"Inflation’s standard definition is too narrow to provide an appreciation of the extent of its harm; it is far more than a deterioration of the currency’s purchasing power. It’s also much more than a "hidden tax." Government’s perennial fiat inflation is a subtle WMD. Consider the following:
In funding wars, it allows government to ignore the fiscal resistance of its citizens.
It benefits the central government at the expense of secondary and tertiary governments.
It turns moral hazard and irresponsibility into an institution, and guarantees recurring economic crises.
By making credit cheap, it encourages businesses to finance their ventures through borrowing rather than equity. Because of market competition, few firms can resist the offer of low credit, making them more dependent on banks. As Pius XI noted in 1931, it puts a dictatorship in the hands of lenders who regulate the lifeblood of the entire economic system.
Fiat inflation drives people to invest in capital markets where few will have the expertise, time, and inclination to monitor their investments properly. In former times people could save simply by holding gold and silver coins.
Under a perennially increasing price level, the average citizen finds his best strategy is personal debt, which weakens self-reliance and independence.
Under chronic fiat inflation, people will tend to choose their employment based on monetary returns. Money then becomes the prime or only consideration for personal happiness.
Perennial inflation deteriorates product quality. Industries that cannot compensate for inflation with technological innovation turn to other means, such as producing an inferior product under the same name. Lying, which is bound up with fractional-reserve banking, tends to spread like a cancer over the rest of society.
By fueling the exponential growth of the welfare state, fiat inflation fosters the decline of the family. Families become degraded into “small production units that share utility bills, cars, refrigerators, and especially the tax bill.” The welfare state drives the family and private charities out of the “welfare market.”
As Hülsmann concludes, “fiat inflation is a juggernaut of social, economic, cultural, and spiritual destruction.”
— George F. Smith, The Case For Natural Money
The unprecedented success of Keynesianism is due to the fact that it provides an apparent justification for the “deficit spending” policies of contemporary governments. It is the pseudo-philosophy of those who can think of nothing else than to dissipate the capital accumulated by previous generations.
Yet no effusions of authors however brilliant and sophisticated can alter the perennial economic laws. They.. work and take care of themselves. Not-withstanding all the passionate fulminations of the spokesmen of governments, the inevitable consequences of inflationism and expansionism as depicted by the “orthodox” economists are coming to pass. And then, very late indeed, even simple people will discover that Keynes did not teach us how to perform the “miracle… of turning a stone into bread,” but the not at all miraculous procedure of eating the seed corn.
Clarke and Dawe explain Quantitative Easing
Oops, it’s not going to work?
1. Don’t think Krugman or Keynesian economists support war for the sake of benefitting the economy. This misconception stems from the analysis that WWII, a time of total war and production for war, this led to high levels of employment and helped bring an end to the depression.
I guess I should say thanks for giving me the opportunity to back these up? Cheers. Most of the sources here directly link to ones that contain the requested material. Two birds with one stone. Enjoy.
Keynesian economists and Krugman actually do support the broken window fallacy.
- Krugman’s war fantasies by William Anderson
- Does Capitalism Require War? by D.W. MacKenzie (commentary on Krugman throughout)
- Posted by Lew Rockwell on June 5, 2011
Writes Andrew Penn Fitzgerald:
Actual quote from Krugman on ‘This Week’ this morning: “If we had the threat of war, had a military buildup, you’d be amazed at how fast this economy would recover.”
And here I thought that we were currently waging offensive war in at least four countries with troops in more than 150 foreign countries and currently spend more on our military than every other country in the world combined. Clearly we just need to do more in the militarist direction (similar to Krugman’s other advice that we throw more money down the bailout hole to make it work).”
- A compulsory draft is AMAZING at reducing “unemployment”, you know - forcing people to join the army and get shipped off to die in war does wonders for reducing the % of employable people.
- Check out Robert Higgs lectures; totally demolishes the myth that the war ended the depression.
- Disastrous Economic Fallacies - Terror as Stimulus? [2min video] *Another Krugman quote.
2. Even if you pay people for seemingly menial or unimportant tasks, the people working these jobs generally will either have been unemployed or have a low enough income that they spend what they make, thus one accomplishes both putting people back to work and increasing personal consumption/spending levels.
- Public Works Mean Taxes - Economics in One Lesson, Henry Hazlitt.
- Fetish of Full Employment - Economics in One Lesson, Henry Hazlitt.
3. Find me an article where Krugman supports a housing bubble, or any bubble for that matter.
It’d be my absolute pleasure.
- Krugman Did Cause the Housing Bubble by Mark Thornton
- Krugman’s Intellectual Waterloo by Daniel James Sanchez
Last Monday evening, Lew Rockwell, from a tip by someone named “Travis,” posted this damning quote of Paul Krugman’s from a 2002 New York Times editorial:
”To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
Krugman. 2002. Calling for a housing bubble.
4. “Debt” isn’t killing the economy. And “debt” isn’t the only problem. More like, “Unemployment stagnating economic growth? Spending will fix that”.
- “The annual government deficit, plus the annual interest payment that keeps rising as the total debt accumulates, increasingly channels scarce and precious private savings into wasteful government boondoggles, which “crowd out” productive investments. Establishment economists, including Reaganomists, cleverly fudge the issue by arbitrarily labeling virtually all government spending as “investments,” making it sound as if everything is fine and dandy because savings are being productively “invested.” In reality, however, government spending only qualifies as “investment” in an Orwellian sense; government actually spends on behalf of the “consumer goods” and desires of bureaucrats, politicians, and their dependent client groups. Government spending, therefore, rather than being “investment,” is consumer spending of a peculiarly wasteful and unproductive sort, since it is indulged not by producers but by a parasitic class that is living off, and increasingly weakening, the productive private sector.” ~ Repudiating the National Debt, Murray N. Rothbard
5. Again, I’d ask when Krugman ever advocated that, and would also say there are times when either inflation or deflation are ways to correct economic fluctuations.
- Krugman Strikes Again by Peter Schiff
”In today’s column, Krugman analyzes the Greek debt crisis, arguing that the best solution for Athens would be to simply inflate away its debt burden with printing-press money. Krugman laments that this sensible option is being foreclosed by the monetary priggishness of the German heavyweights in the European Union, who are “foolishly” seeking to prevent inflation and impose fiscal discipline.” ~ April 12, 2010.
- Inflation and Deflation, Human Action by Ludwig von Mises
6. This one doesn’t really make an argument, but rather seems to assert that your own belief is we are spending too much.
More a fact that I accept, as opposed to a ‘belief’ which requires faith.
7. This actually would be more beneficial to the economy, as anyone who has taken even one economics course knows that consumer spending is an essential part of any economy and yet human behavior is irrational in that when the economy slows instead of spending and pumping money to help get businesses moving and people hired, the savings rate increases thus further exacerbating the problem in the first place. Those with more disposable income ought to spend it. Just saying.
Hate to burst your bubble [pun intended ;D], but that ‘economics’ course you took - whilst being an appeal to authority fallacy - was also a waste of time & money. Don’t worry, I was also forced to sit through them aswell.
- Consumers Don’t Cause Depression by Robert P. Murphy
"There’s one saving grace about Paul Krugman’s column at the New York Times: when an Austrian economist wants to explain how mainstream economics leads to ruin, he can always trust Krugman to set up the target in a clear, concise manner. This saves us a lot of work, because we don’t have to first build up the position before knocking it down."
Long story short, I get this is supposed to be a joke, or “meme” but with little backing and sense to these particular ones I don’t think this is anything more than partisan mockery of legitimate challenges to your own economic viewpoints.
A long story short… "It’s funny because it’s true."
Drunken Ben Bernanke Tells Everyone At Neighborhood Bar How Screwed U.S. Economy Really Is
SEWARD, NE—Claiming he wasn’t afraid to let everyone in attendance know about “the real mess we’re in,” Federal Reserve chairman Ben Bernanke reportedly got drunk Tuesday and told everyone at Elwood’s Corner Tavern about how absolutely fucked the U.S. economy actually is.
Bernanke, who sources confirmed was “totally sloshed,” arrived at the drinking establishment at approximately 5:30 p.m., ensconced himself upon a bar stool, and consumed several bottles of Miller High Life and a half-dozen shots of whiskey while loudly proclaiming to any patron who would listen that the economic outlook was “pretty goddamned awful if you want the God’s honest truth.”
"Look, they don’t want…
Hahaha, up yours Benny Bernank.