Post: #1

Tried to watch a Captain Capitalism (Aaron Clarey) video purporting to rebut Paul Krugman on the Greek crisis. Gave up after 15 minutes. Comments:

--I'm not normally one to argue from authority. But extraordinary claims require extraordinary proof. Clarey claims that "you cannot view Paul Krugman as an economist." Krugman is a Nobel Prize winner in economics, a professor at Princeton and the London school of Economics and writer of numerous textbooks and other academic works on economics. Clarey is a guy who makes youtube videos.

--Swearing a lot does not make you sound smart or like a truth-telling straight-talker.

--Making fun of your opponents' arguments using retard voice does not mean you are winning.

--Clarey attempts to justify the failure of his and others' predictions of economic catastrophe from Obama's policies by reference to the dollar's status as the world's reserve currency. He claims that this makes him right and Krugman wrong despite the failure of his predictions and the success of Krugman's. His tone while doing this is as if he is pointing out something dead obvious. But the dollar was the world's reserve currency in 2009, when Clarey made his predictions of catastrophe; presumably he was aware? Also, Krugman has discussed the reserve-currency factor extensively, a fact that Clarey makes no mention of.

I am not an economist, just an educated layperson. So when people talk about economics I am forced to rely in part on markers of credibility and reasonableness to decide who is making sense. Clarey sounds like a jackass who pitches his talk at a choir of believers who know, just know, that pointy-headed East Coast liberals like Krugman must be wrong and who know (a little) less about economics than Clarey does.

As a fan of the manosphere, I wish we could get sites like Vivalamanosphere to boot ignoramuses like Clarey. Class the place up a little.

Here is, reluctantly, a link. http://captaincapitalism.blogspot.com/20...-pull.html

Post: #2

I can't speak for US, but Krugman has been 100% right on the Eurozone crisis so I'm inclined to listen to his advice.

As for Aaron Clarey, I very much like his arguments (even if I don't agree with them sometimes), but only when presented in written form. The youtube-clown style doesn't suit them at all, and it just looks unconvincing this way.

Post: #3

He does do a funny Professor Frink voice but it comes off as very immature.

Which reminds me, what was it Vox Day's blog said about doing funny voices, again? He probably called it "gamma" or something like that.

Post: #4

I'm more convinced every day that economics is a religion. Economists pull a modern day equivalent of Roman augurs taking the auspices. Sometimes their predictions are right, sometimes they are not.

Maybe I'm just a rube but the way I see it the common man who tries to do right is looted by thieves inside and outside the government. The "free market" capitalists say the market isn't free enough and that liberalization is what will solve all problems. The socialists then say that things need to be wrested out of the control of the evil capitalists and given over to the government that is wholly in bed with crooked capitalists in the first place.

Post: #5

I have a soft spot for Clarey because years ago I happened across one of his early youtube videos, probably 2010, and that ended up introducing me to the manosphere, but he's part of this lot of right-wingers who have read a bit of libertarian boilerplate and think it makes them economic experts. Somehow among these people hating Paul Krugman has become an especially odd quirk. I mean there are criticisms you can make on Krugman but it's almost a cult of disdain centered around him, it's weird. They're also always predicting that "hyperinflation" is just around the corner, constantly.

Post: #6

If you're looking for serious critique of Krugman you should probably be getting from someone like Russ Roberts.

Post: #7

Cappy is cool. Do not fuck with him

Post: #8

(07-16-2015 10:56 AM)Ryre Wrote:  --I'm not normally one to argue from authority. But extraordinary claims require extraordinary proof. Clarey claims that "you cannot view Paul Krugman as an economist." Krugman is a Nobel Prize winner in economics, a professor at Princeton and the London school of Economics and writer of numerous textbooks and other academic works on economics. Clarey is a guy who makes youtube videos.

Any time someone starts with "I'm not normally," you know that, yes, they are that way normally. First off, there is no Nobel for Economics, Mr. Respect-Mah-Authoritah. Feel free to respond once you've figured out why.

Second, Scholes & Merton were responsible for LTCM and "too big to fail." Maybe that's a sign that winning a prize for one specific achievement doesn't grant you papal infallibility on every subject in your purported area of expertise.

Of course, they're not the only Nobel fuckups floating around, unless you endorse eugenics and our past eight years of wars as well?

(07-16-2015 10:56 AM)Ryre Wrote:  --Clarey attempts to justify the failure of his and others' predictions of economic catastrophe from Obama's policies by reference to the dollar's status as the world's reserve currency. He claims that this makes him right and Krugman wrong despite the failure of his predictions and the success of Krugman's. His tone while doing this is as if he is pointing out something dead obvious. But the dollar was the world's reserve currency in 2009, when Clarey made his predictions of catastrophe; presumably he was aware? Also, Krugman has discussed the reserve-currency factor extensively, a fact that Clarey makes no mention of.

It's all in the timing, son. There were people who called out the ABS madness prior to 2008, and people who called bullshit on China's economy prior to 2015, and people like you who said at that time, "Nothing bad has happened yet."

(07-16-2015 10:56 AM)Ryre Wrote:  I am not an economist, just an educated layperson. So when people talk about economics I am forced to rely in part on markers of credibility and reasonableness to decide who is making sense. Clarey sounds like a jackass who pitches his talk at a choir of believers who know, just know, that pointy-headed East Coast liberals like Krugman must be wrong and who know (a little) less about economics than Clarey does.

If I peed on your leg and told you it was raining while waving my credentials around, would you believe me?

This isn't a sporting event, where we pick a favorite team and cheer for it. Dig into the case and the countercase and then make up your own mind. If you don't have an educated opinion, then maybe you shouldn't be picking sides.

(07-16-2015 10:56 AM)Ryre Wrote:  As a fan of the manosphere, I wish we could get sites like Vivalamanosphere to boot ignoramuses like Clarey. Class the place up a little.

Funny how you were bemoaning Clarey's namecalling above.

Post: #9

Captain Capitalism is alright and Bachelor Pad Economics was a solid book, but I think his politics are kind of silly. He acts like Obama is awful and Romney or McCain would be better. To me personally I have been around long enough to know there is no real difference between the parties. The two parties will pretend to be different about emotional issues (that are usually already decided like abortion) but when it counts they are the same. If you want to know when the common man is being fucked over, just watch when the parties vote together- The invasion of Iraq, the assault weapons ban,the Millennium banking act, the consumer protection act (which made bankruptcy real tough), the Bailout, making student loans nondischargeable in bankruptcy, and mandatory minimum sentencing all had bipartisan support. Cappy seems to think the parties are different and that the republicans would somehow be better for America, once you are over 35 you should realize both parties serve the same interests and it is not regular Americans.

Post: #10

[quote='Atlanta Man' pid='1066833' dateline='1437075964']
Delete accidental repost.

Post: #11

I have read CC for years but I cannot stand his videos, for the most part.

That said, Krugman is awful. His ideas all suffer from the religion of Keynes and the broken window fallacy writ large. For example:





It's as if Hayek and the other Austrians never existed in economic theory.

Post: #12

Anyone who calls themselves an economist and expects to be taken seriously deserves all of the ridicule they receive.

F.A. Hayek won a Nobel prize by equivocating the field to fortune telling.

Nassim Taleb is his intellectual successor today.

Quote:Friedrich August von Hayek's speech at the Nobel Banquet, December 10, 1974

Your Majesty, Your Royal Highnesses, Ladies and Gentlemen,

Now that the Nobel Memorial Prize for economic science has been created, one can only be profoundly grateful for having been selected as one of its joint recipients, and the economists certainly have every reason for being grateful to the Swedish Riksbank for regarding their subject as worthy of this high honour.

Yet I must confess that if I had been consulted whether to establish a Nobel Prize in economics, I should have decidedly advised against it.

One reason was that I feared that such a prize, as I believe is true of the activities of some of the great scientific foundations, would tend to accentuate the swings of scientific fashion.

This apprehension the selection committee has brilliantly refuted by awarding the prize to one whose views are as unfashionable as mine are.

I do not yet feel equally reassured concerning my second cause of apprehension.

It is that the Nobel Prize confers on an individual an authority which in economics no man ought to possess.

This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence.

But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally.

There is no reason why a man who has made a distinctive contribution to economic science should be omnicompetent on all problems of society - as the press tends to treat him till in the end he may himself be persuaded to believe.

One is even made to feel it a public duty to pronounce on problems to which one may not have devoted special attention.

I am not sure that it is desirable to strengthen the influence of a few individual economists by such a ceremonial and eye-catching recognition of achievements, perhaps of the distant past.

I am therefore almost inclined to suggest that you require from your laureates an oath of humility, a sort of hippocratic oath, never to exceed in public pronouncements the limits of their competence.

Or you ought at least, on confering the prize, remind the recipient of the sage counsel of one of the great men in our subject, Alfred Marshall, who wrote:

"Students of social science, must fear popular approval: Evil is with them when all men speak well of them".

Post: #13

(07-16-2015 10:56 AM)Ryre Wrote:  --I'm not normally one to argue from authority. But extraordinary claims require extraordinary proof. Clarey claims that "you cannot view Paul Krugman as an economist." Krugman is a Nobel Prize winner in economics, a professor at Princeton and the London school of Economics and writer of numerous textbooks and other academic works on economics. Clarey is a guy who makes youtube videos.

...

--Clarey attempts to justify the failure of his and others' predictions of economic catastrophe from Obama's policies by reference to the dollar's status as the world's reserve currency. He claims that this makes him right and Krugman wrong despite the failure of his predictions and the success of Krugman's. His tone while doing this is as if he is pointing out something dead obvious. But the dollar was the world's reserve currency in 2009, when Clarey made his predictions of catastrophe; presumably he was aware? Also, Krugman has discussed the reserve-currency factor extensively, a fact that Clarey makes no mention of.

I am not an economist, just an educated layperson. So when people talk about economics I am forced to rely in part on markers of credibility and reasonableness to decide who is making sense. Clarey sounds like a jackass who pitches his talk at a choir of believers who know, just know, that pointy-headed East Coast liberals like Krugman must be wrong and who know (a little) less about economics than Clarey does.

Despite what economists will imply, economics is not a difficult subject to grasp at all. If you have a high school level of reading comprehension, you can understand everything there is to know about the subject by taking a few of months and indulging in a cursory read of the likes of Adam Smith, Locke, Ricardo, Schumpeter, Menger, Mises, Hayek, Mill, Bastiat, Friedman, even Marx, Fisher and Keynes. For more contemporary stuff, I'd start with guys like Taleb. It's dry and boring, but it's not difficult to comprehend, and the differences in the views those authors would have had with each other mirror the differences still argued today. The economic battleground today looks more like Keynes + Variations of Keynes vs Everyone Else, and has been this way since the 1930s.

Economics became 'difficult' when Paul Samuelson, part of the Keynesian camp, published Foundations of Economic Analysis in 1947. That book basically changed economics forever, from basically a subset of philosophy/sociology into a pseudo hard science heavily reliant on mathematics. That change rendered economics almost useless, because, to put it simply, the human behavior which economics ultimately is founded on, does not fit neatly into linear equations, and therefore cannot be accurately modeled by them. Unfortunately, economists have persisted with the idea that they can, and have put forth increasingly complex theorems and formulas which project the veneer of scientific validity but are nothing of the sort. Hayek, another Nobel Prize winner, said as much in his 1974 acceptance speech, 'The Pretense of Knowledge.'

Then there is the issue of differing schools of thought. I mentioned before that Keynes dominates economics today, and Krugman is the most visible supporter of that school of thought. Since you say you're an economic layman, the easiest way to describe Keynesianism is that it works in the short term, but the costs are longer term failure. It then relies upon the belief that there is no connection between the short term and longer term, and thus, the short term solution is the right one, when the time comes.

It's like a drug addict who enters rehab. The immediate withdrawal to a Keynesian is a problem, because it doesn't feel good. His solution would be to take more drugs to feel good again. Taking more drugs 'works' in the sense that the addict feels good in the short run, but in the long run the wear on the body from the increased drug use gets that much worse.

Krugman has been 'right' about the Eurozone, because he makes the point that cutting government spending/austerity (going into rehab) is going to weaken the economies in which it's tried. He uses that obvious truth as a springboard to say that increased government spending, debt and inflation in perpetuity (more drugs) is the only way to go.

The Keynesian playbook always looks great in the short term, but it's based on an impossibility. It's like a logical proof that starts with the assumption that 1+1=11, but after that it's the greatest proof ever. In that narrow sense, within his school of thought, Krugman is a great authority, Nobel Prize winner, yada yada. But his expertise is in a bankrupt discipline, which opens him up to be challenged by people who most would consider to be intellectually inferior, but rightly so. This isn't a first year physics student saying Stephen Hawking is clueless.

Along that same line, the argument about collapses that haven't happened yet and so forth are usually dismissed by people who say 'even a broken clock is right twice a day.' If Clarey and co are broken clocks, Krugman is a clock wound such that the second hand takes 30 seconds to go around once rather than 60. It may tell you the right time at the moment, but it will be more and more off as time goes on.

Post: #14

Some Austrians (notably Mish) argued that we would not have hyperinflation during a credit crunch. What's seldom stated in the Zimbabwe hyperinflation scenario is that they confiscated the economic means from people who were producers and gave it to people who were consumers. That day may be coming to America, but it hasn't happened yet, and outside of absolutely ridiculous financial policies (ie: complete student loan forgiveness, etc), we won't see hyperinflation for a while.

Aaron brilliantly refutes several myths from Krugman and others in the media in that video, mainly that Greece is not a victim of anything. Germans are the ones being suckered and coming to the rescue of an irresponsible country. Imagine a world in which we didn't lend to people who defaulted - the Greeks would see just how harsh their reality would be (extreme poverty). Look at what happened when Mexico collapsed with their currency crisis - some people experienced levels of poverty most could never imagine (cardboard homes, not having access to fresh water, going to the restroom "in the fields", not having access to any food - extreme poverty). These poor in Mexico would work a full sixteen hour day and only have one hundredth of what all of us are enjoying now.

On the flip side, that poverty purified many of the people who grew up in it. When I meet people who grew up during those times, everyone of them works sixty to seventy hours a week and thinks Americans are crazy for complaining about their part time jobs, where they get to surf Facebook all day long. Poverty makes you really appreciate what you have; in a way, sending people to it - as cruel as it sounds - is sometime the very thing people need to experience to see "just how bad it could be."

100% of the people who come to you saying, "I am a victim of" are really rationalizing some lazy behavior somewhere in their life.

As for Krugman, the man hates young men and older people. On his blog, which I read for a while, he constantly rails against keeping interest rates high for seniors, acting as if no senior has any savings (a complete lie if anyone reads even the Fed's own data). He also can't stand the thought of young men getting cheap health insurance - ironically because they demand less of the services. He loved the idea of taxing young men more to pay for everyone else. Finally, like Keynes (and as Aaron points out), the man has no concept of work - he simply thinks paying people to do "anything" will be good for the economy, as stupid as the analogy that Aaron uses where someone digs a hole, and another person fills it in, and they both get paid. To him, that's wealth!

"Smart" guy.

The thing I forgot to mention about Krugman, which is hilarious - he HATES bitcoin. It is everything that he stands against - decentralized, unprintable, and has integrity in the system.

Post: #15

Krugman is just another crazy tribal member.

Post: #16

   

Post: #17

Did you really just start a thread just to shit on some guy?

That's low class.

Why not talk shit to his face instead?

G

Post: #18

(07-16-2015 10:56 AM)Ryre Wrote:  --I'm not normally one to argue from authority. But extraordinary claims require extraordinary proof. Clarey claims that "you cannot view Paul Krugman as an economist." Krugman is a Nobel Prize winner in economics, a professor at Princeton and the London school of Economics and writer of numerous textbooks and other academic works on economics. Clarey is a guy who makes youtube videos.

So, is Obama a peacemaker, then?

The field of economics has been almost completely dominated by Keynesian hacks since the 40s. Dare to expression any opinion at all contrary to "print shitloads of money, keep central banks operating in a black hole of opacity and unaccountability, expand the public sector, the government can and will fix everything we just need more of it" and you will be labeled a kook and laughed if not kicked out of academia and Washington.

Citing Krugman's credentials as a Nobel prize winner and a professor is about as impressive as citing any high profile feminist's professor position at shitfuck university. Who cares? Academia is a cliquey left wing nightmare and increasingly few people there, in any field of study, are friends of logic, reason, honesty, or truth.

Post: #19

(07-16-2015 02:50 PM)philosophical_recovery Wrote:  I have read CC for years but I cannot stand his videos, for the most part.

That said, Krugman is awful. His ideas all suffer from the religion of Keynes and the broken window fallacy writ large. For example:





It's as if Hayek and the other Austrians never existed in economic theory.

Krugman is making the point that economic conditions are not just determined by available resources and skills, but by the motivation to the put them to use. He's not making the argument that we would be better off if we were invaded by aliens or thrust into a giant war. He's saying that the physical and human capital available would allow us to produce more goods and employ more people than we currently have and that motivation to do so is the cause of the gap.

Post: #20

(07-16-2015 12:20 PM)TheWastelander Wrote:  I'm more convinced every day that economics is a religion. Economists pull a modern day equivalent of Roman augurs taking the auspices. Sometimes their predictions are right, sometimes they are not.

Maybe I'm just a rube but the way I see it the common man who tries to do right is looted by thieves inside and outside the government. The "free market" capitalists say the market isn't free enough and that liberalization is what will solve all problems. The socialists then say that things need to be wrested out of the control of the evil capitalists and given over to the government that is wholly in bed with crooked capitalists in the first place.

It's because most economists begin from ideology, then cherry-pick examples to support said ideology and misattribute the causes to those ideological points.

Post: #21

Also here's an economist who is halfway competent, and has a vastly better track record than the others. He's the one who predicted the 1987 crash to the day, the collapse of the USSR years ahead of time, and the 2007 crash over a decade ahead of time:


http://www.armstrongeconomics.com/archives/8772

Post: #22

(07-16-2015 10:56 AM)Ryre Wrote:  Tried to watch a Captain Capitalism (Aaron Clarey) video purporting to rebut Paul Krugman on the Greek crisis. Gave up after 15 minutes. Comments:

--I'm not normally one to argue from authority. But extraordinary claims require extraordinary proof. Clarey claims that "you cannot view Paul Krugman as an economist." Krugman is a Nobel Prize winner in economics, a professor at Princeton and the London school of Economics and writer of numerous textbooks and other academic works on economics. Clarey is a guy who makes youtube videos.

--Swearing a lot does not make you sound smart or like a truth-telling straight-talker.

--Making fun of your opponents' arguments using retard voice does not mean you are winning.

--Clarey attempts to justify the failure of his and others' predictions of economic catastrophe from Obama's policies by reference to the dollar's status as the world's reserve currency. He claims that this makes him right and Krugman wrong despite the failure of his predictions and the success of Krugman's. His tone while doing this is as if he is pointing out something dead obvious. But the dollar was the world's reserve currency in 2009, when Clarey made his predictions of catastrophe; presumably he was aware? Also, Krugman has discussed the reserve-currency factor extensively, a fact that Clarey makes no mention of.

I am not an economist, just an educated layperson. So when people talk about economics I am forced to rely in part on markers of credibility and reasonableness to decide who is making sense. Clarey sounds like a jackass who pitches his talk at a choir of believers who know, just know, that pointy-headed East Coast liberals like Krugman must be wrong and who know (a little) less about economics than Clarey does.

As a fan of the manosphere, I wish we could get sites like Vivalamanosphere to boot ignoramuses like Clarey. Class the place up a little.

Here is, reluctantly, a link. http://captaincapitalism.blogspot.com/20...-pull.html

You have to look at the context of Clarey's video. I believe he is bashing Krugman on this recent article, which covers the importance of spending and its effects on the economy.

Whether you like Clarey's style of retard voice, cussing, humor, etc., the guy knows what he is talking about. He has many posts backing up his economic viewpoints regarding economic growth (or lack thereof) with the rolling 20 year GDP, a book analyzing the housing bubble as it was unfolding (probably wrote it starting in 2007), and was a banker for many years. A good example of his style of economics versus Krugman in the article is "Why we can't just print money," which is a simplified example of why money-printing and Keynesianism do not lead to economic growth per se. Simply changing the money supply and cutting/raising government spending doesn't necessarily equate to private investment and entrepreneurship, which is what Clarey and other Austrians describe as true growth.

While I wouldn't call Krugman an idiot, he follows the wrong models often and if one wants to learn real-world practical economics, I'd recommend Clarey's blog and videos over Krugman.

Post: #23

Krugman is just a professional leftist propagandist hired to intellectually fortify the desired activities of the government from attacks from reasonable freedom-loving men.

The fact someone gets a 'Nobel prize in economics' means nothing - it's not like the people who issue the prize are magic truth-detecting aliens who issue it based on "yes, he is the most accurate one this year".

Krugman isn't an idiot, because otherwise they wouldn't have hired him, he is simply providing an ideological service. For this reason "correctness" isn't his primary concern.

Post: #24

My post was an intemperate attack, I admit, which resulted in a 3-day ban that I probably deserved. I have a tendency to assume that when something is relatively widespread and popular, like Clarey or the right-wing disdain for Krugman, there must be some there there. When I actually listened to Clarey he was worse than I, a Krugman believer, expected. I lashed out, probably should have counted to 10 first.

Now that I am unbanned I want to respond to a few things people here have said in reply. We aren't going to settle Austrian v. Keynesian economics in this thread, but there are a few specific, factual things I think we can clean up.

First off, there is no Nobel for Economics, Mr. Respect-Mah-Authoritah. Feel free to respond once you've figured out why.

Yes there is. http://www.nobelprize.org/nobel_prizes/e...laureates/

The field of economics has been almost completely dominated by Keynesian hacks since the 40s.

This would be news to the Chicago school of economics. "Chicago macroeconomic theory rejected Keynesianism in favor of monetarism until the mid-1970s...." https://en.wikipedia.org/wiki/Chicago_sc..._economics
Note that the list of notable Chicago school theorists includes a number of Nobel Prize winners, hardly indicating Keynesian dominance.

The dominance of Keynes would also be news to the EU and the UK, both of which have pursued austerity, rather than Keynesian pump-priming, since the financial crisis of 2008 (with disastrous conseequences).

Did you really just start a thread just to shit on some guy?

That's low class.

Why not talk shit to his face instead?

Same reason we do the same for the Lindy Wests of the world. Because their views are influential, wrong, and damaging. Because we don't know them personally, to confront them personally. Besides, there's little to gain from confronting a Clarey or a West personally. What, they're going to change their minds? It's the minds of people reading them that matter.

Krugman has been 'right' about the Eurozone, because he makes the point that cutting government spending/austerity (going into rehab) is going to weaken the economies in which it's tried. He uses that obvious truth as a springboard to say that increased government spending, debt and inflation in perpetuity (more drugs) is the only way to go.

Flatly untrue. Here's Krugman arguing for a temporary stimulus in 2008. http://krugman.blogs.nytimes.com/2008/01...us-issues/
Here's Krugman talking about how the stimulus in fact was temporary. http://krugman.blogs.nytimes.com/2013/08...-stimulus/
Here's Krugman rebutting the idea that he is for stimulus all the time. http://krugman.blogs.nytimes.com/2015/06...keynesian/

Krugman called for a temporary stimulus in response to an acute crisis. He predicted that the stimulus was too small and would result in a tepid recovery, and that Europe and Britain's rejection of Keynesian policies in favor of austerity would produce even worse results there. All of this came to pass. Perhaps there are valid reasons to disagree with him. Hey, hyperinflation could still hit. But disagree with what he actually said, not some right-wing straw man.

Post: #25

(07-19-2015 12:22 PM)Ryre Wrote:  Krugman has been 'right' about the Eurozone, because he makes the point that cutting government spending/austerity (going into rehab) is going to weaken the economies in which it's tried. He uses that obvious truth as a springboard to say that increased government spending, debt and inflation in perpetuity (more drugs) is the only way to go.

Flatly untrue. Here's Krugman arguing for a temporary stimulus in 2008. http://krugman.blogs.nytimes.com/2008/01...us-issues/
Here's Krugman talking about how the stimulus in fact was temporary. http://krugman.blogs.nytimes.com/2013/08...-stimulus/
Here's Krugman rebutting the idea that he is for stimulus all the time. http://krugman.blogs.nytimes.com/2015/06...keynesian/

Krugman called for a temporary stimulus in response to an acute crisis. He predicted that the stimulus was too small and would result in a tepid recovery, and that Europe and Britain's rejection of Keynesian policies in favor of austerity would produce even worse results there. All of this came to pass. Perhaps there are valid reasons to disagree with him. Hey, hyperinflation could still hit. But disagree with what he actually said, not some right-wing straw man.

I'll deal with this bit, as it is in response to me.

First off, this part of my post is extremely relevant:

"the easiest way to describe Keynesianism is that it works in the short term, but the costs are longer term failure. It then relies upon the belief that there is no connection between the short term and longer term, and thus, the short term solution is the right one, when the time comes."

The standard Keynesian playbook is fiscal and monetary easing in the face of crisis, then when the crisis abates, a normalization of policy is recommended. The issue with this is that easing polices can do no more than restore a previously existing economic structure, a structure which had already proven to be a failure, as evidenced by the crisis. The crisis necessitates that the preceding economic structure be torn down and rebuilt differently, which is something Keynesian and other big government types are reluctant to do.

The pre 2008 economy was one that had its foundation resting on debt-driven consumer spending, which in turn depended almost exclusively on ever rising real estate and other asset prices. In order to sustain that required ever increasing amounts of debt. It should be clear that at some point, the there is a limit to the debt that can be taken on by households and institutions. Once this limit was reached, the impetus for higher prices faded, and thus the foundation for the economy caved, and crisis ensued.

The call for 'temporary' stimulus was meant to prop up demand at an impossibly high price level. The economy on its own couldn't keep asset prices elevated forever, so the government and Federal Reserve were called on by the likes of Krugman to do this job. They can only do this job through cutting interest rates and printing money. Even if they printed money and mandated that it could only be spent on housing so as to prop up prices, that stimulus money would run out at some point, owing to its 'temporary' nature, meaning no more money for bidding up prices. The economy would once again be in a position in which it couldn't naturally support the high prices, leading to renewed downward price pressure and crisis.

This is true no matter how large the stimulus is, rendering the idea of 'it wasn't big enough' nonsense. The only thing a larger stimulus would have done is to restore bubble conditions for a longer period of time. In other words, it would have merely created a feel good high for a longer time, after which the come down would have necessitated more stimulus. The fact is the 'economic structure' of debt driven asset prices as the basis for economic growth was proven a failure, and as such needed to be allowed to die off.

The Keynesians across the West have been attempting to keep that corpse alive for 7 years with record low interest rates across the globe. In the US, the fed funds rate has been at 0% since 2008. This has fueled an asset price rebound, and far beyond in the case of the stock market. In the context of the debt driven consumer spending and asset price economic growth model, this is 'recovery.' What comes next in the Keynesian playbook, as I said earlier, is to normalize policy after crisis abatement. This has not been done even remotely with respect to monetary policy.

The biggest issue right now in the financial world is when the Fed will start raising rates. The idea of a rate increase from 0-0.25% to 0.25-0.50% is considered such a huge deal, even though in absolute terms it means nothing at all. Of course Krugman's view is that raising rates (and thereby moving away from stimulus) right now is silly. He believes that the Fed moving too soon could start an avalanche of effects that at best has us losing millions of potential jobs. That should tell you everything you need to know about the perilous nature of the faulty economic structure Keynesians such as Krugman seek to preserve. It can't cope with even a 2% fed funds rate, let alone a normalized 4-5% rate without falling apart completely. Thus, this last part of the Keynesian playbook is untenable in practice.

The things Krugman and his ilk have been 'right' about are only so when viewed in a narrow, short term sense. Fiscal stimulus (not monetary) was temporary and 'worked' in the short run, but its very nature means that once it goes, the gains go with it. This is why in practice, Keynesianism is about perpetual stimulus, because it ultimately seeks to preserve what is impossible to preserve. They believe that liquidation, and rebuilding again from the ground up is much worse than persisting with a broken system with a couple of band aids attached.

Monetary stimulus measures (which are still here 7 years on) merely blew air into an already burst bubble. The Keynesians incorrectly believe that by doing this the economy will magically reach 'escape velocity,' to use their terminolgy, and we'll achieve sustained growth. At this point, stimulus can be removed. The reality is that if those measures are properly removed, we'll be right back in a proper crisis again, at which point Krugman will call for big stimulus, once again. As I said earlier, in order to think the Keynesian view is correct, you must ignore the chain of events, and rather compartmentalize each step (stimulus, then recovery, then slump) as separate, independent events.