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Tuesday, November 13, 2012

End this depression now!

Paul Krugman has the solution to the economic crisis in his book published earlier this year.  You'll never guess what it is!
Spend Now, Pay Later

The basic situation of the U.S. economy remains now what it has been since 2008: the private sector isn’t willing to spend enough to make use of our full productive capacity and, therefore, to employ the millions of Americans who want to work but can’t find jobs. The most direct way to close that gap is for the government to spend where the private sector won’t.
There are three common objections to any such proposal:

1.    Experience shows that fiscal stimulus doesn’t work.
2.    Bigger deficits would undermine confidence.
3.    There aren’t enough good projects to spend on.

I’ve dealt with the first two objections earlier in this book; let me briefly summarize the arguments again, then turn to the third.

As I explained in chapter 7, the Obama stimulus didn’t fail; it simply fell short of what was required to offset the huge private-sector pullback that was already under way before the stimulus kicked in. Continuing high unemployment was not just predictable but predicted.

The real evidence we should be considering here is the rapidly growing body of economic research on the effects of changes in government spending on output and employment—a body of research that relies both on “natural experiments” such as wars and defense buildups and on careful study of the historical record to identify major changes in fiscal policy. The postscript to this book summarizes some of the major contributions to this research. What the work says, clearly and overwhelmingly, is that changes in government spending move output and employment in the same direction: spend more, and both real GDP and employment will rise; spend less, and both real GDP and employment will fall.

What about confidence? As I explained in chapter 8, there’s no reason to believe that even a substantial stimulus would undermine the willingness of investors to buy U.S. bonds. In fact, bond market confidence might even rise on the prospect of faster growth. Meanwhile, both consumer and business confidence would actually rise if policy turned to boosting the real economy.
One would probably have to read this book to believe the astonishing simplicity of his Neo-Keynesian approach.  I could have written it in in a single page.  Actually, I could have written in in a single sentence: More public debt and more government spending is the solution to this economic depression because government spending is capable of creating the jobs necessary to produce economic growth, while the resulting public debt is not a problem because any country with its own central bank can issue an infinite amount of it without any long-term costs.

I think what we are seeing here is the beginning of the death throes of Neo-Keynesian economics.  They can't assert that debt doesn't matter at all anymore, since the conventional Samuelsonian argument was blown away by the growth of foreign debt and the financial crisis of 2008, so now Krugman and company have shifted to arguing that a certain and specific type of debt can be amassed infinitely.  Time will soon prove this move of the goalposts to be false as well.

There is a lot to question in Krugman's book and I will be addressing those questions over the next few weeks as I have 16 sections bookmarked.  But this is the essential summary.

Labels: ,

145 Comments:

Anonymous LES November 13, 2012 2:58 PM  

From what little I have read wealth is created by manufacturing, farming, mining and fishing. Service jobs do not create wealth. The printing of money by the Federal Reserve does not create wealth.

Companies only hire people when they need them and pay them as little as they can.

Pat Buchanan wrote in his book "The Great Betrayal" when people lose their jobs they look to the government for help. The Republicans are seen as the party that sent our manufacturing jobs to China and the Democratic party is seen as the party of the financial safety net.

Anonymous Starbuck November 13, 2012 3:01 PM  

I guess 700+ Billion wasn't enough? What if they spent 4 Trillion, and it failed? Would that have been enough or would have everything turned out peachy if they only spent one more dollar?

Why hasn't anyone in his said profession kicked his arse?
Oh yea.. they agreed with him..

Anonymous Susan November 13, 2012 3:02 PM  

Isn't Krugman the guy who married a rich woman? Maybe her finances are starting to be affected by the stupidity going on in the markets right now. I guess the only way libs learn is to be walloped in their wallets.

As someone who has to work extra hard to understand economics, I appreciate the depth of your explanations on the subject. I don't grasp all of it every time, but I do appreciate your efforts to educate us.

At least your economic forecasts have a better chance of coming true(smile).

Anonymous JartStar November 13, 2012 3:03 PM  

So if his solution is correct the European PIGS and Greece could be saved with the largest stimulus package in the history of the world financed by debt.*



*If it fails it wasn't large enough.

Anonymous Tallen November 13, 2012 3:11 PM  

A home for every person, a money printer in every home...

Anonymous JartStar November 13, 2012 3:11 PM  

I think what we are seeing here is the beginning of the death throes of Neo-Keynesian economics.

I dunno. How do you falsify an idea that if it fails it's because you never did it large enough?

Anonymous Cheddarman November 13, 2012 3:23 PM  

Vox,

I would much rather that you decapitate the Krugman and all associated Keynsians, neo-Keynsians, etc. with your flaming sword, that with rhetoric.

Sincerely

Cheddarman

Anonymous Matt November 13, 2012 3:24 PM  

Isn't Krugman the guy who married a rich woman?

I don't know if she's rich, but she is one of those Elizabeth Warren "minority" academics.

Anonymous Koanic November 13, 2012 3:27 PM  

"I have 16 sections bookmarked."

In other words

Blogger Wagnerian November 13, 2012 3:32 PM  

What the work says, clearly and overwhelmingly, is that changes in government spending move output and employment in the same direction:

Correct in a perverse sense. If one considers government make-work in secondary goods to be output, then it goes up. If one considers output to be primary goods and services, it goes down. The money substituted for capital investment goes for nonsense, and both real output and employment go down from what they would be.

Blogger Bob Wallace November 13, 2012 3:33 PM  

I refer to Krugman as a cartoon, a buffoon and a poltroon.

Anonymous Boogeyman November 13, 2012 3:35 PM  

I, as I'm sure many others are, am tired of this little button eyed freak. The only interesting thing left about him is guessing at what set of conditions would be needed for him to recant. All of the capitol burning, the permanent failure of utilities, Vikings swarming over the walls to loot and rape?

The safe bet is never. He could be living in a mud hut decades from now, bent and gray, struggling with a plow being dragged behind a horse, abandoned cites crumbling in the distance, and Krugman will still be muttering "We just didn't print enough money."

Blogger Nate November 13, 2012 3:38 PM  

Communism didn't fail... the countries involved just didn't have enough time and resources to fully succeed!

Anonymous drose November 13, 2012 3:43 PM  

"A home for every person, a money printer in every home..."

But seriously what is the difference between the Fed printing out billons of dollars in stimulus vs. each person printing out as much money as they want? If you follow the Krugman logic wouldn’t that stimulate the economy as well?


Anonymous Toddy cat November 13, 2012 3:43 PM  

And this joker won a Nobel Prize? With a totally unfalsifiable theory? So much for the "science" of economics

Anonymous Edjamacator November 13, 2012 3:43 PM  

Are guys like this moronic, incompetent, or are they actually purposely trying to destroy the economy for personal or political gain? If Vox can sit here and explain why it won't work, if the reality of it not working is too hard for them to see, what is the state of their minds? Are they malicious or just stupid?

Anonymous Edjamacator November 13, 2012 3:44 PM  

And why not just pay off everyone's mortgage? Wouldn't that help people feel "open" to spending really fast?

Anonymous Mr. Nightstick November 13, 2012 3:49 PM  

We aren't seeing the death of Neo-Keynesian Economics. We are seeing the birth of Post Neo-Keynesian Economics as well as the seeds of Neo Post Neo-Keynesian Economics being planted.

Anonymous JW November 13, 2012 3:50 PM  

" Toddy catNovember 13, 2012 3:43 PM
And this joker won a Nobel Prize? With a totally unfalsifiable theory? So much for the "science" of economics"

Well why not? Big O won a Nobel Peace Prize for having done absolutly nothing.

Anonymous Noah B. November 13, 2012 3:53 PM  

Wow -- this is like begging someone to hire you to dig your own grave.

Anonymous zen0 November 13, 2012 3:55 PM  

Krugman: ... is that changes in government spending move output and employment in the same direction: spend more, and both real GDP and employment will rise; spend less, and both real GDP and employment will fall.

Denninger: GDP = C + I + G + (x - i)

That is, GDP = Consumption + Investment + Government Spending + Net Exports

Note that this alleged "measurement" is inherently flawed, however, because it is a nominal value.

That is, if we have 10,000 units of credit and currency in the system and we add 1,000 units through deficit spending, GDP increases even though from the common man's perspective who is not a recipient of the government largesse he actually saw his economic prosperity in real terms decline!

But even the recipient of the largesse did not see an actual gain, although one was reported -- he saw "status quo." That is, he saw "more" but each unit of currency and credit bought less, and those more-or-less cancel out.

To "fix" the fiscal cliff you must stop deficit spending, one way or another. And there is no free lunch -- if you increase taxes then either "C" (consumption) or "I" (investment) must decline since the money to pay the taxes has to come from one of those two categories. If you cut government spending then GDP decreases by the exact amount that "G" is decreased.

When "growth" in GDP is 2% a year but you are deficit spending 8% then the real economic growth is -6%. If you stop the deficit spending, no matter how you do it, the true economic rate of change becomes exposed irrespective of how you do it.


zen0: Krugman's real GDP and Denninger's real GDP are different animals. Which one is the stuffed one? Can I get a ruling on this?

Anonymous Rantor November 13, 2012 3:56 PM  

Edjamacator,

arguably, if they had payed all the TARP and stimulus money against the primary mortgages of US citizens, it would have saved more banks and been more stimulative overall than what they did do with it.

Anonymous JW November 13, 2012 3:59 PM  

" NateNovember 13, 2012 3:38 PM
Communism didn't fail... the countries involved just didn't have enough time and resources to fully succeed!"

Besides that those communists just didn't know enough to make it succeed. The new improved Communists now in power are just brilliant don't you see...the socialist paradise is just around the corner comrads

Anonymous CLK November 13, 2012 4:03 PM  

"Are guys like this moronic, incompetent"...

Yale, MIT, Stanford, Princeton, Nobel .. yes obviously the guy is a moron. There is a certain amount of respect that should be observed ... go get your degrees from Yale and MIT, write 20 text books, get an Nobel prize and then you can call him a moron.


Anonymous Porky? November 13, 2012 4:10 PM  

Are they malicious or just stupid?

Well, they aren't stupid so by process of elimination....ummm...carry the two...uh... I just don't know.



Blogger Serge_Tomiko November 13, 2012 4:10 PM  

No, wealth beyond the basic necessities of life comes from the fact people demand it, and most such demand is imposed by an elite. This is why the concept of aggregate demand is essential to understanding advanced economies.

When demand collapses, employment collapses.

And please, stop with this Ayn Rand nonsense! Germany in the 1930s, America at the same time and especially in the 1950s... There are countless examples of government creation of money to fund capital expenditures leading to extraordinary prosperity. It is madness to suggest otherwise.

Anonymous VD November 13, 2012 4:16 PM  

This is why the concept of aggregate demand is essential to understanding advanced economies.

No, it is essential to misunderstanding any economy. But don't worry, I'll be explaining this in some detail in future posts.

Blogger Serge_Tomiko November 13, 2012 4:16 PM  

""A home for every person, a money printer in every home..."

But seriously what is the difference between the Fed printing out billons of dollars in stimulus vs. each person printing out as much money as they want? If you follow the Krugman logic wouldn’t that stimulate the economy as well? "

This, fundamentally, is why libertarians are incompetent and are incapable of understand macroeconomics.

A sovereign is not a person. A person is not a sovereign. Money has value because the government dictates its value and demands payment in that currency for taxes. The sovereign entity can change the terms of money at any time. It makes the laws and therefore can change them as necessary.

The ability to create money is the sole distinctive characteristic of all advanced societies. For a person to create money is to challenge the authority of the state. They are attempting to assert their own sovereignty, which is why counterfeiting is illegal.

Anonymous Noah B. November 13, 2012 4:16 PM  

"Service jobs do not create wealth."

Many service jobs do indeed create wealth. A good test of whether or not a service job creates wealth is the degree to which hiring that person is a voluntary decision. If one person is helping another person do their job better and faster, that creates wealth.

Anonymous VD November 13, 2012 4:18 PM  

Yale, MIT, Stanford, Princeton, Nobel .. yes obviously the guy is a moron. There is a certain amount of respect that should be observed ... go get your degrees from Yale and MIT, write 20 text books, get an Nobel prize and then you can call him a moron.

He scoffed at those who recommended at investing in gold when it cost less than $300 per ounce and recycled the old "barbarous relic" comment. It's now over $1700. Pretty much everyone who bought at those prices can quite reasonably call him a moron.

Anyhow, I recommend reading his book, then my critiques, before you reach any conclusion on the matter. He's actually quite an engaging writer, in fact, he's a much better writer than economist.

Anonymous Noah B. November 13, 2012 4:19 PM  

"Yale, MIT, Stanford, Princeton, Nobel .. yes obviously the guy is a moron. There is a certain amount of respect that should be observed ... go get your degrees from Yale and MIT, write 20 text books, get an Nobel prize and then you can call him a moron."

So you're going with malicious, then?

Anonymous VD November 13, 2012 4:21 PM  

The ability to create money is the sole distinctive characteristic of all advanced societies.

Obviously false. Even extremely primitive societies have created money. In fact, one can even argue that some monkeys have created money. You are obviously in way over your head here.

Anonymous Noah B. November 13, 2012 4:23 PM  

"The ability to create money is the sole distinctive characteristic of all advanced societies."

And, you're obviously not a Star Trek fan.

Anonymous Josh November 13, 2012 4:28 PM  

There are countless examples of government creation of money to fund capital expenditures leading to extraordinary prosperity. It is madness to suggest otherwise.

Than why did the Obama and Bush stimulus plans fail?

Anonymous Redjack November 13, 2012 4:28 PM  

By definition, a service job does not create wealth.

We went through this a while back. The service job may be needed and helpful, but it is a SERVICE, not a product.

Anonymous Tallen November 13, 2012 4:29 PM  

There are countless examples of government creation of money to fund capital expenditures leading to extraordinary prosperity. It is madness to suggest otherwise.

It doesn't take an economist to realize that printing money adds no real wealth to a nation. In fact it detracts wealth in that the materials and time could have been used to produce something more useful, and it also decreases the value of one's existing money and income (unless one is the recipient of the printed money).

The cry that "government spending automatically creates wealth" because of a few instances of success - I'm working with your assumption here; others may choose to question it - does not follow. The example that comes to mind is a pinball machine. Sometimes the ball needs a push to get into play - which might be the government providing some startup money or infrastructure or it might be a private entity. After that it is the private industry that stands or falls on its own by playing the game. If you just keep putting balls into the machine of course you'll get a perfect score - until you run out of quarters.

Mathematically what this means is that a strong national economy does not come from infinite spending, but there is a base value or range where government spending boosts the economy, allowing it to reach its potential. If you increase the value too far, then national wealth ultimately falls. I'm not saying it's as simple as a quadratic equation but historically infinite spending hasn't worked out for any nation.

Blogger Joshua_D November 13, 2012 4:29 PM  

drose November 13, 2012 3:43 PM

But seriously what is the difference between the Fed printing out billions of dollars in stimulus vs. each person printing out as much money as they want?


This difference is, you don't get the new money when the Fed creates it, the Fed's banksta buddies do.

If you follow the Krugman logic wouldn’t that stimulate the economy as well?

The Kroog isn't operating under the constraints of logic.

Anonymous Josh November 13, 2012 4:30 PM  

The ability to create money is the sole distinctive characteristic of all advanced societies. For a person to create money is to challenge the authority of the state. They are attempting to assert their own sovereignty, which is why counterfeiting is illegal.

So people do not own themselves? Why do you support slavery?

Anonymous Outlaw X November 13, 2012 4:32 PM  

Communism didn't fail... the countries involved just didn't have enough time and resources to fully succeed!

Not telling you anything new, Nate. Communism was never about economy it was about control. It is alive and well and spreading. Call it fascism if you like.

Anonymous Josh November 13, 2012 4:34 PM  

And please, stop with this Ayn Rand nonsense!

That's the first sign you don't have a clue...

Anonymous Mannerheim November 13, 2012 4:35 PM  

It seems like Krugman is implying that if the Treasury had to issue $1 trillion in new debt to grow GDP by .01%, that would be an unalloyed good if the alternative is letting GDP fall. In fact, bond investors would look at that skyrocketing growth and fight each other for the privilege of buying those bonds.

Does he literally believe that, just because you have a central bank that can monetize the debt, you can therefore borrow infinite money and no feedback mechanism will ever stop you?

Anonymous Tallen November 13, 2012 4:37 PM  

For a person to create money is to challenge the authority of the state. They are attempting to assert their own sovereignty,

Where does the state's authority come from? In the United States, it (ostensibly) comes from the people. If you don't believe that yet consider yourself a US citizen then I request you turn yourself in for treason. Only a sovereign citizen can consent to give power to the state; if power is taken from them without consent, then they are merely a slave.

Anonymous Josh November 13, 2012 4:40 PM  

Does he literally believe that, just because you have a central bank that can monetize the debt, you can therefore borrow infinite money and no feedback mechanism will ever stop you?

Yes. Because he teaches at Princeton and won a Nobel prize.

Blogger Nate November 13, 2012 4:42 PM  

"A sovereign is not a person. A person is not a sovereign. Money has value because the government dictates its value and demands payment in that currency for taxes. The sovereign entity can change the terms of money at any time. It makes the laws and therefore can change them as necessary.

The ability to create money is the sole distinctive characteristic of all advanced societies. For a person to create money is to challenge the authority of the state. They are attempting to assert their own sovereignty, which is why counterfeiting is illegal. "

Money has value because government delcare that value?

So then you have never actually paid any attention to economic history then right?

This is one of the dumbest things anyone has said on this blog. Ever.

Anonymous Gen. Kong November 13, 2012 4:43 PM  

Paul Krugman - the Robert Mugabe of economics. No wonder they gave him the Nobel prize.

Anonymous Outlaw X November 13, 2012 4:43 PM  

If there are 200 trillion dollars out there (Just guessing don't know). How many dollars would they have to create to hyper inflate?

Blogger Nate November 13, 2012 4:43 PM  

Money is an exchange medium that has exists with, or without, government.

Anonymous Noah B. November 13, 2012 4:44 PM  

"We went through this a while back. The service job may be needed and helpful, but it is a SERVICE, not a product."

It should be obvious to everyone that a service is not a tangible product. But if one person's work helps another person do their job better, the net effect is that it creates wealth. The dispute the last time began over Vox's statement that firemen don't make anything -- an obvious truth that some people actually objected to and reflexively inferred him to mean that firemen don't do anything important.

Blogger Nate November 13, 2012 4:44 PM  

"If there are 200 trillion dollars out there (Just guessing don't know). How many dollars would they have to create to hyper inflate?"

None.

All it would require is for people to stop wanting those dollars.

Anonymous DaMan November 13, 2012 4:46 PM  

"The ability to create money is the sole distinctive characteristic of all advanced societies. "

Advanced societies have only one distinctive characteristic? Are you sure about that?

Anonymous Gen. Kong November 13, 2012 4:49 PM  

Matt:
I don't know if she's rich, but she is one of those Elizabeth Warren "minority" academics.

Hey, show some respect! That's Princess Taxagewea of the Cigarstorewampum Tribe, Massachusetts Branch you're taking about there. We now have at least two princesses in the Imperial Chamber of Incitatuses: Princess Taxagewea and the Palmetto Princess, Miss Lindsay Graham. Bipartisan bliss.

Anonymous Salt November 13, 2012 4:49 PM  

I'm surprised Der Krugster hasn't called for demonstrations in DC exhorting "SPEND MORE NOW!"

Anonymous The Ghost of Everett Dirksen, Senator of Soviet Lincolnlogistan November 13, 2012 4:53 PM  

A trillion here, a quadrillion there. Pretty soon you're talking about real money...

Anonymous Daniel November 13, 2012 4:56 PM  

...send...more...paramedics.

Anonymous Mannerheim November 13, 2012 4:58 PM  

Yes. Because he teaches at Princeton and won a Nobel prize.

Can't tell if you're being sarcastic or not. If not, the mysterious feedback mechanism I was talking about looks like this: After years of debt growth relative to GDP, it investors realize the issuer has no hope of repayment without hyperinflating the currency, and stop buying the bonds (or demand ruinous interest rates, same difference). From that point the central bank is the only remaining buyer, and the flood of new currency entering the system leads to loss of faith and a widespread rush into stronger currencies or hard assets. Theoretically the CB can keep issuing new dollars to buy debt for as long as it wants after the collapse, but at that point they're no longer really a currency, just meaningless slips of paper.

Bottom line: Krugman assumes that government deficits always lead to GDP growth large enough to "grow into" the higher level of debt. It's like how we always hear the Eurozone debate phrased in terms of "growth" vs. "austerity" when what they mean is "more debt and damn the torpedoes" versus "reducing gov't spending to a long-term sustainable level".

Anonymous Josh November 13, 2012 4:59 PM  

No. No, dammit, we will not return to the previous service/production/wealth discussion.

Now I'm going to go sob quietly to myself over the end of Rand's political career.

Anonymous Josh November 13, 2012 5:00 PM  

Can't tell if you're being sarcastic or not.

Yes, that was sarcasm.

Blogger James Dixon November 13, 2012 5:03 PM  

> But if one person's work helps another person do their job better, the net effect is that it creates wealth.

Nope. The person their helping do their job better may create wealth, but the work itself doesn't. Even that isn't a given, since the person they're helping may themselves per performing a service and not producing anything.

Anonymous rienzi November 13, 2012 5:08 PM  

Serge Tomiko said: A sovereign is not a person.

Wheeler, the Queen of England, the Emperor of Japan, and various and sundry royals the world over beg to differ.

Anonymous Edjamacator November 13, 2012 5:10 PM  

Yale, MIT, Stanford, Princeton, Nobel .. yes obviously the guy is a moron. There is a certain amount of respect that should be observed ... go get your degrees from Yale and MIT, write 20 text books, get an Nobel prize and then you can call him a moron.

Nah, if those accomplishments result in the total inability to see reality when it smacks you in the face it pretty much invalidates their value in the real world.

I'd rather have the truth than a degree.

Anonymous WinstonWebb November 13, 2012 5:11 PM  

The ability to create money is the sole distinctive characteristic of all advanced societies.

The Most Advancedest Society Ever

Time to 'fess up. Which one of you is using the sock-puppet alt of "Serge_Tomiko"?

Blogger LP 999/Eliza November 13, 2012 5:11 PM  

Neo-k's are disliked b/c they KNOW better.

Anonymous Holla November 13, 2012 5:39 PM  

*One would probably have to read this book to believe the astonishing simplicity of his Neo-Keynesian approach. I could have written it in in a single page. Actually, I could have written in in a single sentence: More public debt and more government spending is the solution to this economic depression because government spending is capable of creating the jobs necessary to produce economic growth, while the resulting public debt is not a problem because any country with its own central bank can issue an infinite amount of it without any long-term costs.*

Is the thinking really that magical? It's astounding if it is.

Anonymous Noah B. November 13, 2012 5:51 PM  

"The person their helping do their job better may create wealth, but the work itself doesn't."

My contention, stated as precisely as I can, is that in many cases, the addition of a service job to the economy results in increased total wealth. (In a lot of other cases, mostly where government intervention is involved, they don't.) If you still disagree with me, give me a real world example of a type of occupation in which you believe someone is productive and does create wealth. I will then provide you with a real world example of how someone can provide a service to make that person more productive, thereby increasing wealth. We will have to begin with the mutually agreed assumption that, in the aggregate, increased worker productivity leads to increased wealth.

Anonymous jack November 13, 2012 6:07 PM  

Anyhow, I recommend reading his book, then my critiques, before you reach any conclusion on the matter. He's actually quite an engaging writer, in fact, he's a much better writer than economist.

Maybe he should take a swing at fantasy fiction. How bout a future space opera where the ships are mortgaged to the hilt then the captains realize its a big universe out there. Just boost for the far side of the galaxy, set up your own little kingdom and forget about the monthly payments. Wonder if that would work here? South seas? Hmmmm....

Anonymous VD November 13, 2012 6:07 PM  

Is the thinking really that magical? It's astounding if it is.

Read the forthcoming posts. I will quote him, at length, so you can verify yourself that I am not mischaracterizing his positions. What really shocks me is his "confidence fairy" argument. I mean, what does he think "animal spirits" are?

Anonymous Tad November 13, 2012 6:14 PM  

@Vox Day "They can't assert that debt doesn't matter at all anymore..."

No, they can't assert this. But, then they never did.

Burn that straw man down!!!

Anonymous Tom White November 13, 2012 6:22 PM  

@ CLK: That's an appeal to authority wrapped up in a tangle of words. All that is required to judge ideas is an ability to reason and understand the subject. Understanding and reason are not exclusively granted by prestigious degrees and fancy prizes but by having a mind.
Admittedly we can't judge whether he is a moron, merely that his ideas are moronic.

Of course, I am open to the theory that he is deliberately out to destroy the economy. If graduating from Yale, Stanford, MIT, princeton and getting a nobel prize is a measure of intelligence than it follows that he must possess such intelligence and yet his ideas are moronic...so the two obvious conclusions to be drawn is that either his ideas are indeed intelligent and if so then they are probably achieving what they are meant to be achieving [destruction of the economy]
Or the assertion that graduation from Yale, Stanford, MIT, princeton and a nobel prize confer, or recognize, intelligence is inherently false.

Anonymous scoobius dubious November 13, 2012 6:22 PM  

"Just boost for the far side of the galaxy, set up your own little kingdom and forget about the monthly payments. Wonder if that would work here? South seas?"

South seas, my eye. It already works, right here, right now. Have a look at the Levantine coast of the Eastern Mediterranean. What little kingdom do you see there that the Krugmanoids are really rather fond of?

Anonymous Koanic November 13, 2012 6:27 PM  

Kruggerbean has fallen and he can't get up. Is it entertainment?

Anonymous Anonymous November 13, 2012 6:30 PM  

Spend Now, Pay Later

So. It's really the "pay later" part that is bad. If we skip that, we can spend now AND spend later. See how easy that is? If you never intend to pay it back, it's free money. Take as much as you like. It's on the house.

--Professor Hale

Anonymous scoobius dubious November 13, 2012 6:30 PM  

Krugman: "The real evidence we should be considering here is the rapidly growing body of economic research on the effects of changes..."

Well, like a certain crook once said, "When I hear the words 'rapidly growing body of economic research,' I reach for my revolver."

VD: "I think what we are seeing here is the beginning of the death throes of Neo-Keynesian economics."

Oh, I do believe we're seeing the death throes of something a whole lot larger than that, buckaroo.

@ Tom White: There's a third possible explanation about Krugman, of course, and it's the simplest and most historically durable one. Anyone who calls his column "Conscience of a Liberal" is basically making a hilarious "Pale Fire"-type confession.

Heh. He said "conscience". Like he knows what those are.



Anonymous kh123 November 13, 2012 6:39 PM  

Amazing. He turns "Panic Spending / Being Indefinitely Indebted Now" into "Long Term Investment with Infinite Results Later".

Because it's the responsible thing to do.

Krugman should work for big pharma. We'd be seeing those nice drug commercials on tv pushing for Heroin in no time - and somehow without the 3 minute prologue of side effect disclaimers.

Anonymous zen0 November 13, 2012 6:42 PM  

Tad November 13, 2012 6:14 PM

@Vox Day "They can't assert that debt doesn't matter at all anymore..."

No, they can't assert this. But, then they never did.

Burn that straw man down!!!






WITH little fanfare, a dangerous notion has taken hold in progressive policy circles: that the amount of money borrowed by the federal government from Americans to finance its mammoth deficits doesn’t matter.


The Dangerous Notion That Debt Doesn’t Matter
-STEVEN RATTNER
Published: January 20, 2012 New York Times Sunday Review

So shutup, Tad, you ignorant slut.

Anonymous zen0 November 13, 2012 6:47 PM  

More for Tad:

Finally, the most remarkable reason of all is that debt, money and the financial system itself play no role in conventional neoclassical economic models. Many non-economists expect economists to be experts on money, but the belief that money is merely a “veil over barter”—and that therefore the economy can be modeled without taking into account money and how it is created—is fundamental to neoclassical economics. Only economic dissidents from other schools of thought … take money seriously, and only a handful of them—including myself (Steve Keen, 2010; http://www.economics-ejournal.org/economics/journalarticles/2010-31)—formally model money creation in their macroeconomics.

Even the most “avant-garde” of neoclassical economists … have only just begun to consider the role that debt might play in the economy ….
--Steve Keen

So shutup some more you festering wad of STD's.

Anonymous kh123 November 13, 2012 6:49 PM  

...Epilogue. Dammit.

Anonymous Noah B. November 13, 2012 7:05 PM  

Oh, I've got it... he should have called the article...

"We Must Destroy The Economy In Order To Save It"

Anonymous Roundtine November 13, 2012 7:05 PM  

Krugman goes off the deep end.
When Confidence Hurts
The point, of course, is that America doesn’t have a lot of foreign-currency debt. Neither does Japan — which is why I would say yes, reduced confidence in Japanese bonds would actually help their economy. Right now, as I’ve written in the past, the collision of deflation with the zero lower bound means that Japan actually offers investors a higher real interest rate than they can get in other advanced countries. The result is a strong yen that is really hurting Japanese manufacturing. Some loss of faith in those Japanese bonds, whether default risk or fear of higher inflation, would be a blessing.

Strong currency does not equal confidence. He mistakes shelter for confidence. His argument is the economic equivalent of destroying a storm shelter and thinking it will bring about confidence.

His main argument is ass backwards. If you owe a lot in foreign debt (see Asian Crisis 1997), devaluing is a great way to screw your creditors. The MORE foreign debt you have, the MORE logical it is to devalue.

Note that Krugman isn't arguing for the Austrian case of letting the markets clear, he actually thinks sparking a bond market panic would inspire confidence.

Anonymous scoobius dubious November 13, 2012 7:06 PM  

"a dangerous notion has taken hold in progressive policy circles..."

Ah, circles. It puts me in mind of something. The basic problem with progressives is the same problem that the late-era Ptolemians had: they can't and won't admit the truth, that their model is just plain wrong, their core assumption was and remains wrong, and that they have to admit that everything that stems from this is wrong. There ARE no epicycles. There never were. It was all just wrong.

For the progressives to correct themselves, they would have to admit three things which they can never admit; they'd melt like the Wicked Witch if they did:

1) You can't maintain an open or "free trade" policy of trading with large-scale economies which do not also practice open trade in return, but which rather practice aggressive mercantilism and aggressive intellectual property theft -- which is to say, Asia. (And who are, by the way, also your racial and cultural enemies and rivals, which is an "animal spirit" which causes all sorts of trouble that can't be quantified.) If you try this, then all the benefits of the trade will go in only one direction, which is of course, what we observe. And wow, I didn't even have to do a "growing body of economic research" in order to point that out.

2. The progressive doubling-down on "diversity" and "immigration" is a sucker's bet, because the truth can never be admitted: blacks and Latinos and most third-world immigrants represent low human capital, poor return on investmet, and high social cost. It's an eternal sink-hole, on net. No matter how much "investment" you put in, young Latrawvious is never going to become the guy who revolutionizes computer science -- he'll just play that guy on TV (another form of, ah, "investment"). All you did with all those transfer payments is ensure that Bob and Pete, who probably could revolutionize the field, will now have a tougher time getting access to the resources that would make it possible. Of course, if your secret goal is actually to make sure that Bob and Pete can't do those sorts of things ever again, and only Noah and Ari can, well then, mission accomplished. Write another check to Latrawvious by all means. My hunch is that the West is not "committing suicide," it is being deliberately and willfully poisoned to death. By... "investment". I suppose I could "enrich" myself with some arsenic later today, if I wanted. I'll let you know the result.

3) The "policy circles" have essentially been full-on hijacked by small groups, ethnic and otherwise, which view their interests very, very differently from the interests of the people on whose behalf they presume to make policy. To finally reverse a joke which was itself originally a reversal, We have met the Enemy, and he is NOT us. But, he is the guy at the steering wheel, unfortunately.

Anonymous Stilicho November 13, 2012 7:13 PM  

This is one of the dumbest things anyone has said on this blog. Ever.

Concur. And that includes Beezle. And Civil Servant. And...

Anonymous Anonymous November 13, 2012 8:47 PM  

Apparently, the only option in a debt-based money system is to keep printing/amassing more debt to pay the interest on all existing debt, since no additional money was ever created to pay the interest in the first place. Govt stimulus per se can be good, but not if it's funded with debt. We pay an estimated $500 billion/year in interest on the national debt to private banks for the privilege of creating the nation's money, when the nation could simply create it for free and control the volume. In a debt-based money system, cutting deficit spending has the nasty side-effect of reducing the money supply: less money=less jobs=shrinking economy.

Blogger Serge_Tomiko November 13, 2012 9:01 PM  

"It doesn't take an economist to realize that printing money adds no real wealth to a nation. In fact it detracts wealth in that the materials and time could have been used to produce something more useful, and it also decreases the value of one's existing money and income (unless one is the recipient of the printed money)."

Again, this shows a total lack of understanding of what money is. Money has no value, really. At least, it has no intrinsic value. Its value is determined by government authority, and nothing else. The purpose of deficit spending has nothing to do with increasing wealthy directly, it is used to increase employment and boost economic exchange and thus gross national product. In every instance it has been tried, it has worked very well.

"The cry that "government spending automatically creates wealth" because of a few instances of success - I'm working with your assumption here; others may choose to question it - does not follow. "

You have to step back from materialistic conceptions of money. Money, even gold, has no intrinsic value to human life. People are only wealthy as long as a relatively stable civilization exists, which has the power to force everyone to trade in the same currency.

The key issue here is civilization. Deficit spending works with civilized people. It does not work with barbarians.

Regardless, economics is NOT a science. Money and economics is subject to human nature, with all of its imperfections and flaws. It is only as healthy as the people that inhabit a given society. You cannot employ pure logic such as this with people, as they are always exceptions to nearly every rule of human behavior. This does not negate the power of statistics, but it is an important lesson many libertarians cannot grasp.

I'm generally of the opinion that libertarians are drawn to this sick ideology because they possess some kind of personality defect that leaves them alienated in society and unable to understand their fellow humans.

"Mathematically what this means is that a strong national economy does not come from infinite spending, but there is a base value or range where government spending boosts the economy, allowing it to reach its potential. "

This is what Keynes, Krugman, and all Modern Monetary Theorists argue. Governments are NOT *spending* constrained. They are *productivity* constrained. This is why the only metric that matters is the debt to GDP ratio. The absolute numbers are irrelevant.

Blogger Serge_Tomiko November 13, 2012 9:01 PM  

"If you increase the value too far, then national wealth ultimately falls. I'm not saying it's as simple as a quadratic equation but historically infinite spending hasn't worked out for any nation."

It also has very rarely been implemented. Even in the case of Weimar Germany, it was a direct response to crushing war debts.

Hyperinflation, in most cases, is far less disastrous than deflation, because it doesn't usually result in massive unemployment such as what is happening right now in the United States and Europe.

You are also ignoring other key elements related to deficit spending

1) money is created by government fiat or by the issuance of new loans. At the time of loan issuance, only the principal is created. The money required to pay interest must either be created from another loan or taken from the pool of existing money. Before you had modern banking, you had debt jubilees. Why? Usury invariably results in the banks having all the money. Today, right now, American households devote twice as much of their annual income on debt service as they did in 1999 when the surplus years began.

There are only two ways forward: debt forgiveness or deficit spending. The primary reason the American economy is in the toilet is the average middle class household is overwhelmed with debt and there is not enough money in circulation to pay for it. So they cut other spending - the spending that leads to productive employment.

2) The United States also has a unique position due to our domination of the world. The National Debt has absolutely nothing to do with borrowing. It is the means by which the American Empire is able to extract wealth from the world. We compel other nations to purchase our debt in order that they can participate in international trade. There is always a limit to how much money can be printed obviously, but the US is unique in that the vast majority of its currency and the demand for that currency exists outside of its own borders.

Anonymous CLK November 13, 2012 9:04 PM  

VD says "Anyhow, I recommend reading his book, then my critiques, before you reach any conclusion on the matter. He's actually quite an engaging writer, in fact, he's a much better writer than economist."

My critique was not aimed at you (VD) .. you presented a case and your points ...that's reasonable and fair. I would never presume to argue economics. What bothers me is that with his bio, whether we agree or disagree with his positions, he is clearly not a moron.

Blogger Serge_Tomiko November 13, 2012 9:06 PM  

"Money has value because government delcare that value?

So then you have never actually paid any attention to economic history then right?

This is one of the dumbest things anyone has said on this blog. Ever."

ActuallThe ability to create money is the sole distinctive characteristic of all advanced societies. For a person to create money is to challenge the authority of the state. They are attempting to assert their own sovereignty, which is why counterfeiting is illegal. "

Money has value because government delcare that value?

So then you have never actually paid any attention to economic history then right?

This is one of the dumbest things anyone has said on this blog. Ever.

If that is the best you have to say, then you're a fool.

There are many economists who are liars. There is zero evidence that money ever spontaneously was invented by any people. It has always been imposed, from its beginnings in the very first city states. Further, we have substantial evidence than any time the tax man stops coming, people revert to barter. This happened all throughout Europe within a generation of the Roman Empire collapsing. Sovereign collapse = no more taxes and no more money. In every instance.

If you stopped accepting what other people say and do a little research, you will find absolutely no evidence at all in the fundamental principles of free market economics. It is a fantasy predicated upon the religious belief in human rationality and equality, which is proven nonsense.

Blogger James Dixon November 13, 2012 9:15 PM  

> Money has no value, really. At least, it has no intrinsic value. Its value is determined by government authority...

And you think we don't understand money? The value of money is determined by people's willingness to accept it in trade. That can little to nothing to do with the authority of government.

> You cannot employ pure logic such as this with people, as they are always exceptions to nearly every rule of human behavior. This does not negate the power of statistics, but it is an important lesson many libertarians cannot grasp.

And apparently you don't understand libertarians either.

> Hyperinflation, in most cases, is far less disastrous than deflation, because it doesn't usually result in massive unemployment such as what is happening right now in the United States and Europe.

And yet Vox is one of the few people I've seen arguing that deflation is taking place. In fact, most people think we're in an inflationary cycle, and the prices I've been seeing seem to confirm that. So how can we be having massive unemployment?

Blogger James Dixon November 13, 2012 9:17 PM  

> My contention, stated as precisely as I can, is that in many cases, the addition of a service job to the economy results in increased total wealth.

And no one has argue that that cannot be the case. The only dispute might be about the use of the word many.

Blogger Serge_Tomiko November 13, 2012 9:21 PM  

"No, it is essential to misunderstanding any economy. But don't worry, I'll be explaining this in some detail in future posts."

You have to ask yourself, are you interested in understanding human nature and history as it is? Or do you want to play fantasy games about how you wish the world could be?

Every single advanced human civilization has had major government deficit spending. It was not as advanced as today, but it has always existed. There is a reason for this. Are you really going to say that Eisenhower and Reagan were lunatics who wrecked the economy? Or that Adolf Hitler did not building an industrial base in but 6 years capable of taking on the world? And what of the massive public improvements in the US in the 19th century. Canals, Railroads. Civil war spending.

I have every advanced human civilization to back up my arguments. What do you have? A freak like Hayek? A psychopath like Ayn Rand?

You have some great stuff VD, but you seriously have to ditch this libertarian nonsense. It is all wrong. All of it. And you will continue to be incapable of grasping what is happening in this country and in the world economy. Instead, you'll spend another decade on this site preaching about how the hyperinflationary collapse is just around the corner.

For the record, we do not have time for this nonsense any longer. You have a uniquely successful blog, in no small part due to your excellent skills at writing as well as your productivity while doing it. If you have any sense of honor, you will understand that you have a duty to use that power for good. And advocating a sick ideology that benefits usurers and the plutocratic elite, that repeatedly results in mass unemployment in a dozen nations, and which is literally bankrupting the middle class is not good.

Either we create a new party to replace the Republicans, or the left will adopt more rational economic policies or have their own schism. It's your choice.

Blogger Serge_Tomiko November 13, 2012 9:25 PM  

"And you think we don't understand money? The value of money is determined by people's willingness to accept it in trade. That can little to nothing to do with the authority of government."

Duh. Since everyone has to have the same currency to pay their taxes, it would seem to be the best means of exchange, no? Or do you have another explanation as to why crazy libertarian alternative money is a joke? It's not like any of us can just stop using US Dollars if we are US citizens.

Again, within 1 generation of the Roman Empire collapsing, people reverted to barter. The ability of the state to impose taxes over a large geographic area is the only thing that allows for an advanced economy. It is against human nature, and when people are not compelled to participate, they abandon the system.

Anonymous A Visitor November 13, 2012 9:28 PM  

"…the private sector isn’t willing to spend enough to make use of our full productive capacity and, therefore, to employ the millions of Americans who want to work but can’t find jobs." BULL!


I dunno. How do you falsify an idea that if it fails it's because you never did it large enough? I

t's the same argument that Communists make: it has never worked because it's never been done "right." You just keep showing the absurdity of it the world over and the majority of people that matter eventually get it and said idea is relegated to a moot point.

The best thing for the country, from the way I see it, is just to let the economy go off the fiscal cliff. You want Obamacare? GREAT! ENJOY YOUR RATIONED CARE YOU BASTARDS! YOU WANT ENTITLEMENTS? WONDERFUL! WHINE WHEN THE GOVERNMENT CAN'T PROVIDE EVERY DAMN THING FOR YOU LIKE THOSE WIMPS IN NEW JERSEY AND NEW YORK. My apologies for the caps Vox; I'm just sick of all of it.

Blogger Serge_Tomiko November 13, 2012 9:30 PM  

"And yet Vox is one of the few people I've seen arguing that deflation is taking place. In fact, most people think we're in an inflationary cycle, and the prices I've been seeing seem to confirm that. So how can we be having massive unemployment?"

Vox has not explicitly come to understand that debt forgiveness and deficit spending are fundamentally the same thing. They are a fundamental change in the value of money versus existing assets due to government edict.

It is more complicated in the US due to our control of global trade. In all instances but this one, it is taxation exclusively that establishes demand for currency. The US however is able to compel the rest of the world via military adventures and foreign aid to participate in the dollar financial system. This creates distortions in various sectors.

I don't have time to explain how it works in the US. Michael Hudson's Super Imperialism is the principal book on this subject. Look instead to Europe. Fiscal austerity has been a total disaster EVERYWHERE. There is not a single instance of success.

Anonymous Brian November 13, 2012 9:44 PM  

Krugman is like the failed businessman who says "my business didn't fail, I just didn't make enough money to break even!" he doesn't realize they're the same thing. Sadly, most of America doesn't understand that, either.

Anonymous scoobius dubious November 13, 2012 10:30 PM  

"The primary reason the American economy is in the toilet is the average middle class household is overwhelmed with debt"

Seems to me you're mistaking cause and effect -- or maybe, to put it more accurately, you're leaving out important phases of the cycle.

The US economy is not in the toilet because Americans are in debt; rather, Americans are in debt because their economic horse was shot out from under them, and they are borrowing in order to continue to live in the manner to which they've become accustomed for the previous several generations, on the assumption that it was always like that and always will be, and that as Americans they have a "right" to their prosperity. Their economy packed its bags and moved to Asia, and they're living on fumes and wishes, trying to pretend it hasn't happened.

Here's a thought: leave off the economics textbooks for an evening, and go read "The Cherry Orchard." Chekhov has more accurate things to say about what is happening to America right now than Krugman. Of course, so does Pee Wee Herman, so it's not much of a compliment.

Anonymous Josh November 13, 2012 10:49 PM  

Govt stimulus per se can be good, but not if it's funded with debt. We pay an estimated $500 billion/year in interest on the national debt to private banks for the privilege of creating the nation's money, when the nation could simply create it for free and control the volume. In a debt-based money system, cutting deficit spending has the nasty side-effect of reducing the money supply: less money=less jobs=shrinking economy.

This entire paragraph is completely wrong.

Cite your figure of $500 billion/year.

How are you defining the money supply?

Govt stimulus is never good because of the impossibility of using pricing signals. It results in malinvestment.

Anonymous Josh November 13, 2012 10:53 PM  

Are you really going to say that Eisenhower and Reagan were lunatics who wrecked the economy? Or that Adolf Hitler did not building an industrial base in but 6 years capable of taking on the world? And what of the massive public improvements in the US in the 19th century. Canals, Railroads. Civil war spending.

Yes, Eisenhower and Reagan wrecked the economy. Witness the lack of economic growth in the 60s and 70s, and the recessions of the 90s and 00s.

The German industrial base was already largely there.

The massive public improvements in the US in the 19th century resulted in thousands of bankrupt canal and railroad companies, bankrupt towns, bank runs, recessions, and a very bloody war of independence.

Anonymous Josh November 13, 2012 10:53 PM  

Fiscal austerity has been a total disaster EVERYWHERE. There is not a single instance of success.

The recession in 1920.

Anonymous Josh November 13, 2012 10:56 PM  

You have some great stuff VD, but you seriously have to ditch this libertarian nonsense. It is all wrong. All of it. And you will continue to be incapable of grasping what is happening in this country and in the world economy. Instead, you'll spend another decade on this site preaching about how the hyperinflationary collapse is just around the corner.

You must be new here. Vox is predicting a deflationary collapse. Not hyperinflation.

What is this "libertarian nonsense" you keep babbling about?

What is happening around the world is the collapse of the debt-fueled monetary and economic system. The chickens are coming home to roost.

Anonymous scoobius dubious November 13, 2012 10:56 PM  

America, just like Wile E. Coyote, walked confidently off the cliff way back during the 90s, but in true cartoon tradition, it didn't start to fall until it looked down.

In the 90s, while America's industrial base continued hollowing out, we invented the internet and got the bright idea that we'd all get rich selling each other stuff on the web, and living off the rising value of our stock portfolios that we bought with the options we were paid to build imaginary web sites.

When that idea turned out to be smoke and mirrors, we stalled off the coming collapse with Bush's and Frank's monstrous and ludicrous inflation of the real estate market: now, instead of making things, we were going to get rich by paying imported Mexicans to build cheap, shoddy non-union houses on pointless tracts of land that nobody ought to have needed to live on, except as a means to get your children away from all the imported Mexican construction workers who just took over your old neighborhood. This time we were going to get rich by selling our houses to recent immigrants at inflated prices -- it didn't occur to anybody to ask where, if you sell your house for profit at an inflated price in an inflated market, the heck are you supposed to buy a new house at a NON-inflated price.

When that idea turned out to be ruinous horseshit, the new idea under Obama, I suppose, became debt. That one's even funnier than real estate. God forbid anybody try and make anything, they only do that in Asia. Instead, this time we were going to "invest" in infrastructure by building and fixing roads and bridges. Except that a) all the unemployed people are laid-off real estate brokers and office cubicle jockeys, not mighty builders of roads and bridges. The skill-sets aren't exactly transferrable. Who's going to build those roads, the laid off reporters from the LA Times? No, silly, it's going to be immigrant Mexicans -- your replacements. Oh, and b) there's no point in building a new high-speed choo choo train from point A to point B if there's no jobs at point B for you to ride the choo choo train to. So, infrastructure won't save the economy either.

What did Obama do with all that stimulus money? Well hey, haven't you seen all those shiny new roads and bridges he built? Oh, wait, no, he used it to prop up failing state governments so they could pay useless SEIU affirmative-action make-work Vice Chancellors of Diversity and Inclusion. I want to see the look on your children's faces, when they're old enough, when you have to tell them that the reason they'll be tax-slaves for the rest of their lives, getting nothing for their money but debt service on the distant past, is that we borrowed all the money to "stimulate" the economy, but instead of "investing" in production to create jobs that would last into their time, instead what we bought with all the borrowed money was a bunch of pointless make-work middle-management jobs for angry, pompous, semiliterate black ladies.

I just hope those kids won't be working at the nursing homes we'll all be rotting in, because we'll be pretty much at their mercy, and we'll deserve it.

Anonymous David of One November 13, 2012 11:21 PM  

I know nearly nothing about economics save that which by some miracle has been retained by reading VD's blog the last few years. Even then, that is probably meager and assumes much as to my level of understanding ...

Bearing this significant caveat in mind, my cursory review of what has been excerpted of Mr. Krugman's writing in the post impresses me as grossly wanting of supportable logic and reason.

It is likely that I surely understand nothing whatsoever of the topic but I do wonder if:

a. An honest child that has successfully engaged in the business of a lemonade stand might very well prove to be more worthwhile of listening to regarding economics and a better candidate for a Nobel Prize.

b. perchance, Mr. Krugman is really addressing "economics" as could be applied to a society such as China instead of a free market capitalist based society such as the United States.

c. Mr. Krugman suffers irreversible hypoxic hypoxia due to trying to keep his face/head firmly implanted in Big O's ass.

I am certain that I could come up with a dozen more musings and ponderings as to lack of meaningful content and context of Mr. Krugman's economic expertise based upon the short excerpt alone but to what end?

At the risk of being personally credited with the eventual economic demise of the free world ... it occurs to me that Mr. Krugman, and many others like him, will eventually adopt another legal inducement by the federal government which would likewise be declared completely legal by Judge Robberts ... that all American citizens will be required to purchase a percentage of their income (graduated) of U.S. Government Bonds for the purposes of "savings".

It wouldn't be a tax and Big O would be just fundamentally transforming American savings for the future as well as forcing their investment of supportable projects.



Anonymous David of One November 13, 2012 11:35 PM  

Here's a couple of more related articles for our "entertainment":

http://consortiumnews.com/2012/10/27/anti-government-economic-orthodoxy/

China Daily's take on Krugman's recent opinion ...

http://usa.chinadaily.com.cn/world/2012-11/13/content_15921314.htm

Anonymous Roundtine November 14, 2012 1:17 AM  

Fiscal austerity has been a total disaster EVERYWHERE. There is not a single instance of success.

Korea and Russia at the end of the 1990s. Today: Estonia, Latvia, Iceland.

Blogger James Dixon November 14, 2012 6:30 AM  

> Duh. Since everyone has to have the same currency to pay their taxes, it would seem to be the best means of exchange, no?

In point of fact, no. There absolutely no necessity or even rational reason that they be the same. It depends entirely on the willingness of the recipients to receive them.

> It's not like any of us can just stop using US Dollars if we are US citizens.

If everyone but the government stops accepting them, we won't have any choice in the matter.

You act as if the historical examples of collapses of currencies don't exist. They do.

Blogger Serge_Tomiko November 14, 2012 8:04 AM  

"Fiscal austerity has been a total disaster EVERYWHERE. There is not a single instance of success.

Korea and Russia at the end of the 1990s. Today: Estonia, Latvia, Iceland."

The economies of Russia and Korea are WAY better than they were today than in the 1990s? Russia? When the country was ruled by Jewish plutocrats? Are you crazy?

Estonia and Latvia are DISASTERS. The youth are fleeing the countries. Prostitution is a top 5 industry. They will likely cease to exist as sovereign entities within a generation.

And Iceland? Iceland has done precisely what I advocate! THEY HAD TOO MUCH DEBT, SO THEY SAID FUCK IT.

Blogger Serge_Tomiko November 14, 2012 8:15 AM  

"In point of fact, no. There absolutely no necessity or even rational reason that they be the same. It depends entirely on the willingness of the recipients to receive them."

In your world, all people are equal, and they rationally out how to divide their labor and trade towards rational materialistic ends.

In the real world, most Americans can't even find the capital city on the map. They can't plan their finances worth a damn, and would never bother working if they didn't have to pay taxes or take out a life debt to just get a roof over their heads. I'm sorry, but you're simply wrong. Your vision of what it means to be human is not correct, and therefore you understand human behavior.

"If everyone but the government stops accepting them, we won't have any choice in the matter.

You act as if the historical examples of collapses of currencies don't exist. They do."

You don't seem to understand what sovereignty entails. Or even this system. Your first sentence is illogical. Sovereignty means you have the power of life and death over a given people. Your example is absurd because a sovereignty that cannot force its people to use its currency IS NO LONGER A SOVEREIGN. What you describe is active, and open rebellion - the unwillingness to recognize the sovereignty of a given power.

The value of a currency and the influence it wields in the world is entirely dependent upon the power of the authority issuing them. Currencies collapse, yes, BUT ONLY WHEN SOVEREIGNTY COLLAPSES FIRST. Further, sovereignty is expanded when you can force ever greater numbers of people to use your currency. In all cases but the US, this is done via taxes.

The US, as I've said, uses a different system of compelling foreign regimes to use USD for global trade. But it's still authority. If they don't comply, we send some drone strikes to remind them who is the boss. In the end, the decision of governments to participate in this system is the same as with people. Most of the time, it is cheaper and easier to just play ball.

Blogger James Dixon November 14, 2012 9:08 AM  

> In your world....

With lots of verbiage claiming to know what I think, none of which is in fact the case.

> Your vision of what it means to be human is not correct...

Which, whether true or not, has absolutely nothing to do with the discussion.

> You don't seem to understand what sovereignty entails. Or even this system. Your first sentence is illogical. Sovereignty means you have the power of life and death over a given people.

Your the one who doesn't understand the US system of sovereignty, not me. Now, it questionable whether that system still exists or not, so it may be a moot point.

> Your example is absurd because a sovereignty that cannot force its people to use its currency IS NO LONGER A SOVEREIGN.

In which case there has almost never been a sovereign entity in human history. Use of a currency has always been largely voluntary. The only way to enforce its use is to have a person with a weapon on hand at every financial interaction. No one has ever had that kind of control.

Anonymous Josh November 14, 2012 9:36 AM  

Your example is absurd because a sovereignty that cannot force its people to use its currency IS NO LONGER A SOVEREIGN. What you describe is active, and open rebellion - the unwillingness to recognize the sovereignty of a given power.

My goodness you're an overactive idiot.

So, when people in the united states are using alternative currencies, and alternative forms of payment, has the American government lost its sovereignty?

Blogger TontoBubbaGoldstein November 14, 2012 9:38 AM  

This is a hoot. Ray Stevens sings " Obama Money".

http://www.youtube.com/watch?v=J6TcpfBHlbs&feature=youtube_gdata_player


Ray Stevens: Understanding basic economics that Krugmann just can't grok.

Anonymous scoobius dubious November 14, 2012 9:40 AM  

"Your example is absurd because a sovereignty that cannot force its people to use its currency IS NO LONGER A SOVEREIGN."

I have no dog in this fight, but I should point out that your reasoning here is limited to only choosing the cases you wish to consider, and ignoring both the 'problem of the heap,' and the "gradually, then suddenly" law of reality, as it were, (we might call it Hemingway's First Law) with respect to your idea of what makes a sovereign.

For instance, I would posit that a country that cannot and will not keep hostile, grasping foreigners from invading its borders and looting its citizens and colonizing its schools and hospitals and meddling in its politics and altering its elections while gleefully breaking its laws and demanding that another language be spoken is NOT A SOVEREIGN, either. And yet the US does some pretty sovereign-y kinds of things, we will see for how long.

Maybe light is both wave and particle after all.

Blogger Nate November 14, 2012 9:46 AM  

Serge...

If sovereign means the authority of life or death of a given people... and the right to LIFE is guaranteed to the American people... then isn't that proof positive that the American People did NOT cede sovereignty to the federal government?

Anonymous DonReynolds November 14, 2012 9:48 AM  

The two fundamental facts of economics (regardless of which school of thought you abide by) is unlimited wants and scarce resources. These two facts (of life) make it necessary for people to choose which wants they will satisfy and which resources they will give up in the process. For a school of thought to be useful in the economic debate, it must enable people to make rational choices. Krudman is patently stupid because he argues that no choices are necessary in economics....we can just put it on plastic. To him, resources can be used without limit to satisfy every whim and fancy we might have, because there is no limit on our charge card. No choice is necessary except with regard to how we wish to spend our time. Will we eat all the time, or sleep all the time, or go fishing, or watch porn on our laptops? The only rationale Krudman admits to is the trendy and politically correct, a la global warming, or diversity, or economic justice...blah, blah, blah. This is not economics at all nor would it constitute economic thought at any time in the past. It is pure Pollyanna wishful thinking and does not include ANY of the difficult choices (or even opportunity costs) that would require economic thought. Krudman seems to be the John Kenneth Galbraith of our times.

Anonymous Roundtine November 14, 2012 9:48 AM  

The economies of Russia and Korea are WAY better than they were today than in the 1990s? Russia? When the country was ruled by Jewish plutocrats? Are you crazy?

Are you saying Russia was better off being ruled by plutocrats? Russia took the hard medicine in the late 1990s, as did Korea, and emerged fresh and growing quickly.

I think you are debating a bit of a strawman on austerity. The point of austerity is to avoid default and the pain it entails. Once a nation is past the point of no return, then default is the only option and austerity is stupid. I can't recall anyone defending Greece austerity in the comments here. The U.S. is probably also past the point where austerity will work. On the flip side, Krugman is saying there is no problem and the debt should continue increasing.

Anonymous Josh November 14, 2012 9:52 AM  

If sovereign means the authority of life or death of a given people... and the right to LIFE is guaranteed to the American people... then isn't that proof positive that the American People did NOT cede sovereignty to the federal government?

I think the federal government usurped it, it certainly has the power over live and death, especially with domestic drone strikes...

Anonymous Roundtine November 14, 2012 9:53 AM  

When there is no state sanctioned money, people revert to credit money. Historically, credit was used when there was no state money. In the Middle Ages, people kept records in Roman money, even though they had no coins. It was the unit of account for credit transactions.

In Debt: The First 5000 Years, Graeber argues that specie and credit move in cycles. The age of Empire was an age of state money, followed by the Middle Ages and credit money, followed by the Industrial Revolution and gold/silver standards. He puts the end of the last hard money cycle in 1972 and thinks a long era of credit money will come back.

Anonymous RedJack November 14, 2012 9:53 AM  

Noah B.
Define "wealth". I suspect we are talking past each other.

Wealth is a "Thing". In other words, a piece land, an asset. Service jobs by definition do not produce assets. They do not produce or create wealth.

They may help with its creation, or skim some off the top, but they do not create wealth.

Blogger James Dixon November 14, 2012 9:54 AM  

> I think the federal government usurped it,

As I said, it may be a moot point. :(

Anonymous Josh November 14, 2012 9:55 AM  

So in Sergio's little model of how the world works, the only use of money is to pay taxes. If this is the case, can he explain why other forms of currency were used in the American colonies? Or why you had banks issuing paper bank notes in the 18th century? Or why Walmart giftcards have any.value?

Anonymous Josh November 14, 2012 9:59 AM  

Following up on that last sentence, people are obviously fools to use Walmart gift cards. What good is that card, you can't pay taxes with it!

Blogger Nate November 14, 2012 9:59 AM  

"Or why Walmart giftcards have any.value?"

or why a US congressman is demanding to be paid in Gold?

or why the Euro is currently used in many transactions in the US?

Anonymous DonReynolds November 14, 2012 10:26 AM  

The only reason the Greek economy has anyone's attention is the fact that they are part of the Euro zone. If they were still using their national currency (dracma), nobody would give a crap....most especially the Germans. Greece would be not much different from one of the many South American countries with runaway inflation. In fact, Greece would do the same routine.....print money, inflate, spend more, and repeat as needed. If you do not like South America, then check out Afrika. Who else prints a trillion dollar note beside Zimbabwe? (You can buy them all day long for less than two bucks.)

The Germans do not give a flip about the Greeks, they are trying to protect the Euro, and they are willing to pay the Greeks billions to keep them from hyperinflating the Euro.

Blogger Serge_Tomiko November 14, 2012 11:26 AM  

"In which case there has almost never been a sovereign entity in human history. Use of a currency has always been largely voluntary. The only way to enforce its use is to have a person with a weapon on hand at every financial interaction. No one has ever had that kind of control."

Keep repeating your libertarian lies. It doesn't matter how there is zero evidence that your fantasy world has existed. It doesn't matter how many historical examples I give. You will continue to believe this solipsism that the entirety of the human race consists of rational actors intent on maximizing their material prosperity.

I'm hear to tell you that your fantasy world doesn't exist anywhere in the world. That is a proximate cause of the coming social collapse. That is a monstrous lie that only antisocial fools can believe in because they have no experience dealing with real people.

Blogger Serge_Tomiko November 14, 2012 11:30 AM  

"So, when people in the united states are using alternative currencies, and alternative forms of payment, has the American government lost its sovereignty?"

Another libertarian fantasy. Alternative currencies are the wet dream of subhuman failures of men whose lives revolve around pornography and video games.

There are no alternative currencies. A currency is that which can be used to pay ALL DEBTS PUBLIC AND PRIVATE. The government will not take your alternative currency, and if it resembles the actual currency too much, you will be prosecuted for counterfeiting. Any trade that does not involve government issued money is barter, plain and simple.

Blogger Serge_Tomiko November 14, 2012 11:37 AM  

"For instance, I would posit that a country that cannot and will not keep hostile, grasping foreigners from invading its borders and looting its citizens and colonizing its schools and hospitals and meddling in its politics and altering its elections while gleefully breaking its laws and demanding that another language be spoken is NOT A SOVEREIGN, either. And yet the US does some pretty sovereign-y kinds of things, we will see for how long.

Maybe light is both wave and particle after all."


Libertarians, especially those who believe in this Failed State of the Enlightenment, have a peculiar understanding of the word sovereignty. They think it means something like King George. The evil that we rebelled against in 1776.

Sovereignty is not about valuing a particular law or a particular ideology. It is the exercising of exclusive power over a given people and geographic region.

Money is not an ideal, it is a fundamental aspect of human societies. What those societies do with their sovereign power is a whole other matter.

Blogger Serge_Tomiko November 14, 2012 11:41 AM  

"So in Sergio's little model of how the world works, the only use of money is to pay taxes. If this is the case, can he explain why other forms of currency were used in the American colonies? Or why you had banks issuing paper bank notes in the 18th century? Or why Walmart giftcards have any.value?"

Josh, are you unable to read? Taxes create the initial demand for money. Again, we have numerous historical examples of many societies reverting to barter the moment the tax man stopping coming. There are many examples even in the 20th century. The social function of debt is similar. Most people are slaves, and the only way to organize them to a productive end is via government edict. Left to their own devices, they revert to tribal societies.

And I can't believe you're actually bringing up the American colonies. This very issue was the MAJOR CAUSE of the American Revolution. Not any of that enlightenment bullshit. There was not enough money in the colonies, and the British were prohibiting states from printing their own currency as Pennsylvania did in the 1730s. It caused major economic stagnation and hardship.

Anonymous Roundtine November 14, 2012 11:51 AM  

Serge,

You realize all fiat currencies failed before any libertarians were even born?

Any trade that does not involve government issued money is barter, plain and simple.

Almost no one barters. In the absence of money, people use credit. Credit is a competing form of money. Credit doesn't disappear when state currency comes into play, what changes is the legal standing of those credits, how they are denominated and how they are repaid/defaulted on.

Blogger Serge_Tomiko November 14, 2012 11:52 AM  

""Or why Walmart giftcards have any.value?"

or why a US congressman is demanding to be paid in Gold?

or why the Euro is currently used in many transactions in the US?"

Or why do I want to be paid with sex slaves?

Obviously, anyone can demand anything from anyone. The question is, will the government ENFORCE that demand with the weight of the law?

Chattel slavery is of course illegal.

But let's say you own a house and decide to finance its sale to someone. You write up a note that demands payment in gold over a period of time at regular intervals. in 1 year, the purchaser defaults and you have this note. What happens?

Do you really think you are going to take the purchaser to court and he will be forced to pay you in gold?

No. The only universal means of settling all debts, PUBLIC AND PRIVATE, is the currency issued by the sovereign. Every other trade is barter that is purely voluntary and does not involve the power of the state.

Blogger Serge_Tomiko November 14, 2012 11:59 AM  

"You realize all fiat currencies failed before any libertarians were even born?"

That is in fact my essential point. They failed because the issuing sovereignty failed. The health of a currency is directly related to the relative health of a people.

The danger of liberal philosophy is that it ignores human nature. Libertarianism is most pernicious in this regard because it caters to antisocial personalities.

Every advanced human society that has ever existed has had government issued currency that alone was the exclusive means of settling public and private debts. Every advanced society has had taxes that could only be paid in state issued currency. Every advanced society has had some kind of money lending and either debt jubilees or money expansion in order to ameliorate the effects of usury.

If your particular ethic condemns every human society that has ever existed, you're living in a fantasy world.

Every government in history has collapsed. It doesn't mean we have decided anarchy is preferable.

Blogger Serge_Tomiko November 14, 2012 12:02 PM  

"Almost no one barters. In the absence of money, people use credit. Credit is a competing form of money. Credit doesn't disappear when state currency comes into play, what changes is the legal standing of those credits, how they are denominated and how they are repaid/defaulted on."

Your definition of credit and money is not the same as any civilization that has ever existed.

No government will enforce payment terms for ANY debt except in the state issued currency. The entire system of credit would completely collapse if this was not the case.

I'm sorry, but you have to pull away from the fantasy world and look at the real world.

Blogger Serge_Tomiko November 14, 2012 12:08 PM  

"Greece would be not much different from one of the many South American countries with runaway inflation. In fact, Greece would do the same routine.....print money, inflate, spend more, and repeat as needed. If you do not like South America, then check out Afrika. Who else prints a trillion dollar note beside Zimbabwe? (You can buy them all day long for less than two bucks.) "

this speaks to my point that the value of money is directly related to the health of the sovereignty and its subjects. Greece has ceded their sovereignty to the European Union, but if they did not yes. They could simply create money as necessary. If that spending did not result in increased productivity, inflation would result.

None of this means that printing money is bad.

The reality is different people have different needs. This is why you can't have one monetary policy. It is why every large advanced civilization devolves.

The Euro has failed because the needs and abilities of the various constituent entities is highly variable. No single policy can benefit all countries equally. And nor should it.

And this is why the Euro is doomed.

Blogger Serge_Tomiko November 14, 2012 12:21 PM  

"The U.S. is probably also past the point where austerity will work. On the flip side, Krugman is saying there is no problem and the debt should continue increasing."

The US is a special case as I've tried to elucidate. Because 75% of global trade occurs in US dollars, which must in time be settled in the US, we can create much more money without damaging inflation occurring.

This is the major danger for adopting libertarian economic theory. You cannot understand how the economy of the US works.

The truth is our military is stronger than ever. We control more global trade than ever before. The real engine of the US economy - plundering of global trade - is working better than ever. It cannot last, and this is why the ruling elite is intent on destroying what is left of White America. When the Empire finally collapses as all do, there will be hell to pay.

Present attempts at austerity are merely intended to break the White middle class as money shortages primarily affect debtors. The poor are on the government dime, and the rich are the lenders. Today, the typical White American household spends upwards of 30% of their household income on debt service, when it was more like 12% not even 15 years ago.

The danger is that this game can continue for another 20 years. In 20 years, whites will be a minority in the US meaning violent civil war is the likely outcome.

Anonymous scoobius dubious November 14, 2012 12:22 PM  

"Libertarians, especially those who believe in this Failed State of the Enlightenment..."

Hush your mouth! If you ever call me something as filthy and low as a libertarian again, I'll bite your nose off.

"Sovereignty is not about valuing a particular law or a particular ideology. It is the exercising of exclusive power over a given people and geographic region."

Well in the United States, it is the People who are ostensibly sovereign. Of course we all know that that is not actually the case any longer, which is one reason why I brought up the problem of the heap. What we have got now is ----> tyranny. If all you're really saying about sovereignty is that "Powerful guy is powerful," well that's fine I guess, but it isn't very interesting. And it's only partly true.


Blogger Serge_Tomiko November 14, 2012 12:27 PM  

"Noah B.
Define "wealth". I suspect we are talking past each other.

Wealth is a "Thing". In other words, a piece land, an asset. Service jobs by definition do not produce assets. They do not produce or create wealth.

They may help with its creation, or skim some off the top, but they do not create wealth."

A misunderstanding of sovereignty again.

All natural resources and all land is owned by the state. The function of money and government policy is to most efficiently organize the populace to use a geographic area towards whatever ends are desired by the sovereign.

The vast majority of wealth comes from human ingenuity alone. What wealth does not come from human action comes by government edict with respect to the distribution of natural resources.

And PS: you don't own any land really. Try to stop paying property taxes and you'll understand what I mean.

Blogger Serge_Tomiko November 14, 2012 12:34 PM  

"Hush your mouth! If you ever call me something as filthy and low as a libertarian again, I'll bite your nose off."

Point taken. My sincerest apologies, and thank you for disavowing that sick ideology.

"f all you're really saying about sovereignty is that "Powerful guy is powerful," well that's fine I guess, but it isn't very interesting. And it's only partly true."

It doesn't matter if a sovereign is one man, a junta, a dictator, or a democratic mob. As long as they can impose their will over life and death and impose law and order vis a vis state currency and contracts, they are sovereign.

I hammer this point home in order to help you break away from ideology, no matter what it might be. There is nothing ideological about money, it is simply a means of increasing the productivity of the masses.

Once we all understand that, we can start focusing on what the sovereign is doing. At the moment, the ruling elite is waging an economic war against the White middle and lower classes while simultaneously using our military to plunder global trade for their personal benefit.

This is a war, and you must understand how it is being waged.

And, for the likes of Vox Day, we need real meaningful debate on how to move forward. We are running out of time.

Blogger Nate November 14, 2012 12:40 PM  

Serge... honestly... you're totally and completely ignorant. You have no idea what Money even is.

Blogger Serge_Tomiko November 14, 2012 12:48 PM  

Nate, if that's the best you can do - you're irrelevant. You won't serve any function in the coming catastrophe. You're a follower, and you'll do what you're told. I have given you an enormous amount of material, very clear questions and arguments. If you cannot pick but one, bugger off.

Enjoy your freedom while you have it, sucker.

Anonymous scoobius dubious November 14, 2012 1:45 PM  

"As long as they can impose their will over life and death and impose law and order vis a vis state currency and contracts, they are sovereign."

Okay see, now you are broadening your definition and so maybe I am reaching you. This is why I brought up the problem of the heap. Your original idea was that enforcing a common currency was the sine qua non of sovereignty. My point is that sovereignty consists of a "heap" of powers and responsibilities, currency being one. If you remove one grain of sand --the power of issuing currency-- I am in grave doubt that the rest of the heap is still not somehow a heap.

You bring up things like mobs and juntas. But what we have in this country is a sort of oscillating relationship to sovereignty between a lot of different frequencies -- state and national legislatures, state and national courts, open elites, hidden elites, double-secret hidden elites, fourth and fifth and sixth estates, wailing organized grievance groups. It's a zoo. I am not persuaded there is a single zookeeper, though I could be wrong.

My point is merely that to have an accurate analysis, one first requires an accurate description. Describing accurately what we have actually got in hand here is, as they say, matter for a May morning.

Blogger Nate November 14, 2012 2:08 PM  

"Nate, if that's the best you can do - you're irrelevant. You won't serve any function in the coming catastrophe."

Serge... you're a moron. You have no idea what is going on... nor do you have any idea how to prepare for it.

And you would no doubt be shocked and disturbed to know what I have done, am doing, and will do.

Blogger Nate November 14, 2012 2:11 PM  

I mean you come here... where many of us predicted this economic and social crises down to the letter... and explained exactly why and how it would happen...

and you claim to be giving us information?


Where were you in 2002 when we were telling everyone to buy gold and silver?

Where were you in 2004 and 2006 when we were telling everyone to get out of the real estate market?

We've seen this coming for a decade... and now you're going to wonder in and educate us?

Piss off douchebag.

Blogger Serge_Tomiko November 14, 2012 3:12 PM  

"You bring up things like mobs and juntas. But what we have in this country is a sort of oscillating relationship to sovereignty between a lot of different frequencies -- state and national legislatures, state and national courts, open elites, hidden elites, double-secret hidden elites, fourth and fifth and sixth estates, wailing organized grievance groups. It's a zoo. I am not persuaded there is a single zookeeper, though I could be wrong."

Well, this is how it always is. It is never as clear cut as a single king or dictator.

It's actually better to dispense with any idealism regarding government and to instead think of government and money reflecting a given society's values. The nature of the government and money varies from time to time and place to place.

But the concept of money IS central. What I said was the imposition of taxes that can only be paid with state money is the singular universal attribute of all complex societies that grew beyond the city state. There must be a reason for this, and it must be rooted in human nature as it is constant.

One can even make the argument that money IS power. When you internalize this, it makes sense that strong states have strong, stable currency and weak states have hyperinflation and social collapse.

This is why it is essential for the right to jettison libertarian ideas. Everyone who runs the show knows the world is nothing more than faith, and trust, and pixie dust. Money is power they control in order to enrich themselves, and lately to destroy us.

We can seize that power as easily as any group. But we need enough people to realize what we could accomplish if the power of money was put into our hands.

Anonymous Josh November 14, 2012 3:12 PM  

All natural resources and all land is owned by the state. The function of money and government policy is to most efficiently organize the populace to use a geographic area towards whatever ends are desired by the sovereign.The vast majority of wealth comes from human ingenuity alone. What wealth does not come from human action comes by government edict with respect to the distribution of natural resources.

Hey look, you're a freaking fascist.

Piss.off, Mussolini.

Anonymous Josh November 14, 2012 3:15 PM  

One can even make the argument that money IS power. When you internalize this, it makes sense that strong states have strong, stable currency and weak states have hyperinflation and social collapse.

You have the casual relationship entirely backwards.

Blogger Serge_Tomiko November 14, 2012 3:19 PM  

"I mean you come here... where many of us predicted this economic and social crises down to the letter... and explained exactly why and how it would happen..."

Actually, what I saw was a bunch of people correctly perceiving a bubble market and calling its ending. It doesn't take a genius to see a bubble.

But most of these same pundits have been proclaiming hyperinflation and all sorts of terrible things. They have for 5 years told us gold is the answer, that hyperinflation is around the corner. And it is not true. None of it.

Once again, since you are far too stubborn: you cannot understand how the American empire functions if you don't understand how increasing demand for money is a function a state power. You will never understand why the overwhelming majority of global trade is settled in US Dollars, and you won't understand why inflation is easily exported with this system.

But, keep on believing the doom and gloom is coming. That's a lot easier for a true believer than actually picking one of arguments to discuss.

I am obviously using a pseudonym. But, I have been in this movement for some time. We maybe have even met. I have spent years studying this issue, and I no longer have the patience for people who sit on their asses awaiting economic collapse rather than truly acting to save their people and all they have created.

Collapse will come. But it will take much longer than people think. If everyone simply awaits economic collapse, it will be too late. Our numbers will be too few, and what resources we have available today will no longer be.

Blogger Serge_Tomiko November 14, 2012 3:23 PM  

"One can even make the argument that money IS power. When you internalize this, it makes sense that strong states have strong, stable currency and weak states have hyperinflation and social collapse.

You have the casual relationship entirely backwards."

If there was ever the essence of the liberal delusion, this is it. Pure, unfettered materialism.

It's the MONEY that makes the people! All that beautiful gold, decorating every limb of your precious body, it radiates such goodness to the world, it imparts you with magical powers over your fellow man, and provides you with endless milk and honey freeing you from want.

You're crazy.

Go back to your videogames and internet porn. You have no power, and have no understanding what it is.

Blogger Serge_Tomiko November 14, 2012 3:25 PM  

"All natural resources and all land is owned by the state. The function of money and government policy is to most efficiently organize the populace to use a geographic area towards whatever ends are desired by the sovereign.The vast majority of wealth comes from human ingenuity alone. What wealth does not come from human action comes by government edict with respect to the distribution of natural resources.

Hey look, you're a freaking fascist.

Piss.off, Mussolini."

Yes, I am a fascist. But, this quote has nothing to do with fascism.

This is English Common Law, and it is the basis of American legal doctrine to this day.

Formalizing sovereign ownership of all land was the major consequence of the Norman Invasion. Google the Domesday Book if you want more information.

Anonymous Josh November 14, 2012 3:36 PM  

Yes, I am a fascist. But, this quote has nothing to do with fascism.

It's a more wordy version of Mussolini's quote about the state.

Anonymous Roundtine November 15, 2012 1:36 AM  

Your definition of credit and money is not the same as any civilization that has ever existed.

No government will enforce payment terms for ANY debt except in the state issued currency. The entire system of credit would completely collapse if this was not the case.


No, it's exactly the case. When the government comes in it takes over the credit market and denominates it in state currency. In the absense of state money, there would still be credit money, not barter. Exactly, previous credit systems did not have state sanction which is why they functioned locally and gold was used for impersonal, long-distance transactions.

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