Don't forget - - Socialist Worker's Party, I mean "Modern Money" lectures at Columbia Law School this Monday night!

Hard leftists at Columbia explain central banking while meticulously avoiding mention of Austrian analysis or even the US Constitution. 

In New York (and in Michigan and Massachusetts, home of Harvard),a lawyer shall not knowingly fail to disclose to the tribunal controlling legal authority known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel;

See Rule 3.3(a)(2) of the New York State Rules of Professional Conduct for attorneys.

Farley Grubb, one of the prior presenters, has written:

This new U.S. Constitution, ratified by the states and then adopted by Congress in 1789, profoundly altered the nation’s monetary structure. It was nothing short of revolutionary (Ferguson 1983, 404-405). Before the U.S. Constitution, the principal “inside” paper money in circulation was issued directly by government legislatures and backed not by specie (the “outside” money of the times) but by the issuing government’s future taxes.2 Very few banks existed—none before 1782 and only three by 1787. AFTER THE U.S. CONSTITUTION, GOVERNMENTS WERE PROHIBITED FROM ISSUING PAPER MONEY.

This fact has not been mentioned by the other presenters and is utterly contrary to the entire Magic Money Tree, I mean Modern Monetary Theory "paradigm".

UPDATE:

Before being allowed to practice law in the State of New York, each person must take the constitutional oath of office in open court:

I do solemnly swear that I WILL SUPPORT THE CONSTITUTION OF THE UNITED STATES, and the constitution of the State of New York, and that I will faithfully discharge the duties of the office of attorney and counselor-at-law, according to the best of my ability.

So, can you be a Keynesian and an attorney at the same time?

UPDATE 2:  

I've had a run-in with Mr. Vernengo before. 

From the mouths of babes: Tom Hickey inadvertently admits to understanding economic calculation and Cantillon Effects

Mike Norman blogger Tom Hickey has inadvertently a) admitted to understanding economic calculation; b) admitted that everyone engages in it and c) admitted that the process is distorted by emissions of funny money.  I had pointed out:

The funny money 1971 "dollar" was worth 32% of the 1933 "dollar". The 2013 "dollar" was worth 6% of the 1933 "dollar". And with every funny money emission, someone was able to rob others of their purchasing power, which is the whole point of the emission process.

Hickey responded to this irrefutable observation with this:

Looking at the relative value of a currency relative to the amount of gold it will purchase is irrelevant to most people, who are concerned instead with living standard, which is a function of productivity and income, for instance.

Yes, anyone who hoarded money under the mattress lost purchasing power. How many people would have been that stupid. 

This is after all a market economy and people are presumed to be intelligent enough to make reasonable investment decisions, which involves inflationary expectations [emphasis added]. 

I pointed out his inadvertent admission:

See, everyone DOES engage in economic calculation and such activity is distorted by emissions of funny money. You just said so.

I'm bookmarking this one for posterity.

Hickey tried to take it all back, but it was now too late:

Let's put it differently. No one stashes money under the mattress for long periods other than crazy people.

I pound this point over and over:  EVERYBODY actually understands economic calculation to some degree in their real lives.  Keynesianism finds it necessary to expunge it from existing categories of thought.  Every day, all the time.

Hickey's statement is also an admission of his contempt for the unsophisticated. As I constantly explain, the purpose of funny money emissions is the theft of purchasing power BY THE ELITE from average people.  In Hickey's world, STUPID (his word) AVERAGE PEOPLE are going to be robbed blind by the process.  Cantillon Effects are real.  Who knew?

The very disturbed Keynesian liar "Lord Keynes" lies again (and again) - this time about the Austrian concept of capital goods.

The very disturbed personality "Lord Keynes" appears to be the only Keynesian in the galaxy to actually read Austrian writings. All other Keynesians purposefully distort Austrian analysis without actually having read any Austrian writings. "Lord Keynes" is different in that he reads the Austrians before distorting them.

His latest distortion is here:

The Austrian system of classification of capital goods cannot be considered a universal, clear cut, or strictly useful one, if many capital goods’ classification is simultaneously to be included under different orders. 

Also, the classification system obscures another point about capital: while capital goods are heterogeneous, many can have a significant degree of substitutability, flexibility and durability. A capitalist economy in which we find some important degree of adaptability, versatility and durability in the nature of capital goods also means that the Austrian capital theory underlying the Austrian business cycle theory (ABCT) is not a realistic vision of modern economies.

The problem with this analysis is that Austrians already know that a particular item can, in different situations, be considered a consumer good or a capital good, depending upon the state of mind and plans of the economic actor:

Although Rothbard’s discussion of the ham sandwich (pp. 8–9) is a useful introduction the concept of stages of production, even here the classification of goods ultimately relies on the subjective plans of individuals. There is not an objective “fact of the matter” about the order (first-, second-, third-, etc.) in which a certain good should be placed. The classification depends upon the means-end framework as conceived by the relevant individual. See Robert P. Murphy: "Study Guide to Man, Economy and State", pages 11-12.

Murphy further notes that:

The structure of production concept is also a particularly Austrian feature. By classifying goods as first-, second-, third-order, and so on, the Austrians never lose sight of the fact that production takes time. Murphy at page 9.

A purpose of the "structure of production" analysis is to emphasize that production takes time AND that the structure and how to analyze it must be based upon the subjective valuations of the participants. 

Finally, as a general observation, the Austrian concept of "economic calculation" is ubiquitous in the real world and in Austrian analysis. No Keynesian anywhere seems to understand it (or wants to) and "Lord Keynes" is always adamant about distorting it while failing to understand it. Economic calculation is what allows that market participants to accurately price each of the zillions of factors that make up the structure of production as it develops over time. Keynesian policies are based upon providing funny money and government spending subsidies which MUST distort economic calculation because the resulting transactions could not have been based upon purchases derived from the actors' own savings. Even the Keynesians admit that THE RESULTING TRANSACTIONS WERE INDUCED BY THEIR KEYNESIAN POLICIES (or else there would have been no point to imposing the polices). 

The impact of Keynesian policy is distortion analogous to a company owner directing his 2 million employees to purchase his daughter's latest popular music CD which few people actually enjoyed. No sane person would claim that the sales totals and proceeds for this CD had provided an accurate measure of what types of popular music the public would be willing to VOLUNTARILY purchase with their own savings. Similarly, Keynesian interference in the pricing process seriously distorts the pricing process of complex capital projects that are completed over time. 

Likewise, Keynesian interference in the pricing process produces asset bubbles which result in horrific "debt deflation" when the bubbles pop. This is a simple and straight forward application of basic Austrian concepts. Keynesians seem to recognize that the current system results in bubbles and debt deflation but suppress and obfuscate the cause, economic miscalculation induced by their own foolish policies. A bizarre result of this purposeful denial and obfuscation of the basic Austrian concept of economic calculation is the Minsky-ites.

Keynesians like "Lord Keynes" cannot allow the public to understand these basic truths so he does what he does to obscure those truths.

A clueless Stephanie Kelton on the Thom Hartmann show: Modern Monetary Theory as Marxism lite

MMT Queen Stephanie Kelton was on the Thom Hartmann show this week asserting that "infrastructure" cannot be provided by "the private sector" and because the government can never run out of dollars, it  can never really run out of the ability to construct "infrastructure".  Similarly, the government can never run out of funny money with which to pay for anything, like $200 trillion in diaper changing costs for 70 million senile baby boomers.  Just as with the Marxists, production happens "SOMEHOW", and the only thing holding it back is a mistaken belief that we still live under a "gold standard".  The law of scarcity and the problems of economic calculation and pricing magically disappear as the result of the unlimited supply of funny money dollars (actually, MMTers lack the mental capacity to recognize and/or understand the concepts of scarcity, economic calculation and the pricing process).  

For a comparison to Marxism, let's examine this review of Thomas Sowell’s Marxism: Philosophy and Economics:

Perhaps the most telling example of Marx’s ideas in practice is the results of Lenin’s early acceptance of the SOMEHOW approach to all but labor, as indicated by this quote from State and Revolution cited by Sowell:

Capitalist culture has created large-scale production, factories, railways, the postal service, telephones, etc., and on this basis the great majority of the functions of the old “state power” have become so simplified and can be reduced to such exceedingly simple operations of registration, filing, and checking that they can be easily performed by every literate person, can quite easily be performed for ordinary “workmen’s wages”, and that these functions can (and must) be stripped of every shadow of privilege, of every semblance of “official grandeur.”

In fact, Sowell observes that:

The early history of the Soviet Union provided the most dramatic empirical refutation of the Marxian assumption that management of economic enterprises is something to be taken for granted as occurring SOMEHOW. When economic incentives were drastically reduce or abolished in the heady egalitarian period following the Bolshevik revolution, the Soviet economy ground to a halt. Widespread hunger and a halt to vital services forced Lenin to resort to his “New Economic Policy” that restored the hated capitalist practices. The later nationalizing of all industry under Stalin and his successors did not restore egalitarianism. Quite the contrary. There were highly unequal rewards to management, including today whole systems of special privilege stores to which ordinary Soviet workers have no access. Moreover, the managers of Soviet industry have been disproportionately the descendants of the managerial class of earlier Soviet and czarist times (193).

Then comes the noteworthy conclusion:

Many observers have seen these developments as mere betrayals of Marxist ideals, missing the more fundamental point that a crucial false assumption must be corrected in practice if people are to survive. Its continuing sacredness in theory can only produce hypocrisy. The betrayal may be real, but in Marxian terminology, “no accident.” A similar process is occurring in China, to which many Western Marxists transferred their hopes after disillusionment with the Soviet Union. This too is seen as simply a betrayal of Mao by Deng, rather than a nation’s painful learning from experience that a key assumption of Marxian economics is false (193-4).

The gross falsehoods of Marx’s communism is why the lament commonly heard from so many communist sympathizers — that “true” communism was never put into practice — ought to be rejected. In fact, the ideals of communism — collectivism, dialectical materialism, the evils of capitalism, the idea of labor as the source of all surplus value, the goal of reshaping of man’s nature, the principle of “from each according to his ability to each according to his need,” and so on — were substantially put into practice by the communist regimes of the 20th century. The fact that the result was widespread starvation, forced labor camps, unbearable misery, totalitarian police states, and mass death is hardly a reason to think that the more consistent application of these ideas would result in blissful paradise.

I have pried and prodded these MMTers until I'm blue in the face. While they understand how the various squirtings of funny money appear within our nefarious fiat money system, they have no conception of how the underlying economy actually works because they do not understand production or pricing and they believe that the entire society is held together by these allegedly essential squirtings of funny money by the fiat funny money system.

Platinum coin would have been seen as preposterous by average people - that's why it wasn't used

Well, Obama has nixed the idea of using the "trillion dollar platinum coin". My opinion on why this option was not used is because the coin idea is SELF EVIDENTLY PREPOSTEROUS and even brain dead Americans can see that. The current money dilution schemes like the Fed buying treasury bonds appears obscure, mysterious and incomprehensible to average people which is how the powers-that-be like it. Not so the coin. 

Jon Stewart mocked the idea of the platinum coin. I doubt that he has mocked the purchase of treasuries by the Fed. This caused the monstrous and horrible King of the Keynesians Paul Krugman to go berserk: 

"Above all, however, what went wrong here is a lack of professionalism on the part of Stewart and his staff. Yes, it’s a comedy show — but the jokes are supposed to be (and usually are) knowing jokes, which are funny and powerful precisely because the Daily Show people have done their homework and understand the real issues better than the alleged leaders spouting nonsense. IN THIS CASE, HOWEVER, IT’S OBVIOUS THAT NOBODY AT TDS SPENT EVEN A FEW MINUTES RESEARCHING THE TOPIC. IT WAS JUST YUK-YUK-YUK THEY’RE TALKING ABOUT A TRILLION-DOLLAR CON HAHAHA. [Bob Roddis says "HA HA HA, Krugman, you miserable jerk!"]

Hey, if we want this kind of intellectual laziness, we can just tune in to Fox.

Update: Some people are asking why I don’t go on TDS to explain. Um, first I have to be invited — which hasn’t happened since, I think, 2005."

Trillion dollar platinum coin is the end of civilization - and no one cares

While I never predicted high inflation to ensue back in 2009, I did think that Keynesianism and the war on terror had been exposed as complete nonsense responsible for our bad times and were finally finished. Never did I expect the welfare/warfare monsters to double down on their horrible policies, in the very least because I thought the public would not let them. Because there is no pushback from the brain dead citizenry, these monsters feel more secure in coming out of the closet from the formerly obscurantist form of Keynesianism and interventionism so now we get the absurdity of a trillion dollar platinum coin.  These people are shameless and hopeless.  

And, of course,  we must continue our bankrupting and barbarous foreign policy because the Bible says we must support Israel’s right and obligation to conquer the Middle East and kill A-rabs. I actually thought exposing these noodle-brains for what they really believed would make an impact. I was wrong.

I also must admit that I never thought that the Keynesians would have the audacity to meticulously and continuously ignore the Austrian concept of economic calculation in the face of a constant challenge on the topic. I was wrong on that too.

If one were looking for a way to demonstrate how faithfully the Obama administration had carried on the evil legacy of the Bush administration, this past week takes the cake.

John Glaser writes that if one were looking for a way to demonstrate how faithfully the Obama administration had carried on the evil legacy of the Bush administration, this past week takes the cake:

1. Warrantless wiretapping of American citizens;

2. Indefinite detention without charge or trial;

3. Targeted killings of suspects by drone, without any pretense of due process (even if they are US citizens) remains none of the American people’s business.

Nothing to worry about there, right?