… Currency reforms of the sort Diocletian undertook still happen sometimes in the modern era, but they almost always go in the other direction. When a country has in the recent past suffered a bout of serious inflation that’s just come to an end, sometimes the government will choose to put an asterix on the new regime by basically striking a zero or two off the old currency. So in 1960, France introduced a New Franc and announced that one New Franc was worth 100 Old Francs, and that 1 Franc Coin of the old vintage could stay in circulation as one New Centime. You could describe the impact of that switch as a giant one-off deflation, but that’s a pretty misleading way to think about it.
The Truth About Diocletian and Inflation →
Yeah, that is a pretty misleading way to think about it. So why suggest it as “going in the other direction”? Coming up with a “new” currency with new denominations is not necessarily any less inflationary if the effect is still the same. If the U.S. government prints brand new money out of thin air, it doesn’t matter if they print five Dollarinos worth $1,000 each or simply five thousand dollars.
I’m not sure I follow your objection. The French monetary exchange didn’t involve just printing new money per se. Under the traditional definition of inflation (an increase in the money supply), the French deflated their currency. The old centime pieces were never circulated widely, and fell out of use under the new system. So under the exchange that took place, the total amount of practically usable legal tender was reduced. …
But it is. They created new money. They didn’t first extract existing currency to then replace it with the new. At least, I don’t believe they did (please, correct me here if this is the case). As I said, creating a new currency isn’t necessarily any less inflationary, particularly if it’s additive. And of course the old centime pieces were increasingly less circulated because their value was exceedingly low in relation to the new money added to the economy, especially since they were no longer being minted to keep up with the volume demanded to keep up with inflating prices. When actual inflation becomes price inflation, there is a point in which the velocity of the lowest denominations, especially when said denominations become a smaller percentage of the overall currency, tends to slow down as such denominations become more cumbersome and less practical to use.
… I linked to Yglesias’s article because Ron Paul accused Krugman of supporting the economic policies of Emperor Diocletian. Krugman rejected that accusation, and I think the article demonstrates that Paul was being overwrought: I don’t believe I’ve ever heard Krugman calling for an overnight 100% doubling of the exchange value of the currency, which is what Diocletian did when he issued his final currency Edict. I think we can both agree that such a policy decision would be catastrophic and ruinous. …
This is only a matter of degrees. The point Ron Paul was making (and that I would agree with) is that Krugman’s preferred “tools” and “methods” are, essentially, the same as Diocletian - they only disagree in speed, as it were. One may advocate stabbing someone in the abdomen quickly, and the other may advocate a much more gentle stabbing. But the stabbee would rightly protest to both knives through his gut.
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[I had to redact much of letterstomycountry’s argument as I only had time for a quick rebuttal of his main points. Please click here if you wish to see his argument in full.]
Krugman and Money
“[D]o you really think people use dollar bills because the federal government isn’t allowing them to use other stuff? That seems like a very strange point of view…You can do barter with all kinds of stuff…”
- Paul Krugman, in his recent televised discussion (hardly a “debate”) with Ron Paul.
For starters, of course the government “isn’t allowing [people] to use other stuff,” if we understand “stuff” to be what Ron Paul was arguing (and Krugman was immediately responding to): money. We need only look at the recent Bernard von NotHaus conviction for minting “Liberty Dollars,” both coins and gold and silver certificates. Further, as Ron Paul stipulated, there are taxes on gold and silver that make using it as a medium of exchange artificially more prohibitive and costly.
But this isn’t quite what Krugman was getting at. He explicitly conflated money/currency, which is what Ron Paul was discussing, with barter. This is such a fundamentally flawed proposition that it almost shocks me how little push-back the media has given Krugman.
As Bob Murphy explains in his economics book for middle-schoolers, Lessons for the Young Economist, “direct exchange, or what is also called barter, [are] exchanges that do not involve money”:
We only leave a state of barter and enter the realm of indirect exchange when people receive an item during a trade that they don’t plan on using themselves, whether for consumption or production. What happens in this case is that they plan on trading the item away to somebody else in the future. This is actually what happens in every trade involving money. When you sell a few hours of your leisure cutting your neighbor’s lawn for $20, you are engaged in indirect exchange. You don’t plan on eating the $20 bill, and you don’t intend to combine it with other materials in order to build something. The reason you value it, is that you expect to be able to find somebody else (in the future) who will sell you something you do directly value, in exchange for the money.
It’s pretty basic stuff. But Krugman was probably hoping the unthinking masses wouldn’t notice his deflection.
LvMI quiz.
It was a toss-up between “a.” and “c.”…
Ron Paul vs. Paul Krugman: Austrian vs. Keynesian economics in the financial crisis
(Source: youtube.com)
Keynesian Economics vs. Austrian Economics
Watch as Ben Bernanke and Paul Krugman embarrass themselves with their absolute cluelessness. Watch Peter Schiff speak truth while being ridiculed. I’m surprised there wasn’t more of Ron Paul; there’s so much material, the video could have gone on for quite some time.
This video makes this hysterical defense of Krugman/Keynesians and attack of Ron Paul/Austrians by ryking that much more comical - particularly in light of ryking’s use of a college “study” that not only had no Austrians in its pool of only 26 “pundits,” but had such non-economist ignoramuses (ryking made it a point to note that Krugman was an economist while Paul was merely a physician) as Chuck Schumer, Nancy Pelosi, John McCain, Lindsey Graham, and Sam Donaldson.
(Source: youtube.com)
Schiff: Krugman Reveals Krugmonomics Fails Even in Small Elite Leftist NYC Neighborhood
(Source: youtube.com)
About the amazing prognosticative powers of Ron Paul.
The latest polls show Newt slipping in Iowa — but not to the benefit of Mitt Romney. Instead, it now seems possible that Ron Paul will win the caucuses.
Now, Paul is unique among the GOP contenders, or for that matter among politicians in general, in making monetary policy his signature issue. So it’s worth noting that he is among those who have been wrong about everything in this slump.
Paul fans always make a big deal about digging up some ancient video of Ron saying something years ago and triumphantly announcing that he’d predicted what’s happening today. There is no logic to this. Let me draw an analogy.
Imagine a weatherman who predicts a disastrous storm every night. You have to stock up on food and water, he says, and for good measure sleep in the basement. This goes on for a few years, until finally — and inevitably — there is a big storm that knocks down trees and cuts power and wrecks a house or two.
Now, does that make him a good weatherman or a shitty weatherman? Paul is actually worse than that, warning of an imminent economic collapse that still has not happened. They’re basically declaring the collapse of the housing bubble “close enough.”
“I’m sure that the Paulistas will find a way to claim that their man has been right about everything, even though his predictions have been all wrong,” Krugman writes. “But he really has built his political career around the notion that he’s an expert in a subject about which he actually understands nothing.”
Using Krugman as a source to attack Paul. Priceless.
This is hilarious.
I can’t even think of a proper analogy in which someone so consistently wrong calls someone so consistently right to be consistently wrong. And because Krugman espouses what some want to hear, the unthinking masses champion his falsehoods as truth.
Black Friday = Keynesian Friday
Buy! Buy! Buy!
Ironic that the ones who usually deplore consumerism and preach conservation also subscribe to the economic philosophy that promotes consumerism and champions waste.
He’s a stupid man’s idea of what a smart person sounds like.
—
Paul Krugman on Newt Gingrich
Pot, meet kettle.
(via statehate)
(Source: politicore, via statehate)
An Austrian vs. Keynesian
For the doubters who think this is a “strawman”, please see here.
Integrity Redux
“So it turns out that Paul Krugman never even said that controversial quote that was floating around yesterday.”—
http://www.huffingtonpost.com/2011/08/24/paul-krugman-impersonator_n_935186.html
I’m sure all your “Libertarian” scumfucks will apologize.
You mean like that time you posted a quote that was beyond any doubt not by Jon Stewart yet you attributed it to him anyway? But since it has received nearly 10,000 notes, it remains with its false attribution.
And re: the Krugman quote. It was not unreasonable in the slightest to believe that the man who once wrote mere days after 9/11:
Ghastly as it may seem to say this, the terror attack — like the original day of infamy, which brought an end to the Great Depression — could even do some economic good.
and also wrote after the Japanese earthquake/tsunami:
And yes, this does mean that the nuclear catastrophe could end up being [economically] expansionary, if not for Japan then at least for the world as a whole.
could have also said:
People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.
All the economic points made by libertarians and Austrians are not invalidated simply because he didn’t espouse the broken window fallacy - this time.
And for the record, I posted an update on my post as soon as I found out that the quote was indeed fake (about 12 hours after the original post).
ETB made this joke hours ago. Krugman is dead serious. Although if the earthquake would have happened simultaneously with a fake alien invasion, that would be even better.
Follow-up (8/24): turns out this specific post may be a hoax. Problem is, it exactly matches every bit of Keynesian nonsense Paul Krugman ever espouses. He really has said, numerous times, “physical destruction of good assets can help economic growth” from 9/11 to the Japanese earthquakes.
Dear Anti-war Progressives: We Are With You →
“The boring and hackneyed ‘Glass-Steagall’ myth [goes like this:] that the repeal of the Glass-Steagall Act, which prevented the commercial banks that hold the savings of ordinary Americans from engaging in speculative investment, was the reason for the 2008 crash. This is only true in the narrowest of senses — you have to ignore the entire body of US regulation and the actions of the various financial authorities to come to this conclusion with a straight face.
“We live under a massive, overarching system built to favor gigantic connected corporations over ordinary people. This is NOT a free market, it is a heavily commanded one. It is one that purposely undermines the plans of ordinary citizens in favor of the plans of the few lucky enough to have the ear of the politburo. It’s called ‘fiscal policy,’ and it is that for which ‘liberal’ ‘economist’ Paul Krugman gets paid to propagandize. Sadly, progressives unwittingly agitate for MORE of this evil system, thinking they will ever hold the reins. They will not.
“To say, as many progressives did after the crash, that ‘everything was deregulated’ is to fall into the trap of the power elite. The world’s biggest corporations love regulation — after all, they write it, someone else enforces it, and their alleged enemies on the left cheer this system on as they are taxed to pay for it. It’s insane. And it ignores all the other crashes of the last 200 years, all due to some intervention by the ruling rich into the voluntary economic affairs of everyone else.
“So, no, progressives, we are not Republicans. We do not favor lower taxes over ending war — ending war lowers taxes! And what good is a healthy economy anyway when your government rampages over the world creating enemies who plot to destroy your wealth?
“If you oppose war and its concomitant monopolistic control over the economy by connected elites, we are with you. But if you just want a D in front of the murderer-in-chief, it’s best if you left the real opposition to violence and institutional control to those of us who actually care about human freedom.”
Brilliant.
Except…I’m not entirely sure that there are any remaining “anti-war progressives.” Hellooo? Anyone out there? “Bush lied, kids died?” Code Pink, where’d you go?
There certainly aren’t any on Tumblr, as even a cursory scan of the #Politics tag reveals that what the intellectually dishonest hacks who make up the left-wing blogging community have actually become is, to quote Bill Kristol, “born again neo-cons,” party loyalists, ideologues, and rabid, sycophantic Obama zealots.
Shame.
Indeed. And I’d add “Ron Paul slanderers” to that list - and even from the ostensibly more “reasoned” and “intellectual” editors… Shame how some people damn the truth in favor of promoting their worldview and maintaining their status quo.
