I had no more than published the QOTW yesterday, and this one popped up. I’m of the opinion now that NYT economist and columnist Paul Krugman has gone insane, because nobody with any intact cognition would make a statement like this. Even Al Gore hasn’t gone this far, this is in nucking futz territory.
The scene is set on HBO’s Real Time Friday. Krugman is a guest, pitching his book, but at the same time pitching an idea that he’s totally serious about. It involves aliens and scientists and lies to the public on a grand scale, plus a shout out to California’s high-speed rail boondoggle. Here’s the transcript, brace yourself.
PAUL KRUGMAN, NEW YORK TIMES: This is hard to get people to do, much better, obviously, to build bridges and roads and healthcare clinics and schools. But my proposed, I actually have a serious proposal which is that we have to get a bunch of scientists to tell us that we’re facing a threatened alien invasion, and in order to be prepared for that alien invasion we have to do things like build high-speed rail. And the, once we’ve recovered, we can say, “Look, there were no aliens.”
But look, I mean, whatever it takes because right now we need somebody to spend, and that somebody has to be the U.S. government.
Watch the video here: http://newsbusters.org/blogs/noel-sheppard/2012/05/26/krugman-scientists-should-falsely-predict-alien-invasion-so-governmen#ixzz1w5zk6aAO
UPDATE: one commenter thinks he’s being sarcastic or tongue in cheek, here’s my response –
If he had left the comment at that, I’d agree with you, but he added this without saying “I’m joking” or “That’s silly but…”
But look, I mean, whatever it takes because right now we need somebody to spend, and that somebody has to be the U.S. government.
He’s a big boy, he knows the ropes of these interviews, and he didn’t insert an appropriate caveat. – Anthony
UPDATE2: This is now a theme with Krugman. Obviously he stands by his words or he would not have repeated it. See 1:01 in this Aug 14th, 2011 video.
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The signs have been there. In Feb 2011, Krugman pulled another whopper. Paul Krugman’s opinion in the NY Times blamed climate change for the unrest in Egypt.
Dr. Ryan N. Maue wrote then:
Based upon this quote from Krugman:
But the evidence tells a different, much more ominous story. While several factors have contributed to soaring food prices, what really stands out is the extent to which severe weather events have disrupted agricultural production. And these severe weather events are exactly the kind of thing we’d expect to see as rising concentrations of greenhouse gases change our climate — which means that the current food price surge may be just the beginning.
There is no other way to interpret this than “I told you so” from Krugman directly linking climate change and the disparate weather events of the past year or two to food prices and the crises in the Arab world. To various commenters who are defending Krugman religiously, do you doubt that Krugman is linking the events implicitly or explicitly? Remind you, this is the same Nobel prize winner that less than a few hours after Congresswoman Giffords was shot blamed conservatives for the so-called “Climate of Hate“. How does he have ANY credibility at all — especially with anything related to physical sciences?
==============================================================
Indeed.
h/t to WUWT reader “good business”
Related articles
- Krugman: scientists should falsely predict alien invasion (motls.blogspot.com)
- Krugman: Scientists Should Falsely Predict Alien Invasion So Government Will Spend More Money (newsbusters.org)
- Krugman : Scientists Should Lie – To Force The Country Further Into Debt (stevengoddard.wordpress.com)
The difficulty lies not so much in developing new ideas as in escaping from old ones.
John Maynard Keynes
Oh yeah, spend some more “government” money, that’s the ticket.
U.S. gov’t debt is now over $138,500 per taxpayer and inflation is …
Print some more money and spend it.
That should help.
Krugman is nutz. World food output is directly proportional to world energy input to the food system. More energy for tractors, and other farming equipment means more food. Even the energy in the powder in an “eskimo’s” rifle ammo, increases his food production, as doe his snowmobile fuel.
So when enviro-wackos force curbs on world energy production, and raise energy costs, they doom some of the world population to starvation and the rest of it to higher food prices.
Take a hard look at Krugman, Hansen, Gore, Mann, Gleick, McKibben, doesn’t it seem possible that something alien has infected their brains, leading to their insanity?
Nucking Futs comes close, but doesn’t go far enough. He is obsessed with the government spending more of money it doesn’t have and there is nothing he wouldn’t have some do, no matter how dishonest, to drive this spending. Alas, the spending won’t work, but he’s hellbent to see that it happens.
I guess if it weren’t so dangerous it would be sad to see.
I think you are off base about his aliens comment. Watch the video, he is obviously being sarcastic. He is making the point that gov’t spending is what will bring us out of the great recession and referencing that it took the arms spending we did just before we entered WW2 to lift us out of the depression.
So maybe an alien invasion would get us off our butts and do the spending he feels is necessary.
If you disagree with Keynes, fine. But you don’t need to distort what Krugman said.
REPLY: If he had left the comment at that, I’d agree with you, but he added this without saying “I’m joking” or “That’s silly but…”
But look, I mean, whatever it takes because right now we need somebody to spend, and that somebody has to be the U.S. government.
He’s a big boy, he knows the ropes of these interviews, and he didn’t insert an appropriate caveat. Sorry, your point fails. – Anthony
If he is serious he is totally barking, if he is not he is totally barking. Why a high speed rail link? Does he think an alien spaceship with warp drive will not be able to catch it?
You can always count on Americans to do the right thing – after they’ve tried everything else.
Winston Churchill (his mother was American)
Krugman has a nasty economics text book which my daughter was obliged to buy for a class. Cost more than $100….It is a tough job ripping off students.
BYZ–
“The difficulty lies not so much in developing new ideas as in escaping from old ones.
John Maynard Keynes”
BYZ, that is an A+ zinger. Well played.
R. Shearer says:
May 27, 2012 at 11:41 am
“Take a hard look at Krugman, Hansen, Gore, Mann, Gleick, McKibben, doesn’t it seem possible that something alien has infected their brains, leading to their insanity?”
It’s liberalism on parade! Oh, the HUMANITY!!!
Maybe he was talking about Illegal Aliens, and signed up. Naaaa. Watched too many episodes of Ancient Aliens. Yeah, that’s the ticket. Those guys were smart – all those pyramids and stuff. 😉
I think Krugman is trying (poorly) to do a “Haha! Only serious.” He obviously does believe in aliens, and he wants you to believe as well, but he can’t bring himself to mention them, unless he can (clumsily) pass it off as a joke when somebody calls him on his crap.
Let me understand – Krugman (Economics – 2008), Gore (Peace – 2007, Obama (Peace 2008), Carter (Peace – 200e all share a common award – NOBEL Laureates all. Makes one wounder about POLITICS huh?
i need a new drug
one that won’t get debate
one that we consense about
one that lets the fed inflate.
i need a new grant
any crisis will do
one that let’s me rip a rant
keep the lifestyle i’m accustomed to
So…..
What is new about liberals telling a big lie and enrolling Hollywood to perpetuate the lie in order to back door profound policy initiatives favored by the left? This is normal operating procedure for the left, and since many scientist live in the left sphere, they are involved with it. They see it as actually acceptable behavior.
This why the act of lying, particularly within science, is so repulsive and why there should be a campaign of perpetual public ridicule if not criminal prosecution for anyone, particularly scientists who lie or contribute to a lie for the advancement of their own financial, religious, and/or political goals.
Michael Mann is a poster child for this and should occupy the coverage for a permanent legacy publication of known corruptors of truth. Paul Krugman is a lie by design advocate.
Lie at any cost because the end justifies the means….a axiom of the left.
There needs to be a severe penalty for lying. If I know that a person tells lies, I never speak to them anymore. For all you really know about a person is what comes out of their mouth. If that information is false, you are better off listening to nothing at all. Because at least nothing is neutral. Liars needs to be ostracized.
Krugman has also very seriously implied that natural disasters are good for the economy:
http://spectator.org/archives/2012/05/23/a-tsunami-of-bad-economics
Presumably Krugman, since he believes in CAGW, also prays that we will have more CAGW, since it supposedly causes all manner of disasters, and disasters are supposedly good for the economy.
As far as Egypt goes, he has a point. Since the Aswan Dam was built, the silt-bearing flood waters of the Nile no longer fertilize the river flood-plains. As the natural fertility has diminished, more and more expensive fertilizer has had to be imported, raising food prices. the burgeoning populations of the oil-rich states also have to be fed, and are prepared to pay top price to the egyptian farmers, So by stretching a few points Man Made Climate Change has happened in the Nile valley – just not the way Krugman describes.
GoodBusiness says:”Krugman (Economics – 2008), Gore (Peace – 2007, Obama (Peace 2008), Carter (Peace – 200e all share a common award – NOBEL Laureates all. Makes one wounder about POLITICS huh?”
Nope. The “Nobel Prize in Economics” does not exist. Alfred Nobel did not consider Economics a science. The “Nobel in Economics” is actually the Swedish Bank Prize and to call it a Nobel Prize is to go against the wishes of Alfred Nobel.
tomjtx ,
Perhaps , but this isn’t the first time Krugman has mentioned alien invasions . In Feb. 2011 (I think) he wished we were threatened with an alien attack in order to ramp up defense spending , apparently forgetting that we were already fighting two wars . Krugman is insane .
The Dire Menace that requires Marshalling all of society’s resources. Pretty tired device. A better menace, and one that could actually happen, is a large comet on a high certainty collision orbit with the Earth. What if “The Consenous” determines that it is technically feasible to mitigate this hazard, but at the cost of all the productive capacity of the world, what happens? The world is saved but now enslaved?
“He is making the point that gov’t spending is what will bring us out of the great recession and referencing that it took the arms spending we did just before we entered WW2 to lift us out of the depression.”
Government spending sucks money out of productive private uses to throw at what are mostly worthless boondoggles that no-one in their right mind would invest in. WWII ‘saved’ America because it required the rolling back of numerous regulations which had seriously harmed American business, and because most of America’s economic competitors were either bankrupt or bombed to heck afterward.
If you want growth, you need to roll back government spending and regulation, not increase it. All that’s left if you continue down the current path is decline into bankruptcy.
Perhaps Krugman should read up on the Broken Window Fallacy before he spouts more nonsense.
Krugman is one of the many delusional Keynesian economists who believe you can spend yourself out of debt and tax yourself wealthy. He conflates belt tightening with efforts to increase economic activity. His delusion is in his belief that there’s a magical money tree which perpetually sprouts wealth.
The austerity programs in Europe are not designed to grow an economy, they are implemented because they simply don’t have anymore money. They’ve been operating under the Keynesian economics for so long places like Portugal, Italy, Greece and Spain have discovered that there is no magical govt wealth creating tree. Now they’re stuck relying upon Germany to float their economies.
What Krugman doesn’t understand about the U.S., is that our debt payments is interfering with our ability to provide for the social programs he thinks we need. By 2017 (in five short years) our debt payments will exceed $500 billion/year. It will be 1/8th of our entire budget.
So, what is to be done? It’s simple. We go back to the form of economics which worked. Have government get out of the way and create an environment which spurs economic growth from the private sector. Drilling, mining, industrialization. Of course, you’ll never get a leftists to understand this, much less advocate it.
My Real Science comment:
“Paul Krugman advocated on HBO’s Real Time Friday that scientists should get together and lie about an imminent attack to boost federal spending.”
Krugman is a hardened socialist / communist, about as leftist as you get. Some leftists, like Stalin, thought it was good to kill off a large portion of his own population. Compared to that, I guess, the fact that the leftists openly advocate outright lying, is not a big deal.
The leftist zealots behind the climate change scare are predictably also big time supporters of lying to deceive the public:
“It doesn’t matter what is true, it only matters what people believe is true.” -Paul Watson, co-founder of Greenpeace
“We have to offer up scary scenarios… each of us has to decide the right balance between being effective and being honest.” -Stephen Schneider, ipcc author, 1989
“The only way to get our society to truly change is to frighten people with the possibility of a catastrophe.” -Daniel Botkin, Chairman of Environmental Studies at UCSB
“In searching for a new enemy to unite us, we came up with the idea that .. global warming.. would fit the bill…It does not matter if this common enemy is a real one or…one invented for the purpose.” -Club of Rome
I firmly believe that Paul Krugman’s neo-Keynesianism is not economics at all. Economics concerns the attempt to satisfy unlimited demand with limited resources. Neo-Keynesianism is simply an effort to produce as much employment and GDP without regard to value, effect, or efficiency.
Not one of them is a Nobel laureate. Look it uo.
Mark
Hansen, Krugman, and Suzuki are a skeptics best friend. They are the “Joe Biden” of global warming, the “gift that keeps on giving”, and while we’re at it…… “chuckoo for cocoa puffs.”
This is the basic premise of “Report from Iron Mountain” thoght to have been written by John Kenneth Galbraith. Invent an alien threat to get the nations to work together.
The Nobel committee seem to be using the prize to provide affirmation of their liberal socialist thinking.
Aliens…..The new religion of the left. “Alien” has replaced “God” in broad circles of the left. Richard Dawkins, who is hostile to God, causally invokes Alien panspermia as more rational than a God despite it having no more evidence for its existence than God.
The left loves the Godless Alien notion and promotes it abundantly. So you should be asking yourself why since there is no evidence of it. Who has something to gain by this.
Krugman just gave you one reason….Krugman want you to worry. Krugman knows that people are motivated by fear. Global Warming does not frighten the majority anymore so he needs a new boogy man.
Yes according to Krugman, there will absolutely be a hostile alien invasion and the only solution is “one world government” where all the resources of the planet are directed to the common goal of an interplanetary Noah’s Ark. BTW it is a green, socialist Noah’s Ark, full of genetically modified, hybrid people, …. you can just imagine how far he would go…..
Hide the decline,
Oust any non-compliant editor,
Demonize any critics,
Manufacture a hot spot,
Revise history,
Whatever it takes,
…… for The Cause!
When you shoot your mouth off as much as this clod does, it is inevitable that you will eventually say something really, really, seriously stupid. Krugman is one of a distinct class of people that derives incredible pleasure from the sound of their own voice.
My high school senior class took a vote for the person described as “Talks most, says least.” Krugman would have been a runaway winner of that award.
I can’t believe people are taking him seriously. He is on as a guest of Bill Maher and making a Maher-like extrapolation. This is a comical look at politics in keeping with that show. It is almost like believing something from The Onion, which extrapolates politics only a little further than Bill Maher.
In the midst of his ravings, Krugman is letting slip a show of lucid humor, methinks. He’s showing he knows about the scare-’em-green tactic of government, and searches for how to double down on the method. Usual tendentious oblivion of the need for a sound productive base, though.
Who is the least insane?
Tim “Unapliers” Flannery?
David “Humans Are Maggots” Suzuki?
Paul “Aliens Are Invading” Krugman?
Follow the Money
Thank you 🙂
I just seemed appropriate 🙂
When I studied economics Keynes was ridiculed and had been consigned to the dustbin of history.
The problem we have today is that many Keynesian economists are not Keynesian at all, however if you go back and read what he said (very hard as it is written in 1930’s style english) you realise what a brilliant man he was and how we need to rediscover some great wisdom that has been lost through reinterpretation.
The problem is that Keynesian economics is nonintuitive it seems like “Alice in Wonderland”, however Alice was written by Charles Dodgson (AKA Lewis Carroll) a great Mathemetician and is based on mathematics. So this is why Keynes’s economics seems mad as it is based on mathematical rigour and experiment not on what feels right.
Aristotle based his philosophy on what seemed reasonable and all science was constrained for over a thousand years, when mathematical rigour and experiment were unleashed we started thinking differently (as Steve Jobs was keen on) and we advanced past the Greeks.
Think Different, Apple did despite people ridiculing opening “Apple Stores” (said they’ed be shut in six months) and did many things that flew in the face of inherited wisdom and now they are a stock most people would like in their portfolio 😮
Just because you don’t like something or think it is mad doesn’t mean it is wrong, remember climate scientists don’t tolerate those of us who question or who have a different point of view, don’t allow ourselves to be hypocrites when dealing with economics.
🙂
Krugman translation: People won’t do what “We” tell them to do unless we fool them with lies.
He is now a self professed liar.
Krugman, meet liars paradox.http://www.newworldencyclopedia.org/entry/Liar_paradox
“I am a liar. This statement is false.”
wow,just wow
Kind of sounds like what they are doing with global warming….
Only one way to lay this to rest. Get Krugman put in charge of the Fed. Better still, both the Fed and secretary of state for finance, or whatever the American’s call it. Give him unrestrained powers to put his schemes into actions. Let him raise QE3 to be the Godzilla of all QE’s. Let him cut interest rates to zero – heck, he’ll probably make them negative. When the bond markets take such fright that even the Eurozone looks like a safe haven, let him crank up federal bond purchases to levels that would make Obama’s eyes water.
Then, when the scheme fails – no one, but no one, will eve again be able to trot out that tired old argument that it would have worked – if only we spent more money. Go Krugman, go!
MarkG says:
May 27, 2012 at 12:07 pm
Perhaps Krugman should read up on the Broken Window Fallacy before he spouts more nonsense.
Wouldn’t do any good — Krugman believes the Broken Window *works* to create jobs: “And now you can see why tighter ozone regulation would actually have created jobs: it would have forced firms to spend on upgrading or replacing equipment, helping to boost demand. Yes, it would have cost money — but that’s the point!” My emphasis.
http://krugman.blogs.nytimes.com/2011/09/03/broken-windows-ozone-and-jobs/
George E. Smith; says:
May 27, 2012 at 11:41 am
Krugman is nutz. World food output is directly proportional to world energy input to the food system. More energy for tractors, and other farming equipment means more food. Even the energy in the powder in an “eskimo’s” rifle ammo, increases his food production, as doe his snowmobile fuel.
So when enviro-wackos force curbs on world energy production, and raise energy costs, they doom some of the world population to starvation and the rest of it to higher food prices.
____________________________
As has been stated many times in these threads, it is no secret that a large part of “the plan” is to reduce human population by any means necessary.
The leftist advocates of “the plan” are very upfront about their ultimate purposes, if one takes the time to listen to them.
tomjtx is right. Krugman is trying to emphasize his idea that in a liquidity trap (the current US economy) excess government spending increases economic growth without causing inflation. He feels exasperated that the Obama administration is letting economic growth be flushed down the toilet and temporary unemployment be converted to permanent, structural, unemployment. Krugman’s ideas are within normative capitalist economics.
He’s serious, knowledgeable and has a Noble Prize in Economics. None of this guarantees he is right, of course.
Krugman doesn’t know much about global warming, he believes his academic friends. Krugman is also a Democratic party activist, but not a good one. He also needs a TV coach and better pair of glasses.
REPLY: No, tomjtx isn’t right This is now a theme with Krugman. Obviously he stands by his words or he would not have repeated it. See 1:01 in this Aug 14th, 2011 video.
Its pretty clear from the first quote he’s talking about Keynesian economics which is a fair suggestion. Of course the alien suggestion is ridiculous but I think it’s meant to be outlandish. I don’t think commentators have become so polarized that people can’t recognize an outlandish statement like this as hyperbole.
As for high speed rail America really needs to build this in places where it makes sense. If you doubt whether this is a worthwhile endeavor I suggest you go to Italy and take a train trip from Rome to Florence. It is absolutely amazing to get a train in the centre of one city (not some random airport 20ks away) at say 9am and be in the centre of another city before lunch. or how about a trip on the Eurostar? In Paris before lunch, magic.
It’s fine to disagree with Keynesian economics and I think everyone should be skeptical when it comes to climate stuff but high speed rail is awesome. The only way I can explain why Europe and china have lots of high speed rail and US has none is to say US is either disfunctional, backward or both which is just sad.
Sorry if there are errors typed on iPhone in a rush
I used to read some of the NYTimes, however, I don’t bother anymore. Part of my reason was that reading Krugman’s column would fire up my thinking and ignite some aggravation. However he has become so irrational that there is no longer anything to debate in his ideas, so he should just be ignored. James Taranto rightly calls him “ex-Enron advisor” Paul Krugman.
Hasnt his technique been tried before?
His statement should read:
“But my proposed, I actually have a serious proposal which is that we have to get a bunch of scientists to tell us that we’re facing a threatened climate change / man bear pig, and in order to be prepared for that impending global warming invasion we have to do things like build high-speed rail. And the, once we’ve recovered, we can say, “Look, we stopped the climate disruption.”
Its the standard alarm call of the green movement, hasnt he figured that out yet – or it didnt work, so lets change to alien invasion! I am sure there are some crackpot scientists out there who will write an international report clearly stating their 99% confidence that aliens will invade the earth in the next 100 yrs based on a model they built of the universe and what they cleaned about the aliens from studying their previous visits which are captured in the ring spacings of hockey stick shaped trees
Let me give a example where western governments have really got things wrong at present.
When they spend money they hand it over to banks (quantative easing as it is called in the UK).
The trouble with this is that the banks then horde this money and it never goes into the economy, whereas Keynes said that it was better to pay someone to dig a hole and fill it in again than for them to be unemployed, as if they had money in their pockets they would spend some thus starting a spiral of positive feedback.
Here in the in UK everyone is trying to cut spending which means that less people buy things and the economy shrinks, what we need to do is not give the money to banks, but directly employ people to build infrastructure that will help the economy grow and thus put money into peoples pockets.
In the US you need to build your way out of a downturn if you don’t it will just be a downward spiral, the problem at the moment is the area of the economy you are currently spending money on is the wrong bit which only lines the pockets of the wealthy not the ordinary person.
When the average US citizen feels that they are a little better off then they will spend money, what you need to make sure of is that you buy things that cause us citizens to be employed (this is what the Chinese did for the last 20 years!!).
Keynesian theory has never worked one time – it extended the Great depression under FDR and we are still paying for people to be on the dole of government employment doing little or nothing. At the same time we all decided to move our “DIRTY” value added manufacturing to China and India. So, now we have cleaner air [marginally] and no employment for our blue collar skilled labor forces.
Take the locks off our natural resources and end the EPA/ESA over regulations and let us develop all the nuclear power plants and you will see coal fazed out and our value added manufacturing will be earning profits and America will be the undisputed economic leader for the next 50 years.
Dr Ken Pollock says (May 27, 2012 at 12:13 pm): ‘This is the basic premise of “Report from Iron Mountain” thoght to have been written by John Kenneth Galbraith. Invent an alien threat to get the nations to work together.’
Or he’s seen too many movies/TV shows, e.g.
Watchmen 2009: http://www.imdb.com/title/tt0409459/
Outer Limits 1963: http://en.wikipedia.org/wiki/The_Architects_of_Fear
in the above clip about 1:20″there was a twilight zone episode like this ” enuff said
Freddy says:
May 27, 2012 at 12:39 pm
tomjtx is right. Krugman is trying to emphasize his idea that in a liquidity trap (the current US economy) excess government spending increases economic growth without causing inflation.
In what world?
And the, once we’ve recovered, we can say, “Look, there were no aliens.”
Replace “aliens” with “AGW” and I think you’ve got the climate alarmists in a nutshell. Of course instead of high speed trains, we’re talking de-industrialization and political funding shifts to the cronies of the left
byz says:
May 27, 2012 at 12:47 pm
Let me give a example where western governments have really got things wrong at present. …
So when Keynesian economics fail, it’s always because it’s imperfectly implemented? Rather like Marxism then?
Um… This is a proposal to tell a direct lie in order to get a national government to fund a course of action which they would not otherwise undertake.
I am not sure how many laws are being broken here. Fraud is an obvious initial point – you do not have to make a FINANCIAL advantage out of a lie to be guilty of fraud, simply a dishonest one. I suspect that treason is another point to consider. There are probably several other crimes which a skilled prosecutor could suggest.
Is there such a person in the WUWT audience…?
He writes for the New York Times for heaven’s sake! I need say no more.
Krugman is clearly saying, by means of his unfortunate space-alien example, that fiscal stimulus, that is, government spending, in a recession or depression, will bring the economy out of the doldrums. He isn’t saying there is a space-alien threat. Like anybody, he could be wrong, but he’s not mentally ill.
I think the current lack of government interest in high speed rail is partly due to the poor economic health of the airlines and the auto industry. Rail takes decades for ROI, so government help makes some sense. The US government helped the railroads way back when, and helped the airlines and the auto companies (the national highways) in the middle of the 20th century. It builds the economy.
Current interest rates are near zero, so borrowing is affordable. In fact, if you have something really useful to build, it’s almost crazy not to borrow at 0% and build it.
Keep talking Paul Krugman… Keep talking Al Gore… Keep Talking David Suzuki…Keep faking Peter Gleick, Keep lying Micheal Mann, Keep hiding data Phil Jones….. Just keep doing what you do so well. It is working just fine.
Krugman is basically a joke. He is on record calling for a housing bubble:
From http://archive.mises.org/12389/krugman-and-the-bubble/, “To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
If you want to learn actual economics, read Hazlitt, von Mises, or Rothbard.
Paul Krugman has just described the AGW scare to a T. 😉
Wasn’t it Calvin Coolidge who was faced with a serious recession and responded by cutting taxes and eliminating half of the federal government at the time ? The recession was over in two years.
Krugman should work a little harder on fine tuning his meds, cognitive dissonance is starting to overload his two or three neurons that are still holding hands.
Chris Horner’s Heartland session is very interesting
http://climateconferences.heartland.org/christopher-horner-iccc7/
It illustrates another Keynesian failure. Spain has borrowed and spent up to the limit on wind power, and can’t do it any more, because the country is broke. Spanish government bonds are next to worthless, the interest rate on them is so high.
Spain’s problem isn’t that Spain is broke, though. The problem is that Germany is broke.
Krugman – Nothing like liberal monetary policy, high inflation and more government borrowing to help fix an economy.
Other economists – We learned in the 1980s that conservative monetary policy, low stable inflation, balanced budgets, low government debt and low taxes is the key to a strong economy.
The US hasn’t actually tried out what the other economists have been saying but there sure has been alot of Krugman-type advice taken.
Not much different than the climate change debate – there is theory and then there is what is actually happening in the real climate / what actually works in a real economy.
Elliot says:
May 27, 2012 at 12:40 pm
The only way I can explain why Europe and china have lots of high speed rail and US has none is to say US is either disfunctional, backward or both which is just sad.
It’s neither. The reason we don’t have high-speed rail in the US is because of our population distribution, interstate highway system, and network of public airports, none of which have either european or Chinese counterparts. European high-speed rail lines travel through sparsely-populated countryside; China just drew straight lines linking their cities and bulldozed any houses for 50 meters on either side of those lines.
The only place high-speed lines are feasible in the US is in the Southwest. Problem is, you can’t draw a straight line linking major cities without encroaching into one or more military training areas. If it’s in the middle of nowhere, there’s a training site there; in fact, being in the middle of nowhere is the *reason* the military put them there — no civilians to injure when ordnance lands outside the impact areas or when armor is conducting large-scale maneuvers (ever been inside a tank? You can’t see a %$#@! thing except straight to your front).
What he’s actually saying is: ‘It doesn’t matter what you spend money on, just spend, spend, spend’.
That’s crazy enough, the aliens thing is just to emphasise how urgent he thinks it is (and that people are stupid enough to believe anything).
And this is the Economist who want to lead the Europeans from their current predicament to the promise land. Help! Where is Von Hayek when we need him.
@MarkG
“…WWII ‘saved’ America because it required the rolling back of numerous regulations which had seriously harmed American business, and because most of America’s economic competitors were either bankrupt or bombed to heck afterward.”
++++++++++
Hmm…Well, the US companies like that owned by the G Bush family made off like bandits selling steel to Germany during the most expansive phases of WWII when steel was at a premium. In the case of Bush Sr the company only stopped trading with Nazis when Federal agents put chains on the doors of their office in NY. War is good for business, especially when you are not involved except to sell weapons and materials to both sides.
The idea that you can spend un-backed Dollars printed for convenience and fund a war (or a Maglev train) is simply untrue. That is why the government had to borrow so much from China to fund the war in Iraq. Ditto the UK in WWI when they went off the Gold Standard. War goods have to be paid for in real terms, not imaginary money fancied by the Social Credit Party of Canada (“Give municipalities money for the cost of printing it”).
A war against global warming/climate change/disruption is no more fundable with funny-money than any other war. Printing money creates inflation. That is Piggy Banking 101. Inflation eats everyone’s savings because there is no free lunch. An alien invasion would re-direct spending, but there is no ‘little green men economy’. It is just pooling everyone’s money to be eaten by a greener version of Daddy Warbucks. Different players, same M.O.
“If you doubt whether this is a worthwhile endeavor I suggest you go to Italy and take a train trip from Rome to Florence.”
How many people want to take a train from Rome to Florence?
And now many of them are willing to pay the true cost of that train ride?
As far as I’m aware, high-speed rail is heavily subsidised in most of the world because it makes no economic sense. If you disagree, you should be able to build a convincing business case and convince someone to invest in your project. The fact that people are demanding tax-payers money to fund it is pretty clear proof that nineteenth century transport technology doesn’t make sense as a solution to twenty-first century transport problems.
When I lived in the UK we had high-speed trains (at least 120mph or so) but driving to my parents’ house was much faster because they went from where I didn’t want to be (the station nearest me) to where I didn’t want to be (the station nearest my parents) via where I didn’t want to go (central London to change stations and get a different train).
Oh, and the ticket was also more expensive despite about 300% fuel tax.
Sorry Anthony, this really doesn’t work that way 🙂
You do realise that he already gave away that there really wouldn’t be any aliens, after all – so it’s not a ‘secret’ anymore, and hence can’t be a ‘serious plan’. Of course he is saying that to illustrate how urgent it is to get people going in his view.
hewhotypes says:
May 27, 2012 at 1:05 pm
40% of the debt is borrowed from China.
Tell ya what–we’ll do a lot more borrowing if you can somehow get China to agree to your 0% interest rate.
Please stay in touch; let us know how negotiations are proceeding.
I diagnosed Krugman as a paranoid schizophrenic the first time I saw him on a news show. It’s the way the beady eyes moved around, disconnected to any idea or point he was making. The diabolical and inappropriate grin makes the diagnosis easier, of course. But the clincher is the actual words that come out of his mouth.
In today’s political, educational, and journalistic climate, being a schizophrenic turns out to be a big plus.
Having a degree in economics, I assure that Krugman is indeed insane. Many economists have pondered this. While his thesis was lightweight and not deserving of a Nobel Prize, his textbook is well respected and enunciates classic economic principles and formulae well. It is suggested that that laudatory reportage and praise from the left wing faculty when he became an early adherent of some mildly leftists economic theory, at a time when economists were still capitalists so pleased him that it led to ever more bizarre leftist thought in search of more praise..
Andrew says:
Krugman has also very seriously implied that natural disasters are good for the economy:
http://spectator.org/archives/2012/05/23/a-tsunami-of-bad-economics
Presumably Krugman, since he believes in CAGW, also prays that we will have more CAGW, since it supposedly causes all manner of disasters, and disasters are supposedly good for the economy.
Krugman has a point. The Black Death wiped out at least a third of the British population (and that of most other European countries too). Afterwards, there was a shortage of labour and the big landowners were obliged to treat the peasants better and pay them more for their work. Therefore the living conditions of most of the ordinary people who were lucky enough to survive the epidemic improved.
World War II did great damage to the economies of most of the countries involved including some of the victors such as the Soviet Union and Great Britain (despite many British advances in technology during the War) but the United States ended the War richer than it entered it. Even before the United States entered the War its economy was being dragged out of the Depression by orders for Britain, e.g. under the lend/lease program.
Nobody would say that the Black Death was a good thing or that World War II was either. But that does not mean that they did not have some benefits for some people.
During the Great Depression Keynes said that the economy could be helped by paying people to dig holes and then fill them in again. He was perfectly serious, but that does not mean that he actually wanted the British government to pay people to dig holes and fill them in. He knew perfectly well that there were far more useful things for the government to spend money on. Roosevelt realised that too and had a certain amount of success with infrastructure projects such as those undertaken by the Tennessee Valley Authority. Adolf Hitler was a lot more successful in ending mass unemployment with his rearmament programme, although tackling unemployment was not his main motive.
When Krugman talks about Alien invasions I think he is simply making sure that he will get his point across – just like Keynes did with his proposal for paying people to dig holes and fill them in again. You may not agree with him, but that is no excuse for misunderstanding him.
Nobody in Britain ever puts /sarc/ after a sarcastic comment. We assume that readers are intelligent enough to recognise sarcasm when they see it, although we do realise that people who are not native speakers of English, including Americans /sarc/, might not get the point! The same goes for irony. However there is a widespread view in Britain that most Americans, with the possible exception of New Yorkers, do not understand irony. The attacks on Krugman, not for his arguments but for the way he makes them, suggest that is true.
“Fake aliens to scare us into creating a world government” is the plot of the short-story “The Martian Shop” by the writer (and Communist Party USA member) Howard Fast, who is best-known for writing “Spartacus”.
Spending money just to spend money has never worked to permanently stimulate the economy. The spending of the New Deal helped to alleviate the Great Depression, but was only marginally successful and was followed immediately by another recession. Even the spending on WWII, which broke the recession of 1937, was followed by a recession when the spending stopped again.
We are spending at an unsustainable rate now, but predictably, it isn’t working. Krugman wants to spend more (he really doesn’t care on what), which will not work and will result in calls for even more spending. Maybe Krugman would benefit from learning something about system response to step changes in input.
We have mortgaged our grand children’s futures already, and he wants to make it worse, ensuring that the economy collapses totally. He really is insane. He likely thinks like Nancy Pelosi that every dollar spent by government returns $1.50 in taxes, so why worry.
His call for a false report of a space-alien threat is a parallel to the warmists’ false reports of CAGW. They are really no different. Both are based on the use of fear mongering rather than logic. Was he serious? Perhaps he was tongue-in-cheek when advocating the use of a space-alien scare, but he was serious when he called for mindless spending on pointless projects. He doesn’t care what tactic is used to achieve the end. Spending on projects that we need, for example replacing major infrastructure and power distribution systems, would make some sense. High Speed Rail is probably sexier in the eye of a liberal.
Gary Hladik says:
May 27, 2012 at 12:51 pm
Dr Ken Pollock says (May 27, 2012 at 12:13 pm): ‘This is the basic premise of “Report from Iron Mountain” thoght to have been written by John Kenneth Galbraith. Invent an alien threat to get the nations to work together.’
Or he’s seen too many movies/TV shows, e.g.
Watchmen 2009: http://www.imdb.com/title/tt0409459/
Outer Limits 1963: http://en.wikipedia.org/wiki/The_Architects_of_Fear
———-
Haven’t they already tried dipping a toe into this scenario? NASA and the Very Angry Aliens who intend to do something about those humans releasing more carbon dioxide and cooking the Earth..
Actually, everything he said here is true. It IS true that if we thought as serious a crisis was in the offing as a space alien invasion–or a world war–then we would prime the pump and End This Depression Now, the way we did when we armed Europe against the Nazis. You guys all need to get a grip.
On the other hand, Krugman’s views on climate change mirror the AGW orthodoxy, which I find terribly disappointing. One really should stay within one’s discipline.
Krugman might just as well align himself with the CAGW clowns–he has all the necessary accoutrements.
Each week I think things can’t get any worse for The Team supporting The Cause, and I’m wrong–it DOES get worse.
Each week I think things can’t get any worse for the current US administration, and I’m AGAIN wrong–it gets worse for them, too.
Two losers; two parallel causes; two dispicable wastes of time, energy and money. It’s pathetic.
Krugman isn’t nuts in the “he believes in aliens” sense. He’s nuts in the “gov should lie to the people” psycho sense. The guy believes that gov has a “moral responsibility” to lie to us in order to do what *he* thinks is the right thing (no matter how many times he and Keynesian-ism have been discredited).
This thinking should sound pretty familiar to the skeptics here at WUWT… It permeates the environmental movement and AGW activists. He (and they) live by the code that the end justifies the means. And yet they fail to see the irony that anyone who believes as they do are people no one should believe in the first place… But they’ll always be around to serve as useful idiots to the Machiavellian schemes of politicians.
Actually, Krugman IS an Alien! He is attempting to destroy us economically so his masters can take over without our being able to fight back. 😉
What you all don’t seem to realize is that the really insane ideas are the austeriry and deficit reduction myths that the Republicans have touted for decades, that they made Obama buy into, and that are swirling Europe down the drain as we speak, likely swirling us along in due course. Krugman is right as rain on the economy, and wrong as can be on climate. That’s the way it is with human beings,… and we all don’t have the same sense of humor either. Relax, everyone. Let’s go chew on Gavin or someone deserving.
REPLY – Better watch out someone doesn’t chew on you. I, for one (as a big gummint liberal), happen to strongly support tax cuts and austerity measures. A tax rate of 100% is too high. A tax rate of 0% is too low. Once you have accepted that, congratulations, you have accepted the principles of Reaganomics, and, as Shaw once put it, we are merely haggling over a price. And you don’t wanna know my opinion regarding Krugman. Suffice it to say that intelligent opinions differ. But this is not an economics blog, so let’s just stick to talkin’ ’bout the weather. ~ Evan
Elliot says:
“As for high speed rail America really needs to build this in places where it makes sense.”
It makes no sense anywhere.
There is already an infrastructure in place: airlines. The High Speed Rail [HSR] boondoggle proposes laying tracks costing well over $100 BILLION to connect San Francisco to Sacramento to L.A. and San Diego. The project will never pay for itself; taxpayer-funded operating subsidies will always be necessary, forever. Property tax-paying land will be converted to government-owned land, thus eliminating that tax income. And the government always lies thru it’s teeth regarding ridership projections.
“High speed” rail is projected to take 3.5 – 5 hours to travel from S.F. to San Diego. But I can fly from S.F. to San Diego in just over an hour, for a little over a hundred dollars. The airline infrastructure is already in place, and it is very efficient. Krugman is just shilling for politicians and the self-serving unions that vote for them. Between buses, airlines, and existing trains, there is plenty of capacity. Indebting an overspending, profligate state $100,000,000 more, for something completely unnecessary, is the same kind of irresponsible thinking that has caused our current budget problems.
hewhotypes says:
“Rail takes decades for ROI, so government help makes some sense. The US government helped the railroads way back when, and helped the airlines and the auto companies (the national highways) in the middle of the 20th century. It builds the economy. Current interest rates are near zero, so borrowing is affordable. In fact, if you have something really useful to build, it’s almost crazy not to borrow at 0% and build it.”
HSR makes zero sense, and it would harm the economy. The state and the country would be much worse off with government HSR. Read this short description of Bastiat’s Broken Window Fallacy, and you will understand the problem. We see the proposed HSR. But it is what we do not see that will cause huge economic problems.
Typical keynesian drivel. I’m surprised, after the keynesian model has been REPEATEDLY shown to be a failure (especially 70’s stagflation), why it won’t die. A few fallacies demonstrated here: First of all, it’s not *consumption* that drives the economy it is *production*. Savings and investment come first, not spending. Another, is that the great depression ended when we began arms build up during WWII. By all metrics *except for employment*, the depression became WORSE during the war, and didn’t get better until around 1946, when the gov’t implemented policies that promoted savings and investment…which of course the keynesians cried that it would become a disaster, and actually turned out the opposite. Added on the improper use of the physical scientific method to a social science. I can’t wait til keynesianism dies.
Hey, is he suggesting that scientists could be PAID, to CREATE a scare..
how rude !!
Could never happen !!
/s
GoodBusiness says:
Keynesian theory has never worked one time – it extended the Great depression under FDR and we are still paying for people to be on the dole of government employment doing little or nothing.
Keynes was in charge of British economic policy during World War II. Thanks to his policies the British government was able to raise enormous sums of money at a much lower rate of interest than in World War I. Britain was practically bankrupt after World War II but that did not matter. It was a war of survival and without Keynes the total financial commitment Britain made would have been smaller. Thus he had more influence on the outcome of the war than any other economist or civil servant.
Keynes also had a major say in the Bretton Woods agreement in 1944 which gave the world two and a half decades of stability in which the global economy thrived, in marked contrast to the period between the two world wars. Of course the Bretton Woods agreement wasn’t perfect and it eventually broke down, but perhaps some of the problems with it could have been avoided if some of the proposals put forward by Keynes had not been blocked by the Americans.
He was a complex character and you can find contradictory things in his works. That is not surprising because the economic situation is constantly changing and what it the right policy at one time might not be the right policy at another time. The detractors of Keynes frequently fail to understand him – unfortunately his supporters are often equally ignorant!
But you already have the Afghanistan conflict for useless spending. You didn’t even have to invent the Taliban.
Next time the NYT bemoans the high cost of Afghanistan forces, tell’em it’s Krugmannian spending.
It seems to me truth telling is the number one element that will allows societies and the human condition to truly progress forward. Echoing someone else’s comment, should we even listen to people who tell lies? The left does it (ends justify the means), Islam does it to infidels (taqiyya), too much of the corporate world does it (under the shield of advertising), and as a result it is infecting our younger generations as acceptable. Sure lying is part of the human condition but must it become so institutionalized?
Perhaps it has always been as extensive as now and this is just the 1st time in human history when the magnitude is being revealed and shared more widely through Gore’s www invention.
Here’s the way I understand Krugman’s statement. He firmly believes in government spending to save the economy. Now since the government has no money, it all has to come from the taxpayer. So what Krugman wants looks suspiciously like the CAGW swindle: Get a group of allegedly highly intelligent “scientists” to state that there is a serious problem coming our way, and the only way out is to start some huge and hugely expensive project that can only be accomplished by the government using taxpayer’s money and employing taxpayers. The approaching disaster could be anything… global climate disruption, Borg invasion, mass halitosis, whatever. The future disaster doesn’t matter, as long as the experts proclaim it so, and the gullible media spreads the word, and our elected superiors do what they “must”.
The problem is, of course that this simply moves money to less productive uses and to those riding the gravy train. Eventually people see this, realize that they are being fed lies and are having their money ripped from their pockets. That never ends well.
Too much hot air here. He was obviously making a point without being completely serious about the aliens.
You are all missing the most telling message in his statement: He’s not suggesting that the Air Force lie, or that the government lie; he’s suggesting that SCIENTISTS should be the ones who lie. Krugman sees scientists as the most willing liars.
Barefoot boy from Brooklyn says:
May 27, 2012 at 2:06 pm
What you all don’t seem to realize is that the really insane ideas are the austeriry and deficit reduction myths that the Republicans have touted for decades, that they made Obama buy into, and that are swirling Europe down the drain as we speak, likely swirling us along in due course. Krugman is right as rain on the economy, and wrong as can be on climate. That’s the way it is with human beings,… and we all don’t have the same sense of humor either. Relax, everyone. Let’s go chew on Gavin or someone deserving.
===================================================
Holy Crap!! There has been no austerity in the U.S……. or did you not notice the unparallelled growth in our debt in the last 3 1/2 years?
Europe isn’t going down the drain because they quit spending. They quit spending because there is no more capital to spend. What part of “debt payments” is hard to understand? The thought that government can run an economy is exactly why Greece is in such peril. They tried to spend their way out of trouble and now they can’t meet their debt payments. It wasn’t their reluctant cuts in spending which put them there. It was unrestrained borrowing and spending that got them to where they are today.
To the other people saying WWII got us out of the depression, sure, it played a part. But don’t we see that we’re in a war at this very moment? Yeh, wow, look at our economy go! The idea that if we just printed and spent more money that we’d be okay is absurd. The U.S. has been doing that for many years now, and we haven’t decreased it, we’ve increased it by a lot in these recent years.
I’m looking forward to the dreaded space alien menace threat being used to whoop us into line, I’m really over the AGW rubbish and It’s believers. The science of space aliens could be even more ridiculous than inferno Earth from beer bubbles. Is such a thing even possible? yes it is.
Beam me up, Scotty…..no really, beam me up please…there’s no intelligent life down here!
Well, calling on imaginary threats from extra-terrestrials has worked really well for religion: why shouldn’t it do the same for science?
Mario martini says:
May 27, 2012 at 2:21 pm
“Too much hot air here. He was obviously making a point without being completely serious about the aliens.”
America incarcerates a higher proportion of its population than any other Western country. This costs enormous amounts of money. Does Krugman think that this is a boon to the economy?
Could one of the Keynesian commenters tell me about the position Krugman has about this?
The theme of alien invasion has been raised before, on a number of occasions, both by (retired) Gen. Douglas MacArthur in the 50s and 60s, and again by President Ronald Reagan in the mid/late 80s, in the context of uniting humanity.
AnotherPhilC says:
May 27, 2012 at 12:59 pm
“So when Keynesian economics fail, it’s always because it’s imperfectly implemented? Rather like Marxism then?”
If Keynesian economics fails then we are all up sh*t creek without a paddle 😮
Currently we only have two tested forms of economics Neoclassical (which is what 99% of all current economists are including Krugman) or Keynesianism, we know from past situations that Keynesianism works in the current situation, however it hits the rich and market speculation (it is better for the poor and the average man as it creates employment). The mess we currently have is a result of 40 years of Neoclassical economics which removed constraints to what banks could do (just like in the 1920’s).
Keynesian economics isn’t perfect (it doesn’t work when you have stagflation), however it is the best we have for the current situation. The only reason the west escaped the 1930’s depression ultimately was due to WWII, and that was a classic Keynesian expansion (we expanded because we had too).
What many people putting down Keynesianism are forgetting the massive expansion of the US in the 1950’s and 60’s which was down to following Keynesian economics, if Neoclassical economics had been in place the USSR would have been first to the Moon!!!!
Why did we never get out of earth orbit for the last 40 years? Because we have had a neoclassical system in place.
Keynes was once asked why his economics was based only on the short term benefit and his answer was “In the long term we are all dead!”
No country currently is implementing pure Keynesianism and that is why it isn’t working, it is like only taking half a dose of antibiotics it won’t cure you and you’ll not get any better, taking the full dose will not be good for the wealthy (who are those in power) so we are fiddling while Rome burns. If they really go for it then we know from history that things will get sorted out, however the rich will be worse off.
However to quote another great economist “It is easier for a camel to pass through the eye of a needle than a rich man to enter the kingdom of heaven” and “go sell everything you own and give it to the poor and come follow me” by some commentators views here he was probably an extreme communist 😉
“Now since the government has no money, it all has to come from the taxpayer.”
Try to at least get your facts right
The US Govt is Monetary sovereign (google it) so has unlimited money and does not have to get money from taxpayers.
Which is what the US Govt is currently doing. It spends using Fed reserves (created by a journal entry) and then drains the Fed reserves using either bonds or tax
So the spending comes first and the tax or bonds second
Roy says:
May 27, 2012 at 2:16 pm
“He was a complex character and you can find contradictory things in his works. That is not surprising because the economic situation is constantly changing and what it the right policy at one time might not be the right policy at another time. The detractors of Keynes frequently fail to understand him – unfortunately his supporters are often equally ignorant!”
Hayek said the same thing in an interview; he knew Keynes. So we don’t know what Keynes would propose today. But “Keynesianism” has a fixed meaning now, whether you like it or not.
Don’t forget that Krugman believes that he is more intelligent than the rest of us, and deserves to be our overlord.
“Keynes was in charge of British economic policy during World War II. Thanks to his policies the British government was able to raise enormous sums of money at a much lower rate of interest than in World War I. Britain was practically bankrupt after World War II but that did not matter”
Agree. But the world is a very different place today. No gold standard and floating currencies means that the restrictions on Govt (running out of money) with their own central bank but forced to settle in gold if required no longer exist. So Govt’s like the UK and US can spend without limit. The danger is inflation or a depreciating currency.
The US and UK can never out of money. This has applied since the gold standard was removed around 1972. (even though many economists still have not caught up with this significant change yet).
Barefoot boy from Brooklyn says:
May 27, 2012 at 2:06 pm
“What you all don’t seem to realize is that the really insane ideas are the austeriry and deficit reduction myths that the Republicans have touted for decades, that they made Obama buy into, and that are swirling Europe down the drain as we speak, likely swirling us along in due course.”
Barefoot Boy From Brooklyn, the southern European countries don’t actually do austerity. Instead they have all proposed a “mixed approach” of tax increases and government spending cuts, of which the tax increases came to pass while the spending cuts largely stay promises. Greece has promised for 3 years now to privatize their many state-owned companies and not one has been privatized. Their biggest private company is still Hellenic Bottling as far as I know, the local Coke licensee. Railways? public. Airports? public. Athens harbour? public etc etc etc.
Of course, when you increase taxes while keeping your public sector spending, you slaughter the private sector by draining the spending power and that’s where the enormous unemployment comes from.
DirkH says:
May 27, 2012 at 2:31 pm
“Could one of the Keynesian commenters tell me about the position Krugman has about this?”
As I pointed out earlier Krugman is not a Keynesian he is a neo-classicist stealing some of Keynes’s ideas.
I am not defending Krugman 😮
Krugman is basically endorsing the same policy toward government spending that the left argues Bush 43 and co. embraced regarding Iraqi WMDs.
Tell any story that furthers your agenda.
Europe isn’t going down the drain because they quit spending. They quit spending because there is no more capital to spend.
No more MONEY to spend? This is true for the Euro countries as they have given up their own currency. An act of foolishness that is likely without equal in the last 100 years.
But not true for non Euro countries.
DirkH says:
“… ‘Keynesianism’ has a fixed meaning now, whether you like it or not.”
Dirk is correct, unfortunately. J.M. Keynes was much more complex than is suggested by the throwaway line, “Keynesianism.” And his policies were always followed — half way. His stimulus spending has been embraced by every kind of politician, but when it came to spending cuts and saving for a rainy day, well, we’re still waiting to see that.☹
DirkH says:
May 27, 2012 at 2:39 pm
“Hayek said the same thing in an interview; he knew Keynes. So we don’t know what Keynes would propose today. But “Keynesianism” has a fixed meaning now, whether you like it or not.”
True enough but the fixed meaning is what the neo-classicists interpret Keynes as saying, however if you read his works you see it diverges from the modern interpretation.
The people who currently teach economics in all universities are neo-classicists so everything is seen through the neo-classical view point.
byz says:
May 27, 2012 at 2:53 pm
“As I pointed out earlier Krugman is not a Keynesian he is a neo-classicist stealing some of Keynes’s ideas.
I am not defending Krugman :o”
This deflection tactic has a name:
http://www.logicalfallacies.info/presumption/no-true-scotsman/
Again: Could one of the Keynesians on board tell me what Krugman has to say about the Afghanistan conflict and the prison population? Bait, bait!
Many “pheasant pluckers” turn out to be “nucking futz”. “ducking the fog” explains it all.
The problem with Krugman’s proposal (ok there’s a whole bunch of problems — this is only my favourite): “Scientists” who scream that the sky is falling and therefore a whole bunch of new government policy must be implemented, stat! … no longer have any credibility. Not even among “true believers”. He’s never read the story about the Boy Who Cried Wolf, apparently.
In a certain sense Krugman’s plan has ALREADY been implemented (substitute global meltdown for alien invasion). And look at the financial mess it has caused.
Europe is in trouble as no-one enforced the rules of being in a single currency and why is this…
Because Germany broke them first!!
Good news.
The AGW lie doesn’t work anymore. They need a new one.
Aliens sound reasonable too.
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” — H.L. Mencken
‘Nuff said.
Sorry for the fropanities and eph-words ▲
Maus,
Here’s another Mencken gem:
“The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time it is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods.”
Good, no? Keep it in mind during the next election cycle.☺
As with all rabid leftists, the end justifies the means. What they fail to grasp is that a lot of us don’t like their ‘end’ to begin with so there’s absolutely no reason to ‘justify’ it to us.
DirkH
stop trolling!!
I am being straight over this and not diverting, I have read his works and Keynes’s works and they do not agree.
As to the prison population they are like having someone unemployed, it would be better to have them doing useful work, than being locked in their cells 23 hours a day.
Afganistan is down to you not spending money on intelligence and defence in the first place, the US had been warned about those involved in 9/11 and didn’t act on it, you then paid the price. Just like the powers before WWII were warned about Germany and failed to act. This has nothing to do with economics just incompetence. I flew around the US in 2004 and was shocked how awful security was around internal flights, anyone could have put anything on a plane.
I don’t know if this is a repeat, but Krugman did this last year.
http://mises.org/daily/5559/Keynes-and-Space-Aliens
Come on people let’s turn on our sense of humor again.
Krugman believes in massive government spending to kick-start the economy.
He makes an analogy with the Depression and WWII. And he is trying to be funny: “Let’s say aliens are invading and we need high-speed rail to combat them. That way government spending will start up the economy again.”
I am a huge fan of this blog and I rarely agree with Paul Krugman, but putting a humorless spin on this and acting really indignant, makes you look like a humorless fool.
Should he repeat this joke a hundred times more; it still doesn’t make it a serious proposal.
———————
Now here is some serious news about aliens:
Ridley Scott is preparing a prequel to Alien !!!
http://www.alienprequelnews.com/2011/12/ridley-scott-alien-felt-epic-but-this.html
Mike M says:
May 27, 2012 at 3:13 pm
As with all rabid leftists, the end justifies the means. What they fail to grasp is that a lot of us don’t like their ‘end’ to begin with so there’s absolutely no reason to ‘justify’ it to us.
“Anything is acceptable if it leads to a successful result.” First use in the United States: “Diary” (1657) by Michael Wigglesworth (1631-1705), American clergyman and poet.
🙂
Based upon this quote from Krugman:
But the evidence tells a different, much more ominous story. While several factors have contributed to soaring food prices, what really stands out is the extent to which severe weather events have disrupted agricultural production. And these severe weather events are exactly the kind of thing we’d expect to see as rising concentrations of greenhouse gases change our climate — which means that the current food price surge may be just the beginning.
==================================
Rising food prices in the USA and as a net exporter in the world market could be tied to the US govt. desire / mandate to burn agricultural crops. Simple concept is to chose a favorite for burning (corn). Government mandate to burn and subsidize its burning. Other agricultural resources such as wheat, oats, etc. are reduced in acreage planted to meet burning mandates. Food sources using these agricultural grains as feedstock (beef, poultry, eggs, etc) skyrocket. Food sources using agricultural grains of all sources (bread, cereal, etc) skyrocket. Vehicles utilized for burning these crops (corn) use more fossil fuel through conversion and reduced fuel mileage. It has been a very expensive and failed model. Who could have believed it possible?
Toss in “cash for clunkers” to remove affordable used vehicles from the market by those needing affordable transportation while at the same time crushing the markets (auto parts and repair shops) that kept them running and the independent dealers that sold them.
Toss in western energy policies and well ….. you get the idea.
There are many such economists in the nucking futz camp. The ones who bought into these BS ideas are also nucking futz. Who could have possibly believed it possible?
byz: “The people who currently teach economics in all universities are neo-classicists so everything is seen through the neo-classical view point.”
Well that all depends on how much of a stickler we want to be. For certainly numerous people state ‘Keyesian’ when they mean ‘neo-Keynesian’. And if we wish to play the pedant then is is surely wrong to mix and match the two.
That said, if we wish to play pedant, ‘neoclassical’ refers to micro-economics while Krugman is speaking of macro. In which case your entire line of argument is simply wrong. But then, of course, many folks say ‘neoclassical’ when they mean ‘neoclassical synthesis’. The latter being quite obviously what you intend given the context of your above quote. But then the neoclassical synthesis is neoclassical for micro and neo-Keyensian for the maco. In which case you’re still wrong.
All told though it’s nice to see that someone has any interest or knowledge in what Keynes held and what other folks did to his corpse.
“But look, I mean, whatever it takes because right now we need somebody to spend, and that somebody has to be the U.S. government.”
============================
Where does one even start, when a statement such as this is uttered.
A Noam Chomsky wannabe, obviously.
In true “crazy blue protesting lady” style.
As if there are no real problems that we could mobilize people to invest in solving…..Paul, have you ever heard of malaria? HIV? Illiteracy? Women’s oppression? Poverty (particularly as it could be defined as lack of access to technology)? Hell, even obesity?
While I think Krugman is right that people will be more inclined to invest in defense against invasion than any of those causes, it’s still pretty ridiculous to suggest we need to make up a major problem, as if there aren’t real ones.
It’s an interesting controversy this one. I may be wrong, but didn’t the US build it’s way out of the 1920s recession by constructing the interstate.
The problem is that Obama seems to want to increase borrowing to cover debt payments without any recovery plan. Not that high speed rail is necessarily the answer, but some sort of plan to get folks back to work and build for the future economy is needed. If you don’t want to spend more money, just reduce grants on loony global warming research.
I saw the video and I thought he was exaggerating a tad, but he clearly is obsessed about the government spending more money. It’s better to spend the money on “energy saving” things such as the High Cost Rail than hostpitals or bridges, or other useless tat like that. He does clearly also advocate a comprehensive and deliberately dishonest propaganda campaign to achieve his goals.
Goldie,
The US Interstate system was built starting with the Eisenhower Administration in the 1950’s.
Much is revealed about Keynes’s intentions by reading the foreword to the 1936 German edition of the “General Theory”…
“The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire. This is one of the reasons that justifies the fact that I call my theory a general theory. Since it is based on fewer hypotheses than the orthodox theory, it can accommodate itself all the easier to a wider field of varying conditions.
Although I have, after all, worked it out with a view to the conditions prevailing in the Anglo-Saxon countries where a large degree of laissez-faire still prevails, nevertheless it remains applicable to situations in which state management is more pronounced. For the theory of psychological laws which bring consumption and saving into relationship with each other, the influence of loan expenditures on prices, and real wages, the role played by the rate of interest — all these basic ideas also remain under such conditions necessary parts of our plan of thought.” …
“7 September 1936
J.M. Keynes”
http://mises.org/daily/3693
Essentially Keynes promotes the totalitarian, or at least the fascist, state – he advocates the state control of markets and of the means of production.
Argh! he must have watched the Australian Greens politician Bob Brown, giving his “inspired” Hobart, Tasmania, speech on Aliens watching us. Maybe he will follow bob’s example and gracefully retire one step ahead of the aliens……..
Apparently Krugman is not smart enough to notice that the US government is already spending more than any government ever has in the history of the world and it isn’t helping. How much more must the government spend before Krugman realizes his folly? Draining money from the private sector to fuel excess government spending for wasteful projects like Solyndra and high-speed rail-to-nowhere is exactly what has kept us in recession for so long. FDR prolonged the Great Depression with his government programs and excess spending. It wasn’t until World War II forced him to take his boot off the necks of the private sector and loosen government regulations that the country finally came out of the depression.
Fareed Zakariah interviewing Paul Krugman and Kenneth Rogoff about the efficacy of Keensian economics… My, what a happy confluence!
Oh, come on, Dude. I saw this on Bill Maher the other night, and he was so obviously joking, this whole post makes me think you must be joking to put it up here. I mean, seriously? Have you been so wrapped up in these climate wars you’ve lost all sense of humor? I suggest some whacky tobaccy and an evening of cartoons.
Bill Maher is a comedy show where he and all his guests are encouraged to make up ridiculous jokes and examples to make their points with humor. That’s all Krugman did. The point was serious, of course, in the sense that some massive public works project like fighting WWII (or aliens for that matter) would very quickly get everyone back to work and end the recession/depression. He just chose a ridiculous example so as to make it funny also. It’s not Meet the Press.
REPLY: I’d agree with you, except he’s said this before. See the second video interview from August 2011. He’s a regular on programs like this and knows enough about how media works to have the good sense to put in a caveat if he was in fact joking. He’s dead serious. – Anthony
“Anything is acceptable if it leads to a successful result.”
Wrong is wrong, even from a poet and clergyman.
Take an ethics class while you can… better yet, learn from one…
I’d have said “Keynesian” had my spelling been more keen.
“”””” Ian Weiss says:
May 27, 2012 at 3:53 pm
As if there are no real problems that we could mobilize people to invest in solving…..Paul, have you ever heard of malaria? I believe the malaria problem was solved 70-80 years ago; the solution was known as DDT. Then Rachel Carson wrote her sky is falling book, and malaria became an aceptable disease again. We still know how to make DDT.
As for HIV, it is spread by people with the disease (whoever heard of that concept). The solution is to quarantine everybody who doesn’t have the disease, so they don’t catch it.
In fairness to Keynes, he never advocated entrenching fiscal debt through entitlement programs and getting in debt up to your eyeballs and then trying to spend your way out of it. Agree with him or not, he was not a fool. Counter-cyclical economics means saving in the good years (ie running budget surpluses) and spending in the bad years (which may involve some temporary, non-structural debt).
The trouble is, politicians have used the national credit card to buy votes, ie they never did the saving in good years bit. Trying to spend your way out of bankrupcy is obviously a lunatic solution. The so-called ‘austerity’ measures in Europe and the UK aren’t even attacking the debt principal – they are just slowing down the rate of increase.
They are behaving like gambling addicts in serious denial, and it will end badly.
I have not commented to US economics because there are lots of people here better placed to do so than me, but my feeling is that if politicians have the guts to bite the bullet on public debt, the resilience and ingenuity that has powered the country’s economy for the last 100 years will enable it to bounce back after a few years of serious belt-tightening. Europe is so bound up with regulations and subsidies that recovery is a much longer, harder road for them.
“…we have to get a bunch of scientists to tell us that we’re facing a threatened alien invasion, and in order to be prepared for that alien invasion we have to do things like build high-speed rail.”
We’ve already had the alien invasion, and we’re going to expel them this coming November.
High speed rail to Paris or Amsterdam would be worthwhile, but I can’t think of any place around Houston I’d like to get to fast.
Also, your absurd point (given to similar comments above) that unless he gives cavaets that he’s joking, we are supposed to take him seriously, fails to take into account that Maher’s show is a comedy show. You might as well say that unless Steven Colbert inserts a cavaet at the end of each of his bits, we should presume he’s dead serious. Have you really no sense of humor anymore? The seriousness with which you are now defending yourself is not a good sign. I mean, honestly, get a grip. You may not agree with Krugman’s Keynsian economics, but give him credit for coming up with a funny way of expressing his point. I certainly laughed when I heard it. Now, maybe you’re just not familiar with Maher’s show. Maybe you think it’s some kind of PBS News Hour Interview panel. Or maybe you’re just losing any ability to find an even keel in the midst of these culture wars. But let’s be clear, you’re just plain wrong, and also wrong to expect that Krugman has to insert a cavaet here. I mean, any reasonable person with a sense of humor knows Krugman was joking. Everyone in the room with me watching knew he was joking. If you need cavaets, that’s not a good sign, my friend. Love your website and work here, but you clearly need to get some rest and a fresh perspective.
Krugman is a crazy bastard. It was a tongue in cheek comment but but for an economist to believe the tripe he spews he’d have to be completely insane.
“If he had left the comment at that, I’d agree with you, but he added this without saying “I’m joking” or “That’s silly but…””
That’s your rule, Anthony. Not anyone else’s. When you speak about aliens, it’s pretty much guaranteed to be sarcasm unless you’re Giorgio A. Tsoukalos. Krugman even mentioned directly the faking of a crisis to get more government spending. That’s what he’s after regardless of the means. He’s willing to lie to the people in order to bring about what he thinks is a better future even though he’s completely wrong of course. George W. Bush even mentioned this exact scenario about “world peace”.
So Krugman is not serious on the alien thing, but he is serious about faking a crisis to get more government spending.
Goldie says:
May 27, 2012 at 3:53 pm
It’s an interesting controversy this one. I may be wrong, but didn’t the US build it’s way out of the 1920s recession by constructing the interstate.
============
It seems your history is mixed up.
Anybody that has ever attacked U.S. soil, has never been seen on the battlefield again.
condrag,
Once, maybe it’s a joke. But Krugman has been on his ‘aliens’ theme for too long. As Stark wrote upthread, Krugman “…obviously does believe in aliens, and he wants you to believe as well, but he can’t bring himself to mention them, unless he can (clumsily) pass it off as a joke when somebody calls him on his crap.”
Again, in reply to my first post, he’s joking. That he’s told this particular absurd example before doesn’t mean he isn’t still joking. He’s using a joke to make a point about economics, at least what he believes to be true, that massive government spending will indeed cure a depression caused by a lack of demand. That’s the serious part of his argument. The joke part of it is that to get that stimulus you would lie to the people and invent an alien invasion to justify it.
And let’s be clear: every economist agrees that it was the massive government spending on WWII that ended the depression. He’s quite right there. Whether it would do the trick again under present circumstances is a different question, and he could be wrong there. (I don’t think he is).
People used humor to make points like this all the time. Your own websites uses such jokes. You’ve even written whole posts tongue in cheek to make such points. And really, if Krugman were actually serious about this alien invasion proposal, don’t you think he just ruined the plan?
I don’t know if Krugman actually believes in aliens, but I do know that a lot of scientists do. Carl Sagan does. Millions have been spent on SETI. It’s not a crackpot idea, even if Krugman does believe in them. Hell, I half do myself. The mathematical odds of us being alone in the universe are vanishingly small. Nonetheless, the idea is part of our culture as a kind of running half-joke. We make blockbuster movies about this subject every other year or so. No one takes it seriously serious except for crackpots. And I think Krugman was quite obviously using the notion of an alien invasion in that cultural context. It’s certainly true that if one of those movie scenarios actually happened, we definitely would gear up the economy to a wartime level of full employment almost instantly. But we also know to treat the context as a fantasy. I guess if you live in a black underground survival bunker and have never read science fiction or watched these movies or watched a modern comedy show, Krugman might be taken seriously. Kind of like Orson Welles’ audience back in 1938. These days, if people tried to announce an alien invasion, it would be assumed to be a joke, and it would take a long time to convince anyone that it was real.
“Nucking-Futs” is a new expression to me but I will treasure it and apply it to all future similar outbreaks. Perhaps they could store him in the basement of Fort Knox so that he can see how low reserves have got. If it wasn’t all so dangerous it would be laughable.
byz says:
May 27, 2012 at 2:39 pm
AnotherPhilC says:
May 27, 2012 at 12:59 pm
“So when Keynesian economics fail, it’s always because it’s imperfectly implemented? Rather like Marxism then?”
If Keynesian economics fails then we are all up sh*t creek without a paddle 😮
Currently we only have two tested forms of economics Neoclassical (which is what 99% of all current economists are including Krugman) or Keynesianism, we know from past situations that Keynesianism works in the current situation, however it hits the rich and market speculation (it is better for the poor and the average man as it creates employment). The mess we currently have is a result of 40 years of Neoclassical economics which removed constraints to what banks could do (just like in the 1920′s).
Keynesian economics isn’t perfect (it doesn’t work when you have stagflation), however it is the best we have for the current situation. The only reason the west escaped the 1930′s depression ultimately was due to WWII, and that was a classic Keynesian expansion (we expanded because we had too).
What many people putting down Keynesianism are forgetting the massive expansion of the US in the 1950′s and 60′s which was down to following Keynesian economics, if Neoclassical economics had been in place the USSR would have been first to the Moon!!!!
Why did we never get out of earth orbit for the last 40 years? Because we have had a neoclassical system in place.
———————————-
Sorry, but this is utter nonsense. Keynesianism got us to the Moon?! Seriously?? Sure a lot of government spending went into Apollo but in no way was it dependent upon deficit spending. The fact that we were financing Vietnam at the same time clearly demonstrates just how false that notion is. The US got to the moon first for a variety of reasons. The first is that we had more resources to put into the project. The second is that we got a bigger piece of the German technical team than the Soviets did. And third, let’s not forget just how close the race was. Korolev was no idiot. Fourth, the Russian can still get to space; the US government can’t. Fifth, SpaceX is demonstrating just how pathetically low is the rate of return on government spending on NASA and ULA. Hell, we won’t even get the Orion capsule for what it has cost SpaceX to build a capsule AND TWO lift stacks. That’s the success of your Keynesianism?
And can we stop with the nonsense that says that WWII ended the depression? Please? Wars destroy things. They kill people. Both of those are the very definition of destruction of capital. Wars do NOT fix economies. US debt increased to over 100% of GDP during the war. The only reason that the US did so well afterwards was that it was literally the only industrial economy left standing. The UK had never truly recovered from WWI and had already begun its decline before WWII even started. The US had begun to come out of the depression even before the war started in spite of all of the command economy tactics that Roosevelt tried. You can argue all you like about moral and ethical reasons to fund likes like the WPA, but economically it just doesn’t hold water. Note that I do understand the problem of the commons and I do understand the need for some amount of infrastructure spending by the government as a result.
We will be just fine if Keynesian economics fails. In fact, the sooner the better. Many have argued that it already has multiple times. The problem in the West is that we have propped up economies with unsustainable government spending for so long that the hangover is going to be massive. If dot.bomb and housing were bubbles, then government overspending is a hyperbubble. Fundamentally, the world needs to relearn that genuine economic growth comes from individuals exploiting resources in novel ways to improve efficiency and make more widgets for us all. Every time that the government attempts this results in a terrible waste of capital. Solyndra, anyone?
And lest you believe that the West is the only place that has this problem, then I suggest you take a look at China. They pumped in a much bigger stimulus than the US and yet as that has run out so too is their economy cooling. In fact manufacturing has been contracting for months now. Really, the only reason they’re still growing is because the West has propped up their exports and they have some very low hanging fruit for domestic development, i.e. electricity and running water.
Krugmannian neo-Keynesianism is to real Keynesianism what Islam is to Judaism.
So conradg, Krugman says (seriously) that our govenment should lie to us so they can be empowered to do what is best for us and you think the important part is the aliens? Wow, you cannot see the forest for all the trees.
Europe has a much bigger problem: demographics. All the right economic policy in the world won’t save them from that problem.
Unfortunately, Krugman doesn’t joke about government spending. He believes heavy government expenditures on practically any project will help fire up the economy – even if the money comes from borrowing. Debt is good. He is saying here that an alien invasion has the same threat value for political exploitation as global warming. Either (or both) are adequate and useful chimeras to arouse public alarm and create the kind of spending that he wants. Most reasonable people would agree that this is a somewhat cynical view of the citizenry whom he wants to manipulate, although some people appear to appreciate what he is doing.
When he wasn’t appointed by the Obama administration, he embarked on the populist journalistic / blogging path to get his ideas out, though I doubt he is sanguine about any political future for himself at this point – unless it is post-2020.
Randle Dewees says:
May 27, 2012 at 12:06 pm
“The Dire Menace that requires Marshalling all of society’s resources. Pretty tired device. A better menace, and one that could actually happen, is a large comet on a high certainty collision orbit with the Earth. What if “The Consenous” determines that it is technically feasible to mitigate this hazard, but at the cost of all the productive capacity of the world, what happens? The world is saved but now enslaved?”
Randle,
Look for a smaller scale ‘scare’ this fall, to ‘wag the dog’ and rally the nation around Our Dear Leader just before the Nov elections. War with Iran is the most likely possibility, ostensibly to stop the development of nuclear weapons by Imadoinjihad and the Mad Mohammed Mullahs. Leon Panetta is ‘sabre rattling’ even now.
The anemic economy, concern for our irrational public spending and almost insurmountable public debts, and public opinion are all turning against Obama and the democrats. This leaves them with little leverage to sway voters, except a cause celeb to create national unity. If it isn’t Iran, it will be something else.
MtK
conradg (May 27, 2012 at 4:33 pm):
And let’s be clear: every economist agrees that it was the massive government spending on WWII that ended the depression.
That may be the belief of every Keynesian economist, it’s not true of any economist who has read and understood Bastiat.
James Sexton says:
May 27, 2012 at 12:07 pm
“So, what is to be done? It’s simple. We go back to the form of economics which worked. Have government get out of the way and create an environment which spurs economic growth from the private sector. Drilling, mining, industrialization. Of course, you’ll never get a leftists to understand this, much less advocate it.”
Prime Minister Harper of Canada has, so far, steered through the global economic minefield that has been blowing up countries large and small. He did give out cash for infrastructural construction – everything was about to fall down anyway- so it was a good way to give stimulus. But he did that for a measured stretch and then began clamping down on expenditure. To keep things going, he has pulled out all stops on resource development – oil, gas, pipelines, mines… and he has particularly pulled out one particular stop: limiting the endless, overlappingd environmental challenges that hold developments up for years to decades that are raised by unabashedly leftist, anti-industry development activists.
You know, its a funny thing. The lelftists need a conservative government to be in power long enough to straighten out the economy – legislate strikers back to work, move people off perpetual dole into jobs (the pogey its affectionately called by generations of those who live off the largess of the taxpayers), balance budgets, shrink government and create a favorable climate for business. This is the only way that leftists can have the wherewithall to throw money away, bleed business and put the same folks back on the pogey again.
In Europe, they don’t have this luxury. They are all leftists and they have created an untenable (or to use their phrase an “unsustainable”) economic structure. Keynes’s stimulus was for a black-hole economy between two world wars. Even he realized (if his modern day clones like Krugman don’t) that it wasn’t something that could go on forever. When asked (paraphrase) “Yeah but what about the future?” He said, “In the future we will all be dead!” Pretty much all of European economic sense emigrated long ago and they have since been going in circles seeking to work the majic of Keynes. Margaret Thatcher breezed in, cleaned house, sold off coal mines and railways, chopped the fat off the civil service, deregulated and disenfranchised the industry killers and the UK enjoyed an economic boom. Now the so-called conservatives are about as left as Thatcher’s opposition was. The rest of the continent, except for Germany, was already economically moribund in Thatcher’s time.
I’m more than a little concerned about US Keynesian economists. The Nobel guys are using the prize to encourage this kind of self immolation in the US.
Please, when is this ‘WW2 ended the depression’ junk going to die?
You cannot, cannot, grow an economy by sending it’s youth and output off to the other side of the world to be destroyed.
If growing an economy was as simple as inventing a threat, and then blowing up perfectly good equipment and having your young men murdered, why hasn’t Iraq and Afghanistan created a booming economy?
People think that the economy improved during WW2 – which is utter tripe. While some notional gdp growth figures may have improved, in every single way, the living conditions of just about every single person were worse during and immediately after the war than they were prior to the USA entering the war.
Rationing, dramatically increased workforce participation – all these increased production, but in no way did the actual living standards of the people improve.
The reason the US prospered after the war is that it shunned socialism for a couple of decades, kept intact it’s capital stock, and prospered greatly from the Bretton Woods agreement which handed it most of the world’s gold supply and the advantage of having the reserve currency, a position with which it continues to abuse all other nations to this day.
Anyone who thinks you can instantly get prosperity by making tanks and bombs and destroying things needs to get a grip. Iraq/Afghanistan have already gone on much longer than WW2 and have only caused further impoverishment of the US economy. If it’s as simple as blowing things up, then why hasn’t it worked this time? Why didn’t it work in the 1960s and 70s with Vietnam?
As for the Egyptian food riots that led to the toppling of the regime – you can lay the blame squarely at two places :1) biofuels and biofuel subsidies, which made it more profitable to burn food rather than sell it to people to eat and 2) money printing by the Federal reserve, which caused massive inflation, and crushes countries like Egypt that keep a US dollar peg, and which subsidise the cost of wheat and other staples to their population. Revolutions happen when people go hungry and see that they can’t feed their family. What other option do they have?
There has never been a famine or food shortage in a country with a democratic government and a free press. And there never will be. Every single country in the world has comparative advantage in something, and can easily exchange that for food with countries that can produce large surpluses of food.
There was a great ‘Outer Limits’ episode from the early 1960’s
where a group of ‘concerned scientists’ morphed a volunteer
to look weird and put him on some craft which was supposed to
come into DC but instead crashed in a Florida swamp. Krugman
needs to see that episode of Outer Limits.
Government implementation of Keynesian economics (save money in good times, spend the surplus in bad) is flawed anyway. The politicians heard “bzz bzzz bzzz bzzz, spend money bzzz bzzz bzzz “, so they said to themselves “we can spend money, bewdy, everything will be OK and we’ll get re-elected”.
Just why the government should get involved in the business cycle is another matter and it seems to me, given the response lags, to be very easy or nearly impossible not to make things worse. In aircraft piloting it is known as “Pilot induced Oscillation”.
heh- tsk tsk-
you probably know that keynes talked the adam smith line until he found he could get no employment preaching laissez-faire. so, just as did milton friedman and alan greenspan.
(btw- adam smith wrote wealth.of.nations in an attempt to refute the goals of the constitution which was not about liberty at all, but about enforcing collection of gold from the states into central coffers for a lot of fops to play royalty)
here’s a quote from alan the g: ‘there is only one kind of inflation – the printing of currency- and not one man in a million can tell how his pockets were picked’ (maybe not exact, but close enough)
whenever you hear someone talk about ‘price inflation’ or ‘wage inflation’ or especially ‘stagflation’, you can be sure that person has no clue about economics and is repeating something he has heard but is not capable of deciphering. such people require a gang to provide the security of consensus because reason has been rejected for catechism.
keynes ‘contribution’ as witchdoctor to attila was advising that because the nature of manufactured goods is that, once the tooling is amortized and supply has increased, prices fall.
similarly, gold value increases as it trades against a greater supply of values.
keynes proved that you can steal the difference by inflation and call it ‘stabilization of prices’ and pass it off as beneficial to the victims if they happen to notice.
of course, inflation is a game of musical chairs and when the music stops, everybody is left standing with a wheelbarrow full of pulp.
but a nobel prize was awarded for the guy who suggested speeding up the music.
i’ve been hearing npr programming about the evils of ‘hoarding’, lately. this is a bellweather i’ve noticed that has, in the past, signalled that the way was being prepared for nationalization and resource confiscation.
and now they’ve armed the domestic drones.
so even if the cagw schtick loses its audience – it has done fine work neutralizing any effective opposition by distraction. troll power is meant to disrupt rational discourse.
Freddy says:
May 27, 2012 at 12:39 pm
tomjtx is right. Krugman is trying to emphasize his idea that in a liquidity trap (the current US economy)…. Krugman’s ideas are within normative capitalist economics.
He’s serious, knowledgeable and has a Noble Prize in Economics. None of this guarantees he is right, of course….
________________________________
First, the current USA (and world) economic system is not Capitalism. Capitalism is based on the recognition of individual rights, including property rights, where property is privately owned. Wealth is invested to produce more wealth from labor and raw materials. An ever increasing supply of fiat currency has no place in real capitalism.
The system today is a system of fiat currency where banks trade monopoly money created out of pixie dust for our labor and goods. It is systematic theft and fraud, legalized by the governments because they get to borrow “cheap” fiat money and raise the tax rate via inflation.
In other words when you go to a bank for a loan you sign a contract for X years of servitude to the bank in exchange for money printed out of nothing. There is no WEALTH involved on the part of the bank. But that is not the only theft involved. Mises & Gary North explains the rest of it. Mises most distinguished follower, F.A. Hayek, was awarded the Nobel Prize in economics for his work in elaborating Mises’s business cycle theory during the later 1920s and 1930s.
I love high-speed rail (I’m a rail fan), but unfortunately it is just not cost-effective. Infrastructure and ongoing operations in every country require large government (taxpayer) subsidies. I have argued that, since in the USA the Federal Government subsidizes interstate highway construction, airports and the air-traffic control system, conceivably an high-speed rail system might work in some heavily-traveled corridors if government were responsible for the infrastructure and private companies took care of the rolling stock and passenger services, as the airlines do now. But I don’t have any numbers to back up this speculation.
There is a private firm in Italy launching HSR. Let’s see how that works.
/Mr Lynn
“Sure a lot of government spending went into Apollo but in no way was it dependent upon deficit spending.”
The US ran a budget deficit almost every year of the 1960s. So the space program was definitely financed at least in part by deficit spending. The economic boom of the 1960s didn’t arise purely from private sector business growth. Nor did NASA get financing from private industry. It was purely a function of big government centralized planning. Socialism, in other words. Heavens, it must be evil therefore.
REPLY: Reality check Conrad. Explain how you’ll personally be paying back the ~ $138,000 you owe squandered by the US government on deficit spending
byz says:
May 27, 2012 at 3:03 pm
Europe is in trouble as no-one enforced the rules of being in a single currency and why is this…
Because Germany broke them first!!
Considering that Germany is about the only thing productive in the EU (and France, but that may change shortly), that statement is either asinine or a sarcasm barb with out the /sarc tag.
http://i48.tinypic.com/1zlby2b.png
Guys, there’s no form of economics that ever worked. Every single one had massive flaws and problems. There is no utopia, even of the conservative libertarian variety. If they had worked, we would have kept them in place. They didn’t. What we have now is just a continuation of the trial and error method of harnessing human greed. Of course it sucks. Stop dreaming that there’s some Eden in our past, or some Utopia in our future, where economics will just “work”. Try to make the best of what we have, and improve it somehow, without imagining some perfect world exists out there but for the people we don’t like.
“REPLY: Reality check Conrad. Explain how you’ll personally be paying back the $138,000 you owe squandered by the US government on deficit spending”
First, I don’t owe that money, the government does, and so the creditors can’t come after me for it. And frankly, most of the people who are owed that money are not my concern. The debt is a fiction of currency swaps.
And second, the government has no plan to ever pay that money back, as far as I can tell. And yet creditors keep lending it to us. What does that tell you about how real it is? They continue to believe we are good for it, whatever that means. I think it’s fine to encourage that fiction. People lend the government money, they spend it, pay a little bit in interest, and everyone seems happy about it. If they stop lending the money, where are they going to put it? It’s just pieces of paper and electronic blips. It’s not like human labor or material goods.
Nucking Futz, Indeed!
Unfortunately, neither Obama nor Krugmann embrace the Chicago School of Economics and The
Theory of Rational Expectations. Its basic tenets are that (1) markets allocate resources more efficiently than any government, (2) monopolies are created by government’s attempt to regulate an economy (3) governments should avoid trying to manage aggregate demand and, instead, (4) should focus on maintaining a steady and low rate of growth of money supply.
Milton Friedman, a principal contributor to the Chicago School of Economics, passed away in 2006 at age 94. He is quoted as saying “There is no such thing as different schools of economics; There is only good economics or bad economics.” We are paying the price for really bad economics, of which AGW is just one expression. While AGW is not, by any standard, an economic priority, trillions of dollars globally are misdirected by governments into a myriad of AGW money drains as areas of real need and high investment potential go begging.
MtK
The future is here:
http://www.zerohedge.com/news/if-greece-was-california
byz says: @ May 27, 2012 at 12:47 pm
…..The trouble with this is that the banks then horde this money and it never goes into the economy, whereas Keynes said that it was better to pay someone to dig a hole and fill it in again than for them to be unemployed, as if they had money in their pockets they would spend some thus starting a spiral of positive feedback…..
_______________________________________
Keynes was wrong. Most people want to work and want to make money called it greed/self-interest if you want. The 1933 economic crash and the recent economic crash didn’t just happen they were CAUSED, but that is an entire book. see link and link.
USA Today had a very good article that shows why the US economy is stalled.
Jimbo says: May 27, 2012 at 1:13 pm
Jimbo has nailed it here!
Krugman is just the first to admit the main reason for the ‘global warming scare’ is the perceived need for a ‘whole new economy’.
I agree entirely with your summary, except that the recovery of the U.S. economy from the 1929 to 1933 “great contraction” is pretty complex. The economy did manage a sustained recovery from 1933 to 1935 (I don’t know if it was a continuous recovery during this period), but coming off such a low level as it had hit in 1933, one is hard pressed to say whether FDR programs were effective or not (I lean toward not). However, after 1936 the U.S. economy fell into the “depression within a depression”.
Even Morgenthau, FDR’s treasury secretary, admitted the spending was not effective. When the Federal Reserve bank increased reserve requirements in 1936 the economy sputtered, and it didn’t help that FDR was running a war of rhetoric against business and industry and anyone who opposed him. In 1940 FDR realized that he had to cooperate with business and industry, because he needed their cooperation to begin rearmament. The war itself was massive deficit spending; but you are correct, Tsk Tsk, that war destroys assets, and people who view it as economic progress suffer a massive case of “broken window fallacy”.
Perhaps we gained intellectual assets during the war, but by war’s end the consumer/domestic economy was all but worn out, and people spent a lot of money to make the switch from munitions to domestic goods. That I think is how we finally caught up quickly to where we were in 1929. In any case, the story is so complex that one can hardly point to government spending as having done any particular thing.
Krugman may be struggling with the realization he is becoming irrelevant, and his intellectual legacy is evaporating.
His so called “Economic Nobel Prize” was for advances in Free-Trade theory.
However, even by 2007 he had started to realize it didn’t all work quite as simply as he thought it should:
http://www.nytimes.com/2007/12/28/opinion/28krugman.html?_r=1&ex=1356584400&en=502cb187aec80250&ei=5090&partner=rssuserland&emc=rss&oref=slogin
Just a comment about the appropriate role of Government in managing the economy. This is from our experience here in Australia which has performed better than any other country through the crisis, due to over 2 decades of economic reform prior to that from both sides of politics.
Government, working well, acts as an automatic stabiliser for the economic cycle. During the good times, when the economy is booming, governments must run surpluses. They pay down government debt and actually salt money away in things like sovereign wealth funds.
Then during the down times, governments start spending. Some of this is automatic with increased payments to the unemployed, stimulus schemes etc. Some of it happens automatically since government tax revenues drop. They even allow themselves to go substantially into debt during the down time. But they payback the debt during the next boom. Cutting government spending often means sacking government workers. So more unemployed, more people needing unemployment support, and reduced demand in the private sector since all those unemplyed people aren’t spending as much.
The reason often given for cutting government spending during downturns is ‘to get out of the way so business will invest’. But this makes no sense. If you were in business, you wouldn’t invest during a recession when demand is low. You won’t get the return on your investment. You would keep your powder dry and invest when the recovery has happened and demand is growing again. So maintaining and enhancing demand during downtimes is a major role government takes, almost without trying. And private sector activity maintains and enhances demand during the boomtimes.
Running an economy is a partnership between government and the private sector, each balancing the other.
But the key aspect of this, is that governments (and this means every single member of the legislature, not just the Treasury Secretary) must understand their role. And enforce the discipline that says that in the good times, they run surpluses, pay down debt and salt some cash away.
The problems around the world are due to governments not doing their jobs over the past several decades. So when the crash happens, they aren’t cashed up and ready to shoulder their burden during the bad times. It has been lazy government in the US and elsewhere that is a biig part of this mess. Lazy government in letting deficits run during boom times. Lazy government in not putting in place enough controls to ensure that things like sub-prime crises can’t happen. The private sector wont do that. The private sector caused the sub-prime crises for example.
So now we have a full blown crisis because past governments haven’t done their job well and their is nothing in the wallet when we need it most.
But the argument that government should get out of the way and let the private sector just go is also wrong. Then you don’t have the automatic stabiliser. Without governments taking their role, the crashes would be worse. The best economic outcomes come from a creative tension/conflict between government and the private sector. Government lets the private sector run free to a fair extent, but with enough restraint to limit the ‘animal spirits’ of the private sector to try and minimise the booms and busts. Steady as she goes is what a good economy looks like.
So maybe governments are broken. But getting rid of them isn’t the answer. They are an essential part of how the economy works. So the right answer is ‘fix government’. How? Don’t elect those who are ideologically driven. Elect educated people. Elect people from a wide range of backgrounds. Don’t elect people who will give us too much when the shouldn’t. Get changes to the system made so that individual legislators can’t derail the fiscal discipline of the federal budget.; allowing totally unrelated spending items to be tacked onto a bill is a really bad idea. Think about how many different centres of power in the legislature and executive control total spending. Focus on the efficiency of how government does things and the broader impact of how government works on efficiency throughout the economy.
More broadly, start thinking about an ongoing agenda of economic reform throughout the economy, spanning decades, looking at what really makes economies work well, rather than ideological positions about it.
In fact that is the best answer to most problems in life. Take ideology out of it. Completely! Because the central fallacy in ‘ideology thinking’ is that the right answer to something can be found in something as simplistic as an ideology. It can’t. Reality is a lot messier than that and the best answer, those that give the best outcomes for prosperity, human wellbeing, dignity and civility come from finding often equally messy answers that draw a little bit from many sources. Under the simple mantra – what works best.
If America wants to find the answer to its problems, it needs to start with understanding that many of America’s problems are caused directly by the very polarised, ideological nature of American thinking about itself. Left vs Right and all that. And which is RIGHT. Answer. None of them. They all have a little bit of truth in them. If you want to sort out the mess you are in, throw all that in the trash can. All 300+ million of you move towards the Centre and start dealing with the messy business of living in a messy world.
Maybe America is in so much trouble because your ideas about yourselves and what America is are just too simplistic. Noble ideas are usually wrong because they just don’t accept the reality of how messy reality actually is.
A little more on failures of “Krugman’s baby” – re some of the failures of the more extreme of “Free Trade” policies:
http://www.enn.com/agriculture/article/38551
Krugman may be struggling with the realization he is becoming irrelevant, and his intellectual legacy is evaporating. (His so called “Economic Nobel Prize” was for advances in Free-Trade theory. )
Please point to the experiment in which we tried Libertarian, Laissez Faire, open markets, for long enough time to consider the results definitive, found them wanting, and then tried something else. Please point to exactly what didn’t work and how what we tried next improved upon it.
Moreover, you may not think that you’re on the hook for the U.S. National debt, but your children and grandchildren most likely are. Please have a good look at Argentina and Greece for a more complete explanation, but Argentina stiffed the bond holders (2000) and now “she” has trouble borrowing money at favorable rates. So, the Kirchner government is playing at the end game of nationalizing industry. Unless Argentina can finance internally the needed investment to make the economy grow (i.e. provide capital for business and industry) then “she” is on the slow growth path for a long while. In other words not on what you characterize as “…People lend the government money, they spend it, pay a little bit in interest, and everyone seems happy about it….”
Roy says: @ May 27, 2012 at 2:16 pm
…Keynes also had a major say in the Bretton Woods agreement in 1944…..
___________________________________
ERRRrrr I am not sure that is such a great feather in his cap.
Harry Dexter White was a long time US Treasury official and as assistant secretary of the Treasury (1945–46), along with John Maynard Keynes, was the principal architect of the Bretton Woods agreement. Confessed spies and FBI informants Whitaker Chambers and Elizabeth Bentley accused White of having been a Soviet “agent of influence” while in government. The declassified VENONA decrypts of Soviet diplomatic traffic during the 1940s appear to confirm the charges.
Krugman is only suggesting that scientists do what he has been doing for years.
The “Nobel” in Economics is given by Sweden’s central bank Sveriges Riksbank.
So, a privately owned central bank gave Krugman his prize and when he repays them by spouting Bankster nonsense, it should not be a surprise. That we should still take him seriously is the real surprise.
Being not Japanese you can be forgiven for not seeing that government running a budget surplus and spending massively on programs of dubious value, helped maintain a 20+ year-long recession.
Being not an American you can be forgiven for not understanding how U.S. Federal mandates like the Community Reinvestment Act gave banks an incentive to relax loan standards and lend according to political needs–please read “Reckless Endangerment” for the full story. The sub-prime mess in the U.S., at least, is a perfect example of public/private partnership; just as green industry will be. What went on in Europe and Asia to induce their own version of subprime mess is unknown to me.
Australia has weathered the financial crisis because of the world-wide commodities boom. Please come back some years hence when we learn how raising taxes and fees on your mining industry in the face of a decline, most likely, in commodity prices works out…
Also please have a close look at the problems of trying to save money for a rainy day on the scale of national economies. How are most of those “sovereign wealth” funds doing?
conradg says:
May 27, 2012 at 5:37 pm
“Nor did NASA get financing from private industry. It was purely a function of big government centralized planning. Socialism, in other words. Heavens, it must be evil therefore.”
It surely cost you about 5 % of your GDP each year for as long as the Apollo program ran.
conradg says:
May 27, 2012 at 4:17 pm
I can’t speak for your intelligence, but your lack of taste is almost unlimited in this regard.
Bill Maher, Jon Stewart, & Steven Colbert all use precisely the same formula:
“Guys, it’s like this: we need to round up our enemies and put them in camps. Okay, I’m only joking. But seriously, the stuff they’re doing is unbelievably evil and we need to have them barcoded and possibly executed. Yeah, that was a little bit of a joke. Okay, but have you seen this thing they do? That is deserving of death camps, for sure. Haha, no we can’t do that can we?”
Or as Sean Medlock puts it: “Clown Nose on! Clown Nose off!“
i thought that Krugman already has had his desired stimulus to the USA economy and that did not need aliens to appear either for the stimulus to happen. Just some good old fashioned lies and corruption from a cabal of climate warming scientists did the same job.
And it doesn’t seemed to have worked at all in stimulating the economy as any supposed national economic results are in the negative and the benefits of the massive government investments are not even measurable.
.
From the Australian “JoNova’s” site.
“US Government *only* spent $70 billion on climate since 2008”
http://joannenova.com.au/2012/05/us-government-only-spent-70-billion-on-climate-since-2008/
UPDATE: Table 5. Budget Authority for All Reported Climate Change Programs
FY2008 through FY2012
(in millions of nominal dollars)
Department of Agriculture 1,418
Department of Commerce 1,932
Department of Defense 776
Department of Energy 51,824
Department of Health and Human Services 21
Department of the Interior 401
Department of State 422
US Agency for International Development 1,041
Department of Transportation 295
Department of the Treasury 1,112
Environmental Protection Agency 659
NASA 6,764
National Science Foundation 1,704
Smithsonian Institution 34
Totals = 68,574 billion US dollars
[ Official totals in the Table above are given as 68, 402 billion dollars.
There appears to be a discrepancy of 171 million US dollars in the 4 year totals from the Dept of the Interior in the official table above ]
So some 68, 574 billion dollars have been spent on global warming science and CO2 mitigation [ alternative energy ] in the USA alone in the 4 years from 2008 to 2012
Double that for the world at large!
And the results
Scientifically ; status quo with only the poorly funded skeptical scientists advancing the climate knowledge base
Economically; tending towards disastrous particularly in Europe.
Socially; promotion of despair and fear and now a number of rapidly increasing and potentially catastrophic, grossly energy deficient nations and populations with all the consequences that entails towards employment, industry, health and commerce and human welfare.
All of which was and is so totally unnecessary except to those fanatical zealots who will forcibly thrust their radical Gaia ideology and dogma onto the rest of the world if they ever gain power.
Krugman has already had his big scare campaign that was supposedly needed to stimulate economic activity, the results of which are just the opposite to what he claimed would happen
The source for the figures above are from Table 5
; Funding for Federal Climate Change Activities, FY2008 to FY2012
Congressional Research Service; April 26th 2012
http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=91e9fae6-083a-44f6-b47c-33fdac25d6e0
Krugman and much of the world has forgotten that at the start of the current recession, some years ago now, the old Keynesian theories of the 1930’s were adopted vis. “Spend your way out of it.” This was adopted with enthusiasm by many countries. Unfortunately the double dip recession has meant that countries like Greece, Italy and Spain are now unable to service this debt.
byz says:
May 27, 2012 at 3:14 pm
“DirkH
stop trolling!!
I am being straight over this and not diverting, I have read his works and Keynes’s works and they do not agree.
As to the prison population they are like having someone unemployed, it would be better to have them doing useful work, than being locked in their cells 23 hours a day.
Afganistan is down to you not spending money on intelligence and defence in the first place, the US had been warned about those involved in 9/11 and didn’t act on it, you then paid the price.”
I wasn’t trolling. I was asking a polite question. And you have completely misunderstood the question.
First: The prison population. You say they are like unemployed – well, I don’t know what you do with your inmates but here in Germany they need to work if they want to earn money with which they can buy cigarettes – simple work, badly paid, but they are doing something useful – for instance folding leaflets or something like that.
But my question was: Is the COST of your prison system, the money you pay to the wardens etc., a boost to your economy? It should be according to Keynes.
Second: Afghanistan. Again, you misunderstand me entirely. I didn’t ask how you got into that situation or how you could have avoided that. As I was specifically asking for what Keynes would say about it, I was meaning to ask does the COST of the military operations boost your economy?
Sorry if you think I’m trolling. If a Keynesian does not like to be asked about these things, then it is difficult to fathom how a debate about Keynesianism with a Keynesian can be possible. Maybe Keynesians like it better not to be made aware of the contradictions of their belief system.
“Every violation of truth is not only a sort of suicide in the liar, but is a stab at the health of human society.” – Ralph Waldo Emerson
Why does spending money on battling non-existent aliens work to improve the economy but tax breaks to all tax payers does not?
Yes, because conservative supply-side trickle down economics was such a HUGE success. Let’s blame it all on the liberals…
Money is not a real thing, it is always a purely relative measure. If you think it is an absolute physical entity you have no standing to talk about economics in my opinion, and that is where virtually all the criticism of Keynes stems from. Did it not occur to you that this may be the reason why we had a gold standard in the past (until a CONSERVATIVE president dropped it)?
Stick to the science plx. Kthx.
Also, you are saying that you don’t think that this is what the “War on Drugs” and all of these other things are? Making up aliens is far less crazy that the war on drugs, let me assure you. And that isn’t the only thing either…
Kevin Kilty,
Please point to the experiment in which we tried Libertarian, Laissez Faire, open markets, for long enough time to consider the results definitive, found them wanting, and then tried something else. Please point to exactly what didn’t work and how what we tried next improved upon it.
Ah, so you’re operating under the fantasy that there are, indeed, truly workable economic systems out there, that we just haven’t tried yet. Communists still make that claim, that “true communism” hasn’t been tried yet. It’s the “no true Scotsman” fallacy. Well, this one is impossible to refute, and so you are welcome to the fantasy. Just keep in mind that every economic system that has ever actually been tried, has been riddled with errors and problems. I think you should be a bit humbler about things, given that track record. I’m sure there are better systems out there, but the thing about problems is that solving them just creates more problems. And that applies doubly to economics. There’s no end to problems, and no end to people whining about them, and people claiming to have all the answers. It’s that kind of hubris which I thought this site was trying to combat.
As for the US becoming like Greece, that could only happen if the rest of the world is hugely more productive than the US. Greece isn’t in the problem they’re in because of debt, but because of lack of productivity. You seem not to understand that currency is literally relative. It has no value of its own. Where exactly is all that money supposed to go? It’s just paper and electrons, after all. It goes towards production.
A lot of people seem not to understand that the only purpose of money is to maximize productivity. It’s the creation of governments, used to make capital mobile and to ensure that as many people are working productively as possible. If it ceases to perform that function, we have economic collapses. It’s not due to debt, but to a misallocation of capital in inefficient ways. Unemployment is one of the most egregious forms of inefficient productivity, and using money and debt in various fictitious ways to get everyone working is what it’s all for.
And this is the underlying truth behind Krugman’s joke. As an economist, he knows better than most that money and debt is a useful fiction, kind of like inventing a story about aliens invading to get the everyone working again. Deficit spending is very much like that – a useful fiction about fictitious money used to get everyone working again, solving a lack of faith in the system of fictitious currency. Much of economic life involves the suspension of disbelief in various fictitious forms of money and debt so as to get everyone working more productively and taking part in the fruits of that.
Keynsian Economics and CAGW are both failed theories resulting from the same fundamental mistakes: distortion of historical data, basing assumptions on failed models, confusing correlation with causation, a belief system based on dogma rather than evidence, failure to address unintended consequences, argumentum ad populum, argumentum ad verecundiam, political agendas supersedes contrarian evidence, etc.
Eventually, both theories will be thrown on the trash heap of history because they simply don’t work and evidence to the contrary invalidates them.
“The last card they will play will be alien invasion” – Attributed to Werner Von Braun by his assistant (Dr. Carol Rosin) for the last several years of his life.
Glenn Tamblyn
May 27, 2012 at 6:20 pm
###
You appear to be confused by a few things, but mostly about the nature of what is happening in the US, its politics, and the diversity of its citizen’s world view. Not to be insulting, but this is understandable as your only source of data has been predigested to conform to a world-view that you have been trained to have. I really doubt that you can understand a traditional American conservative world-view. I hope I am wrong. I have met many Australians who do understand, but finding that out was difficult due to language. because of the stranglehold on public discourse held by lefties until recently, conservatives have not had much of a chance to develop a common vocabulary.
Any system of thought that puts validity in the “Left-Right” dichotomy is going to be socialist. The dichotomy is a deliberate creation of socialists. The purpose is to severely limit political discussion so that it is always within a Marxist world view. With that, no mater which side “wins” socialism succeeds. Every political ideology that is not lefty, is mapped onto this abstract “right” by academia and the new media. Any characteristic that does not conform and can not be reinterpreted, is ignored and forgotten. That which can be reinterpreted, is then represented (usually with some distortion) as aspects of this “Right”. Then remaining characteristics are in filled, without any supporting evidence. Lack of supporting evidence does not matter because that evidence will be imagined and in remembrance, the imagined and the real become one.
In a very real sense every problem in the US can be laid right at the feet of socialists.
Governments can not fix anything. The more they try, the more they break things, even with good intentions. So even ascribing good intentions, which is quite a stretch when socialists are involved, by the time a government reacts to a trend, the trend has changed and whatever the reaction was is ineffective at best, but more usually damaging.
BTW, a socialist is anyone who believes that society needs to be engineered and it is the roll of government to do that engineering.
One more thing. I am pretty autistic and trying to serialize out complex thoughts is difficult. That is why I tend to limit my input to inanities. I hope what I wrote makes sense, but I fear that I might as well have been writing in Japanese.
“But look, I mean, whatever it takes because right now we need somebody to spend, and that somebody has to be the U.S. government.”
===========
Why? If the government is going to borrow money, why not give it to the people and let them spend it? They will most certainly do a better job than the government.
In effect the government is like your children when they borrow your credit card. They go to the store and buy a bunch of stuff they don’t really need of dubious quality, because it isn’t their money. They don’t care. Heck they might even buy stuff for their friends if you aren’t watching.
However, when the bills come at the end of the month you have to make the payments – while the kids are out partying – laughing at your stupidity.
The US Federal Reserve is NOT owned by the people of the US. It is owned by private bankers. Their interests are not the same as those of the US people. When the US government borrows money from the Federal Reserve, the government isn’t going to pay it back. They are going to spend it and a lot of it they will spend foolishly.
It is you the taxpayer that will have to pay it back. One way of the other.
YIKES!!!
In my post, that “new media” was supposed to be “news media”. It has been “new media” that has provided the remedy!
BTW, any economist (Keynes) that had put faith in their ability to model the effects of government involvement in a economy were fooling them selves because the mathematical tools to do that modeling did not exist until fairly recently. Some early economist were rightly suspicious of the utility of such modeling.
Glenn Tamblyn says:
May 27, 2012 at 6:20 pm
“Maybe America is in so much trouble because your ideas about yourselves and what America is are just too simplistic. Noble ideas are usually wrong because they just don’t accept the reality of how messy reality actually is.”
Glenn,
Our Dear Leader and his socialist supporters have stabilized the economy of the United States of America in an unrelenting recession! Their misguided actions, of inflating the money supply to support incredibly wasteful public sector spending while simultaneously strangling private enterprise job creation with suffocating regulations, are destroying creativity and profits while driving energy costs ever higher. We have coal and oil reserves within the contiguous United States sufficient to meet our energy needs for the next 300 years, yet we can’t tap and develop them because our socialist governments policies and regulations prevent their development!
This is not ‘The Capitalist Regulated American Model’ of our fathers. This is The Ig-Noble Socialist Model of the Neo-European America! Or should I say Nobel Socialist European Model?! It is killing my country. We accept the reality of just how destructive the Ig-Nobel Socialist European Model really is and how incredibly messy and wasteful it is! We are determined to take our country back before Our Dear Leader and his socialist supporters can drive us past the economic tipping point of NO return that Europe finds itself on the precipice of now. We damn well know what works best! We’ve been there….
Glenn, You don’t have to look any further than the economic mess that is the European Union right now, to see the simple truth that socialist ‘noble ideas’ yield an unrecoverable economic mess that leaves destruction and despair nearly everywhere it is embraced. When the economic destruction is sufficient, revolutions, wars, and famines result. With this on the horizon, why would any sane person continue to ‘compromise’? With this on the horizon, why would any sane person advocate more ‘compromise’? Compromise and tolerance are what have brought us to the point of anarchy and destruction. The hard times are here, thanks to ‘compromise’.
Screw ‘compromise’. Compromise has screwed us! No more…..
MtK
Samurai says:
May 27, 2012 at 7:43 pm
“Keynsian Economics and CAGW are both failed theories resulting from the same fundamental mistakes: distortion of historical data, basing assumptions on failed models, confusing correlation with causation, a belief system based on dogma rather than evidence, failure to address unintended consequences, argumentum ad populum, argumentum ad verecundiam, political agendas supersedes contrarian evidence, etc.
Eventually, both theories will be thrown on the trash heap of history because they simply don’t work and evidence to the contrary invalidates them.”
Nice parallel, Samurai !!
MtK
Nenndul says:
May 27, 2012 at 7:25 pm
Money is not a real thing, it is always a purely relative measure.
=====
The banks will not agree when they foreclose. Money is a promise to pay. A Promissory Note. And the Law says you will pay or lose your property.
Right now every man, woman and child in the US owes $50,000 and this is increasing exponentially. This debt is the modern day equivalent of slavery. Indentured servitude wearing lipstick and a filly dress.
This is the single greatest threat facing the US people and it is beyond the ability of the government to solve. When the money runs out, great empires collapse first from within.
If we are to believe the demographers, sometime around 2050 the world’s population will finally cease to grow and then may plateau for a generation or so before it begins to fall. That fall in quite a lot of the developed world’s national populations can already be found by checking through the “Index Mundi” site which uses the CIA facts book as it’s original source.
http://www.indexmundi.com/g/g.aspx?v=24&c=xx&l=en
Our capitalism system relies upon growth in every field, increasing money supply, increasing population to consume, increasing industrial output, increasing consumption and etc for it’s very survival.
After the global population ceases increasing there will be long period where the standards of living in a very large part of the global population will continue to rise and so the increases in consumption and much else needed for our present type of capitalistic system to survive will continue on.
But there will come a time when the both the consumption of goods and services by individuals and by entire populations and societies will level off which can generally be defined as the level where individual’s and society’s energy needs plateau per unit of population.
And by then late in the 21st century there is likely to be a long slow decline in human populations under way.
When this global population decline and the slow down in the rise of living standards and consumption cross over, then the present capitalist system as we know it will likely fail.
Japan has been the canary in the mine in this regard with it’s 2 decade long stagnation of it’s economy and it’s rapidly aging and now declining population. Russia is not far behind with it’s rapidly declining population as is the case with many developed western countries.
Japan’s salvation is that despite a high level of xenophobia, they are able to and have been importing large numbers of younger labour from surrounding Asian nations to keep their industry manned and their economy and industry still running at a reasonable level of efficiency.
And they have been exporting their industry into cheaper labour markets but maintaining the underpinning technology within their own ranks and in doing so importing the wealth generated by others back into Japan which has helped Japan to maintain a consistently high standard of living despite it’s rapidly aging and now falling population.
That option will soon run out for Japan as other nations start to face the same labour shortage situation, a shortage that even China may start to face around 2020 as the long term outcome, the aging of offspring of their now 2 or 3 decades old one child policy starts to cascade down though their society.
i am an old man now but much of this will happen within the lifetimes of those who are now in their early working lives and who still have another half a century at least of a lifetime ahead of them.
That old Chinese curse may yet carry far more angst for future generations than any might wish for.
“May you live in interesting times”
DesertYote says:
May 27, 2012 at 7:51 pm
“…….In a very real sense every problem in the US can be laid right at the feet of socialists.
Governments can not fix anything. The more they try, the more they break things, even with good intentions. So even ascribing good intentions, which is quite a stretch when socialists are involved, by the time a government reacts to a trend, the trend has changed and whatever the reaction was is ineffective at best, but more usually damaging.
BTW, a socialist is anyone who believes that society needs to be engineered and it is the roll of government to do that engineering.
One more thing. I am pretty autistic and trying to serialize out complex thoughts is difficult. That is why I tend to limit my input to inanities. I hope what I wrote makes sense, but I fear that I might as well have been writing in Japanese.”
DesertYote,
Thank You! You make perfect sense to me, Sir!
MtK
“this is in nucking futz territory”
How so very………….engineerish!
(If you can make up words, so can I.)
Love this site. Keep up the good work!
By the way, I tried looking up the “old Chinese curse: may you live in interesting times”. The phrase was first mentioned mid 1930’s by people in the diplomatic service, although no actual Chinese translation is noted. It was used by Robert Kennedy in 1966 who may (or may not) have gotten it out of a fortune cookie. But is does sound learned, cool, and inscrutable. I used to use it that way (to appear learned, cool and inscrutable) until I looked it up. Oh, fiddlesticks!
http://en.wikipedia.org/wiki/May_you_live_in_interesting_times
Steamboat Jack (Jon Jewett’s evil twin)
US government debt has risen from around 70% to over 100% of GDP in the last two years (compared to around 120% in 1946).
http://www.tradingeconomics.com/united-states/government-debt-to-gdp
Krugman’s answer is that the stimulus spending was not enough, which is a form of Zeno’s paradox.
How far does Krugman want to push it?
No, I am asking you to point out where these tests have been made that you claim disprove each and every economic system.
Greece is in the pickle it is because it has low productivity AND has been using debt to live beyond its means. Without the debt there’d be no issue, would there? If Greeks want to live in a manner befitting low productivity then that is their business, but if they want to live better, yet do so through borrowing, then that becomes a larger issue. The lenders have already taken a haircut, but they aren’t lending new money to Greece at low rates, and this is where Greece is currently in a tight spot.
What I do or do not understand about currency you don’t know about at all; what I do know is that lenders do not perpetually throw good money after bad. They will go looking for better investments, or they will get interest rates that befit the risk.
Why is it that when I see an image labeled “Paul Krugman” I see Wesley Mooch looking back?
Socialism is very successful until it runs out of OPM.
[ OPM = “Other People’s Money”. ]
It’s not the first trip down Alien Invasion Road for Krugman, it’s his own personal Broken Windows Fallacy.
Though I’m far less offended by someone going on about aliens than I am by somebody who thinks the solution to massive debt and grinding regulations stifling an economy is more debt and political graft (which is all we got out of the last doses of “stimulus”).
Krugman is the economic equivalent of a mad bomber.
Also, “take ideology out of it” has always meant “follow my ideology,” 100% of the time. There is no exception. Everyone but a handful of “radicals” thinks they are moderate and middle-of-the-road, and even the radicals often claim that.
And on top of that, international discussions on politics are almost impossible because, as DesterYote pointed out, the words don’t mean the same things, even if the language looks alike. Most of the commonwealth doesn’t have anything like the “American Right,” the political traditions aren’t the same, especially the words “right wing” mean totally different things in the US than the commonwealth or Europe.
conradg says:
May 27, 2012 at 5:55 pm
“REPLY: Reality check Conrad. Explain how you’ll personally be paying back the $138,000 you owe squandered by the US government on deficit spending”
First, I don’t owe that money, the government does, and so the creditors can’t come after me for it.
The creditors can’t, but the IRS can — and if you think the government isn’t going to raise your taxes to cut some of that deficit, you’re in for a rude awakening.
And frankly, most of the people who are owed that money are not my concern. The debt is a fiction of currency swaps.
Swapping currency from one person (or entity) to another based solely on a promise to repay is a debt. When you go grocery shopping, the food in your cart is debt until you arrive at the register and pay for it.
Hansen, Krugman, Suzuki and such
These global warmists are nucking futz
Check for mercury in the water supply
The New Mad Hatters are riding high
“”””” ROM says:
May 27, 2012 at 9:41 pm
Socialism is very successful until it runs out of OPM.
[ OPM = “Other People’s Money”. ] “””
Strange; the exact same thing is true of Capitalism. Smart investors always play only with OPM.
Yes, Krugman is serious about his proposal to concoct a story about an alien invasion…Of course, he’s making a point about economics, that it doesn’t matter how you justify a stimulus from economic standpoint as long as it is enacted…
You guys have a lot of difficulty with abstraction apparently…My advice: Take a literature class and an economics class as well…
Actually the ‘big lie’ to engender a common popular action as directed by a particular priesthood/leader/elite/ruling class is as old as civilisation itself. How do you get a mass population to engage in a common effort for which they would normally have little interest in expending their energies or changing their established way of life in order to achieve the required objectives?
The methods are:
Slavery, enslave a workforce/population and force them to obey a central will, whips and threat of death and work camps and a police state.
Fear, instil in a population the belief of an external or internal threat great enough so that self interest dictates the required common action. This could be an external enemy or a minority population like the Jews or an invented entity.
Fraud, make up a God illusion that the population can hold in common and spread the word that this superhuman God wishes for some works to be done. Spread through a priesthood that the God/s will be angry and visit fury and vengeance upon them if they fail to engage in the common activity.
Self interest, make it known that unless an action is taken disaster is certain to strike, that unless common action and sacrifices are made now the future will be an awful hell on earth with fire and brimstone and pain and suffering, people throughout the ages have feared the future more than anything else and are likely to take any action if they can be fooled into taking action that they believe will help them in the future.
The beauty of these three methods are that they are infinitely interchangeable, combinations can be used to great effect to gain the trust of a population, instil fear, encourage mass group identity, encourage hatred of those who do not wish to take part. The CAGW fraud is not a new phenomenon at all, in fact frauds like it have been a central part of the human story from Stonehenge to the pyramids to Nazi Germany. How to get a population to obey a central or individual will, how to construct something new or destroy something old, how to gain power or how to seize a throne or overthrow an old deity. The central players are always the elites, the tiny minority who need the muscle power or obedience of the greater mass to achieve their aims. This elite will lie and cheat and deceive and manipulate and terrorize to reach their common objectives, the fewer morals they have and hold the greater the chance of success, at least in the short term. The fact that like death, the ends of such advancement of a cause always ends in the death/collapse/destruction of that cause is ignored. A peculiar contradiction of this paradigm that the ends justify the means directly causes the ultimate failure of the project itself and yet this lesson is seemingly never learned by the current architects of the current fraud. Those who do not learn from history are doomed to repeat it, maybe that is humanitys curse.
“”””” DirkH says:
May 27, 2012 at 6:49 pm
conradg says:
May 27, 2012 at 5:37 pm
“Nor did NASA get financing from private industry. It was purely a function of big government centralized planning. Socialism, in other words. Heavens, it must be evil therefore.”
It surely cost you about 5 % of your GDP each year for as long as the Apollo program ran. “””””
Need to check your history DirkH. The Apollo Program didn’t cost US taxpayers one brass razoo !
President John F Kennedy, committed the US to investing $40B and ten years to put a man on the moon and return him safely to earth.
The program came in two years ahead of schedule, and under budget ($35B). That entire investment was recouped and then some in the next 8 years, simply from the reduction in crop losses in the US South East, as a consequence of improved forward weather forecasting and severe weather warning. That came about because Apollo was a manned project, and it was required to maintain round the world round the clock continuous contact with the vehicles, and with the world weathr conditions, for crew safety. Now when you consider the vast array of advabced materials and technologies that were developed for that program, it is easy to see, that the astronauts just went along for the ride. The project was a technology tour de force, that may never be surpassed.
Compare CERN with Apollo as an investment in useful science and technology. Well CERN is at least useful in employing thousands of otherwise unemployable people.
And the “Planning” of the ApolloProgram had very little to do with the three branches of the US federal government. It was in fact a result of competent corporate managers, in addition to the NASA umbrella. More like big industry.
I must once again jump to the defence of Keynes here, even though I have significant reservations about his views. Poor man, he has been misinterpreted and demonised, especially thanks to charlatans like Krugman.
Keynes never said that the way to dig yourself out of structural debt is to spend more.
Keynes never said that having more people in prison, or war, is good for the economy because it creates jobs.
His work was much more nuanced than people give it credit for. And, his prescription for short term volatility (save in good times, spend in bad) is hardly controversial. The problems faced by many Western economies are a result of long-term, structural, unsustainable deficits. Not the same thing at all.
As for the effect of war on economies, it varies. Destruction of old infrastructure can result in building new, state of the art infrastructure, as happened in Japan, South Korea and Germany – provided the conditions are right and capital is available. But, wartime restrictions can become bad habits, for example the retention of rationing and associated regulation for years afterwards, which happened in both the UK and Australia (that I know of). Only when rationing was abolished, and production deregulated, did supply and demand match up again.
Desertguy, I think your comments about the left/right dichotomy are very insightful. There is a lot of miscommunication on this blog and more generally because (a) people don’t understand that the US political tradition is quite different from the European, British and their derived ones; and (b) it follows that the terminology causes confusion. And I say that as an Australian, who is more in the Euro/UK camp in terms of political tradition, but has spent time in the US.
Gary Pearse says:
May 27, 2012 at 5:12 pm
Prime Minister Harper of Canada has, so far, steered through the global economic minefield that has been blowing up countries large and small. ……..
=====================================================
Exactly, he got the government out of the way and let people do what they do best. Further, his encouragement, allowed for real wealth creation and not some silly market/money switch trick. He’s set Canada on solid footing and is a worthy study.
Krugman wasn’t always crazy. The baby sitting club was quite good.
http://www.slate.com/articles/business/the_dismal_science/1998/08/babysitting_the_economy.html
How foolish. What’s worse is there are many people who will automatically believe him.
Here’s how Krugman economics really work:
The Broken Window Fallacy
Krugman is missing a trick here, the economy is no more complex than the climate.
Why dont we have a great big model, written by the most brilliant scientific econo-gurus that the world has ever seen. They can base their global economy algorithms on the micro economy of – say – a small town in Northern Siberia.
These alorithms can then churn away in the model (Been Had Crud) and the resulting concensus will be that we need a high speed rail link paid for by the fed
It might be better to call his ideas nuts – calling someone nucking futz could be regarded as a mini-Heartland-poster moment! The fruitcake/weirdo descriptions don’t move the argument forward (ask the UK’s Cameron about that!)
on food prices: i seem to remember they took off as more and more corn was diverted to ethanol production…corn ethanol does not make much sense if you compare the energy input and output…by the way the Indian govt is sitting on 75 million tons of food grains, much of which will go to waste once the monsoon starts…
on the alien lie idea: i thought we already tried that when we went to war in Iraq over imaginary WMD…without raising taxes and doubling the national debt in the process
on climate: Krugman does not know what he is talking about…i think politics has no place in this debate…unfortunately it has deteriorated into mutual abuse
Krugman debate
Bring it on!
http://www.krugmandebate.com/
Now if we really do have an alien invasion no one will believe them…
I’m not sure if he’s completely nuts, but basically what he seems to be saying is “scientists should tell huge lies to the public to get the public to support political agendas that I happen to believe in but which are not currently supported by the public”.
….which sounds awfully similar to the AGW approach.
Looks like he’s read Adam Robert’s sci-fi masterpiece ‘Yellow Blue Tibia’.
http://www.amazon.com/Yellow-Blue-Tibia-Adam-Roberts/dp/0575083573
EternalOptimist,
the models are needed to make the arbiters right. Macro-economic models serve economic central planning, warming models do the same -no coincidence.
Ultimately, it doesn’t matter what we think about government crackpots because come every election cycle, we’re ducks in a pond fighting over bread crumbs. We refuse to give up on the central planners.
If you think about it, high speed rail would be an ideal way of detering any conquest-mined aliens; it’d be clear and convincing proof that there’s no inteligent life on this planet.
Clearly, he is calling for a Martian Plan.
8-]
DirkH says:
May 27, 2012 at 7:10 pm
byz says:
May 27, 2012 at 3:14 pm
“DirkH
stop trolling!!
I am being straight over this and not diverting, I have read his works and Keynes’s works and they do not agree.
As to the prison population they are like having someone unemployed, it would be better to have them doing useful work, than being locked in their cells 23 hours a day.”
I wasn’t trolling. I was asking a polite question. And you have completely misunderstood the question.
First: The prison population. You say they are like unemployed – well, I don’t know what you do with your inmates but here in Germany they need to work if they want to earn money with which they can buy cigarettes – simple work, badly paid, but they are doing something useful – for instance folding leaflets or something like that.
But my question was: Is the COST of your prison system, the money you pay to the wardens etc., a boost to your economy? It should be according to Keynes.
====================
http://www.globalresearch.ca/index.php?context=va&aid=8289
“There are approximately 2 million inmates in state, federal and private prisons throughout the country. According to California Prison Focus, “no other society in human history has imprisoned so many of its own citizens.” The figures show that the United States has locked up more people than any other country: a half million more than China, which has a population five times greater than the U.S. Statistics reveal that the United States holds 25% of the world’s prison population, but only 5% of the world’s people. From less than 300,000 inmates in 1972, the jail population grew to 2 million by the year 2000. In 1990 it was one million. Ten years ago there were only five private prisons in the country, with a population of 2,000 inmates; now, there are 100, with 62,000 inmates. It is expected that by the coming decade, the number will hit 360,000, according to reports.
What has happened over the last 10 years? Why are there so many prisoners?
“The private contracting of prisoners for work fosters incentives to lock people up. Prisons depend on this income. Corporate stockholders who make money off prisoners’ work lobby for longer sentences, in order to expand their workforce. The system feeds itself,” says a study by the Progressive Labor Party, which accuses the prison industry of being “an imitation of Nazi Germany with respect to forced slave labor and concentration camps.”
The prison industry complex is one of the fastest-growing industries in the United States and its investors are on Wall Street. “This multimillion-dollar industry has its own trade exhibitions, conventions, websites, and mail-order/Internet catalogs. It also has direct advertising campaigns, architecture companies, construction companies, investment houses on Wall Street, plumbing supply companies, food supply companies, armed security, and padded cells in a large variety of colors.”
According to the Left Business Observer, the federal prison industry produces 100% of all military helmets, ammunition belts, bullet-proof vests, ID tags, shirts, pants, tents, bags, and canteens. Along with war supplies, prison workers supply 98% of the entire market for equipment assembly services; 93% of paints and paintbrushes; 92% of stove assembly; 46% of body armor; 36% of home appliances; 30% of headphones/microphones/speakers; and 21% of office furniture. Airplane parts, medical supplies, and much more: prisoners are even raising seeing-eye dogs for blind people.”
Slave labour for capitalists and jobs taken out of the market place. And re Afghanistan, on the back of the bwankers industrial/military business.
“Insanity: doing the same thing over and over again and expecting different results.”
-Albert Einstein
What else needs to be said.
FD
I think you’re wrong here: the real idiocy does start after he mentions the aliens, when he calls for the US Government to spend spend spend. That’s lunacy, what’s needed that the govenment shrinks as part of GDP and as quickly as possible. But then again you’re right, there are people who are pathologocally incapable of recognising their own nonsense.
Note to Paul Krugman: DUDE! When you’re initiating a secret grand conspiracy, DON’T talk about it on the TV! Now everybody is wise to the scheme, and won’t believe the alien invasion story. Oh, there’s one more tiny issue with your logic, Paul. IF people had believed an alien invasion was imminent, wouldn’t we be demanding rockets, missles, laser beams and nukes, and such? Wouldn’t we be wanting our resources dedicated to building nuclear reactors in some of our deepest mine shafts? WHY exactly would you imagine terrified people would be demanding a new high speed rail line between San Francisco and L.A? We all know that one of the first targets to be hit is going to be L.A. Haven’t you ever watched “Independence Day,” fer godssake? 😉
He’s obviously kidding about aliens, but he’s not kidding about lying to the public in order to support government action on something. That is completely irresposible, and I weep for the future of science. I really hope this type of thinking is all but gone once my 3 year old enters school and learns science.
What to expect of Krugman and all public Keynesians of Government-Media complex . Even the word “Austerity” is Keynesian: When the taxes go up there is no call of “Austerity” in Media. People get less money no? So why the Media don’t call Austerity when taxes go up…?
But when the Government have to have less bigger deficits – note i am not even talking about surplus- the Media call it “Austerity”…
Depression,Recession are the natural consequences of a credit bubble – a credit bubble by definition didn’t produced enough wealth to pay its debt. If everyone was trading/building stuff because the credit was so cheap, but even with so cheap can’t pay, that means when that stops the whole thing crumbles to realistic levels : a recession is the path to realistic levels of trades between people.
I should add others factors that make the perfect storm : demographics, improved products, technological evolution -easier to build stuff, technological plateau with diminishing returns, most of education in hands of the left and socialists which means an huge imbalance in professional fields, over regulation and red tape that punishes everyone that makes anything.
tomjtx@sbcglobal.net says:
“He is making the point that gov’t spending is what will bring us out of the great recession and referencing that it took the arms spending we did just before we entered WW2 to lift us out of the depression.”
It is a fallacy that WW2 was a good example of Keynesyan economics. it was other people’s money that began to lift America out of the depression. The British and French governments spent huge sums of money with US arms manufacturers months before the US government began spending. In fact North American Aviation was close to going bust before it was rescued by the British contract for the P-51 fighter plane. Britain itself (a relatively prosperous nation at that time) was effectively bankrupted by war by the time that the Lease-lend Act was passed. In short, the US may have ended the war with a revitalized economy, pretty much everyone else was ruined.
The idea that your government can just print money to stimulate the economy (proposed by a certain Nobel Prize-winning nut) was tried by Germany after WWI. I recall as a child collecting stamps from Germany with values in the milllionen mark. That experiment ended up with another experiment in government…National Socialism and Adolf Hitler.
Our current problem was caused by an over-expansion of credit (home-building bubble) and speculation by banks which were “too big to fail”. Both problems can be solved by prudent leadership. And by splitting the big banks into investment and banking moeities. And if a bank is still considered to big to fail, break it up also.
Maybe a good first step would be to outlaw financial paper that has no function except as a bet or a financial hedge. Real hedges excepted.
It’s right out of ‘The Report From Iron Mountain’ that also suggested environmental fear to grow government.
If Krugman is nuts about anything it’s his idea that were in a depression and two, that building trains like mad will do anything to help our economy.
I like his even more insane insistence that debt doesn’t matter because we just owe it to ourselves. I don’t think he believes any of it. He’s just busy making money off economic illiterates that flock to CNN and Bill Mahre for justification of their president’s mad spending policies.
“In short, the US may have ended the war with a revitalized economy; pretty much everyone else was ruined.”
People forget that fact. If one was to apply the ‘Broken Window’ Fallacy to WWII…and today being Memorial Day…remember those that paid the ultimate price for our freedom.
40,000,000 people died because of Progressive, Socialist beliefs. The argument that we somehow spend our way to prosperity is a weak one.
NY Post takes Krugman to task… Money Quote!
“Krugman’s principal job may be to throw his readers the liberal equivalent of red meat (organic, sustainable, fair-trade soy with nontoxic pink dye?). ”
http://www.nypost.com/p/news/opinion/opedcolumnists/krug_attacks_cv5ld2kSZ5DFnNMQcxt8aJ
According to the Left Business Observer, the federal prison industry produces 100% of all military helmets, ammunition belts, bullet-proof vests, ID tags, shirts, pants, tents, bags, and canteens. Along with war supplies, prison workers supply 98% of the entire market for equipment assembly services; 93% of paints and paintbrushes; 92% of stove assembly; 46% of body armor; 36% of home appliances; 30% of headphones/microphones/speakers; and 21% of office furniture. Airplane parts, medical supplies, and much more: prisoners are even raising seeing-eye dogs for blind people.”
From another commentator, one of the “grand conspiracy theory” people. OH, the Prisons are a mean, wicked, capitolist system. Baaaaahd, BAAAAHHHD!!! (Like a SHEEP.)
Buddy, yes, wrong topic…but one to get some of us really RILED. My 34 year old Nephew is a “guest” of the “State” in a large city containing area. (I’ll demure from too much info, family privilage shall we say.)
WOULD that he was “occupied” doing such tasks. My fear (and from what I know about the system in that state, not MY home state, which actually is rather PROPERLY PROGESSIVE on trying to give the inmates “a chance”…)is that all he will do in the next 8 years is learn to become a more accomplished street hoodlum.
If I had my “wish” he’d spend the rest of his LIFE in “custodial care”…. If we don’t have courage enough to EXECUTE those who prove themselves “un-adjustable”, by the technical 1/2 way point on their lives (70 years, once upon a time…35= 1/2 way..), or to “deep freeze” them, hoping for a day and a way to “un-thaw” and “fix” their adjustment problem…then, yes…humanely, we need to BIT THE BULLET and develop a system of “custodial care”.
But being a “profit making industry”??? HA! In the state where my nephew is, they WISELY decided, about 15 years ago, to allow the “contract prison” building in the “outstate” areas, 250 miles plus from the MAJOR METRO. In rural areas with “high unemployment” at the time. THERE IS A POSITIVE RESULT FROM THIS, it helped many people in those areas SURVIVE during various “tough times” in the last 15 years.
So take your conspiracy and STUFF IT!
JimB says:
“Our current problem was caused by an over-expansion of credit (home-building bubble) and speculation by banks which were “too big to fail”. Both problems can be solved by prudent leadership. And by splitting the big banks into investment and banking moeities. And if a bank is still considered to big to fail, break it up”
The Glass-Steagal Act did that from 1933 until 1999 when it was repealed.
Since 1999 we have had the Internet Dot Com bubble followed Home-Building bubble.
…I am just saying.
Ryan says:
May 28, 2012 at 1:43 am
I’m not sure if he’s completely nuts, but basically what he seems to be saying is “scientists should tell huge lies to the public to get the public to support political agendas that I happen to believe in but which are not currently supported by the public”.
….which sounds awfully similar to the AGW approach.
==================================
Hammer meets nail.
You have hit the nail on the head.
Question is: Why does one believe that nailing my feet to the floor is a good thing? Build something worthwhile and support it on its own merits, and stop the damn lying. Real science is being destroyed as well as the world economy.
Here’s someone that understands the economy, Jim Rogers. He sees a time like the Great Depression coming very soon. He has real success in the economy for 44 years now. Krugman only knows left wing ‘economics’. You’ll learn what really works in the economy from Jim Rogers. You can find 100’s of videos of him on the internet.
(p.s., I’m not linking the video because it’s from Glenn Beck, I’m not really a big fan of him, but I also am not opposed to him)
Unfortunately Jim Rogers sees a very, very bad economic time coming to America.
@Amino Acids…
I have heard Jim Rogers many times…over many years.
Jim Rogers was Co-Founder of the Quantum Fund…the other Co-Founder was George Soros.
However, he did leave the Quantum Fund in 1980, more than a decade before Soros broke the Bank of England.
I will take JimRogers and the Austrian School of economics (think Hayak, Nobel in 1974) over Krugman…or Gore…or Obama…all Nobel ‘winners’.
The food prices can be linked to excessive leverage, which have caused massive and progressive distortion of economies and markets. What we seem unready to do, is to distinguish between cause and effect. Was the cause dreams of instant gratification or individuals, cooperatives, and authoritarian interests (i.e. government) who exploited those dreams for their selfish interest?
As for “global warming”, that appears to be little more than a scheme to generate new revenue streams and subsidize marginal and unproductive economic, academic, and governmental enterprises.
@n.n.
I would argue food price inflation is linked to Biofuel and the expansion of the Food Stamp program.
Much stronger cause and effect relationships can be observed…I think.
Richard Salsman and others have explained how government spending cannot improve the economy. Government does not produce, it consumes. The act of redistribution, which government spending inherently is, reduces the ability of taxpayers to produce and favours the inefficient (who get the spending because they are able to whine or con more than others, or “have connections”).
Salsman has pointed to government spending as slowing recovery from the Great Depression.
Of course the scare tactic to justify oppressive measures is a popular one, Hitler used it to advantage. (Hitler was of course more capable than Krugman, an evil genius. Marxists like Lenin were good at using the scam as well, especially against business people. Marxist Pol Pot )
The underlying belief of people like Krugman is that people can be manipulated and should be, which comes from viewing humans as mentally incapable and untrustworthy.
History shows otherwise – freedom protected by a justice system fosters humans. But Krugman and his defenders work against freedom. Why?
“Aristotle based his philosophy on what seemed reasonable and all science was constrained for over a thousand years, when mathematical rigour and experiment were unleashed we started thinking differently (as Steve Jobs was keen on) and we advanced past the Greeks.”
(byz says: May 27, 2012 at 12:25 pm)
Say what?!
Mathematical rigour and experiment (testing against reality) were greatly advanced by Aristotle’s teachings.
The decline from the best of the Greek era (noting Aristotle was an ancient Greek) resulted from a shift to the bizarre mind-body dichotomy of Plato, which always leads to superstition and emotions as the preferred means to knowledge. I suggest David Harriman’s book “The Logical Leap” as one way to see the difference.
(It also leads to nasty people like Krugman, because they find out that their way of obtaining knowledge doesn’t work well, they never know what to do because they reject principles – of morality not just science, and other people don’t do what they want. So they use the only ways they – emotions and force.)
Then “byz”(antine) goes on to make the grossly ignorant claim that banks horde money. Reality is that banks make money by loaning out money, much of which is from depositors who are paid interest for the use of their money.
But “byz” is almost matched by the claim of “Crispin in Waterloo” that war is good for business. War is destruction which is never good. The freest most business-oriented countries are the most peaceful. Consider the US compared to Imperial Shinto Japan, as chonicled by John David Lewis in his book “Nothing Less Than Victory”, and National Socialist Germany as explained by Leonard Peikoff in his book “The Ominous Parallels”. Plus the war-mongering Marxists of the USSR, who tried to take over East Berlin after World War II – and demonstrated in East Germany the dismal nature of collectivist society compared to the free type of society in West Germany. (Recall that the Allies put West Germany on a path to six decades of peace and prosperity, and the US did the same for Japan, whereas the USSR couldn’t even feed its own people.)
So in other words Krugman grew up watching Outer Limits “The Architects of Fear” (1963) or the more recent movie “Watchmen” which tied into the original OL episode. Way to go, Krugman, real original thinking….
Glass Steagall was a very sensible measure. So sensible, makes you wonder why it was repealed. Who benefitted? What happened next? Similar controls were removed in the UK. Now occassionally there is talk of re-introducing them. Who growls? Wonder why?
ROM says:
May 27, 2012 at 7:00 pm
The source for the figures above are from Table 5
; Funding for Federal Climate Change Activities, FY2008 to FY2012
Congressional Research Service; April 26th 2012
===================
Approx $70,000,000,000 (seventy billion dollars US) from FY 2008 to FY 2012 in the US alone on climate related expenditures.
What fools had their hands on the purse strings in the US Congress for these appropriations. New appropriations for the 2008 FY budget would have had to be the House of Representatives in 2007 congressional session or earlier congressional sessions.
Were the fools listening to Krugman or was there some other ideological obsession? Or both?
http://wattsupwiththat.com/2012/05/27/quote-of-the-week-bonus-krugman-insanity-edition/#comment-995367
Max Hugoson says:
May 28, 2012 at 8:25 am
According to the Left Business Observer, the federal prison industry produces 100% of all military helmets, ammunition belts, bullet-proof vests, ID tags, shirts, pants, tents, bags, and canteens. Along with war supplies, prison workers supply 98% of the entire market for equipment assembly services; 93% of paints and paintbrushes; 92% of stove assembly; 46% of body armor; 36% of home appliances; 30% of headphones/microphones/speakers; and 21% of office furniture. Airplane parts, medical supplies, and much more: prisoners are even raising seeing-eye dogs for blind people.”
From another commentator, one of the “grand conspiracy theory” people. OH, the Prisons are a mean, wicked, capitolist system. Baaaaahd, BAAAAHHHD!!! (Like a SHEEP.)
…
So take your conspiracy and STUFF IT!
Gosh, there’s certainly a conspiracy to bribe judges, get more punitive laws enacted and so on to expand the lucrative slave labour workforce by those running private prisons, that the system itself is a conspiracy, well no, that is out in the open and well documented – it’s policy..
Slave labour created out of the prison population by big business interests who lobby for harsher sentences to keep their prisons full – three strikes and you’re out.. For, say stealing a candy bar.:
http://www.globalresearch.ca/index.php?context=va&aid=8289
“CRIME GOES DOWN, JAIL POPULATION GOES UPAccording to reports by human rights organizations, these are the factors that increase the profit potential for those who invest in the prison industry complex:. Jailing persons convicted of non-violent crimes, and long prison sentences for possession of microscopic quantities of illegal drugs. Federal law stipulates five years’ imprisonment without possibility of parole for possession of 5 grams of crack or 3.5 ounces of heroin, and 10 years for possession of less than 2 ounces of rock-cocaine or crack. A sentence of 5 years for cocaine powder requires possession of 500 grams – 100 times more than the quantity of rock cocaine for the same sentence. Most of those who use cocaine powder are white, middle-class or rich people, while mostly Blacks and Latinos use rock cocaine. In Texas, a person may be sentenced for up to two years’ imprisonment for possessing 4 ounces of marijuana. Here in New York, the 1973 Nelson Rockefeller anti-drug law provides for a mandatory prison sentence of 15 years to life for possession of 4 ounces of any illegal drug.The passage in 13 states of the “three strikes” laws (life in prison after being convicted of three felonies), made it necessary to build 20 new federal prisons. One of the most disturbing cases resulting from this measure was that of a prisoner who for stealing a car and two bicycles received three 25-year sentences.. Longer sentences.. The passage of laws that require minimum sentencing, without regard for circumstances.. A large expansion of work by prisoners creating profits that motivate the incarceration of more people for longer periods of time.. More punishment of prisoners, so as to lengthen their sentences.
…
Who is investing? At least 37 states have legalized the contracting of prison labor by private corporations that mount their operations inside state prisons. The list of such companies contains the cream of U.S. corporate society: IBM, Boeing, Motorola, Microsoft, AT&T, Wireless, Texas Instrument, Dell, Compaq, Honeywell, Hewlett-Packard, Nortel, Lucent Technologies, 3Com, Intel, Northern Telecom, TWA, Nordstrom’s, Revlon, Macy’s, Pierre Cardin, Target Stores, and many more. All of these businesses are excited about the economic boom generation by prison labor. Just between 1980 and 1994, profits went up from $392 million to $1.31 billion. Inmates in state penitentiaries generally receive the minimum wage for their work, but not all; in Colorado, they get about $2 per hour, well under the minimum. And in privately-run prisons, they receive as little as 17 cents per hour for a maximum of six hours a day, the equivalent of $20 per month. The highest-paying private prison is CCA in Tennessee, where prisoners receive 50 cents per hour for what they call “highly skilled positions.” At those rates, it is no surprise that inmates find the pay in federal prisons to be very generous. There, they can earn $1.25 an hour and work eight hours a day, and sometimes overtime. They can send home $200-$300 per month.Thanks to prison labor, the United States is once again an attractive location for investment in work that was designed for Third World labor markets. A company that operated a maquiladora (assembly plant in Mexico near the border) closed down its operations there and relocated to San Quentin State Prison in California. In Texas, a factory fired its 150 workers and contracted the services of prisoner-workers from the private Lockhart Texas prison, where circuit boards are assembled for companies like IBM and Compaq.”
That’s the ugly face of capitalism, the motivation to pay as little as possible to maximise profits for the owners/shareholders is why unions began, slave labour is the greedy capitalists’ wet dream..
http://www.corpwatch.org/article.php?id=867
“Greasing the Wheels of Power to Keep Jails Full To be profitable, private prison firms must ensure that prisons are not only built but also filled. Industry experts say a 90-95 per cent capacity rate is needed to guarantee the hefty rates of return needed to lure investors. Prudential Securities issued a wildly bullish report on CCA a few years ago but cautioned, “It takes time to bring inmate population levels up to where they cover costs. Low occupancy is a drag on profits.” Still, said the report, company earnings would be strong if CCA succeeded in ramp(ing) up population levels in its new facilities at an acceptable rate”.”(There is a) basic philosophical problem when you begin turning over administration of prisons to people who have an interest in keeping people locked up” notes Jenni Gainsborough of the ACLU’s National Prison Project.”
Don’t you see this as a problem?
http://mediafilter.org/MFF/Prison.html
By Phil Smith
from the Fall 1993 issue of Covert Action Quarterly “Private prisons are a symptom, a response by private capital to the “opportunities” created by society’s temper tantrum approach to the problem of criminality.”
In Britain it’s common for the ‘government’ to periodical claim that ‘crime’ is going up, when it isn’t. If people can be kept in fear they are easier to control – that’s why we now have all these big brother and degrading security and surveillance measures, and more to come, and those objecting becoming the ‘enemy against security’, in policy documents labelled as ‘terrorists’ – for example, those who pay with cash are to be suspect.
Why are drugs illegal?
Anyway, if you’re interested in researching further this link has others to give more of the picture.
http://www.apfn.org/apfn/private-prisons.htm
“Glass Steagall was a very sensible measure. So sensible, makes you wonder why it was repealed. Who benefitted? ”
Goldman Sachs…for one.
Lot of people and entities did for awhile.
Some still are benefitting.
Kevin Kilty,
Please point to the experiment in which we tried Libertarian, Laissez Faire, open markets, for long enough time to consider the results definitive, found them wanting, and then tried something else. Please point to exactly what didn’t work and how what we tried next improved upon it.
I only said that all economic systems that have been tried so far have many faults and problems in them, and I infer from this that in the real world, all future economic systems will be similarly imperfect and people will continue to whine about them. You enjoy the fantasy that Libertarianism will solve all the world’s problems. Well, count me highly skeptical. What’s your evidence that it won’t have all kinds of problems as well?
…
Greece is in the pickle it is because it has low productivity AND has been using debt to live beyond its means.
Certainly that’s part of the problem. The other and bigger problem is that the EU has a common currency, but not a common government and budgeting. We in the US have regions that are pretty unproductive – Mississippi and Alabama come to mind – which get far more in federal dollars than they pay in taxes, but they don’t have a fiscal crisis because we have a common currency and a federal system of government which oversees the overall economy. If the EU had a government akin to the US, Greece would just be another unproductive region, not a nightmare.
What I do or do not understand about currency you don’t know about at all; what I do know is that lenders do not perpetually throw good money after bad. They will go looking for better investments, or they will get interest rates that befit the risk.
Bad is always a relative concept when it comes to lending. The US is paying very low interest rates on its debt because it’s considered such a safe haven. If lenders really thought the US fiscal situation were anywhere near what Greece’s was, they wouldn’t be lending us money. The interest rates tell us the real story. The people with money think the US is an incredibly safe place to put there money.
And keep in mind, currency is itself the creation of government. Lenders don’t have their own currency they are lending us. They are lending us back our own dollars, created by our government. That means we have all the power still.
The creditors can’t, but the IRS can — and if you think the government isn’t going to raise your taxes to cut some of that deficit, you’re in for a rude awakening.
The IRS can’t come after me for the national debt. They have no such power. They can only tax me on my income, at the rate specified by law. Raising taxes requires legislative action, meaning that our elected representatives have to approve of such action, meaning people have to elect these folks with some mandate to repay the national debt. I don’t ever see that happening, not in my lifetime or my children’s for that matter. The more worrisome matter is entitlements like SS, etc., not repaying the national debt.
And please don’t tell me the debt ever has to be repaid. I don’t know if the US has ever been debt free, so it’s never been repayed.
Swapping currency from one person (or entity) to another based solely on a promise to repay is a debt. When you go grocery shopping, the food in your cart is debt until you arrive at the register and pay for it.
It’s always a huge mistake to compare national currency debts to personal buying and budgeting. Governments create their own currency. I don’t get to buy stuff at the store with my own currency, I have to use the government’s. When a government borrows back their own currency, it’s a fictitious debt. It’s useful for economic purposes, to try to stimulate the economy and the flow of money through capital markets, but it’s a fiction nonetheless. It’s a different story if they borrow some other country’s currency, but even then, that’s still just mixing fictions of different origin.
1987 Ronald Reagan’s address to the United Nations, he said:
“I occasionally think how quickly our differences worldwide would vanish if we were facing an alien threat from outside this world.”
I’m surprised though that no one’s yet mentioned Project Blue Beam.. Which is the story that the NWO is/was planning a holographic global event to fake the “Second Coming” and consolidate their new global religion: http://educate-yourself.org/cn/projectbluebeam25jul05.shtml and of course NASA’s involvement with promoting scary aliens against carbon dioxide as WUWT covered earlier: http://wattsupwiththat.com/2011/08/18/bizarre-craptastic-theory-from-the-guardian-penn-state-and-nasa-et-will-kill-us-because-global-warming-will-tip-them-off-that-we-are-a-bad-species/
But a staged alien invasion has been in the conspiracy theory pipeline for a while now, due to appear at the 2012 Olympics in London:
http://www.guardian.co.uk/uk/2010/dec/05/olympic-games-2012-alien-conspiracy-theory
And of course, there’s lots on the alleged actual development of alien spacecraft, supposedly from the work of the German scientists during the 2nd World War, and this goes back to Tesla.
Nikola Tesla said in an interview in he New York Herald Tribune, October 15, 1911: “All I have to say on that point is that my airship will have neither gas bag, wings nor propellers, It is the child of my dreams, the product of years of intense and painful toil and research. I am not going to talk about it any further. But whatever my airship may be, here at least is an engine that will do things that no other engine ever has done, and that is something tangible.”
And I’d earlier found information on Maxwell which gives work of his which was sidelined, http://www.rexresearch.com/maxwell.htm
So, perhaps they have actually built such craft, which could account in some part to the growing sightings, and are getting ready for the big finale…
..now I’ll have to watch the closing ceremony – probably an advertising exec’s bright idea to get higher ratings and I shall be disappointed.
Which still doesn’t explain why America would need high speed trains to fight them off..
US spent 2% of GDP for stimulus. This is a mild stimulus.
Eurozone Austerity.
US official unemployment 8.1% – Eurozone 10.9%
Aliens? Really?! That’s your factual argument against stimulus spending?
Besides your hero Schiff has been moaning about the market since Obama has taken over. If you invested money in the broad market at the lows shortly after Obama took office your account would have been doubled (up 99%) by Feb/March of 2012.
Schiff was generally right 5 yrs ago. Not so much anymore.
economynewsblog says:
“If you invested money in the broad market at the lows shortly after Obama took office your account would have been doubled (up 99%) by Feb/March of 2012.”
Buying at the bottom, eh? Why don’t you show us how that’s done? And then explain how you knew to get out in “Feb/March 2012”? Because the market is down a thousand points since then.
• • •
conradg says:
“The IRS can’t come after me for the national debt. They have no such power.”
No, but the government can tax the money away from you to pay the national debt. What’s the difference?
50% return over 4 yrs ain’t too bad either Smokey.
Dude! I wish I was a market maven. Don t we all? Mythical as it might be… even the professionals have been having a problem investing… http://www.reuters.com/article/2012/05/28/uk-hedge-funds-idUSLNE84R02420120528
How about good old common sense real world economic solutions – just simple to the manufacturing segment of our society – Klugman what about this very uncomplicated solution = GROWTH?
The energy industry will save the USA – it will finance the rebuilding of our from raw materials [natural resources] altered in value adding manufacturing which will put the people back to work. The end result will be a doubling of the GDP over ten years and the problem will be until next time. End the EPA AND ENDANGERED SPECIES ACT – DO TORT REFORM and watch the hardest working most productive society on earth be reborn as the worlds industrial GIANT.
Manufacturing matters… I agree.
Interesting article of what has been driving the market recently in the US… http://www.businessinsider.com/every-serious-person-needs-to-see-this-chart-2012-5?nr_email_referer=1&utm_source=Triggermail&utm_medium=email&utm_term=Money%20Game%20Select&utm_campaign=MoneyGame%20Select%20Mondays%202012-05-28
I’m close to 100% sure, giving energy corporations a free leash will not explode growth. Besides cleaning up after these guys is far more expensive than any positive economic impact.
On what information do you base your statements?
“I’m close to 100% sure, giving energy corporations a free leash will not explode growth. Besides cleaning up after these guys is far more expensive than any positive economic impact.”
“All generalizations are false, including this one.”
Mark Twain
Not sure what Growth you are referring to… EPA makes sure we have clean water etc. Maybe you are referring to growth in hazardous materials and bottled water industry exploding from the lack of clean water…
We do not need more wasted stimulus spending. We need 1921-style government spending CUTS.
Obama has already cut military spending by more than 12%. Now the rest of the government sector needs to be cut by more than 12% across the board. No sniveling. Just do it. The economy will come ROARING back, and employment will skyrocket.
Will Obama do the right thing? He certainly hasn’t yet.
<i<No, but the government can tax the money away from you to pay the national debt. What’s the difference?
It’s called elections and law-making. The government doesn’t exist as some independent entity out there. It can’t just arbitrarily decide to suddenly pay back the national debt and come knocking on everyone’s door demanding $138,000 from everyone. And no sane elected official would even propose such a thing, much less have any success in passing such a law. Taxes are related to spending, which includes interest on the debt, but there’s no budgetary item for debt repayment. The last time we had a surplus and some proposed using it to pay down the debt, the GOP vetoed the idea and instead used the surplus to cut taxes, which has vastly increased the deficit. Kind of the opposite of what you presume is going to happen.
We do not need more wasted stimulus spending. We need 1921-style government spending CUTS.
You mean 1937-style spending cuts, which sent the economy which had been recovering from the Great Depression into a second tailspin. Which is precisely what it would do now if enacted. As any good Keynesian would tell you , you run deficits when the economy is weak, and surpluses when it’s strong. Spending cuts would be great when the economy is fully recovered, but that’s the hardest time to make them politically. Hope you are putting pressure to cut spending during those times. It would be a good test to see whether Democrats can become genuine Keynesians, and if Republican are serious about debt reduction (which they have never ever been before).
“You mean 1937-style spending cuts…”
No, I mean 1921-type spending cuts. Do some searching and get up to speed.
conradg says:
May 28, 2012 at 2:06 pm
The creditors can’t, but the IRS can — and if you think the government isn’t going to raise your taxes to cut some of that deficit, you’re in for a rude awakening.
The IRS can’t come after me for the national debt. They have no such power. They can only tax me on my income….
_______________________________________
That is what you think. Never underestimate the conniving minds of thieving politicians.
And anoter:
Another take on a similar scheme.
… it appears some politicians are talking about forcing your IRAs and 401Ks into Treasuries so they can continue to fund the deficits. As I understand it, this is the same Ponzi scheme they set up with Social Security. It is actually Social Security on steroids.
I am not sure of the truth in any of this but the idea is certainly floating around.
Myrrh says:
May 28, 2012 at 3:49 am
http://www.globalresearch.ca/index.php?context=va&aid=8289
the United States holds 25% of the world’s prison population, but only 5% of the world’s people.
========
The land of the free.
condrag:
Since you didn’t reply, this will help expand your knowledge base:
The Depression Of 1921
Exactly what is needed today. But will an economic illiterate community organizer like Obama do the right thing? He hasn’t yet.
conradg says:
May 28, 2012 at 7:57 pm
The government doesn’t exist as some independent entity out there. It can’t just arbitrarily decide to suddenly pay back the national debt and come knocking on everyone’s door demanding $138,000 from everyone.
========
They don’t need to, nor do they want to. Does your credit card company want you to pay off the balance? No, they want you to borrow to the max.
Look at the value taken out of US pension plans over the past 5 years. A generation of savings wiped out. Goldman Sachs officials running the US treasury department and in bed with Gore on CCX. Hundreds of billions of dollars transferred to insiders.
Now there is quantitative easing. More easy money to spend on favors to friends and campaign contributors. The current administration is nothing. Wait for the next 4 years. You ain’t seen nothing yet.
Smokey says:
May 28, 2012 at 8:26 pm
But will an economic illiterate community organizer like Obama do the right thing? He hasn’t yet.
========
You obviously haven’t talked to those of the gravy train. The view always looks worse when you are the one tied to the rails.
ferd,
Thanks for that. I grew up on Rocky & Bullwinke, Dudley Do-Right, Sherman & Mr. Peabody. Brings back fond memories!☺
[youtube http://www.youtube.com/watch?v=GTQnarzmTOc&version=3&hl=en_US%5D
Myrrh says:
May 28, 2012 at 1:03 pm
“Why are drugs illegal?”
I consider myself a libertarian and I think drugs (including tobacco) should be illegal because they are addictive and chemically remove a person’s right to choose. It may be a choice to start to use drugs, but it quickly becomes a chemical addiction which removes that choice. They destroy liberty on a biological level and that actually goes against freedom of the individual. The level of illegality should be directly proportional to the level of addiction they cause.
Smokey, it seems like you are pretty passionate and literate. Better than most Austerians but still… You don’t need to go too far back to see the effect of Austerity.
Look at several important factors.
Spain. Latvia. Ireland. Greece. Compare. Debt to GDP, GDP growth, employment. All worse (or comparatively worse) since Austerity measures have been enacted. If you dig a little deeper… Spain actually had a lower debt to gdp than Germany pre-economic crisis. Its not JUST debt. Growth policy matters.
I’m a little torn on some of the cuts. Budget issues need to be addressed in the US. I kinda agree with some old school GOP budget cuts… def not neo con cuts. I would just say that timing is everything. Gotta. Gotta. Gotta do the large cuts during economic booms vs busts.
The US economy is starting to pick up. 2% of GDP stimulus (moderate) seemed to help a bit. 10.9% eurozone unemployment vs 8.1% US unemployment. Unemployment in the US at 4+ yr low. Eurozone – 13 months of consecutive unemployment increase. US Housing starts up. Manufacturing up.
Its no mystery that recently Merkel’s political party suffered setbacks, Sarkozy was kicked out, and Greece’s leader is being kicked out… Europeans definitely don’t like Austerity. US won’t either… if somehow Tea Party get a majority (which they NEVER will) they will f up the economy so much worse than Obama ever did or could do!
The coming generations will never vote again for another modern day conservative again. Almost rooting for Romney and Tea Party landslide. They would kill the recovery quick. Economic chaos. Conservatives will get the “invisible market hand” they so desire. Greater Depression. Another anti immigration, fascist world leader. WWIII. Millions die!
Romney 2012!
Myrrh says: @ May 28, 2012 at 1:03 pm
“Why are drugs illegal?”
Truthseeker says: @ May 28, 2012 at 9:32 pm
I consider myself a libertarian and I think drugs (including tobacco) should be illegal because they are addictive and chemically remove a person’s right to choose. It may be a choice to start to use drugs, but it quickly becomes a chemical addiction which removes that choice. They destroy liberty on a biological level and that actually goes against freedom of the individual. The level of illegality should be directly proportional to the level of addiction they cause.
_______________________________________
Drugs are a medical problem and and should be treated as a medical problem. They should not be a reason for jailing a person.
Also of note on the skyrocketing incarceration rate in the USA, is the mental institutions tossed out many inmates supposedly because they could live in half way houses thanks to new drugs that were developed. Unfortunately once the inmates were out the support system was cut and we ended up with street people who could not be placed in homes or institutions without some one screaming about infringing upon their civil rights so they had the freedom to freeze to death on the streets or steal in an effort to support themselves.
My old computer has all my references but here is one:
In the 1950s, those who were living on the streets were taken to county homes and given a place to live and food to eat. Thoses judges severely mentally ill were placed in hospitals. The ones I knew (Mom volunteered to teach twice a week) were alcoholics, mildly retarded, old or sick. Now these people would be left on the streets to fend for themselves and many would end up in jail as a result.
Truthseeker says:
May 28, 2012 at 9:32 pm
Myrrh says:
May 28, 2012 at 1:03 pm
“Why are drugs illegal?”
I consider myself a libertarian and I think drugs (including tobacco) should be illegal because they are addictive and chemically remove a person’s right to choose. It may be a choice to start to use drugs, but it quickly becomes a chemical addiction which removes that choice. They destroy liberty on a biological level and that actually goes against freedom of the individual. The level of illegality should be directly proportional to the level of addiction they cause.
But…, before those who do become chemically addicted become so, they freely chose. Perhaps you should consider yourself something else?
The Libertarian party makes the point, and this is after all what made America so different in that it had a consciously created Constitution based on Common Law:
“The preamble outlines the party’s goal: “As Libertarians, we seek a world of liberty; a world in which all individuals are sovereign over their own lives and no one is forced to sacrifice his or her values for the benefit of others.” Its Statement of Principles begins: “We, the members of the Libertarian Party, challenge the cult of the omnipotent state and defend the rights of the individual.” The platform emphasizes individual liberty in personal and economic affairs, avoidance of “foreign entanglements”, and military and economic intervention in other nations’ affairs and free trade and migration. It calls for Constitutional limitations on government as well as the elimination of most state functions. It includes a “Self-determination” section which quotes from the Declaration of Independence and reads: “Whenever any form of government becomes destructive of individual liberty, it is the right of the people to alter or to abolish it, and to agree to such new governance as to them shall seem most likely to protect their liberty.”
That’s from wiki, and from http://www.catb.org/~esr/faqs/libertarianism.html
“A. Definitions, Principles and History:
A1. What is a libertarian?
The word means approximately “believer in liberty”. Libertarians believe in individual conscience and individual choice, and reject the use of force or fraud to compel others except in response to force or fraud. (This latter is called the “Non-Coercion Principle” and is the one thing all libertarians agree on.)
A2. What do libertarians want to do?
Help individuals take more control over their own lives. Take the state (and other self-appointed representatives of “society”) out of private decisions. Abolish both halves of the welfare/warfare bureaucracy (privatizing real services) and liberate the 7/8ths of our wealth that’s now soaked up by the costs of a bloated and ineffective government, to make us all richer and freer. Oppose tyranny everywhere, whether it’s the obvious variety driven by greed and power-lust or the subtler, well-intentioned kinds that coerce people “for their own good” but against their wills.
A3. Where does libertarianism come from?
Modern libertarianism has multiple roots. Perhaps the oldest is the minimal-government republicanism of the U.S.’s founding revolutionaries, especially Thomas Jefferson and the Anti-Federalists. Adam Smith, John Stuart Mill and the “classical liberals” of the eighteenth and nineteenth centuries were another key influence. More recently, Ayn Rand’s philosophy of “ethical egoism” and the Austrian School of free-market capitalist economics have both contributed important ideas. Libertarianism is alone among 20th-century secular radicalisms in owing virtually nothing to Marxism.”
Can’t see it, doesn’t gel, a libertarian would not make such a law, basically, because it’s nobody’s business but mine whether I choose to take drugs or not, addictive or not. Making it illegal is the use of force. There’s also fraud which comes into it, for example the demonisation of hemp by the politically powerful pharmaceutical and clothing industries…
I’m astonished that anyone can think it rational to impose such laws on others about the use of plants which exist in a world they didn’t create.. Liberty appears to be a difficult concept to grasp. I think you have to go back to the roots of Common Law – that freedom, liberty, is a natural right. No one has the right to impose his ‘head’ over another, which is what an-archy means, without another’s head ruling over you.
More on libertarianism here: http://www.theihs.org/what-libertarian
And roots of Common Law here: http://www.britsattheirbest.com/freedom/f_british_constitution.htm
Hi Anthony. I guess I am one of those who, as you formulate it, “.. are defending Krugman religiously …”
1. If I gave the impression I defended Paul Krugman religiously, something must have gone wrong with my choice of words. Probably due to English not being my native language.
2. I make a clear division between Krugman the economist, Krugman the political commentator and Krugman the opinionist on climate and everything related to the physical sciences.
Krugman the economist represents a respectable school of economists, who of course may be right or wrong given a certain situation.
Krugman the political commentator – like when he accused the conservatives of creating a “Climate of Hate” is furiously leftist and relishes in personal attacks. Very, very unpleasant – to the point of being disgusting.
Krugman, when he talks about the climate, shows himself to be almost completely ignorant – as you justly showed. I agree with you that he has zero credibility in relation to the physical sciences.
So, I read Krugman’s wish for imaginary aliens as funny.
His economic ideas I take seriously – which doesn’t mean I agree with them.
His political comments I abhor.
His scientific exclamations I completely ignore.
3. Much, much more important than Krugman is the tone and atmosphere on this blog.
I visit this blog every day. To get the science, to enjoy the smart and good people here, to get an antidote of reason against the constant prophesies of doom and administrations of guilt .
What I find so disgusting about most alarmists are their never ending attacks on the personality of the people who disagree with them. When you disagree with them, you must be a horrible person in every way.
Please, let’s not do that here.
I once was a member of GreenPeace and a believer in CAGW. An important reason I began to lose my trust GreenPeace was their tone which became nastier and nastier. Attacking opponents weakens one’s credibility with people who want to know the truth.
4. Anthony, I appreciate this blog immensely. Your work and that of all the contributors and mediators – invaluable. Thanks.
REPLY: Thank you, nicely said – Anthony
Robin Kool,
To put my opinion of Klugman as an economist would be shown in this economic theory model – Mr. Klugman is the “BROKEN GLASS in the FALLACY.”
Too an extent, global warming is responsible for increasing food prices for the poor. Or rather, the reaction to global warming is responsibile.
Converting millions of bushels of corn into auto fuel, has caused a measurable increase in the price for corn, world wide.
James Sexton says:
May 27, 2012 at 12:07 pm
THe so called austerity programs in Europe universally consist of big tax increases, with promises to talk about spending cuts some time in the future.
Smokey,
1921 style spending cuts would only do well in a 1921-style post-war economy, which we are not in. Similar spending cuts enacted now would have the effect that they did in 1937, which the economy was in a similar slow-recovery phase. Also, the government percentage of GDP was much, much lower then, and only temporarily high due to WWI, and less structurally dependent on government spending. A 65% cut in government spending at this point would instantly produce a deep Depression.
However, a long term determined commitment to slash government spending by that amount, including defense and entitlements, could be accomplished as long as the economy was given time to adjust. It’s highly unlikely to pass through congress, but it could be done, and we’d just have to see what the results would be.
Gail Combs
Nefarious plan indeed. But it would require legislation to pass both houses and be signed by the President. I would consider that highly unlikely.
“Why are drugs illegal?”
I consider myself a libertarian and I think drugs (including tobacco) should be illegal because they are addictive and chemically remove a person’s right to choose. It may be a choice to start to use drugs, but it quickly becomes a chemical addiction which removes that choice. They destroy liberty on a biological level and that actually goes against freedom of the individual. The level of illegality should be directly proportional to the level of addiction they cause.
Then television and the internet should both be illegal, as many people are clearly addicted to them, including I imagine everyone posting here.
The truth is that only a small percentage of people who use drugs are addicted to them. Most use them by choice, when and where they wish to, like everything else. Drugs do not take away our ability to choose. They just influence, because the pleasure they give is something people like to repeat. People can and do quit even the most chemically addictive drugs, like nicotine. They quit because it’s their choice. But I admit very, very few people ever quit their television and internet habits, so maybe that should be classified as a Schedule One drug and selling it should carry the maximum penalties for drug kingpins. That would be compatible with Libertarianism, wouldn’t it?
economynewsblog says:
“I kinda agree with some old school GOP budget cuts… def not neo con cuts. I would just say that timing is everything. Gotta. Gotta. Gotta do the large cuts during economic booms vs busts. The US economy is starting to pick up.”
The US economy is pathetic. There has never been such a pathetic “pick up” after a sharp correction in American history. The reasons are clear: the Administration’s mis-handling of the economy, due directly to the sheer incompetence of a President who has never held a real job, or met a payroll, or done anything productive; he has consistently failed upward, courtesy of the political system. It’s time to put the adults in charge.
I guess I should go easy on anyone who makes such absurd statements as: “I’m close to 100% sure, giving energy corporations a free leash will not explode growth. Besides cleaning up after these guys is far more expensive than any positive economic impact.”
The Deepwater Horizon spill was almost universally reported to have caused “irreparable” damage to the coast and ecosystem. But six months after it was successfully capped, no damage could be found. So how is that “far more expensive than any positive economic impact”? Those look like the words of either a lunatic, or the baseless opinion of someone who does not know the facts.
[I should add that IANAR, and the 1921 remedy falsified the notion that government cuts during recessions are counter-productive; they are not. The fact show that masive cuts in government employment and spending are more necessary for recovery during slowdowns that at any other time.]
• • •
condrag says:
“1921 style spending cuts would only do well in a 1921-style post-war economy, which we are not in.”
Flat wrong. But I suppose that even though your argument fails based on real world evidence, it is the best argument you have, so you’ve gotta run with it despite all the contrary evidence. And if you believe we are not in a post-war economy, maybe you forgot about the winding down of Afghanistan, the discharge of 12% of the military, and the end of the American war in Iraq. So your argument is simply a red herring. Further, the current US economy is much richer now than it was in the ’20’s, and thus has much more room for government cuts. Without massive cuts in federal employment and transfer payments, we are in for many more years of the equivalent of stagflation [and if you believe the government inflation numbers, then you don’t believe your lyin’ eyes when you see the double-digit rise in grocery prices, in rents, in gasoline prices, in commodity prices, etc.]
The fact is that the 1921 Depression is a true, real-world test lab of how to fix the economy in short order. It has nothing to do with the Great Depression: as I showed in my link, the two depressions were handled totally differently. Both Hoover and FDR flooded the system with easy money folowing 1929, and guess what? The Great Depression was greatly exacerbated as a direct result. The fact that QE is doing exactly the same thing as was done following 1929 means that the result will be exactly the same long, drawn out, slow recovery that we had during the Great Depression.
The 1919-1921 remedy is a crystal clear example of how to best handle a stock market crash. That real world example shows that the economy and employment can fully recover in very short order — while the 1929 crash, with its Krugman-approved nonsense, caused a decade of high unemployment and breadlines.
conradg says:
May 28, 2012 at 1:55 pm
And keep in mind, currency is itself the creation of government. Lenders don’t have their own currency they are lending us. They are lending us back our own dollars, created by our government. That means we have all the power still.
===================
This puzzled me, still does, do you propose that the government takes back control over lending? Instead of as now, borrowing back the money it has printed and paying the interest by your personal taxes collected by the IRS.
Not a healthy option for a president to suggest such a thing, but if the government as servants of the people was ordered to by the people, then could be achieved.
Henry Ford once said “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning”.
Quoting from the Governor’s speech McDonnell emphasised the following extract: “Banking was conceived in iniquity and born in sin. Bankers own the world. Take it away from them, but leave them the power to create money and control credit, and with a flick of the pen, they will create enough money to buy it back. But if you want to continue to be the slaves of bankers, and pay the cost of your own slavery, let them continue to create money out of nothing, and control credit.”
“But how did this situation come about” I asked. “It’s quite simple”, replied McDonnell. “People have been fooled into thinking that central banks such as the Bank of England, the Bank of Portugal and the Federal Reserve Bank of America are owned and controlled by governments. But nothing could further from the truth. They are privately owned by individuals whose forefathers wrested control of these nations´ money supply from elected national governments charged to protect the rights of its citizens.
“They did it by way of bribery, corruption and putting their own people into high powered political positions. You only need to look at how the Federal Reserve came into being in 1913 with the connivance of Woodrow Wilson’s government. If governments have control of their countries monetary supply why are they in debt to the world’s bankers for trillions of dollars? In fact, of course, it is make believe money. It’s conjured up out of nothing. But the population of the world is in hock because of it.”
Extracts from these two links:
http://www.libertyforlife.com/banking/federal_reserve_bank.html
http://www.theportugalnews.com/cgi-bin/article.pl?id=681-11
Read the first for a potted history of the American banking system, and some expansion on: http://www.petitiononline.com/fedres/petition.html
“In reality, the act created a private, for profit, central Banking Corporation owned by a cartel of private banks. Who owns the FED? The Rothschilds of London and Berlin; Lazard Brothers of Paris; Israel Moses Seif of Italy; Kuhn, Loeb and Warburg of Germany; and the Lehman Brothers, Goldman, Sachs and the Rockefeller families of New York.
Did you know that the FED is the only for-profit corporation in America that is exempt from both federal and state taxes? The FED takes in about one trillion dollars per year tax free! The banking families listed above get all that money.
Almost everyone thinks that the money they pay in taxes goes to the US Treasury to pay for the expenses of the government. Do you want to know where your tax dollars really go? If you look at the back of any check made payable to the IRS you will see that it has been endorsed as “Pay Any F.R.B. Branch or Gen. Depository for Credit U.S. Treas. This is in Payment of U.S. Oblig.” Yes, that’s right, every dime you pay in income taxes is given to those private banking families, commonly known as the FED, tax free.”
So, is this what you mean by “we have all the power still”?
“Like many of you, I had some difficulty with the concept of creating money from nothing. You may have heard the term “monetizing the debt,” which is kind of the same thing. As an example, if the US Government wants to borrow $1 million у the government does borrow every dollar it spends у they go to the FED to borrow the money. The FED calls the Treasury and says print 10,000 Federal Reserve Notes (FRN) in units of one hundred dollars.
The Treasury charges the FED 2.3 cents for each note, for a total of $230 for the 10,000 FRNs. The FED then lends the $1 million to the government at face value plus interest. To add insult to injury, the government has to create a bond for $1 million as security for the loan. And the rich get richer. The above was just an example, because in reality the FED does not even print the money; it’s just a computer entry in their accounting system. To put this on a more personal level, let’s use another example.
Today’s banks are members of the Federal Reserve Banking System. This membership makes it legal for them to create money from nothing and lend it to you. Today’s banks, like the goldsmiths of old, realize that only a small fraction of the money deposited in their banks is ever actually withdrawn in the form of cash. Only about 3 or 4 percent of all the money that exists is in the form of currency. The rest of it is simply a computer entry.
Let’s say you’re approved to borrow $10,000 to do some home improvements. You know that the bank didn’t actually take $10,000 from its pile of cash and put it into your pile? They simply went to their computer and input an entry of $10,000 into your account. They created, from thin air, a debt, which you have to secure with an asset and repay with interest. The bank is allowed to create and lend as much debt as they want as long as they do not exceed the 10:1 ratio imposed by the FED.
It sort of puts a new slant on how you view your friendly bank, doesn’t it? How about those loan committees that scrutinize you with a microscope before approving the loan they created from thin air. What a hoot! They make it complex for a reason. They don’t want you to understand what they are doing. People fear what they do not understand. You are easier to delude and control when you are ignorant and afraid.”
And now the banks too big to fail have stolen trillions from the tax payers with the connivance of governments as they created even more ways to create money out of nothing, and the blame put on the taxpayers.. Booms and busts are created by bwankers, they are extremely well organised.
“If you want to be the slaves of banks and pay the cost of your own slavery, then let the banks create money…” Josiah Stamp, Governor of the Bank of England 1920.
From a British look at the bwankers and touching on such aspects as the IMF: http://www.whale.to/m/greaves1.html
And here an interesting look at some options around if we really “have all the power still”: http://georgewashington2.blogspot.ca/2010/03/7-questions-about-public-banking.html
And for the full Josiah Stamp quote: http://quotes.liberty-tree.ca/quote_blog/Josiah.Stamp.Quote.69BB
Smokey,
Hoover cut the federal budget, tightened monetary policy, and made the Depression much worse than it should have been. FDR raised spending, and the Depression lifted so much, that in 1936-7 there was a great deal of pressure to cut spending to balance the budget, which he did, and this brought on the double-dip Depression of 1937-38. That didn’t end until the rampup to WWII which brought much more spending and huge deficits. So that’s the real world experiment supporting Keynesism. I doubt there’s an economist in the world who thinks you could suddenly cut spending by 65% without inducing a long and brutal depression. Oh, sure, humanity would survive, but a lot of people would suffer pretty badly. And the electorate just wouldn’t stand for it. And honestly, just try drastically cutting military spending or Social Security or Medicare/Medicaid. What party is going to propose that, much less carry it out?
Myrrh,
Yes, banking like sausage is something best left unobserved if one wishes to feel good about it. And bankers certainly make it as complicated as possible so as few people as possible will see what they are doing. But that is just my point. Currencies are an agreed fiction which we use to grease the wheels of capitalism. And those who lend us back our own money need that fiction to survive as much as we do. Their livelihoods depend upon it. And yes, the government that issues the currency has all the power, not those who lend it back to us. Not the people, but the government, the Fed, the bankers, the money men. It’s not democratic, but it does keep things moving. Like a shell game. But as long as it’s in everyone’s best interest to keep it moving, it will continue. That’s why the bailout was so necessary. Of course it wasn’t a democratic solution, but it sure was necessary to keep the machine from clogging up and just breaking down.
Now, there are certainly other ways of doing things. Maybe even better ways. But if the world is built upon a certain foundation, it’s very hard to change that foundation without having the world come crashing down at your feet.
conradg says:
May 29, 2012 at 9:50 pm
Myrrh,
Yes, banking like sausage is something best left unobserved if one wishes to feel good about it. And bankers certainly make it as complicated as possible so as few people as possible will see what they are doing. But that is just my point. Currencies are an agreed fiction which we use to grease the wheels of capitalism. And those who lend us back our own money need that fiction to survive as much as we do. Their livelihoods depend upon it. And yes, the government that issues the currency has all the power, not those who lend it back to us. Not the people, but the government, the Fed, the bankers, the money men. It’s not democratic, but it does keep things moving. Like a shell game. But as long as it’s in everyone’s best interest to keep it moving, it will continue. That’s why the bailout was so necessary. Of course it wasn’t a democratic solution, but it sure was necessary to keep the machine from clogging up and just breaking down.
Now, there are certainly other ways of doing things. Maybe even better ways. But if the world is built upon a certain foundation, it’s very hard to change that foundation without having the world come crashing down at your feet.
=============
Ah, now no longer puzzled..
Nonsense, fear moneygering to continue the creation of money out of nothing by the bWankers and their puppet governments – they’re not too big to fail, fail they must; this is organised crime, a fraud, direct theft from the taxpayers. Let it come crashing down and get these sociopath parasitic criminals out of our lives, and especially out of our heads. Let’s get back to real money, a means to facilitate exchanges and nothing more.
We could all buy dollar bills from the US Government at bwankers rates and loan it back to them at face value and charge interest on that loan…
Famous Sir Josiah Stamp Quote
“Banking was conceived in iniquity and was born in sin.
The Bankers own the earth. Take it away from them,
but leave them the power to create deposits,
and with the flick of the pen they will
create enough deposits to buy it back again.
However, take it away from them, and
all the great fortunes like mine
will disappear and they ought to disappear, for
this would be a happier and better world to live in.
But, if you wish to remain the slaves of Bankers
and pay the cost of your own slavery,
let them continue to create deposits.”
by: Sir Josiah Stamp
(1880-1941) President of the Bank of England in the 1920’s, the second richest man in Britain
Source: Speaking at the Commencement Address of the University of Texas in 1927
From:
http://quotes.liberty-tree.ca/quote_blog/Josiah.Stamp.Quote.69BB
The world would be a happier place without them, said the man made rich beyond the dreams of avarice by this crime; let’s drive the money changers out .. for good.
And educate our children properly..
There is no debt – it’s an illusion created out of imaginary money in a deliberate act of theft from the taxpayers.
The aim of the bankers is to bankrupt us all into slavery, governments complicit in this should be dismantled.
Myrrh,
“Let’s get back to real money, a means to facilitate exchanges and nothing more.”
There’s no such thing as “real money”. And don’t tell me gold is real money. It’s not. It’s just a pretty metal with a few uses in electronics and other applications. It’s only money because people believe it is, which is no different than paper or electronic currencies.
As you acknowledge, money is essential as a means to facilitate exchanges, and to allocate capital where it can be the most productive. It’s a necessary fiction. And I’m sure there are better ways to manage these fictitious currencies than we are currently doing, to make them more efficient at their real purpose than is currently the case. But that’s still going to involve currencies and fiat money and lending practices that create more money on credit, etc. Yes, currency debt is a fiction also, because all currency is a fiction, but the purpose is not theft, that’s just one way it can work out. The reform has to involve ways of minimizing the theft, and maximizing the efficiency of the currency markets and lending practices so that real productivity is maximized, rather than financial sector profits.
conradg says:
May 30, 2012 at 10:16 am
Myrrh,
“Let’s get back to real money, a means to facilitate exchanges and nothing more.”
There’s no such thing as “real money”. And don’t tell me gold is real money. It’s not. It’s just a pretty metal with a few uses in electronics and other applications. It’s only money because people believe it is, which is no different than paper or electronic currencies.
========
Real money was the greenbacks, for example, non usurious tokens, that’s its only rational use and that is what makes it real money. Gold standard and all the variations on the theme are merely schemes for making the rich bankers richer and all the poor poorer.
The following from http://www.libertyforlife.com/banking/federal_reserve_bank.html and http://one-simple-idea.com/FederalReserve.htm
“Governments and politicians do not rule central banks, central banks rule governments and politicians. President Andrew Jackson won the presidency in 1828 with the promise to end the national debt and eliminate the SBUS. During his second term President Jackson withdrew all government funds from the bank and on January 8, 1835, paid off the national debt. He is the only president in history to have this distinction. The charter of the SBUS expired in 1836.
Without a central bank to manipulate the supply of money, the United States experienced unprecedented growth for 60 or 70 years, and the resulting wealth was too much for bankers to endure. They had to get back into the game. So, in 1910 Senator Nelson Aldrich, then Chairman of the National Monetary Commission, in collusion with representatives of the European central banks, devised a plan to pressure and deceive Congress into enacting legislation that would covertly establish a private central bank.”
That’s how you got the Federal Reserve – a private bank taking control of the money, Monopoly money, created out of nothing – logically the only reason you could possibly have for not wanting to rock that boat knowing all this, is vested interest.
Thomas Jefferson said, “If the America people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless on the continent their fathers conquered.”
· “The government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the tax payers will be saved immense sums of interest. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. – Abraham Lincoln, assassinated President of the U.S.
“Whoever controls the volume of money in our country is absolute master of all industry and commerce . . . and when you realize that the entire system is very easily controlled one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” – James A. Garfield, assassinated President of the U.S.
“A fiat monetary system allows power and influence to fall into the hands of those who control the creation of new money, and to those who get to use the money or credit early in its circulation. The insidious and eventual cost falls on unidentified victims who are usually oblivious to the cause of their plight. This system of legalized plunder (though not constitutional) allows one group to benefit at the expense of another. An actual transfer of wealth goes from the poor and the middle class to those in privileged financial positions.” (Congressman Ron Paul (R-TX), “Paper Money and Tyranny”)
· “When the President signs this bill [converting to a fiat-money system], the invisible government of the monetary power will be legalized . . . the worst legislative crime of the ages is perpetrated by this banking and currency bill.” (Charles A. Lindbergh, Sr. 1913)
· “Whoever controls the volume of money in any country is absolute master of all industry and commerce.” (Paul Warburg, drafter of the Federal Reserve Act)
· “Permit me to issue and control the money of a nation and I care not who makes its laws.” (Mayer Amschel Rothschild)
==================
Ironic isn’t it? The War of Independence was fought against the British Bwankers, and for the last hundred years they’ve been collecting into their and their cronies private coffers every cent you pay in taxes..
p.s. sorry, didn’t make this clear: the link I gave to the full Josiah Stamp quote has the quote in the comments, you’ll note that the full quote uses the the word “money” not “deposits”.
Funny you should claim that Greenbacks were “real money”, as when they came into existence they were considered fake fiat money, and opposed by the hard money crowd. In fact, the Supreme Court ruled against them the first time around, until the Presidents packed the court with Republicans and reverse the rulings.
The truth is, it’s all fake money, but of genuine symbolic value as a measure of trust in the governments issuing them. Perhaps you think federal reserve notes should be trashed and the fed put out of business, and have the treasury go back to issuing its own notes. Hard to say if that would really be any better. Greenbacks saw huge financial manipulation of the markets also, including the Great Depression, so they hardly represent a flawless system. It would be very interesting to see what the world would look like without central banks, but I don’t think we’ll ever see that. Your crowd is always hoping for an apocalypse of some kind so it all falls apart and we can start over, but I don’t think that’s going to happen, fortunately. More likely are reforms to keep market manipulations to a minimum.
All wealth is only as secure as the Nation and the Military that will protect that right to own and posses gold, gems, metals, coins and other commodities. Look at the Art of Europe that was stolen by the Germans. The gold was taken by the American government one time.
That is why the fiat paper money of the United States is the reserve currency because the world is at risk and most nations could fail – look at the EU and the euro – Japan and the Yen – if war breaks out where would you prefer to have your cash – $ 100 bills are the most sought after bill on planet earth. Look at how many they found in Iraq in Saddam’s houses.
How much do you think gold would be worth if America failed militarily?
conradg says:
May 30, 2012 at 3:23 pm
Funny you should claim that Greenbacks were “real money”, as when they came into existence they were considered fake fiat money, and opposed by the hard money crowd. In fact, the Supreme Court ruled against them the first time around, until the Presidents packed the court with Republicans and reverse the rulings.
? Overruling the bwanking cartel organised from Britain with its usurious creation of money as a commodity? You find that funny? A commodity created out of nothing but a few strokes of the pen with which all industry and commerce is by this controlled, by private companies perpetrating grand larceny by issuing them back to the people as debt plus all the fractional reserve fraud ..
Yep, I too think it funny, that the bwankers got blocked, thrown out of the market place by the introduction of the greenbacks. That they manipulate booms and busts whenever they get control is not well enough known. Time to do it again, drive them out, to go back to a debt free money system and finally get rid of the scheister money changers with their grand larceny of fractional reserve. Heard the other day that their 1913 contract, charter, was for a hundred years, that it runs out at the end of this year. But anyway, what they are doing is unlawful, it’s a con, a fraud on the American taxpayers, who through the bwankers private collection arm, the IRS, are paying the private bwankers interest on these notes, that is theft from the taxpayers passing itself off as tax to the Government – the American government has no right to sell notes to a private company for the private banking company’s profit against the interests of the American people who are forced by this manipulative con to buy them back at face value and charged interest. Just because ‘laws’ can be enacted, doesn’t make them lawful. A con is a con. Fraud is fraud. This is fraud on a grand scale. As the bwankers well understand – if this becomes common knowledge they’re toast. This legal fiction won’t save them.
The truth is, it’s all fake money, but of genuine symbolic value as a measure of trust in the governments issuing them.
False trust, because the Government complicit in the banking scam. Greenbacks were real money, issued without interest, debt free. The fake money is the bwankers buying notes for peanuts and selling them back at face value plus interest. And the government since 1913 has abused that trust against the interests of the American people, it doesn’t have to give it to money changing middle men ..
Perhaps you think federal reserve notes should be trashed and the fed put out of business, and have the treasury go back to issuing its own notes.
Perhaps? Gosh, I’d have thought by now you would have got that I’m saying precisely that..
Hard to say if that would really be any better. Greenbacks saw huge financial manipulation of the markets also, including the Great Depression, so they hardly represent a flawless system.
Bullshit, only when the bankers got control of the money supply, they created the depressions, Great and others by their fractional reserve fraud creating money out of nothing and manipulating the money supply, stop rewriting history. While the American people starved the bwanking cartel was sending out money to create the next wars elsewhere, financing the Russian Revolution because the Tsar wouldn’t let them set up a central bank, besides buying up everything they could at rock bottom prices from those who had no choice but to default on loans. This is organised crime, it’s time this was fully out in the open and we got rid of the retard system.
It would be very interesting to see what the world would look like without central banks, but I don’t think we’ll ever see that. Your crowd is always hoping for an apocalypse of some kind so it all falls apart and we can start over, but I don’t think that’s going to happen, fortunately. More likely are reforms to keep market manipulations to a minimum.
We know what it would look like…, real prosperity. And no, my ‘crowd’ aren’t hoping for any such thing, we want the system of central banking dismantled completely and the criminals held accountable for their fraud.
http://www.thirdworldtraveler.com/Banks/Gold_FedResNotes_WOD.html
“an editorial in the The Union Times during the Civil War – against President Abraham Lincoln’s debt-free Greenbacks
If that mischievous financial policy which had its origin in the North American Republic during the late war [Civil War], should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without debt. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must destroyed or it will destroy every monarchy on the globe.”
When the government first issued the greenbacks they did so to bypass the bwankers manipulation – as before it was notes used simply to facilitate exchanges and the country enjoyed real prosperity without the people been ripped off, as it had before the War of Independence when the British bwankers tried to get control of the debt free money being issued. Even recently the government was issuing debt free money, greenbacks were still being printed.
After 1971 the federal reserve notes were taken off the gold standard, they are issued now soley with the Governments declaration that they are legal tender. That’s all it takes to make real money, the Government must issue its own interest free, debt free, notes as a sovereign nation and the private banking cartel of the money changers outlawed.
The gold backed notes were another bankers scam – same link: “Money reform advocates today tend to argue that the solution to the country’s financial woes is to return to the “gold standard,” which required that paper money be backed by a certain weight of gold bullion. But to the farmers and laborers who were suffering under its yoke in the 1890s, the gold standard was the problem. They had been there and knew it didn’t work. William Jennings Bryan called the bankers’ private gold-based money a “cross of gold.” There was simply not enough gold available to finance the needs of an expanding economy. The bankers made loans in notes backed by gold and required repayment in notes backed by gold; but the bankers controlled the gold, and its price was subject to manipulation by speculators. Gold’s price had increased over the course of the century, while the prices laborers got for their wares had dropped. People short of gold had to borrow from the bankers, who periodically contracted the money supply by calling in loans and raising interest rates. The result was “tight” money – insufficient money to go around. Like in a game of musical chairs, the people who came up short wound up losing their homes to the banks.”
See the film the Wizard of Oz which was pointing out the gold backed money scam, the grand theft illusion, let’s draw back the curtain they’re hiding behind. More on understanding the gold standard scam which makes the bankers richer and enslaves the poor.http://www.goldstockbull.com/articles/debt-free-money-resource-based-economy-superior-gold-standard/
This subject as presented by the private banking cartels and their puppets is clever in its lies about the history, these can only be spotted if the real history is known, an example:
http://fauxcapitalist.com/2009/10/30/the-federal-reserve-lies-about-united-states-notes-lincoln-greenbacks/
“The Federal Reserve lies about United States Notes (Lincoln Greenbacks)
October 30, 2009 by FauxCapitalist
The Federal Reserve first starts off by telling the truth about United States Notes:
“U.S. notes, the first national currency, began circulating during the civil war; they were authorized by the Legal Tender Act of 1862. The Department of the Treasury issued these notes directly. Issuance was subject to limitations; the Congress established a statutory limitation of $300 million on the amount of U.S. notes outstanding and in circulation. Although this amount was significant in Civil War days, it is a very small fraction of the total currency now in circulation in the United States.“
Then, they tell a big lie:
“U.S. notes serve no function that is not already served by Federal Reserve notes.”
Completely false! U.S. Notes were issued interest-free by the government. The purpose they served was to not bankrupt the American people in funding the Civil War, by not subjecting them to an unpayable, interest-accruing debt, from the moment of creation, as Federal Reserve notes do.
They lie, not only mislead, since they give so many accurate details, only to lie about the most important distinguishing function of U.S. Notes from Federal Reserve notes — their interest-free issuance. Sarah Emery, in her 1887 work, Seven Financial Conspiracies Which Have Enslaved the American People, states: “the enactments of July 17, 1861, and February 12, 1862, authorizing the issue of $60,000,000 treasury notes, not bearing interest and payable for all debts, public and private.“
The function they serve that isn’t already served by Federal Reserve notes is that not a single penny of interest was ever due on them, nor will ever be due, by the American people to the bankers or the government.”
These criminal bwankers are just that: http://www.xat.org/xat/usury.html
THE HISTORY OF MONEY PART 2
Colonel Dick Taylor When Lincoln asked if the people of America would accept the notes Taylor said. “The people or anyone else will not have any choice in the matter, if you make them full legal tender. They will have the full sanction of the government and be just as good as any money; as Congress is given that express right by the Constitution.”
Colonel Dick Taylor 1 Lincoln agreed to try this solution and printed 450 million dollars worth of the new bills using green ink on the back to distinguish them from other notes. “The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers….. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power.”
The Americans fought against the London bwankers to get their independence: http://www.kamron.com/Liberty/colonial_script.htm
Colonial Script
“This system guarantees HONEST MONEY. It was not controlled by a private corporation with a monopoly on the credit of the nation as it is today.
There was no inflation or deflation, as long as the MONEY SUPPLY WAS KEPT EQUAL TO THE VALUE OF GOODS AND SERVICES TO BE PRODUCED AND MOVED (distributed).
As will be shown later in this paper, what we really need has already proven itself historically — not only in Franklin’s early colonial days, but in other historical instances.
We will see that it was this system which Franklin describes that was taken away from the America colonies through the gradual encroachments of the British Parliament (Legislative branch of Britain’s government) and the enforcement of this legislation in King’s Admiralty/Maritime/Equity courts set up in the colonies by America’s mother country, Britain, without reference to the common law established by Magna Carta that led to the American Revolution.
Those encroachments are described in the Declaration of Independence.
Is America today being governed without reference to Magna Carta and the national and state Constitutions founded thereon?
What was the condition in England, in Franklin’s day?
All her money was borrowed from private banks at interest, and repressive taxes were laid upon the people.
Private banks usurped the government’s right to create and regulate money. Banks created money or credit “out of thin air”, by mere bookkeeping entries, with no labor or wealth involved or exchanged.
The money supply was not kept equal to the value of goods to be moved. Nor was it issued interest or tax free. It was issued at interest by private for profit banks “out of thin air” just like it is being issued here in America today.
Think about this!
If you had a “magic” checking account with the ability to write unlimited checks against no funds (backing) “out of thin air”, would you not be able to buy and control the whole world eventually?”
From: http://www.heartlandnews.us/02_04_09_debtfreedollars.html
Congressman Calls for Debt-Free Dollars
BY CHRIS PETHERICK
“An Ohio congressman has called on the federal government to take back the power to issue money from the Federal Reserve, the private central bank that, along with Wall Street, is to blame for plunging the world into an economic crisis not seen since the Great Depression of the 1920s and 1930s.
“The Federal Reserve [is] no more federal than Federal Express,” said Rep. Dennis Kucinich (D-Ohio) on the floor of the House of Representatives on Jan. 26. “It’s a collection of private bankers that was established in 1913 by the Federal Reserve Act.””
That’s it, in a nutshell.
Myrrh,
Condrag just does not understand. He picks out isolated points that support his beliefs and constructs his arguments around them, but he does not see the big picture.
For example, his claim about “greenbacks”: Greenbacks followed Brownbacks. Brownbacks were certificates showing that real money, either physical gold or silver, was stored in the Treasury and would be paid on demand to the bearer of the note. Territorial Notes were also issued for Hawaii and the Indian Territories. Goldbacks were gold certificates that were redeemable upon demand, in gold coin [I have numerous examples of all these notes because I have collected pre-1928 ‘large size’ notes for over 30 years, and have several hundred examples in uncirculated condition].
There were ‘Treasury Notes”, Silver Certificates’, and ‘Federal Reserve Notes’ [FRN’s]; all were ‘Greenbacks’ at one time. FRN’s began the debasement of our currency. Prior to that, US currency consisted of bearer notes redeemable in gold, silver, or either/both [eg: 1891 ‘Coin Notes’]. Which would you rather have, a ‘Federal Reserve Note’, or a Gold Certificate’? FDR repudiated the gold clause in 1933, and silver certificates were repudiated in the 1960’s [IIRC]. The last US silver coins were minted in 1964 [with one minor exception, the 40% silver 1965 Kennedy half dollar].
Regarding the Depression of 1921, that is a real world example of how to get past a business panic [just like today’s] in a minimum of time, and with a minimum of suffering. In only eighteen months unemploymend declined from ≈12% to under 3%, and the greatest business expansion and wealth producing decade in American history followed.
But by copying FDR’s mistakes made during the Great Depression, we are in for years of high unemployment [after suffering through 3 1/2 years of extremely high unemployment already]. The government continues to debase our currency, and [several years, to possibly a decade out], a return of double-digit inflation will occur once again, which will steal Americans’ buying power just like it did under the inept Jimmy Carter. A return to the gold standard would rectify most of the problems in the economy, and all of the serious problems. Because you can’t print gold.
Smokey says:
June 1, 2012 at 7:50 pm
For example, his claim about “greenbacks”: Greenbacks followed Brownbacks. Brownbacks were certificates showing that real money, either physical gold or silver, was stored in the Treasury and would be paid on demand to the bearer of the note. Territorial Notes were also issued for Hawaii and the Indian Territories. Goldbacks were gold certificates that were redeemable upon demand, in gold coin [I have numerous examples of all these notes because I have collected pre-1928 ‘large size’ notes for over 30 years, and have several hundred examples in uncirculated condition].
…
A return to the gold standard would rectify most of the problems in the economy, and all of the serious problems. Because you can’t print gold
You also can’t create it, which means you limit the amount of transactions that can take place and you limit wealth to those with the means to acquire gold, and gold’s supply is finite. The notes were taken off the gold standard because by that time it was obviously a fiction they were redeemable for actual gold, only some 40% of gold being required to back up the notes printed, so clearly a gold standard didn’t work. Hence previously Roosevelt’s making illegal redeeming notes for gold, there wasn’t enough gold to be redeemed, and of course the great theft then of making it illegal for the America people to own gold, he stole it all from them.
The New Deal and Roosevelt’s Seizure of Gold: A Legacy of Theft and Inflation
http://www.lewrockwell.com/anderson/anderson154.html
The New Deal and Roosevelt’s Seizure of Gold:
A Legacy of Theft and Inflation, Part 2
http://www.fff.org/freedom/fd0609d.asp
The real problem here is that we’re conditioned to thinking of real money as something that has intrinsic value in itself, but that’s simply making it a limited commodity which then has all the pitfalls of accumulation of it by the powerful and abuse of that power by those who have control, the Wizard of Oz link – bankers used it as they do now notes, by being in control of it they created the booms and busts and picked up the wealth of the people by expanding and limiting its supply at will and calling in loans to create the busts. The Federal Notes are their new gold, but now they have an unlimited supply, they can buy up everything – bankers playing with monopoly money for real.
Re the Wizard of Oz – the slippers were changed from gold to ruby in the film, but it’s about the monopoly of money, of gold, by the bankers in the East which screwed the farmers and resulted in the land grab by bankers as farmers defaulted –
“Populists were especially concerned about the high cost of money. Farmers required capital to purchase agricultural equipment and land. They needed credit to buy supplies and to store their crops in grain elevators and warehouses. At the time, loans for the supplies to raise a crop ranged from 40 percent to 345 percent a year. The Populists asked why there was no more money in circulation in the United States in 1890 than in 1865, when the economy was far smaller, and why New York bankers controlled the nation’s money supply.” http://www.digitalhistory.uh.edu/database/article_display.cfm?HHID=157
That’s where the confusion is here re gold backed and fiat, it’s not that the Fed notes aren’t real money because they don’t have gold backing, fiat money, but because they have created it a commodity as was gold, a limited commodity which they control as they did gold money – and that’s not the purpose of money. And so the confusion compounded by associating debt free notes as if current fiat which can’t be exchanged for gold, as not real money. But the two systems are completely different.
Money should be merely a token of value to facilitate exchanges, for goods, services, labour. That’s all that’s required of it to be. When it is issued debt free, free of interest, by a government for the ease of exchanges, then it is fulfilling its role, its purpose, and that is the only real money. Because, the value in it represents real worth; the hours of labour, the goods created, the animals raised, the corn grown. This is anathema to the bankers, and traditionally monarchies, who want to accrue all wealth to themselves and devalue the worth of others.
Reading up on the American history as I’ve given some links above, there isn’t enough gold to represent the value of the worth of all the people, and even gold standard notes were only backed by 40% gold with the bankers lending money created out of nothing, no gold to back up the notes they produced so it’s all a fiction, and there’s still the problem of control of notes which should not be in private hands, by which they make it a commodity and then don’t have to care about any laws made because they can always game the system when they have control.
As a bit of an aside here re fiction, that’s how bankers in Europe first began the scam, they began giving out notes representing the gold they were entrusted with, for ease of use in exchanges… Shortly after as the bankers became quickly much wealthier than they had been, those depositing their gold with the bankers became suspicious, thinking that the bankers had stolen their gold and so were issuing these notes with nothing to back it, of course the bankers opened their vaults and showed their customers their gold was intact, and they left satisfied – the bankers had discovered the perfect con, they could pretend that every note issued, in loans and so on, was real token of a certain amount of gold which they had in safe keeping, few bothered to check. Over the centuries they perfected fractional reserve to extend their limited supply of gold and that has now done away with the fiction that money was gold backed.
Anyway, as explained to Lincoln, make particular notes legal tender and issue them debt free, interest free, and they become that without needing to go to banks to borrow money at interest – and at the time banks were offering deals of some 30-40% interest – and so it’s been written into the Constitution that the goverment alone has the right to create money – but, as I’m still thinking this through, how does that work for me? This still puts the creation of money into the power of one entity, and absolute power …
Although it’s obvious the debt based money system created by the banks is unworkable, as well as being their means of deliberately defrauding the public of all their wealth by the twin methods of creating booms by extending money and particularly busts by limiting money supply and calling in loans* on top of the basic fraud of collecting the interest by taxes through the IRS passing it off as tax to the government, I’m not sure how it would work with government issued legal tender even if debt and interest free.
What happens if I want to start a business and borrow interest free money from the government which I then hope to pay back as my business prospers, what if my business fails? The government would take whatever assets I had and would end up being the owner of land and property – and that’s not the function of goverment as servant and of course is open to abuse. What happens when someone wants to employ me and has to pay in this legal tender? I can see that being workable, say they are themselves a new business and don’t have a cash flow, they have to go to the monopoly source to borrow it and they are paying double for my services, the loan from the government of the legal tender which they have to give to me and then have to pay back the same amount to the goverment. Although the employer would only be paying back what they borrowed because it is interest free, that still leaves the problem of the what if the business failing and defaulting on the original borrowing from the government. How would that work for me selling some of the corn I’ve grown? Cutting out the middle man and selling direct to the families in my neighbourhood, do they all have to go to borrow money from this monopoly source before they can buy from me and bake their bread? I still have a lot of questions. I think in principle the requirement for an interest free money system is essential, but there is still the problem of investing trust in the government to consider and I think Lincoln here may well have been looking through rose coloured glasses at the government when he’d beaten the bankers –
“The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power.”
Because a monopoly source can’t be guaranteed to be safe, a government remain uncorrupted. That the bankers won in 1913 by gaming the system of voting is the first problem of confusing republic with democracy …
The asterisk above *, is for an example of what happened to a friend running a small travel agency, the family having three offices by borrowing from the bank to build up the business. By the end of each month in the holiday season the company bank account would have 2-3 hundred thousand collected from those buying flights and holidays which would then be paid to those supplying same at the end of the month, this was around the same amount he had borrowed from the bank to set up the business. Under a particularly nasty time in Margaret Thatcher’s manipulations, the banks suddenly called in his loan and hundreds of thousands like it which resulted in massive destruction of small businesses throughout the country which were like my friend’s, doing well, paying their bank loans, not in any financial trouble. In my friends’ case they took the money direct from his account without informing him of it, money which technically wasn’t even theirs to take as it wasn’t my friends money but money he was holding in transit to the owners. He was not only financially ruined by this immoral act, his bank pointed to the small print which said they could call in the loan at any time to justify it, but he lost his industry accreditation because he couldn’t pay for the tickets he’d sold, they took away his ability to trade. And so the bankers wealth grew even more.
Much as I’d like to think that governments would be as high minded as Lincoln thought his would be, we can see by what’s happened with the EPA being given powers that should be those only of congress, high minded ideals have to be made to work and congress can be corrupted.
This morning I found an interesting discussion about all this, beginning: http://www.chrismartenson.com/forum/debt-free-fiat-currency-solution-deflation-and-inflation/12438?page=0#comments
Gregory K. Soderberg gives a very good precis of the problem with debt money system in his first post on that page, but I think rhare on the next page has out of the box thinking which could be some of the solution to the problem I see of legal tender as a government monopoly:
“However, I would say this can be reduced down to a very simple statement:
•Capitalism – A voluntary system of trade based on self interest.
As long as two (or more) parties are free to choose how they interact, it is capitalism and I believe the best solution. As soon as you start placing restrictions on that interaction you are tilting the playing field in favor of one of the parties. This may include a third party that is providing “money” as a form of intermediary for the trade. If If it has ceased to be 100% voluntary then it is no longer capitalism.
So what do I think the solution should be, very simple:
•Goverment shall make no restrictions on trade, money, or what is used as money.
Now, many of you may say but we have to have protections, yada yada yada…. I will concede that this type of system is unlikely to ever be fully acceptable, or at least not without many generations of less and less government involvement. We have had multiple generations of government nannydom to bring us to our current situation and it may take many to get us to a mindset that you have to be responsible for yourself (self sufficiency). That means no SEC, FDIC, FDA, no FED.
But as an intermediate step I think removal of the legal tender laws, removal of taxes on monetary exchange, remove any laws that stop competing currencies from existing and allow parties to a transaction the ability to choose what currency they wish to use is a good first step. There doesn’t have to be one currency or system, many can co-exist and participants can be free to chose what they want to use.
Ron Paul has some comments on competing currencies.”
I shall now have a look at what Ron Paul says about this.. But, I think rhare is missing that it could be possible for such a system to be brought into effect sooner rather than later, because less and less government is the founding principle of your republic – reclaim that. Take out the corruption big industry made of congress, as in allowing them insider dealing privileges, and particularly stop the banksters fraud of the Fed/IRS and begin new money by issuing debt free notes (and by simply taking back into the debt free system the notes they fraudulently printed for the Fed Reserve, wipe out the debt because the criminals should not continue to benefit by the con they created in the debt money system, i.e. it’s a fraud, there is no debt).
The Federal Reserve fraud really has to be dealt with first – that all your IRS taxes go direct to the bankers loaning back the notes to the government at interest is a crime, they are, government and bankers both, defrauding all of the people.
Not only should you all stop paying IRS taxes, you are owed all the back taxes you’ve paid to this banking cartel through its private company collection arm masquerading as the Government…
But further, the bankers monopoly of creation of money must be stopped, whichever way they do it. They were pretty much insufferable shites in the centuries they were building their scam in Europe, but now they’ve spread that everywhere because they have got themselves into the position where they create as much money out of nothing as they want, it is insanity to let them continue.
Besides a good, albeit depressing, timeline of the history of the money changers, the conclusion worth looking at.
http://www.iamthewitness.com/books/Andrew.Carrington.Hitchcock/The.History.of.the.Money.Changers.htm
The History of the “Money Changers”
By Andrew Hitchcock, 26 Feb 2006
Conclusions
In my research, I have discovered those critics who currently condemn the monetary system almost universally suggest that the only solution is to restore a gold backed currency. I don’t think any readers of this timeline can be in any doubt, that such a system will be open to abuse by those very people who abuse it today. Indeed if we introduced a currency backed by chairs, I believe we would find ourselves with nothing to sit on!
The only monetary system that seems to have worked in history is one which is backed by the goodwill of a government and is debt free, such as President Lincoln’s, “Greenbacks.” Fortunately, the Nobel Peace Prize winning economist, Milton Friedman came up with an ingenious solution of wresting back control of the money supply from the bankers, paying off all outstanding debt, and preventing inflation or deflation whilst this process is completed. I summarize this below.
Using America as the example here, Friedman suggests that debt free United States notes be issued to pay off the United States Bonds (debts) on the open market. In conjunction with this, the reserve requirements of the day to day bank the regular person banks with, be proportionally raised so the mount of money in circulation remains constant.
As those people holding bonds are paid off in United States notes, they will deposit the money in the bank they bank with, thus making available the currency then needed by these banks to increase their reserves. Once all these United States bonds are paid off with United States notes, the banks will be at 100% reserve banking instead of the fractional reserve system and then fractional reserve banking can be outlawed.
If necessary, the remaining liabilities of financial institutions could be assumed or acquired by the United States government in a one-off operation. Therefore these institutions would eventually be paid off with United States notes for the purpose of keeping the total money supply stable.
The Federal Reserve Act of 1913 and the National Banking Act of 1864 must also be repealed and all monetary power transferred back to the Treasury Department. The effects of this will be seen very soon by the average person as their taxes would start to go down as they would no longer be paying interest on debt based money to a handful of central bankers.
A law must be passed to ensure that no banker or any person in any way affiliated with financial institutions, be allowed to regulate banking. Also the United States must withdraw from all international debt based central banking operations ie. the IMF; the BIS; and the World Bank.
If all the countries of the world adopted the conclusions above, then humanity will at last be free of these central bankers and their debt based currency. It’s a lovely idea, but first we have to get it past our corrupt politicians many of whom are quite aware of the scam that plays us on a daily basis, however rather than do the job we have elected them to do, they keep their mouths shut and instead look after themselves and their families, whilst the rest of us continue to be exploited.
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How do we get this information out to people? Billboards…?