patrick.net

And Krugman, being a Keynesian, still believes that aggregate demand is the one and only solution to depressions. This is bad, bad reasoning. You should never extrapolate a rule from only one example, especially when that example ignores many lurking variables.

To quote myself from a previous thread,

Keynesians falsely believe that WWII ended the depression by increasing aggregate demand rather than the real reason: WWII restored the trust in the economic engine by ensuring payments for production. Trust, not demand, is the oil of the engine. There was plenty of demand for goods and services during the depression, but no trustworthy means of payment. The same is true today.

The solution is to stop the accounting fraud and realize losses quickly and accurate. Prosecute those who committed fraud and let companies in which fraud ran rampant go bankrupts. Let smaller, more honest firms feed of the carcasses of the too-big-to-fail firms. Then overhaul the system so that it is transparent and people don't have to rely on trust.

Everyone knows that the losses must be fully realized eventually. Nothing can stop that. The approach Keynesians are taking is to realize the losses as slowly as possible spreading them over decades. To do this they must continue the accounting fraud that caused the financial crisis. And in doing so, they prevent trust from being re-established. The end result is that this depression will continue for at least another five years. This depression will be as long as the last one. Unemployment and real wages together won't return to normal levels for at least another five years.

To continue with the lurking variables, before WWII there were two industrialized economic centers: America and Europe. After WWII, Europe was devastated. Europeans were starving. The factories were all destroyed.

Meanwhile, America was completely untouched by the war, except for Pearl Harbor in Hawaii. So America was the only industrialized nation at the time. It had absolutely zero competition. Gee, you think that might have contributed to America's boom. An entire continent of people demanding the production of an industrialized economy but unable to produce it themselves and having to turn to America, the only country that had the ability to produce goods at the time. Fuck, if we had that today, nobody would be unemployed.

WWII killed off all the economic competition for America. To make today like the 1940s, we'd have to nuke all of China, India, and many other 3rd world nations. We need a different solution.

bgamall4 says

austerity cannot work.

Austrian economics isn't just about living within your means. Austrian economics is not synonymous with austerity despite what sound bytes the media mindlessly parrots.

The difference between what we are doing and what we should do are:

1. We shouldn't debase our currency through inflation. This is simply stealing wealth from savers to pay off the debts of people who gambled. This is neither socially just nor wise as it encourages reckless behavior and taking on debt and discourages savings and honest investments.

2. We shouldn't spend money on whatever special interest has the best lobbyists. Contrary to Keynesian philosophy, paying men to dig holes and fill them in is not a path to prosperity. Neither is the aggregated demand generated by warfare. Using wealth to destroy infrastructure is always counter-productive.

3. Instead, we should carefully spend what we have and what money we borrow on investments that provide a real, not imaginary, return. Investments like better power grids, fiber optic Internet access, solar and wind energy farms, hydroponic farms, mass recycling centers, carbon sequestration. What you spend money on matters. Simply spending does not lead to prosperity

4. The money should not be borrowed from the Federal Reserve, nor should the Fed be allowed to increase the money supply. Lack of money is never, ever, ever the problem. Money is an imaginary measuring stick and nothing more. It is not wealth. Increasing money does not increase wealth. It transfers wealth from responsible people to the central banks.

5. Instead the federal government should directly issue government bonds with 8% tax-free interest rates and sell these bonds to U.S. citizens only. If the gvt does this, there would be absolutely no lack of cash for government spending as millions of citizens would gladly take a 100% safe investment with 8% tax-free real return (remember, no inflation!). This is what got the U.S. economy out of the First Great Depression. Back then, they were called war bonds. (Technically, my bond idea is a better stimulus, but those are details.)

6. The massive amount of resources being allocated to the defense industry should be almost entirely reallocated to internal infrastructure until the depression is solved and then should be freed by eliminating federal income tax on the first $100k/yr of earnings.

Also, any idea that you can grow your way out of debt is ultimately doomed to fail. The Earth has finite capacity and cannot support indefinite economic growth. Therefore,

7. Our economic system should be based on maximizing the per capita production rather than blinding seeking unbridle growth. Not only would our economy be better, but so would our environment.

8. Money removed from the economy by any means (deflation or hording) does not decrease wealth. Wealth is determined entirely by present and past production and waste and deterioration. Decreasing the money supply does not decrease wealth, it increases the purchasing power of savings and earnings. If the wealthy were hording money, we'd be better off. Instead, they have dropped all their money in exchange for gold and other assets. The wealthy are hording wealth not money.

bgamall4 says

End demand is a function of an adequate supply of money and of desire to buy.

No. I could run the entire world's economy on one dollar. And I could run it better than our economies currently run, with no bubbles and bursts, no business cycle, no environmental damage, and maximum long-term productivity.

Most important of all, it only takes a single dollar to conduct all present and future business. For more details, read this old thread.

bgamall4 says

Dan, that is BS. Lack of money turning over in the economy was a huge problem in the great depression and is a problem now.

Don't believe everything they taught you in elementary school. American history for kids is 90% propaganda.

Dan8267 says

2. We shouldn't spend money on whatever special interest has the best lobbyists. Contrary to Keynesian philosophy, paying men to dig holes and fill them in is not a path to prosperity. Neither is the aggregated demand generated by warfare. Using wealth to destroy infrastructure is always counter-productive.

bgamall4 says

You are kidding right? Americans who travel abroad say everything from airports to roads are in decay here compared to elsewhere.

Performing legitimate and useful repairs on infrastructure is the Austrian remedy. Paying a man to dig a hole in the ground and then fill it up accomplishing nothing is the Keynesian solution. Paying that man to dig and refill the hole prevents you from using that man to build a road or airport. That's why Keynesian economics is stupid.

bgamall4 says

Then Japan R Us, only we borrow from abroad due to our trade deficit, making us more vulnerable to our creditors.

Japan's two lost decades were caused because the Japanese government refuse to let any of its banks go under. Hence the term "zombie bank".

Dan8267 says

Money removed from the economy by any means (deflation or hording) does not decrease wealth. Wealth is determined entirely by present and past production and waste and deterioration.

bgamall4 says

People in the Great Depression would laugh you out of town on that one if they were still around.

Some of them are still around. But as most Americans in the First Great Depression were patsies who didn't have any understanding of why the system collapsed and had no power to correct it. Much like today.

Still, maybe you are right. The truth goes through three phases. First it is ridiculed. Then it is violently opposed. Finally, it is accepted as self-evident. I'm on stage three and you are on stage one. Come back in twenty years and buy me a beer.

You don't get the idea that money isn't actually a real thing. It's an arbitrary measuring stick. People are out of work because their potential productivity is being wasted by malinvestment of resources and fraudulent accounting.

If printing money was the answer, the economy would be trivial to fix overnight. Printing money is easy. You don't even have to print it. You just update a row in a database and you can quadruple the money supply. Do you really thing that doing that would fix the economy?

It's amazing how many people actually buy the ridiculous proposition that you can have a zero percent of the population producing actually goods and services and still have a robust economy if you just have enough monetary units or if you just keep increasing the number of monetary units.

The U.S. economy has over 500 times as many monetary units as it did in 1913 -- and that's a damn conservative estimate (it's probably over twice that) -- and yet there isn't enough money? Exactly how many monetary units would it take to run the economy in your opinion bgamall4? And if we adjusted the money supply to that or twice that would you then say ok, we can keep the money supply constant?

Dan8267 says

It's amazing how many people actually buy the ridiculous proposition that you can have a zero percent of the population producing actually goods and services and still have a robust economy if you just have enough monetary units or if you just keep increasing the number of monetary units.

Actually it's amazing how ridiculously you distort and misrepresent Keynesian theories. You are very good at presenting strawmen though.

tatupu70 says

Actually it's amazing how ridiculously you distort and misrepresent Keynesian theories.

I don't think it is a distortion.

Keynesian economics rests on the foundation that reduction in aggregate demand is the cause of the bust. That's totally backwards.

The cause of the bust is that malinvestments during the boom phase go kaput.

Secondly, Keynesian economics also recommends that government intervention will help solve the problem of inadequate aggregate demand. Government intervention is always done at the expense of the saver class. Keynes clearly did not have any respect for the savers.

Instead of just stating "you are very good at presenting strawmen", please directly argue for Keynesian economics.

What you're doing is called "Ad Hominem", a classic logical fallacy.

uomo_senza_nome says

Keynesian economics rests on the foundation that reduction in aggregate demand is the cause of the bust. That's totally backwards.

No--that's not true at all. Determining what caused the bust is important, but Keynesian economics is telling you what to do now.

uomo_senza_nome says

The cause of the bust is that malinvestments during the boom phase go kaput

That is certainly part of the cause now. (as it usually is) The income inequality is another cause. Regardless, lack of demand is the issue that must be solved whatever the cause.

uomo_senza_nome says

Government intervention is always done at the expense of the saver class. Keynes clearly did not have any respect for the savers.

That is factually incorrect. Keynes advocted for governments to run surpluses during the good times so that there would be rainy day funds available for use during bad times. Inflating currency would not be required. That fact that our government is not fiscally responsible enough to do it is not a reflection on Keynes.

uomo_senza_nome says

What you're doing is called "Ad Hominem", a classic logical fallacy.

No--not really. If I said Dan was a Patriots fan, therefore his views on economics are crap--that would be an Ad Hominem attack. What I did was simply point out his strawman arguments.

tatupu70 says

No--that's not true at all.

Care to explain why? Or would this just be a blind assertion? Krugman is screaming from the rooftops about lack of aggregate demand. And you can't find a more reputable Keynesian than Krugman.

tatupu70 says

Regardless, lack of demand is the issue that must be solved whatever the cause.

Lack of demand is an issue because you are focusing only on spending and paying no respect to saving. Lack of demand is the effect of households faltering with too much debt .

Reflect on that statement for a moment. And tell me if debt is the problem or demand is the problem.

Stagnant wages is also a problem, but that ties in with the too much debt problem. Wages remaining stagnant have forced households to take on more and more debt until SHTF.

There are several ways of solving it, but we're arguing about the primary cause here.

tatupu70 says

Keynes advocted for governments to run surpluses during the good times so that there would be rainy day funds available for use during bad times. Inflating currency would not be required. That fact that our government is not fiscally responsible enough to do it is not a reflection on Keynes.

This is true. I read a statement somewhere that the present day policy makers are more Keynesian than Keynes. :)

tatupu70 says

What I did was simply point out his strawman arguments.

Point out where they are so that we can see them. Blind assertions get us nowhere.

bgamall4 says

And because libertarians believe they should keep it and because they think it is stealing to tax it, there is no way to get it to the economy that needs it under the libertarian system.

correct!

I think Krugman is largely wrong on the prescriptive side ($10 gasoline isn't going to be doing anyone any good) but that doesn't mean the anti-Keynesians in general or the Miseans in particular are correct about anything.

The real fault of the libertarian right is their blind spot on land.

http://geolib.com/essays/sullivan.dan/royallib.html

and also neoliberal globalism. I'm all for globalism that doesn't come with a trade deficit, but it's selling this country out to push for globalism in the current environment.

bgamall4 says

Artificial distinction.

Are you trying to make the argument that it does not matter whether we perform useful work or non-useful work, just as long as there is work? That is certainly the Keynesian idea. But really, do you believe there is no material differences between the following three scenarios as far as economic productivity is concerned?

Scenario 1: Useful work
We repair roads and infrastructure, upgrade our power grid, build green power production like solar/wind/hydro, improve schools, rebuild New Orleans where it won't get flooded, provide super-fast Internet access to every residency, school, library, and business.

Scenario 2: Destructive work
We build more weapons, advance weapon technology, drop bombs on weaker nations, build more bombs to replace those, increase the number of air-craft carriers, and destroy the infrastructure of other countries.

Scenario 3: Useless but non-destructive work
We build a giant statue of a penis that can be seen from space, the largest structure ever. Then we blow it up. Repeat process 100 times.

If you think that scenario 2 and 3 are as good as scenario 1, then you are not using common sense. Scenario 3 produces no wealth and scenario 2 destroys wealth.

Dan8267 says

The U.S. economy has over 500 times as many monetary units as it did in 1913 -- and that's a damn conservative estimate (it's probably over twice that) -- and yet there isn't enough money? Exactly how many monetary units would it take to run the economy in your opinion bgamall4? And if we adjusted the money supply to that or twice that would you then say ok, we can keep the money supply constant?

bgamall4 says

It is with the 1 percent. And because libertarians believe they should keep it and because they think it is stealing to tax it, there is no way to get it to the economy that needs it under the libertarian system.

The issue of taxing the rich is completely orthogonal to what we are discussing. Hell, I'm for taxing the rich much more than you are. But that's not what we're discussing here.

The Federal Income Tax is not even remotely related to the issue of inflation. Nor is it relevant to the issue of stopping the fraudulent accounting and realizing the losses quickly so they don't keep the unemployment rate high. Furthermore, the rich have replaced their USDs with gold and other assets.

Finally, you still haven't answered the question. You stated that there isn't enough monetary units in the economy. How many monetary units are enough and if we put that many monetary units in the system will people like you stop insisting on adding more monetary units every day? I.e., Do you want inflation simply to tax those with savings, even the poor an middle class who bear the brunt of inflation?

tatupu70 says

Actually it's amazing how ridiculously you distort and misrepresent Keynesian theories. You are very good at presenting strawmen though.

Give a specific example of where I am presenting a strawman argument and why it is a strawman argument. Simply asserting such a thing is a piss poor argument and does not advance this discussion.

And what you call "ridiculous", I call rational and objective reasoning based on mathematics rather than political ideology.

uomo_senza_nome says

Keynesian economics rests on the foundation that reduction in aggregate demand is the cause of the bust. That's totally backwards.

Correct. Both great depressions were triggered by unbridle risk taking amplified by leverage and accounting fraud, and when the fraud was uncovered, instead of realizing all the loses quickly and reallocating resources to productive industry, the money masters chose to hide the fraud and prolong the pain. This destroyed the very trust required to perform day-to-day business. Everybody became a turtle hiding in its shell and productivity stopped.

It is the stoppage of productivity, not monetary units, that kept unemployment high and productivity low. If productivity simply wasn't lowered, but instead the prices of goods lowered to where they sold, then there would have been no First Great Depression.

People buy things when the prices are lowered. Take plasma and lcd tvs for example. Think of all the smartphones, tablets, and other electronics that are selling lot hotcakes because they became much more affordable. Lower consumer prices do not cause a depression. If anything, they alleviate the effects of a depression.

uomo_senza_nome says

What you're doing is called "Ad Hominem", a classic logical fallacy.

Exactly. Ad Hominem arguments indicate that the writer has no legitimate counter-argument to make, yet doesn't want others to realize that the opponent's position is correct.

An Ad Hominem is a general category of fallacies in which a claim or argument is rejected on the basis of some irrelevant fact about the author of or the person presenting the claim or argument. Typically, this fallacy involves two steps. First, an attack against the character of person making the claim, her circumstances, or her actions is made (or the character, circumstances, or actions of the person reporting the claim). Second, this attack is taken to be evidence against the claim or argument the person in question is making (or presenting). This type of "argument" has the following form:

1. Person A makes claim X.
2. Person B makes an attack on person A.
3. Therefore A's claim is false.

The reason why an Ad Hominem (of any kind) is a fallacy is that the character, circumstances, or actions of a person do not (in most cases) have a bearing on the truth or falsity of the claim being made (or the quality of the argument being made).

http://www.nizkor.org/features/fallacies/ad-hominem.html
By the way, will people please brush up on all the argument fallacies so they stop using them. http://www.nizkor.org/features/fallacies

tatupu70 says

Determining what caused the bust is important, but Keynesian economics is telling you what to do now.

Keynesian economics proposes the answers to both the cause and the fix for a depression. It is wrong on both of them.

Unfortunately when people present logical and factual arguments against Keynesian economics and alternative approaches, the supports refuse to listen to the arguments and misinterpret. Keynesian economics has become a sort of religion whose dogma isn't questionable to most people. And that's a bad thing.

tatupu70 says

lack of demand is the issue that must be solved

There is no lack of demand. People are just as materialistic and greedy as they were ten years ago. Everyone wants a 6000 sq.ft. house, five 90" plasma televisions, a Lamborghini, a Ferrari, and a vacation home in Hawaii.

People will buy stuff if it's affordable. If you keep productivity up and you don't cook the books. Make no mistake. Either the fraudulent behavior in the financial industry is dealt with through criminal prosecutions and the public accounting made accurate so everyone knows what and where the loses are, or we will continue this depression for another 10 years as the fraud slowly dissipates.

It's better to fix the problem right away than to keep hiding the severity of the problem. Realizing losses over long periods maximizes those loses because it prevents people from being productive and employed.

tatupu70 says

The income inequality is another cause.

Income inequality is a serious problem, but that problem has nothing to do with Keynesian vs. Austrian philosophy.

tatupu70 says

Keynes advocted for governments to run surpluses during the good times so that there would be rainy day funds available for use during bad times.

Our government is Keynesian and it hasn't done that. And saving for a raining day is a good idea, but Austrian economics promotes that as well. The big difference between Keynesian and Austrian economics is that Keynesian doesn't give a rats ass what you spend the money on or where you get it from, and Austrian economics does.

The money should come from honest taxation, not by covertly taxing only responsible savers. And the money should be spent on things that will return wealth to society in the long-run, things that are useful to society. Austrian economics does not say that government should never spend on public works projects. It says it should spend only on useful public works projects not useless (giant penis statues) or destructive (warfare) projects. Keynesian says it's all good.

Our war on terror has spent 25% of the resources on the war on terror as it spent on WWII. According to Keynesian economics, if we spend four times as much on military operations killing brown people, we'll get out of this depression. Paul Krugman, who is a very intelligent person despite having a blind spot for Keynesian economics, actually believes this. However, since Krugman like I am, is a peace promoter, he won't say make war against brown people. Instead, he'll say make war against green people. But the economic principle is the same regardless of the ethical difference.

http://www.youtube.com/embed/nhMAV9VLvHA

Do you really think that misspending trillions of dollars on preventing an alien attack that isn't going to happen since the aliens don't even exist is going to solve the depression? A massive mal-investment is the solution to the massive mal-investments that caused the depression? This is like trying to save a drowning person by throwing buckets of water on him. It is simply ridiculous. Yet, that is what Keynesians promote.

Austrian economics says that money is far better spent on investing in infrastructure that will return wealth to society and paying for that investment through honest means, not parasitically stealing from savers via inflation.

And debt is bad. Sometimes it makes sense to take on debt in order to invest in something that will have good long-term returns like a house or a college degree. But debt is still bad and should be minimized and paid back as quickly as possible. Debt is not money, but our currency is based on it. That's a really bad thing.

uomo_senza_nome says

Stagnant wages is also a problem

Of course stagnant wages are only a problem because of inflation. Without inflation, stagnant wages would not lower the quality of life or cause households to go into debt. Inflation not only taxes a person's life savings while letting the ultra-rich go untouched, they also harm anyone living on wages or a fixed income source like social security, pensions, IRAs, and 401Ks. Inflation makes your grandmother eat dog food.

http://www.youtube.com/embed/BfOWWuTyZ7c

uomo_senza_nome says

I read a statement somewhere that the present day policy makers are more Keynesian than Keynes.

Agreed. And this is actually a very typical phenomenon with humans. A human H proposes a philosophy P. Over time the followers of P change it to become more and more extreme to the point where H wouldn't even recognize it.

bgamall4 says

No, the cause of the bust is hot money getting out of the bubble it caused.

So, if hot money stayed in the bubble it would have never burst? Ponzi schemes mathematically cannot continue forever.

And even if the housing bubble magically did continue forever, it would be extremely bad because money spent on housing cannot be spent on infrastructure, education, vacations, electronics, concerts, restaurants, furniture, cars, home solar panels, maid service, or anything else. Money spent on housing starves the 99% of the economy that isn't housing and mortgage financing.

A bubble that didn’t burst would be the worst possible thing for an economy. It would starve us all. The bubble is the problem.

tatupu70 says

No--not really. If I said Dan was a Patriots fan, therefore his views on economics are crap--that would be an Ad Hominem attack. What I did was simply point out his strawman arguments.

Actually, what you said was

Actually it's amazing how ridiculously you distort and misrepresent Keynesian theories. You are very good at presenting strawmen though.

And that is most certainly an Ad Hominem attack. Perhaps you use them so often, it has become an overlooked habit.

A real counter-argument would state what the Straw Man argument was by identifying person A, person B, position X, and position Y. For details, remember the defnition of the Straw Man argument.

The Straw Man fallacy is committed when a person simply ignores a person's actual position and substitutes a distorted, exaggerated or misrepresented version of that position. This sort of "reasoning" has the following pattern:

1. Person A has position X.
2. Person B presents position Y (which is a distorted version of X).
3. Person B attacks position Y.
4. Therefore X is false/incorrect/flawed.

You have done none of the above except identifying me as person B.

Would you like to try again?

Of course a smart person would realize that I never intentionally misinterpret any person's argument since I believe the analysis, not the conclusion, is what is important. If you understand that, you'll understand everything I say and believe. It's really an easy concept, but many people just don't seem capable of understanding it.

tatupu70 says

If I said Dan was a Patriots fan, therefore his views on economics are crap

Normally, I'd make a smart-ass remark in reply, but since I know nothing about sports, I'll refrain.

The Krugman video also reminded me that Krugman is for inflation. I say if the government wants to print more money, it should give all the newly printed money to savers in proportion to the percent of their income that they saved. We can make the top 1% ineligible for this handout.

Once I get my share of the newly printed money, I'll stimulate the economy by going to the local strip joint and letting them handle my stimulus package.

uomo_senza_nome says

Care to explain why? Or would this just be a blind assertion? Krugman is screaming from the rooftops about lack of aggregate demand. And you can't find a more reputable Keynesian than Krugman.

Sure--it's a fine distinction to be sure. I don't think Keynesian economics denies that malinvestment causes a recession. It's saying that the malinvestment eventually causes a lack of demand. And creating that demand can heal the economy.

.uomo_senza_nome says

There are several ways of solving it, but we're arguing about the primary cause here.

You are arguing about the primary cause. I am not. I'm more focused on how to heal the economy.

uomo_senza_nome says

Point out where they are so that we can see them. Blind assertions get us nowhere.

No problem. I thought I did. I quoted it right above my sentence about strawmen arguments. When someone writes a sentence about what "others believe" or what "Keynesians think", what follows is often a strawman.

Dan8267 says

Give a specific example of where I am presenting a strawman argument and why it is a strawman argument. Simply asserting such a thing is a piss poor argument and does not advance this discussion.
And what you call "ridiculous", I call rational and objective reasoning based on mathematics rather than political ideology.

I have twice now. We'll have to disagree on your rationality and objectivity...

Dan8267 says

There is no lack of demand

Here's where you are confused. Demand is not just desire to buy something. It's also having the ability to pay for it.

http://en.wikipedia.org/wiki/Demand_(economics)

That's how income inequality comes into the equation. Sure poor people (now 50% of the population) want stuff. But they don't have the ability to pay for it so it creates NO demand. When you understand this, you understand Keynes.

Dan8267 says

And that is most certainly an Ad Hominem attack. Perhaps you use them so often, it has become an overlooked habit.

I still don't see how it's an Ad Hominem attack. You presented a strawman argument (again) so I called you on it. I remembered you doing it several times in the past as well...

tatupu70 says

I have twice now

And yet you cannot provide the specific examples now? I call your bluff.
tatupu70 says

We'll have to disagree on your rationality and objectivity...

Whether or not you think I am rational or objective is irrelevant. From your postings I can only conclude that your interpretation of "rational and objective" is "someone who agrees with me". And that's a crappy interpretation.

tatupu70 says

Demand is not just desire to buy something. It's also having the ability to pay for it.

Which is why you should lower the damn prices if you want to increase demand! Hence, aggregated demand and falling prices aren't the problem. When the prices are lower the demand goes up. You don't have to create artificial demand by having the government build bombs or giant penises.

tatupu70 says

http://en.wikipedia.org/wiki/Demand_(economics)

More evidence that a Wikipedia reference indicates that one should simply skip reading a post. By the way, did you know that Plato was an ancient Hawaiian surfer and weatherman taught by Barney the Purple Dinosaur? I read that on Wikipedia.

tatupu70 says

I still don't see how it's an Ad Hominem attack.

I can only dumb down a subject so much. You'll simply have to read the definition of Ad Hominem attack, which I have provided a link for, and think about how it applies to what you wrote. Although you don't see how your posts are an Ad Hominem attack, the rest of us do.

tatupu70 says

You presented a strawman argument (again) so I called you on it.

Correction: you asserted that I made a Straw Man attack, but did not point to where or why. I've shown you the proper way to identify and report a Straw Man attack, now use that way or we'll all know you're assertion is full of shit.

tatupu70 says

You presented a strawman argument (again) so I called you on it. I remembered you doing it several times in the past as well...

This is another example of an Ad Hominem attack. "I remember you doing it several times in the past as well…". Therefore, everybody should take my word that you only use Straw Man attacks even though no evidence whatsoever has been presented.

But I suppose you don't "see how this is an Ad Hominem attack" either. And that is precisely why your attempts at a priori reasoning should not be taken seriously. There are certain rules to logic and it's trivially easy for someone who understands those laws to determine if an argument follows them or not. Mathematics is the most transparent of all subjects.

Dan8267 says

And yet you cannot provide the specific examples now? I call your bluff.

I copied it directly above my initial comment. Like I said, when you start a sentence with "others believe", or "Keynesian's think" what follows is often a strawman.

Dan8267 says

Which is why you should lower the damn prices if you want to increase demand! Hence, aggregated demand and falling prices aren't the problem. When the prices are lower the demand goes up. You don't have to create artificial demand by having the government build bombs or giant penises.

That is just not right. Lowering prices shrinks the economy, causing unemployment to rise and wages to further shrink. It's a death spiral. Demand will never increase in this scenario.

Dan8267 says

More evidence that a Wikipedia reference indicates that one should simply skip reading a post. By the way, did you know that Plato was an ancient Hawaiian surfer and weatherman taught by Barney the Purple Dinosaur?

Wow--talk about ignoring the facts if they disagree with you. I could quote 1 million sources if you'd like. Do you disagree with the definition of demand?

As to the rest of your post--it's not worth arguing about. I'm not saying you are wrong about x because you are wrong about y. I'm saying you are wrong about x and you used a strawman as your backing.

tatupu70 says

I copied it directly above my initial comment. Like I said, when you start a sentence with "others believe", or "Keynesian's think" what follows is often a strawman.

Your initial comment was

tatupu70 says

Actually it's amazing how ridiculously you distort and misrepresent Keynesian theories. You are very good at presenting strawmen though.

This does not identify a Straw Man argument. I've given you the means to argue against a Straw Man argument and explained exactly what you need to do. Stop bullshitting and do the math or shut up. You get zero credit for not showing your work.

For your convenience, I'll repeat how to deal with a Straw Man argument.

Dan8267 says

A real counter-argument would state what the Straw Man argument was by identifying person A, person B, position X, and position Y. For details, remember the defnition of the Straw Man argument.

The Straw Man fallacy is committed when a person simply ignores a person's actual position and substitutes a distorted, exaggerated or misrepresented version of that position. This sort of "reasoning" has the following pattern:

1. Person A has position X.
2. Person B presents position Y (which is a distorted version of X).
3. Person B attacks position Y.
4. Therefore X is false/incorrect/flawed.

You have done none of the above except identifying me as person B.

Would you like to try again?

Since you claim " I copied it directly above my initial comment. " , you should apply the above form to the section of my post you quoted, which was

Dan8267 says

It's amazing how many people actually buy the ridiculous proposition that you can have a zero percent of the population producing actually goods and services and still have a robust economy if you just have enough monetary units or if you just keep increasing the number of monetary units.

If you cannot do this, you are full of shit. I've given you enough chances to retake the test already. Simply repeating your assertion like Fox News isn't good enough.

tatupu70 says

Lowering prices shrinks the economy, causing unemployment to rise and wages to further shrink.

So the economy is worst off for lower prices on plasma and LCD high def televisions, high resolution digital cameras, cheap laptops, cheap tablets, cheap smartphones, 99 cent apps? These things have wrecked our economy? Our economy would be better off if gas was $4.50 / gal? Did the lower gas prices after Bush left office cause massive unemployment? Would our economy be better off if a 1200 sq.ft. crappy house built in 1923 cost $400,000?

Lower prices stimulate consumer spending and increase aggregated demand. And aggregated demand and consumer spending is exactly what Keynesians promote. It's amazing how Keynesians don't see when they contradict themselves.

Cheap consumer goods, cheap gas, cheap housing all let consumers buy more of everything, which in turn increases demand and stimulates production. Production in return makes goods even cheaper as economies of scale are realized. Let me put this in terms that you would understand. Production good, high prices bad. We need to make stuff to consume stuff.

tatupu70 says

It's a death spiral. Demand will never increase in this scenario.

I guarantee that if house prices fell to 1993 levels, all that excess inventory would be sold damn quickly. Hell, I'd buy three houses myself. 'Nuff said.

tatupu70 says

I could quote 1 million sources if you'd like.

Please, go ahead. And then realize that one credible source is worth more than 1 million non-credible ones.

tatupu70 says

Do you disagree with the definition of demand?

You have not presented a definition of demand. And I don't argue nomenclature. It's a waste of time. So I'll present you with the definition of demand.

Demand:
An economic principle that describes a consumer’s desire and willingness to pay a price for a specific good or service. Holding all other factors constant, the price of a good or service increases as its demand increases and vice versa.
tatupu70 says

I'm saying you are wrong about x and you used a strawman as your backing.

Yeah, and that's the problem. You're saying it without any evidence or reasoning or even citing the specifics of the Straw Man fallacy. I could say that you throw puppies in a river. That doesn't make it a fact no matter how many times I repeat it or how I phrase it: " I remembered you doing it several times in the past as well...".

Proof by repetition is not proof.

Dan8267 says

So the economy is worst off for lower prices on plasma and LCD high def televisions, high resolution digital cameras, cheap laptops, cheap tablets, cheap smartphones, 99 cent apps?

I knew you would come back with this. I should have addressed it in my first post. Prices falling due to productivity gains are different from prices falling due to lack of demand. Increasing productivity is good (although you need to make sure the gains are distributed across society. Something the US is not good at). Shrinking GDP is not.

Dan8267 says

I guarantee that if house prices fell to 1993 levels, all that excess inventory would be sold damn quickly. Hell, I'd buy three houses myself. 'Nuff said.

I wasn't specifically talking about housing, but since you brought it up--how would that help matters at all? You aren't the problem. The problem is the other 50% of the people that have no demand.

Dan8267 says

Please, go ahead. And then realize that one credible source is worth more than 1 million non-credible ones.

And by credible--you mean one that you agree with? Because I most definitely DID provide a defintion. I'll ask again--do you disagree with that definition?

OK--last time on the strawman. I'm sorry I ever brought it up.

Dan8267 says

It's amazing how many people actually buy the ridiculous proposition that you can have a zero percent of the population producing actually goods and services and still have a robust economy if you just have enough monetary units or if you just keep increasing the number of monetary units.

Who thinks this? According to you it's amazing how people believe this so it must be some population much greater than zero.

tatupu70 says

It's saying that the malinvestment eventually causes a lack of demand. And creating that demand can heal the economy.

What is the Keynesian prescription for "creating that demand"? Please state this as well.

tatupu70 says

I'm more focused on how to heal the economy.

How exactly?

tatupu70 says

When someone writes a sentence about what "others believe" or what "Keynesians think", what follows is often a strawman.

Not really. You want an example?

"Keynesians think that excessive savings have an adverse effect on the economy".

There you go. That's not a strawman.

Here's Keynes himself:

“Saving is the act of the individual consumer and consists in the negative act of refraining from spending the whole of his current income on consumption.”

According to Keynes, saving is bad bad bad. Spending is good good good.

Keynes has basically disparaged the whole act of saving right there in that one sentence.

tatupu70 says

OK--last time on the strawman. I'm sorry I ever brought it up.

So you're agreeing that Dan hasn't really presented any strawman, but you just told that he presented it?

This is the very definition of Ad Hominem.

uomo_senza_nome says

What is the Keynesian prescription for "creating that demand"? Please state this as well.

It could come from any number of areas. Building/updating infrastructure is a common prescription. Food stamps should also qualify. Or unemployment insurance.

uomo_senza_nome says

Not really. You want an example?

lol. This is getting completely ridiculous. If I were to say it's often sunny in San Diego, would you hurry up and post that it was cloudy last Tuesday??

uomo_senza_nome says

According to Keynes, saving is bad bad bad. Spending is good good good.
Keynes has basically disparaged the whole act of saving right there in that one sentence.

No he hasn't. You are completely misinsterpreting him. As I think you are aware because this whole post seems to be somewhat tongue in cheek.

uomo_senza_nome says

So you're agreeing that Dan hasn't really presented any strawman, but you just told that he presented it?
This is the very definition of Ad Hominem.

No--it was a strawman. I'm just sorry I brought it up.

tatupu70 says

Building/updating infrastructure is a common prescription. Food stamps should also qualify. Or unemployment insurance.

Who gets to decide this building/updating infrastructure? The Government? We all know that the Government is fiscally irresponsible. So Keynes recommends that we rob money from the savers and then go spend it on the economy.

Food stamps and unemployment insurance provide no long term benefit to the society. They do ensure the society doesn't degenerate into complete chaos. They're stop gap measures.

So where is real, sustainable Keynesian prescription?

tatupu70 says

No he hasn't. You are completely misinsterpreting him.

What the fuck?

I stated what Keynes said. I did not pull that statement out of my ass you know. What do you want as proof then, that Keynes thought savings was bad?

tatupu70 says

No--it was a strawman. I'm just sorry I brought it up.

You still haven't pointed to the exact statement which Dan said, that you think is a strawman.

So far you've just said:

tatupu70 says

When someone writes a sentence about what "others believe" or what "Keynesians think", what follows is often a strawman.

Please cut and paste the exact statements that Dan has said, which you believe are strawmen. We would like to see. Stop evading the question.

tatupu70 says

I knew you would come back with this

It should be obvious what arguments I will make since I systematically follow good reasoning. If you cannot predict my response, you're not using logic. Naturally, the converse of this statement is not necessarily true. You can predict my responses without being logical in yours.

It's irrational people who are chaotic an unpredictable.

tatupu70 says

Increasing productivity is good (although you need to make sure the gains are distributed across society. Something the US is not good at). Shrinking GDP is not.

The P in GDP stands for "product", which means what our economy produces. Increasing productivity increases the GDP. Do I really have to explain a truism?

So, by saying "Shrinking GDP is not [good].", you are agreeing with me that productivity not aggregated demand is the basis of a good economy. If only you could put down your dogma to see that you have reached the same conclusion as I have.

As for income equality, for the ten thousandth time, that's an orthogonal issue. Nobody is disagreeing with you on that, but it's irrelevant to the Keynesian vs Austrian debate. Keynesian economics does not promote income equality. At least Austrian economics indirectly does by maximizing each person's productivity and letting them keep more of the fruits of their labor. And I mean "labor" not "rent-seeking". You'd have more equality under Austrian economics, but that's an entirely different story.

tatupu70 says

I wasn't specifically talking about housing, but since you brought it up--how would that help matters at all? You aren't the problem. The problem is the other 50% of the people that have no demand.

Elizabeth Warren did a study that compared the discretionary spending of a typical 1970s family to one today. What she discovered to her surprise was that the 1970s family had much more discretionary income -- that is, income after paying taxes and buying necessities. The reason for this is that families today spend far more on three necessities: housing, health insurance, and schooling (particularly college) -- I don’t use the term education because you don't pay for that.

These three industries are starving American families of their income that they would have spent on other things. According to what you have said in this thread, it would be a very bad thing for the cost of housing, health insurance, and schooling to drop. I say that's complete bullshit because money spent on these items is money that can't be spent on other things.

Falling prices are not a bad thing. In a healthy economy the prices of all goods and services should fall with time asymptotically approaching an efficient minimum. In fact, the only goods that should rise in price are diminishing resources like fossil-based fuels. But I don't see you bitching and moaning that gas prices have fallen, and they have fallen due to "lack of demand" rather than "increased productivity". So you should be jumping up and down like an angry leprechaun about lower gas prices. That is, if you actually consistently applied your theory to reality.

In fact, rising gas prices are a good thing because they make green technology more competitive and cause people to reduce their consumption of oil, which in turns decreases the likelihood of war, increases political stability, and reduces the risk of a sudden, sharp shortage of oil.

tatupu70 says

And by credible--you mean one that you agree with?

Now that's a Straw Man argument! Here's the form:

Person A - Dan
Person B - Tatupu
Position A (Dan's) - Arguments should reference credible sources.
Position B (Tatupu's deliberate misinterpretation of Dan's position) - Arguments should reference sources who's facts and conclusions support those of Dan.

See, it's clearly a Staw Man argument, you hypocrite. And that's how you argue against a Straw Man argument.

As a bonus, I might actually give an example of a creditable and a non-creditable source. Since I'm a nice guy, I will.

Back in the thread In Soviet Russia Bachmann is a professor of current affairs, Shrek used Wikipedia as his go to source. I tore apart the credibility of Wikipedia by showing some of the ridiculous claims it made. In contrast, the source I used was The American Political Science Review, which has a much better reputation. Now, I don't always agree with The American Political Science Review or any other source, but at least the sources I quote would be respected in a court of law. I doubt Wikipedia would be.

tatupu70 says

Because I most definitely DID provide a defintion.

No honey, you didn't. The closest you came is a vague description of one of the properties of demand in the form: Demand is not just desire to buy something. It's also having the ability to pay for it.

That's hardly a definition. A definition is what I gave, repeated below.

Demand:
An economic principle that describes a consumer’s desire and willingness to pay a price for a specific good or service. Holding all other factors constant, the price of a good or service increases as its demand increases and vice versa.

Notice the difference?

Now personally, I find it silly that we have to argue definitions of Standard English words. Do you really think that the typical reader here doesn't understand the concept of supply and demand?

Well, since you keep harping on it… Do you object to my definition of demand? It kicks the ass out of your vague description.

tatupu70 says

I'm sorry I ever brought it up.

That's good. Once you feel that way about everything you've brought up, you can start listening and learning. But first, you must unlearn all the crap in your head. Letting go of misconceptions is much harder than learning new ideas. Congratulations, you have taken your first step into a larger world.

tatupu70 says

Who thinks this? According to you it's amazing how people believe this so it must be some population much greater than zero.

All Keynesians. That's why we have more people working on mortgage backed security derivatives and other such nonsense than on building infrastructure and goods. That's why we tax labor instead of rent-seeking. That's why we squeeze the middle class instead of the venture capitalist.

The philosophy of our government is "Labor bad. Hedge funds good.".

uomo_senza_nome says

Food stamps and unemployment insurance provide no long term benefit to the society. They do ensure the society doesn't degenerate into complete chaos. They're stop gap measures.

No shit Sherlock. That's the point. The economy needs a short term boost to get things moving again. Government spending during bad times to replace lost demand. Government saving during good times to put a regulator on the economy.

I don't know what you are asking about a real, sustainable presecription. Why should there be any?? That's a whole different policy discussion.uomo_senza_nome says

Please cut and paste the exact statements that Dan has said, which you believe are strawmen. We would like to see. Stop evading the question.

You've got to be kidding. I've done it 3 times now. Read my post at 9:10 am. I'm not sure how addressing the same question 3 times can be construed as evasion, but whatever...

uomo_senza_nome says

I stated what Keynes said. I did not pull that statement out of my ass you know. What do you want as proof then, that Keynes thought savings was bad?

Yep--I didn't say you misquoted him. You misrepresented what he meant. He was not making a judgment on savers vs. debtors--just stating that the economy grows faster when the velocity of money is high. It's not an earth shattering concept.

tatupu70 says

He was not making a judgment on savers vs. debtors--just stating that the economy grows faster when the velocity of money is high.

That's stupid.

Velocity of money will be super high during a hyperinflation. So according to you, Keynes thinks Hyperinflation is freaking awesome? because during a hyperinflation, things are exploding when valued in dollars.

Keynes did not respect savers. I've proven this with a statement of Keynes himself. He said "saving is a negative act". What more do you need? Please prove it otherwise if you can.

tatupu70 says

You've got to be kidding. I've done it 3 times now. Read my post at 9:10 am. I'm not sure how addressing the same question 3 times can be construed as evasion, but whatever...

Are you saying everything that you quote as Dan said in your 9.10 am post are strawmen?

tatupu70 says

You've got to be kidding. I've done it 3 times now.

Nope. You asserted that I made many Straw Man arguments, but didn't point them out since they don't exist. When called on your b.s., you repeatedly refuse to support your accusations and merely repeated your assertions. Then you made a blatant Straw Man argument yourself, which I pointed out specifically in the manner you should have done had I really made any such Straw Man arguments.

Game over man! Game over!

Dan8267 says

So, by saying "Shrinking GDP is not [good].", you are agreeing with me that productivity not aggregated demand is the basis of a good economy. If only you could put down your dogma to see that you have reached the same conclusion as I have.

If that's what you were saying, then I probably would agree with you. You've spent all your time in an imaginary battle with the forces of Keynes instead. If anyone is blinded by dogma, it's you.

Dan8267 says

Increasing productivity increases the GDP

Not necessarily. If you increase productivity by 100% by automating all factories and laying off the workers, but all the gains are hoarded by the top 1% of the population and not shared with the former workers, then increasing productivity will almost certainly not increase GDP. Prices will go down, but demand will go down faster. The supply demand curve intersection will end up at a point with fewer sales.

Dan8267 says

As for income equality, for the ten thousandth time, that's an orthogonal issue.

Income inequality is NOT orthogonal. It is extremely important to all discussion about how we got here and how we can fix the economy.

Dan8267 says

According to what you have said in this thread, it would be a very bad thing for the cost of housing, health insurance, and schooling to drop.

Again--that's not what I said. That's what you would like me to have said--but you're wrong.

Dan8267 says

But I don't see you bitching and moaning that gas prices have fallen, and they have fallen due to "lack of demand" rather than "increased productivity". So you should be jumping up and down like an angry leprechaun about lower gas prices. That is, if you actually consistently applied your theory to reality.
In fact, rising gas prices are a good thing because they make green technology more competitive and cause people to reduce their consumption of oil, which in turns decreases the likelihood of war, increases political stability, and reduces the risk of a sudden, sharp shortage of oil.

You've pretty much answered your own exception there. Gas is mostly made overseas so it is a drain on the US economy. Lower prices are a smaller drain so are good.

Dan8267 says

Now that's a Straw Man argument! Here's the form:
Person A - Dan
Person B - Tatupu
Position A (Dan's) - Arguments should reference credible sources.
Position B (Tatupu's deliberate misinterpretation of Dan's position) - Arguments should reference sources who's facts and conclusions support those of Dan.
See, it's clearly a Staw Man argument, you hypocrite. And that's how you argue against a Straw Man argument.

Dan, Dan, Dan. Really. Please give up the strawman argument discussion. You clearly don't get it. That was not a strawman.

If you don't like wiki fine. That's your prerogative. But to dismiss everything is pretty short-sighted and dumb. Anyways, for the 4th time--do you disagree that having the ability to pay is required to qualify as demand?

Dan8267 says

All Keynesians. That's why we have more people working on mortgage backed security derivatives and other such nonsense than on building infrastructure and goods. That's why we tax labor instead of rent-seeking. That's why we squeeze the middle class instead of the venture capitalist.

Ahhh.. Here we go. Thank you. Saying all Keynesians believe, " the ridiculous proposition that you can have a zero percent of the population producing actually goods and services and still have a robust economy if you just have enough monetary units or if you just keep increasing the number of monetary units." is the essence of a strawman argument. Build a strawman (Keynesians believe you can have zero % of the population producing...) then knocking it down.

And to say that hedge fund managers are Keynesian is beyond absurd, or that we aren't building infrastructure because of Keynes is equally ridiculous. Infrastructure projects are the very essence of Keynesian economics.

uomo_senza_nome says

Keynes did not respect savers. I've proven this with a statement of Keynes himself. He said "saving is a negative act". What more do you need? Please prove it otherwise if you can.

Keynes was talking about the macro economy. If you don't get this, then there's no need to have any further discussion.

Dan8267 says

Game over man! Game over!

Yes it is. You lost.

tatupu70 says

Keynes was talking about the macro economy. If you don't get this, then there's no need to have any further discussion.

What the heck is the macro economy if you remove out all the human participants?

So you're saying that some humans deciding to save is OK, but all humans deciding to save is NOT OK?

Why is that?

tatupu70 says

" the ridiculous proposition that you can have a zero percent of the population producing actually goods and services and still have a robust economy if you just have enough monetary units or if you just keep increasing the number of monetary units." is the essence of a strawman argument.

To be sure, Krugman honestly believes that easy monetary policy and massive fiscal policy will kick start the economy. He argues from the viewpoint that 2% inflation is good because the middle class is hurting with stagnant wages. But the problem is -- you can't centrally plan the economy. An economy is a dynamic complex system. To reduce it to static mathematical models ignores several long term unintended consequences.

Massive fiscal policy from a deficit-spending government is robbery from the saver class. Easy monetary policy hurts a large section of fixed income savers (especially the pensioners). Krugman can ignore away all these effects, because his static mathematical models say so.

Krugman genuinely believes that his prescriptions will save the economy. But Krugman also has this myopic view that deflation is always bad, which is clearly not the case.

uomo_senza_nome says

What the heck is the macro economy if you remove out all the human participants?
So you're saying that some humans deciding to save is OK, but all humans deciding to save is NOT OK?
Why is that?

Nope--that's not what I'm saying. It's pretty simple--just read what I write. That's what I'm saying.

tatupu70 says

Not necessarily. If you increase productivity by 100% by automating all factories and laying off the workers, but all the gains are hoarded by the top 1%

Those are a lot of IFs and they don't reflect reality. Yes, the top 0.1% does horde much of the gain of technology, but it is never 100%.

tatupu70 says

Income inequality is NOT orthogonal. It is extremely important to all discussion about how we got here and how we can fix the economy.

It is orthogonal to the discussion of whether simply increasing aggregate demand is the solution or stopping the accounting fraud, realizing the losses quickly, and reallocating resources is the solution.

We can discuss income inequality all you want. There is nothing in Paul Krugman's plan to fix the economy by battling imaginary space aliens that will address income inequality.

Seriously man, you waffle on the issues worse than John Kerry and Mitt Romney at an all you can eat IHOP buffet. Try to keep track of your own arguments so you don't contradict yourself. If you can't even agree with yourself, why should we?

Dan8267 says

Now that's a Straw Man argument! Here's the form:

Person A - Dan
Person B - Tatupu
Position A (Dan's) - Arguments should reference credible sources.
Position B (Tatupu's deliberate misinterpretation of Dan's position) - Arguments should reference sources who's facts and conclusions support those of Dan.

See, it's clearly a Staw Man argument, you hypocrite. And that's how you argue against a Straw Man argument.

tatupu70 says

Dan, Dan, Dan. Really. Please give up the strawman argument discussion. You clearly don't get it. That was not a strawman.

Holy shit! Did Tatupu just deny that he made a Straw Man argument when I showed with mathematical precision that his argument is the quintessential example of a Straw Man argument? I never understood how someone could just tell a lie that is so obviously a lie. It is trying to argue that "ax^2 + bx + c = 0" isn't a quadratic equation. It meets the fucking definition!

I mean it's one thing to repeat a factual lie like some statistic. But to lie about something self-evident like "atmospheres don't contain air" takes some kind of psychopathic disorder.

Tatupu, you bullshitted about my making a Straw Man argument and then made one yourself. To save face, admit you mistake and learn from it. You're like a child that refuses to admit he broke the vase when his parents question him about it. The parents know he broke the vase and want the kid to just admit to it. There's a lesson in honesty here.

tatupu70 says

But to dismiss everything is pretty short-sighted and dumb.

I don't dismiss everything. I dismiss Wikipedia. If there is a factual statement on Wikipedia that happens to be true, then it should be damn easy to find a reputable site that also makes that statement. Given that Wikipedia mixes truths with falsehoods with no regards to accuracy means you cannot trust a statement simply because it appears on Wikipedia. And the reader should not have to do the research to find out which of your Wiki quotes are accurate and which are hogwash. You the writer have the burden of proof. As such, it never makes sense to quote Wikipedia. Go to a real source.

By the way, this is the second Straw Man argument you made. Again, here's the form.

Person A: Dan.
Person B: Tatupu.

Dan's actual argument: Wikipedia is not a reliable source.
Tatupu's deliberate misinterpretation: No source is reliable.

The thing about Straw Man arguments is that they are almost always intentional deception used by people with no real defense. It's rare that someone accidently makes a Straw Man argument, and when it does happen by accident, the offender typically apologizes for misinterpreting the statement and then addresses the real argument made by person A.

tatupu70 says

Yes it is. You lost.

Ironically, that's the best argument you have ever made.

uomo_senza_nome says

Krugman honestly believes that easy monetary policy and massive fiscal policy will kick start the economy. He argues from the viewpoint that 2% inflation is good because the middle class is hurting with stagnant wages.

Yes, he honestly does believe that. And Krugman is one of the smartest Keynesians there are. He's no dummy. But he does have a blind spot. He unquestioning accepts the principles that mild inflation is always good and that the way to get out of a depression is to suddenly and increase aggregate demand regardless of what demand you are increasing: hospitals or bombs, no difference.

I say it's much better for society to build hospitals than bombs. Hospitals have a return on investment. Bombs just destroy wealth. It does matter on what the government spends our money.

It also matters how the government gets it. Net inflation is always a bad thing, as is net deflation. The only time inflation should be used is to counter past deflation, and the only time deflation should be used is to counter past inflation so as to keep the money supply constant. I don't give a flying fuck what the money supply is. We can increase it a billion, trillion fold if you like. But whatever you make it, keep it fucking constant. The only reason that bankers increase the money supply is because it is a mechanism that steals money from savers and wage earners and gives it to that 1% your always bitching about.

How about this? How about if we change the mechanism of inflation such that the newly created money is given to the people in perfect proportion to the amount of money they already have. I.e., the purchasing power of your money isn't affected after the money supply is increased. Similarly, the amount of debt you have is increased proportionally. The net result is zero transfer of wealth and more monetary units. Somehow, I suspect you won't like that.

Inflation is theft. It's not a legal tax because I get no representation in the Federal Reserve. I cannot vote Fed board members out of office. I have no say in what the rate of inflation is. Hell, the Fed no longer even reports the rate of inflation.

Meanwhile, the real cause of the financial crisis, ramped fraud and low interest rates, continue unabated.

uomo_senza_nome says

But the problem is -- you can't centrally plan the economy. An economy is a dynamic complex system. To reduce it to static mathematical models ignores several long term unintended consequences.

Sure--but you can't just ignore it either. You try to control it as best you can. You assume (incorrectly IMO) Krugman's motives and desires. He uses models at times to help understanding, sure.

Massive fiscal policy, when used correctly, is the least painful of evils. Krugman does not ignore the evils--he understands the trade-offs and chooses the course that he feels best manages them.

My guess is that Krugman believes that unemployment is the biggest hindrance we face and our policies should be to lower it. From that viewpoint--deflation is bad.

If you are from the camp-I have a job, F*&# everyone else, then your viewpoint is obviously different. And deflation is OK for you.

Dan8267 says

Tatupu, you bullshitted about my making a Straw Man argument and then made one yourself. To save face, admit you mistake and learn from it. You're like a child that refuses to admit he broke the vase when his parents question him about it. The parents know he broke the vase and want the kid to just admit to it. There's a lesson in honesty here.

Dan--I have no problem admitting when I'm wrong. I have done it several times on pat.net. In this case, I'm not wrong. You can BS about mathematical precision all you want. I didn't say no source is reliable--I said that you shouldn't dismiss all of wiki because you may have found one listing you didn't like. fyi--you still haven't answered whether you think having the ability to pay should be part of the definition of demand. Why is that?

Dan8267 says

The thing about Straw Man arguments is that they are almost always intentional deception used by people with no real defense. It's rare that someone accidently makes a Straw Man argument, and when it does happen by accident, the offender typically apologizes for misinterpreting the statement and then addresses the real argument made by person A.

So, now that I've explained why your argument was a strawman 4-5 times, do you admit your mistake? If it was an accident, no problem. If it was hyperbole, I understand. Just get over it.

tatupu70 says

you still haven't answered whether you think having the ability to pay should be part of the definition of demand. Why is that?

You are delusional. I clearly gave my exact a href="/post/1208460#comment-796673">definition of demand and it did not use the word "ability" but rather "willingness". Now willingness is influence by how much money a person has, but no I did not use the word "ability" in my definition. I would pay $100 million for a house if I had $100 quadrillion, but I don't. What matters is my willingness given the money I have.

So, are you saying my definition sucks ass? If so, make your case or shut up.

tatupu70 says

now that I've explained why your argument was a strawman 4-5 times

What color is the sky in your world?

If you think that you have even identified what the real and false arguments in the alleged Straw Man (and learn how to fucking spell it already) argument are, then you are a pathological liar. Furthermore, you made two easily identifiable Straw Man arguments yourself on this page so far and when you are called out on you transparent hypocrisy, instead of correcting yourself you continue to lie about them. The other readers on Patrick.net are stupid enough to be fooled by your lies. They can compare the definition of Straw Man argument provided as a link to the arguments you and I have made and see which ones match. It's not that hard.

By repeating lies that everyone knows are lies, you simply make yourself look worse. At this point, it is clear you didn't make an honest mistake. When you constantly repeat lies, that indicates the presence of bad intentions.

The only thing that you've proved here is that the more often a person cites Wikipedia, the dumber he is.

Dan8267 says

Geeze, I've only been calling this the Second Great Depression since 2007, five years ago.

I've been calling it The Greater Depression since 2007. Mine is more accurate.

tatupu70 says

Massive fiscal policy, when used correctly, is the least painful of evils.

This may be correct sometimes in a working economy. But "massive fiscal policies" cause massive distortion in any economy. Today American economy plainly does not work because of huge previous distortions. As it is today first of all it needs massive clean up. It needs to get rid of all pretend business it has. BTW, that means deflation. Any fiscal policy that tries to slow down the process only extends the pain and is doomed in the long run.

tatupu70 says

Nope--that's not what I'm saying. It's pretty simple--just read what I write. That's what I'm saying.

what the heck man?

Seriously.

You said macro economy. What do you mean by that word "macro economy"? Please enlighten us.

tatupu70 says

You try to control it as best you can.

Wrong. You try to control what you can and you don't control what you cannot.

Rule of law as imposed by a proper government is a form of control that we can control. Self-regulation is a myth and properly established laws regulate the way people interact to ensure there's honesty and fairness.

But how the heck can you centrally plan the whole f-ing economy? The Soviets tried they failed. The Argentinians tried, they failed.

Yes unemployment is a big problem but IT IS NOT THE ONLY PROBLEM.
Too big to fail banks are the elephant in the room that nobody wants to talk about. Why the heck is Krugman not arguing to break up the big banks like Simon Johnson is?

Why should unemployment have the highest priority over everything else (such as massive misallocation of capital and labor due to misguided government and monetary policies)? Why aren't the policies that led to this disaster in the first place, not getting fixed yet?

These are not easy questions, but we shouldn't be afraid to ask them just because Keynesian dogma is super-pervasive.

uomo_senza_nome says

But how the heck can you centrally plan the whole f-ing economy?

I'm sorry, but I'm not following your points. Who is advocating centrally planning the whole economy? Krugman is not. I am not.

uomo_senza_nome says

Yes unemployment is a big problem but IT IS NOT THE ONLY PROBLEM.
Too big to fail banks are the elephant in the room that nobody wants to talk about. Why the heck is Krugman not arguing to break up the big banks like Simon Johnson is?

I would argue that unemployment is a much larger problem than the TBTF banks. I agree they should be broken up--really they should never have been allowed to get TBTF in the first place, but we're here now. I would guess that the problem now is that's it's nearly impossible to break them up until they are healthy.

uomo_senza_nome says

Why should unemployment have the highest priority over everything else (such as massive misallocation of capital and labor due to misguided government and monetary policies)? Why aren't the policies that led to this disaster in the first place, not getting fixed yet?

IMO, unemployment is the largest problem, so it should have the highest priority. And misallocation of capital is NOT solely a government policy problem. The free market does this on its own quite well, thank you. The lack of regulation has been addressed. It's hard to fix the free market problems though--banks and S&Ls need to figure out how to design compensation policies so their execs act in the company's best interest rather than their own. That's not the government's job.

uomo_senza_nome says

These are not easy questions, but we shouldn't be afraid to ask them just because Keynesian dogma is super-pervasive.

I agree we should talk about them. What does Keynesian economics have to do with it?

uomo_senza_nome says

what the heck man?
Seriously.
You said macro economy. What do you mean by that word "macro economy"? Please enlighten us.

I'm saying that what's good for the macro economy in the abstract doesn't mean that it's the best policy for individuals. And I'm certain Keynes wasn't making a judgment on savers.

I don't even think he was advocating an economy with no savings--he was just saying that saving is a drain. Look at Japan. It's a concept.

Dan8267 says

By repeating lies that everyone knows are lies, you simply make yourself look worse. At this point, it is clear you didn't make an honest mistake. When you constantly repeat lies, that indicates the presence of bad intentions.
The only thing that you've proved here is that the more often a person cites Wikipedia, the dumber he is.

OK--I'm done with you. You are more interested in name calling than trying to have a discussion. You are the most guilty of what you accuse others of doing. Dogma has overtaken your thought process and you can't have a rational discussion.

You may now have the last word. And I'm sure the last insult.