MCViewPoint

Opinion from a Libertarian ViewPoint

Posts Tagged ‘Keynesian’

Powell Spills the Beans – LewRockwell

Posted by M. C. on July 17, 2019

Followers of Austrian economic theory like Stockman, Murray Rothbard or Walter Block will tell you deflation is the ideal. Lower prices brought by efficiency and innovation.

When has government been efficient and innovative (in the good sense)?

https://www.lewrockwell.com/2019/07/david-stockman/powell-spills-the-beans-no-phillips-curve-no-keynesian-central-banking/

By

David Stockman’s Contra Corner

Thursday was a Red Letter day for that old “you don’t say!” riposte. We are referring to the obvious response to Powell’s black and white confession to the Senate Banking Committee yesterday that more people working doesn’t cause inflation.

“The relationship between the slack in the economy or unemployment and inflation was a strong one 50 years ago … and has gone away,” Powell said Thursday during his testimony before the Senate Banking Committee. He added the strong tie between unemployment and inflation was broken at least 20 years ago and the relationship “has become weaker and weaker and weaker.”

Why, yes, it apparently has disappeared entirely per the graph below.

Since the recessionary jobs bottom in 2010, the unemployment rate (brown bars) has plunged from just under 10% to a 50-year low of 3.7% at present. Yet despite the apparent massive evacuation of labor “slack” from the US economic bathtub, real weekly earnings of prime age males (purple bars) have essentially flat-lined during the last eight years.

So you could put a stake in the so-called Phillips Curve and be done with it. But actually the story is far bigger and Powell’s confession implicates much more than merely the wage/employment equation.

To wit, it actually crushes the core tenant of Keynesian central banking. Namely, that Fed policy operates largely in a closed bathtub of domestic GDP and that by raising or lowering the water level of “demand” therein, the Eccles Building can bend domestic inflation, employment and economic growth to its will.

Self-evidently, it cannot. And the reason for that starts with Powell’s incorrect claim that the relationship between wages and employment “has gone away”.

In fact, what is implicated here is the fundamental law of supply and demand, which did not mysteriously disappear into some monetary Stranger Things realm. No, it simply migrated from the Lower 48 to a planet-wide venue…

Be seeing you

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EconomicPolicyJournal.com: New York Magazine Headline: “Trump Nominates Famous Idiot Stephen Moore to Federal Reserve Board”

Posted by M. C. on March 26, 2019

https://www.economicpolicyjournal.com/2019/03/new-york-magazine-headline-trump.html

From the accompanying article by Jonathan Chait:

Stephen Moore’s career as an economic analyst has been a decades-long continuous procession of error and hackery. It is not despite but precisely because of these errors that Moore now finds himself in the astonishing position of having been offered a position on the Federal Reserve board by President Trump…

Since Donald Trump moved into the White House, the Republican Party has reversed its views on both fiscal and monetary policy. Whereas it had previously deemed deficits and inflation a mortal threat, and called stimulus and lower interest rates counterproductive, the party line now demands both.

Moore has naturally ridden along with this reversal, but what has set him apart is the fervency with which he has embraced the volte-face. He has insisted on television that the economy is experiencing deflation, and when corrected by panelist Catherine Rampell on this unambiguous error of fact, refused to give ground. He has called for firing the Federal Reserve chairman as well as firing the entire Federal Reserve board.

Mooore’s current ultra-dovish stance is hardly anywhere near as ridiculous as his previous ultra-hawkish stance. The problem is that he has no grasp of the policy, and simply follows whatever line helps the Republican Party. While the internal workings of his mind remain a matter of speculation, I doubt he is consciously venal enough to tailor his thinking explicitly to partisan goals. Rather, Moore has extremely strong partisan instincts and extremely limited analytical skills. The combination results inevitably in the latter giving way to the former. He should not be permitted any position of serious responsibility, in government or anything else.

In other words, he sounds pretty much like every mainstream Keynesian economist, except that other mainstream economists don’t like him.

He is bad but so is everyone sitting on the Fed board today.

RW

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The “Green New Deal” Debunked (Part 2 of 2) | Mises Wire

Posted by M. C. on January 27, 2019

https://mises.org/wire/green-new-deal-debunked-part-2-2

One of the hottest topics in policy wonk circles is the “Green New Deal,” spearheaded by the rising star of the progressive Left, Alexandria Ocasio-Cortez. In my previous post, I explained that the entire premise of a current New Deal—whether green, red, or blue—was flawed. Even on standard Keynesian terms, it makes no sense to embark on a $1 trillion government spending program with official unemployment below 4 percent and the Fed raising rates to rein in price inflation. Worse, historically the actual New Deal under Franklin Roosevelt prolonged the nation’s suffering, making the Great Depression linger for a decade. Finally, I pointed out that the supporters of a Green New Deal weren’t merely interested in mitigating climate change: they quite openly announce that they will use the plan as a vehicle for transforming society according to the standard progressive wish list.

In the present post, I’ll critically analyze some of the specific policy goals listed in the draft text calling for a creation of a select committee to craft a Green New Deal. The various proposals would waste enormous sums of money in pursuit of impossible goals that would raise energy prices and hurt consumers. Even if one believes that carbon dioxide emissions constitute a “negative externality,” the measures in the proposed Green New Deal would achieve emission reductions at a much higher cost than necessary. And we see once again that the progressive Left does not think a simple “price on carbon” is enough to achieve their agenda. Conservatives and libertarians should therefore be under no illusions when the idea of a “carbon tax deal” is floated.

A Carbon Tax Won’t Satisfy the Green New Dealers

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The “Green New Deal” Debunked (Part 1 of 2) | Mises Wire

Posted by M. C. on January 27, 2019

https://mises.org/wire/green-new-deal-debunked-part-1-2

There’s a growing buzz around a “Green New Deal,” spearheaded by newly-elected Alexandria Ocasio-Cortez. Although the details are in flux, currently the draft text calls for the creation of a 15-member “Select Committee for a Green New Deal” that would “have authority to develop a detailed national, industrial, economic mobilization plan” to make the U.S. economy “greenhouse gas emissions neutral.” As if that weren’t ambitious enough, the Select Committee’s detailed national plan would also have the goal “to promote economic and environmental justice and equality.” The draft specifically mentions spending $1 trillion over ten years, in addition to extensive taxes and regulations to steer the economy and society as the 15 committee members see fit. (To be clear, the draft text currently calls for the creation of the select committee, which in turn is then tasked with drafting legislation forming the “Green New Deal” itself.)

In this two-part series I will strongly critique both the spirit and substance of a proposed “Green New Deal.” In the second article, I will focus on the specific proposals in the draft legislation. But in this first piece I will give the historical context and explain why the very notion of a Green New Deal is misguided, because it relies on faulty history and bad economics.

The Original New Deal Was Implemented During the Great Depression

Perhaps the most obvious flaw with anyone proposing a modern-day New Deal—whether green or any other hue—is that we are not currently in the midst of an economic depression. Even textbook Keynesians, who think that (say) the incoming Obama Administration was justified in administering a large “stimulus package” because we were stuck in a so-called liquidity trap, now admit that there is no economic rationale for continuing to run large budget deficits. (As Paul Krugman notoriously and conveniently wrote soon after the election of Trump, “Deficits Matter Again.”)

The very term “New Deal” was chosen to appeal to the 20%+ of the unemployed in the workforce, who had ostensibly been left behind by the traditional U.S. economic system. Yes, Ocasio-Cortez and her supporters are touting the Green New Deal as (among other things) the solution to lingering economic inequities in the current system. But to call concern over a wage gap a “New Deal” is as inapt as christening a bullet train program a “Green Moon Shot.”

The New Deal Actually Hurt the U.S. Economy and Prolonged the Great Depression

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Hitler’s Economics – LewRockwell

Posted by M. C. on October 29, 2018

Perhaps the worst part of these policies is that they are inconceivable without a leviathan state, exactly as Keynes said. A government big enough and powerful enough to manipulate aggregate demand is big and powerful enough to violate people’s civil liberties and attack their rights in every other way.

https://www.lewrockwell.com/2018/10/lew-rockwell/hitlers-economics/

By 

[Originally published August 02, 2003.]

For today’s generation, Hitler is the most hated man in history, and his regime the archetype of political evil. This view does not extend to his economic policies, however. Far from it. They are embraced by governments all around the world. The Glenview State Bank of Chicago, for example, recently praised Hitler’s economics in its monthly newsletter. In doing so, the bank discovered the hazards of praising Keynesian policies in the wrong context.

The issue of the newsletter (July 2003) is not online, but the content can be discerned via the letter of protest from the Anti-Defamation League. “Regardless of the economic arguments” the letter said, “Hitler’s economic policies cannot be divorced from his great policies of virulent anti-Semitism, racism and genocide.… Analyzing his actions through any other lens severely misses the point.”

The same could be said about all forms of central planning. It is wrong to attempt to examine the economic policies of any leviathan state apart from the political violence that characterizes all central planning, whether in Germany, the Soviet Union, or the United States. The controversy highlights the ways in which the connection between violence and central planning is still not understood, not even by the ADL. The tendency of economists to admire Hitler’s economic program is a case in point. Read the rest of this entry »

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EconomicPolicyJournal.com: The Washington Post Smashes the Bernie Sanders’ Jobs For Everyone Guarantee Proposal

Posted by M. C. on May 10, 2018

But overall it is good to see the general strong objection to the notion to the paper that serves the rulers in the belly of the national beast

http://www.economicpolicyjournal.com/2018/05/the-washington-post-smashes-bernie.html?m=1

How nutty is the Bernie Sanders proposal to guarantee everyone in America a job?

So nutty that the economic columnist for the interventionist supporting Washington Post, Robert J. Samuelson, is attacking the idea.

Samuelson writes: Read the rest of this entry »

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