Paul Krugman vs Ron Paul

[murphy_p_t]

I would like to understand what is behind the media blackout of Ron Paul?
What media would lose if he were elected president?

one way to look at this is the view that powerful interests (say banking industry) control both major political parties...including undue influence on the nominee of each party. It seems very likely that these same interests also control major media outlets. As Ron Paul is not able to be controlled by these interests....and in fact his platform directly opposes crony capitalism...and his views appeal to a wide variety of the electorate...the media seems to have determined that the best way to handle his candidacy is simply to pretend he doesn't exist...in hopes he will fade away.

[MediumTex]

I would like to understand what is behind the media blackout of Ron Paul?
What media would lose if he were elected president?

I think that a long time ago the media elite decided he was a kook and have never strayed much from that belief.

At this point, Romney's nomination has been tied up, so focusing exclusively on Romney from here forward makes sense.

As far as who would lose if Paul were elected President, take your pick among the moneyed interests in society that depend on certain favors, preferences and regulatory capture of various branches of the government, all of which Ron Paul would potentially disrupt.

edit: I'm basically saying the same thing that murphy is saying above.

[AdamA]

Would any of you guys vote for Ron Paul?  

I think he's a very smart, articulate man, but he's an austerity guy, which a lot of the discussion on this website has convinced me is a very bad idea...

...not to say that Ron Paul would be any more effective at implementing his policies than anyone else elected president.

[murphy_p_t]

Would any of you guys vote for Ron Paul?

I think he's a very smart, articulate man, but he's an austerity guy, which a lot of the discussion on this website has convinced me is a very bad idea...

...not to say that Ron Paul would be any more effective at implementing his policies than anyone else elected president.

i will vote for him even if only for the liberty, constitutionalists side of his platform.
i am still struggling with the whole MMR idea that our money is made of unicorn farts, and debt doesn't matter because we can just feed the unicorn more magic beans to produce more gas for the economy "since unicorns and magic beans are both imaginary anyway."

i believe even MMT is anti corruption anti mis-allocation of government spending, i suspect he is still the best choice on both those issues, even if his philosophy is Austrian economics

Adam... Are you referring to the anti-austerity dogma of the MMT believers?

To answer your question...I proudly voted for RP

[Lone Wolf]

Would any of you guys vote for Ron Paul?  

I think he's a very smart, articulate man, but he's an austerity guy, which a lot of the discussion on this website has convinced me is a very bad idea...

Sure, I'd love to vote for the good doctor!  I think he'd do very well at the job.

As for "austerity" (whose definition seems to have grown to include any reductions in spending or the size of government of any kind ever), I reject MMT for a number of what I perceive to be fundamental theoretical flaws: http://gyroscopicinvesting.com/forum/ht ... 1#msg33781

The effect of all this MMT talk seems to have been to get everyone breathing into a paper bag at the idea of cutting back to even 2007's already-insane levels of spending.  Anyone remember Harry Browne's excellent organization Downsize DC?  Well, I'm with Harry on this one.

Having the government clumsily direct greater and greater portions of the economy is not a recipe for success.  I think that Paul would work to materially change that.

[AdamA]

Adam... Are you referring to the anti-austerity dogma of the MMT believers?

Yeah, and MT has also posted some interesting thoughts.  http://gyroscopicinvesting.com/forum/ht ... ic.php?t=3

[MediumTex]

Would any of you guys vote for Ron Paul?  

I think he's a very smart, articulate man, but he's an austerity guy, which a lot of the discussion on this website has convinced me is a very bad idea...

...not to say that Ron Paul would be any more effective at implementing his policies than anyone else elected president.

i will vote for him even if only for the liberty, constitutionalists side of his platform.
 i am still struggling with the whole MMR idea that our money is made of unicorn farts, and debt doesn't matter because we can just feed the unicorn more magic beans to produce more gas for the economy "since unicorns and magic beans are both imaginary anyway."

i believe even MMT is anti corruption anti mis-allocation  of government spending, i suspect he is still the best choice on both those issues, even if his philosophy is Austrian economics

I wrote in Ron Paul for President in 2008.

[jackely]

I wrote in Ron Paul for President in 2008.

I registered as a Republican in 2008 marking the first time in my life I have been anything other than an independent. Also put a bumper sticker on my car and donated money, both also firsts for me.

I don't agree with him on everything. Just about 99.5 percent.

[MachineGhost]

Would any of you guys vote for Ron Paul?  

He's good as a popular protest vote, especially in a state like CA which is so overwhelmingly Democrat, it doesn't matter who you vote for.

But, if he had an actual chance of winning the electoral college, it would raise serious issues as he believes a lot of overlysimplistic, economic malarky that would be akin to Volker's unpopular recession if implemented.  At the least, I think he would restore a moral authority to the institution of the President and Executive branch even if he couldn't get his philosophy passed through Congress.

MG

[hoost]

I still very much believe in the idea of Santa, and I think that understanding the core truths embedded in the Santa narrative is really the key, rather than becoming overly preoccupied with the mechanics of the naughty and nice list...or at least that's what I told Santa the last time I sat on his lap. 

You know, I think Jesus said kind of the same thing.  I'm not going to read through the gospels again and find the verse, but he said something to the extent that people were too focused on the rules of man and not enough on the spirit of God.  That verse really struck home with me and lines up with my intuitive sense of the way things should be.  Do unto others as you would have them do unto you seems like a pretty good rule to live life by.  We all stray from it sometimes, but I think it's a good ideal to strive for.  I have a hard time imagining a God who cared more about how many prayers you said a day or what animal you ate than how you treated others.

[hoost]

Would any of you guys vote for Ron Paul?  

I think he's a very smart, articulate man, but he's an austerity guy, which a lot of the discussion on this website has convinced me is a very bad idea...

...not to say that Ron Paul would be any more effective at implementing his policies than anyone else elected president.

I intend to write him in this year.  I don't see any fundamental difference between Romney and Obama, just more of the same.  Harry Browne said something about voting for people you don't agree with...the words escape me, but it definitely had an impact on how I perceive politics.  HB was a wise man; somewhat of a philosopher really.  I'm glad I've become exposed to some of his ideas, because he offers a somewhat fresh perspective and explains it very well both verbally and in writing.

[hoost]

http://whiskeyandgunpowder.com/how-to-d ... t=My+Yahoo


i share this article because it puts into words my *feelings* about this discussion...especially this MMT/MMR/Mosler ideas...I *feel* like the devotion to Mosler I observe here is like he is the leader of a gnostic cult...

I put *feel* in stars becuase I have not delved into the deepest readings of his work which were referenced in another thread...although I admit what I have read seems to have some internal consistency. However, I remain highly *skeptical* of buying this gnosis...as it seems like a "free lunch".

Just please don't begin burning MMRer's at the stake. 

Maybe an analogy will help (this might not even even be correct, but it's the way I see things):

Imagine two separate baseball games, the first uses a gold standard to keep score, while the second game uses MMR to keep score.  After the third inning the gold standard game runs out of gold pieces to keep score, which means the game stops and the players just stand there without advancing the game.  While the MMR game continues on without a hitch, since it is quite easy to print new points, as long as the players are still producing points.

In the first game the gold standard is more important than the actual production from the game, while in the second game the production takes priority over the score keeping.

So MMR is not providing a "free lunch" but rather allowing the game to continue.

Gosso,

My view is that your analogy is not very helpful. I say this because it suggests that the amount of gold a nation possesses limits the amount of economic activity. The analogy might apply usefully if the idea was that only gold coins were circulating...as there is only a finite amount amount of metal coins that could be produced. However, I think this misrepresents the nature of a gold-backed currency (gold standard). Paper money circulates, just as it did prior to FDR's confiscation of gold...paper money is convertible for a determined amount of metal. For the system to work well...that exchange rate must be determined properly.

ps...I think your analogy is more helpful if it were applied to international trade in that the gold is useful to affect a balance of trade.

I haven't read the whole discussion, but I would add that if you have a free market currency, and the productive capacity of the world becomes so high that small gold coin isn't small enough for daily transactions, another currency would likely emerge to facilitate these smaller transactions.  I could envision some other industrial metals such as silver or even copper being used for smaller transactions.  As long as the exchange rate is allowed to fluctuate at market rates, this would probably work out pretty well.  If it didn't, people would find something that works better.

Or perhaps you could have some sort of fiat tokens that represent a small share of gold, but I think this is a slippery slope that would end up in inflation and collapse.

[hoost]

http://whiskeyandgunpowder.com/how-to-d ... t=My+Yahoo


i share this article because it puts into words my *feelings* about this discussion...especially this MMT/MMR/Mosler ideas...I *feel* like the devotion to Mosler I observe here is like he is the leader of a gnostic cult...

I put *feel* in stars becuase I have not delved into the deepest readings of his work which were referenced in another thread...although I admit what I have read seems to have some internal consistency. However, I remain highly *skeptical* of buying this gnosis...as it seems like a "free lunch".

Just please don't begin burning MMRer's at the stake. 

Maybe an analogy will help (this might not even even be correct, but it's the way I see things):

Imagine two separate baseball games, the first uses a gold standard to keep score, while the second game uses MMR to keep score.  After the third inning the gold standard game runs out of gold pieces to keep score, which means the game stops and the players just stand there without advancing the game.  While the MMR game continues on without a hitch, since it is quite easy to print new points, as long as the players are still producing points.

In the first game the gold standard is more important than the actual production from the game, while in the second game the production takes priority over the score keeping.

So MMR is not providing a "free lunch" but rather allowing the game to continue.

In the first game the game is different.  You have to earn points from the other teams by doing something valuable if you want points.  In the second game, you just have to please to scorekeeper to get the points you want.

Also, what do you do with all of these points once you've "earned" them?

I think the game analogy may be a good way to look at it.  The thing to think about though is while these two teams are here playing baseball and "scoring points", everyone else is at work.  No one produced any extra while the scorekeeper was doling out points.  So even though you have many more points available, there are no more goods available.

[hoost]

What makes Krugman's argument about World War II so daft is that he believes spending a bunch of money on things that do not necessarily add value can ever do anything positive.  If it did, we could make ourselves wealthier by selecting an American city, evacuating it, and then carpet-bombing it into oblivion.  Think of the glorious spending such a reconstruction would bring!

Yes, this reminds me of Bastiat's broken window parable:  http://en.wikisource.org/wiki/That_Whic ... s_Not_Seen  It's Chapter 1.  The chapter is a bit long, so I won't quote it here; you'll have to follow the link.

[hoost]

Regarding post WWII prosperity, I'm thinking that it was not a monetary phenomena, but rather a result of massive confidence and a release of pent-up demand.  When millions of soldiers returned from overseas, they were highly confident ("we won the war", "the world is now safe", "the future is bright"), and immediately released six years of pent up demand into the economy.  They got married, started families, bought homes and cars, started businesses, etc.  The velocity of money must have been ridiculous. And with money flowing like wine, it was easy and justifiable to start a new business, and everyone saw an increase in their standard of living.

I haven't done a lot of research into this yet (it's on my list) but I believe there were a lot of wage and price controls in place pre WWII that were removed after the war.  If so, that could have something to do with it.

[moda0306]

What makes Krugman's argument about World War II so daft is that he believes spending a bunch of money on things that do not necessarily add value can ever do anything positive.  If it did, we could make ourselves wealthier by selecting an American city, evacuating it, and then carpet-bombing it into oblivion.  Think of the glorious spending such a reconstruction would bring!

Yes, this reminds me of Bastiat's broken window parable:  http://en.wikisource.org/wiki/That_Whic ... s_Not_Seen  It's Chapter 1.  The chapter is a bit long, so I won't quote it here; you'll have to follow the link.

It's not about what people did (unarguably destructive acts) during the war, it's about 1) the skills they learned while at war, and 2) (moreso) the new financial assets (savings) they acquired on their balance sheets, removing the Mexican Standoff that was a monetized economy in a depression.  It wasn't low taxes (taxes were kind of high), demand from Europe (almost all demand was domestic), or the war itself... it was almost entirely that consumers had replenished balance sheets (the gov't liabilities printed up were private sector assets).

Regarding wage & price controls... there were some before the war, and a lot of rationing during the war, and I'm willing to bet the former was in no way helpful economically, but I don't buy at all that price controls were a driver of the depression.  Any wage cuts would have led to further demand drops in the aggregate.

[Lone Wolf]

Yes, this reminds me of Bastiat's broken window parable:  http://en.wikisource.org/wiki/That_Whic ... s_Not_Seen  It's Chapter 1.  The chapter is a bit long, so I won't quote it here; you'll have to follow the link.

Ah, I love this essay.  You can see that Krugman's fallacies creak with age.  It's fun to watch Bastiat reach forward out of the past to dismantle them.

Bastiat really was such a brilliant guy.

[hoost]

What makes Krugman's argument about World War II so daft is that he believes spending a bunch of money on things that do not necessarily add value can ever do anything positive.  If it did, we could make ourselves wealthier by selecting an American city, evacuating it, and then carpet-bombing it into oblivion.  Think of the glorious spending such a reconstruction would bring!

Yes, this reminds me of Bastiat's broken window parable:  http://en.wikisource.org/wiki/That_Whic ... s_Not_Seen  It's Chapter 1.  The chapter is a bit long, so I won't quote it here; you'll have to follow the link.

It's not about what people did (unarguably destructive acts) during the war, it's about 1) the skills they learned while at war, and 2) (moreso) the new financial assets (savings) they acquired on their balance sheets, removing the Mexican Standoff that was a monetized economy in a depression.  It wasn't low taxes (taxes were kind of high), demand from Europe (almost all demand was domestic), or the war itself... it was almost entirely that consumers had replenished balance sheets (the gov't liabilities printed up were private sector assets).

Regarding wage & price controls... there were some before the war, and a lot of rationing during the war, and I'm willing to bet the former was in no way helpful economically, but I don't buy at all that price controls were a driver of the depression.  Any wage cuts would have led to further demand drops in the aggregate.

What do you think was a driver of the depression?

Regarding wage cuts, it would be much better to work for a lower wage than to not work at all because no one can afford to pay you the mandated wage.

[moda0306]

hoost,

I think the driver of the depression was a speculative boom, pop, and banking bust, followed by super high unemployment and super utilization of productive capacity. 

When people aren't consuming the products our economy is designed to offer, it should be asked whether it's really because they don't want those products, or if we're in a self-fulfing economic Mexican Standoff, where nobody's balance sheet is stable enough to justify spending beyond bare essentials.

These types of economic problems don't usually develop in barter societies, as the entire economy is built around trading work for work, product for product.  In monetized economies, however, financial assets that now determine our willingness to consume can collapse overnight, and we're in no position to go back to a barter economy efficiently over night.  There's simply not enough money in the economy for it to function... or at least not enough super-safe base money.  P

Supply-side incentives don't really work in these economies, as at the aggregate level, when somebody gives you an incentive to build a factory by lowering taxes, the suppliers will still look at demand and say, "Nope... no dice... I am only at 70% capacity in my current plant.  Why would I build another."  This is aggregate, mind you... SOME factories will get built, but just as many more deteriorate at less-than-full capacity.  I'll repeat that I don't think this is happening because people don't want to work and don't want to buy their products... this is happening because there's not enough money in a monetized economy.

An economy could lower its wages, but lower wages means lower demand at the aggregate level.  The economy was actually recovering at a less-than-good-but-ok pace from 1933-1937, when austerity was attempted, and we went barreling back into recession and were back at 15% unemployment.  This unemployment didn't end until spending skyrocketed in the war buildup.  Many try to use this observation as a way to say that non-Austrians are warmongers, but it's simply a tool to show that the gov't CAN uend unemployment if it wants to.  Are they as good at allocating capital as the private sector?  usually, no, but if the gov'ts role is to maintain a healthy monetary system, it probably could be said that if it had simply sent people checks for all that money in 1941, and not consumed anything, that we'd have been MUCH better off... better yet, bump those checks back to 1931 and we wouldn't be talking about the great depression.

[MachineGhost]

I think the driver of the depression was a speculative boom, pop, and banking bust, followed by super high unemployment and super utilization of productive capacity.  

You forgot to include the worldwide trade war and rolling sovereign debt defaults.

A lot of people think 2008 was a "Category 5" event.  I just laugh at them.

usually, no, but if the gov'ts role is to maintain a healthy monetary system, it probably could be said that if it had simply sent people checks for all that money in 1941, and not consumed anything, that we'd have been MUCH better off... better yet, bump those checks back to 1931 and we wouldn't be talking about the great depression.

That won't matter if there is no confidence because capital is scared, fleeing from country to country and there is a game of begger-thy-neighbor punitive tariffs escalating.  Economic growth is all about confidence and monetizing nonconfidence just doesn't work.  Structural reform is required.  Bush Jr tried "demand side" tax cuts (rebate checks) and it doesn't do anything other than bring future consumption forward to the present or gets saved.

MG

[hoost]

I think it's helpful to drill down to the root of a problem, system, etc. and come to a base set of assumptions to work with.

hoost,

I think the driver of the depression was a speculative boom, pop, and banking bust, followed by super high unemployment and super utilization of productive capacity. 

It would make sense to me that a boom followed by a bust would probably lead to a recession.  What caused the boom and the following bust?

When people aren't consuming the products our economy is designed to offer, it should be asked whether it's really because they don't want those products, or if we're in a self-fulfing economic Mexican Standoff, where nobody's balance sheet is stable enough to justify spending beyond bare essentials.

Who designed the economy?

Why are the balance sheets unstable? Or maybe a better way to put it is, how are the balance sheets unstable?  What properties of the balance sheets make them unstable?

These types of economic problems don't usually develop in barter societies, as the entire economy is built around trading work for work, product for product.  In monetized economies, however, financial assets that now determine our willingness to consume can collapse overnight, and we're in no position to go back to a barter economy efficiently over night.  There's simply not enough money in the economy for it to function... or at least not enough super-safe base money.  P

What is the difference between a barter economy and a monetized economy?  How do you define the two? 

What is "base money"?

An economy could lower its wages, but lower wages means lower demand at the aggregate level.  The economy was actually recovering at a less-than-good-but-ok pace from 1933-1937, when austerity was attempted, and we went barreling back into recession and were back at 15% unemployment.  This unemployment didn't end until spending skyrocketed in the war buildup.  Many try to use this observation as a way to say that non-Austrians are warmongers, but it's simply a tool to show that the gov't CAN uend unemployment if it wants to.  Are they as good at allocating capital as the private sector?  usually, no, but if the gov'ts role is to maintain a healthy monetary system, it probably could be said that if it had simply sent people checks for all that money in 1941, and not consumed anything, that we'd have been MUCH better off... better yet, bump those checks back to 1931 and we wouldn't be talking about the great depression.

Who is the economy and how does he/she lower his/her wages?

How is a healthy monetary system defined?

Again, I think it's helpful to start at the beginning and move forward so we're on the same page, so my questions are more geared toward the pre-crash causes and basic assumptions at this point.

[MachineGhost]

Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation. -- Ben Bernanke (2001)

Note he didn't say above that the [independent] Fed had the technology...

MG