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Saturday, August 04, 2012

Economics advances

In a modification of Kuhn's theory of scientific revolutions, it would appear that political economy advances one character assassination at a time. In this case, Mike Shedlock finishes off what I started in putting Gary North out of his intellectual misery:
Obvious Falsehoods

Gary North does not speak for any deflationist, nor does he speak for all the inflationists. He acts as if he does. Sustained price deflation is certainly not inevitable, nor is price deflation inevitable in the short-term either. Since I am a staunch deflationist, and since Gary North is aware of my writing, it appears he is purposely making preposterous straw-man arguments just to be able to shoot them down....

Credibility Issues

People really get into serious trouble using phrases like "no inflationist" and "every deflationist" when they clearly do not speak for everyone, especially when they also need a lecture about changing attitudes and time-preference as well. Finally, it's easy to setup a straw-man debate that you can win. It's also easy to lose credibility doing just that.
Unlike athletes, intellectuals seldom seem to recognize when they are done. This is as true of scientists and economists as novelists; while there are the occasional rare exceptions, for the most part very few intellectuals have anything coherent or substantive to say beyond the age of 65. I suspect this has as much to do with a lack of energy as it does with an inability to focus or the mental ossification of age. It's always alarming, whether one is reading a novel or a polemic, to realize that while the writer may not have lost the plot entirely, the intellectual equivalent of his fifth gear, his burst, his vertical, or his fastball, is gone.

One can be sympathetic, to an extent, in understanding why North is so skeptical about deflation. After all, he's been hearing warnings about it for some 40 years now and it simply hasn't ever arrived. But - and here is where his age appears to have become a handicap - the fact that something hasn't happened in 40 years is totally irrelevant when viewed from the perspective of recorded history rather than one's own lifetime. Every central bank has eventually failed. Every currency has eventually gone out of circulation. The future failure of the Fed and the collapse in the value of its notes, paper or digital, is not a question of if, but when. At 99 years and counting, the Fed has actually had a pretty good run by historical standards.

Even with more than 20 years of potential intellectual activity in front of me by my own rough metric, I've noticed an increasing inclination to take a "been there done that" approach to challenges based on my own experience and familiarity with the same old failed arguments presented time and time again. It is both amazing and irritating how often people continue to keep presenting the same futile arguments again and again and again. But it is important to resist the urge to dismiss challenges without first at least glancing over them and determining whether or not one's previously successful rebuttals necessarily apply to them. After complacent laziness comes intellectual torpor and then complete stagnation.

But if we can understand Gary North's failure to rise to the challenge posed by the following generation of right-wing economists, we cannot excuse it. No one is forcing him to remain in the ring contesting these issues, after all. Mish and I would be similarly to blame if we simply ignored the challenges to conventional and Austrian economic theory posed by the likes of Ian Fletcher and Steve Keen. I am perfectly aware that the more ideological Austrians are deeply affronted by my willingness to go off the reservation, but as I have noted in the past, I am not a joiner. Lacking all the benefits of the various intellectual establishments, even the lesser ones, I also lack the ideological restrictions that come with them and so I am free to follow the logic and the evidence wherever it goes. Mises was brilliant, but keep in mind that he did some of his best work nearly 90 years ago. Even if I lack his exceptional brilliance, I have the benefit of considerably more information at my disposal.

To a certain extent, my decision to begin writing the monster epic series on which I'm currently working was partly the result of realizing that if I don't tackle these sorts of projects now, I am far less likely to do so in the future as I grow older. This realization has also influenced my next non-fiction project, which is going to be even more ambitious in its way than a mere one million word epic fantasy series.

The failure of North's attempt to rebut the current deflationist arguments does not mean that Mish and I are necessarily correct in predicting the eventual failure of the Federal Reserve to continue its 99-year program of methodically expanding the money supplies through the continuous increase of debt. I freely admit that I didn't expect The Helicopter to be able to maintain the substitution of federal debt for household and financial sector debt for four solid years. But can the Fed maintain this indefinitely? The history of socialized economies strongly suggests otherwise. Can they maintain it long enough to relaunch the private debt sectors? The inability of the current generation of college graduates, already saddled with heavy student loan debt, to find jobs or finance cars and homes, also suggests the likely failure of this strategy.

Labels:

36 Comments:

Anonymous Dr. Idle Spectator, MBA MFA Ph.D. MD OD Esq. August 04, 2012 8:10 AM  

I'm not quite done yet.

Anonymous Roundtine August 04, 2012 8:25 AM  

You describe the current state of the nation. Pick a topic and you get the same results. Bring up free trade or the military/foreign policy: heard that isolationism before! Challenge multiculturalism: racist! The Internet both helps and hurts: if you have an open mind, you can open it wider. But if you want an echo chamber, it's the biggest.

Blogger James Dixon August 04, 2012 8:35 AM  

> After all, he's been hearing warnings about it for some 40 years now and it simply hasn't ever arrived.

Uhm, Vox, 40 years ago was 1972. We had significant, though not hyper, inflation in the the 1970's (I remember the 12% interest rates on CD's and 18% loan rates from that time), and if Reagan and Volcker hadn't been as capable as they were, I suspect hyper-inflation would have been right around the corner.

Now, 30 years, and I'll grant the point.

Anonymous VD August 04, 2012 8:45 AM  

Now, 30 years, and I'll grant the point.

North specifically referred to deflation warnings he'd been given by his friend in the 70s. Deflation clearly did not occur at that time, by your own admission.

Blogger James Dixon August 04, 2012 8:54 AM  

OK, I misunderstood your point and thought he was writing off inflation. I apologize.

Blogger James Dixon August 04, 2012 8:55 AM  

Of course, why I misunderstood is beyond me, re-reading the post. :(

Anonymous Mr. Nightstick August 04, 2012 8:57 AM  

Irwin Jacobs co-founded Qualcomm in 1985 at age 53. It did alright under his leadership well into his 70s. 65 is too young an age to quit if you are on a roll.

Anonymous VD August 04, 2012 9:05 AM  

65 is too young an age to quit if you are on a roll.

There are always exceptions. But the point is that one should be cognizant of what the normal expectations are and be honest with oneself about how one is managing one's decline.

I still play soccer, after all. I'm actually more dangerous in the box with the ball than I was when I was 17 and blazing fast. I also have more ball control and see the field better than before. If I continue to keep myself in shape and avoid injury, there is no reason I can't expect to play until I'm 50. But if I tried to play the way I played when I was 17, I would be almost useless because I simply don't have that sub-11 speed anymore. It's just gone.

Blogger Nate August 04, 2012 9:09 AM  

We are in complete agreement that they can not balance on the razor's edge forever... I am convinced they will dive for the fire when the balancing grows to difficult. After all... They can inflate... Cash out... And watch the show from a safe distance.

Anonymous The other skeptic August 04, 2012 9:47 AM  

And now we have an economic death spiral to go with that Arctic death spiral

Anonymous The other skeptic August 04, 2012 10:14 AM  

More interesting economic activity

Some would call it Looting the treasury. It is good to be politically connected.

Blogger IM2L844 August 04, 2012 10:44 AM  

Is hyper-biflation a possibility?

Blogger Joshua_D August 04, 2012 10:51 AM  

OT: I've seen clips here and there on the Interwebz from a movie, maybe made in the 80s, about a market crash, or panic. The scene I've seen involves a trading house that's trying to sell off, the supervisor calls his wife and sends her to the bank to withdrawal all their cash, and then there is monologue about dollars, oil, and maybe the Saudis.

What movie is that? Help! Thanks.

Anonymous Orville August 04, 2012 11:06 AM  

Maybe "Rollover" with Kris Kristofferson and Hanoi Jane?

Blogger Joshua_D August 04, 2012 11:16 AM  

Thanks Orville. That's it. I knew y'all come through. I searched for 30 minutes last night: stock market, stock market crash, financial panic, oil panic ...

No luck.

Question the Ilk, receive answer in a few minutes.

Blogger IM2L844 August 04, 2012 1:14 PM  

Wow, this thread has come to a screeching halt. Maybe everyone is busy watching Rollover. Thanks, Joshua_D!

Anonymous Noah B. August 04, 2012 3:00 PM  

"We are in complete agreement that they can not balance on the razor's edge forever... I am convinced they will dive for the fire when the balancing grows to difficult. After all... They can inflate... Cash out... And watch the show from a safe distance."

I think that is the likely outcome as well, but whether the collapse happens by inflation or deflation ultimately depends on what central banks do. But either way, the current global monetary system is done for.

I do expect that events in Japan will eventually trigger the collapse, and it will be only a matter of seconds before it spreads worldwide.

Anonymous Anonymous August 04, 2012 3:19 PM  

Gary North is senile and to maintain any sort of credibility Lew Rockwell should stop running his articles.

Blogger LP 999/Eliza August 04, 2012 4:14 PM  

Fantastic post!! I love this inflationista vs. deflationista stuff.

Anonymous tdm August 04, 2012 5:18 PM  

"... for the most part very few intellectuals have anything coherent or substantive to say beyond the age of 65."

I noticed at about 65 I had a large decline physically and mentally, so I guess it works for us regular guys too.

Anonymous patrick kelly August 04, 2012 5:25 PM  

WTF does it matter whether it is inflation or deflation that lets loose the apocazombielypse? Is one gentler than the other or give you a good reach around or something?

Anonymous Anonymous August 04, 2012 6:19 PM  

Gary North, Ph.D, believes that volume of output equates to intellectual accomplishment. He delights in bragging about the number of hours he puts into a "work day". He brooks no feedback or challenge to his positions but he has a loyal following of minions who doggishly sit at his feet awaiting the next pronouncement from on high. North missed the Y2K issue by a wide margin. He yearns for TEOTWAWKI. That ought to make him suspect. He won't debate preferring to simply write his "stuff" content in his own opinion and others be damned. Some intellect.

Blogger RobertT August 04, 2012 6:21 PM  

" I suspect this has as much to do with a lack of energy as it does with an inability to focus or the mental ossification of age."

I kind of chuckle at your attitude and hope I'm still around to watch you age. Actually I think it is as simple as, when you run out of ideas, you've run out of them. Many people produced their best work in their late teens or early 20's. They obviously have plenty of energy and haven't ossified. They just had nothing left in the vault. They were obviously not as innovative as it seemed. They were innovative once. But others who continually shift concentration from thing to another have good ideas all their lives. They may not all be world record ideas, but how many of those do you run into anyway? Right now I have a relative who in a rest home that's suffering from mild dementia. However I have met some 90 years olds who are still apparently sharp as a tack. I just watched a video by Jon Moynihan who is certainly not young, but still out-thinks most of the people in his profession. I suspect the way you live and eat contributes the way you age.

But it is inevitable, eventually we will lose all ability as we die.

Blogger RobertT August 04, 2012 6:48 PM  

"been there done that"

My point exactly.

Blogger RobertT August 04, 2012 6:57 PM  

"But can the Fed maintain this indefinitely?"

"What can't go on forever, wont." Herb Stein

Blogger rcocean August 04, 2012 7:27 PM  

The truth is that everyone's world view more or less freezes at a particular age and it never changes unless external events smash it to smithereens.

Speer stated that Hitler could deal well with all scientific and military issues that were well known before WWI, but anything after that date was a mystery. You can see the same thing with most of the Liberal MSM commentators who still think its 1988, 1978, or even 1968.

Anonymous bob k. mando August 04, 2012 10:12 PM  

VD 8/04/2012 06:16:00 AM
but as I have noted in the past, I am not a joiner.


and yet, you complain about the failure of your readers to join YOU in comment threads on high finance / banking posts which you make over on WND.

while wonderfully ironic, it does point up a problem with your avowed attempts to make an impact on the zeitgeist; your personal non-joinerness may well be orthogonal to the problem of entraining others to your cause, yet the fact remains that you aren't doing that fantastic of a job of recruiting others.

Anonymous Beau August 04, 2012 10:47 PM  

But the point is that one should be cognizant of what the normal expectations are and be honest with oneself about how one is managing one's decline.

The will is written. The debts paid. Heartfelt sentiments all expressed.

Blogger Spacebunny August 05, 2012 1:01 AM  

and yet, you complain about the failure of your readers to join YOU in comment threads on high finance / banking posts which you make over on WND.


Do try not to be an idiot bob - where did he complain about the failure of his readers to join him in comment threads anywhere, much less WND? Especially as he has never commented there himself? And before you think I am attempting to be pedantic with regards to your abominable grammar, I would point out that noticing and demonstrating how stupid people are is not complaining about them joining him.

Blogger IM2L844 August 05, 2012 10:54 AM  

while wonderfully ironic, it does point up a problem with your avowed attempts to make an impact on the zeitgeist; your personal non-joinerness may well be orthogonal to the problem of entraining others to your cause, yet the fact remains that you aren't doing that fantastic of a job of recruiting others.

I've only been hangin' out around here for about a year, but this is all news to me. I had no idea that Vox had declared his intentions to impact the zeitgeist and I certainly didn't know he was actively trying to recruit others to join him in this cause. If this is true, why would anybody have a problem with it? Is maintaining the status quo really preferable to trying to change it and encouraging others to do the same?

Blogger John Regan August 05, 2012 4:02 PM  

I've periodically marveled at North's error filled screeds for a couple of years now:

http://strikelawyer.wordpress.com/2010/12/28/free-market-gold-standard-gary-norths-folly/

As you say, it seems to be getting worse. Neither he nor the LRC crowd have much to offer in the way of solutions. Long on criticism, though.

Anonymous VD August 05, 2012 4:57 PM  

and yet, you complain about the failure of your readers to join YOU in comment threads on high finance / banking posts which you make over on WND.

Don't be ridiculous. I'm lamenting the fact that most people are idiots who care more about Team Red vs Team Blue than the global economic crash. I'm not asking anyone to join me.

your personal non-joinerness may well be orthogonal to the problem of entraining others to your cause, yet the fact remains that you aren't doing that fantastic of a job of recruiting others.

Almost certainly. And I'm doing an abysmal job of recruiting others, mostly likely because I'm not attempting to recruit anyone for anything except the worship of Jesus Christ. I figured out a long time ago that I would either have to become complicit in harming large quantities of people or sit back and let the world disintegrate on its own. That's why I understand what certain groups in the global elite are working towards. I think like them, I merely rejected their path. But I understand them, and to a certain extent, can even sympathize with their contempt for humanity.

I merely chronicle, I do not act.

Anonymous bob k. mando August 05, 2012 11:21 PM  

Spacebunny August 05, 2012 1:01 AM
Do try not to be an idiot bob


do or do not. there is no try. [/Yoda]



Spacebunny August 05, 2012 1:01 AM
I would point out that noticing and demonstrating how stupid people are is not complaining about them joining him.



it was pointed out by numerous people, myself included, that failure to comment may mean nothing more than tacit agreement.

many of the regulars HERE made the point that they didn't consider themselves qualified to comment on a post about the nuances of monetary policy. not because of "stupidity" but because they considered themselves ignorant on the subject. and given the miserable condition that the American public schools have sunk too, they're almost certainly correct.

i know a current college student who, over the last month, has asked me what it meant when i used the words "vet" and "lewd".



Spacebunny August 05, 2012 1:01 AM
where did he complain about the failure of his readers to join him in comment threads anywhere, much less WND?


see, little bunny ( to use a Space Bunnyism ), this is the kind of thing that gets you into trouble.

to quote Vox from the post in question:
http://voxday.blogspot.com/2012/07/contemplating-quitting.html
"But it is really incredible to see how few people at WND are interested in substantive matters like a conceptual revolution in economics versus other, considerably less significant issues.

There are all of two comments on today's WND column. That's less than one-twentieth of how many comment on any given column.
"

i'm not always correct but i DO have far better than average recall.

Vox made an unsupported extrapolation about the stupidity of his ( WND )readership AND an incorrect characterization of Jonah in the same post.

let me ask YOU TWO a question:
every so often i make the point that the GDP metric violates thermodynamics. to my knowledge, neither of you have ever commented on that.

should i take this as evidence of your stupidity? that you think i'm a complete loon? that you agree with me and think the point is so blindingly obvious that i'm beating a dead horse?

considering that i don't think that ANY of the Ilk have ever commented/disputed on that point i would guess that the general consensus is that most people are just confused about my assertion and think either it might be a non-sequitur or that i may be dain bramaged.

*shrugs*

that's fine. i'm not the one trying to change the world.

but the fact remains that if i use Vox's methodology for determining intelligence, i should assume that both of you are failing to meet my standard.



IM2L844 August 05, 2012 10:54 AM
If this is true, why would anybody have a problem with it? Is maintaining the status quo really preferable to trying to change it and encouraging others to do the same?


congratulations.

you have completely failed to grasp the point.

and, too be fair, sometimes Vox says he just wants to watch it all burn. and then he turns around and starts the Alpha Game blogspot and says that his purpose for that is to try to save Western civ.

does he contradict himself? he is an Internet Super Intelligence. he is large, he contains multitudes.


having brought up Alpha Game, i wonder if the traffic growth over there meets the predictions Vox made for it when he first started it up. i tend to doubt that it does.

and if it does not, the lack of regular and original posts over there is certainly a leading factor.

not that i'm complaining, mind you. i can certainly understand how a money making endeavor like trying to synthesize the next "Great" fantasy book series might take precedence over pro bono blog work.

Anonymous The other skeptic August 05, 2012 11:35 PM  

North on the Euro or something

Blogger Spacebunny August 06, 2012 2:24 AM  

Did bob just get even more stupid? Unsurprisingly yes, he did.

I suggest you get a dictionary, use it (or have someone help you) and stop attempting to conflate two separate things.

Anonymous patrick kelly August 06, 2012 10:42 AM  

Bob, before I point and laugh at you, did you really read that as Vox lamenting the ilk were not following him to his WND column and commenting there? Really? I just want to make sure.

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