Friday, March 1, 2013

Nobody that knows their economics supports a gold standard

Just in case that was an open question to anyone.


  1. Dyslexia strikes, or too long a night. Anyhow, I saw the banner and read
    "Nobody knows that their economics supports a gold standard."

    Now there's a subject for a nice long post!

    1. I read it thus: "Nobody that knows that their economics supports a gold standard." ;)

  2. Oh and a new one that I am just now listening to:

  3. Barkley backed off that a little.

  4. This is supposed to be a big joke, right? You guys are hitting us back for the "econ 101" thing on the minimum wage?

    Surely Barkley Rosser knows that at least 50 US-based professional economists support a gold standard, in the context of his remarks. The only reason they wouldn't, is that they really want an abolition of the government's role in money altogether. I hardly think that's what your readers would conclude from your statement.

    Like I said, if you are just being cheeky in a quick blog post, fair enough, but Rosser sounds like he is serious.

    1. They are not professional economists; they are merely either gadflies or pr mouth pieces for the .1% (i.e., we all know why Forbes wants a gold standard)

      As for me, I will take zero real interest rates any day.

      Dan, BTW, he also has up this post on the impact of current account deficits.

      And, you owe me a lot of thanks for putting up the links to Pettis on Keynes and the current account deficit, but not a peep, so here is a timely link. Pay close attention to the picture

    2. re: "And, you owe me a lot of thanks for putting up the links to Pettis on Keynes and the current account deficit, but not a peep, so here is a timely link. Pay close attention to the picture"

      Ummm... thanks?

      I wasn't checking the blog later last night. Don't get too upset over that.

      It's more the interaction between the current account deficit and government deficits - the point that we should not be running deficits and not the significance of the current account deficit per se that I found intriguing.

    3. Daniel,

      Your damn right it is intriguing and Keynes was as right as rain. Just do the Martin Wolfe helicopter drop. Drop a Ben Franklin. It is picked up. The money is taken to Wal-Marts and spent, most all of its goes to China. We sell China a bond and get back the $100, creating no jobs here.

      This was, as several people have written, basic, fundamental 1978 macroeconomics, when I went to school.

      The spent money has to stay here to have any positive effect.

      1) keynes was never "for" fiscal deficits; there is no such thing as Keynesian deficit

      2) keynes was never "for" current account deficits

      3) keynes was clear that, if you have a current account deficit, deficit fiscal spending will not help---the money just goes to the rest of the world and you slide deeper into debt (subject to probably the mother of all solutions and that is print enough money that you drive your currency so low that you no longer have a current account deficit)

      4) keynes pov was that, in a deep depression or recession, the country that has to run a fiscal deficit is the country with a current account surplus---now China

      We have been proving Keynes right for years.

      If we keep borrowing and doing nothing about the current account deficit, you will work until you are 85

    4. And, BTW, Moseler is the smartest economist in the world. Just look where he lives


    5. Oh you're just talking about open market leakages? Well sure - I think everyone knows about that. Multipliers are smaller in relatively open economies. I think you are overselling the point if that's all you're saying. Smaller multipliers don't mean don't run deficits. I thought you said he said not to run a deficit in current account deficit countries.

    6. Daniel,

      Don't ask me what Keynes meant.

      Ask Pettis. He knows the passages far better than you or I.

      I have read the passages. As I read them, Keynes thought that deficits for a country running a current account deficit of any size would be of little use or value.

      This is where I have a fundamental departure with economists. I don't see the point of arguing over what some dead economist thought. Keynes was clearly of the POV that in the 1930s it was the US, as the country with the current account surplus, that should be running deficits. He did his best to charm Roosevelt in that direction.

      It seems to me that our experience over the last several years proves him correct.

      As for overselling the point, I believe the evidence is all to my favor. We have run up trillions in deficits with little progress to show for such and no sign of deficits ending in the near future or our closing what I like to call the "DeLong" Gap. My case and evidence are understated.

      I am not against the deficits, as an experiment, as they won't do much damage (at worst, we can always print money to pay it down if we over borrower; at best, we have so much untapped knowledge, our principal resource, that our debt to asset ration is di minimis), but the deficits are not working as hoped.

      If you have a fire and you pour water on and pour water on and it still burns, if you are sensible, you begin to ask questions.

    7. Out of curiosity Alexander Hamilton, were you aware that Dr. Michael Emmett Brady has stated that John Maynard Keynes was opposed to deficit finance?

      Furthermore, Daniel Peter Kuehn has shown the first of the two links above in this post before...

    8. Blue Aurora

      I confess I have what is known as a 1978 education in economics, having completed my formal studies by about that time. Someone has a nice blog on the lack of advancement in economics since 1978. I agree.

      I had several very liberal teachers, all Phds, and all of whom taught that Keynes was against deficits, except in very narrowly defined ways. In the understated way that academics talk about incentive caused bias, they were correctly firm to disregard Hayek and Friedman, as charlatans little different from a fundamentalist preacher like Jimmy Lee Swaggart, willing to say or do anything to find a flock.

      They respected Keynes because he could apply his knowledge, making fortunes investing.

      I was taught it is all about confidence, meaning the rule one is there are no rules, as Obama is re-learning every day to the detriment of all of us. Man is he dull. What works is what gives confidence to the 80% of business that can make it only in the best of times. This simple rule of Keynes is what has been lost.

    9. "I confess I have what is known as a 1978 education in economics, having completed my formal studies by about that time. Someone has a nice blog on the lack of advancement in economics since 1978. I agree."

      Hilarious! "I ain't learned no eeconomics since 1978, but I know none of it ain't any good!"

    10. Gene, you have never learned what Franklin knew in 1729 about paper currency. Get to that point, then call.

      The interested reader my want to read Franklin himself.

      A Modest Enquiry into the Nature and Necessity of a Paper Currency.

      A useful Fed Reserve publication on Franklin is here:

      Today, as for Franklin, a "lack of money remains the root of all evil," (Rev. Ike, among others)

      The Fed publication has a 'graph just for you Gene:

      Franklin begins his pamphlet by noting that a lack of money to transact trade within the province carries a heavy cost because the alternative to paper money is not gold and silver coins, which through trade have all been shipped off to England, but barter. Barter, in turn, increases the cost of local exchange and so lowers wages, employment, and immigration. Money scarcity also causes high local interest rates, which reduces investment and slows development. Paper money will solve these problems

      Readers interested in what we knew in 1978 might start here, albeit this is not the exact essay I had in mind when I made by comments above.

      And yes, Gene, I am unable to tell any difference between you and a believer in Jimmy Lee Swaggart.

      And, BTW, and Brad will really laugh at your over this. You just called Mises "Hilarious" and implied that he was ignorant for on your own blog you defend Mises for not even reading Keynes.


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