Wackiest MMTer of the week (for the second time): Septeus7

Septeus7 declares:

Every Austrian believes that government should constantly monitor the unions of poor workers 

Really. I mean that's all we ever plot and scheme about, isn't it?

For future reference - MMT's Tom Hickey finally solves the mystery of the origin of the value of money

MMTers are obsessed with proving that the value of money is not based upon the subjective whims of the populace but upon the enforceable pronouncements of the Assaultive and Omniscient State.  But then yesterday, Tom Hickey made this amazing admission:

"You are confusing nominal value and exchange value. The nominal value is stamped on the face of the coin. This is determined by the issuer. What the exchange value may be at any time is market determined" 

So called "nominal value" concerns weights, measures and purity.  It has nothing to do with “value” as that term is used today. As usual, MMTers engage in obscurantism.  However, this is an amazing admission. 

No Austrian denies that governments have mandated the weight, measure and purity of coins over the ages. We deny that governments can impose "exchange value", which is what "value" means. People have subjective values and since we cannot read minds, objective prices resulting from voluntary exchange are the only method for determining and making informed decisions as to the exchange value of zillions of goods and services as valued by 7 billion strangers on this planet. Fiat funny money fatally distorts that calculation process.  Keynesians, MMTers and monetarists are oblivious to even the existence of the calculation process, much less its distortion by fiat funny money.

How can you tell when an MMTer or "progressive" is lying?

If he's making a statement.

Some guy name Chris Dillow claimed that Obama was criticizing “Randian Conservatives” in a speech.  Sorry, but there is no such thing as a “Randian Conservative”.

Then, the same numbskull claimed that EVEN Edmund Burke understood that present generations rely upon what is handed down from prior generations!  No man stands alone, which is what the “Randian Conservatives” think. Right.

And all that nonsense is allegedly derived  from the strict prohibition upon the initiation of force? 

Let's review.  First, here are no "Randian Conservatives".  Second, no libertarian or conservative believes that people do not constantly interact with and influence each other, especially family members.  Third, what Obama really meant by his "you didn't build that" statement was that because people generally have had help in creating their wealth, such wealth should be seized by Obama and the Assaultive Keynesian State.

With MMTers and "progressives", I can never tell where the dishonesty ends and the stupidity begins.  You too?

As I've said for forty years, people do not take naturally to the phony Keynesian analysis.

They have to be intimidated into believing it by the men in the white lab coats!  

Matias Vernengo,Associate Professor of Economics, University of Utah writes:

I]t is almost always true that the vast majority of my students think that inflation is the real problem.

And, of course, the Keynesian Vernengo then has to set them straight using his powers of imprimatur as a “professor”.

That students do not naturally take to the Keynesian Hoax is a marvelous thing to know. Having been an advocate of the Austrian School since 1973, this Vernengo post supports my longstanding theory that not only is Keynesianism false but it is counter-intuitive.  People have to be intimidated into believing it, like in “The Emperor’s New Clothes”.

Of course “inflation” is the problem. It is the cause of the distortions in the price, investment and capital structures that result in the boom/bust cycle and depressions. If people can be inoculated with sound Austrian analysis in advance, they would never fall for the Keynesian Hoax.

Do cheaters get high from breaking the rules?

Apparently, MTTers get high from breaking the rules of morality and the Constitutional limits on the issuance of money with their theft via funny money schemes.

Bob Wenzel notes that: 

[S]timulus programs are worse than a wash and are really a negative, since instead of allowing a non-stimulus economic environment, a government stimulus program distorts and takes, in one form or another money from others, mostly by some form of coercion, and then runs it through the government bureaucracy and then doles it out to those who can influence government power centers. This folks is an anti-stimulus. anti-free market program.

Wenzel links to Arthur Laffer making a similar point in the Wall Street Journal.

The fundamental undeniable fact of the universe is that human beings act but with very limited knowledge of each other's subjective values. Further, humans engage in voluntary cooperative economic exchange where each party believes he/she has improved her condition.  There is no "equivalence" in such an exchange except for the approximate valuation given to the transaction by the use of money.  Such transactions are often referred to as "spending" but that provides an incomplete picture because such a reference focuses only upon the buyer. 

The fundamental basis of the Keynesian worldview is to ignore the underlying fundamental reality of human exchange and to suggest, without basis in fact or theory, that the exchange process is analogous to physics.   According to this "windup toddler toy model" of economics, the process of voluntary exchange allegedly requires an external source to provide it with "momentum" or "stimulus".  The free actors left to themselves will allegedly not be able to generate the necessary "momentum" for the toy to spin to its full potential so that the process needs a source of ubiquitous external oversight in the form of the totalitarian-minded Keynesians to provide that "momentum".  How convenient.

Due either to stupidity or dishonesty (probably both), the Keynesians must always focus upon "spending" while insisting that two completely different phenomena, voluntary exchange and government "spending" are really the same thing.  Not only that, but they insist that government "spending" can replace private "spending" in a positive manner.  Not only that, but they insist that a lack of private spending suggests a lack of "momentum" which can be and must be provided by government "spending".

In reality, the only thing that the creation of fiat funny money can functionally accomplish is to steal purchasing power from those holding the existing money to those getting the new money.  It is likely that those getting the new money will probably "spend" it sooner than the real owners of the purchasing power would have, thereby making the dimwitted Keynesian think he has provided the necessary "momentum" to the "spending" process.  The catastrophic secondary effect is to distort the pricing process, the information system necessary for informed economic calculation.  The only thing that government "spending" can accomplish is to steal resources from others and [mis]direct those resources as the government chooses.  Since the real owner of those resources was probably not "spending" in the present time as fast as the Keynesian deemed appropriate and  while the government was "spending" in the present time, the dimwitted Keynesian can shout with joy that he has provided the necessary "momentum" (stimulus) to the "windup toddler toy" that is his "model" of free exchange.  In reality, those resources have simply been misdirected, but the "spending" itself has distorted the price system and thus impaired informed economic calculation.

Because the "economy" is not a windup toddler toy and does not possess or lack momentum, the entire Keynesian theory and worldview is preposterous.   

Naturally, the MMTers, Delong, and DavidGlasser, "FTC economist", mock Laffer while ignoring the fundamental problem of the Keynesian Hoax. 

UPDATE:  In in the 39 years since I've became an Austrian, I think I've found about 4 anti-Austrians who even knew the basic subject matter of the Austrian School.  The commenters at the David Glasner blog ain't one of them.

I somehow missed Obama's birthday

And so close to Hiroshima Day too.

Keynesian New Deal Democrats are the only people in the galaxy to use atomic bombs on people

Remember those weirdos at the end of "Beneath the Planet of the Apes"? They worshiped the atomic bomb. Kinda like liberal Democrats (and their cousins, the neo-con Republicans) and their worship of the mass bombers FDR and Harry Truman. 

Today we celebrate the highest holy day in the liberal Democrat's religion (The Church of FDR/Truman), which is the unnecessary nuking of women, children and puppies by Truman on August 6, 1945. In the entire history of the galaxy, the only people who ever nuked anybody were Keynesian New Dealer Democrats. And that's not a coincidence. 

Daniel Kuehn provides the factual basis for the Rothbardian explanation of the 1920 depression

The basis of the Keynesian analysis of the economy is the allegation that the market fails and requires government intervention in the form of "monetary" and "fiscal" policy to get the market back on track to achieve "full employment".  However, there is no basis in fact to support the allegation that the market fails or has failed.  Certainly, from the beginning of the reign of the Federal Reserve, it has been the Fed that has induced the monetary and price dislocations that have resulted in booms, busts and unemployment.  This has been demonstrated by uber-Keynesian Daniel Kuehn although I am certain that such was not his intent.  Krugman agrees.

In his paper A Critique of the Austrian School Interpretation of the 1920-21 Depression,  Daniel Kuehn claims to have refuted the Austrian School analysis of the 1920 depression.  Instead, he unintentionally demonstrates the veracity of the long held Rothbardian/libertarian explanation of that depression and even the Great Depression.  Further, he helps demonstrate that there is no factual or theoretical basis for the Keynesian explanation of either the 1920 and/or the later Great Depression.  Or of virtually anything Keynesian for that matter.  The market did not fail.  The market does not fail. Price distortions were caused by the Fed, not the market.

Kuehn first demonstrates that it was the Fed's funding of WWI that caused an artificial boom and inflation. The problem was not caused by any failure of "the free market".

2. The austerity depression of 1920–21

During World War I federal expenditures ballooned and although the new income tax was able to partially finance the war effort, most of the financing was done through federal borrowing and by the highly accommodating monetary policy of the Federal Reserve. The role of the Federal Reserve at this time was expressed unambiguously by the New York Federal Reserve Bank Governor Benjamin Strong, who told a Congressional committee in 1921 that ‘I feel that I, or the bank at least, was their [the Treasury’s] agent and servant in those matters’ and further added that the wartime inflation caused by the low interest rates maintained by the bank were ‘inevitable, unescapable, and necessary’ for prosecuting the war (Strong, 1930) [emphasis added}

This is the pure Rothbardian explanation.  Wars are funded with fiat money which robs average people of purchasing power without the victims understanding exactly what is being done to them and without any due process of law.  If the citizens had to make an immediate sacrifice in the form of a forced contribution of tax money to fund wars on a pay-as-you-go format, there would be far fewer wars.  Kuehn then notes that the inflation encountered by the populace had been caused by the “expansionary policy of the Federal Reserve” and thus not any alleged “market failure”.  After the war, such policy was “sharply curtailed” as was government spending leading to the predictable bust:

However, after the war ended the deficit spending of the Wilson administration and the expansionary policy of the Federal Reserve were sharply curtailed to bring a halt to the inflation. By November 1919 the Wilson administration balanced the federal budget, slashing monthly expenditures by almost 75% in a matter of months.4 The New York Federal Reserve Bank raised the discount rate by 244 basis points over the course of eight months, with other Reserve System banks following suit. Shortly after these austerity measures were taken, the 1920–21 depression was under way. Postwar industrial production in the USA peaked in January 1920 as the economy moved into a major depression, with production levels dropping by 32.5% by March 1921.5 This loss in output is second only to the Great Depression in American economic history (Romer, 1999), although its duration was considerably shorter. Declines in output were matched by precipitous drops in employment and the price level. The proximate cause of the 1920–21 depression was a deliberate fiscal and monetary retrenchment following World War I.

Even with this horrible distortion of the price, investment and capital structure caused by the government, free people were able quite quickly to re-establish prosperity without any significant government involvement. Indeed, it was the lack of such involvement that allowed prosperity to return.  This horrible historical chapter inflicted upon the public was caused by "progressive" interference in society and was cured without significant governmental assistance. This is why the episode is virtually unknown to public school graduates and people who get their news from the mainstream media.

Note that it is simply outrageous the way Kuehn and the Keynesians refer to the process of ending the criminal and immoral government programs which facilitate war and theft of purchasing power as “austerity”.  To a statist Keynesian, when you are successful in keeping your own money out of the hands of the fascist state, such a state of affairs is inherently “austerity”.    The way they distort and mangle common words and ideas is almost……Orwellian. 

UPDATE SEPTEMBER 21, 2014.   Note that Krugman long ago gave his approval to Mr. Kuehn's paper.  Further, Mr. Kuehn conceded that his paper was consistent with the Rothbardian narrative.

UPDATE NOVEMBER 15, 2016.  Progressive interventionist warmonger Woodrow Wilson had a stroke soon after the end of WWI and was unable to interfere in the ongoing slashing of government spending.  Richard Vedder has referred to this as the  “stroke of luck”.

From 2009, Tom Woods mentions the “Stroke of Luck” in jest at the 2:25 minute mark of this youtube video:

https://www.youtube.com/watch?v=czcUmnsprQI

What is amazing about Krugman’s reaction to Kuehn's paper is that it was a short Tom Woods article from around that time published in “The American Conservative” which spawned Kuehn’s paper because the short TAC article did not mention Wilson. Thus, we have the spectacle of Kuehn and Krugman chortling that Austrians do not understand the timeline for the event because they allegedy failed to realize that the most important events regarding the 1920 depression occurred under Wilson.  Such insight. 

UPDATE DECEMBER 4, 2014.  From "Out of Work" by Vedder and Gallaway, page 62:

Factory employment from the beginning of 1920 to the trough in the third quarter of 1921 fell slightly more than 30 percent on a seasonally adjusted basis, a sharp drop by any standard. Similarly, industrial production fell by a like proportion. An even steeper decline occurred with respect to wholesale prices. Between the second quarter of 1920, when they peaked, to the third quarter of 1921, a period of slightly over one year, wholesale prices fell nearly 44 percent, one of the steepest decreases recorded in American history.

The substantial fall in prices greatly exceeded the drop in money wages, so real wages rose markedly until the third quarter of 1921. It would be an overstatement, however, to characterize money wages as rigid. After all, they did fall over 19 percent from the summer of 1920 to the end of 1921. It is more accurate to say that wages proved less flexible than prices.

All of that repricing and repair happened without a government program.  So much for the alleged problem of "sticky" prices and wages.  It is clear that the market did not fail here (as it never does) but that the market quickly repaired a horrendous crisis caused by government, its wars, its violent interventions and its central bank funny money. Further, the distortions that existed prior to the quick repairing of the problem by the market were far worse than anything one would ever find in a free market. This is why this event is and must be suppressed by the statists. 

How do we re-establish trust in economics asks Lars P. Syll

Such a mystery.  

Why don't they start by learning and understanding Austrian School concepts such as limited knowledge and economic calculation?  Oh, but that would be so FRINGE.  And so GAUCHE. 

Thank goodness for the TSA

Bitter, cranky old Bob goes tubing in Texas

As part of my bitter, cranky old Bob photo series.

Government promises free doctors for everyone - but the NYT says there aren't enough doctors - HOW CAN THAT BE????

DOCTOR SHORTAGE LIKELY TO WORSEN WITH HEALTH LAW

By ANNIE LOWREY and ROBERT PEAR

RIVERSIDE, Calif. — In the Inland Empire, an economically depressed region in Southern California, President Obama’s health care law is expected to extend insurance coverage to more than 300,000 people by 2014. But coverage will not necessarily translate into care: Local health experts doubt there will be enough doctors to meet the area’s needs. There are not enough now.

Other places around the country, including the Mississippi Delta, Detroit and suburban Phoenix, face similar problems. The Association of American Medical Colleges estimates that in 2015 the country will have 62,900 fewer doctors than needed. And that number will more than double by 2025, as the expansion of insurance coverage and the aging of baby boomers drive up demand for care. Even without the health care law, the shortfall of doctors in 2025 would still exceed 100,000.

How is that POSSIBLE? Everyone knows that government bureaucrats have special powers to coordinate goods and services over time that average mortals simply do not possess.

When are we going to get serious and enact furniture control?

Look at the causes of these outrageous numbers of murders in the USA in 2010:


745 with hands and feet
373 with shotguns
358 with rifles

But in 2000, there were 650 deaths from falls involving a bed, chair or other furniture. WHEN ARE WE GOING TO GET SERIOUS ABOUT THIS TERRIBLE PROBLEM?  If the government forced everyone to sit on the floor, none of this would happen.


It's good thing Obama has unleashed his swarm of drones to watch over us. They could look into windows and make sure that everyone is always sitting on the floor!

More people need an Obama decoder ring

What could possibly be more pathetic than a supporter of Dear Leader?

Daniel Kuehn shows his true colors

"Glenn Greenwald bothers me in a really deep, genuine way..."

The great Glenn Greenwald, the only "progressive" left with any integrity.

It should never surprise us that "progressives" are blind to slaughter when performed by one of their own guys

Stalin killed 30 to 50 million people.  So did Mao. Ever see a single film come out of "progressive" Hollywood with socialist genocide as its main theme?

Romney and sons - TEAM CHICKENHAWK

Obama will be freer to attack Iran as Democrats will cheer for violence and slaughter when ordered by a sophisticated, urbane, "progressive" Constitutional Law Professor

From Glenn Greenwald, the last "progressive" with integrity:

"In other words, Obama will be freer to attack Iran than Romney would be because Democrats, progressives, and the “international community” (that’s neocon for: Europeans) passively accept or even cheer for violence, aggression and executive power abuses when ordered by a sophisticated, urbane, Constitutional Law Professor with Good Progressivism in his heart, and only cause a messy ruckus when done by an icky, religious, overtly nationalistic Republican.

To see how true that is, just compare the years-long screeching over President Bush’s mere eavesdropping and detentions without any judicial review or transparency — he’s assaulting the Constitution and Our Values! – compared with the reaction to Obama’s more extremist assassinations without any judicial review or transparency. Or consider how a high-level aide to John Ashcroft marveled with envy over Obama’s ability to prosecute whistleblowers with such abandon, noting to The New York Times that the Ashcroft DOJ was deterred by the prospect of a political storm that Obama simply does not face: ”We,” lamented the Ashcroft aide, “would have gotten hammered for it.”

Thank goodness for "Lord Keynes"

I do not in fact think monetarists are anywhere near as bad as Austrians.


Of course, "Lord Keynes" still does not understand the basic Austrian concept of economic calculation.