Wednesday, June 24, 2009
Tempted by the Ring of Power
Robert Wenzel sent me the below email, in reference to his hard-hitting financial P.I. site. (He sends me a candy bar every time I use that description.)
I knew this would eventually happen. See, what the clever elite do is, they identify all the really really ambitious and talented people.
And then they buy their silence.
Now I can't prove the following, of course, but it seems entirely plausible to me: Suppose that Ben Bernanke knows beforehand what his policy decision is going to be; that it is "exogenous" to the central banker, if you want to adopt the terminology of the fancy model builders. And then Bernanke's actual job is to come up with a big production (and he has many employees, remember) to justify what he's doing.
Here's a pop quiz, and hopefully we'll get some big gun like Scott Sumner to chime in. (Scott is at that awkward state in his blogosphere career where he has to "participate" in podunk sites like mine, just to keep trying to bump his name recognition beyond the tipping point. In that regard, everyone wants to be the next Tyler Cowen. And we hate ourselves for it.)
Anyway here's the quiz: Is there any school of thought right now that claims Ben Bernanke is doing the right thing? The Austrians think his 0% interest rate is insane, and if I'm not mistaken, there are just as many Friedmanites who think Bernanke is inexplicably failing to use the "ammunition" at his disposal. So if the economy is stuck in a rut for 5 more years, both the Austrians and the monetarists will say, "Duh, we told you this would happen if you ignored us."
So is Bernanke following any academic blueprint to success? If not, doesn't that make my hypothesis above more plausible?
This came up as a search today:
""bob murphy" "council of economic advisors"
The search was done by:
national archives and records administration
Are they setting up for some plans we don't know about?
I knew this would eventually happen. See, what the clever elite do is, they identify all the really really ambitious and talented people.
And then they buy their silence.
Now I can't prove the following, of course, but it seems entirely plausible to me: Suppose that Ben Bernanke knows beforehand what his policy decision is going to be; that it is "exogenous" to the central banker, if you want to adopt the terminology of the fancy model builders. And then Bernanke's actual job is to come up with a big production (and he has many employees, remember) to justify what he's doing.
Here's a pop quiz, and hopefully we'll get some big gun like Scott Sumner to chime in. (Scott is at that awkward state in his blogosphere career where he has to "participate" in podunk sites like mine, just to keep trying to bump his name recognition beyond the tipping point. In that regard, everyone wants to be the next Tyler Cowen. And we hate ourselves for it.)
Anyway here's the quiz: Is there any school of thought right now that claims Ben Bernanke is doing the right thing? The Austrians think his 0% interest rate is insane, and if I'm not mistaken, there are just as many Friedmanites who think Bernanke is inexplicably failing to use the "ammunition" at his disposal. So if the economy is stuck in a rut for 5 more years, both the Austrians and the monetarists will say, "Duh, we told you this would happen if you ignored us."
So is Bernanke following any academic blueprint to success? If not, doesn't that make my hypothesis above more plausible?
Comments:
I hope you're never like Tyler Cowen, because then you'll stop reading my emails. Did I mention you're my favorite econoblogger?
I just want to be the next Bob Murphy.
I actually think most economists think he is doing a good job. The blogosphere self selects those with an ax to grind. Like you and me.
I actually think most economists think he is doing a good job. The blogosphere self selects those with an ax to grind. Like you and me.
Well, Bob, you're missing the Keynesian masses of elite economists. They think Bernanke is doing a good job. He's giving Obama all the green papers he needs to pay people to do worthless jobs.
The funny thing is that all of these Keynesian/socialist/Marxist economists who fill every elite university in the country, still, somehow manage to convince themselves that the evil Free Market types are the ones running the world. They really do not realize that Bernanke is doing everything from their textbook. Which, coincidentally enough, is HIS textbook.
Ironically, your blogpost's limiting of economist schools of thought to Austrian and Monetarist plays right into their hand!
The funny thing is that all of these Keynesian/socialist/Marxist economists who fill every elite university in the country, still, somehow manage to convince themselves that the evil Free Market types are the ones running the world. They really do not realize that Bernanke is doing everything from their textbook. Which, coincidentally enough, is HIS textbook.
Ironically, your blogpost's limiting of economist schools of thought to Austrian and Monetarist plays right into their hand!
# posted by 
: June 25, 2009 at 4:04 AM
: June 25, 2009 at 4:04 AM
I guess what I'm trying to say is: once you realize that there are THOUSANDS of professional economists with PhD's who think Bernanke is God's gift to the world economy, there is no longer any need to invoke any "exogenous" factors.
Further, it's not just the economists who believe this nonsense, it is also most of the financial industry, media politicians and voters. They actually BELIEVE this crap. You could torture Jim Cramer, Paul Krugman, Barney Frank and John Doe for hours and they would all still tell you that you need to print more money.
There's nothing exogenous about it. Most people believe garbage economics, people elect their government, their government gives them garbage economic policy. The middle ages had their flat earth, the Taliban had their irrational fear of shaved beards, and today's America has its economics. Bad ideas have a way to continue to be propagated. This is all perfectly endogenous.
Further, it's not just the economists who believe this nonsense, it is also most of the financial industry, media politicians and voters. They actually BELIEVE this crap. You could torture Jim Cramer, Paul Krugman, Barney Frank and John Doe for hours and they would all still tell you that you need to print more money.
There's nothing exogenous about it. Most people believe garbage economics, people elect their government, their government gives them garbage economic policy. The middle ages had their flat earth, the Taliban had their irrational fear of shaved beards, and today's America has its economics. Bad ideas have a way to continue to be propagated. This is all perfectly endogenous.
# posted by : June 25, 2009 at 4:20 AM
: June 25, 2009 at 4:20 AM
As Justin Ptak posted not long ago, Keynes once wrote
"the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist."
"the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist."
# posted by : June 25, 2009 at 5:53 AM
: June 25, 2009 at 5:53 AM
Anon wrote:
I guess what I'm trying to say is: once you realize that there are THOUSANDS of professional economists with PhD's who think Bernanke is God's gift to the world economy, there is no longer any need to invoke any "exogenous" factors.
But you're missing one of my points. There are plenty of economists who don't understand why Bernanke isn't pumping in more green pieces of paper.
Look, if Fed's timidity caused the Great Depression, then our current rising unemployment signifies that Bernanke isn't printing enough money. I've never heard someone put it so crudely, but plenty of analysts (not just Scott Sumner) are saying, "It would be so much cheaper for them to provide stimulus through the Fed, rather than deficit spending!"
I guess what I'm trying to say is: once you realize that there are THOUSANDS of professional economists with PhD's who think Bernanke is God's gift to the world economy, there is no longer any need to invoke any "exogenous" factors.
But you're missing one of my points. There are plenty of economists who don't understand why Bernanke isn't pumping in more green pieces of paper.
Look, if Fed's timidity caused the Great Depression, then our current rising unemployment signifies that Bernanke isn't printing enough money. I've never heard someone put it so crudely, but plenty of analysts (not just Scott Sumner) are saying, "It would be so much cheaper for them to provide stimulus through the Fed, rather than deficit spending!"
One last thing, Anon, Paul Krugman certainly doesn't like what's going on. If the economy is in a rut in 5 years, he will say, "I told you the stimulus was too small."
That involves not just the Fed, of course, but I'm just saying I don't think the government+Fed's actions line up with any coherent school of thought.
That involves not just the Fed, of course, but I'm just saying I don't think the government+Fed's actions line up with any coherent school of thought.
Tom Woods was on the Alex Jones show the other day and they seemed to agree that you couldn't call this "socialism" or anything else other than plain ol' looting.
# posted by : June 25, 2009 at 9:33 AM
: June 25, 2009 at 9:33 AM
Query: Is Bernanke waiting until 2010 to unleash a gusher of money to help re-elect a Democrat Congress? Doing this too early might fizzle by election day. Most people I meet seem to think that these bad times are merely temporary and that we will see good times return in a year due to the effects of Dear Leader's programs. Perhaps Bernanke is waiting for the right moment to start another mini boom, the bad results of which will not be apparent until after the election.
# posted by : June 25, 2009 at 10:05 AM
: June 25, 2009 at 10:05 AM
Bob,
I agree with you that the Frd's actions don't correspond to any coherent school o thought. But if you ask me, there are no coherent schools of thought anywhere in mainstream economics.
What we instead have is a jumble of ideology, mediocre math, sophistry, alchemy wannabes and politics. The sum of all this is thousands of economists who understand the economy as awfully as the policy-makers. None of those people has a clue about anything. The resulting policies come from within this jumble but is heavily politically influenced.
Hacks like Krugman and Delong will always cover their asses by criticizing the policies enacted no matter how similar they are to their ideologies. This way, if the policies work or don't work, they'll be able to say "I told you so."
And because of how utterly nonsensical the econ those people believe is, they can always whip out a model from their backside that tells a different story that allows even someone like Krugman to convince himself he's a courageous truth-teller.
But in reality, it is all one giant mangled bunch of nonsense. Fed policy doesn't conform to anyone's particular brand of ideology and econ, but it comes from the same general garbage heap everyone gets theirs from.
I agree with you that the Frd's actions don't correspond to any coherent school o thought. But if you ask me, there are no coherent schools of thought anywhere in mainstream economics.
What we instead have is a jumble of ideology, mediocre math, sophistry, alchemy wannabes and politics. The sum of all this is thousands of economists who understand the economy as awfully as the policy-makers. None of those people has a clue about anything. The resulting policies come from within this jumble but is heavily politically influenced.
Hacks like Krugman and Delong will always cover their asses by criticizing the policies enacted no matter how similar they are to their ideologies. This way, if the policies work or don't work, they'll be able to say "I told you so."
And because of how utterly nonsensical the econ those people believe is, they can always whip out a model from their backside that tells a different story that allows even someone like Krugman to convince himself he's a courageous truth-teller.
But in reality, it is all one giant mangled bunch of nonsense. Fed policy doesn't conform to anyone's particular brand of ideology and econ, but it comes from the same general garbage heap everyone gets theirs from.
# posted by : June 25, 2009 at 3:49 PM
: June 25, 2009 at 3:49 PM
The utter idiocy an insanity of these policies will always make the "exogenous" explanation more appealing. But if you've hung out with elite academics and policy-makers as much as I have, you'll realize they all actually believe this garbage. The policies you get are completely endogenous.
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# posted by : June 25, 2009 at 3:52 PM
: June 25, 2009 at 3:52 PM Subscribe to Post Comments [Atom]
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