tag:blogger.com,1999:blog-2761684730989137546.post384191564310844391..comments2024-03-28T07:50:06.102-04:00Comments on Mike Norman Economics: Why the Gold Standard Is the World's Worst Economic Idea, in 2 Chartsmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger34125tag:blogger.com,1999:blog-2761684730989137546.post-24185579764020832002012-08-29T08:12:58.689-04:002012-08-29T08:12:58.689-04:00The important question is why every single Bob Rod...The important question is why every single Bob Roddis "critique" is invariably without content or any familiarity with even the most basic theoretical or historical analysis.<br /><br />Rob Boddisnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-46575053840598312552012-08-27T17:34:57.457-04:002012-08-27T17:34:57.457-04:00without content or any familiarity with even the m...<i>without content or any familiarity with even the most basic Austrian theoretical or historical analysis"</i><br /><br />So history is different fom the Austrian perspective?<br /><br />I thought history was nothing more than a sequence of events.<br /><br />The voices Austrians hear are different than the voices I hear.<br /><br />This looks like another edition of "that's the way it is".paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-75895974310498830012012-08-27T17:18:11.957-04:002012-08-27T17:18:11.957-04:00The important question is whether Peter Schiff pre...<i>The important question is whether Peter Schiff predicted the housing collapse for the right reasons. Even a blind squirrel finds an acorn every now and then.</i><br /><br />The important question is why every single "critique" of Austrians and Austrian theory is invariably without content or any familiarity with even the most basic Austrian theoretical or historical analysis.Bob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-6983457123461311872012-08-27T17:17:58.156-04:002012-08-27T17:17:58.156-04:00MF, Bob,
Ron Paul did, Shiff did, who didn't?...MF, Bob,<br /><br />Ron Paul did, Shiff did, who didn't?<br /><br />Don't take my word for it. Here is one of your own saying that it attempts to provide "an<br />explanation for why, contrary to the predictions of many Austrian<br />economists, credit deflation is more likely than mass inflation."<br /><br />http://libertarianpapers.org/articles/2010/lp-2-43.pdf<br /><br />So he admits that the Austrian theory of banking fell on its face and what he talks about is instead what MMT produced decades ago. So Austrian theory is only right if it follows MMT. I can take that.<br /><br />Of course Bob you didn't predict inflation in the "short run". Nobody is so stupid. You just predict it in the "medium" run., right? And what is the "medium run"? Well, of course it is the "run" over which the inflation will appear! This way you will never be wrong. You are lying to yourself that the theory has a predictive power, whereas it failed miserably. <br />PeterPhttps://www.blogger.com/profile/02032621777697914182noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-73809919048676671362012-08-27T17:07:18.464-04:002012-08-27T17:07:18.464-04:00"Mike Norman mocked Peter Schiff's predic...<i>"Mike Norman mocked Peter Schiff's prediction of a housing price collapse back in 2006"</i><br /><br />The important question is whether Peter Schiff predicted the housing collapse for the right reasons. Even a blind squirrel finds an acorn every now and then.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-6830455522935185892012-08-27T16:17:15.016-04:002012-08-27T16:17:15.016-04:00PeterP:
Austrian "theorists" have a ter...PeterP:<br /><br /><i>Austrian "theorists" have a terrible prediction record, where is the hyperinflation?</i><br /><br />Which Austrian economist(s) predicted hyperinflation by now?Major_Freedomnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-49208919118724376122012-08-27T15:35:38.639-04:002012-08-27T15:35:38.639-04:00I've never predicted hyperinflation in the sho...I've never predicted hyperinflation in the short run. The gist of the Austrian theory is the distortion of the price, investment and capital structure due the impairment of economic calculation by the artificial creation of fiat funny money and other schemes.<br /><br />Mike Norman mocked Peter Schiff's prediction of a housing price collapse back in 2006. So much for great predictions.<br /><br />http://www.youtube.com/watch?v=1G0tfb8ZefABob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-1577261163386333052012-08-27T14:32:49.490-04:002012-08-27T14:32:49.490-04:00Bob Roddis,
Have more humility. Austrian "th...Bob Roddis,<br /><br />Have more humility. Austrian "theorists" have a terrible prediction record, where is the hyperinflation? You can claim as permabears to have precicted the 2008 collapse, but eg. your take on forced austerity will always yield incorrect prediction of "it will turn out OK". You cannot predict the stuff like melting Eurozone.<br /><br />So for the world to start caring about the Austrian body of theory you need a much better record. MMT struggles with lack of recognition too but at least it got everything right so it has facts behind it.PeterPhttps://www.blogger.com/profile/02032621777697914182noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-74126512245260456932012-08-27T14:27:16.952-04:002012-08-27T14:27:16.952-04:00The period in the two charts was not a gold standa...The period in the two charts was not a gold standard. They both take place after 1913, the year the Fed was introduced, which allowed the banks to create even more fiat money, "backed" by gold redemption, but the state always created more dollars at a par price than there was gold backing it. An actual gold standard would not result in more paper claims to gold, than actual gold. Then in 1933 FDR prevented Americans from trading in gold, then after the war only central banks were promised gold bullion.<br /><br />Gold standard? Hardly.Major_Freedomnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-55295891608325673622012-08-27T14:18:41.489-04:002012-08-27T14:18:41.489-04:00Of course human action is unpredictable. But it&#...Of course human action is unpredictable. But it's purposeful, so it's not "random". Since human action is unpredictable, future actions cannot be predicted with math like they can in physics and engineering. And totalitarian wannabe types in positions of power like MMTers are people too and just as unpredictable and ignorant (and random).Bob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-15046041179221237002012-08-27T13:48:39.949-04:002012-08-27T13:48:39.949-04:00Bob,
"OR"
The world is made up of bill...Bob,<br /><br /><i>"OR"</i><br /><br />The world is made up of billions of Billy's and Susie's. Their choices are random (unpredictable).<br /><br />If the outcome of their choices in the aggregate are predictable, there is an embedded pattern.<br /><br />Entropy is based on this type of randomness. How do we know that an ice cube at room temperature will melt (reach a higher state of entropy)?<br /><br />Some of the molecules in the ice cube move to a state of lower entropy over time, so it is possible, yet the ice cube always melts.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-58638276370183448382012-08-27T13:04:30.201-04:002012-08-27T13:04:30.201-04:00Wow,
Mention the word "gold" and Bob re...Wow,<br /><br />Mention the word "gold" and Bob really perks up.<br /><br />We should keep an all-time thread going on gold and keep the gold-bugs tied up in there. That way we won't get their droppings in a bunch of threads.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-66311349184247204272012-08-27T12:17:28.739-04:002012-08-27T12:17:28.739-04:00The actions of the individuals in the groups is ra...<i>The actions of the individuals in the groups is random, as is every event in the universe.<br /><br />What emerges is patterns that define the behavior of systems.</i><br /><br />But of course. When toddler Billy hates carrots and never buys them as an adult and toddler Susie hates olives and never buys them as an adult, their very being and minds merge into a mysterious whole which creates a mysterious pattern.<br /><br /><b>OR</b><br /><br />Billy doesn't buy carrots and Susie doesn't buy olives. <br /><br />I'll stick with the latter real world explanation.Bob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-35208876018190847192012-08-27T12:16:19.994-04:002012-08-27T12:16:19.994-04:00"This is the basis for Entropy, which as far ..."This is the basis for Entropy, which as far as i know can't (or hasn't yet been) be proven mathematically."<br /><br />You need to go back & read Boltzmann & Planck. "Entropy" is the name arbitrarily assigned to a puzzling yet proven mathematical observation, indicating that every energy transaction is a probability function. Puzzling over the mathematical phenomenon of entropy is what led to discovery of quantization and Planck's Const.<br /><br />Planck & Boltzmann - same system, different coordinate system.<br />What's indirect per one perspective is direct in another, if you simply use a different coordinate system.<br /><br />http://en.wikipedia.org/wiki/Boltzmann_constant#Planck_unitsRoger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-7100473295263388662012-08-27T12:13:28.444-04:002012-08-27T12:13:28.444-04:00Why on earth do Goldbugs & Austrian Economists...<i>Why on earth do Goldbugs & Austrian Economists fixate on the $/gold ratio?</i><br /> <br />I don't know of any Austrian eocnomists who "fixate" on the "$/gold ratio". <br /><br />You have no clue as to what you are talking about which is quite a positive thing for the good guys.Bob Roddishttps://www.blogger.com/profile/17263804608074597937noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-9387258408150616622012-08-27T12:07:19.689-04:002012-08-27T12:07:19.689-04:00Such calculations are done only by whole groups, a...<i>Such calculations are done only by whole groups, as the outcome of ALL the analog events themselves"</i><br /><br />The actions of the individuals in the groups is random, as is every event in the universe.<br /><br />What emerges is patterns that define the behavior of systems.<br /><br />This is the basis for Entropy, which as far as i know can't (or hasn't yet been) be proven mathematically. The concept of entropy is largely based on the fact that contradictions to it have never been observed in the real world.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-57385522904352557832012-08-27T11:55:04.047-04:002012-08-27T11:55:04.047-04:00Gold bugs are easy to figure. They are heavily inv...Gold bugs are easy to figure. They are heavily invested in gold and are talking their book.<br /><br /><br />Austrian economists think in terms of bank credit extension and cb keeping interest rate too low, resulting in saving rate being too low and investment rate too high, ending in excessive malinvestment and falling rate of profit. This is the basis of <a href="http://en.wikipedia.org/wiki/Austrian_business_cycle_theory" rel="nofollow">Austrian Business Cycle Theory</a> <br /><br />The insight upon which ABCT is based is similar to Minsky's financial instability hypothesis but markedly different in economic approach and policy prescription for dealing with it. Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-51725083262195156812012-08-27T11:31:01.427-04:002012-08-27T11:31:01.427-04:00@Tom Hickey,
Why on earth do Goldbugs & Austr...@Tom Hickey,<br /><br />Why on earth do Goldbugs & Austrian Economists fixate on the $/gold ratio? <br /><br />Why don't people plot the net buying power of individuals over time? The whole POINT of an agile economy is that prices of all products/services can dynamically float.<br /><br />If there are 10Mil transaction types in a given year, do we worry if 50% went up & 50% went down in $-denominated price? Do we worry about our $-denominated incomes or our non-$-denominated trades & deals? Do we worry about our net buying power? Or do we worry about the net change in Output and Capabilities? Hint: all of the above, and more, in a complex function, with none of them ever separable from all the rest.<br /><br />The workings of any complex system rely on complex, polynomial functions, never any one term in that calculation.<br /><br />Austrian Economists claim that they personally "Calculate" all these things, but that's hogwash. Such calculations are done only by whole groups, as the outcome of ALL the analog events themselves.<br /><br />None of us is as smart as all of us - the definition of group of social intelligence - so some of the claims of Libertarians & nearly all of the claims of Austrian Economists are pure, irrelevant fantasy.Roger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-56623656392264059642012-08-27T11:20:22.826-04:002012-08-27T11:20:22.826-04:00Bob Roddis says: "It is so encouraging to kno...Bob Roddis says: "It is so encouraging to know that The Atlantic, along with every other mainstream journalistic and academic establishment, cannot and will not directly engage even basic Austrian School concepts ... "<br /><br />Bob, to their credit, they also no longer visit asylums for the criminally deluded - or at least not very often. However, you could yourself visit, say, Irwin Schiff in jail, just to see what Brain Krampf he's working on now. Might even be another best sellout.Roger Ericksonhttps://www.blogger.com/profile/17515506247888521516noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10415020310688999272012-08-27T11:16:30.978-04:002012-08-27T11:16:30.978-04:00Gold bugs have it figured at ~5K USD/oz. HOw are y...Gold bugs have it figured at ~5K USD/oz. HOw are you getting 1 - 1.5K? Present market price? The market price will surely rise dramatically if there is serious motion toward a GS, and the gold bug argument is based on the size of the money supply that the reserve would have to support.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-13590097778816137972012-08-27T02:55:04.708-04:002012-08-27T02:55:04.708-04:00I've been repeating some things I heard about ...I've been repeating some things I heard about gold. <br /><br />I have this idea that if we went to a gold standard, I would be poorer since I don't have any gold. <br /><br />My thinking last week was that they would really be talking about 'floating' the dollar against gold...like from 1934 to 1970. Warren Mosler indicates, no, it would instead be fixed dollar to fixed price of gold.<br /><br />Then I realized the federal reserve would have to buy any precious metal a little at a time over a long period. So instead of seeing over night inflation, we would see more of a steady deflation of prices as the the value of the dollar increases. (correct me here) <br /><br />So they are are talking about pre 1934 Fixed Price for Gold for the Dollar. But we don't know if they would pick $1500 or $1000 per ounce. We have laws against citizens buying gold, so it is not clear to me if there is enough gold to meet the demand. India is the latest, right? Some gold is only electronics held in a Trust account. And gold bugs and insiders seem to think gold prices on futures markets are held down. <br /><br /><br />How does MMT and other economist on here see 'down-ward sticky prices'? People that control commodities, products, services, or supply of houses may drive hard bargains to keep prices high if credit or money is in short supply. A gold backed dollar may be more valuable and harder to get, but prices may stay the same. Who wins? The guy with the gold? <br /><br />Looks like the Article in The Atlantic indicates prices would deflate...as I have been guessing. <br /><br />A more valuable dollar might lower wages and/or promote zero wage growth for an extended period as the federal reserve buys more gold or precious metals.<br /><br />There is a long line of people that say that the gold standard was a reason we stayed in depression for so long up to 1934. And history seems to say that the USA was the last to come out of depression because it was the last to come off the gold standard.Dan Flemmingnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-36599514249190328002012-08-27T02:31:34.663-04:002012-08-27T02:31:34.663-04:00Edmund... I like your work on eras and their Price...Edmund... I like your work on eras and their Prices and GDPs. <br /><br />I've been looking at federal budget spending in different years. <br /><br />War and Defense investment obviously can have an impact on GDP and prices as well. And some of us are wondering what GDP looks like post 1970 if we subtracted out the financial GDP (however we define it). <br /><br />I'm going to go back and capture some data for the Vietnam War on budget spending and maybe I can follow up some day with GDP growth in some of our war eras. There was a paper for instance on Ronald Reagan hoping for higher GDP growth with less dependence on federal spending. I think in the end he was disappointed. <br /><br />I'm guessing Mitt Romney's economic plan is based on a Ron Reagan budget for DOD.Dan Flemmingnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-46866963530116509092012-08-27T02:30:33.277-04:002012-08-27T02:30:33.277-04:00This comment has been removed by the author.Middleaged-Living-in-a-Land-of-Makebeleivehttps://www.blogger.com/profile/09135314675614265950noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-67116740568978452212012-08-27T00:29:42.137-04:002012-08-27T00:29:42.137-04:00How does the gold standard stack up when it comes ...How does the gold standard stack up when it comes to growth? I'm using real GDP per capita growth averages for different eras.<br /><br />19th Century: 1.45%<br />20th Century: 1.98%<br />1865-1913: 1.61%<br />1913-Present: 2.12%<br />1934-Present: 2.71%<br />1971-Present: 1.79%<br />1980-Present: 1.58%<br />1900-1913: 0.92%<br /><br />Interestingly, the two price stability amigos are still pretty close: they both suck. Even more interestingly, the pure gold standard is the worst. The vaunted late 19th century, pre-Fed growth rate is awful compared to the much derided funny money age we've lived in since monetary policy stopped being beholden to the shiny.<br /><br />Long live fiat money - long live Keynesian economics.<br /><br />Note: all figures used were from Measuring Worth.Edmundnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-24352293774227633482012-08-27T00:20:44.327-04:002012-08-27T00:20:44.327-04:00The story made me curious about price stability in...The story made me curious about price stability in different monetary epochs in the United States. So here are standard deviations of inflation rates for different eras. Obviously, this is problematic. You could object to that by suggesting that deviations from zero are a better notion of price stability, or deviations from the central bank target. Whatever, I'm not doing that right now.<br /><br />Aside from arbitrary boundaries, like the sample and centuries, I show the post-Civil War bimetallic era through the establishment of the Fed, post-Fed establishment, the 1934 gold seizure to present, and the end of Bretton Woods to present.<br /><br />1800-Present: 5.753586366<br />19th Century: 6.195762627<br />20th Century: 4.801753031<br />1865-1913: 2.608319157<br />1913-Present: 5.00901406<br />1934-Present: 3.229125044<br />1971-Present: 2.963074437<br /><br />Two more interesting periods: from the Volcker appointment on to see the volatility of the "Great Moderation" rate, and from 1900-1913 - the only period when the US was on a gold-only standard without a central bank.<br /><br />1980-Present: 2.529294177<br />1900-1913: 1.921487662<br /><br />The pure gold standard obviously wins, although the post-Volcker Fed is its closest competitor.Edmundnoreply@blogger.com