Tuesday, April 28, 2009
Answering Scott Sumner's Questions About Austrians
Scott Sumner asks some great questions about the Austrian view of the financial crisis. I'll do my best to balance brevity against comprehensiveness in my answers.
1. Why did NGDP collapse late last year?
I'm not saying this is the whole story, and someone might plausibly say I'm confusing cause with effect, but I think the following were all involved:
(a) People panicked because they were told by "the authorities" that the entire world financial system was on the brink of collapse. So the demand for cash shot way up.
(b) The real economy was due for a serious correction after the housing boom. In this article written in September 2007 (which itself was based on an analysis I made in July 2007), I was calling for the worst recession since the early 1980s. That clearly hadn't "hit" as of last summer, so I was not surprised that things finally started falling apart. I don't know why it happened late last year, except to say that the Fed and Treasury had been doing unprecedented things (TAF etc.) to keep the plates spinning. Once people realized that Paulson and Bernanke were bluffing, and that they had no clue what they were doing, panic set in and people understood that there would be no magic undoing of the malinvestments of the boom years by "injecting liquidity" or other such crankish schemes.
2. Could a suitably expansionary monetary policy have stopped NGDP [nominal Gross Domestic Product] from collapsing?
Of course. What was the growth rate in Zimbabwe's nominal GDP? (I actually don't know but I'm assuming >> 0%.)
3. Wouldn’t Hayek have favored enough monetary expansion to keep NGDP from collapsing?
You mean Friedrich, right? If so, I'm not sure. I believe the mature Hayek thought the Fed should have prevented M1 from falling during the Great Depression, but that's not the same thing as propping up NGDP. The best single paper on Hayek (and Robbins') changing views of "liquidationism" in the 1930s I've seen is this one [pdf].
4. Hayek originally thought that the Depression was a needed corrective for the excesses and misallocations of the late 1920s. He later changed his mind and argued that the Fed should not have allowed NGDP to collapse. Was he right to change his mind?
No. Read the book.
5. If monetary policy could not have prevented an NGDP collapse, what is your story? Is it the Keynesian liquidity trap? (I assume the answer is no.)
I do not fear NGDP collapses. I eat units of food, not dollar bills.
6. If a suitably expansionary monetary policy could have prevented an NGDP collapse, should the Fed have tried to do this?
No. Please don't ask me again.
7. If the answer is no, why not? Wouldn’t that have prevented the collapse in manufacturing in Asia late last year? What is the structural imbalance corrected by having 10s of millions of Chinese loose jobs making stuff like shoes? (Presumably there was no shoe bubble.) Are Austrians worried about the U.S. trade deficit?
Are you comparing shoemakers to prostitutes?
The world economy was in an unsustainable configuration during the boom years of 2002-2005. The flow of consumption goods (including durable goods like housing) coming out of the capital structure pipeline increased, but at the expense of necessary maintenance. See this article for a very simple, yet numerical, model of what I'm talking about.
I think he sometimes overshoots into too much "commonsense" simplicity, but I think Peter Schiff is dead right when he ridicules the notion that Asia needs US consumers to fuel their economic growth. The idea seems to be, if Asia didn't have fat lazy Americans grabbing iPhones and plasma screens, then the Asians would be thrown out of work. That's the crudest of...well something, I don't know what. I wanted to say Keynesianism but I think it's older and more primitive than that.
During the boom years, the Chinese and other net exporters were willing to ship Americans consumption goods, in exchange for a growing stockpile of claims on future income. This was clearly unsustainable. So yes, the expansion of Chinese export sectors--to the extent that they were catering to purchases made by Americans who were falsely believing themselves to be rich because of rising house and stock values--was indeed a "bubble." If American real estate had grown at a "proper" rate, then those Chinese exporters wouldn't have seen their demand grow so quickly.
People often ask me, "OK so what sectors were starved for capital, if you think housing, Wall Street quant departments, etc. expanded too much?" I don't know, but if we believe in scarcity and moderately full employment of resources during 2002-2005, then there must have been such sectors. I'm a lover, not an applied economist.
I get why we needed housing to decline for eight straight quarters from mid-2006 to mid-2008, but I don’t get why we then needed to violate Hayek’s maxim to keep NGDP from falling, and let NGDP fall sharply—causing massive output declines in sectors completely unrelated to the housing bubble. Recall that those non-housing sectors held up well during the first two years of unwinding the housing bubble–so we are not just talking about manufactured goods like rugs and furniture.
I'm not sure if this answers your question, but here goes: If in August 2007 the Fed hadn't starting cutting rates (the discount rate at the time, following next month by fed funds target rate cut), and if the government had said, "Well we live in a profit and loss economy, boys, I guess you'll all be filing Chapter 11," then there would have been a horrendous quarter or two. But all of the remaining assets owned by the insolvent banks and other financial institutions would have been sold off to the highest bidder, we would have had functioning asset markets, and there would have been no "credit crunch" because everybody would know exactly what the derivatives were worth, and who was holding what.
But that's not what happened. The government made bolder and bolder moves every month, leading the insolvent firms to believe that if they could just string their investors and creditors along, eventually they would be bailed out. And they were right.
So the Austrian business cycle theory explains why there needs to be a depression following an unsustainable boom. But if the government minds its own business (or better yet, cuts spending and taxes) then the economy can recover fairly quickly.
For example, during the 1920-1921 depression, the government cut the budget outrageously (at least 30% in one year, and I believe even more from 1919 to 1920 I believe) and the NY Fed jacked its discount rate up to a record high for the 1913-1931 period. (I think the record would extend beyond 1931 but I know the above is true for sure.) You had prices fall more than 15% in one year.
So if the Keynesian or monetarist explanation of the Great Depression is right, the 1920s should have been a decade of stagnation.
And yet they weren't; they were the Roaring Twenties. That's because Harding didn't do squat, and so unemployment peaked at 11.7% in 1921 and then was down to 2.4% in 1923. (See this article for more.)
I think Friedman and Schwartz were totally wrong in blaming the "inaction" of the Fed for the 1930s. Was the Fed more inactive then, compared to when it didn't exist pre-1913? How could it possibly be that the worst depression in US history was the fault of a timid Fed, when there were several bad (but not "Great") depressions that occurred before the Fed was created?
Oh, and one other question: As you know I am completely contemptuous of those (mostly Keynesians) who use interest rates as an indicator of monetary policy. Interest rates were very low in American in 1931; and very high in Germany in 1923. I believe that interest rates tell us precisely nothing about whether money is too easy or too tight, especially short term rates. The key variable is NGDP growth (which I believe Hayek also favored targeting.) Do you agree with my view that the 1% (short term) interest rates of 2003 were a totally meaningless indicator of the stance of monetary policy?
I agree that interest rates need not indicate the tightness or looseness of monetary policy. But since prices were falling more quickly in the 1920-1921 depression than in any single year from 1929-1933, I think the NY Fed's discount rate of 7 percent in the first period, versus 1.5 percent in the second period, shows that the Fed was halting money growth in the first period while at least being more liberal in the second. (I didn't have access to a consistent series on monetary aggregates for the whole period.)
So yes, the mere fact thatBernanke Greenspan brought the target down to 1% (in June 2003) by itself doesn't prove anything, but I have argued that he allowed the base to grow at rates that were almost as high as any point in the 1970s. So if we think that the Fed was too loose in the 1970s, then I think we can agree the Fed was too loose in the early 2000s.
Also, if we adjust for actual price inflation, then the real fed funds rate went negative in the early 2000s, something that hadn't happened since the 1970s. (See here.) Since I don't think the technical productivity of roundabout processes went negative (on the margin), this is a clear indication to me that Greenspan was pushing rates down, rather than passively responding to real changes in the supply and demand of loanable funds.
1. Why did NGDP collapse late last year?
I'm not saying this is the whole story, and someone might plausibly say I'm confusing cause with effect, but I think the following were all involved:
(a) People panicked because they were told by "the authorities" that the entire world financial system was on the brink of collapse. So the demand for cash shot way up.
(b) The real economy was due for a serious correction after the housing boom. In this article written in September 2007 (which itself was based on an analysis I made in July 2007), I was calling for the worst recession since the early 1980s. That clearly hadn't "hit" as of last summer, so I was not surprised that things finally started falling apart. I don't know why it happened late last year, except to say that the Fed and Treasury had been doing unprecedented things (TAF etc.) to keep the plates spinning. Once people realized that Paulson and Bernanke were bluffing, and that they had no clue what they were doing, panic set in and people understood that there would be no magic undoing of the malinvestments of the boom years by "injecting liquidity" or other such crankish schemes.
2. Could a suitably expansionary monetary policy have stopped NGDP [nominal Gross Domestic Product] from collapsing?
Of course. What was the growth rate in Zimbabwe's nominal GDP? (I actually don't know but I'm assuming >> 0%.)
3. Wouldn’t Hayek have favored enough monetary expansion to keep NGDP from collapsing?
You mean Friedrich, right? If so, I'm not sure. I believe the mature Hayek thought the Fed should have prevented M1 from falling during the Great Depression, but that's not the same thing as propping up NGDP. The best single paper on Hayek (and Robbins') changing views of "liquidationism" in the 1930s I've seen is this one [pdf].
4. Hayek originally thought that the Depression was a needed corrective for the excesses and misallocations of the late 1920s. He later changed his mind and argued that the Fed should not have allowed NGDP to collapse. Was he right to change his mind?
No. Read the book.
5. If monetary policy could not have prevented an NGDP collapse, what is your story? Is it the Keynesian liquidity trap? (I assume the answer is no.)
I do not fear NGDP collapses. I eat units of food, not dollar bills.
6. If a suitably expansionary monetary policy could have prevented an NGDP collapse, should the Fed have tried to do this?
No. Please don't ask me again.
7. If the answer is no, why not? Wouldn’t that have prevented the collapse in manufacturing in Asia late last year? What is the structural imbalance corrected by having 10s of millions of Chinese loose jobs making stuff like shoes? (Presumably there was no shoe bubble.) Are Austrians worried about the U.S. trade deficit?
Are you comparing shoemakers to prostitutes?
The world economy was in an unsustainable configuration during the boom years of 2002-2005. The flow of consumption goods (including durable goods like housing) coming out of the capital structure pipeline increased, but at the expense of necessary maintenance. See this article for a very simple, yet numerical, model of what I'm talking about.
I think he sometimes overshoots into too much "commonsense" simplicity, but I think Peter Schiff is dead right when he ridicules the notion that Asia needs US consumers to fuel their economic growth. The idea seems to be, if Asia didn't have fat lazy Americans grabbing iPhones and plasma screens, then the Asians would be thrown out of work. That's the crudest of...well something, I don't know what. I wanted to say Keynesianism but I think it's older and more primitive than that.
During the boom years, the Chinese and other net exporters were willing to ship Americans consumption goods, in exchange for a growing stockpile of claims on future income. This was clearly unsustainable. So yes, the expansion of Chinese export sectors--to the extent that they were catering to purchases made by Americans who were falsely believing themselves to be rich because of rising house and stock values--was indeed a "bubble." If American real estate had grown at a "proper" rate, then those Chinese exporters wouldn't have seen their demand grow so quickly.
People often ask me, "OK so what sectors were starved for capital, if you think housing, Wall Street quant departments, etc. expanded too much?" I don't know, but if we believe in scarcity and moderately full employment of resources during 2002-2005, then there must have been such sectors. I'm a lover, not an applied economist.
I get why we needed housing to decline for eight straight quarters from mid-2006 to mid-2008, but I don’t get why we then needed to violate Hayek’s maxim to keep NGDP from falling, and let NGDP fall sharply—causing massive output declines in sectors completely unrelated to the housing bubble. Recall that those non-housing sectors held up well during the first two years of unwinding the housing bubble–so we are not just talking about manufactured goods like rugs and furniture.
I'm not sure if this answers your question, but here goes: If in August 2007 the Fed hadn't starting cutting rates (the discount rate at the time, following next month by fed funds target rate cut), and if the government had said, "Well we live in a profit and loss economy, boys, I guess you'll all be filing Chapter 11," then there would have been a horrendous quarter or two. But all of the remaining assets owned by the insolvent banks and other financial institutions would have been sold off to the highest bidder, we would have had functioning asset markets, and there would have been no "credit crunch" because everybody would know exactly what the derivatives were worth, and who was holding what.
But that's not what happened. The government made bolder and bolder moves every month, leading the insolvent firms to believe that if they could just string their investors and creditors along, eventually they would be bailed out. And they were right.
So the Austrian business cycle theory explains why there needs to be a depression following an unsustainable boom. But if the government minds its own business (or better yet, cuts spending and taxes) then the economy can recover fairly quickly.
For example, during the 1920-1921 depression, the government cut the budget outrageously (at least 30% in one year, and I believe even more from 1919 to 1920 I believe) and the NY Fed jacked its discount rate up to a record high for the 1913-1931 period. (I think the record would extend beyond 1931 but I know the above is true for sure.) You had prices fall more than 15% in one year.
So if the Keynesian or monetarist explanation of the Great Depression is right, the 1920s should have been a decade of stagnation.
And yet they weren't; they were the Roaring Twenties. That's because Harding didn't do squat, and so unemployment peaked at 11.7% in 1921 and then was down to 2.4% in 1923. (See this article for more.)
I think Friedman and Schwartz were totally wrong in blaming the "inaction" of the Fed for the 1930s. Was the Fed more inactive then, compared to when it didn't exist pre-1913? How could it possibly be that the worst depression in US history was the fault of a timid Fed, when there were several bad (but not "Great") depressions that occurred before the Fed was created?
Oh, and one other question: As you know I am completely contemptuous of those (mostly Keynesians) who use interest rates as an indicator of monetary policy. Interest rates were very low in American in 1931; and very high in Germany in 1923. I believe that interest rates tell us precisely nothing about whether money is too easy or too tight, especially short term rates. The key variable is NGDP growth (which I believe Hayek also favored targeting.) Do you agree with my view that the 1% (short term) interest rates of 2003 were a totally meaningless indicator of the stance of monetary policy?
I agree that interest rates need not indicate the tightness or looseness of monetary policy. But since prices were falling more quickly in the 1920-1921 depression than in any single year from 1929-1933, I think the NY Fed's discount rate of 7 percent in the first period, versus 1.5 percent in the second period, shows that the Fed was halting money growth in the first period while at least being more liberal in the second. (I didn't have access to a consistent series on monetary aggregates for the whole period.)
So yes, the mere fact that
Also, if we adjust for actual price inflation, then the real fed funds rate went negative in the early 2000s, something that hadn't happened since the 1970s. (See here.) Since I don't think the technical productivity of roundabout processes went negative (on the margin), this is a clear indication to me that Greenspan was pushing rates down, rather than passively responding to real changes in the supply and demand of loanable funds.
Comments:
Now Austrians have to forever justify or disown Hayek. Fuck Hayek, what a bunch of meaningless questions.
# posted by 
: April 29, 2009 at 12:47 AM
: April 29, 2009 at 12:47 AM
Thanks Bob, I just posted a long update to my Austrian posts, which addresses some of these issues. If you look at pages 26-27 of the White article you sent me, you will see that you are totally wrong about Hayek. His views are exactly what I stated. He wanted to increase M to offset a fall in V. Favored NGDP targeting like I do. I completely agree about Zimbabwe, and was already planning on using that example to refute many Austrians commenting on my blog, who think the Fed cannot prevent NGDP from falling. We'll have to agree to disagree on NGDP, I think it is the key to the business cycle. I do agree that the 1921 depression was handled much better than 1929-33, and study that comparison in my Depression manuscript. I'm also a big Harding fan, so we have some similarities there.
Anon said:
F*ck Hayek...You mean Salma, right? If so, I am married, man. And if you were talking to Scott, I bet she thinks U of C economists are in league with dictators.
F*ck Hayek...You mean Salma, right? If so, I am married, man. And if you were talking to Scott, I bet she thinks U of C economists are in league with dictators.
I maintain that the essence of the Austrian Business Cycle Theory (ABCT) is more difficult to understand than it would be if the explanation started off with an explanation of the so called Cantillon Effects of fiat money creation.
MARK THORNTON , a senior fellow at the Ludwig von Mises Institute, in his article “CANTILLON ON THE CAUSE OF THE BUSINESS CYCLE” (THE QUARTERLY JOURNAL OF AUSTRIAN ECONOMICS VOL. 9, NO. 3 (FALL 2006): 45–60, 48) wrote:
“…Cantillon showed that changes in the quantity of money were not neutral in terms of production and consumption nor was there any dependable numerical relationship between the quantity of money and its purchasing power. Anticipating the Misesian critique of the helicopter theory of money, he stated, 'by doubling the quantity of money in a state the prices of products and merchandise are not always doubled' (Cantillon, pp. 235/177/73). The impact depends on where money is injected into the economy and how the new money would give a 'new turn to consumption and even a new speed to circulation. But it is not possible to say exactly to what extent' (pp. 239/181/74). A proportional, quantitative relationship between money and prices might not hold. In fact, according to Cantillon, it almost never did…”
http://mises.org/journals/qjae/pdf/qjae9_3_3.pdf
I would initiate an introduction to Austrian theory yet another step earlier. I would argue:
All that the central bank can do is dilute the money supply. People getting the new money are, in essence, stealing the purchasing power of people holding the old money. Ultimately, purchasing power of money is diluted across the board. Money creation is not neutral and fiat money creation is not some neutral “tool” of experts. The entire process is dishonest, corrupt, criminal. Perhaps these forms of theft “stimulate” additional economic activity in the short run and increase NGDP (as would stealing the life savings from Granny‘s cookie jar by thieves who spend it all on booze and women), but at what cost?
Now, if your listener is still listening and alert, you can now throw in an explanation of the Cantillon effect. (Of course, you may not want to call it that, or else your listener might return to watching “The Bachelor”.)
After this, if the listener is still listening and alert, you can set forth the usual full fledged ABCT. The theory should now be much easier to comprehend if the listener has first grasped the undeniable “dilution/theft of savings” nature of fiat money creation.
This is why no one should ever want a central bank to create fiat money. Ever.
HT2 Tom Woods:
http://www.takimag.com/site/article/did_somebody_say_capitalism/
MARK THORNTON , a senior fellow at the Ludwig von Mises Institute, in his article “CANTILLON ON THE CAUSE OF THE BUSINESS CYCLE” (THE QUARTERLY JOURNAL OF AUSTRIAN ECONOMICS VOL. 9, NO. 3 (FALL 2006): 45–60, 48) wrote:
“…Cantillon showed that changes in the quantity of money were not neutral in terms of production and consumption nor was there any dependable numerical relationship between the quantity of money and its purchasing power. Anticipating the Misesian critique of the helicopter theory of money, he stated, 'by doubling the quantity of money in a state the prices of products and merchandise are not always doubled' (Cantillon, pp. 235/177/73). The impact depends on where money is injected into the economy and how the new money would give a 'new turn to consumption and even a new speed to circulation. But it is not possible to say exactly to what extent' (pp. 239/181/74). A proportional, quantitative relationship between money and prices might not hold. In fact, according to Cantillon, it almost never did…”
http://mises.org/journals/qjae/pdf/qjae9_3_3.pdf
I would initiate an introduction to Austrian theory yet another step earlier. I would argue:
All that the central bank can do is dilute the money supply. People getting the new money are, in essence, stealing the purchasing power of people holding the old money. Ultimately, purchasing power of money is diluted across the board. Money creation is not neutral and fiat money creation is not some neutral “tool” of experts. The entire process is dishonest, corrupt, criminal. Perhaps these forms of theft “stimulate” additional economic activity in the short run and increase NGDP (as would stealing the life savings from Granny‘s cookie jar by thieves who spend it all on booze and women), but at what cost?
Now, if your listener is still listening and alert, you can now throw in an explanation of the Cantillon effect. (Of course, you may not want to call it that, or else your listener might return to watching “The Bachelor”.)
After this, if the listener is still listening and alert, you can set forth the usual full fledged ABCT. The theory should now be much easier to comprehend if the listener has first grasped the undeniable “dilution/theft of savings” nature of fiat money creation.
This is why no one should ever want a central bank to create fiat money. Ever.
HT2 Tom Woods:
http://www.takimag.com/site/article/did_somebody_say_capitalism/
# posted by : April 29, 2009 at 10:24 AM
: April 29, 2009 at 10:24 AM
Maybe I should be posting this on Scott_Sumner's blog instead but ...
Scott_Sumner doesn't seem to "get" that "All that glitters is not NGDP." What matters is whether buyers can coordinate with sellers, not whether an increasingly meaningless figure can go up.
We can double NGDP tomorrow. Still wouldn't meany anything.
There's no room to "agree to disagree" about Zimbabwe. It's the canonical example of why worrying about NGDP is pointless
Scott_Sumner doesn't seem to "get" that "All that glitters is not NGDP." What matters is whether buyers can coordinate with sellers, not whether an increasingly meaningless figure can go up.
We can double NGDP tomorrow. Still wouldn't meany anything.
There's no room to "agree to disagree" about Zimbabwe. It's the canonical example of why worrying about NGDP is pointless
Scott Sumner,
I didn't know one could "agree to disagree" on the truth of a given topic.
Is that how science is moved forward in other fields?
"I think there's gravity."
"I don't think there's gravity. I suppose we'll just have to agree to disagree."
Ugh. Intellectuals don't agree to disagree unless they're lazy or dishonest. Which are you, Scott? Don't accuse me of establishing a false dichotomy, either, otherwise I might just have to agree to disagree!
I didn't know one could "agree to disagree" on the truth of a given topic.
Is that how science is moved forward in other fields?
"I think there's gravity."
"I don't think there's gravity. I suppose we'll just have to agree to disagree."
Ugh. Intellectuals don't agree to disagree unless they're lazy or dishonest. Which are you, Scott? Don't accuse me of establishing a false dichotomy, either, otherwise I might just have to agree to disagree!
An utterly meaningless government statistic is the key to the business cycle. Well, I'm convinced.
# posted by : April 29, 2009 at 8:00 PM
: April 29, 2009 at 8:00 PM
"How could it possibly be that the worst depression in US history was the fault of a timid Fed, when there were several bad (but not "Great") depressions that occurred before the Fed was created?"
Say what? Compare: "How could it possibly be that the worst highway accident in US history was the fault of bad car design, when there were several bad (but not "Great") accidents that occurred before cars were invented?
'People often ask me, "OK so what sectors were starved for capital, if you think housing, Wall Street quant departments, etc. expanded too much?" I don't know,'
I think a better way to answer this question is to *find those sectors*.
Say what? Compare: "How could it possibly be that the worst highway accident in US history was the fault of bad car design, when there were several bad (but not "Great") accidents that occurred before cars were invented?
'People often ask me, "OK so what sectors were starved for capital, if you think housing, Wall Street quant departments, etc. expanded too much?" I don't know,'
I think a better way to answer this question is to *find those sectors*.
"Ugh. Intellectuals don't agree to disagree unless they're lazy or dishonest."
TAYLOR, people don't force issues like that unless they are socially inept weenies or bullies trying to score an intellectual point. Which are you, TAYLOR?
I mean, really, this is a common phrase that means, essentially, "I can see we're not going to resolve this on this blog today, but we're still friends, right?" Scientists do this all the time, TAYLOR. Anyone with a grain of social sense knows it doesn't mean they've embraced some full bore truth relativism.
TAYLOR, people don't force issues like that unless they are socially inept weenies or bullies trying to score an intellectual point. Which are you, TAYLOR?
I mean, really, this is a common phrase that means, essentially, "I can see we're not going to resolve this on this blog today, but we're still friends, right?" Scientists do this all the time, TAYLOR. Anyone with a grain of social sense knows it doesn't mean they've embraced some full bore truth relativism.
Gene,
If that's the case, why not say just that?
Perhaps I've encountered multiple exceptions to the rule but anytime someone has told me "We'll just have to agree to disagree," what they're saying is "I'm not going to discuss this with you anymore. I'm holding fast to the position I came into this debate with and I'm not going to consider this further."
If that's the case, why not say just that?
Perhaps I've encountered multiple exceptions to the rule but anytime someone has told me "We'll just have to agree to disagree," what they're saying is "I'm not going to discuss this with you anymore. I'm holding fast to the position I came into this debate with and I'm not going to consider this further."
Give me a break Gene. You changed two key things in your "non-analogous analogy" (to quote Silas' favorite description of my work).
People aren't just saying "the Fed screwed up." If that's all they were saying, then of course I would agree--that's my theory too!
But no, Friedman says, "The Fed didn't pump in enough money to arrest price declines."
So I think it's entirely reasonable for me to ask, "What happened in previous depressions when the Fed pumped in 0, since it didn't exist, and price fell much more violently than they did during the 1930?"
People aren't just saying "the Fed screwed up." If that's all they were saying, then of course I would agree--that's my theory too!
But no, Friedman says, "The Fed didn't pump in enough money to arrest price declines."
So I think it's entirely reasonable for me to ask, "What happened in previous depressions when the Fed pumped in 0, since it didn't exist, and price fell much more violently than they did during the 1930?"
So I think it's entirely reasonable for me to ask, "What happened in previous depressions when the Fed pumped in 0, since it didn't exist, and price fell much more violently than they did during the 1930?"
I'd say that's a bit different than what you said first, and better. (Yes, I've no doubt that's what you were thinking, but it wasn't what you said.)
I'd say that's a bit different than what you said first, and better. (Yes, I've no doubt that's what you were thinking, but it wasn't what you said.)
Gene, what did I mean with that adjective "timid" in the original quote you used? A Fed that was afraid to ask credit markets to the prom?
'If that's the case, why not say just that?
My point is, that IS what he was saying. When a friend says to you, 'I'll be back in a second', and returns 15 seconds later, do you complain, and when he says, 'What I meant was, "I'll be back some short, unspecified period of time later; certainly less than a few minutes"', do you say, 'Why didn't you just say that?'
'Perhaps I've encountered multiple exceptions to the rule but anytime someone has told me "We'll just have to agree to disagree," what they're saying is "I'm not going to discuss this with you anymore. I'm holding fast to the position I came into this debate with and I'm not going to consider this further."'
No, what they are saying is 'I'm not going to disucuss this with YOU right NOW any further' -- an entirely reasonable thing to decide on many occasions. And they are trying to say this in a politely way that implies, 'But we're still friends, OK?'
BTW, I was a bit harsh with you on my first post, but with a purpose -- I was trying to get you to see how your post must have appeared to Sumner.
My point is, that IS what he was saying. When a friend says to you, 'I'll be back in a second', and returns 15 seconds later, do you complain, and when he says, 'What I meant was, "I'll be back some short, unspecified period of time later; certainly less than a few minutes"', do you say, 'Why didn't you just say that?'
'Perhaps I've encountered multiple exceptions to the rule but anytime someone has told me "We'll just have to agree to disagree," what they're saying is "I'm not going to discuss this with you anymore. I'm holding fast to the position I came into this debate with and I'm not going to consider this further."'
No, what they are saying is 'I'm not going to disucuss this with YOU right NOW any further' -- an entirely reasonable thing to decide on many occasions. And they are trying to say this in a politely way that implies, 'But we're still friends, OK?'
BTW, I was a bit harsh with you on my first post, but with a purpose -- I was trying to get you to see how your post must have appeared to Sumner.
Gene,
Must we only be concerned with how my post looked to Sumner, and not be at all concerned with how Sumner's post looked to me?
My experience, personally and anecdotally speaking, has been that anytime this phrase gets trotted out, it's not only not friendly, it's often a passive-aggressive way of saying "Look, you're a dolt and I don't deign to explain this matter to you any longer." Curiously, it's usually after I've rebutted several of my opponents arguments in a row that they suddenly decide it's time to "agree to disagree."
My problem is that I do not ever "agree to disagree." So what does that leave the other person with? Disagree to disagree?
I don't mean to step on toes here... this is obviously a discussion between Sumner, Murphy, Callahan and other respected friends and confidantes so I'll but out because I don't understand the relationship well enough to distinguish when someone who says they want to agree to disagree actually means "Let me get back to you on this, buddy."
It sounded lazy/dishonest to me, so I called it how I saw it.
Enjoy the debate gents, I'll watch this one from the sidelines.
Must we only be concerned with how my post looked to Sumner, and not be at all concerned with how Sumner's post looked to me?
My experience, personally and anecdotally speaking, has been that anytime this phrase gets trotted out, it's not only not friendly, it's often a passive-aggressive way of saying "Look, you're a dolt and I don't deign to explain this matter to you any longer." Curiously, it's usually after I've rebutted several of my opponents arguments in a row that they suddenly decide it's time to "agree to disagree."
My problem is that I do not ever "agree to disagree." So what does that leave the other person with? Disagree to disagree?
I don't mean to step on toes here... this is obviously a discussion between Sumner, Murphy, Callahan and other respected friends and confidantes so I'll but out because I don't understand the relationship well enough to distinguish when someone who says they want to agree to disagree actually means "Let me get back to you on this, buddy."
It sounded lazy/dishonest to me, so I called it how I saw it.
Enjoy the debate gents, I'll watch this one from the sidelines.
Because Bob has listed a grievance against me, I think I need to explain what he's talking about.
Bob has an unfortunate tendency to fundamentally alter someone's position in order to bring it down to something he's capable of responding to. Let me give you a short list of what he's done to me, just so you know why I've made the accusation Bob mentions:
I say: "Bob, under the premises you used, you are wrong to claim that carbon emission caps don't reflect true economic scarcity."
Bob hears: "Politicians can be trusted."
I say: "The assignment of clear, transferrable rights in the earth's scarce carbon absorption capacity counts as a market solution, even if we might think it's a bad one."
Bob hears: "Any restriction on CO2 is a good idea."
I say: "Government meddling *and* lack of clear property rights in scarce resources are both very bad, so there are some government carbon policies that are superior to the lack of property rights in that realm."
Bob hears: "Government is wonderful, if we can just put the right people in charge."
I say: "Permanently flooding people out of their land is a violation of their rights warranting compensation, even if you spread the responsibility really thin."
Bob hears: "I'm a socialist."
I say: "Geoengineering only rearranges the public goods/injustice problem involved in global warming, and even if it were cheap it would still be a) a government solution, and b) an evasion on the part of libertarians on how to deal with harms *of that type*."
Bob hears: "I'm stupidly pessimistic about technology and engineering."
Bob (yes, Bob, that's not a typo) says: "Unlike a terrorist attack on a pipeline, political restriction on oil because of climate concerns doesn't reflect economic scarcity."
Bob hears: "Obviously, restrictions on emissions can reflect scarcity." "What, why couldn't you guys understand that I believe restrictions on emissions can't reflect scarcity?"
(I can provide the links for all of these, but Bob doesn't like such "stalking".)
Bonus example of what I have to deal with on climate issues:
I say: "Biological CO2 emissions are inherently carbon-neutral because they can only return to the atmosphere that which was recently taken from it."
TAYLOR hears: "..."
TAYLOR says: "What do you think about my argument?"
TAYLOR hears: "[Describes what argument he's talking about.] What do you think about my argument?"
Bob has an unfortunate tendency to fundamentally alter someone's position in order to bring it down to something he's capable of responding to. Let me give you a short list of what he's done to me, just so you know why I've made the accusation Bob mentions:
I say: "Bob, under the premises you used, you are wrong to claim that carbon emission caps don't reflect true economic scarcity."
Bob hears: "Politicians can be trusted."
I say: "The assignment of clear, transferrable rights in the earth's scarce carbon absorption capacity counts as a market solution, even if we might think it's a bad one."
Bob hears: "Any restriction on CO2 is a good idea."
I say: "Government meddling *and* lack of clear property rights in scarce resources are both very bad, so there are some government carbon policies that are superior to the lack of property rights in that realm."
Bob hears: "Government is wonderful, if we can just put the right people in charge."
I say: "Permanently flooding people out of their land is a violation of their rights warranting compensation, even if you spread the responsibility really thin."
Bob hears: "I'm a socialist."
I say: "Geoengineering only rearranges the public goods/injustice problem involved in global warming, and even if it were cheap it would still be a) a government solution, and b) an evasion on the part of libertarians on how to deal with harms *of that type*."
Bob hears: "I'm stupidly pessimistic about technology and engineering."
Bob (yes, Bob, that's not a typo) says: "Unlike a terrorist attack on a pipeline, political restriction on oil because of climate concerns doesn't reflect economic scarcity."
Bob hears: "Obviously, restrictions on emissions can reflect scarcity." "What, why couldn't you guys understand that I believe restrictions on emissions can't reflect scarcity?"
(I can provide the links for all of these, but Bob doesn't like such "stalking".)
Bonus example of what I have to deal with on climate issues:
I say: "Biological CO2 emissions are inherently carbon-neutral because they can only return to the atmosphere that which was recently taken from it."
TAYLOR hears: "..."
TAYLOR says: "What do you think about my argument?"
TAYLOR hears: "[Describes what argument he's talking about.] What do you think about my argument?"
Hey Kook,
I say: "Biological CO2 emissions are inherently carbon-neutral because they can only return to the atmosphere that which was recently taken from it."
TAYLOR hears: "..."As I understand it, when a human inhales, he takes in O2 (as well as other gaseous compounds) and when he exhales, he releases CO2 (as well as other gaseous compounds).
I don't understand how this is "carbon neutral."
Taken: O2
Returned: CO2
There seems to be a stray C in the equation.
You can respond to this at face value and take it for what it is, the honest confusion of someone who apparently doesn't understand biological chemistry well enough to see how your statement is a self-evident reflection of natural reality.
Or, you can try to give me a homework assignment where I do the work of explaining your ideas for you and/or become irritated at how stupid and lazy I am for not understanding exactly what you mean the first time around.
Is that the argumentation tactic you employ with non-libertarians, as well?
Kook: "The market is self-clearing."
Confused non-libertarian non-kook: "I don't understand what you mean. How does that work? I thought the market can fail?"
Kook: "OMG, IDIOT! Wow, go look this up there's a whole literature out there on this I shouldn't have to explain myself, I should be able to say anything I want and if you aren't clear on what I say you should go write a thesis paper in an effort to understand what the hell I am talking about, a thesis paper I won't review or comment on because if I did I'd be playing right into your little game!"
I say: "Biological CO2 emissions are inherently carbon-neutral because they can only return to the atmosphere that which was recently taken from it."
TAYLOR hears: "..."As I understand it, when a human inhales, he takes in O2 (as well as other gaseous compounds) and when he exhales, he releases CO2 (as well as other gaseous compounds).
I don't understand how this is "carbon neutral."
Taken: O2
Returned: CO2
There seems to be a stray C in the equation.
You can respond to this at face value and take it for what it is, the honest confusion of someone who apparently doesn't understand biological chemistry well enough to see how your statement is a self-evident reflection of natural reality.
Or, you can try to give me a homework assignment where I do the work of explaining your ideas for you and/or become irritated at how stupid and lazy I am for not understanding exactly what you mean the first time around.
Is that the argumentation tactic you employ with non-libertarians, as well?
Kook: "The market is self-clearing."
Confused non-libertarian non-kook: "I don't understand what you mean. How does that work? I thought the market can fail?"
Kook: "OMG, IDIOT! Wow, go look this up there's a whole literature out there on this I shouldn't have to explain myself, I should be able to say anything I want and if you aren't clear on what I say you should go write a thesis paper in an effort to understand what the hell I am talking about, a thesis paper I won't review or comment on because if I did I'd be playing right into your little game!"
Silas,
I think you need to recalibrate your "tone detector." I thought I was being a good sport by using a term you often use, and acknowledging that I get criticized for the same thing I was accusing Gene of doing. Maybe it was dumb, maybe it wasn't funny, but it sure as heck wasn't an attack on you. I was on the contrary trying to keep my "attack" on Gene civil by bringing in some humor.
I think you need to recalibrate your "tone detector." I thought I was being a good sport by using a term you often use, and acknowledging that I get criticized for the same thing I was accusing Gene of doing. Maybe it was dumb, maybe it wasn't funny, but it sure as heck wasn't an attack on you. I was on the contrary trying to keep my "attack" on Gene civil by bringing in some humor.
@Bob: Okay, I understand. Your reference to my "non-analogous analogies" was not an attack on me. But how about all those times I listed where you distorted my position beyond all recognition and never apologized? Were those still attacks on me? Do you plan to recalibrate your "argument detector"?
@TAYLOR: Okay, now you're showing evidence of having read my explanation of biological organisms' carbon-neutrality. But last time, you acted like it didn't exist at all.
I'll be glad to respond to what you said just how about breathing.
Yes, humans breathe in O2 and breathe out CO2. Now, er, where do you think that C in there comes from? Do you think humans are C-generators? Wow, apprently, these days it's too much to ask that people be aware of conservation of mass.
No, breathing is part of the more general process of respiration, in which we extract energy from our food. The carbon we exhale comes from the food we eat, which ultimately comes from plants, which got it (recently) from the atmosphere. This stands in contrast to releasing, in very short time periods (geologically/climatologically speaking) millions of years' worth of accumulated biological matter.
It's a fair question to ask, from a novice. But you put your whole thinking cap on and everything and promised you were, like, totally serious about addressing this issue ... uh, but like, not serious enough to do basic background reading about the environmentalist case or the carbon cycle. "Oh, but look! I typed these long questions! That counts as effort, doesn't it?"
Btw, I don't know what this refers to: "The market is self-clearing."
@TAYLOR: Okay, now you're showing evidence of having read my explanation of biological organisms' carbon-neutrality. But last time, you acted like it didn't exist at all.
I'll be glad to respond to what you said just how about breathing.
Yes, humans breathe in O2 and breathe out CO2. Now, er, where do you think that C in there comes from? Do you think humans are C-generators? Wow, apprently, these days it's too much to ask that people be aware of conservation of mass.
No, breathing is part of the more general process of respiration, in which we extract energy from our food. The carbon we exhale comes from the food we eat, which ultimately comes from plants, which got it (recently) from the atmosphere. This stands in contrast to releasing, in very short time periods (geologically/climatologically speaking) millions of years' worth of accumulated biological matter.
It's a fair question to ask, from a novice. But you put your whole thinking cap on and everything and promised you were, like, totally serious about addressing this issue ... uh, but like, not serious enough to do basic background reading about the environmentalist case or the carbon cycle. "Oh, but look! I typed these long questions! That counts as effort, doesn't it?"
Btw, I don't know what this refers to: "The market is self-clearing."
Kook,
Am I responsible for the effect on the environment of the carbon emissions of other people? I think from my limited understanding of modern science and the environment I believe it's true that the carbon emissions of any one individual are typically negligible in the grand scheme of things.
Am I responsible for the effect on the environment of the carbon emissions of other people? I think from my limited understanding of modern science and the environment I believe it's true that the carbon emissions of any one individual are typically negligible in the grand scheme of things.
TAYLOR, are you even listening? The whole point of explaining the carbon neutrality of exhalation was to show how that breathing does not and cannot contribute to global warming and so there is no effect to begin with.
Now, as for the fossil fuel emissions, as I have painstakingly explained numerous times, if the aggregate effect causes a harm to others, each individual owes his share of the damage. Again, this is based on the principle that you don't get to **** people over with impunity just because you diffused the responsibility thinly enough.
And please confine your rudeness to criticisms of my actions, rathern than simply calling me names.
Now, as for the fossil fuel emissions, as I have painstakingly explained numerous times, if the aggregate effect causes a harm to others, each individual owes his share of the damage. Again, this is based on the principle that you don't get to **** people over with impunity just because you diffused the responsibility thinly enough.
And please confine your rudeness to criticisms of my actions, rathern than simply calling me names.
Hey Kook,
I just realized this has been a massive waste of our time and energy because the argument depends on the premise that global warming is man-made.
I reject this premise.
I just realized this has been a massive waste of our time and energy because the argument depends on the premise that global warming is man-made.
I reject this premise.
Silas wrote:
But how about all those times I listed where you distorted my position beyond all recognition and never apologized?I am not being sarcastic in the following: I admit in our arguments at times I have stopped "fighting fair" and distorted your view in an effort for a laugh or to score a debating point. I don't necessarily agree that I did it in the cases you list, but I'm sure I have done it on occasion. I apologize.
(Also, I zapped your comment in the Room 101 thread. You don't need to drag in your objections to my views on global warming on posts that are not in the same ballpark. Yes, I know you gave an argument as to its relevance, but everything on this blog revolves around property rights somehow, so you could bring up my aggression against foreigners [in the pursuit of cheap oil] anytime you wanted to. So I think this thread is enough for now.)
But how about all those times I listed where you distorted my position beyond all recognition and never apologized?I am not being sarcastic in the following: I admit in our arguments at times I have stopped "fighting fair" and distorted your view in an effort for a laugh or to score a debating point. I don't necessarily agree that I did it in the cases you list, but I'm sure I have done it on occasion. I apologize.
(Also, I zapped your comment in the Room 101 thread. You don't need to drag in your objections to my views on global warming on posts that are not in the same ballpark. Yes, I know you gave an argument as to its relevance, but everything on this blog revolves around property rights somehow, so you could bring up my aggression against foreigners [in the pursuit of cheap oil] anytime you wanted to. So I think this thread is enough for now.)
Bob, I'm not sure you ever once did accurately represent my arguments on an issue where we fundamentally disagreed. It's simply not true that you "resorted" to not "fighting fair". As far as I can remember, it was always your first line of defense, and at this point, I seriously doubt you're even capable of responding to the true arguments.
And I remember in particular that you believed for months that I thought CO2 emission had to be curtailed to protect coastal lands, when I really only said it justified compensation to the displaced ... and I had said that from the beginning ... and in ignorance of my position you incorrectly claimed that there was some Coasean insight I didn't didn't appreciate. (Ever noticed how Austrians abhor Coasean reasoning until it givens them an "out" on global warming?)
In any case, thanks for your year-late, vague apology that no one's going to see and will do nothing to correct the misconceptions about my views you've sown.
And no, you didn't zap my comment because of topicality. You zapped it because you just don't want to be reminded of the damning contradiction in your views.
You have spent years patting yourself all the back, portraying yourself as noble for rejecting violence. You made it absolutely clear in Minerva that you consider it an atrocity to displace others from their land, but then go right on and trivialize that very same activity when you realize it can keep your oil cheap. The hypocrisy is astounding.
Someone needs to point this out, and I'm sorry it has to be me. When you define yourself by such a lie, which creeps into more and more of what you write, that makes it relevant.
In the future, just save yourself some integrity and quit speaking about the environment and your "pacifism".
And I remember in particular that you believed for months that I thought CO2 emission had to be curtailed to protect coastal lands, when I really only said it justified compensation to the displaced ... and I had said that from the beginning ... and in ignorance of my position you incorrectly claimed that there was some Coasean insight I didn't didn't appreciate. (Ever noticed how Austrians abhor Coasean reasoning until it givens them an "out" on global warming?)
In any case, thanks for your year-late, vague apology that no one's going to see and will do nothing to correct the misconceptions about my views you've sown.
And no, you didn't zap my comment because of topicality. You zapped it because you just don't want to be reminded of the damning contradiction in your views.
You have spent years patting yourself all the back, portraying yourself as noble for rejecting violence. You made it absolutely clear in Minerva that you consider it an atrocity to displace others from their land, but then go right on and trivialize that very same activity when you realize it can keep your oil cheap. The hypocrisy is astounding.
Someone needs to point this out, and I'm sorry it has to be me. When you define yourself by such a lie, which creeps into more and more of what you write, that makes it relevant.
In the future, just save yourself some integrity and quit speaking about the environment and your "pacifism".
Bob, you'd better face facts -- I know you're a Christian and married and all, but to stop the madness you're just going to have to give Silas what he wants -- you -- for just one night. Jesus and Rachael will understand and forgive you.
"Must we only be concerned with how my post looked to Sumner, and not be at all concerned with how Sumner's post looked to me?"
Yes, Taylor, we must, because he was saying something perfectly ordinary and you exploded at him and started calling him names (or more accurately, giving him a choice off which of two names he wished to be called.)
Post a Comment
Yes, Taylor, we must, because he was saying something perfectly ordinary and you exploded at him and started calling him names (or more accurately, giving him a choice off which of two names he wished to be called.)
Subscribe to Post Comments [Atom]
<< Home
Subscribe to Posts [Atom]