Cafe Hayek - Latest Comments in Only at GMU

Re: Only at GMU

Daniel Kuehn — Tue, 30 Nov 1999 02:00:00 -0000

S Andrews -

Yes, and Legerbott put it at 18% I believe, and either way that's high in an economy where it's much easier to "exit the labor force", not be in the unemployed count, and work on the family farm.

It was a really bad downturn - it was and is considered a depression, as I understand it. I'd guess this one will too. It's not just unemployment - it's depth of GDP shortfall, and it's the length of it that are also important factors.

RE: "Debating whether it was contractionary or expansionary is besides the point"

Maybe not to you, but it's central to the point of people who want to "end the fed" - it's expansionary policy that is their perennial concern. And indeed - it is the constant, low, expansionary policy that advocates of the Fed like so much!

Re: Only at GMU

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

Christ. I used to enjoy it here.

I remember you SteveO. Even back then, you used to make such paternalistic comments.

Re: Only at GMU

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

Today, Bob Murphy has written a very interesting write up on the Fiscal follies of the 1930s

Re: Only at GMU

SteveO — Tue, 30 Nov 1999 02:00:00 -0000

God dammit.

As time goes by I find longer and longer spans of days where I feel like bothering reading through the comments.

Now, I dip in again to see what's happened and as could be predicted, it's descended to the same 3 or 4 people calling each other names.

Would you people go away?! Please. Start your own blog. Don't you have anything to do all day? A job? This space has become 95% pollution. I really wish they would charge per comment here.

Christ. I used to enjoy it here.

Re: Only at GMU

LowcountryJoe — Tue, 30 Nov 1999 02:00:00 -0000

>>If they hadn't acted as a lender of last resort by trying to unclog credit markets, and increasing the monetary base because of the massive reduction in velocity, then we would be sitting in the next Great Depression right now<<

If the desired effect was to unclog so-called clogged credit markets, then elimanating the unfavorable tax treatment on debt instruments would have been an excellent and long-lasting approach to get more savers/lenders to market. Equities enjoy better tax treatment and housing, as an asset, the best tax treatment.

Re: Only at GMU

Daniel Kuehn — Tue, 30 Nov 1999 02:00:00 -0000

S Andrews -

I see! The two wrongs make a right approach ;-)

Which, if you think about it, is an approach that justifies muirgeo's words in the first place.

Re: Only at GMU

Daniel Kuehn — Tue, 30 Nov 1999 02:00:00 -0000

S Andrews -

RE: "You are going too far here to find fault. I don't see a general derogatory connotation attributed to that word."

Only a week back... I'm sure I could find other gems :)

Re: Only at GMU

Daniel Kuehn — Tue, 30 Nov 1999 02:00:00 -0000

S Andrews -

As for the depression... interesting stuff on 1873. I did some googling and it seems as if that was primarily a psychological depression - really more of a "great deflation".

But your own numbers on 1893 show a 10% contraction of real GDP. Isn't that a little disconcerting for you?

Re: Only at GMU

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

For #1 in your list, I apologize. While I might be reluctant to admit this, you are a more worthy voice from the other side on than many others. Your version of fallacies are worded much better and better put.

For #2 in your list, it was in response to muirgeo resorting to shouting ( blog comment equivalent would be typing in all Caps, asking for FREAKING EVIDENCE ) while at the same time calling this a pathetic blog of cry babies; where he's been a regular visitor for several years. There were other disgusting terms he used.

#3. In my opinion, they are all statists. I didn't realize that is such an insult - liking calling somebody a laissez-fool, fetishist, or big mouth, unsophisticated. You are going too far here to find fault. I don't see a general derogatory connotation attributed to that word.

Re: Only at GMU

Daniel Kuehn — Tue, 30 Nov 1999 02:00:00 -0000

RE: "I remember you SteveO. Even back then, you used to make such paternalistic comments."

Haha! My thoughts exactly S Andrews. Actually - only one insult has been hurled today (gold fetishist), and whether that was an insult or not is still being disputed ;-)

Re: Only at GMU

Daniel Kuehn — Tue, 30 Nov 1999 02:00:00 -0000

S Andrews -

RE: "I find it funny that people have to resort to this type of name calling every time they attempt to make an argument. I feel sorry for you Pingry."

Are you kidding? Within the last week you have:

1. Said I had the attention span of an eight year old.

2. Called muirgeo a "disgusting lunatic", a "detestable excuse for a man", an "idiot", a "bonehead heckler", a "fascist", a "scum of the earth virus", a "dork", a "blood sucking vampire", and a "lying hypocrite"

3. Called bill gates and warren buffet "statists"

At least "gold fetishist" has some relevance to the argument at hand - and the only implied insult is that the accused "gold fetishists" cling too naively and too tightly to what they consider "sound money". But that's not really an insult - it's just a position that pingry holds - that you or others hold too tightly to this so-called "sound money".

Re: Only at GMU

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

I completely agree with Daniel Kuehn

Year Nominal-GDP Real GDP

1872 $8.23 $112.9

1873 $8.75 $122.5

1874 $8.48 $124.7

1875 $8.16 $124.5

1876 $8.31 $129.7

1877 $8.52 $136.1

1878 $8.38 $140.5

1879 $9.36 $156.9

1880 $10.4 $169.9

1892 $16.4 $300.5

1893 $15.4 $283.1

1894 $14.1 $269.6

1895 $15.6 $300.5

1896 $15.5 $295.5

1897 $16.2 $308.2

1898 $18.1 $341.9

1899 $19.5 $365.3

Yeah, that really looks close to the great depression.

Gold standard prevented us from getting out of all those recession. There have been so many depression where only going off the gold standard helped get us out!

gold fetishists out there

I find it funny that people have to resort to this type of name calling every time they attempt to make an argument. I feel sorry for you Pingry.

Re: Only at GMU

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

Irving Fisher and JM Keynes called for the same thing at the time

If only they believed in their own words...Both lost a fortune during the great depression.

If they knew so well that Fed is not following their recommendation, why did Irving Fisher continuously expect a recovery through out the 30s. Is it a case of sunk cost fallacy?

Re: Only at GMU

Pingry — Tue, 30 Nov 1999 02:00:00 -0000

And two more points:

I completely agree with Daniel Kuehn, and also, if it seems like I have repeated myself slightly in the same blog comment above, the reason is that I simply did a copy-n-paste of the same stuff I posted at Cafe Hayek and elsewhere so many times . I combined it with something new that I wrote today, the basic idea is that I incessantly repeat that recessions are neither necessary nor needed. I must admit that it' getting a bit tedious to keep trying to enlighten people who subscribe to an overly simplistic worldview because it does not require hard thinking and it jives with their deeply held view of how things should work, but as thinking people know, they don't work as such.

Furthermore, the Austrians have it wrong, and, there is no perfect monetary system which would prevent these financial crises. In case you haven't noticed, these things seem to occur with alarming frequency, and yes, the Great Depression was caused by a foolish adherence to the gold standard for all you gold fetishists out there.

We would obviously like to stay at full employment as much as possible, and perhaps in the distant future we may master economics enough to eliminate recessions. But I really like what Michael Woodford has said about monetary policymaking. He believes that we should aim for perfect price stability at the macro level [which would go a long way in preventing and lessening the pain of recessions], and perfect price flexibility [so the invisible hand can do its thing] at the micro level.

So, the best way to achieve that, which we know of thus far, is to continue to refine our explicit version of inflation targeting while having some serious financial regulation.

Re: Only at GMU

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

I forgot to mention the great drought of the 1890s in an economy that was still heavily dependent on farming.

Re: Only at GMU

Daniel Kuehn — Tue, 30 Nov 1999 02:00:00 -0000

S Andrews-

RE: "Sure, it does. There was Sherman Silver Act, bimetallism, McKinley Tariff, all to blame for the crisis."

OK - I'd certainly agree that a tariff isn't going to be beneficial for the economy. But the point was, you said that the only peace-time great depression "ever in history" happened on the Fed's watch - presumably as an indictment of the Fed. And when you listed the GDP numbers you sarcastically said "ya that really looks close to the great depression".

I just want to reign in the "blame the fed" view of the Great Depression - particularly the anti-Friedman view that the Fed was too expansionary (there is a decent case to blame the Fed for being too contractionary).

Re: Only at GMU

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

and the only implied insult is that the accused "gold fetishists" cling too naively and too tightly to what they consider "sound money".

He naively believes that all of world's problems can be blamed on gold.

it's just a position that pingry holds - that you or others hold too tightly to this so-called "sound money".

You know nothing about what I hold tightly or loosely. So don't be so quick to jump to any conclusion. Unlike you or Pingry, I don't get aroused by pictures of dead politicians printed on pieces of paper. I have no such fetish. I have no fetish for any legal tender laws either.

Re: Only at GMU

Daniel Kuehn — Tue, 30 Nov 1999 02:00:00 -0000

S Andrews -

RE: "You know nothing about what I hold tightly or loosely."

Which is why I deliberately wrote "you or others"... because I honestly wasn't following that part of the discussion.

Re: Only at GMU

S Andrews — Tue, 30 Nov 1999 02:00:00 -0000

Pingry,

Petty cheap attack never makes a good argument.

You said all these in your comments -

1. bunch of Austrian clowns who say foolish garbage

2. There's nothing as amateurish among self-proclaimed experts as silly chatter about "liquidating malinvestment."

3. it's a shame that the people with the biggest mouths seem to know the least about such sophisticated issues

4. as many laissez-fools wanted.

Is it because you feel insecure as a person and insecure in your beliefs that you need to resort to such lowlife names calling and references.

you say

I think the invisible hand is at its best at full employment, and we do not know enough about it in a recession

and yet you are absolute about what needs to be done -

The Fed is doing the absolute right thing, and it's a shame that the people with the biggest mouths seem to know the least about such sophisticated issues.

and you say

You have committed a sunk cost fallacy.

How is my comment "sunk cost fallacy"?

Re: Only at GMU

Crusader — Tue, 30 Nov 1999 02:00:00 -0000

So are we officially in Great Depression 2.0?

Re: Only at GMU

richard — Tue, 30 Nov 1999 02:00:00 -0000

It's only them kids playin'

Re: Only at GMU

dg lesvic — Tue, 30 Nov 1999 02:00:00 -0000

Daniel,

You wrote,

"What about 1873 and 1893? Those could pretty easily be described as depressions - they didn't come during wars. There was also no central bank at the time."

But there was still no free banking, for there were legal tender laws, forcing you to take US greenbacks as tender in payment.

Re: Only at GMU

Daniel Kuehn — Tue, 30 Nov 1999 02:00:00 -0000

S Andrews -

What about 1873 and 1893? Those could pretty easily be described as depressions - they didn't come during wars. There was also no central bank at the time.

As for the Great Depression - it's fairly universally held that whatever pitiful expansionary policy the Fed did take on at the time, it certainly wasn't enough to prevent the money supply from contracting - which was exactly what turned a "normal business cycle" into a depression. I know the ABCT story holds that it was the central bank that created the preconditions for depression, but I haven't seen that presented as rigorously as Friedman's point that they didn't act enough.

As for the current recession coming close to the Great Depression - thankfully it's not looking like the Great one here in the U.S. (probably thanks to the Fed, to bring this full circle!) - but take a look at the Eichengreen numbers on VoxEU. The extent to which we're tracking the great depression when you look at output, trade, etc. globally is striking.

Re: Only at GMU

John Papola — Tue, 30 Nov 1999 02:00:00 -0000

Rock on!

@dg lesvic,

True, the government spending is the problem. But if the government were constrained by the need to borrow and ultimately tax for all of its spending, instead using the hidden tax of inflating, there would be dramatically more popular push-back.

The relationship between current borrowing and future taxation is much easier to understand than the relationship between monetary expansion and the jagged rise of prices and assets bubbles. Those things, as we've seen, can be blamed on other factors in ways that the public believes (or ignores). $145/barrel oil gets blamed on "greedy oil companies" instead of currency depreciation, for example.

Bush couldn't take the country to war, propose Medicare part D all while cutting taxes without interest rates going through the roof as bond issuance soared to cover the shortfalls. Obama couldn't propose government takeover of education, healthcare, finance, auto and energy while expanding the military without the same.

So indeed, END THE FED.

Re: Only at GMU

speedmaster — Tue, 30 Nov 1999 02:00:00 -0000

LOL, well-done! ;-)