Steve Keen
My presentation at the Rosa Luxembourg Foundation in Berlin today on how Neoclassical economics misunderstands the role of private debt in a capitalist economy. I show how to use my Minsky program to model both the Neoclassical "Loanable Funds" vision of lending and the empirically-informed Post Keynesian "Endogenous Money" model.
74 comments:
Saw this earlier today.
Toward the end, at 21:30, he says "expenditure equals income" is assuming Say's Law.
I don't understand how.
To put it straight, he is confused and wrong.
Say's Law is about output being determined by supply (and being constrained by it) and having nothing to do with demand.
Expenditure equals income is a mathematical statement/equality about two separate ways of looking at the same thing.
Expenditure not being limited by Income is an entirely different matter altogether.
[I think "an entirely different matter altogether" will become my favourite line soon]
For a sector, expenditure may be higher than its income. But as a matter of accounting, for the others it is the other way round, so that expenditure = income.
One thing I would point out is that Keen sets up a hypo where he says:
"An entrepreneur goes to a bank with an idea and the bank says that is a good idea so here is a loan"
This simply NEVER happens.
There is ALWAYS collateral (an EXISTING ASSET) pledged and involved. ie an automobile or property or receivables or USTs or machinery etc...
You need to "take something to the bank" that is an asset already in existence and other than just an idea... and the govt bank regulators have to agree to the price assigned to the collateral asset.
rsp,
The collateral is often created with the loan, no? Such as a new home? So the collateral can't always be said to be in existence.
Not that it matters much except for the benefit of the bank; new purchasing power is created whether backed by collateral or not except if the loan defaults the bank can "sterilize" the created purchasing power by selling the collateral.
f,
Not really.
The mortgage wouldnt close without a title which requires an existing house...
New homes are usually started and can be completed by the developer/builder with some little working capital for labor where necessary and trade credit (ie non-bank credit)...
(all the subs can get a lien on the property if they are not paid)
Mortgage is issued after occupancy permit which means logically the house has to already be built.
Same with autos
Dealers get floor plan loans collateralized by the inventory on their "floor" or lot and then when somebody comes in a buys a car, the loan and title is transfered to the buyer. Again, the asset is already in existence.
A/R loans: Work has already been done and delivered and invoices signed off on.
HELOC: House already exists.
Banks always just come in after the non-bank sector have gotten together to put the asset together.
Banks come in and try to get no value added interest on loans against the assets that the non-bank sector has already produced. Meanwhile no $NFA have been created to account for the interest.
All the non-bank sector people involved to create the real sset all get paid and are just fine via the principle portion of the loan and then the moron bankers play 10 dogs after 8 bones.
This eventually blows up when the $NFA flows required for the net liability people in the non-bank sector to be able to pay interest become insufficient to these net liability cohorts to service the said loans which is mathematically inevitable as Paul Meli has shown.
Moron banks dont have a workable business model and they dont even know it... our banking system is just not designed for success sorry they are all morons.
rsp,
Ramanan
Last time, you started out by dismissing Keen's presentation as being "a total hodgepodge" and full of "simple errors".
Then after a long discussion Matheus Grasselli responded, and it turned out that Keen's presentation wasn't actually "a total hodgepodge" or full of "simple errors" at all. Your eager dismissal turned out to have been… a little too eager.
y,
Total hodgepodge and amateurish.
Grasselli himself commits major accounting mistakes.
Sorry, if you want me to be explicit.
y,
You may be interested in this:
http://www.debtdeflation.com/blogs/wp-content/uploads/2012/11/Discussion_Keen.pdf
The person Debunking Keenonomics himself has issues but does manage to catch Keen's errors.
I am interested in this because I like heteredox economics and am worried that Keen will end up being an embarassment to heterodoxy.
He is generally fun otherwise and needs to be shown his errors which are straightforwardly simple.
If the essence of "neoclassical economics" is avoidance of the self-evident fact of private bank money creation and the fact that loans need not come from deposits and savings, then it is purposeful academic fraud to call Austrian economics "neoclassical". The focus of Austrian economics is ALWAYS on loans created out of nothing that do not come from savings or deposits. That's the source of the boom/bust cycle and depressions/recessions.
The focus of Austrian economics is ALWAYS on loans created out of nothing that do not come from savings or deposits. That's the source of the boom/bust cycle and depressions/recessions.
But most money used in transactions is bank money which is chiefly financed by deposits because that is the least expensive financing available. Moreover, when bank borrow from the cb they pledge savings (normally tsys) as collateral.
Ramanan,
Keen responds briefly to Rendahl, with a link to a recording of their discussion:
http://www.debtdeflation.com/blogs/2012/11/29/a-macroeconomics-debate-at-cambridge/
But most money used in transactions is bank money which is chiefly financed by deposits because that is the least expensive financing available. Tom Hickey
Banks have a government backed monopoly on risk-free deposits and transactions so it can hardly be said that the banking system as a whole finances itself with deposits. Those deposits are in effect "captive" with no other liquid, risk-free place to go.
"The focus of Austrian economics is ALWAYS on loans created out of nothing that do not come from savings or deposits. That's the source of the boom/bust cycle and depressions/recessions"
This is what i don't understand about the savings argument. Do Austrians think under a fixed supply of money (gold) loans <= than the gold supply? So if there's 1 billion gold ounces , only 1 billion of loans can be on the books? . Recipients of loan proceeds will deposit that gold somewhere and it will be relent. Many times the gold supply can be outstanding in loans . A hot economy would provide the situation for this to occur. Prices would still rise during credit booms based on the velocity of loans. Busts are guaranteed , because the money supply is fixed and loan supply is not.
Peter Schiff thinks like most that banks lend deposits of others " so we need to save more to lend". Even under this misconception, he still doesn't make any sense. The economy can't save more or less than the money supply. Those dollars are somewhere in banks and would be able to be loaned no matter how many loans were outstanding in the system. Also under this false fixed money axiom how would government borrowing restrict private . The government doesn't borrow and hoard, it borrows and spends. The money goes right back into a bank as payment.
If I take out a loan for 20 gold ounces. buy a car ,the seller deposits it in his bank. That bank then makes a 20 oz loan to someone else and so one. How is that a better price mechanism than anything else. The variance of credit determines the price (demand) of goods , not the supply of what credit is paid back from.
or did i miss something
y,
Keen's confusions are simple to see.
In simple models one writes
Consumption = alpha x Disposable Income
which is a behavioural identity and means Consumption depends on Income.
One could also interpret it to mean that consumption is limited by income (of course consumption can be financed by borrowing also in a slightly complicated model)
Now Keen tends to think
Expenditure = Income
for the economy as a whole as a behavioural relation and interprets it to mean that Expenditure is limited by Income.
So he thinks it is wrong.
However it is an accounting identity and shouldn't be confused with behaviour.
So he modifies the accounting identity (!)
But that is nonsense.
Keen doesn't seem to understand that the behaviour of one sector has an effect on the other sectors.
"behavioural identity"
should read
"behavioural hypothesis"
f,
" it can hardly be said that the banking system as a whole finances itself with deposits. "
If you look at "financing" in the context of it being defined as an accounting "liability", then we can say that banks are "financed" by deposits as deposits are accounted for as Liabilities in the standard GAAP accounting procedures for depository institutions (ie "banks")
This does not conflict with your assertion that banks have a "monopoly" on their activities... it's just a way of describing their activities via standard accounting semantics....
rsp,
@Matt Franko,
Good point, but I tend to think of "financing" as necessarily being voluntary. Bank deposits do not meet the definition of voluntary since people have no other choice for liquid, risk-free money storage.
f,
That is why it is often best to think of banks (depository institutions) as part of the govt sector in analysis.
They have a govt authorized and regulated "monopoly" on their function within the USD system and therefore can be logically thought to be part of the govt sector for analysis purposes...
rsp,
@Matt,
The monetary sovereign SHOULD provide a risk-free fiat storage and transaction service but that service should pay no interest and especially not make any loans. And shortly after that service is set up then government deposit insurance should be abolished.
Of course the above would cause a massive run on the banks so it is important that all bank deposits be 100% backed by reserves first. A universal and equal bailout of the entire population, including non-debtors, with new fiat plus a temporary ban on credit creation during the bailout period, is a just way to provide the new reserves needed.
Ramanan,
"So he modifies the accounting identity (!)"
I thought Grasselli made it clear that they weren't trying to modify the accounting identity (which he agreed was correct), but rather create a model that could describe the behaviour of the real economy...?
Why are you still attacking them with the "accounting identity" argument when they have already acknowledged that it is an identity?
f,
The only other thing I can think of (short of communism) so far is that govt (not the borrower) can pay interest to banks via fiscal...
They can forward interest to banks as banks successfully guide and assist their borrowers thru a process whereby the borrowers successfully return the principle of the loan to the bank...
Like you say set the interest rate low.
If the govt set this rate at 1% and let banks leverage capital 10x that would allow theoretically a 10% gross return on capital... not too high might be a reasonable compromise to communism or like present system whereby they blow themselves up every few years with mathematical proven causal certainty.... rsp,
Have govt run a GIRO retail banking system (.e., thru the PO), and let govt finance primary residence loans at a fixed low rate, like FHA, eliminating the need for other GSEs like Fannie and Freddie.
y,
That is just his assertion.
It is not just about accounting. If one makes conceptual mistakes, the mistakes end up showing in the accounting.
And there are many of them!
Government should not be in the money lending business since even the lending of existing money is discriminatory. Lending money into existence is even worse. Instead, leave all lending and usury for the private sector and let it bear all the risks. As for primary residence loans, a universal bailout plus the ability to save (non-negative interest rates in housing) should enable people to quickly afford a house.
@Matt,
Who says we even need banks to any large extent? Most people would be content to save without losing purchasing power until they had sufficient savings to invest some of them.
Ramanan It is not just about accounting. If one makes conceptual mistakes, the mistakes end up showing in the accounting.
This is the point that Godley made that is echoed by MMT economists.
"It is not just about accounting"
It's about closed-system math relationships…accounting follows.
Recipients of loan proceeds will deposit that gold somewhere and it will be relent. Many times the gold supply can be outstanding in loans . A hot economy would provide the situation for this to occur. Prices would still rise during credit booms based on the velocity of loans. Busts are guaranteed , because the money supply is fixed and loan supply is not.
With a relatively fixed supply of money, as the population increases and the amount of goods and services increases and the demand for money increases, the money becomes more valuable and the tendency will be for prices to slowly go down, spreading the increase wealth of society to everyone. Prices will reflect actual supply of and demand for goods, services and money as that information is dispersed in everyone’s individual mind. There will be no artificial and distorted prices which are the cause of the unsustainable malinvestments that result in artificial booms followed by inevitable busts.
With a relatively fixed supply of money, as the population increases and the amount of goods and services increases and the demand for money increases, the money becomes more valuable and the tendency will be for prices to slowly go down, spreading the increase wealth of society to everyone. Bob Roddis
No. It doesn't work that way since such a money supply would encourage risk-free hoarding as a means to gain purchasing power. But progress (and a real reduction in prices) requires taking risks. So a fixed or slowly growing money supply relative to potential real economic growth is anti-progress.
And there is the moral injustice of government privilege for what should be purely private money forms at most.
In summary, the cure for theft by inflation is NOT theft by deflation.
Tom,
http://www.deirdremccloskey.com/docs/pdf/Article_129.pdf
"Accounting As The Master Metaphor Of Economics"
"With a relatively fixed supply of money, as the population increases and the amount of goods and services increases and the demand for money increases, the money becomes more valuable and the tendency will be for prices to slowly go down, spreading the increase wealth of society to everyone"
Wrong, you end up with a depression.
"Prices will reflect actual supply of and demand for goods"
No, they will reflect deflation.
"There will be no artificial and distorted prices"
There are no "natural" monetary prices.
The price you have to pay for something is the price you have to pay.
How much is a loaf of bread in your local shop? That is the price of a loaf of bread in your local shop.
In a deflation prices will be "distorted" by deflation.
Hayek:
"It is agreed that hording money, whether in cash or in idle balances, is deflationary in its effects. No one thinks that deflation is in itself desirable."
http://butnowyouknow.net/those-who-fail-to-learn-from-history/hayeks-1932-letter-on-the-great-depression/
"am not only against inflation but I am also against deflation."
http://en.wikipedia.org/wiki/Deflation#Money_supply_side_deflation
f,
"Who says we even need banks to any large extent? "
good point but let's get everyone educated as to how banks work within our current USD system (99% probably still think that banks lend out the deposits)...
and put it to a vote and that will be good with me whatever the political process comes up with... write it into law then do it..
rsp
"With a relatively fixed supply of money, as the population increases and the amount of goods and services increases and the demand for money increases, the money becomes more valuable and the tendency will be for prices to slowly go down, spreading the increase wealth of society to everyone"
1. With money more expensive, debts are more difficult to pay, assuming that as prices falls so does the wage as the price of labor.
2. In a closed system in which money is increasing in value, saving is incentivized, but if all income is not spent for household consumption or firm investment, or all saving lent and spent, including owners' share and interest, then money will be come increasingly scarcer and debt-deflation will ensue as debts cannot be paid.
"Wrong, you end up with a depression."
This is so obvious it's amazing it has to be pointed out over and over again.
Businesses invest in plant and equipment to the extent it takes years to recoup their up-front costs for many products. Deflation would make it nearly impossible to extinguish that debt and still make a profit.
The debt is nominal and does not deflate.
On top of capital deterioration and obsolescence. There is no fixed capital stock, but the nominal debt is craved in stone.
"Wrong, you end up with a depression."
There is no reason in fact, history or theory to support that baseless claim. Depressions come about after resources and investments have been mal-invested due to distorted prices. People are quite able to draft long term contracts that take into account the gradual increase in value of money. Further, if someone wants to "hoard" their money, it's their damned money and none of your damned business. Most people are going to want a bigger return on their savings than what hoarding will provide. Like always, there are no problems here that require interference by the busy and perverted little minds of Keynesians. The economic problems we have are the fault of the Keynesians.
"Further, if someone wants to "hoard" their money, it's their damned money and none of your damned business."
Enter the Paradox of Thrift. The attempt to hoard savings ends up with savers (in the aggregate) having to dis-save in order to survive. Saving is impossible for the economy as a whole unless the government net-spends.
It is becoming apparent that you are OK with a handful (very few) of people succeeding and everyonee else living in squalor.
There is no such thing as "the paradox of thrift". More of Keynes' bullshit to destroy bourgeois values. And it worked.
"With a relatively fixed supply of money, as the population increases and the amount of goods and services increases and the demand for money increases, the money becomes more valuable and the tendency will be for prices to slowly go down, spreading the increase wealth of society to everyone. Prices will reflect actual supply of and demand for goods, services and money as that information is dispersed in everyone’s individual mind. There will be no artificial and distorted prices which are the cause of the unsustainable malinvestments that result in artificial booms followed by inevitable busts."
completely ignored the point and regurgitated some canned text book theory.
While the supply of money is fixed. Supply of loans are not. They can be many times more the fixed supply of money. Higher loan velocity means more spending power over the same period with less velocity, which inflates prices.
Boom and bust cycles happened under gold systems. At what point during the cycle do Austrians think "the price is right" at the peak? the valley? during rising or lowering prices? and why is this momentary window of "correct prices" so important to anything
in reality prices reflect the amount of purchasing power relative to the amount of goods and services available. Purchasing power includes credit which can expand and contract regardless of the money supply.
"There is no such thing as "the paradox of thrift".
It is becoming apparent where Bob's arguments come apart…starts with the simplest of the universal realities.
Bob thinks a universe exists where there is no friction and perpetual motion exists. If one truly believes this I say that person is truly unreachable.
"money becomes more valuable and the tendency will be for prices to slowly go down, spreading the increase wealth of society to everyone."
Rothbard on deflation:
"what matters for business is not the general behavior of prices, but the price differentials between selling prices and costs (the “natural rate of interest”). If wage rates, for example, fall more rapidly than product prices,
this stimulates business activity and employment." (Rothbard 2000, p. 17)
LOL. Accept lower wages now, in the hope that product prices will fall in future. Then if they do fall, repeat the same process over again. This may mean that you can no longer afford your mortgage payments and will lose your home. It may also mean that you lose your job as the result of a collapse in demand. Tough titties.
More Rothbard on deflation:
"It has often been maintained that a failing price level injures business firms because it aggravates the burden of fixed monetary debt. However, the creditors of a firm are just as much its owners as are the equity shareholders. The equity shareholders have less equity in the business to the extent of its debts. Bond holders (long-term creditors) are just different
types of owners, very much as preferred and common stock holders exercise their ownership rights differently. Creditors save money and invest it in an enterprise, just as do stockholders. Therefore, no change in price
level by itself helps or hampers a business; creditor-owners and debtor-owners may simply divide their gains (or losses) in different proportions. These are mere intra-owner controversies." (2000, p. 51)
LOL. Mass bankruptcies lead to banks repossessing and liquidating everything, or what Bob calls "spreading the increased wealth of society to everyone". Of course unemployment skyrockets. But hey that just means that we can force workers to accept even lower wages yet again! Yippee!
Most people are going to want a bigger return on their savings than what hoarding will provide. Bob R
Genuine lending is risky. Until people have enough money to risk some of it, most of them will hoard rather than lend for interest.
But how can one even have a money supply that continually increases in value unless it enjoys some form of government privilege? Otherwise, people who found it difficult to obtain one currency for the payment of private debts would use another, no?
So your fixed or slowly growing money supply fails on libertarian grounds too.
There is no fixed capital stock, but the nominal debt is craved [sic] in stone. Tom Hickey
Yep. That's where common stock as private money is superior; the "creditors" (stock owners) are not guaranteed ANY return, much less a fixed one.
"There is no reason in fact, history or theory to support that baseless claim"
Yes there is. Austrians prefer pseudo-history, or just outright lies in the case of Rothbard.
"Depressions come about after resources and investments have been mal-invested due to distorted prices"
Whatever. Your slogans don't get any more insightful through repetition you know.
"if someone wants to "hoard" their money, it's their damned money and none of your damned business."
Hayek: "It is agreed that hoarding money, whether in cash or in idle balances, is deflationary in its effects. No one thinks that deflation is in itself desirable."
"there are no problems here that require interference by the busy and perverted little minds of Keynesians. The economic problems we have are the fault of the Keynesians"
Your ignorant and obnoxious views have practically no value whatsoever.
"There is no such thing as "the paradox of thrift"."
Your deluded ignorance is mindboggling.
"your fixed or slowly growing money supply fails on libertarian grounds too"
That's why Rothbardians have to make up the nonsense that money creation is a "fraud", so they can impose their ideology on others by making it illegal. (After they've got rid of democracy and torn up the Constitution, of course).
y, you're doing such a good job on the Austrian delusion there is little reason for Lord Keynes to visit us anymore except as a tag-teamer.
completely ignored the point and regurgitated some canned text book theory.
While the supply of money is fixed. Supply of loans are not. They can be many times more the fixed supply of money. Higher loan velocity means more spending power over the same period with less velocity, which inflates prices.
Boom and bust cycles happened under gold systems. At what point during the cycle do Austrians think "the price is right" at the peak? the valley? during rising or lowering prices? and why is this momentary window of "correct prices" so important to anything
in reality prices reflect the amount of purchasing power relative to the amount of goods and services available. Purchasing power includes credit which can expand and contract regardless of the money supply.
1. It's not my intent to teach you people Austrian economics. All I care about is determining for my own purposes that a) none of you have the slightest familiarity with Austrian economics and b) that I stay informed of whatever nonsense (racist racist racist racist!!!) you throw at me in response. I was not familiar with MMT before, but now I am. It's the same old same old on steroids.
2. miller B is actually saying things that support my position: That there will not be a shortage of credit with a relatively fixed supply of gold money which will increase demand for goods and services. The MMTers and Keynesians, on the other hand, scream that such a regime will be deflationary and thus cause an immediate and inevitable depression. So which is it? Frankly, I don't care.
3. I’m not particularly concerned if there are rising or falling prices. My goal is to leave economic decisions, including the supply and type of money, to the citizens, including poor and average people, because I trust their judgment and abilities to make these decisions. Keynesians and MMTers, on the other hand, are arrogant know-it-alls who think that average people living their lives voluntarily and exchanging goods and services (aka “the market”) are so stupid that they need firm guidance at the point of a gun from benevolent and omniscient bureaucrats (the MMTers and Keynesians). Thus, we find the worship of the “state” as run by the MMTers and Keynesians so that they might impose their dreams on society. Viewing average and poor people as too stupid to run their own lives sounds pretty “racist” to me.
My goal is to leave economic decisions, including the supply and type of money, to the citizens, including poor and average people, because I trust their judgment and abilities to make these decisions. Bob R
Then you should realize that in order to have a true free market in private money creation that government money MUST only be inexpensive fiat. Do you?
As for private monies, they should be for the payment of private debts only else they are not truly private.
Racism:
"The belief that all members of each race possess characteristics, abilities or qualities specific to that race, especially so as to distinguish it as inferior or superior to another race or races.
Prejudice, discrimination, or antagonism directed against someone of a different race based on such a belief."
(Oxford English Dictionary)
Ludwig von Mises:
"It is perfectly legitimate to assume that the races are different in their cognitive abilities and in their willpower and accordingly are unequally suited for the task of setting up societies, and that the better races are characterized in particular by their special ability to strengthen social bonds."
Ludwig von Mises, The Market Economy, trans. Danny Lewis, (Jena: Gustav Fischer, 1932), p. 297
"certain races have contributed nothing or very little to the development of civilization and can, in this sense, be called inferior."
http://mises.org/humanaction/chap3sec6.asp
"It may be admitted that the races differ in talent and character and that there is no hope of ever seeing those differences resolved. Still, free-trade theory shows that even the more capable races derive an advantage from associating with the less capable and that social cooperation brings them the advantage of higher productivity in the total labor process".
Mises, L. von. 1951. Socialism: An Economic and Sociological Analysis, pp. 325-326.
Murray Rothbard:
"individuals, ethnic groups and races differ among themselves in intelligence and many other traits, and intelligence, as well as less controversial traits of temperament, are in large part hereditary.
"when we as populists and libertarians abolish the welfare state in all of its aspects, and property rights and the free market shall be triumphant once more, many individuals and groups will predictably not like the end result. In that case, those ethnic and other groups who might be concentrated in lower-income or less prestigious occupations, guided by their socialistic mentors, will predictably raise the cry that free-market capitalism is evil and "discriminatory" and that therefore collectivism is needed to redress the balance. In that case, the intelligence argument will become useful to defend the market economy and the free society from ignorant or self-serving attacks. In short; racialist science is properly not an act of aggression or a cover for oppression of one group over another, but, on the contrary, an operation in defense of private property against assaults by aggressors."
http://www.lewrockwell.com/rothbard/ir/Ch75.html
“The ethno-racial clashes between African tribes have been particularly murderous in Rwanda and Burundi because these two small areas are the densest in Africa... In this relatively small area there have lived for centuries, side by side and at each other's throats, two very different racial tribes: the Hutu and Tutsi… The Tutsi are an Ethiopid, Nilotic people. The Hutu, on the other hand, are short, squat Bantu, a closer approximation to what used to be called "Negro" in America. "Negroes" are now called "black," but the problem here is that the skin color of both the Tutsi and the Hutu are much the same. The real issue, as in most other cases, is not skin color but various character traits of different population groups.
The crucial point is that, in both Rwanda and Burundi, Hutus and Tutsis have coexisted for centuries; the Tutsi are about 15 percent of the total population, the Hutu about 85 percent. And yet consistently, over the centuries, the Tutsi have totally dominated, and even enserfed, the Hutu. How are we to explain this consistent pattern of domination by a small minority? Could it be – dare I say it – that along with being taller, slimmer, more graceful and noble-looking, the Tutsi are far more i-n-t-e-l-l-i-g-e-n-t than the Hutu? And yet what else explains this overriding fact?
http://www.lewrockwell.com/rothbard/rothbard74.html
Rothbard:
“The great fact of individual difference and variability (that is, inequality) is evident from the long record of human experience... Socially and economically, this variability manifests itself in the universal division of labor, and in the "Iron Law of Oligarchy" – the insight that, in every organization or activity, a few (generally the most able and/or the most interested) will end up as leaders, with the mass of the membership filling the ranks of the followers. In both cases, the same phenomenon is at work – outstanding success or leadership in any given activity is attained by what Jefferson called a "natural aristocracy"…
The age-old record of inequality seems to indicate that this variability and diversity is rooted in the biological nature of man…
Let us ponder an example that is deliberately semi-frivolous. Suppose that we observe our culture and find a common dictum to be: "Redheads* are excitable." Here is a judgment of inequality, a conclusion that redheads* as a group tend to differ from the nonredhead population... The idea that "redheads* are excitable" did not originate out of the thin air or as a divine commandment; how, then, did the idea come into being and gain general currency?... The horrible suspicion begins to loom that perhaps redheads* were singled out because they were and are indeed more excitable and that, therefore, society's "stereotype" is simply a general insight into the facts of reality… If so, then we might conclude that redheads* are biologically more excitable…
Since egalitarians begin with the a priori axiom that all people, and hence all groups of peoples, are uniform and equal, it then follows for them that any and all group differences in status, prestige, or authority in society must be the result of unjust "oppression" and irrational "discrimination." Statistical proof of the "oppression" of redheads* would proceed in a manner all too familiar in American political life; it might be shown, for example, that the median redhead* income is lower than nonredheaded income, and further that the proportion of redheaded* business executives, university professors, or congressmen is below their quotal representation in the population. The most recent and conspicuous manifestation of this sort of quotal thinking was in the McGovern movement at the 1972 Democratic Convention. A few groups are singled out as having been "oppressed"... In particular, women, youth, blacks, Chicanos (or the so-called Third World) were designated as having been oppressed…”
*read: blacks, women, 'Chicanos', etc
http://www.lewrockwell.com/rothbard/rothbard31.html
"Black nationalism" within the United States is then only a phony nationalism, and beginning to look like a drive for an aggravated form of coerced parasitism over the white population.”
http://www.lewrockwell.com/rothbard/rothbard218.html
" I’m not particularly concerned if there are rising or falling prices".
really? the majority of your posts are about correct prices for calcuation.
"there will not be a shortage of credit with a relatively fixed supply of gold money which will increase demand for goods and services."
But why not have flexible money, so that credit is minimize and therefore the boom and bust cycles fewer and less potent. The economy on average should have enough money to facilitate demand and growth without huge credit build up. Boom and bust cycle are minimized under the latter and maximized under the dire need for credit under a (scarcity) gold regime.
next you'll tell me you don't care about boom and bust cycle.
Rothbard:
"It is fascinating that there was nothing in (former Ku Klux Klan leader) David Duke's current program or campaign that could not also be embraced by paleoconservatives or paleo-libertarians; lower taxes, dismantling the bureaucracy, slashing the welfare system, attacking affirmative action and racial set-asides, calling for equal rights for all Americans, including whites: what's wrong with any of that?"
http://www.lewrockwell.com/rothbard/ir/Ch5.html
"During the period when the most incendiary [Ron Paul newsletter] items appeared [Edited and authored by Rockwell] —roughly 1989 to 1994—Rockwell and the prominent libertarian theorist Murray Rothbard championed an open strategy of exploiting racial and class resentment to build a coalition with populist "paleoconservatives," producing a flurry of articles and manifestos whose racially charged talking points and vocabulary mirrored the controversial Paul newsletters"
http://reason.com/archives/2008/01/16/who-wrote-ron-pauls-newsletter
"A key player in the (Mises) institute for years was the late Murray Rothbard, who worked with Rockwell closely and co-edited a journal with him. The institute's Web site includes a cybershrine to Rothbard, a man who complained that the "Officially Oppressed" of American society (read, blacks, women and so on) were a "parasitic burden," forcing their "hapless Oppressors" to provide "an endless flow of benefits."
http://www.splcenter.org/get-informed/intelligence-report/browse-all-issues/2003/summer/into-the-mainstream?page=0,1
Hans Hermann Hoppe:
“One would be well on the way toward a restoration of the freedom of association and exclusion as it is implied in the idea and institution of private property, and much of the social strife currently caused by forced integration would disappear, if only towns and villages could and would do what they did as a matter of course until well into the nineteenth century in Europe and the United States: to post signs regarding entrance requirements to the town, and once in town for entering specific pieces of property (no beggars or bums or homeless, but also no Moslems, Hindus, Jews, Catholics, etc.); to kick out those who do not fulfill these requirements as trespassers...
This means following a policy of utmost discrimination: of strict discrimination in favor of the human qualities of skill, character, and cultural compatibility. It implies that all immigrants must demonstrate through tests not only (English) language proficiency, but all-around superior (above-average) intellectual performance and character structure as well as a compatible system of values – with the predictable result of a systematic pro-European immigration bias.”
http://www.lewrockwell.com/orig/hermann-hoppe1.html
But why not have flexible money
Whatever that means. People should be able to use whatever money they want if they can get others to accept it without force or fraud.
Racism:
"The belief that ALL members of each race possess characteristics, abilities or qualities specific to that race, especially so as to distinguish it as inferior or superior to another race or races.
Prejudice, discrimination, or antagonism DIRECTED AGAINST SOMEONE of a different race based on such a belief."
I'll admit that Hoppe doesn't seem to like gays. Other than that, I've never seen ANY sentiment in libertarian circles for the belief that ALL members of whatever subgroup are "inferior" or any "prejudice, discrimination or anatgonism directed against someone of a different race based on such belief".
All human beings have the same natural right to be free of the initiation of violence no matter how powerless or how hated by society. Everything Rothbard ever wrote or said supports that vision:
But while neocons and liberals want the planners and national statists to sort, subsidize, and control, for which they need scientific data such as intelligence as guides, paleos are very different. Paleos believe in Liberty; paleos believe in the rights of person and property; paleos want no government subsidizers or controllers. Paleos want Big Government off all of our backs, be we smart or dumb, black, brown or white.
It is truly fascinating that, while liberals and neocons have been deriding paleos for years as notorious "racists," "fascists," "sexists," and all the rest, that actually we, as libertarians, are the last group who deserve such a label: that, in fact, liberals and neocons, as people who all stand with the power elite over the ordinary Americans, are far more deserving of the statist-racist-fascist label.
Bob,
"...we, as libertarians,..."
There is right where your problems start my friend, hope you can get control of this someday, 'liberty' is out of control within you ... rsp,
People should be able to use whatever money they want if they can get others to accept it without force or fraud. Bob R
But government IS force. Thus government money must only be inexpensive fiat else some private interest (e.g. gold owners or usurers) is free riding on the authority and power of government to tax.
Rothbard was a liar so we need to take that into account.
Racism: "The belief that all members of each race possess characteristics, abilities or qualities specific to that race, especially so as to distinguish it as inferior or superior to another race or races."
Rothbard:
“through the 1920’s, most American intellectuals were fundamentally “racist,” i.e., they upheld two guiding postulates: (1) that the white race in general, and the Anglo-Saxon wing of that race in particular, are inherently superior, intellectually and morally, to other races and ethnic groups, and particularly the brown and black races...
In the 1930’s and 1940’s, an enormous change occurred among American intellectuals on the race question. Influenced partly by the racist excesses of Hitler and the atmosphere of World War II, American intellectuals, during the 1930’s and ’40’s, swung around to almost the opposite position. In their anxiety to preclude a racist brand of statism, the intellectuals adopted the opposite brand of egalitarianism… This shift by intellectuals from racism to egalitarianism then began to filter down, inevitably, to the rest of the population. And this had two crucial effects: it inspired the Negroes to begin to struggle, at long last, for their rights as they saw them; and it disarmed the whites from offering any effective opposition to such a change.”
But:
“Egalitarianism is a revolt against nature…
“egalitarians deny the very basis of human intelligence and of human reason… Since their methodology and their goals deny the very structure of humanity and of the universe, the egalitarians are profoundly antihuman; and, therefore, their ideology and their activities may be set down as profoundly evil as well.”
And:
“Until literally mid-October 1994, it was shameful and taboo for anyone to talk publicly or write about, home truths which everyone, and I mean everyone, knew in their hearts and in private: that is, almost self-evident truths about race, intelligence, and heritability. What used to be widespread shared public knowledge about race and ethnicity among writers, publicists, and scholars, was suddenly driven out of the public square by Communist anthropologist Franz Boas and his associates in the 1930s, and it has been taboo ever since. Essentially, I mean the almost self-evident fact that individuals, ethnic groups, and races differ among themselves in intelligence and in many other traits, and that intelligence, as well as less controversial traits of temperament, are in large part hereditary.”
“The recognition of inheritance and natural inequalities among races as well as among individuals knocks the props out from under the welfare state system."
http://oll.libertyfund.org/index.php?Itemid=287&id=1263&option=com_content&task=view
http://www.lewrockwell.com/rothbard/rothbard31.html
http://www.lewrockwell.com/rothbard/ir/Ch75.html
"two very different racial tribes: the Hutu and Tutsi… The Tutsi are an Ethiopid, Nilotic people. The Hutu, on the other hand, are short, squat Bantu, a closer approximation to what used to be called "Negro" in America... over the centuries, the Tutsi have totally dominated, and even enserfed, the Hutu. How are we to explain this consistent pattern of domination by a small minority? Could it be – dare I say it – that along with being taller, slimmer, more graceful and noble-looking, the Tutsi are far more i-n-t-e-l-l-i-g-e-n-t than the Hutu?"
http://www.lewrockwell.com/rothbard/rothbard74.html
frlbane But government IS force.
"Force (that is state power) is also an economic power." — Friedrich Engels, Engels to Conrad Schmidt, London, October 27, 1890
"government IS force"
Government is law. Laws are enforced. Law is a concept, force is an action.
For law to be effective, it needs to be enforceable. As such the ability to make laws presupposes an ability to enforce them. Effective government therefore requires an ability to use force. However it is a category error to confuse law, or government, with force itself.
If a vast majority of the populace favors equal treatment for all races as evidenced by their passing laws against discrimination, where is this mass of people dying to not do business with minorities?
Basically, I'm saying that market discrimination is a "problem" that does not exist. Like a lack of "aggregate demand" is a problem that does not exist. People generally purchase the best goods and services for the best price and really don't give a rat's ass about the ethnicity of the seller. Note the alleged problem of imports and employment of illegal aliens which shows that people really don't care about the ethnicity of people they trade with. Jim Crow laws passed by the democrats were necessary to "keep the races apart".
I'll also say that Rothbard always seemed to get in trouble with his schemes for alliances which I don't think were very wise. In the 70s, he was always trying to make an alliance with the anti-war left which never went anywhere just like the 90s with the Buchananites. The neo-cons and Randians have been attacking him for decades claiming he's a raging leftist based upon his relentless critique of American imperialism and war.
So it's a positive thing that the neo-con fascists and the commie progressives, both die-hard supporters of rule by SWAT team, hate Rothbard who totally undermined their nefarious schemes.
Like a lack of "aggregate demand" is a problem that does not exist. Bob R
Then you haven't considered that the debt the counterfeiting cartel has driven the population into is measured in nominal, not real terms. Thus it does not shrink when the amount and velocity of money (especially bank credit) shrinks during the bust. Moreover, that nominal debt must be paid with interest that does not even exist in aggregate unless the monetary sovereign creates it via deficit spending.
You also have not considered, it seems, that the workers have been dis-employed with automation financed with the workers' own stolen purchasing power so of course the victims would be short of the ability to "demand" goods and services.
"where is this mass of people dying to not do business with minorities?"
Not relevant to Rothbard's racism.
"a problem that does not exist"
In your imaginary world that doesn't exist, has never existed and could never exist, there are by definition no "problems". You simply define them out of existence, or just assert that they don't exist. Hey presto, problems all gone away in Bob Roddis la la land.
"his relentless critique of American imperialism and war"
You can do that without having to be a total asswipe at the same time.
"supporters of rule by SWAT team"
No supporters of "rule by SWAT team here. SWAT teams don't "rule" anyway.
Yet more overblown drama-queen theatrics in the place of any real argument from Bob Roddis.
Government is law. Laws are enforced. Law is a concept, force is an action.
The point that those opposing the state on the left and the right focus in the power of government to force compliance. Both argue that it is this force that puts a particular class or group in charge. They then conclude that the way around this is to abolish the state.
Others argue that this would not resolve the issue of force, since the law of the jungle is "might is right" and humans are too close to their animal nature to rise above the use of force to get their way.
The rule of law was evolved to resolve this difficulty by harnessing forces to the the rule, which is a republic is determined by elected representatives.
Opponents counter-argue that if there is a centralized political process it can be captured and compromised.
Judging from history, this is a dilemma that remains to be solved. I have suggested that it will only be resolved satisfactorily through a raising of the level of collective consciousness of society, so that both individuals and their cultural rituals and institutional arrangements reflect those values.
The point that those opposing the state on the left and the right focus in the power of government to force compliance. Both argue that it is this force that puts a particular class or group in charge. They then conclude that the way around this is to abolish the state.
Others argue that this would not resolve the issue of force, since the law of the jungle is "might is right" and humans are too close to their animal nature to rise above the use of force to get their way.
The solution is to prohibit fraud and the initiation of force. Whatever you call that is irrelevant. There is no "law of the jungle" if the right to personal physical safety is recognized and protected, even (and especially) for the most hated and powerless minority. I fail to see why that proposal is so controversial and misunderstood.
The problems facing mankind have always been and continue to be assaultive behavior by the state and criminals and not a lack of "aggregate demand". Average people can handle their own economic affairs quite well without the unrequested "helping hand" of a Keynesian SWAT team state. You cannot have at the same time an assaultive Keynesian SWAT team state and an effective prohibition on the initiation of force.
Restitution, Bob. Where is the Austrian call for restitution for previous injustices committed under color of law? There's about an $8.5 trillion gap between commercial bank liabilities and their reserves. That gap represents at the least how much the entire population has been cheated by the banks. So where is the Austrian call for a universal bailout to fill that gap? And don't cry "Inflation!" since a ban on further counterfeiting could enable the bailout to be metered such as to prevent any net changes in the total money supply.
No, the Austrians wish to eliminate any possibility of restitution even if it would cost them nothing in real terms. They're looking, as far as I can see, to score a bonanza in cheap assets via a deflationary Depression. That's just greed, buddy, and a particularly evil kind - one that rejoices in other people's misery.
"The solution is to prohibit fraud and the initiation of force"
You call taxation "intitiation of force", but this is incorrect.
Taxation is law, not force.
If people commit a crime by breaking the law, it is normally enforced. That is the nature of a law. This process need not involve the use of physical force however, except where a criminal or suspect actively refuses all cooperation with judicial and law enforcement bodies, thereby rendering it impossible for them to carry out their legal duties.
Judging from history, this is a dilemma that remains to be solved. I have suggested that it will only be resolved satisfactorily through a raising of the level of collective consciousness of society, so that both individuals and their cultural rituals and institutional arrangements reflect those values.
I think that nails it. Unless and until we evolve away from it (a prospect I'd welcome but personally lack the imagination to really conceive) the capacity for violence exists as a base aspect of the human condition. We can't eliminate it, only choose what structures and institutions we want to create to channel it.
The structural violence and stupidity of bureaucratic government is less bad than ad hoc violence asserted by whoever happens to grab the initiative.
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