The Arthurian

Upcoming Recovery? Choose Your Metaphor

It wasn't Saddam Hussein in the first Gulf war (1991) who used the phrase "The Mother of all Wars" ... ?

It's sad, but we don't really have a "stimulus" bill. What's funny is that some people say we should give the lame-ulus a chance to work, while others say it has already failed. As you note, less that 8% of the money has filtered down from one level of bureaucracy to another, while approximately NONE of it can yet be counted as spending!

Austrian School of Economics Is on the Rise

Sugar, ain't you sweet! So many people blame Keynes for things Keynes didn't do, didn't want, and didn't recommend! I like reading his stuff -- you can <i>feel</i> how brilliant he was. Adam Smith, too.

Austrian School of Economics Is on the Rise

Yeah, Adam855, I know.

Searching for Stimulus on Capitol Hill

There is no point in creating a stimulus package unless you make it big enough and do it soon enough to accomplish your purpose.
Given that we needed a stimulus package (well, we *have* one, so we must have needed it), and given that the economic decline is much worse than expected, one can readily conclude that a bigger stimulus is needed, and sooner. Wouldn't it be great if we could have a stimulus package without increasing the debt? We can!
The Fed is engaged in Quantitative Easing... printing money. Nobody likes it except the Fed, but the Fed was unanimous in their decision to do it. They thought it HAD to be done.
I say, let Congress set up a Debt Forgiveness program and let it be funded by the Fed's newly printed money. Use the money to pay off existing debt. Better for debtors, better for banks, better for the economy, and good for creditors (who get their money back).
We're printing that money anyway. Let's put it to good use. And the new money goes out of existence when used to pay off debt. So, it's not inflationary.

Austrian School of Economics Is on the Rise

Adam, some things are economics and some things are not. A position for or against war may be a moral stance. But it is not economic in nature. Nor is a position on size-of-government an economic matter. It is pure politics. And again, public outrage is not economics. It is, however, the result of economic incompetence.

And this: "If government can successfully reflate the bubble, interest in Austrian economics will probably fade, as Americans once again get comfortably numb." But surely these are not the only alternatives! Incompetent economics versus neanderthal economics?

Ferdinand, if people try to spell "Austrian Economics" and end up spelling "Arthurian Economics" that's okay with me.

Populism vs. Bernanke, Round Two

god i hate politics.
My view, it's Congress should be audited. Scolded. Castrated maybe. Buncha fools elect a buncha richbich, richbich make law to tilt the economy in favor of richbich, Fed is left holding bag & taking blame.

Krugman vs. Bartlett: A Tale of Two Charts

newarthurianeconomics....

Bank Failure Friday Comes Early

Excellent analysis. Interesting solution.

Suppose your system had been set up in the 1930s. In September 2008, when Paulson panicked, people would have wanted to move their money from zero-reserve accounts to 100% reserve accounts. All at once. Then what?

Economy-Wise, The Great Experiment Seems to Be Working

"Clearly, the government has moved heaven and earth to keep the economy afloat. Ours is an era of triumph for public-financed consumption. In both magnitude and timeliness, no government has ever acted with greater speed and depth in keeping the forces of contraction at bay."

I'm not so sure about this. Today is 130 days since Obama signed the $787B stimulus bill. But so far only only 6.7% of that has been "paid out." And most of that 6.7 is probably sitting on some lower-level bureaucrat's desk for another 3-4 months or more.

What looks like the result of stimulus money is more likely the result of "green shoots" propaganda and wishful thinking.

Are We in Keynes' Liquidity Trap Yet?

In your opening quote from Greenspan we see him put the blame on irrational human behavior. Well, Greenspan must be human because he is surely irrational here.

Forget irresistible force. Presume an immovable object; for example, "the effectiveness of flexible markets." Against that object apply a small force, with the condition that this force perpetually increases. Ultimately, your immovable object will move.

I can identify this force for you, but you already know it is debt.

"What we know is that the shock that may trigger the Crash can be very small: the student of economic history know that what triggered Black Thursday in 1929 was the fall of a small Austrian bank. It is a non-linear, chaotic or butterfly phenomenon."

No. When the small force has finally grown to its critical point, only then can a straw break the camel's back.

Sorry about mixing all those metaphors.

The Fear of Inflation

It is never <i>printing</... money that causes inflation; it is <i>spending</... that drives prices up. The connection between printing and spending is obvious but there are moments that it fails, such as this one.

Another cause of inflation is expectations. If enough people <i>think</i> that printing money will cause inflation they will act accordingly, and we will have inflation. But expectation-driven inflation can be restrained by price-controls. (Demand-driven inflation cannot.) If it was up to me, the Fed continues its present QuEasing course, and Congress approves temporary (30-month) wage and price controls.

Fiscal Policy: What's the Null Hypothesis?

Once I figured out that by "null" you mean "default" your article made perfect sense to me. Except for one thing. You write: "Which is the bigger error, to deficit spend when it's not needed, or to fail to do so when it is? I think the bigger risk is doing nothing when it's needed..."

Yes we need to do something, and yes the economy needs stimulus. But <i>more deficit spending</i> is dogma. Set it aside and rethink it through, as the great and wonderful Keynes would do.

Blindy, the trouble with your analysis is that stock market peaks are not the best indicators of peaks in economic growth. As Milton Friedman points out [<u>Free to Choose</u>, Chapter 3, under "The Onset of Depression"] "Business activity reached its peak in August 1929, two months before the stock market crashed." Could be wrong, but I think it was more than two months, this time.

p.s. Look for the "Stimulus Watch" gadget for your iGoogle page.

Obama's Financial Reforms - Who Will Benefit

You say: "If President Barack Obama’s proposed overhaul of the financial regulatory system gets through Congress, it will be a virtual reboot of some of the most engrained government agencies. The plan would rearrange the duties of Federal Reserve, the Treausury Dept., and many other Washington fiefdoms. It would extend federal oversight to hedge funds and a whole new basket of financial products, and change the way Americans use mortgages and credit cards."

I say they're fighting the last war.