Ron Paul vs. Paul Krugman: The Bloody Aftermath

It was the conflagration over inflation! The bash over fiat cash! Ron "End the Fed" Paul vs. Paul "QE IV-VII" Krugman, heating up the pixels at Bloomberg News the other day:

The video:

The transcript for all my pre-McLuhanites in the house.

And the aftermath:

*Mediaite sees Krugman being a dick in his supercilious, fact-free response to Paul afterward at the New York Times website:

what’s even more unnerving about Krugman’s post is the way he describes Paul’s rhetoric as “Gah gah goo goo debasement! theft!” This is how I imagine Nobel laureate Krugman hears all of his opponents. Dr. Paul, willing to engage a well-known popular economist, brings up serious points about monetary policy (points that have long been made by Nobel laureates like F.A. Hayek and Milton Friedman), and Krugman behaves like the child with his fingers in his ears: “Nah, nah, nah, I can’t hear you!”

Krugman, nose firmly pointing upward, describes his debate with Paul as “the perfect illustration of a point I’ve thought about a lot, the uselessness of face-to-face debates.” But contrary to what Krugman may think, the general consensus about the “Paul vs Paul” segment was that it was a truly thoughtful discussion, a refreshing break from the usual talking-heads banter.

He continues on:

"Think about it: you approach what is, in the end, a somewhat technical subject in a format in which no data can be presented, in which there’s no opportunity to check facts (everything Paul said about growth after World War II was wrong, but who will ever call him on it?)."

No one will call Dr. Paul on it, because he was right about spending cuts after World War II. From 1944 through 1948, the federal government cut spending by roughly 75%. I don’t know how that could be at all ambiguous to Mr. Krugman.

Krugman's own response to the debate, which Mediaite quoted above. My favorite from his comment thread:

Let's pretend for a moment that the face-to-face debate was useless and didn't allow you to present the facts to prove Ron Paul wrong. You certainly didn't use the opportunity in this blog entry to dissect Ron Paul's points and present your data. The video is available for your viewing. If you wanted to you could easily use the video to take out Ron Paul's quotes and prove him wrong with dates, charts, numbers and historical facts. You did not do any of that. If it matters so much, why have you not done so? 

Especially on that growth after WW II point, on which see this essay by Richard Vedder and Jason Taylor. David Henderson, while thinking Paul more than held his own against Krugman, notes Paul was wrong on the "slashed taxes" part after WW II.

Krugman also later weighed in with more contentless insults about how his enemies only talk about ancient history and not recent history, not explaining what distinguishes his currency debasement desires from Diocletian's, and not mentioning the 20th century history of inflation and economic crises and ballooning debt that Paul thinks can be blamed on central bank and government policy.

Despite what Krugman says, Paul and Paul fellow travelers such as best-selling author Thomas "Meltdown" Woods talk far more about the past century's history of what they see as government mismanagement, mistakes, bubbles, and even hyperinflations than they do ye olde Romans.

*Tyler Cowen weighs in, with a fair amount of what seems to me like deliberate pretending not to understand where Paul is coming from. Of course, one can understand what he's saying and disagree, but then one has to argue why, and I do understand every blog post isn't sufficient space to explain, say, why you think Misesian business cycle theory doesn't hold up.  

I agree with Cowen that Paul doesn't explain what he means sufficiently when he talks of the need for "liquidation of debt," which could mean anything from repudiating sovereign debt to jubilee style debt forgiveness, but I think from context of hearing him talk about this elsewhere, he means that rather than shifting bad debt onto taxpayers, just letting lots of people who are owed money take a hit by admitting that they aren't ever going to get paid back, and letting people make decisions, earn income, produce, from there without having a debt hole to get out of. This gets complicated (everything is complicated) by the fact that someone's debt burden, if they pay it, is someone else's income, and I agree it's never entirely clear what Paul is advocating or why or what good he predicts will come of it when he talks of "liquidation of debt." 

But it was fun to see Cowen poke at Krugman as well, as per:

Christie Romer (!) has shown that economic volatility was not higher before WWII.  (Somehow that’s one Romer paper which isn’t discussed so much anymore.)  That’s a major hole in K’s argument.  Relative to the evidence, he is overreaching when a more modest point would suffice....

Modern liberals have a bad and selective case of 1950s nostalgia.  Krugman is significantly overrating the role of policy here.  More overreaching....

Demographics, plus government gridlock and lower productivity growth, make a higher debt-gdp ratio more problematic than Krugman admits.

Bob Wenzel makes an impassioned and angry Paulite defense of Paul from Cowen

*The New York Sun thinks Paul represented a victory of Hayek over Keynes in the debate:

The point at which Dr. Paul started leaving Mr. Krugman in the dust was when the Bloomberg interlocutor asked him what Dr. Paul would do. Dr. Paul said he wasn’t pressing for ending the Federal Reserve in a fell swoop. He is, he said, for competition among currencies. At one point, Professor Krugman could be heard muttering “I have no idea what that’s about.”

It seems that Professor Krugman hasn’t been paying attention to Congress. What Dr. Paul was talking about is a bill called H.R. 1098, which he introduced in Congress in September. It’s known as the Free Competition in Currencies Act. It is based on the work of Friedrich Hayek, himself a Nobel laureate. Hayek, in the latter part of the 20th century called for the denationalization of money and the free competition of privately issued currencies. The editor of The New York Sun wrote about the legislation in a column that ran under the headline “Ron Paul, Upping the Ante in His Campaign for Liberty, Hoists the Flag of Hayek.”

It would not be too much to say that what one saw unfolding on Bloomberg was the power of the assertion of the ideas of Friedrich Hayek against the ideas of John Maynard Keynes. ...We would never gainsay the importance of fiscal and regulatory reform in igniting the growth our country is going to need to work itself out of debt. But neither of those strategies will suffice. They will have to be done in conjunction with a restoration of sound money. And the more debates we have like the one just aired on Bloomberg, the clearer it will become that no one in public life understands this issue as clearly as the congressman from Texas.

*My own reactions: Ron Paul is not a "pillar of economic thought" as he was introduced by Bloomberg--he is a remarkably effective political polemicist for the body of economic thought of which he is a student and supporter, the Misesian Austrian tradition. Krugman is in fact a Nobel Prize-winning economist. Given that, it is extraordinary how neither of them sounded like technical academic economists, speaking ideas or techniques above the ears of the average TV listener. That's probably deliberate. As Cowen noted, "given that Krugman is a Nobel Laureate in economics, and Paul a gynecologist, the score could have been more lopsided than in fact it was."  

Paul I think was more sophisticated on points like economic imbalances caused by interest rate fixing, the dangers to the masses of inflation, the knowledge problems of planners, and the cronyism implicit in how the Fed makes its decisions about what assets to buy and how money enters the economy, and the value of competing currencies, and the actual realities of trying to use gold as currency in the current legal regime.

Krugman despite his airy attitude of "I'm too sophisticated for this" pretty much had one idea and one trick: we need much, much more government spending and debt to get us out of the Depression he thinks we are in. (I use language like that myself at times in blogging to reflect the continued employment problems, though the actual data don't support the belief that we are in a Depression and my Nobel Prize get lost in the mail.)

Paul believes that government actions actually launch or exacerbate recessions and Depressions, and are not necessary to get us out of them, because of his acceptance of Mises/Hayek business cycle theory, though it was something he chose not to talk about at length here (though he mentions it once and often talks about it at greater length in other contexts). Paul understands that real things are real and money is just money--you can't just create capital by printing money. Krugman wants to keep going higher with national debt. Would Krugman dare risk less government action and spending if that might get us out of the Depression? A trick question, because of course Krugman doesn't believe that's possible--despite the post-World War II example Paul brought up.

Other relevant links from my old blogging:

*Why some of us think Krugman did too essentially advocate a Fed-fueled housing bubble.

*Krugman's love for Asimov's scientistic central planning fantasy, Foundation.

Hey, I wrote a book about Ron Paul.

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  • robc||

    Krugman even loses his keynesian cred. Was he pushing for MASSIVE spending cuts in order to run a huge surplus during the 90s?

    No, no he wasnt. I true keynesian would.

  • sarcasmic||

    Krugnuts revealed he had no coherent argument as he attacked Ron instead of what Ron said.

    Typical liberal.

  • Invisible Finger||

    The correct term is "Krugpot".

  • sarcasmic||

    I like Krugnuts.

  • Scruffy Nerfherder||

    Krugabe is my favorite

  • WarrenT||

    Do the Krugnasty.

  • ant1sthenes||

    I like Kruggymandias.

  • R||

    How about Krugcunt. That way you can bait Ken Schultz too.

  • BakedPenguin||

    I agree with Cowen that Paul doesn't explain what he means sufficiently when he talks of the need for "liquidation of debt,"

    Ron Paul previously pointed out that (IIRC) the Fed holds something like 5 trillion in government bonds, and if this is essentially intra-governmental debt, it could be retired. Perhaps that's what he was talking about here.

  • gaijin||

    Probably being simplistic, but I've always taken RPaul to use the term liquidation of debt as general requirement of free market incentives...in other words, debt must be repaid, or defaulted on, at every level (individual and organizational). The course chosen impacts the incentives and risk assesment of those who lend--be they banks, investors or bond buyers--by enabling individuals in the market to define risk. By continually accumulating debt, with no capacity to pay it off, one merely forestalls the eventual liquidation event, thus increasing the magnitude of impact (vs. small incremental liquidations along the way that provide continual risk signals to market participants)...or not.

  • Scruffy Nerfherder||

    At this point, the liquidation event is going to be unpleasant.

  • LibertyMark||

    gaijin, your description is very good, and is what I have always thought.

    Liquidation means all the actors bear the consequences of their decisions, which provides very positive incentives for the actors which are good for the economy. In other words, banishing the evil monster of "moral hazard".

    It also forces the solutions to these problems to be at the lowest level possible.

  • BulletGibson||

    Dr. Paul has mentioned that before and I believe he also mentioned housing in the interview. He mentioned 10,000 dollar homes. Banks would take a huge hit, but some of them are leveraged as much as 30 to 1. People owning homes would lose value and those buying would walk away from them. It's either that or bulldozing half of the houses and burning half the money supply.

  • Almanian...still||

    I made it about 1/3 of the way through: too fucking long.

    shorter: "krugnuts is krugnuts, argues infantile strawmen instead of points raised - PWNED by RPaul. story at 11"

  • ||

    Come on, man, it's Doherty. He's he king of long posts. But you gotta hang in there for the full payoff.

  • ||

    I prefer more detail. Makes it that much easier for me to argue coherently.

  • Zeb||

    I've always interpreted Foundation (taken as a whole) as saying that even if people get really good at it, central planning will always fail eventually.

  • squarooticus||

    I think Asimov's opinion on scientific statism changed between the trilogy and Foundation's Edge. Clearly, the end of 2nd Foundation hailed the triumph of the double super-secret central planners.

  • Zeb||

    I tend to be fairly forgiving of science fiction writers who portray futures with massive government and central planning an all that anyway. I interpret it simply as things that might be rather than any suggestion of what should be.

  • Trespassers W||

    the double super-secret central planners

    *spoiler alert*

  • squarooticus||

    I hope that was a joke. The book is 59 years old. At some point, people just need to accept that a plot summary is going to be unavoidable.

  • squarooticus||

    Sadly, Ron Paul is tiring to listen to, and speaks in a kind of stream-of-consciousness that is very difficult to follow unless you are already familiar with his talking points. I would rather see Krugman debate someone like Peter Schiff, who can explain his ideas clearly.

  • ||

    Peter Schiff would pop an enormous rageboner and strangle Paul Krugman. So, yes, that would be awesome.

  • ||

    Schiff could say something about the government "robbing Peter to pay Paul", drop his mic, and walk away. Like a true MC.

  • Scruffy Nerfherder||

    Schiff would eat Krugman alive. I would pay to see that.

  • Old Mexican||

    Re: squarooticus,

    Sadly, Ron Paul is tiring to listen to, and speaks in a kind of stream-of-consciousness that is very difficult to follow unless you are already familiar with his talking points.


    You mean familiar with economics as a subject, no?

  • squarooticus||

    I am very familiar with economics as a subject, and Ron Paul still speaks half-complete thoughts and occasional gibberish that I have to finish in my head. He's not a very good debater or public speaker. That doesn't mean he's not honorable or would not make a good president: I simply think putting him in debates against people who are able to very coolly convince people of falsehoods, like Krugman, does nothing to help the cause.

  • LibertyMark||

    I agree with you squarooticus, even though I have infinite love for RP

  • Zeb||

    That would be awesome. Someone should get on the line with Bloomberg news.

  • Trespassers W||

    Schiff also has that certain combination of overconfidence, absence of doubt, and blindness to subtlety, which is common among traders, and while not something I really admire in itself, is AWESOME AND ESSENTIAL in a debate like this.

  • Trespassers W||

    (And just to be clear, I like Peter Schiff.)

  • ||

    Despite what Krugman says, Paul and Paul fellow travelers such as best-selling author Thomas "Meltdown" Woods talk far more about the past century's history of what they see as government mismanagement, mistakes, bubbles, and even hyperinflations than they do ye olde Romans.

    That book really helped me to get a firmer grasp on how interest rates are supposed to work, what they signal, and just how fucked up they are now.

  • ||

    Paul understands that real things are real and money is just money--you can't just create capital by printing money. Krugman wants to keep going higher with national debt.

    I used this analogy for my wayward Hayekian, now Keynesian, friend: imagine a game in which you can away yourself free points as often as you like. It pumps up your score, but it doesn't mean you're any good at the game.

  • Tman||

    Krugnuts made the absolutely indefensible comment that Friedman would be "on the left" of the current debate over monetary policy.

    The fact that he actually believes this is just astounding.

  • rhofulster||

    Krugman and others really like to point to the post war growth as due to pro union, high tax policies.

    It seems to me that the primary factor leading to the US escaping the depression and gaining post war economic primacy is that our industrial base was the only one that hadn't been obliterated.

    This notion doesn't seem to get any play in any corner of the econ commentariat world. Anyone know of any place where this idea has been developed?

  • Concerned Citizen||

    At the end of WWII the USA had 50% of the world's manufacturing capacity. Of course, labor and mgmt used that position to invest in newer factories and maintain their lofty position. Oops...

  • BakedPenguin||

    The death of American manufacturing has been oversold.

  • ||

    Usually they're selling the lack of manual labor used in manufacturing as bad, rather than insisting there's been a decrease in output. Y'know, because having people build stuff by hand is way better than letting machines do it and freeing up some of the labor force to increase productivity.

  • Zeb||

    Any idea if the dollars in the chart are inflation adjusted?

  • BakedPenguin||

    Alack - it's been proven time and again that increased productivity = = increased wages, but dildos like the CiC want to get rid of ATMs and other automated processes that greatly drive productivity. Why not get rid of the Internet? Think of all the courier jobs that could be gained by people carrying bits of information to and fro.

    Zeb - it's from the UN, so probably not. Even if it isn't, the gain is 700% in 40 years, greatly outpacing the inflation rate.

  • ||

    greatly outpacing the inflation rate

    Don't worry, Bernanke's working on it.

  • Mensan||

    "... but dildos like the CiC ..."

    On the contrary, Obama's a real dick.

  • Scruffy Nerfherder||

    You forget that to Krugman et al, manufacturing is about jobs not output. With that in mind, all they see is the end of the world.

    http://static.seekingalpha.com.....d_mfg1.jpg

  • Death Rock and Skull||

    I do not owe holders of government paper with squiggly lines on it a damn thing.

  • Brandon||

    What about holders of government guns who say you do?

  • Death Rock and Skull||

    I will show up casually several hours later and point out that I own a share of the ordnance, and liberate it back to my possession. And there will be cooperation.

  • Tim||

    The Soviets kept right on spending after WWII and used their industrial base to keep on cranking out tens of thousands of tanks, tens of millions of AK's.
    How'd all that stimulus work out for them?

  • VG Zaytsev||

    A better comparison is the United Kingdom. Which retained the war-time centralized planning until the early 50s and had a crappy economy the whole time.

    A Second example is West Germany which lifted economic controls in the early 50s and experienced and unexpected economic miracle of high growth almost immediately.

  • Incredulous||

    Krugmanomics - Government should spend MOAR and MOAR money!!!

    How much more?

    MOAR and MOAR!!!

    This fucking moron is proof that an economics degree and a Nobel Prize are fucking meaningless.

  • yonemoto||

    the problem with paul is that government doesn't create boom and bust cycles; those are natural to the economy, what government does is (possibly) aggregate them and make them worse and (definitely) bail out the losers and promote connected idiots and greedy bullies to win in society.

    I hate that liberals point out that the fed is good because in the current depression we don't have people starving in the streets. Of course that is probably more due to the fact that we can do shit like grow way too many excess crops and transport crops to meet demand far more effectively.

    And finally, next time libertarian economic theorists need to point out that inflation SCREWS THE POOR, HARD. Defending "savers" makes you sound like you are trying to support scrimping scrooge mcducks who want to swim in piles of gold.

  • yonemoto||

    also, without bankruptcy laws (and the freedom to discharge *all* debt) debt is voluntary, fractional slavery. And government shouldn't borrow because that is taxation without representation (of the future generations who couldn't have voted on the profligate spending of the previous).

  • ant1sthenes||

    Well, I suppose if the debt was immediately parceled out to the existing taxpayers in the form of a "loan" from the IRS.

    Plus, it would motivate more people to give a shit about the debt.

  • Old Mexican||

    Re: yonemoto,

    the problem with paul is that government doesn't create boom and bust cycles; those are natural to the economy


    He doesn't say the government creates boom and bust cycles. He has argued (correctly) that it is the Federal Reserve and the fractional reserve (i.e. fraudulent) banking system which create the boom and bust cycles. Just like Mises said.

  • yonemoto||

    Yeah, that's incorrect. With free banking you can have boom and bust cycles, too, they just tend to be localized.

  • yonemoto||

    I'm not one to run to the 'idiot masses' argument, but if you don't think that the idiot masses can start a speculative bubble without the government's help...

  • ||

    Free banking also uses fractional reserves, or at least doesn't always embrace full tantundem deposits. De Soto argued that it's the expansion of the money supply, regardless of the source, that will create an environment that enables regular booms.

  • yonemoto||

    I think this is closer to the truth. Usually the analysis is couched in a whole "ban fractional reserves" agenda, which bugs me. If you want to participate in a fractional reserve system, that should be your prerogative. (Just as participating in a non-fraudulent ponzi scheme should be)

  • Old Mexican||

    Re: yonemoto,

    Yeah, that's incorrect. With free banking you can have boom and bust cycles, too, they just tend to be localized.


    They're not boom and bust cycles, Y. A boom and bust cycle is a misallocation of capital due to interest rate manipulation. What you're talking about is bubbles, which are NOT the exact same thing.

  • yonemoto||

    nope. You'l still have cycles, some of it is because people forget the mistakes of the previous generation. Isn't that the kondratieff cycle or something?

  • ||

    You may still have cycles based on poor transmission of knowledge across generations, but without cheap credit to fuel it via a constantly expanding money supply (whether there's a central bank or not) its effects will be short-lived as they bump into reality more quickly, and will require very little restructuring of the economy afterward.

  • yonemoto||

    I endorse Alack's comment.

  • Old Mexican||

    I agree with Cowen that Paul doesn't explain what he means sufficiently when he talks of the need for "liquidation of debt,"


    Paul means credit deflation or contraction - basically, leave the banks to rot in their own juices and the people holding the golden promises to rot with them. That is what he means.

    And NO, it does NOT mean necessarily a total collapse of the economy and people dying on the streets and the sun boiling the oceans away. It just means fools like shrikey will receive their comeuppance.

  • yonemoto||

    While paul is correct that we should allow credit to default, Paul almost certainly doesn't understand that credit defaults contract the money supply and cause deflation. This is a serious hole in his economic understanding. Incidentally it's also why he missed the deflation of early 2009 and keynesians like krugman can mock him.

  • Scruffy Nerfherder||

    Of course he understands it. He predicted a housing bubble in 2002. He is now pointing to the endgame where the only choice left to the Fed and the government is to create the last bubble, the bond bubble, which, when it pops, is going to be far worse than any of the deflationary events leading up to it.

  • Old Mexican||

    Re: yonemoto,

    Paul almost certainly doesn't understand that credit defaults contract the money supply and cause deflation.


    He understands this well, Y. Deflation is not the boogeyman you seem to think it is. Deflation is nothing more than the market reaching equilibrium after an inflationary expansion; it is the attempt of the market to reach accurate prices. Deflation is always the hobgoblin of choice of the inflationistas, not because the process is a menace but because it provides evidence of the destructiveness of the previous inflation process.

  • yonemoto||

    I agree that deflation is not a boogeyman. The fact of the matter is that Ron Paul did not call it. Otherwise he would have said, "we will have a crash, then a short period of deflation, then severe (but not hyper) inflation". I have never heard him say this, and people like krugman make fun of him.

    It's not like there aren't austrians who understand this. The mish vs. schiff tiff is exactly that. Mish called the deflationary contarction, schiff did not.

  • yonemoto||

    in fact, if anything the natural order of things is to have slight deflation (not slight inflation) because technological progress creates deflation. Would also lead to a natural redistribution of wealth. The primary reason why we have income disparity is because instead of technology lifting all boats via deflation, the economic productivity gains created by technology is redistributed to the rich via inflation.

  • Old Mexican||

    Re: yonemoto,

    The fact of the matter is that Ron Paul did not call it. Otherwise he would have said, "we will have a crash, then a short period of deflation, then severe (but not hyper) inflation". I have never heard him say this, and people like krugman make fun of him.


    But he has been saying it. He has been warning that the true recovery will be far more painful the longer the government's and the Fed's manipulations continue. This implies the scenario you posit. He knows this because he HAS been warning us about it.

    Certainly he hasn't been warning people lately because he's in campaign, but that does not mean he is aware of the size of the precipice the US will face soon.

  • yonemoto||

    OM, I am nearly 100% certain you are wrong. Prove me wrong, find me a youtube video where Ron Paul predicts there will be deflation, or admits that there was deflation.

  • yonemoto||

    "He has been warning that the true recovery will be far more painful the longer the government's and the Fed's manipulations continue. This implies the scenario you posit."

    No, nowhere in there is the notion that there is deflation. You can certainly have 'recovery' without deflation. This is a very important point.

  • LibertyMark||

    I have heard with my own ears Ron Paul talking about the deflation, he just didn't call it that (I have no link).

    He said that a $100,000 house should be allowed to drop to $10,000 and how that is a net benefit to buyers and will get the economy going again.

  • Old Mexican||

    Your wish is my command.

    http://www.youtube.com/watch?v=42Svmh-BBYw

    "The other option is to allow the deflation to occur, the liquidation of the debt."

  • yonemoto||

    I stand corrected.

    Given that I am a Paul enthusiast, I think it stands to reason that he could bother to bring it up more often. For purely political reasons, I think he uses the catchphrase "printing money" too often, which allows liberals to mock him for thinking that the money supply is M0. Incidentally it doesn't help that there are a lot of libertarians that make the same misunderstanding.

  • BkwdGreenComet||

    Krugman showed great restraint in not turning the onus of the argument against Ron Paul and his fellow Congressmen, especially those in the GOP, regarding the fiscal malfeasance shown by Congress in running up today's high national debt, which Paul seems to be very concerned about, in the first place. Congress operates under no concept of reducing debt during economic expansion or of increasing spending without corresponding additional federal revenues. So a guy like Ron Paul, who unfortunately comes across like your doddering, senile grandfather, comes across as quite disingenuous, as well as confused.

  • yonemoto||

    you are aware of Ron Paul's voting record?

  • BkwdGreenComet||

    Ron Paul's voting record shows that he's completely out of touch with economic reality. Krugman is correct to say that Paul's ideas are rooted in the 19th century and certainly pre 1907, the year J.P. Morgan bailed out the banking system during a large nation-wide banking panic. Paul's pre-Keynesianist ideas have no sway even among the GOP, so he is correctly seen as irrelevant to GOP/Dem bickering over the economy.

  • robc||

    Ron Paul voting records shows that he supports fiscal responsibility.

    Congress operates under no concept of reducing debt during economic expansion

    But Ron Paul did.

  • BkwdGreenComet||

    "But Ron Paul did."

    So what? Congress as a whole didn't do it. So there's ZERO audience in Congress for that part of the argument. As a pre-Keynesian, Ron Paul is incorrect about so many economic principles that his fiscal conservatism can't be credited him.

  • yonemoto||

    So what?

    So a guy like Ron Paul, ... , comes across as quite disingenuous.

    Agree with him about economics, fine, but that point that you made is completely bogus.

  • Scruffy Nerfherder||

    Paul's pre-Keynesianist

    Just for info, von Mises and Keynes were contemporaries. Keynes was more widely accepted for several reasons. Keynes wrote in English, von Mises did not. But more importantly, Keynes gave politicians the illusion that they could control the economy while von Mises did not.

  • Old Mexican||

    Re: bkwdGreenComet,

    Ron Paul's voting record shows that he's completely out of touch with economic reality.


    You mean as defined by Krugman, right?

    Krugman is correct to say that Paul's ideas are rooted in the 19th century


    Just as gravity is rooted in the 17th Century. You mean he should move to something newer?

    [...] and certainly pre 1907, the year J.P. Morgan bailed out the banking system during a large nation-wide banking panic.


    So what if he "bailed out" the banking system (which he didn't really)? The problem is not banks buying out other banks, is A bank controlling the rest at the expense of each person's savings, which is what the Fed does.

    Paul's pre-Keynesianist ideas have no sway even among the GOP, so he is correctly seen as irrelevant to GOP/Dem bickering over the economy.


    So now you're contradicting yourself: "the argument against Ron Paul and his fellow Congressmen, especially those in the GOP, regarding the fiscal malfeasance shown by Congress[...]"

    So either he's complicit, or he's not. He cannot be both, B.

  • BkwdGreenComet||

    My point is that Congress clearly doesn't accept that Ron Paul's point of view on the economy is correct.

  • Concerned Citizen||

    That doesn't mean that Paul is wrong.

  • BkwdGreenComet||

    "That doesn't mean that Paul is wrong."

    Well, no, economics is not a popularity contest. hahaha

    The onus is on those holding to your philosophy to demonstrate the merits of your ideas. That hasn't happened sufficiently for those ideas to be put into practice on a large scale.

  • grylliade||

    The onus is on those holding to your philosophy to demonstrate the merits of your ideas. That hasn't happened sufficiently for those ideas to be put into practice on a large scale.

    So in your view, no one should have listened to Keynes, because his ideas hadn't been put into practice on a large scale?

    It would be a better world had that happened, admittedly.

  • tarran||

    Gentlemen, please go easy on BkwdGreenComet: he's emoting.

  • Old Mexican||

    Re: BkwdGreenComet,

    My point is that Congress clearly doesn't accept that Ron Paul's point of view on the economy is correct.


    And so what? Is your argument then that Krugman should have committed an Argumentum Ad Populum by pointing out that the nitwits he works with do not agree with him?

    You're an idiot, B.

  • BkwdGreenComet||

    If you're a libertarian, don't be too quick to call another an idiot.

  • Old Mexican||

    Re: BkwdGreenComet,

    If you're a libertarian, don't be too quick to call another an idiot.


    You're an idiot for using an idiotic logical fallacy, like you're doing again now: this time a No True Scotsman fallacy.

    Idiot.

  • yonemoto||

    Congress clearly doesn't accept that Ron Paul's point of view on unauthorized wiretapping is correct.

    Congress clearly doesn't accept that Ron Paul's point of view on assassination drone strikes is correct.

    ...

    I could go on.

  • Anonymous Coward||

    1907, the year J.P. Morgan bailed out the banking system during a large nation-wide banking panic.

    A Panic that was largely contained within the banking industry alone. But thanks to the Federal Reserve Act, bankers could not spread their losses across the entire economy thanks to the Congress so graciously handing them control of the money supply.

  • Anonymous Coward||

    BkwdGreenComet|5.3.12 @ 12:21PM|#

    Ad hominem gibberish

    That's all very entertaining, but do you have a point you'd like to make?

  • Old Mexican||

    Here's a quote from the Henderson piece who, by the way, declares the debate was a draw - no, really.

    With government trying to set interest rates, you're likely to get the wrong interest rate, but it will be a market-clearing interest rate because the Fed reserve is entering the market only as a supplier or demander of credit, not as a price fixer in the narrower sense of that term.


    This assertion would have a glimmer of verisimilitude if for the fact that the Federal Reserve issues credit in a monopolized currency. You cannot say that you can't fix a market when the only game in town is yours. I don't understand how David misses this.

    But a 2% inflation rate is a small hit. I know that Ron Paul's favored inflation statistics are from John Williams at Shadowstats. [...] I had some one-on-one time with him in which I tried to persuade him that Williams is not credible: I didn't succeed.


    You see, because the government numbers are credible, especially when they fudge the numbers to avoid going bankrupt even faster if using the OLDER calculation (which Williams uses) for Social Security COLA increases.

    You guys get the picture.

  • yonemoto||

    he's correct. strictly speaking the fed does not set the price of interest; it can only exert downward pressure on the interest rate. If the fed sets its rate too high, then people will just go on the market and borrow from each other.

    Incidentally this creates a path towards phasing out the fed; you could just phase it out by increasing the fed's rate by a small amount each month, and then hit the delete key when no one is borrowing from the fed anymore.

  • Old Mexican||

    Re: yonemoto,

    he's correct. strictly speaking the fed does not set the price of interest


    Y, read the comment from Henderson again - he's implying the Fed is nothing more than another player in the market, as if we were talking about Apple, Atari, Commodore and Radio Shack. He's either being disingenuous or ignorant, and I don't believe he's Krugman so he can't ignore this.

    There's a very good reason for Legal Tender laws, and that reason ain't the pleasure of having a standard medium of exchange.

  • Old Mexican||

    Paul believes that government actions actually launch or exacerbate recessions and Depressions, and are not necessary to get us out of them, because of his acceptance of Mises/Hayek business cycle theory, though it was something he chose not to talk about at length here[...]


    Well, maybe we all should, because you're conflating two entirely different things: Business cycle and government intervention. They're NOT the same thing even if they are related.

    The Busines cycle theory explains how the manipilation of interest rates through easy credit leads to misallocation of capital to unprofitable endeavors. The misallocation happens because investors are fooled into believeing the market is aflush with capital (which comes from savings). Instead, the opposite will be true: Consumers are still spending at the same level, and can even be fooled into increased spending because of the artificially low interest rates - therelies the dislocation. The interest rate fails then to give investors and consumers a clear picture of the market for capital, entincing BOTH to CONSUME capital instead of one saving more or the other offering more to the savers.

    Government interventionism may include credit expansion as part of policy but credit expansion is not necessarily something only government does. Government intervention can come in ways not related to credit, such as: price controls, regulation, tariffs, and other impediments to productivity.

  • Loki||

    "Nah, nah, nah, I can't hear you!"

    Pretty much the reaction of most progresso-tards to people who disagree with them. That's just one thing that makes them all so punchable. That and the hipster beards and the round glasses.

  • Old Mexican||

    This gets complicated (everything is complicated) by the fact that someone's debt burden, if they pay it, is someone else's income,


    Only if the debtor pays with interest; otherwise it's not income. What Paul means is letting banks go bankrupt, let lenders suffer for their foolishness and let prices come down to their accurate, market level. That means a RECESSION, but it's an inevitable recession because the correction will come one way or the other. What Paul advocates is for a hard, painful albeit short recession, instead of having Ben Bernanke and Obama digging a hole under the falling guy so he doesn't hit the ground yet - which is my metaphor for the bailouts.

  • yonemoto||

    let's also remember that the recesssion that paul advocates huts the rich, and the depression that bernanke obama and krugman advocates eviscerates the poor, although evisceration implies a fast process, whereas what will really happen is more like the rack.

  • tarran||

    I was thinking more like the Pit and the Pendulum

  • Mr. FIFY||

    Is there any man with a more-punchable face than Krugman?

  • ||

    My cats, Mr. Clyde H. Tinklepuffs and Mrs. Catherine "Cat" Tinklepuffs, both think I have a lickable face. tee hee hee

  • Mr. FIFY||

    Thing is, that's probably something the real Krugman would say.

  • MonsieurMadeleine||

    When he says liquidation of debt he means government debt. Then it will be harder for our government to borrow in the future, which would be a good thing.

  • han||

    You didn't hate the state, per se, but believed a mostly free market provided the best chance

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