11–20 of 28 posts
Paul Krugman continues to write the best articles about the state of the economy for laymen. I'm continually impressed (despite his years of research, training, and a nobel prize to boot) with his ability to explain what is happening and why. Sometimes I lament the fact that instead of running the show, he's left to opine about the policies of others.
Nobel prizes do not mean anything when polar opposite in economics thought have also won prizes, ie. Hayek.
Earlier quoted context omitted.
I think that someone can have a meaningful discussion on recessions without mentioning the "dismal failures" of the Keynsians. For the record, there are plenty of bubbles that have not been caused by government manipulation. For example, the Tulip bubble that happened in the Netherlands ( http://en.wikipedia.org/wiki/Tulipmania ) (not to mention bubbles caused by people like Madoff and other con men). Also be careful…
Some people still say that the tulipmania is government's fault. http://mises.org/story/2564 The story of Tulipmania is not only about tulips and their price movements, and certainly studying the "fundamentals of the tulip market" does not explain the occurrence of this speculative bubble. The price of tulips only served as a manifestation of the end result of a government policy that expanded the quantity of money a…
Still, I think it proves my point that you can always blame the government if you want to.
In my view, the reasoning has one major flaw. If money supply was the cause, then why weren't there other bubbles in addition to tulipmania?
If you correctly identify the cause, then it should be both sufficient and necessary for the result. If the cause was the Dutch monetary policy, then there should have been other bubbles contemporary with the monetary policy.
As far as I understand it, the tulipmania did not cause a recession or depression even if some very rich people lost all their money. If the author's reasoning was correct, then there should have been other bubbles caused by the same government policy.
http://en.wikipedia.org/wiki/Political_economy
Economics isn't a science. Physicists can agree on 99.99 percent of what they talk about, and the other .01 percent is agreed to be unknown or arguable. Economists can barely, just barely, hold a tenuous consensus on things like comparative advantage. The reason economists "get it wrong", is:
1. They want to direct the money into XYZ set of pockets instead of ABC set of pockets, thus they're always "wrong" as for as ABC is concerned, and
2. They don't have the predictive consistency typical of scientists because...they aren't scientists.
Earlier quoted context omitted.
He seems kinda clueless to me. A whole article on the economic theory of recessions with no mention of malinvestment? He goes on at length about the efficient market hypothesis and bubbles yet never acknowledges that nobody can identify a bubble that has happened without government manipulation of the market. He goes on at length about Keynesian stimulus with no mention of its dismal failures, most notably in Japan.…
You have to consider that in this case he is writing for a general audience. You also have to consider that he is writing in an environment where he has to distinguish himself from Chicago school absolutists. Also, I think your assertion that asset bubbles do not occur absent government interference is wrong; or at the very least leaves out the fact that often it is the speculators themselves who are most demanding t…
"He asked me to do {something stupid}" does not relieve you of the responsibility for the dumb things that you do.
More to the point, the "govt should fix things" belief leads to govt doing dumb things. These things never look dumb up front.
Earlier quoted context omitted.
Some people still say that the tulipmania is government's fault. http://mises.org/story/2564 The story of Tulipmania is not only about tulips and their price movements, and certainly studying the "fundamentals of the tulip market" does not explain the occurrence of this speculative bubble. The price of tulips only served as a manifestation of the end result of a government policy that expanded the quantity of money a…
Thanks for the link. Interesting analysis. Still, I think it proves my point that you can always blame the government if you want to. In my view, the reasoning has one major flaw. If money supply was the cause, then why weren't there other bubbles in addition to tulipmania? If you correctly identify the cause, then it should be both sufficient and necessary for the result. If the cause was the Dutch monetary policy,…
But what made this episode unique was that the government policy did not expand the supply of money through fractional reserve banking which is the modern tool. Actually, it was quite the opposite. As kings throughout Europe debased their currencies, through clipping, sweating or by decree, the Dutch provided a sound money policy, which called for money to be backed one hundred per cent by specie. This policy, combined with the occasional seizure of bullion and coin from Spanish ships on the high seas, served to attract coin and bullion from throughout the world.
I do not know of any more of this monetary policy implemented. Perhaps you could illustrate some examples from history.
Paul Krugman continues to write the best articles about the state of the economy for laymen. I'm continually impressed (despite his years of research, training, and a nobel prize to boot) with his ability to explain what is happening and why. Sometimes I lament the fact that instead of running the show, he's left to opine about the policies of others.
Nobel prizes do not mean anything when polar opposite in economics thought have also won prizes, ie. Hayek.
Paul Krugman continues to write the best articles about the state of the economy for laymen. I'm continually impressed (despite his years of research, training, and a nobel prize to boot) with his ability to explain what is happening and why. Sometimes I lament the fact that instead of running the show, he's left to opine about the policies of others.
Nobel prizes do not mean anything when polar opposite in economics thought have also won prizes, ie. Hayek.
In late nineteenth century, the term "political economy" was generally replaced by the term economics, http://en.wikipedia.org/wiki/Political_economy Economics isn't a science. Physicists can agree on 99.99 percent of what they talk about, and the other .01 percent is agreed to be unknown or arguable. Economists can barely, just barely, hold a tenuous consensus on things like comparative advantage. The reason economi…
That does not mean that the social sciences are unimportant. In fact the amount of money (which you alluded to) means they are actually perceived as important. Once upon a time physics wasn't a science either.
In late nineteenth century, the term "political economy" was generally replaced by the term economics, http://en.wikipedia.org/wiki/Political_economy Economics isn't a science. Physicists can agree on 99.99 percent of what they talk about, and the other .01 percent is agreed to be unknown or arguable. Economists can barely, just barely, hold a tenuous consensus on things like comparative advantage. The reason economi…
Systems biologists can't, nor can climate scientists, oceanographers, ecologists, geophysicists or astronomers.
A few fields (namely the ones taught to physics majors) have a simple unified theory that every sane person can agree to. The rest are messy, much like economics.
Earlier quoted context omitted.
He seems kinda clueless to me. A whole article on the economic theory of recessions with no mention of malinvestment? He goes on at length about the efficient market hypothesis and bubbles yet never acknowledges that nobody can identify a bubble that has happened without government manipulation of the market. He goes on at length about Keynesian stimulus with no mention of its dismal failures, most notably in Japan.…
I think that someone can have a meaningful discussion on recessions without mentioning the "dismal failures" of the Keynsians. For the record, there are plenty of bubbles that have not been caused by government manipulation. For example, the Tulip bubble that happened in the Netherlands ( http://en.wikipedia.org/wiki/Tulipmania ) (not to mention bubbles caused by people like Madoff and other con men). Also be careful…
Nevertheless, I think it's fair to say the government did play a major role in the housing bubble.