H/t Erich Deagastino and Reason TV:
Wednesday, November 10, 2010
Just Say No to the Pro-Bailout Media
Gregory Wyche of Perfect Pitch Media Relations wrote a piece on Kitco concerning a Wall Street Journal event he attended surrounding the author of the book Freakonomics. Wyche was surprised that the author, when questioned by a member of the audience, averred that gold investing is right in the sense that a broken clock is right twice per day. My suggestion to Mr. Wyche was that he might consider improving the quality of his associates:
Wyche:
On October 19th I was invited by The Wall Street Journal to attend a book party here in Manhattan for the launch of the illustrated edition of “Super Freakonomics” I had just seen and liked the movie “Freakonomics” on opening day two weeks before. When it came time sit down for the presentation I was thrilled to be four rows back from one of the stars of the movie and co-author of the book Stephen Dubner. This guy has become successful by challenging conventional wisdom in way way out methods. To say he has hit the ball out of the park in his ability to look outside of the box is a total understatement...(read the whole thing here).
My response:
Thanks for your Kitco article, which I enjoyed. I had read Freakonomics when it came out and thought it was good. Four points:
1. Economics is not a science and the way that economic theory is practiced is not bounded by testable reality. Hence, in economics thinking outside the box is not a meaningful achievement. For example, deconstructionism is an academic theory that the meanings of texts can be derived by reanalyzing words in ways that reveal power relationships. The conclusions deconstructionism draws cannot be tested against reality. It is like astrology. The same with economics as is practiced in universities. Saying that an economist "thinks outside the box" is like saying that a deconstructionist in an English department or an astrologer thinks outside the box. "Geminis really aren't mercurial." "Wow, he thought outside the box." The problem is that there is no testable or "falsifiable" body of knowledge to contradict claims. Keynesians claim the bailout and the stimulus worked. Monetarists claimed the bailout worked but not the stimulus. Sane people wonder what they are talking about, turn off the TV and do not purchase the Wall Street Journal.
2. It is not necessary to think outside the box with respect to economic history and macro-economic issues. Keyensian economics failed in the 1930s; it failed in the 1970s; and it failed in the '00s. It fails every thirty or forty years. Arguing for Keynsian economics means thinking outside the box in that reality has never confirmed it, hence the Keynesian argument is unbounded by reality. Nor does the anti-Keynesian argument require thinking outside the box. It is a very old argument, nearly but not quite as old as the mercantilism of which Keynesian economics is a restatement.
3. I'm puzzled as to why you would think that anyone associated with the pro-bailout media such as the Wall Street Journal would have anything to say in opposition to the pro-Wall Street monetary expansion. The argument for gold is an argument against both monetarism and Keynesianism; against supply siders and deficit spenders.
4. Since economics as practiced by academics is superstition, akin to astrology or palm reading, it is puzzling to me why you would hope that a speaker that the Wall Street Journal sponsors (or anyone associated with the Wall Street Journal) would have anything useful to say.
Not meaning to be prickly, but maybe the lesson you are suggesting is that it might pay to use some common sense and use the dollar you would have spent on the Wall Street Journal to do something more useful, like saving up for a martini at your local bar.
Best wishes,
Mitchell Langbert
Wyche:
On October 19th I was invited by The Wall Street Journal to attend a book party here in Manhattan for the launch of the illustrated edition of “Super Freakonomics” I had just seen and liked the movie “Freakonomics” on opening day two weeks before. When it came time sit down for the presentation I was thrilled to be four rows back from one of the stars of the movie and co-author of the book Stephen Dubner. This guy has become successful by challenging conventional wisdom in way way out methods. To say he has hit the ball out of the park in his ability to look outside of the box is a total understatement...(read the whole thing here).
My response:
Thanks for your Kitco article, which I enjoyed. I had read Freakonomics when it came out and thought it was good. Four points:
1. Economics is not a science and the way that economic theory is practiced is not bounded by testable reality. Hence, in economics thinking outside the box is not a meaningful achievement. For example, deconstructionism is an academic theory that the meanings of texts can be derived by reanalyzing words in ways that reveal power relationships. The conclusions deconstructionism draws cannot be tested against reality. It is like astrology. The same with economics as is practiced in universities. Saying that an economist "thinks outside the box" is like saying that a deconstructionist in an English department or an astrologer thinks outside the box. "Geminis really aren't mercurial." "Wow, he thought outside the box." The problem is that there is no testable or "falsifiable" body of knowledge to contradict claims. Keynesians claim the bailout and the stimulus worked. Monetarists claimed the bailout worked but not the stimulus. Sane people wonder what they are talking about, turn off the TV and do not purchase the Wall Street Journal.
2. It is not necessary to think outside the box with respect to economic history and macro-economic issues. Keyensian economics failed in the 1930s; it failed in the 1970s; and it failed in the '00s. It fails every thirty or forty years. Arguing for Keynsian economics means thinking outside the box in that reality has never confirmed it, hence the Keynesian argument is unbounded by reality. Nor does the anti-Keynesian argument require thinking outside the box. It is a very old argument, nearly but not quite as old as the mercantilism of which Keynesian economics is a restatement.
3. I'm puzzled as to why you would think that anyone associated with the pro-bailout media such as the Wall Street Journal would have anything to say in opposition to the pro-Wall Street monetary expansion. The argument for gold is an argument against both monetarism and Keynesianism; against supply siders and deficit spenders.
4. Since economics as practiced by academics is superstition, akin to astrology or palm reading, it is puzzling to me why you would hope that a speaker that the Wall Street Journal sponsors (or anyone associated with the Wall Street Journal) would have anything useful to say.
Not meaning to be prickly, but maybe the lesson you are suggesting is that it might pay to use some common sense and use the dollar you would have spent on the Wall Street Journal to do something more useful, like saving up for a martini at your local bar.
Best wishes,
Mitchell Langbert
Friday, November 5, 2010
Bernanke: Fed Will Not Monetize Debt
QE 2, quantitative easing, is monetization of the federal debt (h/t Glenda McGee). Keynesian economics is founded on lyng. The liars, i.e., the Fed, the economics profession, the federal government and the media, have bamboozled the public for nearly 80 years. Keynesian economics is based on wage reduction and transfer of wealth to asset holders at the expense of wage earners. This is accomplished using welfare as a smoke screen. Transfer the lion's share to asset holders, a small percentage to welfare recipients, then claim that the wealth is being transferred to welfare recipients. This trick was first devised by Augustus Caesar and it has worked beautifully in the United States. Part of the plan is an education system that numbs minds and teaches that the Keynesian plan is all that works. Keynesian economics is based on lying because saying openly that the economics establishment, Wall Street, the federal government and the media plan to make you poorer to subsidize the stock market will not fly in a democracy. You voted the Keynesians in and they have been ruling over you for 80 years. Enjoy the results.
Wednesday, November 3, 2010
Americans for Limited Government on QE2
I just received this message from Americans for Limited Government's Robert Romano.
ALG Statement on Fed Purchase of $600 Billion of Treasuries
November 3rd, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today issued the following statement condemning the Federal Reserve's planned purchase of $600 billion of treasuries over the next eight months:
"The Federal Reserve's reckless program to purchase $600 billion of treasuries over the next eight months is taking the U.S. into uncharted waters, where the nation's central bank will be the largest holder of the national debt in the entire world next year. The Fed already holds $834 billion of treasuries, and was already on pace to have over $1 trillion in treasuries by August, 2011, more than China, Japan, or any other foreign creditor.
"With another $600 billion on top of the Fed's expected trillion-dollar stake in the debt, the signal we are sending to the world is that to pay for our obligations is to print a ton of new money. In the next three years alone, $5.2 trillion of debt will be coming due. In addition, the Obama Administration plans on increasing the debt another $3.6 trillion over that same period. That means that the Treasury has to sell $8.8 trillion of debt over three years, or $2.93 trillion every year.
"$2.93 trillion a year is more than the Treasury has ever had to sell. Approximately $630 billion more than it has ever sold. So it is little surprise that now the Fed is coming out saying it is buying another $600 billion of treasuries. This action by the Fed has nothing to do with 'a stronger pace of economic recovery,' as the central bank claims. It has everything to do with the fact that we are broke, and we're printing money to pay the bills.
"It is up to the newly elected Congress to rein in Washington's unsustainable fiscal trajectory so that the possibility is eliminated of further Fed purchases of the debt. Otherwise, they will be signing up to have the U.S. triple-A credit rating downgraded, and will preside over the decline of the nation as an economic superpower. Spending must be cut, and the Fed has to be reined in and audited. The very solvency of the Treasury is in danger, and only Congress can reverse course and begin to pay down the debt, before it is too late."
ALG Statement on Fed Purchase of $600 Billion of Treasuries
November 3rd, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today issued the following statement condemning the Federal Reserve's planned purchase of $600 billion of treasuries over the next eight months:
"The Federal Reserve's reckless program to purchase $600 billion of treasuries over the next eight months is taking the U.S. into uncharted waters, where the nation's central bank will be the largest holder of the national debt in the entire world next year. The Fed already holds $834 billion of treasuries, and was already on pace to have over $1 trillion in treasuries by August, 2011, more than China, Japan, or any other foreign creditor.
"With another $600 billion on top of the Fed's expected trillion-dollar stake in the debt, the signal we are sending to the world is that to pay for our obligations is to print a ton of new money. In the next three years alone, $5.2 trillion of debt will be coming due. In addition, the Obama Administration plans on increasing the debt another $3.6 trillion over that same period. That means that the Treasury has to sell $8.8 trillion of debt over three years, or $2.93 trillion every year.
"$2.93 trillion a year is more than the Treasury has ever had to sell. Approximately $630 billion more than it has ever sold. So it is little surprise that now the Fed is coming out saying it is buying another $600 billion of treasuries. This action by the Fed has nothing to do with 'a stronger pace of economic recovery,' as the central bank claims. It has everything to do with the fact that we are broke, and we're printing money to pay the bills.
"It is up to the newly elected Congress to rein in Washington's unsustainable fiscal trajectory so that the possibility is eliminated of further Fed purchases of the debt. Otherwise, they will be signing up to have the U.S. triple-A credit rating downgraded, and will preside over the decline of the nation as an economic superpower. Spending must be cut, and the Fed has to be reined in and audited. The very solvency of the Treasury is in danger, and only Congress can reverse course and begin to pay down the debt, before it is too late."
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