Max Keiser in The Journal.ie

beeftotheheels

SupaNova wrote: »

Lol i hope you are you really being deliberately stupid rather than actully being stupid. Economists with Phd's and MA's regularly contribute to Mises.org, and its easy to track them down by going to the site and you go and talk about a forum poster. Mother of God :rolleyes:. Roger Garrison is another very good Austrian economist off the top of my head.



Krugman for a start. And i'm not going on a runabout for someone being deliberately stupid.



You seem to be having a hard time separating monetary inflation/deflation from price inflation/deflation. Prices across the board can fall in relation to a fixed supply of money due to an increasing supply of goods and services. This type of deflation is not bad. Prices across the board fell from the start of the 19th Century to the end, because the money supply increased at a slower rate than the amount of goods and services.

So you're now engaging in time travel in order to justify an unjustifiable position. Time travel, which by the way, ignores pesky details like the death toll of the 19th century, there weren't any wars in that era, no small Frenchmen losing the run of themselves, no civil wars, revolutions, any of that sort of thing.

So, given that we, in the developed world, have moved on from a society where people die all the time from treatable diseases or hunger or large scale war, given we have produced a social safety net, we have also deprived ourselves of the incentive to produce goods below cost (no doubt you see this lack of pain and suffering as a bad thing).

http://news.bbcimg.co.uk/media/images/56291000/gif/_56291306_seven_billion_count_464.gif

Do you think that a gold mining chart echos this curve?

Lets look at the 20th century which more closely echos the world we live in. Deflation is a bad thing. It was a bad thing in the 30s, it was still a bad thing when Japan caught it almost 70 years later. It is still a bad thing today, not least because no one has yet figured out how to break it.

But none of that is why I accused you of being a religious zealot. Right now, the closest we have to a gold standard i.e. currencies being pegged to a value regardless of the needs or desires of their domestic economies, is the Euro. Which is, in a manner of speaking, the beginning, middle, and end of the current crisis. But you're advocating this on a global scale. Prevent any central bank back stopping her currency, have hard and fast exchange rates set once for all. This didn't work with the gold standard, it didn't work for the ERM and is currently not working for the euro.

Now I think eurozone politicians will learn and adapt and the euro will survive, but the ECB needs to print for the euro to survive, the very thing that a return to a gold standard would prevent from happening.

So, faced with the history of it not working, a belief that it will work this time is either religious zealotry, or is insanity.

SupaNova

beeftotheheels wrote: »

So you're now engaging in time travel in order to justify an unjustifiable position. Time travel, which by the way, ignores pesky details like the death toll of the 19th century, there weren't any wars in that era, no small Frenchmen losing the run of themselves, no civil wars, revolutions, any of that sort of thing.

So, given that we, in the developed world, have moved on from a society where people die all the time from treatable diseases or hunger or large scale war, given we have produced a social safety net, we have also deprived ourselves of the incentive to produce goods below cost (no doubt you see this lack of pain and suffering as a bad thing).

All these wars and revolutions were because of the gold standard, that's a pretty out there explanation, care to explain futher? And i don't think the rest of your rant above is worthy of any response.

http://news.bbcimg.co.uk/media/images/56291000/gif/_56291306_seven_billion_count_464.gif

Do you think that a gold mining chart echos this curve?

I am sure that a lot of things echo that curve, what the hell is your point?

Lets look at the 20th century which more closely echos the world we live in. Deflation is a bad thing. It was a bad thing in the 30s, it was still a bad thing when Japan caught it almost 70 years later. It is still a bad thing today, not least because no one has yet figured out how to break it.

Deflation in the 30's was an unavoidable result of crazy credit expansionary boom. Likewise with Japan. It shows the short sited Keynesian view that they cant even be bothered to study the preceding role of unsustainable credit expansion that occurred all through the 20's, and never do they consider it in the case of Japan.

http://www.financialsensearchive.com/fsu/editorials/amerman/2009/0318.html

But none of that is why I accused you of being a religious zealot. Right now, the closest we have to a gold standard i.e. currencies being pegged to a value regardless of the needs or desires of their domestic economies, is the Euro.

And that's what I like about the euro.

Which is, in a manner of speaking, the beginning, middle, and end of the current crisis. But you're advocating this on a global scale. Prevent any central bank back stopping her currency, have hard and fast exchange rates set once for all. This didn't work with the gold standard, it didn't work for the ERM and is currently not working for the euro.

The ECB is about as good as a central bank gets. Please tell me how exchange rates don't work under a gold standard? Enlighten me, please!

So, faced with the history of it not working, a belief that it will work this time is either religious zealotry, or is insanity.

It did work the last time until it was gradually dismantled. If you actually read my posts, i never said we were going to go back to the gold standard of old and nor do i really care to, all i said is that was a better system than we currently have. I also did say that gold will play a more important role as a reserve asset and in international trade. My guess is based on the changes in reserves of central banks and what some central banks say themselves regarding their purchases of gold. I would have thought anyone with an interest in economics would find those developments to be of some interest, as well as commentary of Robert Zoellick on the subject.

beeftotheheels

SupaNova wrote: »

All these wars and revolutions were because of the gold standard, that's a pretty out there explanation, care to explain? And i don't think the rest of your rant above is worthy of any response.

My point is that in the 19th century faced with a stagnating economy there were options to get things moving along the lines of invading another country, starting a war, and if subjects in a pesky western area of the empire were getting troublesome then you could allow them to starve to death.

However, such actions have consequences, often social consequences leading to further wars and or revolts.

You're suggesting that we look at the economics of the 19th century in a vacuum while ignoring the social unrest and revolution which accompanied said economics, and as a result of which the rules changed.

So to pretend that we can look that far back in history, at the economic outputs (ignoring the social consequences) without discounting that lesson for shifting social paradigms is just daft.

SupaNova wrote: »

I am sure that a lot of things echo that curve, what the hell is your point?

That populations are rising faster than ever. You insist lessons can be learned from times when the human population was a small fraction of what it is today, and an even smaller fraction of what it will be tomorrow, a situation much more suitable to a finite resource of money than one with an exploding population.

SupaNova wrote: »

Deflation in the 30's was an unavoidable result of crazy credit expansionary boom. Likewise with Japan. It shows the short sited Keynesian view that they cant even be bothered to study the preceding role of unsustainable credit expansion that occurred all through the 20's, and never do they consider it in the case of Japan.

I think everyone gets that but there are many preferable solutions to credit control than returning to the gold standard.

SupaNova wrote: »

The euro is about as good as a central bank gets. Please tell me how exchange rates don't work under a gold standard? Enlighten me, please!

Global currencies fixed to a finite resource as evidence of floating exchange rates? Really? It worked so well in the past, especially in war time I'm told, which is great because it is not like such an inflexible system could ever lead to war, or revolution, or anything like that.

Economics, like any social science, does not exist in a bubble. It interacts with politics, law etc and that is so obvious looking at the eurozone right now.

Fiat money may not be the best answer, and our paradigms will continue to shift, but the gold standard is not where they can or will shift to precisely because it was tried, and it failed, and its stepchild the euro is failing (until it stops trying to pretend that it is on the gold standard).

andrew

SupaNova wrote: »

Lol i hope you are you really being deliberately stupid rather than actully being stupid. Economists with Phd's and MA's regularly contribute to Mises.org, and its easy to track them down by going to the site and you go and talk about a forum poster. Mother of God :rolleyes:. Roger Garrison is another very good Austrian economist off the top of my head.

I'm not talking about a forum poster. This guy had a post on the main mises site. So you'll forgive me if I don't trust a site which I could post in tomorrow, if I wanted. How am I supposed to know who's actually an economist and who's just waffling? Surely there's 1 other site you could give?

Krugman for a start. And i'm not going on a runabout for someone being deliberately stupid.

Could you even show me the Krugman article? And is it actually stupid, or is it just that you disagree with him, and therefore, he's stupid?

You seem to be having a hard time separating monetary inflation/deflation from price inflation/deflation. Prices across the board can fall in relation to a fixed supply of money due to an increasing supply of goods and services. This type of deflation is not bad. Prices across the board fell from the start of the 19th Century to the end, because the money supply increased at a slower rate than the amount of goods and services.

As I've asked before, I'd love, really love, to see a citation for that. And the 19th century was pretty terrible economically, what with the depression which happened in the latter half, so I'm not surprised prices were falling. Also, could you clarify the difference between monetary deflation and price deflation?

nesf

andrew wrote: »

Also, could you clarify the difference between monetary deflation and price deflation?

One imagines he's talking a reduction in the money supply/velocity of money on one hand and a reduction in the price level on the other.

How or why it's relevant is beyond me though.

FreudianSlippers

... a terrorist organisation?

MungBean

FreudianSlippers wrote: »

... a terrorist organisation?

SupaNova

andrew wrote: »

I'm not talking about a forum poster. This guy had a post on the main mises site. So you'll forgive me if I don't trust a site which I could post in tomorrow, if I wanted. How am I supposed to know who's actually an economist and who's just waffling? Surely there's 1 other site you could give?

You previously asked for economists with Phd's, i gave you a few off the top of my head. A child who knows how to search the internet could find who is an Austrian economist and who is not, even without being directed to Mises.org, but this is beyond your abilities i see.

On Mises.org all the material i have read is from Hayek, Mises, Rothbard, Hazzlit and others i have mentioned. Is their work invalid because the site hosts an article from someone i never heard of and probably will never read. I'd be curious if you could point to this article or give me the name of the author so i can see this article that ruins the credibility of the whole site? Please do!

Could you even show me the Krugman article? And is it actually stupid, or is it just that you disagree with him, and therefore, he's stupid?

I really don't have the motivation to go running around for you. I'm sure with a little effort you could find which comments of Krugman's an Austrian economist finds absurd. Being an Austrian economist is not even required to find some of what Krugman says absurd.

As I've asked before, I'd love, really love, to see a citation for that. And the 19th century was pretty terrible economically, what with the depression which happened in the latter half, so I'm not surprised prices were falling. Also, could you clarify the difference between monetary deflation and price deflation?

My sources are Rothbard and Thomas E Woods. You can easily find their credentials, all though maybe you can't. Tell me about this 19th Century depression and the authors and Historian's you are basing this on? Love to hear it.

SupaNova

beeftotheheels wrote: »

My point is that in the 19th century faced with a stagnating economy there were options to get things moving along the lines of invading another country, starting a war, and if subjects in a pesky western area of the empire were getting troublesome then you could allow them to starve to death.

However, such actions have consequences, often social consequences leading to further wars and or revolts.

Lol Keynesian logic, the wars and empires are the economic stimuli to overcome the animal spirits that take hold of the market? What metrics and which economic historian's are you using when you claim that the 19th Century was a stagnating economy?

You're suggesting that we look at the economics of the 19th century in a vacuum while ignoring the social unrest and revolution which accompanied said economics, and as a result of which the rules changed.

So to pretend that we can look that far back in history, at the economic outputs (ignoring the social consequences) without discounting that lesson for shifting social paradigms is just daft.

So again, you say the wars and revolutions are a result of economics and the gold standard? Please point me to your revisionist history?

That populations are rising faster than ever. You insist lessons can be learned from times when the human population was a small fraction of what it is today, and an even smaller fraction of what it will be tomorrow, a situation much more suitable to a finite resource of money than one with an exploding population.

I think everyone gets that but there are many preferable solutions to credit control than returning to the gold standard.

You don't need to expand the money supply in line with population. We have become somewhat accustomed to inflation though, and I don't recommend a return to the gold standard of old, i mentioned here and in another thread i am quite happy with the Eurosystem, and i see that model as preferable to any other.

Global currencies fixed to a finite resource as evidence of floating exchange rates? Really? It worked so well in the past, especially in war time I'm told, which is great because it is not like such an inflexible system could ever lead to war, or revolution, or anything like that.

Yes it had to be abandoned in war time. I love this Gold Standard leads to wars line, love to hear more about it, equally as stupid as the fiat money leads to wars line that goldbugs regurgitate.

Economics, like any social science, does not exist in a bubble. It interacts with politics, law etc and that is so obvious looking at the eurozone right now.

I don't disagree.

Fiat money may not be the best answer, and our paradigms will continue to shift, but the gold standard is not where they can or will shift to precisely because it was tried, and it failed, and its stepchild the euro is failing (until it stops trying to pretend that it is on the gold standard).

I think fiat money can be ok, Hayek would agree, which may surprise people who instantly dismiss the Austrian School as religious goldbugs. I admit some of the silly sound bites repeated by goldbugs may give this impression. I don't see a gold standard of old returning, and it would fail again, governments and banks want the ability to inflate to serve themselves. I have even said it already, that if you want to call the restrictions on inflation, permitted by the gold standard a flaw, so be it. You are reading parts my posts and descending into a mindless rant.

I do see gold playing a role again, that does not mean i see a classical gold standard returning or do i really care to, and i have given reasons why? I would have thought someone interested in economics might find developments in the make up of central bank reserves of some interest, guess not.

andrew

SupaNova wrote: »

You previously asked for economists with Phd's, i gave you a few off the top of my head. A child who knows how to search the internet could find who is an Austrian economist and who is not, even without being directed to Mises.org, but this is beyond your abilities i see.

I really don't think it's that much to ask that you provide some links, but nevermind. I had a look at the mises 'faculty.' Telling that only just over half even have Phd's in economics, but I'll accept your point that a handful of american economists teaching at small universities are indeed austrians. I would've been more impressed if they taught at one of these universities though.

On Mises.org all the material i have read is from Hayek, Mises, Rothbard, Hazzlit and others i have mentioned. Is their work invalid because the site hosts an article from someone i never heard of and probably will never read. I'd be curious if you could point to this article or give me the name of the author so i can see this article that ruins the credibility of the whole site? Please do!

Well, it harms the credibility of the site to host material by some randomer, yeah.

I really don't have the motivation to go running around for you. I'm sure with a little effort you could find which comments of Krugman's an Austrian economist finds absurd. Being an Austrian economist is not even required to find some of what Krugman says absurd.

You're the austrian. You're the one saying it's absurd, so really the onus is on you to show it to me.

My sources are Rothbard and Thomas E Woods. You can easily find their credentials, all though maybe you can't. Tell me about this 19th Century depression and the authors and Historian's you are basing this on? Love to hear it.

And I'm willing to bet they're your only sources. I've asked time and again for proof of the assertion that deflation isn't bad, and you can't provide me with a single empirical study or paper; nothing. You read those two guys, they seemed to make sense, and so you decided you were an austrian without fully understanding the whole world of economic theory that's out there.

Also, can you clarify the difference between monetary and price deflation? Is nesf correct?

And yes, yes I can. Here's a link. And before you read the last section and think that it proves me wrong, note that the entire period was a period of low growth and stagnation. Surely if deflation is a good thing, or not bad, then the opposite would've been the case no? On either side of the flat bit which that depression represents, we have significant growth of output and prices, and in the centre, relatively flat growth and falling prices.

SupaNova

andrew wrote: »

You're the austrian. You're the one saying it's absurd, so really the onus is on you to show it to me.

Google the words, Krugman, criticism, absurd, contradiction. Try searching Mises.org also. Although the common sense and the ability to use the search function seems to be beyond you.

And I'm willing to bet they're your only sources. I've asked time and again for proof of the assertion that deflation isn't bad, and you can't provide me with a single empirical study or paper; nothing. You read those two guys, they seemed to make sense, and so you decided you were an austrian without fully understanding the whole world of economic theory that's out there.

I don't have to prove or show empirical studies that falling prices due to increased productivity is bad. Why would anyone go to the trouble of studying something that is obviously a good thing. Prices falling due to changes in money supply are bad, they are different things. Its pretty simple.

Also, can you clarify the difference between monetary and price deflation? Is nesf correct?

Its really simple, you have a supply of real world goods and services on one hand and on the other hand we have a money supply. Changes in money supply distort prices, increases and decreases both are harmful. Increases cause prices to rise further than they otherwise would and the opposite for deflation. If there is no change in the supply of money, and prices fall because there is an increase in the available number of goods and services that is not a bad thing. There is no empirical study to show falling prices for that reason are bad, what logical basis would you have that would warrant such a study?

And yes, yes I can. Here's a link. And before you read the last section and think that it proves me wrong, note that the entire period was a period of low growth and stagnation. Surely if deflation is a good thing, or not bad, then the opposite would've been the case no? On either side of the flat bit which that depression represents, we have significant growth of output and prices, and in the centre, relatively flat growth and falling prices.

I'll have a read later.

Crazy Horse 6

Say what you want about him but he's been bang on the money about what is going on in Europe regarding transfer of wealth from the soverign to the banks.

Amberman

Don't laugh at him, pity him. Poor Andrew clearly doesn't understand that he's fallen under the influence of some witchdoctors.

How the Fed Bought The Economics Profession.

And the High Priests, Bernanke and Geithner haven't been right about anything apart from bailing out Wall Street......for now...they can't see bubbles, the cures haven't worked as they thought they might, the debt has grown in the US just like it did in Japan, the US has lost its AAA rating (after Geithner said there was no way that could happen).

How can these guys be so wrong so often and still have a job?

HeliBen has an Economics PhD, doesn't he Andrew? How do you explain that fact that he has been wrong about almost everything if he's so smart and understands economic reality so well??

Heres one view...

"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

SupaNova

Myth of the Long Depression

Some economic historians have complained about the "great depression" that is supposed to have struck the United States in the panic of 1873 and lasted for an unprecedented six years, until 1879. Much of this stagnation is supposed to have been caused by a monetary contraction leading to the resumption of specie payments in 1879. However, this "depression" saw an extraordinarily large expansion of industry, of railroads, of physical output, of net national product, and real per capita income. As Friedman and Schwartz admit, the decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product, an outstanding real national product growth of 6.8 percent per year in this period, and a phenomenal rise of 4.5 percent per year in real product per capita. Even the alleged "monetary contraction" never took place, the money supply increasing by 2.7 percent per year in this period. From 1873 through 1878, before another spurt of monetary expansion, the total supply of bank money rose from $1.964 billion to $2.221 billion—a rise of 13.1 percent or 2.6 percent per year. In short, a modest but definite rise, and scarcely a contraction.[43]


The myth was brought about by misinterpretation of the fact that prices in general fell sharply during the entire period. Indeed they fell from the end of the Civil War until 1879. Friedman and Schwartz estimated that prices in general fell from 1869 to 1879 by 3.8 percent per annum. In the natural course of events, when government and the banking system do not increase the money supply very rapidly, free-market capitalism will result in an increase of production and economic growth so great as to swamp the increase of money supply. Prices will fall, and the consequences will be not depression or stagnation, but prosperity (since costs are falling, too) economic growth, and the spread of the increased living standard to all the consumers. The analogous "great depression" in England in this period was also a myth for the same reasons.[44]


Although per-capita nominal income declined very gradually from 1873 to 1879, that decline was more than offset by a gradual increase over the course of the next 17 years. Finally and most significantly, real per-capita income either stayed approximately constant (1873-1880; 1883-1885) or rose (1881-1882; 1886-1896), so that the average consumer appears to have been considerably better off at the end of the 'depression' than before. Studies of other countries where prices also tumbled, including the US, Germany, France, and Italy, reported more markedly positive trends in both nominal and real per-capita income figures. Profits generally were also not adversely affected by deflation, although they declined (particularly in Britain) in industries that were struggling against superior, foreign competition.


Accompanying the overall growth in real prosperity was a marked shift in consumption from necessities to luxuries: by 1885, 'more houses were being built, twice as much tea was being consumed, and even the working classes were eating imported meat, oranges, and dairy produce in quantities unprecedented'. The change in working class incomes and tastes was symbolized by 'the spectacular development of the department store and the chain store'. In short, the Great Depression of 1873-96, considered as a depression of anything except the price level, appears to be a myth:

Prices certainly fell, but almost every other index of economic activity - output of coal and pig iron, tonnage of ships built, consumption of raw wool and cotton, import and export figures, shipping entries and clearances, railway freight clearances, joint-stock company formations, trading profits, consumption per head of wheat, meat, tea, beer, and tobacco - all of these showed an upward trend.

Lol some depression alright. And i was aware of this myth thanks to Milton Friedman and Thomas Woods.

Some relevant Thomas E Woods lectures:
http://www.youtube.com/watch?v=6XbG6aIUlog
http://www.youtube.com/watch?v=czcUmnsprQI
http://www.youtube.com/watch?v=TxcjT8T3EGU

And in the talk given about Keynesian predictions he quotes Samuelson, someone who would meet all your requirements: A Keynesian economist, a nobel prize winner, lectured at MIT, here's some of his wonderful insight:

"Every economy has its contradictions. … What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth." — Paul Samuelson, Economics, 1985 edition

"Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive." — Paul Samuelson, Economics, 1989 edition

Bravo!

Amberman

SupaNova wrote: »

Lol some depression alright. And i was aware of this myth thanks to Milton Friedman and Thomas Woods.

Some relevant Thomas E Woods lectures:
http://www.youtube.com/watch?v=6XbG6aIUlog
http://www.youtube.com/watch?v=czcUmnsprQI
http://www.youtube.com/watch?v=TxcjT8T3EGU

And in the talk given about Keynesian predictions he quotes Samuelson, someone who would meet all your requirements: A Keynesian economist, a nobel prize winner, lectured at MIT, here's some of his wonderful insight:

"Every economy has its contradictions. … What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth." — Paul Samuelson, Economics, 1985 edition

"Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive." — Paul Samuelson, Economics, 1989 edition

Bravo!

Game, set and match. Well played Sir, well played!

nesf

SupaNova wrote: »

Its really simple, you have a supply of real world goods and services on one hand and on the other hand we have a money supply. Changes in money supply distort prices, increases and decreases both are harmful. Increases cause prices to rise further than they otherwise would and the opposite for deflation. If there is no change in the supply of money, and prices fall because there is an increase in the available number of goods and services that is not a bad thing. There is no empirical study to show falling prices for that reason are bad, what logical basis would you have that would warrant such a study?

It comes down to whether one believes that a deflationary spiral can happen (i.e. lower goods prices driving down output which drives down wages which drives down prices and so on). Austrians and others believe this cannot happen, mainstream economists believe it can.

One thing I'd caution you on is that any decrease in the money supply has a very long lag in making an impact on prices. You can't equate the two as one in the same exactly.

nesf

SupaNova wrote: »

Lol some depression alright. And i was aware of this myth thanks to Milton Friedman and Thomas Woods.

Some relevant Thomas E Woods lectures:
http://www.youtube.com/watch?v=6XbG6aIUlog
http://www.youtube.com/watch?v=czcUmnsprQI
http://www.youtube.com/watch?v=TxcjT8T3EGU

And in the talk given about Keynesian predictions he quotes Samuelson, someone who would meet all your requirements: A Keynesian economist, a nobel prize winner, lectured at MIT, here's some of his wonderful insight:

"Every economy has its contradictions. … What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth." — Paul Samuelson, Economics, 1985 edition

"Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive." — Paul Samuelson, Economics, 1989 edition

Bravo!

It's a matter of optics. If you take smaller periods in the 1870's then you see the decrease in output and the higher unemployment to go along with the price deflation.

SupaNova

nesf wrote: »

It comes down to whether one believes that a deflationary spiral can happen (i.e. lower goods prices driving down output which drives down wages which drives down prices and so on). Austrians and others believe this cannot happen, mainstream economists believe it can.

One thing I'd caution you on is that any decrease in the money supply has a very long lag in making an impact on prices. You can't equate the two as one in the same exactly.

Yes an Austrian would acknowledge that wages nominally can fall in a scenario. All that matters are real wages. It's possible that real wage rates can rise with increases in money supply, or without. What the Austrian economists explained is the changes in money supply and the way in which money enters and filters through the economy distort prices and the structure of the economy. After reading the ECB document, its something an up front and honest central bank are aware of to a certain degree. But the way they state the problem mirrors exactly Friedman's explanation of what he referred to as static caused by inflation. Hayek's explanation of the same problem is far better, and accounts for changes of the structure of production, describes the temporary stimulative effect, a better description of how inflation filters through the economy, and how the market tries to adjust and why stimulus will be short lived. In the absence or limited effects of changes in money supply, you have far less of the negative effects, and more sustainable growth that will result in real wage rates rising faster, than a market constantly trying to adjust production to the source and volume of monetary expansion.

SupaNova

nesf wrote: »

It's a matter of optics. If you take smaller periods in the 1870's then you see the decrease in output and the higher unemployment to go along with the price deflation.

Yes you can zoom in and find price deflation correlating with unemployment for certain periods. Correlation is not causation. That's where Keynesian theories and other theories of the boom bust go wrong. They look at the effects of the bust and diagnose them as the cause. One of the videos i linked was on economic cycles before the fed. There are plenty of periods you can zoom in on and find prices falling and high unemployment, but also you can find periods where prices fell and the economy was booming. You would think this would be a clue to perhaps look for some other reason why the economy booms and bust other than blaming falling prices for causing a bust. What Austrian's have is a logical sound theory, of why artificial credit expansions cause booms, and why busts are unavoidable. And for every boom and bust in the 19th Century, they have found data showing loose monetary expansion the source of booms and busts. Busts will be typified by higher unemployment and falling prices.

nesf

SupaNova wrote: »

Yes you can zoom in and find price deflation correlating with unemployment for certain periods. Correlation is not causation. That's where Keynesian theories and other theories of the boom bust go wrong. They look at the effects of the bust and diagnose them as the cause. One of the videos i linked was on economic cycles before the fed. There are plenty of periods you can zoom in on and find prices falling and high unemployment, but also you can find periods where prices fell and the economy was booming. You would think this would be a clue to perhaps look for some other reason why the economy booms and bust other than blaming falling prices for causing a bust. What Austrian's have is a logical sound theory, of why artificial credit expansions cause booms, and why busts are unavoidable. And for every boom and bust in the 19th Century, they have found data showing loose monetary expansion the source of booms and busts. Busts will be typified by higher unemployment and falling prices.

Really, you sound like you think the Austrian theory in this matter is flawless. It's far from it and rejected by most mainstream economists for various reasons.

I've no interest in arguing the minutiae of this, it's not an area of economics that I'm hugely familiar with or interested in but you're overstating the Austrian position here and should couch the theory in more qualified terms rather than being "logically sound" etc which implies that other theories do not work (which is bizarre given the successors to this theory and demand side theories of boom/bust cycles).

This is an area of economics with one of the grand supply vs demand side debates. It very much is up for debate and a lot of work is being done in the area but this should stop you from proclaiming the Austrian theory as the perfect solution, things are far, far more complex and uncertain when you actually look into the area.

SupaNova

nesf wrote: »

Really, you sound like you think the Austrian theory in this matter is flawless. It's far from it and rejected by most mainstream economists for various reasons.

I don't think it's flawless, but far far closer than other explanations, some of which are completely silly, others at least identify the role of credit. And I am not too concerned about mainstream economists. Ron Paul a politician/physician could identify the why's and how's of a housing bubble in 2001 because he had solid fundamental picture of the processes of boom bust thanks to Hayek, Mises and Rothbard. Yet a mainstream nobel prize winning economist predicted a thriving socialist economy just before it was about the end because of a flawed fundamental view of the economy. Most mainstream economists are not aware of the Austrian Theory, and the ones that are and have gone to the trouble of criticizing it, have arguments against it of very little worth. I could go into detail. But:

I've no interest in arguing the minutiae of this, it's not an area of economics that I'm hugely familiar with or interested in but you're overstating the Austrian position here and should couch the theory in more qualified terms rather than being "logically sound" etc which implies that other theories do not work (which is bizarre given the successors to this theory and demand side theories of boom/bust cycles).

This is an area of economics with one of the grand supply vs demand side debates. It very much is up for debate and a lot of work is being done in the area but this should stop you from proclaiming the Austrian theory as the perfect solution, things are far, far more complex and uncertain when you actually look into the area.

nesf

SupaNova wrote: »

I don't think it's flawless, but far far closer than other explanations, some of which are completely silly, others at least identify the role of credit. And I am not too concerned about mainstream economists. Ron Paul a politician/physician could identify the why's and how's of a housing bubble in 2001 because he had solid fundamental picture of the processes of boom bust thanks to Hayek, Mises and Rothbard. Yet a mainstream nobel prize winning economist predicted a thiving socialist economy just before it was about the end because of a flawed fundamental view of the economy. Most mainstream economists are not aware of the Austrian Theory, and the ones that are and have gone to the trouble of criticizing it, have arguments against it of very little worth. I could go into detail. But:

I'll leave the details to Andrew, all I want to do here is point out the uncertainty and conflict about these theories within academia. The problem I've seen with the theory is issues with dealing with unemployment within a depression and the complexities thereof.

SupaNova

I don't have much motive for discussion with Andrew. He has a hard time separating the reasons for falling prices. It's obvious to someone who engages their brain, that falling prices due to an increasing supply of goods have completely different consequences to falling prices due to monetary contraction. One obviously positive and one negative. The extent of Andrew's thought on the subject is; deflation is bad because someone said so, show me an empirical study if it isn't a bad thing.

andrew

SupaNova wrote: »

I don't have much motive for discussion with Andrew. He has a hard time separating the reasons for falling prices. It's obvious to someone who engages their brain, that falling prices due to an increasing supply of goods have completely different consequences to falling prices due to monetary contraction. One obviously positive and one negative. The extent of Andrew's thought on the subject is; deflation is bad because someone said so, show me an empirical study if it isn't a bad thing.

Honest, if you can find for me some sort of journal article which says that productivity led deflation isn't bad, I will unhesitatingly admit to having been completely ignorant of that fact, and accept that the gold standard isn't bad for this reason (not that there aren't plenty of other reasons). And I'm not being snarky or anything, if I learn that all deflation isn't bad, then I'd be genuinely happy that I've had a previous misconception overturned.

SupaNova

andrew wrote: »

Honest, if you can find for me some sort of journal article which says that productivity led deflation isn't bad, I will unhesitatingly admit to having been completely ignorant of that fact, and accept that the gold standard isn't bad for this reason (not that there aren't plenty of other reasons). And I'm not being snarky or anything, if I learn that all deflation isn't bad, then I'd be genuinely happy that I've had a previous misconception overturned.

The point is you don't need an empirical study to show positive and negative effects of economic and monetary policy. Mises didn't need to show empirical studies to logical deduce why a socialist economy wouldn't be able to rationally allocate resources in the absence of market prices. Yet a noble prize winning mainstream economist, mislead by aggregate statistics, predicted a thriving socialist economy just before its collapse. Yes their was lots of production under the socialist economy, lots of tractors, yet no food on the supermarket shelves.

Likewise Robert Triffin(not an Austrian) was able to engage his reason and explain the conflict of interests of a single nation having the privilege of reserve currency without ever needing to conduct an empirical study.

Is it not the sign of a good economist to be able logical reason and the deduce the effects of economic and monetary policy without ever needing to undertake empirical studies? Surely you can agree on that?

If you can agree, can you please logically think about the different reasons for falling prices, and the vastly different consequences for the economy? Do you understand the differences, have you ever even thought about it before? How often do you logically think and reason your way through economic questions? And you don't need the equivalent abilities in reason of Mises or Triffin to understand the different reasons for falling prices and their consequences.

andrew

SupaNova wrote: »

The point is you don't need an empirical study to show positive and negative effects of economic and monetary policy. Mises didn't need to show empirical studies to logical deduce why a socialist economy wouldn't be able to rationally allocate resources in the absence of market prices. Yet a noble prize winning mainstream economist, mislead by aggregate statistics, predicted a thriving socialist economy just before its collapse. Yes their was lots of production under the socialist economy, lots of tractors, yet no food on the supermarket shelves.

Is it not the sign of a good economist to be able logical reason and the deduce the effects of economic and monetary policy without ever needing to undertake empirical studies? Surely you can agree on that?

If you can agree, can you please logically think about the different reasons for falling prices, and the vastly different consequences for the economy? Do you understand the differences, have you ever even thought about it before? How often do you logically think and reason your way through economic questions? And you don't need the equivalent abilities in reason of Mises or Triffin to understand the different reasons for falling prices and their consequences.

I had a feeling you'd say that. Basically what you're saying is that you don't need proof for anything that Hayek or Rothbard ever said; if they said it, it must be true. And that's fine, when they're right; because when they are it looks self evident. But when they're wrong? Well, according to you they can't be wrong, because there's no way of proving them wrong! Which is silly, and one of the reasons nobody takes Austrians seriously, and why people on the internet love the Austrian school; they can just assert that they used 'parexology' to come to an answer and they're right. While of course a good economist can logically reason and the deduce the effects of economic and monetary policy, it's a terrible economist who refuses to accept any real life, empirical burden for what they've said.

Anyway, since I'm not inclined to believe the assertions of two economists for it, I've done your research for you, and in reality there are several papers you could've shown me which indicate that you're right and that productivity induced deflation under a fixed monetary regime doesn't have to be a bad thing [1,2,3,4]. This is particularly the case when productivity is rising a ****-ton, and also when the deflation is expected. Presumably this isn't the case when the economic growth is due to a population increase, or just an increase in the amount of stuff produced without an associated rise in productivity. In addition, while it may not be bad for growth, as it says in one of the papers there, it certainly feels bad for those going through it. So, previous conception overturned; deflation may not always be horrible.

As a sidenote, Samuelson isn't the only 'good' economist out there, and judging him for two cherry picked quotes is incredibly disingenuous.

SupaNova

andrew wrote: »

I had a feeling you'd say that. Basically what you're saying is that you don't need proof for anything that Hayek or Rothbard ever said; if they said it, it must be true. And that's fine, when they're right; because when they are it looks self evident. But when they're wrong? Well, according to you they can't be wrong, because there's no way of proving them wrong! Which is silly, and one of the reasons nobody takes Austrians seriously, and why people on the internet love the Austrian school; they can just assert that they used 'parexology' to come to an answer and they're right.

Your wrong, An Austrian can be proved wrong through the simple method of finding mistakes in their reasoned deductions, or false premises. Its not a case of Hayek and Mises said therefore its true. Its a case of reading and understanding their logical reasoning and being unable to find mistakes in there reasoning. There is very simple and logical reasons, for why falling prices due to increased productivity are good, and falling prices due to monetary contraction are bad.

No any Austrian can be proved wrong by sp Rothbard has shown Mises to be wrong.

They can be as i have said. The people who can't be taken seriously are people who assume all deflation is equal, and regurgitate things like deflation is bad because mainstream economists say it is.

Anyway, since I'm not inclined to believe the assertions of two economists for it, I've done your research for you, and in reality there are several papers you could've shown me which indicate that you're right and that productivity induced deflation under a fixed monetary regime doesn't have to be a bad thing [1,2,3,4]. This is particularly the case when productivity is rising a ****-ton, and also when the deflation is expected. Presumably this isn't the case when the economic growth is due to a population increase, or just an increase in the amount of stuff produced without an associated rise in productivity. In addition, while it may not be bad for growth, as it says in one of the papers there, it certainly feels bad for those going through it. So, previous conception overturned; deflation may not always be horrible.

As a sidenote, Samuelson isn't the only 'good' economist out there, and judging him for two cherry picked quotes is incredibly disingenuous.

I was aware of one of those studies you linked and know of another one, which i deliberately withheld. There is no need for a study to tell you the differences between deflation, and the vastly different effects. There was no need for Mises to do an empirical study to show the calculation problem that thwarted the socialist economy.

andrew

SupaNova wrote: »

Your wrong, An Austrian can be proved wrong through the simple method of finding mistakes in their reasoned deductions, or false premises. Its not a case of Hayek and Mises said therefore its true. Its a case of reading and understanding their logical reasoning and being unable to find mistakes in there reasoning. There is very simple and logical reasons, for why falling prices due to increased productivity are good, and falling prices due to monetary contraction are bad.

In a situation where there could be several logical causes and outcomes, how would you know which cause was the most important and which outcome would obtain, in the absence of data. Do you think that every economic decision has a single logical outcome?

And the socialism example is absurd, it amounts to: Mises said socialism would collapse for logical reason x, socialism collapsed, therefore reason x was the reason socialism collapsed. Without empirical studies, you can't know whether reason x was operative or not; you're just asserting that it was.

SupaNova

And the socialism example is absurd, it amounts to: Mises said socialism would collapse for logical reason x, socialism collapsed, therefore reason x was the reason socialism collapsed. Without empirical studies, you can't know whether reason x was operative or not; you're just asserting that it was.

Mises's economic calculation problem didn't say that socialism would collapse for x logical reason. It showed that efficient calculation in allocating resources was impossible in a socialist economy. I never asserted it was the sole reason socialism collapsed, and neither did Mises predict socialism's collapse for this reason. I pointed out that Mises's knew why Socialism would be a stagnating economy because of the calculation problem without ever needing it to be tried tested or for empirical studies.

nesf

SupaNova wrote: »

Mises's economic calculation problem didn't say that socialism would collapse for x logical reason. It showed that efficient calculation in allocating resources was impossible in a socialist economy. I never asserted it was the sole reason socialism collapsed, and neither did Mises predict socialism's collapse for this reason. I pointed out that Mises's knew why Socialism would be a stagnating economy because of the calculation problem without ever needing it to be tried tested or for empirical studies.

That doesn't get around the empirical problem though. One has to resort to empirical analysis of a situation to see if your logic holds. It is very easy to have slightly misjudged one of your logical starting points and this resulting in what seems perfectly logical to not follow through when tested empirically.

The same problem plagues all sciences both hard and soft.