Max Keiser in The Journal.ie

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.

SupaNova

Do you need empirical analysis to determine answer the economic questions regarding the way humans value things, how prices work etc etc? Obviously not. This is what Mises noted was different about Economics as opposed to Physics.

Has Andrew learned anything or gained any greater understanding of deflation due to his change of mind. His first opinion was that deflation is bad because someone(mainstream economists) said so. Now deflation is not bad because a study said so, his learned nothing of the how's and why's? Mises point is that this is a piss poor way to approach economics.

If you take the following statement to be true(even without using the rigor of Mises to arrive at the statement):

"Whenever minimum wage laws are enforced that require wages to be higher than existing market wages, involuntary unemployment will result."

Do we need to trial policies of raising the minimum wage above the market rate for us to know? Lets say we trial the minimum wage at double what it is now in Ireland to see if it really does cause unemployment? After all we can't know if our logic holds unless we try and collect empirical data. Now lets say its tried and we collect data, and low and behold it causes unemployment? How do we know that setting the wage at 10 times what is now will cause unemployment, all our empirical data has shown is the effects of doubling the min wage, and we can't really be sure if raising it to 10 times the current rate will have the same effect unless we try it and collect empirical data, right?

andrew

SupaNova wrote: »

Do you need empirical analysis to determine answer the economic questions regarding the way humans value things, how prices work etc etc? Obviously not. This is what Mises noted was different about Economics as opposed to Physics.

Has Andrew learned anything or gained any greater understanding of deflation due to his change of mind. His first opinion was that deflation is bad because someone(mainstream economists) said so. Now deflation is not bad because a study said so, his learned nothing of the how's and why'? Mises point is that this is a piss poor way to approach economics.

Actually, I have learned more about deflation. I havn't read all of every paper (this is procrastination), but what I've read so far has got me thinking, and has spoken of, the mechanism behind the kind of deflation which occurs due to productivity growth, and the differences between different kind of deflation. I wanted studies because I don't trust people on the internet, and you weren't exactly forthcoming in terms of explaining the mechanism by which productivity led inflation is different, preferring to assert it instead.

And yes you need empirical evidence regarding the way prices work, because prices in the real world are messy and imperfect, as are the people who respond to them.

If you take the following statement to be true(even without using the rigor of Mises to arrive at the statement):

"Whenever minimum wage laws are enforced that require wages to be higher than existing market wages, involuntary unemployment will result."

Do we need to trial policies of raising the minimum wage above the market rate for us to know? Lets say we trial the minimum wage at double what it is now in Ireland to see if it really does cause unemployment? After all we can't know if our logic holds unless we try and collect empirical data. Now lets say its tried and we collect data, and low and behold it causes unemployment? How do we know that setting the wage at 10 times what is now will cause unemployment, all our empirical data has shown is the effects of doubling the min wage, and we can't really be sure if raising it to 10 times the current rate will have the same effect unless we try it and collect empirical data, right?

If data shows that raising the minimum wage 2x above the market wage causes unemployment, then the argument that it'll have the same effect at 10x above the market rate is a lot stronger due to the results from it being 2x above the market rate. In general, the argument that this is the case is strengthened; in your case all you have is an unproven theory: basically an assertion.

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.

So you're saying that Mises showed that efficient calculation in allocating resources was impossible in a socialist economy, and therefore said that the Socialist economy would stagnate. But in the absence of empirical data, it's impossible to know whether a) efficient allocation of resources didn't occur, b) whether stagnation occurred, and c) whether if it did occur, that it caused the stagnation of the socialist economy. There's no way of proving the theory without empirical data of some kind, even if it's just GDP data.

And regarding a), you might not have noticed it, but you used empirical data in your argument: "Yes their was lots of production under the socialist economy, lots of tractors, yet no food on the supermarket shelves." What's the point of including that observation, if by virtue of Mises' theory you knew a priori that this would be the case and don't need any data to support Mises' arguments?

SupaNova

andrew wrote: »

Actually, I have learned more about deflation. I havn't read all of every paper (this is procrastination), but what I've read so far has got me thinking, and has spoken of, the mechanism behind the kind of deflation which occurs due to productivity growth, and the differences between different kind of deflation. I wanted studies because I don't trust people on the internet, and you weren't exactly forthcoming in terms of explaining the mechanism by which productivity led inflation is different, preferring to assert it instead.

All you have now is data that said all deflation is not bad. I had to point out there a differences between the causes and effects of deflation without ever needing an empirical study. And now that you have the data that shows all deflation is not the same, what are you going to do? Use your brain and logical deduce the why's and how's? But you can do this without ever needing to study data?

And yes you need empirical evidence regarding the way prices work, because prices in the real world are messy and imperfect, as are the people who respond to them.

You can find out how prices work and much much more without ever needing a study.

If data shows that raising the minimum wage 2x above the market wage causes unemployment, then the argument that it'll have the same effect at 10x above the market rate is a lot stronger due to the results from it being 2x above the market rate. In general, the argument that this is the case is strengthened; in your case all you have is an unproven theory: basically an assertion.

All you have proven is that in the case of one study raising the minimum wage above the market rate caused unemployment. Is one empirical study enough? Maybe there were some variables unaccounted for? What if another study found and interpreted data and says raising wages above the market rate has no effect on unemployment? Then what?

So you're saying that Mises showed that efficient calculation in allocating resources was impossible in a socialist economy, and therefore said that the Socialist economy would stagnate. But in the absence of empirical data, it's impossible to know whether a) efficient allocation of resources didn't occur, b) whether stagnation occurred, and c) whether if it did occur, that it caused the stagnation of the socialist economy. There's no way of proving the theory without empirical data of some kind, even if it's just GDP data.

This is really frustrating, because one, you are not familiar with the theory, and two, you are saying its impossible to reason and deduce effects of economic policy unless it is tried and data is collected?

If we abandoned money, we wouldn't have have a blind hope in hell of calculating resource allocation, no? Your stance is, how could we know without ever abandoning money in the 21st Century economy? Its never been done in an economy as advanced, we are in uncharted territory, we cannot know if resource allocation would be impossible unless we try this out and collect data?

And regarding a), you might not have noticed it, but you used empirical data in your argument: "Yes their was lots of production under the socialist economy, lots of tractors, yet no food on the supermarket shelves." What's the point of including that observation, if by virtue of Mises' theory you knew a priori that this would be the case and don't need any data to support Mises' arguments?

Mises theory explained why this was, and Mises didn't need empirical data. The reason i included this was to hint at why Samuelson got it so wrong with his empirical mathematical approach. He was most likely looking at some aggregate statistics and feeding them into his mathematical models which lead him to conclusions a million miles away from reality.

Scofflaw

SupaNova wrote: »

Do you need empirical analysis to determine answer the economic questions regarding the way humans value things, how prices work etc etc? Obviously not. This is what Mises noted was different about Economics as opposed to Physics.

Has Andrew learned anything or gained any greater understanding of deflation due to his change of mind. His first opinion was that deflation is bad because someone(mainstream economists) said so. Now deflation is not bad because a study said so, his learned nothing of the how's and why's? Mises point is that this is a piss poor way to approach economics.

If you take the following statement to be true(even without using the rigor of Mises to arrive at the statement):

"Whenever minimum wage laws are enforced that require wages to be higher than existing market wages, involuntary unemployment will result."

Do we need to trial policies of raising the minimum wage above the market rate for us to know? Lets say we trial the minimum wage at double what it is now in Ireland to see if it really does cause unemployment? After all we can't know if our logic holds unless we try and collect empirical data. Now lets say its tried and we collect data, and low and behold it causes unemployment? How do we know that setting the wage at 10 times what is now will cause unemployment, all our empirical data has shown is the effects of doubling the min wage, and we can't really be sure if raising it to 10 times the current rate will have the same effect unless we try it and collect empirical data, right?

The answer to all those rhetorical questions is yes. Yes, you need empirical data, because economics is like physics, both being studies of reality. Claiming that "empirical data is unnecessary" is for theology.

cordially,
Scofflaw

nesf

Scofflaw wrote: »

The answer to all those rhetorical questions is yes. Yes, you need empirical data, because economics is like physics, both being studies of reality. Claiming that "empirical data is unnecessary" is for theology.

cordially,
Scofflaw

You'll note at this point I'm not bothering to argue the point anymore because this specific debate is almost a century old between mainstream economics and (some) Austrians.

Though I'm convinced that until you actually dig down into price data and the ways to trick people's perceptions of prices (anchoring etc) you don't really appreciate why one needs to get one's hands dirty empirically.

Scofflaw

nesf wrote: »

You'll note at this point I'm not bothering to argue the point anymore because this specific debate is almost a century old between mainstream economics and (some) Austrians.

Though I'm convinced that until you actually dig down into price data and the ways to trick people's perceptions of prices (anchoring etc) you don't really appreciate why one needs to get one's hands dirty empirically.

It continually amazes me that even though absolutely nothing in the world (bar mathematics, and possibly software) is the simple product of logic, people continue to believe that one can determine everything about something purely through the application of logic.

Also, of course, arguing end-member systems is a mug's game.

cordially,
Scofflaw

SupaNova

Scofflaw wrote: »

It continually amazes me that even though absolutely nothing in the world (bar mathematics, and possibly software) is the simple product of logic, people continue to believe that one can determine everything about something purely through the application of logic.

There is a world of difference between physics and economics, and Mises explained this best. I regret taking the minimum wage example as there is a lot more implied knowledge in that statement. I should have started with something much easier. If you take the law of supply and demand. And if you also understand money, you do not need to actually increase the money supply and collect data to know that increasing the money supply will cause prices to rise, would you agree?

And the reality is once you collect data, you are going have to come up with the logical how's and why's of economic questions, something you can do without ever needing to collect data, would you agree?

swordofislam

wingsof daun wrote: »

Max Keiser .... seems to be a hero of the masses.

define 'masses'.

swordofislam

SupaNova wrote: »

If you take the law of supply and demand. And if you also understand money, you do not need to actually increase the money supply and collect data to know that increasing the money supply will cause prices to rise, would you agree?

This has happened; we have empirical evidence of this. What are you doing? Please identify something that has not happened for which we do not have empirical evidence and make your 'argument' using that.

SupaNova

swordofislam wrote: »

This has happened; we have empirical evidence of this. What are you doing? Please identify something that has not happened for which we do not have empirical evidence and make your 'argument' using that.

Ok if we have a magical tomato creating machine that can create tomato's just as easily as money is now. Given we know the fundamental law of supply and demand, we don't need to see this machine in action and gather empirical evidence to know all other things being equal that the price of tomatoes will go towards zero.

swordofislam

SupaNova wrote: »

Ok if we have a magical tomato creating machine that can create tomato's just as easily as money is now. Given we know the fundamental law of supply and demand, we don't need to see this machine in action and gather empirical evidence to know all other things being equal that the price of tomatoes will go towards zero.

What's your point?
If all you are trying to say is that increasing the money supply leads to inflation than :mad:
I thought you were trying to say something about there not being a need for empirical evidence in economics.
You certainly don't make that case with a childish analogy.

SupaNova

swordofislam wrote: »

What's your point?
If all you are trying to say is that increasing the money supply leads to inflation than :mad:
I thought you were trying to say something about there not being a need for empirical evidence in economics.
You certainly don't make that case with a childish analogy.

I said you don't need to increase the money supply to know prices will rise, if you are aware of something as fundamental as supply and demand. You said we have empirical evidence for what happens when we increase the money supply, as if that was the only reason we could know the effects, so i gave you an example of something following the exact same principle that we don't have evidence for.

swordofislam

SupaNova wrote: »

I said you don't need to increase the money supply to know prices will rise, if you are aware of something as fundamental as supply and demand. You said we have empirical evidence for what happens when we increase the money supply, as if that was the only reason we could know the effects, so i gave you an example of something following the exact same principle that we don't have evidence for.

The analogy is too obvious. You've asserted that we don't need empirical evidence in economics when trying to make some point about contracting the money supply.
Just work through your arguments. Don't make childish arguments by analogy. Don't claim that empirical evidence is unnecessary in economics and then run back to it.

Identify some action that has not been taken and using your economic theories work through the consequences of that action. Of course this won't prove your point but it might at least demonstrate that you have some minimal amount of intellectual ability and that your assertions might be true.

I feel stupider for having read your posts. It is like reading something by a mentally ill person.

Sharpen up.

Also you didn't say that you said that if money supply was cut prices would fall.

SupaNova

swordofislam wrote: »

Identify some action that has not been taken and using your economic theories work through the consequences of that action.

I just did, with the tomato example.

I feel stupider for having read your posts. It is like reading something by a mentally ill person.

Any part of my posts in particular?

Also you didn't say that you said that if money supply was cut prices would fall.

What part of supply and demand do you not comprehend sir?