Keynesian do not have a clue about Austrian concepts or theory. And don't think Austrians themselves appreciate that Keynesians (and all non-Austrians) understand absolutely nothing about Austrian concepts and/or theory. I became an Austrian in 1973 and I've never met a single person of the left since then (everyone was a full fledged socialist in the 70s) who had a clue about Austrian concepts or theory. "Lord Keynes" is unique in the history of the galaxy. He spends eons of time reading vast amounts of ancient Austrian literature looking for minor inconsistencies because he will not engage the basic Austrian concept of economic calculation. He insists that problems of economic calculation only apply to a Soviet-style forced total abolition of the market and market prices under socialism. However, the same analysis is at the core of the Austrian critique of Keynesianism, which he conveniently ignores.
re: " I became an Austrian in 1973 and I've never met a single person of the left since then (everyone was a full fledged socialist in the 70s) who had a clue about Austrian concepts or theory."
Here's a competing theory: you're a bitter old man with no real appreciation for economic science. You know about as much about economics as I know about being an attorney - which isn't much.
Between your theory and mine, I think mine is far more plausible.
Thanks, Daniel for providing me with that long and extensive list of people of the left that I've met since 1973 who understood Austrian concepts and theory.
You know, the premise you're working from is that you're up to the task of evaluating an understanding of Austrian concepts and theory - that's something I haven't seen much evidence for.
Gee Bob I sure learned a lot from that. You and Major don't do anything but strut around with this contrived sense of superiority based on nothing.
It's a silly game of "Name me leftists who get me" I could jsut as soon ask you to prove that you have any understanding of non-Austrian economics. I've seen no evidence
Neither the non-aggression principle, traditional common law concepts of private property and contract nor "the knowledge problem" and economic calculation are particularly complicated or difficult to understand. The total inability of statists to engage these concepts over the decades that I've been familiar with them is frankly shocking and inexplicable to me.
Don't you ever even make an attempt to understand what Major Freedom is writing about? He explains over and over and over again from slightly different angles that central planners and schemers of monetary manipulation simply do not and cannot have sufficient information to accomplish what they think they want to accomplish AND that their interference in the process of voluntary exchange is the cause of problems they think need fixing.
Daniel Kuehn, I can't speak for Roddis, but I know I've pointed out to you MANY times around the blogosphere that you don't understand Austrian theory. As recently as only a few months ago, you fallaciously claimed that ABCT is brought about by government spending.
For some reason you believe you're more knowledgeable about economics than you actually are. Your knowledge of economics is very superficial and whimsical. You dabble in a lot of things, without getting the core of most debates you take part in.
"Neither the non-aggression principle, traditional common law concepts of private property and contract nor "the knowledge problem" and economic calculation are particularly complicated or difficult to understand. The total inability of statists to engage these concepts over the decades that I've been familiar with them is frankly shocking and inexplicable to me"
Bob if no economists outside the Austrian cult are interested in ABCT that may not be there's a grand conspiracy to ignore it, just that it's empty.
"Don't you ever even make an attempt to understand what Major Freedom is writing about? He explains over and over and over again from slightly different angles that central planners and schemers of monetary manipulation simply do not and cannot have sufficient information to accomplish what they think they want to accomplish AND that their interference in the process of voluntary exchange is the cause of problems they think need fixing"
Believe me I've talked to the good old Major much more than I probably should-sometimes I guess you need comic relife.
What he can't explain though nor can you is if central banking is the problem why wasn't the pre CB era a land of milk and flowing honey.
In truth the post CB period has been far more healthy. With the emergence of FDIC bank runs have been eliminated as a major factor.
I see Major engaging in a lot of feverished theorizing, but I never actually see any emprical evidence of anything he says nor of what you say.
What he can't explain though nor can you is if central banking is the problem why wasn't the pre CB era a land of milk and flowing honey.
So you know absolutely nothing of the history of 19th money. Hmmmm. The central bank was instituted in part to bail out banks that recklessly engaged in fractional reserve banking which is the cause of bank runs. I'm sure MF has explained that from 6 different angles.
Why don't you explain to me how Austrians claim that FRB impacts economic calculation and thus the price, investment and capital structure. You don't have to believe it. Just demonstrate that you understand it.
Hello Bob! I just noticed you have issued me a challenge to discuss the Austrian theory that fractional reserve banking throws off economic calculation and decisions.
I will have to get back to you as I lack time at the present. However, speaking of Lord Keynes-who you believe ignorant of what Austrians believe I just came across this interesting piece he wrote a little while back. Here he thinks that in some ways the Austrian view of inflation is preferable to the Neoclassicals-though yes, he ultimatley disputes it.
"The naïve monetarists believe that there is a “monocausal” explanation of inflation: money supply growth which will cause direct, proportional increases in the price level. This is ridiculous."
He does believe, however, that you guys do on some level still subscribe to the idea of neutrality of money.
The definition of inflation that is now used commonly is very recent. Dictionaries before the 80's or so defined it something to the effect of: the expansion of the money supply with a resulting increase in prices.
The Cleveland branch of the Federal Reserve put out a publication called "On the Origin and Evolution of the Word Inflation" in 1997 that states: "The term inflation was initially used to describe a change in the proportion of currency in circulation relative to the amount of precious metal that constituted a nation’s money. By the late nineteenth century, however, the distinction between “currency” and “money” was becoming blurred."
So the originally it meant an expansion of the currency supply. Which would indeed cause an increase in prices across the board (the effect of the inflation). The big reason many Austrian economists argue that money supply growth is inflation is that is what it originally meant.
Also, I think they don't want people to lose sight of why prices have increased so much: money printing. Not because the goods are any more scarce than they were before, but because money is much more plentiful. It is something that happens because of Keynesian Economists, not because it is a law of economics that the price of soda must increase from a nickle to 75 cents in a certain period of time.
As an addendum to my previous post I would just like to point out the the definition of inflation that Austrians use is implied in the word's common use. Many times people will talk about the price of x (gas, grain, soda, etc.) adjusted for inflation. What they are doing is looking at the actual value of that product: has it gone up, down, or stayed the same in real terms. If the price increases are because of an increased ratio between demand and supply, the price will have gone up in real terms and vice versa. So what's left is the increase in the product's price due to a change in the supply of money that is chasing that product. That is what is accounted for in the inflation-adjusted prices.
Hello Bob. I left a comment yesterday but you haven't printed it as yet. Do you have a bad experience with comments which makes you reluctant to just print them without reviewing them first?
In any case, hopefully you will print it soon. As far as your question about FRB let me attempt to quanitfy where you're coming from. Do you desire a return to the gold standard? Do you believe there's enough gold in the world to supply the world with the amount of money it wants in order to do business?
I wonder why Rothbardians oppose FRB because it's not government mandated and it's a voluntary arrangement that both the depositor and the bank agree on.
Even if you believe FRB to be pernicious, as a libertarian aren't you normally reluctant to impose government regulation?
Why can't people engage in FRB as there are many willing depositors?
As to the desire for either 100% reserves or warehouse banking, if there's a market demand for this why don't we already have lots of these?
If many depostiors were looing for no FRB banks there would be a market to meet the demand, no?
"Do you believe there's enough gold in the world to supply the world with the amount of money it wants in order to do business?"
You are forgetting about the economic principle of supply and demand. The people who say there isn't enough gold don't understand this basic economic principle.
The price of gold is determined by its supply (relatively fixed) and its demand which even today is very low. Same with the dollar. Its value is determined by supply and demand. Right now the demand for dollars is much higher than for gold. The reason is that gold is not currently being used as money but as a commodity instead. If the use of competing currencies was legalized (The only legally-used currency in the US is the Federal Reserve Note as mandated by law) the demand for and price of gold would increase, while at the same time the demand for and price of dollars would decrease. It is a fallacy to say there "is not enough". It doesn't really matter how much of it there is, as supply and demand would alter value accordingly.
And to say the FRB is not government mandated is completely erroneous. It was created by congress through law. Federal Reserve notes are the only form of currency that can legally be used in the United States as well (again mandated by law). It didn't come about by the free market, but by government mandate. Everyone in the US whether they like or not must be tied to the federal reserve because they are the ones with congressional authority to print money (which is unconstitutional by the way, but that doesn't seem to be a problem for our government).
Bob as you have so kindly talked up my blog I figured I should leave you a comment, clearly you're in dire need of one.
ReplyDeleteIs it that Keynesians dont understand the Austrian concepts or that they do and just don't buy them?
Keynesian do not have a clue about Austrian concepts or theory. And don't think Austrians themselves appreciate that Keynesians (and all non-Austrians) understand absolutely nothing about Austrian concepts and/or theory. I became an Austrian in 1973 and I've never met a single person of the left since then (everyone was a full fledged socialist in the 70s) who had a clue about Austrian concepts or theory. "Lord Keynes" is unique in the history of the galaxy. He spends eons of time reading vast amounts of ancient Austrian literature looking for minor inconsistencies because he will not engage the basic Austrian concept of economic calculation. He insists that problems of economic calculation only apply to a Soviet-style forced total abolition of the market and market prices under socialism. However, the same analysis is at the core of the Austrian critique of Keynesianism, which he conveniently ignores.
Deletere: " I became an Austrian in 1973 and I've never met a single person of the left since then (everyone was a full fledged socialist in the 70s) who had a clue about Austrian concepts or theory."
DeleteHere's a competing theory: you're a bitter old man with no real appreciation for economic science. You know about as much about economics as I know about being an attorney - which isn't much.
Between your theory and mine, I think mine is far more plausible.
Thanks, Daniel for providing me with that long and extensive list of people of the left that I've met since 1973 who understood Austrian concepts and theory.
DeleteYou know, the premise you're working from is that you're up to the task of evaluating an understanding of Austrian concepts and theory - that's something I haven't seen much evidence for.
DeleteIf anyone would know whether or not I'm up to the task, it would certainly be you.
DeleteGee Bob I sure learned a lot from that. You and Major don't do anything but strut around with this contrived sense of superiority based on nothing.
ReplyDeleteIt's a silly game of "Name me leftists who get me" I could jsut as soon ask you to prove that you have any understanding of non-Austrian economics. I've seen no evidence
Neither the non-aggression principle, traditional common law concepts of private property and contract nor "the knowledge problem" and economic calculation are particularly complicated or difficult to understand. The total inability of statists to engage these concepts over the decades that I've been familiar with them is frankly shocking and inexplicable to me.
DeleteDon't you ever even make an attempt to understand what Major Freedom is writing about? He explains over and over and over again from slightly different angles that central planners and schemers of monetary manipulation simply do not and cannot have sufficient information to accomplish what they think they want to accomplish AND that their interference in the process of voluntary exchange is the cause of problems they think need fixing.
Deletehttp://www.themoneyillusion.com/?p=15584#comment-173043
Daniel Kuehn, I can't speak for Roddis, but I know I've pointed out to you MANY times around the blogosphere that you don't understand Austrian theory. As recently as only a few months ago, you fallaciously claimed that ABCT is brought about by government spending.
ReplyDeleteFor some reason you believe you're more knowledgeable about economics than you actually are. Your knowledge of economics is very superficial and whimsical. You dabble in a lot of things, without getting the core of most debates you take part in.
At least, that's what I have noticed.
"Neither the non-aggression principle, traditional common law concepts of private property and contract nor "the knowledge problem" and economic calculation are particularly complicated or difficult to understand. The total inability of statists to engage these concepts over the decades that I've been familiar with them is frankly shocking and inexplicable to me"
ReplyDeleteBob if no economists outside the Austrian cult are interested in ABCT that may not be there's a grand conspiracy to ignore it, just that it's empty.
"Don't you ever even make an attempt to understand what Major Freedom is writing about? He explains over and over and over again from slightly different angles that central planners and schemers of monetary manipulation simply do not and cannot have sufficient information to accomplish what they think they want to accomplish AND that their interference in the process of voluntary exchange is the cause of problems they think need fixing"
Believe me I've talked to the good old Major much more than I probably should-sometimes I guess you need comic relife.
What he can't explain though nor can you is if central banking is the problem why wasn't the pre CB era a land of milk and flowing honey.
In truth the post CB period has been far more healthy. With the emergence of FDIC bank runs have been eliminated as a major factor.
I see Major engaging in a lot of feverished theorizing, but I never actually see any emprical evidence of anything he says nor of what you say.
What he can't explain though nor can you is if central banking is the problem why wasn't the pre CB era a land of milk and flowing honey.
DeleteSo you know absolutely nothing of the history of 19th money. Hmmmm. The central bank was instituted in part to bail out banks that recklessly engaged in fractional reserve banking which is the cause of bank runs. I'm sure MF has explained that from 6 different angles.
http://mises.org/daily/3687
Mr. Sax:
DeleteWhy don't you explain to me how Austrians claim that FRB impacts economic calculation and thus the price, investment and capital structure. You don't have to believe it. Just demonstrate that you understand it.
You can stop holding your breath, Bob.
DeleteHello Bob! I just noticed you have issued me a challenge to discuss the Austrian theory that fractional reserve banking throws off economic calculation and decisions.
ReplyDeleteI will have to get back to you as I lack time at the present. However, speaking of Lord Keynes-who you believe ignorant of what Austrians believe I just came across this interesting piece he wrote a little while back. Here he thinks that in some ways the Austrian view of inflation is preferable to the Neoclassicals-though yes, he ultimatley disputes it.
"The naïve monetarists believe that there is a “monocausal” explanation of inflation: money supply growth which will cause direct, proportional increases in the price level. This is ridiculous."
He does believe, however, that you guys do on some level still subscribe to the idea of neutrality of money.
http://socialdemocracy21stcentury.blogspot.com/2010/04/austrian-theory-of-inflation-myths-and.html
What I am skeptical of with regards Austrian theory is this idea that a rise in the money suppply is in itself simply inflation.
The definition of inflation that is now used commonly is very recent. Dictionaries before the 80's or so defined it something to the effect of: the expansion of the money supply with a resulting increase in prices.
DeleteThe Cleveland branch of the Federal Reserve put out a publication called "On the Origin and Evolution of the Word Inflation" in 1997 that states: "The term inflation was initially used to describe a change in the proportion of currency in circulation relative to the amount of precious metal that constituted a nation’s money. By the late nineteenth century, however, the distinction between “currency” and “money” was becoming blurred."
So the originally it meant an expansion of the currency supply. Which would indeed cause an increase in prices across the board (the effect of the inflation). The big reason many Austrian economists argue that money supply growth is inflation is that is what it originally meant.
Also, I think they don't want people to lose sight of why prices have increased so much: money printing. Not because the goods are any more scarce than they were before, but because money is much more plentiful. It is something that happens because of Keynesian Economists, not because it is a law of economics that the price of soda must increase from a nickle to 75 cents in a certain period of time.
As an addendum to my previous post I would just like to point out the the definition of inflation that Austrians use is implied in the word's common use. Many times people will talk about the price of x (gas, grain, soda, etc.) adjusted for inflation. What they are doing is looking at the actual value of that product: has it gone up, down, or stayed the same in real terms. If the price increases are because of an increased ratio between demand and supply, the price will have gone up in real terms and vice versa. So what's left is the increase in the product's price due to a change in the supply of money that is chasing that product. That is what is accounted for in the inflation-adjusted prices.
DeleteHello Bob. I left a comment yesterday but you haven't printed it as yet. Do you have a bad experience with comments which makes you reluctant to just print them without reviewing them first?
ReplyDeleteIn any case, hopefully you will print it soon. As far as your question about FRB let me attempt to quanitfy where you're coming from. Do you desire a return to the gold standard? Do you believe there's enough gold in the world to supply the world with the amount of money it wants in order to do business?
I wonder why Rothbardians oppose FRB because it's not government mandated and it's a voluntary arrangement that both the depositor and the bank agree on.
Even if you believe FRB to be pernicious, as a libertarian aren't you normally reluctant to impose government regulation?
Why can't people engage in FRB as there are many willing depositors?
As to the desire for either 100% reserves or warehouse banking, if there's a market demand for this why don't we already have lots of these?
If many depostiors were looing for no FRB banks there would be a market to meet the demand, no?
"Do you believe there's enough gold in the world to supply the world with the amount of money it wants in order to do business?"
ReplyDeleteYou are forgetting about the economic principle of supply and demand. The people who say there isn't enough gold don't understand this basic economic principle.
The price of gold is determined by its supply (relatively fixed) and its demand which even today is very low. Same with the dollar. Its value is determined by supply and demand. Right now the demand for dollars is much higher than for gold. The reason is that gold is not currently being used as money but as a commodity instead. If the use of competing currencies was legalized (The only legally-used currency in the US is the Federal Reserve Note as mandated by law) the demand for and price of gold would increase, while at the same time the demand for and price of dollars would decrease. It is a fallacy to say there "is not enough". It doesn't really matter how much of it there is, as supply and demand would alter value accordingly.
And to say the FRB is not government mandated is completely erroneous. It was created by congress through law. Federal Reserve notes are the only form of currency that can legally be used in the United States as well (again mandated by law). It didn't come about by the free market, but by government mandate. Everyone in the US whether they like or not must be tied to the federal reserve because they are the ones with congressional authority to print money (which is unconstitutional by the way, but that doesn't seem to be a problem for our government).