "Please Frazier, why don't you just drill a hole in his forehead and let the evil spirits leak out."

    Robert Carroll is hardly a neutral observer on many subjects (even though I agree with him the vast majority of the time), but his views on Freud are pretty uncontroversial: a pseudoscientist who was wrong about almost everything, but a very important figure in the advancement of psychology anyway.

  • Kant feel Pietzsche||

    Not unless there's anything unscientific about shooting up coke and daydreaming about whether cigar=cock.

    NTTAWWT.

  • m||

    anything scientific about it either?

  • ||

    the damage is much less severe thanks to zoning and building codes,

    [citation needed]

  • ||

    yawn

  • Kant feel Pietzsche||

    While we're on the subject, MNG: I will grant you that you are skilled in rhetorically probing for the soft under-belly of your opponent, and applying snark. I'm fairly good at it also, which you substantiate by your need to push back. However, that doesn't provide proof that EITHER of us has anything of substance to say.

    I have been dealing with people like you my entire life. I also have a 50,000+ word vocabulary, and the means to use it. The difference is, I don't feel compelled to use that skill like a blunt weapon on people who don't. And asshole intellectual bullies like you are always first taken aback when I bitch slap them, then furious. It's all good, I love you too.

  • ||

    The proper response to braggarts is not to brag. If you are indeed a skilled rhetorician it will be plain for all to see -- no need to toot your own horn.

  • Kant feel Pietzsche||

    That, and your liberal arts degree will get you a minimum wage job working for a fellow who calls you "college boy".

  • MNG||

    I don't share your bitterness. My liberal arts degree helped me get a very good job which I like.

    I'm afraid my "substance" is the same as it was in my first post on this subject: to the extent that economics is about actual behavior of actual people in the actual world it's claims, whether from "Austrians," "Keynesians" or whatever, must be open to processes of empirical verifiability. That it may be difficult to do that is no argument against the validity of trying.

  • Kant feel Pietzsche||

    Sure you do. ;^) You just couch it in textbook language, so you can appear superior rather than nasty. Anyone in who doesn't have the occasional bout of bitterness isn't playing attention.

    On the other hand, it is entirely possible that the combination of my fucked-up hip allowing me a grand total of 2 hours of sleep, and a particularly annoying poster on another site, might be affecting my good humor.

    I don't disagree that there are things to learn about ANY subject by observing and mining for trends. I just object to authoritative pronouncements on subjects that continue to be tentatively understood at best.

    We'll just let it slide.

  • Kant feel Pietzsche||

    Whoops! Sorry to be ambivalent, but I just re-read your initial response to me. In the space of a few lines, you dismissed me as knowing nothing about either soft or hard science without knowing a thing about me, based merely on the fact that I disagreed with you; called me childish; and then concluded by calling me a fool.

    Yeah, let's stick with FUCK YOU!!!

  • MNG||

    Any "snark" is, I guess, attributable to my comment that I find comments to the effect of "well economics has so many variables it ain't no science" to be goofy. Well, I'm guilty as charged there, I actually do find that comment goofy. I think applying the rigors of science to the study of people engaged in economic behavior will improve our understanding of said behavior. Perhaps it may not perfectly capture the picture of what is going on, but it is surely better than simply declaring the study of the subject unamenable to the scientific method.

  • ||

    Screw the Fed

  • ||

    Well, much to my pleasant surprise, the Fed won't monetize the debt. Between inflation and higher taxes, I'll take the higher taxes.

  • TP||

    Right, you can always cheat on taxes.

  • Wesley Snipes||

    DAMN STRAIGHT!

  • RichN||

    "Mr. Bernanke for the first time addressed concerns that the impasse in Congress over tough spending cuts and tax increases needed to bring down deficits will eventually force the Fed to accommodate deficits by printing money and buying Treasury bonds — effectively financing the deficit on behalf of Congress and spurring inflation in the process."

    As opposed to printing trillions out of thin air sending to banksters around the globe and letting them purchase the T-bonds. FUCK! Charles Ponzi, Bernie Madooff were rank amateurs compared to these crooks!

    "If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
    -–Thomas Jefferson

  • ||

    TP: "Agreed, the only reason why the dollar hasn't crashed is because the Euro and Yen are in the toilet, and it doesn't look like either are going to rebound any time soon."

    I earn in JPY. I think early last year it was about $1 = ¥110. Right now it's about $1 = ¥90. Granted, Japan is just waiting to implode, but I'm loving either the strong yen, the weak dollar, or both. The question is what to do with that yen. Buy US stocks, CAD, AUD, a couple tons of tinned eats and a tract of land in west Texas, or a one-way ticket to a SE Asia country and marry a local to create a brood of the original Social Security?

  • Ed H.||

    I'm not worried about China. Russia? Yes. Putin is unpredictable.

  • ||

    Bernake lies a lot, dont forget. He has also gone overboard with printing. Measuring this slippery eel, I would suspect he is ready to do a 1929 number, when the Fed cut out the money supply it extended the depression. A buck was very hard to come by. Any time money supply is cut off, deep depression follows. I would say by Bernake's past track record, he will not do this safely nor correctly and we may be in for something far worse than 1929. However, who can believe a liar?

    Perhaps the Treasury should bring back the old Lincoln greenback temporarily, with Treasury, not Bernake, carefully controlling the amount. The Fed won't like being bypassed, by hey, if they cant do the job, step back and let someone competent do it, like the Treasury, which is supposed to be doing it anyway.

  • Right Wing Realist||

    Damn it. I was hoping for some help on my school loans.

  • Invisible Finger||

    Bernanke won't make dollars, but he'll throw dollars from helicopters if he has to (his words).

    The man's words are wooden nickels. Only his actual actions are worth consideration.

  • sathi2000||

    the move runs the risk of damaging the dollar's reputation and spawning much higher inflation that would be debilitating to the U.S. economy and living standards.
    http://destinationsoftwareinc.com

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