An MMT site bringing you dogma-free economics without the pleadings of self interest
Bob,Exactly what is LK mistaken about?Maybe this lawn has been mowed many times already.
Once again, self-admitted Neoconfedate slavertarian globalist Bob Roddis is the one who doesn't understand that Austrian "economics" is based on dumbed down London School of Economics i.e. the the economics of imperialism and colonialism. It has no substance and no ideas other than what is necessary to attack what is currently opposed to the Empire which why you can find as many "free market" concepts as imperialist scribblers willing to shill for it. LK's partial debunking is nice but David Ellerman's site completely destroys the Lockean alienist conception "liberty" for the amoral nihilism that it is...and with it the whole of the English School and its slightly retarded children like the Austrians. It's time stop being nice to these idiots like Mike Norman says.We need to start confronting these idiots with the raw truth i.e. Libertarians are the direct intellectual heirs of the American Nazi supporters. The history of the John Birchers, the Liberty League, all the other pr fronts the facist Congress of Industrial Organizations hired to the be official "libertarian" groups is simply continuation of the fascist project. If you cite them you are citing hate groups and should be considered no different than someone than citing NeoNazis .Libertarianism is pure hated...just read von Mises...saying that most men have nothing to contribute other than to be commanded by their betters... he spoke of nothing outside of general hatred of mankind. It doesn't matter what sophist rhetoric of "freedom" and liberty is used because we know the seed is bad because we know the lineage. We true conservative, patriots, and progresses should all have but one goal over the next decade and we must win because the planet and humanity is facing a existential threat from the likes of Bob Robbis and other dupes. Stupidity can be voluntary but in face of a true crisis it is a criminal threat. We need to do to neoliberialism what the Gay Right movement did the homophobes. The kind of hated and stupidity must not permitted but rather shamed for the criminal stupidity that it is. People who deny human rights exists outside of property must be confronted in the name of disposed victims as the haters and bigots they really are. Zero Tolerance for the "dispossessist" bigots like Robbis. Value doesn't come from the subjective judgments of the propertied classes but from the necessary transcendent relations among of men and nature something times referred as providence.
Hans-Hermann Hoppe. That's the guy who wrote Democracy, the God that Failed. Yeah, got co-opted by Neoliberals.Hoppe's solution? Absolute Monarchy. See, the King will take better care of ALL the property (everything) and all his subjects, because he OWNS them.Here's how I responded to the Mike Norman vs Karl Denninger debate, if this is useful.The argument that Govt spending = Inflation comes down to equation MV=PT. Steve Keen looked into ORIGINAL documents, re Debunking Economics. Author said it should never be used in a real economy. Conditions ASSUME that all variables are static except M and P. That's like an 8th grade algebra story problem.Of course if M goes up, P must go up, if we *assume* nothing dynamic occurs.Since when are market economies STATIC? Capitalism is volatile. That's the REASON we defend it, despite flaws.------What has happened to our minds that we can't see the diff btw real physical tangible wealth (incl "stuff" plus health and well-being), vs virtualized accounting units? Nixon disconnected the Dollar from Gold for FOREX 40 years ago.BANKS have (and used) ability to create INFINITE money, but in form of Debt Obligations. BANK credit is 97% of money-in-circulation -- that can never be net wealth --- but we are hysterical about the 3%?US biz and households owed $42 Trillion in 2007, 300% of GDP.------Should we abolish banking?
Very good comment from septeus7The religion they preach is really hatred.
Interesting rant septeus, but why bother? Bob's just a pretentious idiot. Don't waste your breath.
Bob Roddis:Yes I'm afraid of MMT. It's obviously a vile and unscrupulous ruse (not a description) to enable the government to extract even more resources from the public for nefarious purposes than is presently possible.(Except that the Govt is the SOLE issuer of money, while US banks are the issuers of infinite amounts of credit, as we saw them do during the Bubble when they could sell the bad paper by defrauding investors. Ergo, creating money is "stealing" ... by someone. Congress' salaries, I suppose.)The MMTers' pathetic naivete about the true nature of government is shocking. (GOVERNMENT IS EVIL, that's the TRUE NATURE. See below for proof.)The fact that there are actually people who support MMT is terrifying. ------Bob Roddis for Justice of the Michigan Supreme CourtSince Bob is going for State Justice, this means Michigan Taxpayers WILL have to slave away and pay taxes to support his Grosse Pointe Farms lifestyle as a genuine moocher in the sense of Ayh Rand.
Bob,What are your thoughts wrt Germany getting their gold back out from decades of safe keeping here in the us?Rsp
JK said...Bob,Exactly what is LK mistaken about?Maybe this lawn has been mowed many times already.It has. For starters, LK does not understand the concept of economic calculation. Better copy this link quickly before the cowardly MMTers delete me again.http://consultingbyrpm.com/blog/2012/11/econ-101-works-price-controls-cause-gas-lines.html#comment-49192In fact, read all of the comments.
Quote: "It has. For starters, LK does not understand the concept of economic calculation. Better copy this link quickly before the cowardly MMTers delete me again."Really? We are doing this again? We've already proven this to be nonsense and that you can't be brothered to read what the Austrian school actually says on this subject yet alone the problems with the whole exogenous pricing idea that the economic calculation argument relies upon. The economic calculation argument is a communistic argument. You argue that arbitrary subjective pricing is the only way to create the needed information for rational objectively efficient resource allocation. But by claiming that that objectively efficient resources allocation exists violates the the notion of absolutely subjective valuation thus rendering the whole "economical calculation" argument as flim flam. Only by having a "communistic notion" of what predefines a proper resource allocation" can one claim that to assign the label economic miscalculation meaningfully and thus property (itself an valuation) must be predefined by an single absolute authority i.e. property holder however if all property is held and defined by a single entity then it by definition held in common i.e. communism on behalf of all those must use it. Q.E.DThe Austrian economic calculation arguments must result in communism because they assume that their is a objective universal proper use of resources. I, on the other hand like all rational beings, reject absolute apriori ideas about relative concepts such "resources" and their efficient uses.
septeus7:Each person possesses unique knowledge of his/her situation, resources, plans, desires etc…. We can’t read people’s minds. The prices that result from voluntary exchange provide an objective manifestation of that knowledge as best that can exist in this universe and cannot be replicated in any other manner. A Keynesian bureaucracy backed by SWAT teams [aka “the government”] does not and cannot possess that knowledge. Soviet communism abolished those prices. Keynesian policy fatally distorts them causing misdirection of resources, unsustainable investments and unemployment. The alleged “problems” that socialism and Keynesianism seek to repair are, in fact, caused by the socialist and Keynesian policies themselves. Average people can and do solve their own economic problems and do not need the helping hand of Keynesian bureaucrats, much to your chagrin. I have faith in average people. You want to sic the dogs on them.
Bob, you're an idiot. Go away.
"Bob Roddis said...... For starters, LK does not understand the concept of economic calculation. "Here we go... right on cue like a trained parrot.The only way to deal with this is just re-post this:So is this what you mean by the concept of "economic (mis)calculation, bob roddis?:(1) the alleged miscalculation problems caused in the Austrian business cycle theory (ABCT). (2) distortions of prices away from their equilibrium values (as postulated by (4) below) by government spending, deficit spending, central bank fiat money creation, price controls, subsidies, etc.(3) distortions of prices away from their equilibrium values (as postulated by (4) below) by government interventions allegedly leading to Cantillon effects(4) in general, obstructions to flexible wages and prices and therefore to a price vector that will clear all markets (with flexible wages clearing the labour market), as in this quotation of Hayek: “The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure. Remember, please: that is the crucial concept. The point I want to make is that this equilibrium structure of prices is something which we cannot know beforehand because the only way to discover it is to give the market free play; by definition, therefore, the divergence of actual prices from the equilibrium structure is something that can never be statistically measured.” (Hayek 1975: 6–7). If Roddis answers "yes", he demonstrates that his claim that I do not understand the Austrian concept of economic calculationis false.If he answers "no", then he is saying that none of the things above actually cause economic calculation problems! Obviously we do not need to give them any thought - for Austrians aren't concerned be about this such things!
In general, for all those actually interested in why Austrian "economic calculation" problems are misguided, overblown or just false:http://socialdemocracy21stcentury.blogspot.com/2012/12/vulgar-austrians-economic-calculation.htmlhttp://socialdemocracy21stcentury.blogspot.com/2012/10/mises-on-rational-economic-planning.htmlhttp://socialdemocracy21stcentury.blogspot.com/2012/10/austrians-rewrite-history-of-socialist.htmlhttp://socialdemocracy21stcentury.blogspot.com/2012/10/note-on-socialist-economic-calculation.html
"Bob Roddis said...Each person possesses unique knowledge of his/her situation, resources, plans, desires etc…. We can’t read people’s minds. The prices that result from voluntary exchange provide an objective manifestation of that knowledge as best that can exist in this universe and cannot be replicated in any other manner.They provide nothing of the sort - unless you think uncertainty does not exist, human economic plans always mesh, and tastes, fashions and relative abundance or scarcity of resources never change.Many prices are not even set by supply or demand curves at all, but by businesses using price administration. Such prices are not set to reach their equilibrium values, and the very idea that all markets have equilibrium prices, just waiting to be discovered, is nothing short of superstitious dogma."“Uncertainty for Hayek means that each individual decision maker only has a small piece of the puzzle. However, as a whole, the aggregated set of all decision makers have a complete set of all relevant knowledge. There are no pieces missing, lacking or unavailable from the puzzle. Market prices organize and synthesize the aggregate amount of knowledge so that market price signals, understood only by savvy, knowledgeable entrepreneurs, [eliminate] … any uncertainty.” (p. 14)“Keynes, Knight and Schumpeter deny Hayek’s claim that the market generates price vectors which concentrate the knowledge so that savvy, knowledgeable entrepreneurs can act on this information and solve the problem of uncertainty. Uncertainty means vital important information is missing. Pieces from the puzzle are missing and will not turn up in the future” (p. 14).See Michael Emmett Brady:“Hayek could not accept the standard concept of uncertainty as defined by Keynes, Knight and Schumpeter because it would then be impossible for market prices to concentrate knowledge that did not exist. In conclusion, nowhere in any of Hayek’s three articles on Knowledge in Economics in 1937, 1945 and 1947 does Hayek deal with the standard view that uncertainty means knowledge that is not there.” (p. 15). "Michael Emmett Brady, “Comparing J.M. Keynes’s and F. Von Hayek’s Differing Definitions of Uncertainty as it Relates to Knowledge,” January 30, 2011.http://socialdemocracy21stcentury.blogspot.com/2011/10/michael-emmett-brady-on-hayeks-concept.html
Debunking the Austrian-economist mind? Is that like spelunking for cave dwellers?
"I have faith in average people"Michigan Supreme Court election results 2012:Bob Roddis: 2.79% (last place)"Average people" don't seem to have much faith in you or your stupid beliefs, Bob.
Regarding the election, I spent no money and did no campaigning. I received 11% in 2008 which was more than the margin of defeat for Republican Clifford Taylor to Democrat Diane Hathaway. In a fun twist, Hathaway has just been indicted for bank fraud and resigned.http://en.wikipedia.org/wiki/Diane_HathawayI noted in 2012 that there was absolutely no interest by the public regarding things such as the surveillance state, Bradley Manning, Julian Assange, whistleblowers etc. and I was in no mood to fight the media blackout. "y" should be happy then that "tough" Republicans won both open seats and with Hathaway's resignation, the Republican governor will appoint yet another Republican to think up even more ways why average people cannot sue big business, the government or the police.
Who is this Austrian-Slayer that goes by Lord Keyenes? I'm bookmarking your site LK. This June once my semester is over I'll spend the honest hours reading your material.
"“Uncertainty for Hayek means that each individual decision maker only has a small piece of the puzzle. However, as a whole, the aggregated set of all decision makers have a complete set of all relevant knowledge. There are no pieces missing, lacking or unavailable from the puzzle. Market prices organize and synthesize the aggregate amount of knowledge so that market price signals, understood only by savvy, knowledgeable entrepreneurs, [eliminate] … any uncertainty.” (p. 14)Bullsh** (or rubbish in LK-speak). “Keynes, Knight and Schumpeter deny Hayek’s claim that the market generates price vectors which concentrate the knowledge so that savvy, knowledgeable entrepreneurs can act on this information and solve the problem of uncertainty. Uncertainty means vital important information is missing. Pieces from the puzzle are missing and will not turn up in the future” (p. 14).Well, LK, since life is so hopeless, just go kill yourself. The fact remains that those prices are the best available and best possible information with which to make plans for the future. Of course, they are not "perfect" as nothing in human experience is or can be. Keynesian bureaucrats and their SWAT teams have far less information and face even more daunting uncertainty just as Soviet commissars did. Your problem is that you essentially believe in the Magic Keynesian Leprechaun or a Mary Poppins who is exogenous to human experience whom you think you can call upon to solve these mysteries of the future. That's preposterous and infantile but it's the foundation of your "belief system", such as it is.
JK:LK finds every weakness conceivable in Austrian thought, most of which I figured out long ago. He just refuses to comprehend that basics because they are so completely devastating to his "Mary Poppins - the magic Keynesian nanny" view of reality.
"Each person possesses unique knowledge of his/her situation, resources, plans, desires"If this is correct why would you need to spend money and time campaigning" to win an electionAre you saying that you need money and salesmanship, to manipulate each person out of their vote. Which by only they know the best way to vote, given their "unique knowledge? wouldn't you be wasting money. since only each person can decide what politician is best for their unique situation.?Are you trying "distort voter calculation" with funny money and funny talk (campaigning)?
I think these assholes should actually read up on neuroscience to see how science confirms to Kant instead of relying on their own irrational, primitive, "apriori", assumptions.
Notice how Roddis never answered my question at @January 25, 2013 5:18 PM - because we all know his parrot-like original statement ("no one in the world understands the Austrian concept of economic calculation!") is rubbish.
LK:Your questions at 5:18 have been answered ad nauseam here [yawn]:http://consultingbyrpm.com/blog/2012/11/econ-101-works-price-controls-cause-gas-lines.html#comment-49192I still maintain that economic calculation has absolutely nothing to do with "a price vector that will clear all markets" and neither does the Hayek quote you constantly present. A 20 year unsustainable Keynesian boom would have had "market clearing prices" for 20 years right up until the bottom drops out.
I think these assholes should actually read up on neuroscience to see how science confirms to Kant instead of relying on their own irrational, primitive, "apriori", assumptions.The assumptions of Mises labeled "a priori" are Kantian, smart guy. From an Aristotelian perspective, they are empirical. http://library.mises.org/books/Murray%20N%20Rothbard/Defense%20of%20Extreme%20Apriorism,%20In.pdfIt is an empirical fact that you cannot read someone else's mind but you can know what they paid for goods and services.
It's an empirical fact that almost no one voted for you or your stupid ideas, Bob.
Great interview with Phil P as a follow up to his series on Hayekhttp://fromalpha2omega.podomatic.com/player/web/2013-01-26T03_29_12-08_00
I happen to be a former philosophy prof who has taught Aristotle and Kant. The Randians and Austrians who think they understand either of these thinkers and what their implications in a contemporary context may be have rather obviously never studied either or read the scholarly debate over this. In the first place, there is a great deal of controversy among people who actually spend their lives studying such things about what the meaning of these texts actually is. Secondly, most readings of prior thinkers are biased toward the point of view the person using them as authorities. Thirdly, the ancients and moderns were writing in contexts that have little to do with contemporary context. To say that contemporary cognitive science "confirms Kant" in a way that supports Mises's neo-Kantianism is just advocacy without substance. Even Hayek threw that under the bus in siding with Popper.I've even read arguments that Wittgenstein is in agree with the Austrians! ROFL
What do you folks think of this?http://jacobinmag.com/2012/12/the-red-and-the-black/
I think that the piece misunderstands Marx. Marx was not against "profit" aas it is generally understood, that is, owners' share for contribution. Marx points out that owners' share for contribution shows up in the accounting differently and that "profit" is unearned rent extracted from value contributed by workers and diverted to owners through exploitation.Marx was not against all ownership of private property. He was against private ownership of the means of production by a privileged class that extracts rent due to its privilege. He felt that the haute bourgeoisie ("capitalists") just replaced the landed gentry and titled aristocracy of late feudalism. Just as the feudal age ended with abolishing most of the land privilege, so to capitalism will end with the abolishing of the private ownership of means of production.Marx was not against ownership by the petite bourgeoisie, the shopkeepers, tradespeople, etc. He felt that they were corrupted by the existence of the haute bourgeoisie and that would cease with the ending of the capitalist class.The issue today is still class privilege and economic rent. See UMKC prof Michael Hudson on this.What Marx would have foreseen if ever were writing with today's awareness would likely be the replacement of large for-profit corporations with non-profit institutions and co-ops, along with mom&pop enterprises and "gigs."What is needed is an end to class privilege and economic rent rather than ending "profit as an incentive." That is just neoliberal propaganda without basis. In a fair system, there would be fair distribution. Fair distribution doesn't mean equal distribution, as some people try to make Marx out as saying. The point is to develop a fair system that is effective, efficient and sustainable, meeting the growing challenges of complexity and seizing opportunities that increasing knowledge and know-how afford. The focus is on cooperation and coordination rather than competition, sharing rather than owning, and creative play for self-actualization in enlightened society rather than exploitive work for other peoples' aggrandizement.Of course, Marx could not spell out then a program for it anymore than we can now. What we can do is set a direction and remove the obstacles in the way of getting to it. That means raising the general level of consciousness through reform of basic institutions such as education.
Tom Hickey. Great sensible explainer of Marx.Before reading Hudson, I did not know that Karl Marx existed along the spectrum of Classical Liberalism. One would think he was inspired by Satan, rather than by Adam Smith.I have to give Roddis some praise here:"y" should be happy then that "tough" Republicans won both open seats and with Hathaway's resignation, the Republican governor will appoint yet another Republican to think up even more ways why average people cannot sue big business, the government or the police.Libertarians have some good things to say on War and other Freedom.I think a big part of the problem with Keynes and Keynesian econ is covered by Steve Keen in the role played by economists in the 60s and 70s who *claimed* to be Keynesians, and now as well, who either bastardized Keynes to justify some corp welfare agenda, or never actually read Keynes.Keen also points to an evolution of Keynes from General Theory to later writings that had more clarity.Myself, I'm not an expert at all. Second hand. Admit it. I'm probably more versed on Rothbard, to be honest.The point I get is that COUNTER-CYCLICAL force (negative feedback loops) is accepted in all forms of engineering and design, to block runaway conditions, to maintain steady states. Thermostat is one. Cruise control is another. Voltage controls in power supplies and car alternators is another.Dams that create lakes and power sources but prevent flooding, that's another. That's only considering Newtonian physics.The Libertarian argument is essentially that endogenous creation of bank credit and Minsky's Ponzi Finance should be allowed to drift into race conditions without barriers or and create economic havoc for the 99%, so the 1% that does that directly and profits from that immensely can enjoy FREEDOM.Then AFTER that havoc, these same Financial Central Planners are the only parties that should have a legit say-so in reversing the havoc they created, when they decide to do so, when econ conditions are suitable, when private debt levels fall. In the meantime, the other 99% is to be dragged along or left to rot by the side of the road.Or as Hudson says, economic planning power is not eliminated, it's shifted from ostensibly democratic Govt to totally undemocratic Wall Street, from institutions that are designed with the ideal of "public purpose" (see: D of I, Constitution), to institutions that have absolutely ZERO stake in "public purpose" and have contempt for "public purpose" and arguably *cannot* have "public purpose" foremost as their agenda ... even though their continued existence is partly based on the fact of Govt as the Executive of the Bourgeoisie as a whole, especially the top tier.
"I have to give Roddis some praise here"Um, no. People with stupid and extreme opinions always have one or two reasonable things to say, as a sort of figleaf for their other idiotic beliefs.
So tom Hickey is suddenly an expert on Kant and Mises?? That's laughable considering howKantians tend to agree that Kant was an empiricist yet he makes the claim Kant was an aprior thinking which demonstrates he doesn't understand what that word means.
@ Scott GaffUh, no. Hume was an empiricist. Kant was a subjective idealist. Kant was attempting to over come the rationalist-empiricist dichotomy in modern philosophy. He failed to convince. Empiricism developed into positivism thru Comte to the Vienna Circle and Popper's reaction, followed by the likes of Nelson Goodman, Willard Van Orman Quine, J. L. Austin, Peter Strawson, Hilary Putnam, and Richard Rorty in the US and UK. Kant's subjective idealism developed into the various forms of subsequent German I(Fichte, Schelling, and Hegel) and British idealism (McTaggart and Bradley). That branched into Husserl's phenomenology, which also ended in the idealism of Husserls's final work Ideas, and existentialism as an outgrowth of Kierkegaard and Nietzsche. At this time American philosophy was developing along the line of pragmatism in the work of Peirce, James and Dewey.Mises is not a blip on the screen and even Hayek abandoned him for Popper. Mises was a crank.
BTW, I dealt with all this in some details in back and forth comments with "Major Freedom" some time ago. Look in the archive to this blog. I am not going through it again. It's a waste of time.
Tom,Thanks for your response. I don't think Ackerson's (mis)understanding of Marx has too terribly much to do with his sketch. I am not qualified to judge anyway. What Ackerson is imagining is a "socialization of finance" i.e. socialization of the engine of capitalism. His observation that in capitalism there already has been an evolving split between the owners and the controllers, while not universal (there are still firms owned and controlled by the same individuals), does have validity. Essentially what he is proposing, if I understand correctly, is buying out all holders of financial capital and equities and socializing the result. "At the end of the process, firms no longer have individual owners who seek to maximize profits. Instead, they are owned by society as a whole, along with any surplus (“profits”) they might generate. Since firms still buy and sell in the market, they can still generate a surplus (or deficit) that can be used to judge their efficacy. But no individual owner actually pockets these surpluses, meaning that no one has any particular interest in perpetuating or exploiting the profit-driven mis-valuation of goods that is endemic under capitalism. The “social democratic solution” that was once a contradiction – selectively frustrating the profit motive to uphold the common good, while systematically relying on it as the engine of the system – can now be reconciled."The managers could be guaranteed x% of profits thus incentivizing them to do a "good job". Individuals could still be entrepreneurs and start businesses and innovate but when they reach a certain size or importance they become financially socialized. Greed would be curtailed tremendously it would seem. He is vague on the nitty-gritty details but it is just a sketch. I definitely think it is food for thought. I think he does address your view that:"What is needed is an end to class privilege and economic rent rather than ending "profit as an incentive."Profit incentive is still there in his vision (up to a point) but it would become socialized in big and/or important firms and left "individualized" for individual/small "unimportant" businesses/firms:"And while individuals could still be free to start businesses, once their firms reached a certain size, age and importance, they would have to “go public”: to be sold by their owners into the socialized capital market."Anyway, it is about as likely to come to pass as your vision that you described and, as I see it, the two visions are pretty compatible.
I don't think he sees that the issue is rent. Large corporations are already "socialized" in that the shares are spread widely, at least by proxy, with funds holding stakes for their beneficiaries. What we have now is managerial capitalism, as Minsky observed. Now the rent goes to managers rather than owners, and there is no way that the equity owners have been able to bank together to change the board and management.As Michael Hudson observes the pragmatic way to address land rent, monopoly rent, and financial rent is by taxing it away in order to discourage it. This is a whole lot simpler under the present institutional rules than socialization to gain control. That requires completely overhauling the system. Of course, the other way is to apply existing law equally. These things are doable at the ballot box in a functioning democracy. Socializing large corps would require a revolution, which is unlikely in the US. The first goal should be to use existing tools to repair a dysfunctional system. An overhaul is generally only possible through a revolution after a collapse.
People with stupid and extreme opinions always have one or two reasonable things to say, as a sort of figleaf for their other idiotic beliefs.------Yeah. I ran across that this week, in a more personal context. I do have a tendency to ack where there's a sliver to ack.Sorry.Heck, I accidentally saw Pat Robertson calling for legalization of pot on his "700 Club" show. That does not remove the stench of Pat supporting the Contras and General Singlaub and Gen Montt and that WACL fascist gang and mass murder and the Council for National Policy, but it highlights how the Obama admin won't accept what even that creep sees.
"Large corporations are already "socialized" in that the shares are spread widely"Shared widely among the top 0.1% maybe. Essentially that's what profit ends up doing...shifts wealth to the upper crust.The negative feedback loop (progressive taxation) is woefully inadequate, obviously. We have had decades of propaganda convincing us that the holders of capital create jobs. Utter bullshit, they won't risk a penny of it unless they are guaranteed a profit, and that can't come from the existing and ever-dwindling stock of funds held by households.If it could we wouldn't be where we are now.And no, that doesn't imply that taxes fund spending. Wealth is more about the relative difference than the total.We can't decrease the deficit by decreasing spending but we can by taxing economic rents (excess saving) more, stimulating the economy at the same time.It matters who we tax. As we limit accumulated wealth we approach a steady-state non-profit economy.
My point was about distinguishing economic rent and control in Marx. The context of Marx's time was far different from today. Then individuals owned the means of production just as the land barons owned the land in the previous agricultural era and collected rent from the surplus by exploitation due to power and class privilege. The structure of government was entirely different, too, that democracy was absent so changing institutional arrangements through the ballot box was not an option.So we have Marx the economist analyzing rent in the classical tradition begun by Smith and Ricardo, and the political philosopher and activist advocating revolution to switch control from one class to another.Since the time of Marx the context has shifted greatly and a lot of what Marx advocate for has been accomplished in social democracies. But being republics, there is still class privilege and control through institutional arrangements rather than chiefly through individual ownership in the hands of "capitalists." The Koch Bros are the exception rather than the rule.So the symptoms remain but the solution is different due to the different context. A way is already provided for through the ballot box to claw back and economice rent and discourage rent-seeking through legal means including fiscal policy.Attempting to socialize control, on the other hand, would be "revolutionary" in one way or another, since it would mean changing the overall institutional context. Much more difficult to get political support for without a collapse of the system that seemed to mandate it.As paul points out, we now have the knowledge of how to go about balancing the economy through legal and fiscal means through the knowledge that MMT, PKE, etc. provide. But that still leaves the political problem of implementing it, which requires a satisfactory strategy and tactics that is yet to be elaborated, let alone implemented. While the educational process has begun and a lot of progress made, most people are still under the illusion of the myths that keep them in bondage to rent.In fact, I have been thinking of writing a post that we are no longer on a gold standard, we are now on a debt standard. Most of the money that is crated is bank money and bank money is credit (loans), therefore encumbered with debit (deposits) — unlike $NFA as fiat currency.
Quote: "The prices that result from voluntary exchange provide an objective manifestation of that knowledge as best that can exist in this universe and cannot be replicated in any other manner."So value is subjective but pricing is "objectively true knowledge" created by that fact that people have opinions about that what things are worth? So thinking something has utility makes it have objective utility? This is the definition magically thinking. Just because people agree to a price doesn't mean that it has any factually relation to any future physical utility whatsoever. If something doesn't have a physical application then it it's objective knowledge. You are clearly a delusional anti-rational mystic.
"Most of the money that is crated is bank money and bank money is credit (loans), therefore encumbered with debit (deposits) — unlike $NFA as fiat currency." - TomThis is true but misleading without context…I think it's important to note that the (a) credit circuit has no traction…none…without follow-up $NFA creation…that's where the funds to make the payments come from…the asset side of debt generally migrates to savings or accumulated financial wealth of the top 0.1%…inaccessible to the folks that hold the original associated liabilities.If the fiscal authority doesn't provide the funds fnecessary for debt service the credit circuit will collapse in default. We've seen it happen in real time.The liabilities from outstanding household debt exist at about a 3.5-to-1 ratio of $NFA (domestic) and the claims against those liabilities accrue as payments at a rate of about 10% of the outstanding balance.Basically private debt fills a container (of aggregate demand) as a supplement to the aggregate demand provided through governmenrt spending. In recent years the tail has been wagging the dog.The problem is the container has a permanant leak (debt service) that drains it's contribution to demand at a rate somewhere between 5 to 10% per year by my estimation.Maintaining the level of aggregate demand contribution from debt requires the debt must increase by at least 10%/year, which compounds annually, or the shortfall must be made up through fiscal spending.At some point, which it appears we reached around 2008, the debt expansion becomes unsustainable, exceeding the ability of borrowers to service. The resulting contraction magnifies the problem greatly.The resulting collapse in aggregate demand is unsurprising, and the usual automatic stabilizers are insufficient to fill the gap. This is where Congress needed to step in but they think we are out of money…except when it involves giving money to banks and assorted rich donors.This is why all counter-cyclical spending must be implemented through automatic stabilizers and a choke-hold must be placed on the banking system.
So value is subjective but pricing is "objectively true knowledge" created by that fact that people have opinions about that what things are worth? So thinking something has utility makes it have objective utility?Wrong, as always. The price is an empirical fact. Do with it what you might. The people buying stuff might be complete idiots. However, those prices are firm evidence as to what people are buying at what price and are a strong clue as to what they may buy in the future. There is no other source of such knowledge regarding the desires of the vast horde of strangers on this planet. This is a very minimalist claim. The burden of proof that there are other and/or superior sources of this essential knowledge is upon you statists. My jaw always drops when I realize that you Keynesians, Commies and Marxists cannot be bothered to compehend the basic Austrian ASSERTION, ignoring for the moment whether it is right or wrong.
paul, that is why I say the current system is a "debt standard" when most of the money created is encumbered. It's unsustainable. A "balanced budget" is a recipe for disaster without a the sectoral balances coming into balance at full employment (Kelton's seesaw).But even this is not sufficient to produce a balanced economy due to growth of inequality if savings concentrate at the top, especially due to rent extraction.
"But even this is not sufficient to produce a balanced economy due to growth of inequality if savings concentrate at the top, especially due to rent extraction." -TomYeah, and I don't have any ideas wrt how this can be overcome. Education maybe, but most people I know are resistant to any criticism of the status quo other than generalized complaining. Our problems are perceived to be caused mainly by waste and lazy people. The CRA caused the GFC!!!People tend to believe that private sector activities create jobs and growth, but in reality all the private sector is doing is chasing dollars injected through fiscal spending or credit. Even commenters here tend to prefer private sector activity to public sector activity. Both are funded by the government, one doesn't skim profit off the top. Ironically, even public expenditure results in private sector enrichment...we hire private businesses to do the work.Hard to understand why the business community wants to kill this golden goose.Government spending is behind all economic activity.Businesses won't bother fishing an empty pond, and they can't stock it themselves because their goal is to take out more fish than they put in...anyone that thinks business operates in the public interest is deluded.
Businesses won't bother fishing an empty pond, and they can't stock it themselves because their goal is to take out more fish than they put in...anyone that thinks business operates in the public interest is deluded.IN theory this is possible because fish reproduce, and good pond management would allow taking out more than is put in over time. In other words, you can't take out fish before they reproduce.Same with bank credit money. If used prudently for productive investment, then capital stock grows, innovation is funded, and income earned that goes to effective demand for products produced.Taking funds out of the cycle prematurely, not committing them to productive investment, or not spending sufficiently due to excessive saving (hoarding) disrupts the circular flow.Even with this $NFA are required to offset demand leakage to ordinary saving for deferred consumption and as a liquidity provision for cashflow management.
IN theory this is possible because fish reproduce" - TomDollars don't reproduce or multiply...it's a closed system.In this analogy, only the government can stock the pond, the fish are sterile.
Bob's talking to himself, attacking straw men and engaging in dumb circular reasoning as always. What is your point Bob? People are incapable of understanding anything because the government spends money? You're an idiot.
"There is no other source of such knowledge regarding the desires of the vast horde of strangers on this planet".What an extraordinarily stupid statement."...cannot be bothered to compehend the basic Austrian ASSERTION"What is that again? If the government builds a school or employs a police officer that will create unemployment and financial chaos?
Dollars don't reproduce or multiply...it's a closed system.In this analogy, only the government can stock the pond, the fish are sterile.But credit does multiply. If private saving is low, virtually all income spent, and external dissaving is great enough to offset the rest of the private saving, the game can go on for a long time without a govt contribution.
The basic idea here is that as long as credit provides the liquidity to meet cashflow requirements and the loans can be serviced, then the system is sustainable. It can also be made sustainable by bankruptcy and loan restructuring so that assets simply fall into stronger hands.In theory (model) it is workable. In practice (reality), not so much.
y:It's heartwarming to have definitive proof that you are completely unfamiliar with the "socialist calculation problem".
"But credit does multiply. If private saving is low, virtually all income spent, and external dissaving is great enough to offset the rest of the private saving, the game can go on for a long time without a govt contribution" - TomNo, it can't. Not at the level of saturation we are at now.Credit multiplies spending...it doesn't multiply income in the aggregate, nor can it fund saving in the aggregate, or by extension profits in the aggregate.Private debt can't expand under conditions of saturation if incomes won't support it...are incomes increasing 5-10% per year? Will they in the foreseeable future?Credit may be able to drive an economy for a few years...at best...with no contribution from the government. It will create a bubble every time under this condition.Once an economy becomes saturated with debt and accounts for a significant part of aggregate demand...we've been in that position since the Clinton administration ran surpluses...which initiated the massive expansion of private credit...it's game-over and we enter maintenance mode.The option of funding aggregate demand with credit has now left the building...there is no headroom to speak of and it would take decades of de-leveraging or high growth to put us back to where we were in 1992. Our only option now is maintenance of existing debt ad infinitum unless higher inflation comes along and deflates it and incomes rise accordingly. There is no more credit expansion on the table without nearly a 1-for-1 increase in $NFA to service the debt.The burden of debt increases at a much faster rate than incomes.Further, debt service accounts for only a portion of $NFA requirements as we still need to fund growth, savings and losses to net exports.Your comment describes a scenario under which we have never operated for any meaningful period of time...we have created $11T of $NFA since 1980 supporting household credit expansion, and we have run deficits 80% of the time since the 1920's.It isn't credit driving the economy...it's credit backed by government spending funding the debt service. Credit alone would fail catastrophically. It already has with government backing because it got too far out in front.Which is the necessary component...household credit or net government spending?
I agree about the reality, but theoretically, there is a model in which credit money works. But only within fairly tight boundaries. We've exceeded those boundaries.What TPB want is govt to provide liquidity to them and let the others go bankrupt, so TPTB can pick up assets at pennies on the dollar as they are in the blocks of RE being auctioned privately to restrict inventory hitting the market and reducing marginal price.
- TomTom, only in a model that excludes saving and profit, which must then exclude capitalism. There is no point to an argument that ignores both reality and the system we are describing.Even in that make-believe world the system would depend on zero internal friction...perfect settlement of payments....to avoid decay.This is a textbook description of a perpetual-motion machine.Credit is like a 4-wheel drive vehicle...it helps one get stuck in harder-to-get-out-of places.Government spending is the tow-truck.
Right. That is the (neoclassical) textbook model of the perpetual motion machine of capitalism. If money is neutral veil, no problem. There is always full employment at equilibrium, and Say's and Walras's laws work.For example, assume frictionless fluid transfer between production of consumer goods and capital goods to maintain equilibrium at full employment. When that doesn't happen quickly enough after an "external shock" (unforeseeable by the model) that disrupts the system, then the diagnosis is that either unemployment is voluntary, or else it is a structural problem calling for retraining. In other words, you just make up ad hoc assumptions to make the model work.There is nothing wrong with the model. It is quite elegant. It's just not a model of the world we live in, or even a world that is possible to implement, since it is frictionless.Once friction is introduced, then the problems arise. This happens, for instance, in the Keynesian-neoclassical synthesis when "stickiness" is introduced, along with DSGE modeling. But that doesn't work either, since the assumption of equilibrium at full employment is not representative of the way the system actually works.
paul, in case you are wondering about the money as veil thing, the idea is that credit-debt nets to zero and so it is irrelevant economically other than as a way to keep track. It doesn't do anything to effect change.
That is the (neoclassical) textbook model of the perpetual motion machine of capitalism.It sure isn’t the Austrian “model” of economics which consists only of people making stuff and exchanging goods and services. “The economy” is not a machine or analogous to a machine and it isn’t a machine that has either “motion” or “perpetual motion” or lacks “motion” or “momentum” or “traction” that must be supplied by that magic exogenous Keynesian leprechaun, the government. You guys have no grip whatsoever on reality.
Great idea, Bob, except economies have never operated on those principles you imagine. Maybe you are recalling some tribal lifetime. Those were the good old days.
"paul, in case you are wondering about the money as veil thing, the idea is that credit-debt nets to zero and so it is irrelevant economically other than as a way to keep track. It doesn't do anything to effect change."Well, that's the reasoning they have used for ignoring debt so far, but reality paints quite a different picture as you are well aware.This in my view is what makes consumer debt so insidious…It allows consumers to buy stuff they haven't saved up for yet, and then they have to rely on the government for the income to repay the debt. The payments that must be made must come from fiscal because the asset side of consumer debt is accumulated at the top and effectively out of reach.If policy doesn't produce the funds consumers get left holding the bag with no way out…the rich (the ones that initially benefit from the debt) can then come in and buy up assets on the cheap.That group is not burdened with taking their losses…the government steps in and backstops them. It's enough to make a grown man cry.Being a cynical sort I have a tendency to believe this is done with some purpose…we get back to the original question…stupid or evil?
Being a cynical sort I have a tendency to believe this is done with some purpose…we get back to the original question…stupid or evil?The fact is that classical economics was about rent and neoclassical ignores rent (and money) for the methodological convenience of a tractable model. There are three possibilities: 1) acknowledging that the assumptions were too simplistic and considered the math model as merely a heuristic device, ) believing the assumptions are true empirically without evidence and in the face of contrary evidence, and 3) the model was constructed based on an agenda.Some of each likely apply in different cases.
"It's heartwarming to have definitive proof that you are completely unfamiliar with the "socialist calculation problem"You’re a very confused individual, Bob.The "socialist calculation problem" refers to economies in which there are no markets or market prices, and in which the state tries to organize all production and consumption. In these economies the rational allocation of goods and services is not “impossible”, but it is extremely inefficient, especially when the system is highly centralized and dictatorial. This is not the sort of system we have. In our economy the government has responsibility for certain things, and the private sector deals with the rest. So, for example, the government creates laws, provides public services, invests in infrastructure, etc, but it doesn’t set the price of all the goods in your local supermarket or decide what goods it should stock.At one extreme, you have a system in which a centralized state bureaucracy organizes everything. At the other extreme, you have a system in which the state does nothing at all. Both extremes are inefficient, for different reasons. Even Hayek recognised this, but obviously you are completely oblivious to this fact.Your argument is that any government action or intervention in the market necessarily creates “fatal distortions” which render it ‘impossible’ for other market participants to rationally calculate, plan, and efficiently allocate their resources - leading to all sorts of awful economic problems. But this is complete nonsense, of course.What your argument actually boils down to is circular reasoning: 1) whatever happens in the absence of government involvement is ideal, therefore 2) any government involvement is bad.
Perhaps I didn't make the above clear enough. Given that classical economics centered around addressing rent and neoclassical economics had no place for rent, inquiring minds wonder why. Was this a methodological choice due to a desire for simplification to make the math model more tractable ("methodological convenience"), or was there some agenda behind it, maybe?
Your argument is that any government action or intervention in the market necessarily creates “fatal distortions” which render it ‘impossible’ for other market participants to rationally calculate, plan, and efficiently allocate their resources - leading to all sorts of awful economic problems. But this is complete nonsense, of course.It's even more heartwarming to have undeniable evidence that you missed the part where creation of funny money is the primary culprit in distorting the information system of the pricing process. However, J Catalan argues that government spending is also a serious problem in impairing economic calculation. I think he's quite right.http://mises.org/daily/5123/Government-Spending-Is-Bad-Economics
"creation of funny money is the primary culprit in distorting the information system of the pricing process" - Bob RoddisMoney's only purpose is to provide an accounting for earners to accumulate credits for their efforts, otherwise how could one save...on what basis would the "value" of ones efforts be measured in your "perfect" system?There has to be some baseline and the measure must be as plentiful as human effort.I know, the weight of some common metal that happens to be pretty...there's your economic calculation for ya...bling must be the basis of all human effort.
Money's only purpose is to provide an accounting for earners to accumulate credits for their efforts, otherwise how could one save...on what basis would the "value" of ones efforts be measured in your "perfect" system?Whatever value people give to whatever money they chose to use voluntarily. As opposed being forced at the point of a gun to use government funny money which requires the impossible task of attempting to estimate a current and future value for a monopoly diluted funny money and then trying to predict (if one is even aware of the process at all) how much the government thugs will dilute it and where and to whom they will inject it.Your "system" is based in part upon your belief that average people are too stupid to accomplish selecting and exchanging sound money on their own and upon your infantile and narcissistic belief that a priori you can predict that things will be better when guided by your magical exogenous, omniscient and benevolent Keynesian leprechaun running the show.
"The economy” is not a machine or analogous to a machine and it isn’t a machine that has either “motion” or “perpetual motion” - Bob RoddisBob, every system in the universe is a kind of machine and subject to mathematical constraints. Constraints that repeat throughout the universe of systems no matter how dissimilar they may appear on the surface.The fact that you don't seem to recognize these patterns hidden in plain sight all around you is not our problem.
"Whatever value people give to whatever money they chose to use voluntarily."Bob, that's a non-response that doesn't pass the giggle test."Belief that average people are too stupid to accomplish selecting and exchanging sound money"You pretty much just mail your arguments in, mostly per-packaged boilerplate.Average people are not capable of balancing a checkbook or making the simplest of financial decisions, let alone defining what "money" is.You just want a mass of rubes ripe and easy to dupe with your snake-oil bullshit.Society needs to protect the weak and unsuspecting from hucksters like yourself.
every system in the universe is a kind of machineHuman beings are not projectiles. They are unpredictable. Mike Norman has even said this. There are no invariables in the equations. This is the nub of the dispute which makes most of the disputed minutaie irrelevant. And you are wrong.Murray Rothbard, with a math degree from Columbia, said:Mathematical equations are uniquely suited to depicting a state of mutual determination of factors, rather than singly determined cause and effect relations. Hence, again, mathematics are singularly suitable for physics. *** For in economics, the cause is known from the beginning — human action using means directed towards ends. From this we can deduce singly determined effects, not mutually determined equations. This is another reason that mathematics is uniquely unsuited to economics.http://mises.org/daily/3638
"It's even more heartwarming to have undeniable evidence that you missed the part where creation of funny money is the primary culprit in distorting the information system of the pricing process." Yeah I got that part. Like most of your other claims, it's complete garbage. It actually makes no sense whatsoever.
Yeah I got that part. Like most of your other claims, it's complete garbage. It actually makes no sense whatsoever.Of course, that's why there is absolutely no analysis or refutation of it by the statist hordes. That is why Hayek won the Nobel Prize for it.http://www.nobelprize.org/nobel_prizes/economics/laureates/1974/hayek-lecture.htmlAnd it's the missing and purposefully ignored explanation of the Minsky mystery as to why so many people go into private debt and or purchase real estate in a funny money price bubble. With a constantly changing and generally increasing supply of funny money injected hither and yon, nobody knows what anything is actually worth, especially complex projects that take place and are paid off over time. The funny money makes many long term project appear sustainable when they are not. The fact that all you can do is laugh like a fool without attempting to engage the concepts at all (just like the entire cohort of commies and Keynesians) proves I'm right. I win. You lose.
"the Minsky mystery as to why so many people go into private debt"Without private debt very few people would be able to own a house or a car...what a wonderful world you want us to live in.
Without private debt very few people would be able to own a house or a car...what a wonderful world you want us to live in.You don't seem to know the difference between borrowing someone else's real savings and borrowing some new funny money created out of nothing. The latter will artificially bid up prices thereby distorting the price information system and leads to unsustainable debt and investments. I just solved the "Minsky Mystery" and those problems were not caused by "the free market".
"You don't seem to know the difference between borrowing someone else's real savings"Borrowing someone else's real savings limits growth to what already exists…thus no growth.How does savings grow if the money supply is fixed? If savings did manage to grow the money available for economic activity declines…forcing the need for borrowing something there isn't enough of.I know, private monies. Who creates those monies? What happens when i have savings in Florida bucks and i want to buy a house in California? Find someone willing to trade houses or trade monies?That's direct barter. We already know that doesn't work, that's why money was invented.
Borrowing someone else's real savings limits growth to what already exists…thus no growth.That’s total nonsense. There is no basis in fact, logic or theory for such a claim. But, of course, it’s the basis of the Keynesian Hoax. Alternatively, when one is “borrowing” funny money, one is actually “borrowing” someone else’s purchasing power in a now diluted monopoly funny money supply which actually amounts to surreptitious theft of purchasing power from average people. This results in prices being artificially bid up in an unsustainable and misleading price, investment and capital structure.The claim that there would be “no growth” as a result of being limited to borrowing someone else’s real savings is also baseless and preposterous. Lending money to Steve Jobs brings new products to market for the benefit of humanity and interest or dividends are paid to lenders/investors from the profits of the new inventions. Finally, the claim that private money would be problematic is completely baseless if rules against fraud are meticulously understood and enforced.
Bob, instead of your typical content-free word salad response, how about explaining, through a simple chain of logic, the steps through which the money supply will grow through production of goods or services.Since money can't multiply itself, not even private money, something's gotta give.
"As opposed being forced at the point of a gun to use government funny money"The last time you bought your groceries, did the cashier point a gun at you and force you pay in funny money? Or did they politely ask you for funny money, and you voluntarily paid up?"which requires the impossible task of attempting to estimate a current and future value for a monopoly diluted funny money"What you're actually complaining about there, Bob, is price volatility. That's why Hayek, like MMT, advocated 'price stability', i.e. a reasonably predictable price level path. Unlike you, he was not a fan of permanent deflation."government thugs"You mean people that have been elected into office. Like you tried to be. Except that only 2.79% of the electorate wanted you and your batshit ideas. Bob Roddis: least popular candidate with the Michigan electorate 2012!"your belief that average people are too stupid to accomplish selecting and exchanging" Nope. Another Roddis straw man attack."your infantile and narcissistic belief that... etc" Your infantile and narcissitic belief that *your* concept of a laissez-faire economy is devoid of all problems and is absolutely magically perfect in every way, like a magical economic leprechaun sent down from heaven by God himself.
Bob, I'm pissed about the house market too, but I'm not stupid enough to think that the solution to all our problems is going back to gold specie and the middle ages.
"borrowing someone else’s real savings" Let's say you have a weird monetary system in which the only form of money is gold coins.You go to the bank and borrow $100 in gold coins. Then you pay someone with your coins. They then deposit the coins in a bank, which lends them out to someone. That person then spends them, and the person receiving them deposits them in a bank. That bank then lends them out to someone. That person then spends them, and the person recieving them deposits them in... a bank.
The bank then lends them out to someone... etc
"artificially bid up prices thereby distorting the price information system" It's not about nominal prices Bob. It's about:"unsustainable debt" Well done."I just solved the "Minsky Mystery" and those problems were not caused by "the free market".Minsky's argumnet was that it was precisely cause by the "free market", so I guess you don't really know much about his work, huh?
"Hayek won the Nobel Prize"Oh and he shared it with Gunnar Myrdal, a Keynesian social democrat. Oh well.Hayek's speech mentions that unemployment is caused by wages being above their supposed market-clearing 'equilibrium' level, which (in aggregate) is wrong. He then says that a (Keynesian) approach to economics implies a need for continuous spending overall, which is like, duh.He then tries to pass off a tautological argument about the supposed perfection of markets as some sort of deep philosophical insight, like you tend to do.
y, the kicker that Bob doesn't understand in the chain you laid out in your comment above is that saving isn't addressed, and as the chain progresses the spending decreases.If spending decreases income decreases.In Bob's imaginary world nobody saves, but just in case they do we will just have to live with (embrace) deflation.We really are wasting our time here...to buy into Bob's world of make-believe we have to denounce arithmetic itself.As Bob wrote earlier, economics is not governed by arithmetic, or math, or anything but human desire and choices.The problem is that most humans desire to hold money and choose a path that will enable them to acquire it and accumulate it if possible..If they succeed, then all of the other things they desire become available (for the most part).
"As opposed being forced at the point of a gun to use government funny money"The last time you bought your groceries, did the cashier point a gun at you and force you pay in funny money? Or did they politely ask you for funny money, and you voluntarily paid up?"Government" ALWAYS means the use of force to compel you to do something under penalty of law. Otherwise it would be voluntary. I constantly employ the terminology "at the point of a gun" and "via SWAT team" so that you cannot slither away from what you are proposing. But you always slither away regardless. The government will assess a 28% capital gains tax on "gains" resulting from the use of any money other than US funny money dollars. That's interference at the point of a gun."which requires the impossible task of attempting to estimate a current and future value for a monopoly diluted funny money"What you're actually complaining about there, Bob, is price volatility. That's why Hayek, like MMT, advocated 'price stability', i.e. a reasonably predictable price level path. Unlike you, he was not a fan of permanent deflation.Hayek was not in favor of attempting the pointless ephemeral pursuit "price stability". He also was clear that there was no reason to argue about how to cure a depression because there would never be a depression if people just listened to him and had a gold standard or private money.See pages 8 and 9:http://www.flickr.com/photos/bob_roddis/7534880036/in/set-72157630494776170/lightbox/"government thugs"Yes government thugs. http://www.economicpolicyjournal.com/2013/01/this-week-in-police-law-enforcement.html I note that Ralph Nader got only 2.73% in the 2000 election. Kerry Morgan, the other libertarian candidate and I together received 6.8%. So, according to you, that must mean something profound.Your infantile and narcissitic belief that *your* concept of a laissez-faire economy is devoid of all problems and is absolutely magically perfect in every way, like a magical economic leprechaun sent down from heaven by God himself. Nothing magical. I trust average people to manage their own lives. They don't need me to take them by the hand and I have no neurotic desire to boss them around. Keynesians seem to think that the world will collapse without their fussbudget interference into the economy and they are quite obsessive about it. Go away and leave people alone. They will be fine."borrowing someone else’s real savings" Let's say you have a weird monetary system in which the only form of money is gold coins.You go to the bank and borrow $100 in gold coins. Then you pay someone with your coins. They then deposit the coins in a bank, which lends them out to someone. That person then spends them, and the person receiving them deposits them in a bank. That bank then lends them out to someone. That person then spends them, and the person receiving them deposits them in... a bank. This would not happen at a 100% reserve bank unless the deposits were time deposits. Each step in your chain would have to earn a real profit or it wouldn't be happening.It's not about nominal prices Bob. It's about: "unsustainable debt" The artificial prices make it appear that taking on debt will be profitable. Since the prices are the result of funny money and thus an intervention in the market, the process and bad results cannot be blamed on the market. Again, you must twist and distort the plain meaning of words."I just solved the "Minsky Mystery" and those problems were not caused by "the free market".Minsky's argumnet was that it was precisely cause by the "free market", so I guess you don't really know much about his work, huh?See above.
"Hayek won the Nobel Prize"Oh and he shared it with Gunnar Myrdal, a Keynesian social democrat. Oh well.I only mention the Nobel Prize because it means you should have some familiarity with his ideas. Which you don't.Hayek's speech mentions that unemployment is caused by wages being above their supposed market-clearing 'equilibrium' level, which (in aggregate) is wrong. He says no such thing. He does not mention the term "market-clearing" in the context of "equilibrium". He does not even like the word "equilibrium". What he means by "equilibrium" are those prices that would exist in absence of the funny money inflationist system. Markets "clear" all the time in a funny money system. Otherwise, there would be no prices, right? Duh. Those prices are still misleading and distortionary.y, the kicker that Bob doesn't understand in the chain you laid out in your comment above is that saving isn't addressed, and as the chain progresses the spending decreases.If spending decreases income decreases.If people are investing, they cannot be spending the same resources at exactly the same time. Inflationist funny money policies make it appear that such can be done with disastrous results. http://www.flickr.com/photos/bob_roddis/4163003939/in/set-72157623413687847/In Bob's imaginary world nobody saves, but just in case they do we will just have to live with (embrace) deflation.Nonsense. They would save intelligently with slowly decreasing prices for everything helping the poor gain affluence.We really are wasting our time here...to buy into Bob's world of make-believe we have to denounce arithmetic itself.What preposterous, stupid thing to say. People won't balance their checkbooks with arithmetic? Accountants won't balance their balance sheets with arithmetic? The problem is that most humans desire to hold money and choose a path that will enable them to acquire it and accumulate it if possible..If they succeed, then all of the other things they desire become available (for the most part). Exactly. So where is the alleged problem that requires government thugs to create a regime of funny money and steal people's purchasing power to solve problems that do not exist but for the stupid Keynesian "solutions"?
Bob Roddis said...... The fact that all you can do is laugh like a fool without attempting to engage the concepts at all (just like the entire cohort of commies and Keynesians) proves I'm right.I win. You lose.If it wasn't for his photo, you'd swear this was the infantile rant of some teenage troll."What he means by "equilibrium" are those prices that would exist in absence of the funny money inflationist system. Markets "clear" all the time in a funny money system. Otherwise, there would be no prices, right"No, you dolt. Prices in an economy can exist without market clearing or minimal market clearing.Oh, and bob still does not understand the original socialist calculation debate: even Mises admitted that would not even apply to syndicalist system (and by implication to a Keynesian system):http://socialdemocracy21stcentury.blogspot.com/2012/12/vulgar-austrians-economic-calculation.html
Ignorant internet Austrians have a habit of invoking the “socialist calculation debate” and the idea of economic (mis)calculation as if these provide some irrefutable argument against Keynesian macroeconomic management of a capitalist economy.Those concepts do indeed provide irrefutable (and unrefuted) evidence against Keynesian interference.The original core idea, or problem, of Mises’s socialist calculation debate was that “rational economic calculation” was impossible in a planned, command economy, because the lack of market prices for capital goods eliminated those markets which produce prices for the means of production, and capitalists need these prices to calculate profit and loss. That is true as far as it goes. But the CORE AUSTRIAN IDEA is that prices are the only information available for rational economic calculation across society. Socialism eliminates them. Keynesianism distorts them. For years and years, it never dawned on you that the claim that Keynesianism distorts prices was even part of the Austrian critique of Keynesianism until I beat it into your thick skull. Thus, the two concepts are related because they are derived from the same CORE IDEA.It follows a fortiori that a modern capitalist state even with Keynesian macro-management where private ownership of capital goods is the norm must also be capable of “rational economic calculation” in the original sense of Mises’s socialist calculation debate. Regarding syndicalism, if there is true competition and real bidding that creates real prices for factors of production, the impairment of calculation is certainly reduced from that of a Soviet terror slave state where all unauthorized exchange is a crime. Duh. What does that have to do with your insinuation that Keynesian funny money and spending do not distort and impair prices?
Even by the time of The Pure Theory of Capital (1941), Hayek asserted that it was necessary to “abandon every pretence that [sc. equilibrium] … possesses reality, in the sense that we can state the conditions under which a particular state of equilibrium would come about” (Hayek 1976 : 28). If nothing else, the statement of Hayek from 1975 is just further proof that Hayek was inconsistent in his attitude to GE theory, certainly in the 1970s.No. The concept that Hayek was attempting to get you interventionist cement-heads to comprehend WAS NOT THE SAME CONCEPT AS THE PRE-EXISTING CONCEPT OF GENERAL EQUILIBRIUM. Even he admits it was a mistake for him to use the term at all. As Major Freedom has pointed out repeatedly, it was technically incorrect for me to say that the Walrasian concept had “nothing to do with” the Hayekian concept (which I originally whipped off in a blog comment 30 seconds after reading one of your ditties). The true statement is that the Walrasian concept and the Hayekian concept are completely different concepts but that Hayek tried to use the term “equilibrium” in an attempt to get his point across to people who were familiar with the pre-existing use of that term. Only in that tenuous sense does Hayekian “equilibrium” have anything to do with Walrasian “equilibrium”. As MF told you months ago:But you are going too far in saying that Hayek’s arguments somehow logically depend on, or are argumentatively derived by, Walrasian equilibrium. In the strict logical sense, Hayek’s argument really doesn’t have anything to do with Walras’ work. To Hayek, “equilibrium” is what would prevail on the market. It is not Walras’ price vector.http://consultingbyrpm.com/blog/2012/11/econ-101-works-price-controls-cause-gas-lines.html#comment-49217Also, please read the first paragraph of page 7:http://www.flickr.com/photos/bob_roddis/7534880182/sizes/o/in/set-72157630494776170/In conclusion, because you cannot actually dispute the core Austrian concepts, you distort them. Both the “socialist calculation debate” and the price distortions caused by Keynesianism, while different, are related and are derived from the same basic observation. Further, Hayek’s “equilibrium” is not Walras’ price vector.
"... The concept that Hayek was attempting to get you interventionist cement-heads to comprehend WAS NOT THE SAME CONCEPT AS THE PRE-EXISTING CONCEPT OF GENERAL EQUILIBRIUM.No, bob roddis. Hayek's concept in question is - in essence - derived from the idea of Walrasian general equilibrium.It is only your sheer, deluded stupidity that prevents you from seeing this."As MF told you months ago:... etc."Yes, in the same comment where M_F violates the law of non contradiction, and demonstrates that he cannot argue argue without throwing aside the basic laws of logic. You are foolish indeed in invoking anything this absurd troll says."Both the “socialist calculation debate” and the price distortions caused by Keynesianism, while different, etc. ...Finally, you admit that the original socialist calculation debate was about a different issue from your alleged "economic (mis)calculation problems" in a Keynesian economy. This represents another major defeat and concession in this debate. Whenever we have this debate in the future, I will not hesitate to link to this comment.
But the CORE AUSTRIAN IDEA is that prices are the only information available for rational economic calculation across society.Rubbish, bob. What about consumer demand for the products of industry? Sales volume? ... Socialism eliminates them. Keynesianism distorts them. Only if you believe in the absurd myth that (1) supply and demand curves set prices across all markets, and (2) that equilibrium prices exist in each and every market, just waiting to be discovered.The first idea is empirical nonsense: the fact is that, across vast swaths of the market, businesses set and administer prices. The second idea is nothing but a quasi-religious dogma, akin to any religious superstition.
Finally, you admit that the original socialist calculation debate was about a different issue from your alleged "economic (mis)calculation problems" in a Keynesian economy. This represents another major defeat and concession in this debate. Whenever we have this debate in the future, I will not hesitate to link to this comment.We’ve had this same “debate” so many times before where the Austrian position was made crystal clear to you over and over in the face of your relentless obfuscation. http://www.economicthought.net/blog/?p=594#comment-1551andhttp://consultingbyrpm.com/blog/2012/11/econ-101-works-price-controls-cause-gas-lines.html#comment-49192Soviet socialism keeps prices from arising at all. Keynesianism distorts them. It is precisely the same basic concept applied to two different scenarios. It took you years to grasp that simple fact and you still can’t deal with it. Without any prices, how do the authorities know how much of what to make and distribute? With $150,000 homes selling for $800,000 due to funny money loans artificially bidding up prices, how does one know how many homes to build and at what price? Same concept, different scenario. Further, no matter how much obfuscation you attempt, Hayekian “equilibrium” and Walrasian “equilibrium” ARE NOT THE SAME THING.
Socialism eliminates them. Keynesianism distorts them. Only if you believe in the absurd myth that (1) supply and demand curves set prices across all markets, and (2) that equilibrium prices exist in each and every market, just waiting to be discovered.1. Voluntary exchanges are voluntary exchanges and result in objective prices. Putting that uncontroversial fact into the form “supply and demand curves set prices across all markets” is purposefully misleading since supply and demand curves do not have volition and do not “set” anything. 2. Voluntary exchanges are voluntary exchanges and result in objective prices. Putting that uncontroversial fact into the form ”equilibrium prices exist in each and every market, just waiting to be discovered is not only purposefully misleading but preposterous. It suggests that the future is somehow fixed somewhere out there in the ether waiting to be “discovered”. Hayek’s “equilibrium” prices are merely the prices that come about in absence of government intervention. The quasi-religious dogma, akin to any religious superstition is the viewing of Minsky Moments as the mysterious and inexplicable result of “capitalism” when it is self-evident that they are the result of the very same distorted prices that are and have always been the focus of Austrian analysis.
“the CORE AUSTRIAN IDEA is that prices are the only information available for rational economic calculation across society. Socialism eliminates them. Keynesianism distorts them.”Bob, your argument is completely tautological. It proceeds as follows:1) You invent an imaginary economy, in which there is no government involvement.2) You assert that this imaginary economy is as perfect as it can possibly be. There are no economic problems in this imaginary economy, such as unemployment, poverty, financial crises, etc. 3) You assert that the prices in this imaginary economy are necessarily the right prices, by definition.3) You argue that because this imaginary economy is perfect, any government involvement which changes it in any way can only make things worse - by “distorting” it away from this perfection. Q.E.D.
Y completely misses the distinction between compelled transactions based upon the threat of violence and voluntary exchanges. Only voluntary exchanges give you a clue about what people might actually desire and will put their money where their mouth is. And it is not that difficult to differentiate the two concepts when examining various human situations. In fact, average people do it all of the time. Only Keynesians are too cement-headed to be able to do it.By definition, government is the employment of the threat of violence to obtain cooperation. It is so simple that you guys must obfuscate to the ends of the earth to avoid seeing the obvious.
"Y completely misses the distinction between compelled transactions based upon the threat of violence and voluntary exchanges. Only voluntary exchanges give you a clue about what people might actually desire and will put their money where their mouth is."A tax system backed by force still allows people to buy what they want voluntarily in nearly all transactions.Even where things are provided with tax money, what is provided IS desired by the vast majority of people, e.g., universal health care systems, public infrastructure.Roddis has no idea what he is talking about."By definition, government is the employment of the threat of violence to obtain cooperation."By definition, your Rothbardian world would employ private protection agencies using the threat of violence to obtain cooperation.In neither case does that cause insuperable economic problems. It would just provide the social and legal order that allows markets to function, in both cases.
"Only voluntary exchanges give you a clue about what people might actually desire and will put their money where their mouth is"The overwhelming majority of people want a government which spends money on things. You are in a teeny tiny minority. We also know, as an empirical fact, that you were the least popular candidate among Michigan voters. Presumably they didn't think much of your opinions. You choose to live in the US, even though you hate its laws and its government and the opinions of the overwhelming majority of US citizens. Why on earth do you voluntarily choose to do that Bob?
"A tax system backed by force"A tax system backed by law.
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