1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar
Source link: http://archive.mises.org/12774/huffpo-abolishes-scarcity/

HuffPo Abolishes Scarcity

May 24, 2010 by

The economic analysts rounded up by the Huffington Post think the printing press has abolished economic scarcity. They think there’s no need to worry about the federal budget deficit, because Uncle Sam can print all the money he needs. FULL ARTICLE by Robert Murphy


Pravin May 24, 2010 at 8:48 am

are these guys economists or accountants?. everything seems to be about mere entries in the book for them. simply,these folks confuse money with currency.and paper with wealth.lots of knowledge -zero wisdom

Chris Bauer May 30, 2010 at 3:49 pm

The author of the article has a doctorate in English and teaches “essay writing and cultural theory.”I don’t think the authors of this article are either economists or accountants.http://www.huffingtonpost.com/lynn-parramore

C.J. May 24, 2010 at 8:55 am

“Taxes, then, are what give value to money.” Myth 5, Yeva Nersisyan, Doctoral candidate in economics, University of Missouri-Kansas City, Missouri

Wow. I would laugh if I didn’t know that thousands of Huffers now really believe that.

Joe B May 24, 2010 at 9:14 am

This is textbook Chartalism. The world is a rosy place when you have no conception of capital theory or dynamic analysis.

Daniel May 24, 2010 at 9:30 am

This is textbook Charlatanism :D

Current May 24, 2010 at 10:53 am

Yes, there was a big debate on this blog at the time. It turns out the writers are all nominalists.

Daniel Hewitt May 24, 2010 at 9:17 am

The HuffPo is one of my favorite news sites, but it could very well be the biggest collection of economic illiterates on the web. The key is just to stick to reading their news stories, and not reading the op-ed-type articles like this.

Like Dr. Murphy, sometimes my eyes wander and I catch myself reading them. Two of the more memorable ones:

Thom Hartmann’s list of “insane conservative” economists, some who’s names he cannot even spell correctly:

Cenk Uygur’s “irrefutable” reasons why public health care is superior:

Magnus May 24, 2010 at 9:35 am

That Cenk Uygur article was enough to turn my stomach.

My favorite is irrefutable “reason” No. 3 –“The government will have enormous negotiating leverage with drug companies and health care providers, so they can drive down the costs to the consumer even more.

Has the author never actually seen a government contractor before? A military contractor? A sewer and water contractor? A garbage contractor? A streets-and-highways contractor? A government-building construction contractor?

Even the guys who cut the grass in front of government buildings know that the government will pay more for their services than they can get from private payers.

Ben Ranson May 24, 2010 at 4:49 pm

Uygur’s second reason is pretty wacky too.

“The government will not take a profit… An option that doesn’t take profit also doesn’t take as much money from us.”

Apparently, public health care is better because the government loses money providing it!

Hard Rain May 24, 2010 at 9:37 am

Gee, if we were to take myths #1 and #2 seriously they basically make the point that taxation and contributions to the government are pointless because they can just print money and give us “securities”!

Graphite May 24, 2010 at 2:06 pm

Actually many Chartalists make exactly this argument without irony … they’ll advocate, say, abolishing the bond market, or a complete payroll & income tax holiday (with no coincident spending cuts, of course) for people below a given earnings threshold.

Interesting ideas, to be sure, but they might hasten the public’s awareness that fiat money is a confidence game and thus knock a plank out from under Chartalist doctrine itself.

Frank G May 24, 2010 at 9:57 am

I have always regarded the Huffington Post as basically Fox News for Liberals. After reading this absurdity, its clear the Huffington post has exceeded any kind of idiotic rambling that even Fox News has so far put out. Even worse, is that they were able to dig up “so-called” intellectuals in the economics community to create or backup this drivel.

Stephen Grossman May 24, 2010 at 10:10 am

>The common problem with the HuffPo treatment of the first two “myths” is to focus on the narrow issue of accounting, as opposed to the broader economic issue.

As liberals teach, reality is subjective. There is nothing beyond accounting, most especially scarcity, action in the passing of time, preferences and setting aside. Why did I suddenly think of _Alice In Wonderland_? Or is that _Nancy in Keynesland_? We’ll know what the bill contains when we pass it. One policy will make you bigger and one policy will make you smaller. Through the looking-glass. Whee! Lewis Carrol for President! Vote the Cheshire Cat Party! The last thing we’ll see is a grin.

ganpalou May 24, 2010 at 10:29 am

Robert Murphy is either wrong or too charitable concerning Myth# 3. In the early ’80s, a D congress created tax legislation, signed by Reagan, that exempted “passive foreign” investors from taxation, even registering their income with the IRS. Thus “passive foreign” investors have a tax incentive to hold investments that is not shared by US residents, whether citizens, legal aliens, or others. How can any “domestic” economist predict the behavior of “passive foreign” investors, and the future burden of redistribution of wealth to foreign investors? Secondly, Ben Bernanke TOLD Congress that “The Fed” is not going to monetize the deficit. Does Bernanke have that kind of power?

Silas Barta May 24, 2010 at 10:38 am

I know this HuffPost article was linked on the Mises blog a few weeks ago — anyone have the link to the discussion? I recall noting at the time that even the regulars on the site, even the economically illiterate ones weren’t buying it, generally speaking. Give them a little credit for that.

Btw, in case anyone missed it, if you go to the HuffPost article and click on the author, you’ll find out her education is a PhD in English literature. ‘Nuff said.

Duke of Sharon May 24, 2010 at 11:01 am

Liberal is to Economist
Witch is to Doctor

GunderDog May 24, 2010 at 10:18 pm

I am offended by your comment. I would trust a witch more than a government approved MD on most health topics! In fact, my wife has studied medicinal herbs for years and considers herself much more of a witch than a doctor.

Also, more seriously, it depends on what you mean by “liberal”. Austrian economics is all about classical liberalism like Jefferson, etc. To me, conservatism is about one group of people thinking they know better and can tell me what to do, who I can have sex with, whether I can have an abortion, that we should run an empire, that dark skinned people are inferior, etc. I used to be progressive because there is a lot of economic injustice in the world, and way too much poverty considering our technology. I now subscribe to libertarianism because I have read the Austrians I understand the a truly free market will deliver more wealth to more people. If taxing the rich could provide the most health and prosperity to the underprivileged, I would wholeheartedly support it. But it don’t work – in fact is has the opposite effect.

Eric May 24, 2010 at 11:38 am

A quick look at the comments section (and there are many pages of them) indicate that either nobody is fooled by them, or the comments mostly come from mises readers. The second or third link there has a back link to this article.

Frank G says to read their news stories only; but clicking on home and reading the first story below the pictures one reads this Keynes lament:

“Austerity has suddenly become the universally prescribed cure for the fallout from the financial collapse. If widely adopted, it will prove worse than the disease. The budget deficit here and overseas does need to return to a more moderate level — but only after we get an economic recovery. The problem with the austerity treatment during a recession is that if everyone tightens their belts at once, there is nobody to buy the products; the economy shrinks and repayment of debt is even more arduous.”

Frank G May 24, 2010 at 12:01 pm

Eric, please re-read what I posted. I would never recommend anyone read the Huffpost (other then for pure entertainment purposes) much less the news stories. The Huffpost takes a sensational and openly slanted journalistic approach to the news, which IMO is very similar to the way Fox likes to tell the news, hence my reference to the Huffpost being the Fox news for Liberals.

Eric May 24, 2010 at 12:06 pm

oppps, mistaken quote, I was responding to what Daniel said about reading only the news stories.

too bad they only allow edits in the first few minutes, my apologies.

geoih May 24, 2010 at 12:10 pm

They don’t even try to hide the complete bankruptcy of their ideas anymore. “The government can’t go broke, because they can just print money”, but they say this with complete seriousness.

I keep waiting for them to admit their true solution to health care: “Health care costs will never be a problem, because the government can just execute all of the people they don’t want to care for.”

Patrick Barron May 24, 2010 at 3:30 pm

That quip about healthcare is a classic. I hope you don’t mind if I borrow it.

Enjoy Every Sandwich May 24, 2010 at 1:35 pm

It’s as if they’re trying to live down to the most sarcastic thing we can say about them. I’ve said many a time that they believe that the government can just print more money, but I was being snarky!

I confess I wish that I could question them myself. I’m dying to hear why it is that the government doesn’t pay Social Security recipients a million dollars a year, why I can’t just print my own money without being arrested for “counterfeiting”, or why the Congress doesn’t solve the unemployment problem by passing the Everyone’s A Millionaire Act and giving all of us a couple mil.

Magnus May 24, 2010 at 1:52 pm

Why so stingy?

If I were in charge of printing our way to prosperity, I’d make everyone trillionaires.

Current May 24, 2010 at 4:05 pm

Yes, there was a sign by a protesting Zimbabwean a few years ago “Starving Billionaire”. I remember this whenever the nominalists are around.

Joe B May 25, 2010 at 7:52 am

Chartalists blame Zimbabwe’s problems not on the hyperinflation, but on the fact that the money was not spent “prudently”. Here’s a taste: http://bilbo.economicoutlook.net/blog/?p=3773. Athough there are some kernels of truth in this particular post – “Bad Governments will wreck any economy if they want to”. I think the “if they want to” criterion is overoptimistic, and “Bad” is redundant.

This is the exact argument made throughout history by most defenders of fractional reserve banking, as explained by Jesus Huerta de Soto in “Money, Banking, and Economic Cycles”. If new money was only given to projects that were guaranteed to be profitable indrfintely, there would be no danger of a crash!

Mike May 24, 2010 at 1:58 pm

Someone really needs to explain the laws of conservation to these people.

Steve Hogan May 24, 2010 at 2:09 pm

To the ignoramuses over at HuffPo, I have one word: Zimbabwe.

guido June 11, 2010 at 6:33 pm

To the ignoramus Steve – Zim was aggregate supply contraction. Currently much of the world is experiencing an aggregate demand contraction.

FatBeard May 24, 2010 at 2:38 pm

Here’s a few non-myths:

1. The banking and money system creates the principle of loans but not the interest required for them. This requires ever increasing debt as the interest for previous loans must be borrowed into existence.
2. People are driven into debt-slavery via negative real interest rates via fractional reserve lending.
3. With our money-for-debt banking and money system, no debt = no money supply except for maybe coins except that would probably be eaten up too as interest as debts are repaid.

Yes it is silly for the US Treasury to borrow from the Fed at interest what it could create for itself interest free. A solution then would be for the Treasury to print Greenbacks for government expenses and to abolish money-for-debt (fractional reserve lending) using Greenbacks . Debt-forgiveness or bailout and saver compensation might also be wise AND JUST since savers were cheated by negative real interest rates and debtors were driven into debt with them.

To complete the reform, legal tender laws should be abolished soon after any compensation of savers and debtors and competing currencies allowed including common stock which does not require borrowing or lending to acquire assets.

DD5 May 24, 2010 at 3:26 pm

Every single one of your assertions is false. Unfortunately, you’ve taken a few economic cranks a bit too seriously.

FatBeard May 24, 2010 at 3:44 pm

“Unfortunately, you’ve taken a few economic cranks a bit too seriously” DD5

I would bet that you have never considered that investment does not even require borrowing and lending money much less at interest. Yes, there are cranks out there and perhaps I am too. Who knows? However, we should agree on liberty in money creation though and let the market decide. Meanwhile mediate on this if you please:

“You may charge interest to a foreigner, but to your countrymen you shall not charge interest, so that the LORD your God may bless you in all that you undertake in the land which you are about to enter to possess.” Deuteronomy 23:20

I have found the Bible to be impeccable elsewhere with regard to economics so the above verse was hard for me to accept. Once I realized that there is at least one alternative to lending money at interest I could finally accept it.

FatBeard May 24, 2010 at 5:51 pm

Speaking of cranks, I notice the Austrians with the notable exceptions of Mish Shedlock and Steve Keen and maybe a few others have been unsuccessfully predicting price inflation. So, perhaps your understanding of money and banking is not what it should be?

Graphite May 24, 2010 at 6:51 pm

Robert Prechter is another Austrian-influenced analyst who is predicting deflation. Steve Keen is actually a post-Keynesian although he acknowledges that ABCT has some useful insights.

FatBeard May 24, 2010 at 6:59 pm

Thanks. I’ll look up Mr. Prechter.

Matthew Swaringen May 24, 2010 at 6:54 pm

Any Austrians I’ve seen only project that price inflation will eventually occur because of continual increases in the money supply. There is no exact timeline on when that will show up on a specific measure like CPI.

The reason for this is that the industries that benefit from cheap credit may not even be part of the scoring. Another reason is that increases in productivity offset increases in the quantity of money. It is not that prices will necessarily go up, but that they will necessarily go up in the long run more than they would have otherwise gone up without monetary supply inflation.

In the boom industries, prices will necessarily fall as the boom turns into a bust because of excess unsold inventories. The timelines on none of this can be predicted perfectly because of the nature of the market. It’s actors are not all instantly aware of all available information and while some industries were affected directly by malinvestment for other industries this is less true. If the Austrians believed that these things could be predicted perfectly then they would be a part of another sort of government intervention school. They are not, because they believe the market is inherently unpredictable to that degree.

Inquisitor May 24, 2010 at 10:51 pm

Don’t speak of cranks when quoting Christian texts, please…

FatBeard May 24, 2010 at 11:07 pm

“Don’t speak of cranks when quoting Christian texts, please…” Inquisitor

I guess that makes Gary North a crank too? The contributors on Lew Rockwell occasionally quote Scripture too. Are they cranks? Isn’t fractional reserve lending a violation of “Thou shalt not steal”? Is it cranky to point that out? The Bible warns against burying one’s talent in the ground. Is it cranky to point out that the Bible maybe warning of monetary deflation? Meanwhile, some Austrians think deflation is good since it purges “malinvestments”? Maybe if it purged them of their jobs they would begin to see the light.

Bob Murphy May 25, 2010 at 7:00 am

FatBeard, at some point I will write a Mises.org dealing with this issue of our FRB system requiring people to pay back more money than exists, etc. In my opinion, there is a grain of truth (or maybe hundreds of grains!) in what you’re saying, but I think your conclusion is wrong. Incidentally, Griffin in The Creature From Jekyll Island has a good treatment of this very issue.

Re: predictions, it’s true that I and several other Austrians have been warning of large price inflation, which has yet to materialize (in consumer goods). But c’mon, Mish et al. have been predicting price deflation. From April 2009 to April 2010, the government says CPI went up by 2.2%. That’s price inflation, not deflation, and I think if the government is fudging, it’s fudging by understating the true increase.

FatBeard May 25, 2010 at 12:32 pm

You are gracious. I look forward to that article.

As for my conclusions, all I lobby for is liberty in money creation and no legal tender laws with the following possible exception: Partial debtor bailout of underwater homeowners with legal tender Greenbacks and some compensation of savers too who were cheated by suppressed interest rates.

Craig May 24, 2010 at 6:57 pm

Well, of course you could lend money without interest — the choice is completely up to you in a free society. But, what, pray (no pun intended) tell, then is the point of charging interest to foreigners? Presumably, many of those foreigners read the same Bible and do not consider themselves foreign at all.

Why the divisiveness?

Also, you are correct that the money and banking system does not create the interest required to borrow money. Entrepreneurs create it through wealth creation. That’s really pretty basic.

FatBeard May 24, 2010 at 7:04 pm

“Entrepreneurs create it through wealth creation.” Craig

Not quite. If they are more successful than their fellow rats in the money-for-debt rat race then their interest payments will be funded out of the principle loaned to the less successful rats.

Inquisitor May 24, 2010 at 10:53 pm

What are you smoking?

FatBeard May 24, 2010 at 7:17 pm

” But, what, pray (no pun intended) tell, then is the point of charging interest to foreigners? Presumably, many of those foreigners read the same Bible and do not consider themselves foreign at all.

Why the divisiveness?” Craig

Perhaps Gary North would say “to bring them into subjection”. I didn’t write the Bible, I just read it. Here’s another verse to challenge thinking among those who claim to believe the Bible as many Austrians do:

“In you they have taken bribes to shed blood; you have taken interest and profits, and you have injured your neighbors for gain by oppression, and you have forgotten Me,” declares the Lord GOD.” Ezekiel 22:12

Yet in other places the Bible implies profit is good.

Is there a way to gain funds for investment with out borrowing at interest or “taking profits”? Yes, by selling common stock to buy assets thereby sharing assets while purchasing them. There is no need for conventional money, borrowing, lending and charging one’s countrymen interest. Common stock would be an ideal form of money if the capital gains tax on it was abolished.

Matthew Swaringen May 24, 2010 at 7:55 pm

There are multiple views for Biblical interpretation, but most of those who believe in it either believe it selectively or interpret it in accordance with itself, believing it holds no true contradictions, only apparent contradictions due to things that applied best at the time (inhibitions on eating pork, etc. are discarded because they apply prior to Christian freedom).

Going with the latter here (since selectiveness solves this problem easily by just discarding the verses like the one you gave above), those verses that denounce profit must be interpreted in light of those verses that imply it is good (and vice versa).

Thus, one would probably say that profit is bad if “gain by oppression” is true, but it is not bad if you aren’t gaining in an oppressive manner. The Bible (to my recollection) does not really ever positively label the phenomenon of interest or debt (the borrower is slave to the lender).

It’s interesting that it discourages interest because this does make taking on debt more likely if that were the only side of the equation. But the Bible also discourages the practice of lending, and this is why the contradiction isn’t real. By discouraging lending over what one is willing to lose, one has basically “gifted” another for a temporary term. Lending should then also only be done between those who are willing to lose to each other (friends/family/etc.)

The Bible is by it’s nature idealistic. Those who believe it’s intention is to bring about heaven on earth (and at the same time follow non-selective interpretations), probably cannot agree to any debt except between those willing to lose to one another. Those who believe it’s predominant concern is with an afterlife will choose to follow it accordingly, but may hold views that say “foreigners” = non-Christians or those that they don’t readily acquaint themselves with.

Tower May 24, 2010 at 11:54 pm
newson May 24, 2010 at 11:03 pm

i’d suggest you read gary north’s “honest money” if you want a christian-oriented austrian style analysis. the parable of the talents contradicts your bible passage.

newson May 24, 2010 at 11:14 pm

“And if one of your brethren becomes poor, and falls into poverty among you; then
you shall help him. . . . Take no usury or interest from him; but fear your God; that your
brother may live with you. You shall not lend him your money for usury, nor lend him
your food at a profit” (Leviticus 25:35a, 36-37).

it’s an admonition not to confuse charity with business. i see it as giving with no strings attached.

newson May 24, 2010 at 11:19 pm

btw, the “charitable” loans to the poor, which were not to be interest-bearing, were to be repaid within 7 years, otherwise the debtor ended up in bonded servitude. so there was no moral hazard problem with this stricture.

FatBeard May 24, 2010 at 11:22 pm

Borrowing and lending for business is not even necessary. If the corporations could not loots us by borrowing from the government backed counterfeiting cartel they might be forced by high interest rates to buy assets with their common stock. In that case they would be sharing wealth not looting it.

FatBeard May 24, 2010 at 11:17 pm

I read North’s “Honest Money” about 10 years ago. You are referring to burying ones’s talent? Notice that lending at interest is the least acceptable option the servant the servant could have taken. The commended servants actively used their talents.

BTW, burying one’s talent is certainly monetary deflation and was condemned. Meanwhile, many Austrians claim monetary deflation is good!

Just because monetary inflation can be bad does not mean that monetary deflation is good.

newson May 24, 2010 at 11:21 pm

the servant that buried the money was the one that copped the rebuke. the master’s reproach was that the least he could have done was to loan the money out; a tacit approval of lending.

newson May 24, 2010 at 11:33 pm

burying the money (with a view to digging it up), putting it under the mattress, in the wallet, doesn’t constitute a shrinkage of the money supply. it’s neither good nor bad.

for a revised, coherent, austrian view on deflation, i’d recommend:

newson May 24, 2010 at 11:43 pm

“But his master answered and said to him, ‘You wicked, lazy slave, you knew that I reap where I did not sow and gather where I scattered no seed. 27 ‘Then you ought to have put my money in the bank, and on my arrival I would have received my money back with interest. matthew 25:26

seems like an endorsement of interest.

Matthew Swaringen May 25, 2010 at 8:47 pm

newson, thanks for pointing to the verses referring to interest, it seems I have forgotten too many things, it would probably have been best to simply search the terms. That argument seems very sound to me, again under the reasoning that the passages should be interpreted in light of other scripture. So the problem being referenced in Ezekial was not interest itself, but the oppression, just as with the profits. And your discussion of separating charity from business also makes a lot of sense. If you are earning a return you are kind of lying about the giving being charity since you gain from it.

Fatbeard, since you read North’s Honest Money I’m curious of your argument against the points made?

konst May 25, 2010 at 12:38 pm

Fatbeard ,

The period in Deuteronomy the bible refers to was a theocracy where their economy was directed by a dictator. They didn’t need to worry about allocating resources based on the free will of the people. Are you advocating living under a theocracy?

FatBeard May 25, 2010 at 1:00 pm

“Are you advocating living under a theocracy?” konst

Not at all. I am in favor of a totally free market in money creation, acceptance or rejection.
Under liberty, at least a few might VOLUNTARILY heed Scripture with regard to money and freely out-compete those who do not.

The truth does not need coercion to assert itself.

Erhan June 25, 2010 at 1:17 pm

FatBeard, there’s no doubting your crank credentials if you found the bible (or any other ‘holy’ text) impeccable…

The glaring stupidity of that Deuteronomy line from a so called universal god is laughable. A New York banker could charge a Hawaiian interest in 1958, but not in 1959? Anyone whose taking advise from a tomb written by retarded nomads 1000s of years ago needs his head examined.

Smack MacDougal May 25, 2010 at 12:12 am

@FatBeard On May 24, 2010 at 2:38 pm, you wrote,

“The banking and money system creates the principle of loans but not the interest required for them. This requires ever increasing debt as the interest for previous loans must be borrowed into existence.”

Your claim is false and based on false beliefs about banking and the quantity of money as it relates to the U.S. economy.

Because persons lack knowledge of commercial law, especially economists and others who might have read some words on economics, persons don’t get commercial banking whatsoever. A banker is a trader whose business consists in buying money and debts by creating other debts.

While a grocer buys food for resale, a banker buys money or debt and sells credit.

When a banker takes a deposit, that banker creates and issues credits payable on demand and in doing so puts money already in circulation to greater efficiency.

In short, you hold the belief that a zero-sum game is underway. If what you believed were true, then for one person to earn income another person would need to get wiped out. Yet, we see all the time that a person who earns income from Google can buy coffee from Starbucks, which earns income. As the economy is not a zero-sum game, neither is banking a zero-sum game.

As the landlord earns rent, a share of the income of the renter, so too does the banker earn rent, which we call interest and which comes from the share of income of the person who rented cash from a banker. As the efficiency of money in circulation increases, more persons can earn income through exchange and thus the lives of all improve.

Also the amount of money in circulation for an economy has no bearing on whether someone can pay back interest or not. Today, the U.S. government could double the amount of money in circulation by giving persons twice again what they have and those who are about to default on their mortgages would do so because they lack the income (personal profit) to pay their debt obligation.

Moreover, if you bothered to investigate, you would discover that often when bankers inflate and thus bank credit increases, Federal Bankers must engage in money accretion because the average weekly demand for cash withdrawn from ATMs and bank tellers increases. Money accretion is nothing more than new notes and coins added to those in circulation. Simply, Fed Res bankers order money minted by the U.S. Treasury and pay for the minting expense, but not the sum of the face value of money itself. The true source of rising prices is this money accretion when the accretion rate outstrips the output rate of products.

Inflation means to expand credit. It does not mean a rise in all prices or the mythic general price level. Inflation results in an expansion of credit. It’s a process undertaken by central bankers to let member banks buy money and sell credit contracts. Central bankers inflate at the behest of their member banks by lowering interest rates, by reducing reserve requirements, by reducing lending standards, by ending paying interest on reserves. An effect of inefficient inflation is rising prices.

FatBeard May 25, 2010 at 12:54 pm

Hey Smack,

Let’s just abolish legal tender laws and the capital gains taxes on gold, silver, common stock, or anything in fact and let Federal Reserve Notes compete on a level playing field with alternative money forms and let the free-market decide who understands money and banking better.

Would you agree to that?

Tom Rapheal May 24, 2010 at 2:44 pm

Obviously the economists at the HuffPost noticed the economic success of the Weimar Republic and Zimbabwe and decided that the world should follow their course.

Vanmind May 25, 2010 at 12:48 am

No, no, over there it seems to be excused away by so-called American Exceptionalism. “Don’t you dare compare America to those countries,” and all that.

I’ll bet you didn’t know that gravity works different within the borders of America. Jealousy, too. I swear, I didn’t even know that not everyone’s sh*t stinks until I started meeting Americans.

No gays, either — or all the gays you could ever want, depending on which way you “swing” your vote. It really is beyond utopia, closer to heaven. In heaven, inflation doesn’t matter. QED, and score one for the HuffPosers.

Current May 25, 2010 at 3:51 pm

Jamie Galbraith invokes American Exceptionalism when defending the sort of things the HuffPo is saying here. He claims that since the dollar is the world currency the US can print as many of them, and as many US bonds, as it likes.

Silas Barta May 24, 2010 at 3:25 pm

Okay, here’s the previous discussion on the Mises blog about this HuffPo piece.

And for those who doubt my claim that even HuffPo regulars won’t buy into this garbage, go to the last page of comments, which shows the earliest ones, before any Austrians were alerted to it.

Patrick Barron May 24, 2010 at 3:25 pm

As I read the HuffPo “myths”, I was reminded immediately of the desperate claims by pro-slavery Southerners in the decade before the Civil War that slavery really was beneficial to all members of society, including the slaves. The best rejoinder was by Lincoln himself, who said that if slavery was so beneficial he was surprised that many slave holders did not volunteer to become slaves themselves.

I just listened for the umpteeth time to Thorsten Polleit’s lecture titled “Ending the Monetary Fiasco and Returning to Sound Money”–www.mises.org/media/3006. It is marvelous! It’s all there–monetary theory, capital theory, business cycle theory. Dr. Polleit makes the pertinent point (among many, of course) that fiduciary money is a fraudulent violation of property rights, because it is used to exchange something for nothing. The bust phase following the boom is merely the market’s recognition of the fact that no new resources were created by fiduciary money. But this is probably a little too deep for the ordinary HuffPo readers (not those commenting here, of course)!

Jonathan Baltazar May 24, 2010 at 4:56 pm

If the national debt is really just a savings account, why don’t we just increase it as much as possible? That seems to be the best way to secure a bright future for our children.

JFF May 24, 2010 at 5:10 pm

Correct me for stating the obvious, but in essence, what these weasels are saying is, “money really doesn’t have any value either, but that’s OK.”


Abhilash Nambiar May 24, 2010 at 5:38 pm

HuffPo people are Dreaming of Cockaigne and Robert Murphy is trying to pinch them. But it is very difficult to wake someone pretending to sleep.


Predrag May 24, 2010 at 6:15 pm

Scarry! Another scarry example of health “care” gone wrong: http://www.youtube.com/watch?v=NKbtXtJLviU

FatBeard May 24, 2010 at 8:10 pm

“But the Bible also discourages the practice of lending, and this is why the contradiction isn’t real.” Matthew Swaringen

# Deuteronomy 15:8
but you shall freely open your hand to him, and shall generously lend him sufficient for his need in whatever he lacks.

# Deuteronomy 28:12
“The LORD will open for you His good storehouse, the heavens, to give rain to your land in its season and to bless all the work of your hand; and you shall lend to many nations, but you shall not borrow.

# Deuteronomy 28:44
” He shall lend to you, but you will not lend to him; he shall be the head, and you will be the tail.

# Nehemiah 5:10
“And likewise I, my brothers and my servants are lending them money and grain. Please, let us leave off this usury.

# Psalm 37:26
All day long he is gracious and lends,And his descendants are a blessing.

# Psalm 112:5
It is well with the man who is gracious and lends;He will maintain his cause in judgment.

etc. including the New Testament

I strongly recommend you reread the Bible.

all quotes from http://www.biblegateway.com/

Smack MacDougal May 25, 2010 at 12:23 am

Brother. Here’s what you need:

Jesus Is an Anarchist (A free-market/libertarian anarchist, that is–otherwise what is called an anarcho-capitalist.) http://www.anti-state.com/redford/redford4.html

Also, the Old Testament is for Jews. It’s the Old Convenant with God. The New Testament is for Followers of Jesus Christ. It’s the new convenant with God.

Tower May 25, 2010 at 12:34 am

And Mises said that Jesus was a Bolshevik. Either way, let’s not derail this comment section further with frivolous banter concerning anarchism and religion.

FatBeard May 25, 2010 at 3:27 pm

“Mises concludes, then, by being highly pessimistic about the possibility of reconciling Christianity with a free social order based on private property. “A living Christianity cannot, it seems, exist side by side with Capitalism.” from http://mises.org/daily/2639

Well, Mises was just wrong. No one’s perfect though. No mere human, that is. Ayn Rand was confused about Christianity too.

Chiporeo May 25, 2010 at 9:50 pm

“Well, Mises was just wrong. No one’s perfect though. No mere human, that is. Ayn Rand was confused about Christianity too.”

So apostates are now branded as confused, as opposed to being heretics. Well now we’re getting somewhere.

FatBeard May 25, 2010 at 10:04 pm

Mises was Jewish as was Ayn Rand. The Jews are a special case. They can hardly reject what they haven’t accepted.

Matthew Swaringen May 25, 2010 at 9:07 pm

Mises said this because of how some Christians portrayed the religion. He had a good knowledge of history and there was a large part of the church that didn’t do a good job of reinforcing the individualist freedoms that made capitalism possible, so it makes sense he would have seen it as collectivist nonsense.

There are others who have reasons for seeing it differently, based on different selective scriptural passages. I am not sure when it comes to exegetical review (from the perspective of those who believe all of scripture is not truly contradictory) what the final say would be, as I haven’t looked into that in detail.

newson May 25, 2010 at 2:20 am

or even better still – jesus, illegal tax protester, by ned netterville

FatBeard May 25, 2010 at 2:09 pm

“Also, the Old Testament is for Jews. It’s the Old Convenant with God. The New Testament is for Followers of Jesus Christ. It’s the new convenant with God.” Smack

I have read both the Old and New Testaments; they are entirely consistent with each other. Yes Jesus, as is His right, abolished certain aspects of the Mosaic Laws and we live under Grace (Praise the Lord!) not the Law. However:

“All Scripture is inspired by God and profitable for teaching, for reproof, for correction, for training in righteousness; so that the man of God may be adequate, equipped for every good work. ” 2 Timothy 3:15-17

Guard May 25, 2010 at 1:51 am

Thanks for the quote. Biblical economic system sort of has to be adopted on the whole in order to work well. There is also the matter of “diverse weights and measures” (now called inflation) which is strictly forbidden by the Bible. People are now forced to charge interest just to get back the same amount they lent, let alone make any profit on the lending.

FatBeard May 26, 2010 at 3:57 pm

“But love your enemies, and do good, and lend, expecting nothing in return; and your reward will be great, and you will be sons of the Most High; for He Himself is kind to ungrateful and evil men.” Luke 6:35

FatBeard May 24, 2010 at 11:35 pm

“the master’s reproach was that the least he could have done was to loan the money out; a tacit approval of lending.” newsom

The servant could have deposited his talent in a Jewish bank that only charged interest to foreigners and that would have been acceptable.

newson May 24, 2010 at 11:51 pm

…or maybe the bible is just not unambiguously against lending per se.

FatBeard May 25, 2010 at 1:02 am

Let’s just have liberty in money creation and we will see. Let’s drop the capital gains tax on common stock, gold and silver. Heck let’s just get rid of the capital gains tax altogether since other people may have ideas about what should be used for money. Let every form of money be treated equally under the law (no legal tender laws). As for government monies they could be backed by taxing authority.

Then we will see what the free market thinks should be money(s).

Heck, I am no Ellen Brown fan but her solution though it involves centralization would work better than the pitiless liquidation strategy of the Austrians. Instead, the Austrians should lobby for debt forgiveness (Deuteronomy 15:1-3) to true market price levels or a bailout of the debtors to true market price levels with legal tender Greenbacks along with the abolition of fractional reserve lending. Otherwise, the centralizers may win the debate and take us further down the road to “666″.

newson May 25, 2010 at 2:24 am

those cruel austrians.

FatBeard May 25, 2010 at 10:58 am

“those cruel austrians.” newson

No, not intentionally cruel, just unimaginative. I learned a lot about the injustice of banking from Murray N. Rothbard. The problem is that the Austrians are so wedded to the belief that borrowing and lending are necessary for economic growth that they justify it even against Scripture which many of them believe or at least don’t disbelieve. Still, the Austrians are firmly against fractional reserve lending or at least keeping it in check. And they are in favor of alternative currencies which I greatly appreciate since I believe common stock would be the ideal, decentralized currency.

Graphite May 25, 2010 at 3:04 am

Debt forgiveness is EXACTLY the strategy the Austrians are advocating. It is still a form of liquidation–you’re liquidating the foolish lenders who extended all the bad credit. Restructuring and bankruptcy are the modern forms of jubilee. These are the measures which the Keynesians, monetarists, and other sundy interventions are fighting tooth and nail.

FatBeard May 25, 2010 at 11:13 am

The title of this article is “Huffpo Abolishes Scarcity”. That is silly if one is talking about the scarcity of real goods and services. It is not silly if one is talking scarcity of money. As silly as it sounds, virtually costless fiat (in many cases just bookkeeping entries on computers) can become very scarce. Why? Because in our debt-for-money scheme (FRL), continual borrowing is required to kept the money supply and/or velocity from shrinking. Well, the population was driven into so much debt via negative real interest rates that it cannot borrow anymore. Furthermore the banks are afraid to lend into a deflating economy too.

Bailing out the underwater debtors down to the true market price of their houses would also partially bail out the banks. The savers would then howl “Unfair!” so they should be compensated too. Rather than borrow more money to pay down debt, the US Treasury should simply print legal tender Green backs for that purpose.

konst May 25, 2010 at 12:58 pm

The title of this article is “Huffpo Abolishes Scarcity”. That is silly if one is talking about the scarcity of real goods and services.

The economic activity of people exists because of scarcity of goods.

You need to read “Human Action” and “Man, Economy, and State”
An easier book is “Money and Inflation”

You can read them online if you wish:
“Human Action” http://mises.org/books/humanactionscholars.pdf
“Human Action Study Guide” http://mises.org/books/humanactionstudy.pdf

“Man, Economy, and State” http://mises.org/books/mespm.pdf
“Man, Economy, and State Study Guide” http://mises.org/books/messtudy.pdf

“Money and Inflation” http://mises.org/books/mises_money.pdf

Matthew Swaringen May 25, 2010 at 8:52 pm

By printing more money the government provides incentive not to do the right thing the next time around because individuals will get bail outs along with the government. This is a horrible idea, and it steals from everyone who wasn’t involved to pay off those who made bad choices.

Matthew Swaringen May 25, 2010 at 8:58 pm

I doubt that the concept of “foreigner” in Christianity was intended to be a permanent concept given the overarching themes of scripture. You have provided verses for your side but seem to ignore anything contradicting that. I was not wrong to say that the Bible discourages lending to the degree that one is willing to lose (that is in there), but you gave me a ton of verses about lending generally to say I was wrong. That’s very much a selective quotation of scripture and even taking my own words out of context. And you go on to ignore the points of others saying this deal about proper Jewish banks.

Newsons point from scripture I believe was valid.

FatBeard May 25, 2010 at 10:09 pm

As a libertarian, I believe in your right to lend or borrow at interest at will. Let’s just have liberty in money creation and we will see. Me, I think there are better ways to do investment. I could be wrong but I sincerely doubt it.

Guard May 25, 2010 at 1:15 am

I used to read that blog once in a while. It should be called “PuffPost”.

Paul Rhoads May 25, 2010 at 2:17 am

Why doesn’t the Huffington Post advocate abolishing taxes, since it believes that taxation simply destroys money, and adds nothing to the governments sacred spending power, which the government can creat all on its own?

The logical extention of this is abolishing private income altogether. The government would dole out money to people, appropriately, so that their spending could make the economy go…or they could abolish private money altogether. Stores would become depos, where people went to get what they wanted. I’m not sure who would make the stuff in the stores, or stock the shelves…perhaps illegal immigrents or robots controlled by opperators in China.

konst May 25, 2010 at 12:21 pm

I wish you would’ve addressed the nost absurd one, myth #4:

Myth #4: What we don’t tax we have to borrow from the likes of China for our children to pay back.
Reality: Paying our debt holders back consists of transferring funds between accounts.

The only thing you can say to that is LOL

R.P. McCosker May 25, 2010 at 1:43 pm

Most of what passes for “economics” is sophistry for justifying government theft and deceit. Most “economists” are to economics what astrologers are to astronomy.

I like to call these, uh, people — you know, like the ones in the Huffington article’s panel of “experts” — “economologers.” (If that sounds too obscure, how about: snake-oil salesmen for governmental theft and legerdemain?)

FatBeard May 25, 2010 at 9:52 pm

“Fatbeard, since you read North’s Honest Money I’m curious of your argument against the points made.” Matthew Swaringen

It’s been a while but I would probable agree with much of what North said (says) except any justification of charging one’s fellow countrymen interest and the virtues of deflation. Also, if he is a gold or silver bug then I disagree with him there too. That said, I am for total liberty in money creation, acceptance and rejection. No true libertarian could be against that. Let North or anyone charge interest as he pleases at whatever rate he pleases with or without fractional reserves (As far as I know North is strongly against FRL). I predict though that forms of money that share wealth rather than just reap it would out compete the traditional model of lending at interest.

FatBeard May 25, 2010 at 10:01 pm

Matthew Swaringen May 25, 2010 at 8:52 pm said

“By printing more money the government provides incentive not to do the right thing the next time around because individuals will get bail outs along with the government.”

People were driven into debt slavery via negative real interest rates. In other words, the price of housing rose faster than their saving could keep pace. To not borrow from the banks was to be priced out of the housing market. The banks were able to do this via government privilege. It is thus just to use government to free the debt-slaves.

Ned Netterville May 27, 2010 at 11:06 am

FatBeard said, more than once, “Let’s just abolish legal tender laws and the capital gains taxes on gold, silver, common stock, or anything in fact and let Federal Reserve Notes compete on a level playing field with alternative money forms and let the free-market decide who understands money and banking better. Would you agree to that?”

Yes indeed, and I believe most who think of themselves as Misians or Austrians in their economics would concur. I certainly don’t buy your monetary theories or reasoning, but since we arrive at the same critical conclusion–get the government out of the money business and let the market choose–the route to that conclusion may not matter.

FatBeard: “Heck, I am no Ellen Brown fan but her solution though it involves centralization would work better than the pitiless liquidation strategy of the Austrians. Instead, the Austrians should lobby for debt forgiveness (Deuteronomy 15:1-3) to true market price levels or a bailout of the debtors to true market price levels with legal tender Greenbacks along with the abolition of fractional reserve lending. Otherwise, the centralizers may win the debate and take us further down the road to ’666′.”

FatBeard, although this statement may be consistent with Christianity–praise the Lord!–it doesn’t jive with the wisdom of Jesus–may every knee bend at the name. The “pitiless liquidation strategy” is not the product of Austria nor Austrians, it is the product of the market operating in the absence of violent- government intervention-violent, because every government action is always backed by force and/or coercion derived therefrom. I find your acquiescence in the use of violent government intervention (force) to rectify problems caused by previous government forceful intervention in the past to be contrary to the wisdom of Jesus. As I understand the wisdom of Jesus as explicated in the Gospels, if someone steals my goods, I am not justified in stealing to rectify my loss–not even from the bloke who stole from me. Why not just pursue the freedom you seem to embrace, and leave rectifying injustice created by government to the free market and God. I am confident that you will cause more problems than you solve using the same methodology–viz., government intervention–to rectify the problems caused by government intervention. That is one of the wise things Mises taught, and I suspect if you search the wisdom of Jesus you will find it there as well.

I like the passage you quoted from Luke: “But love your enemies, and do good, and lend, expecting nothing in return; and your reward will be great, and you will be sons of the Most High; for He Himself is kind to ungrateful and evil men.” There is no room in this wisdom for “rectifying” past ills, and while God may be kind to ungrateful and evil men, my own experience demonstrates beyond argument that He more often is ever so much kinder to men and women who seek to do His will. And, btw, I find nothing in Austrian economics that conflicts with this passage. I think if you take a closer look, you will find as I have that there is nothing in the teaching of AE that conflicts with the wisdom, teaching and demonstrated way of Jesus.

warren mosler May 28, 2010 at 9:17 am

reading through the comments, I see mainly cheap shots from people who either didn’t read the Huffpost carefully or deliberately took bits out of context.

and i’ve seen nothing from anyone who actually understands monetary operations.

operational and accounting facts are being discussed as if they were theory or philosophy.

I also sense comments from people who don’t realize the Fed and Tsy are under direct control of the same Congress and should be considered on a consolidated basis for the purpose of macro analysis.

It is not anyone’s fault, in that actual monetary operations are generally not taught in any schools

so, for example, as a pure factual matter, the annual govt deficit equals, to the penny, the change in the total of Tsy secs (time deposits in Fed accounts), reserves (clearing balances at the fed), and cash in circulation.

And the cumulative govt deficit- the total debt- is equal to tsy secs, reserves, and cash in circulation. to the penny.

and, also as a point of fact, the total debt is equal to the total net savings of dollar denominated financial assets of the non govt sectors, to the penny.

In other words, you could change the name on the national debt clock in NYC to the world net dollar savings clock and leave the numbers alone.

and govt (on a consolidated basis) does spend simply by changing numbers up on its own computer and taxes by changing numbers down on its own computer.

the govt never has nor doesn’t have dollars, any more than the bowling alley has or doesn’t have the points they post as your score.

that says nothing about how much govt should spend or tax.

but if you don’t at least start with the operational realities you’re just spewing empty rhetoric.


konst May 28, 2010 at 12:36 pm


there was a huge previous discussion at another post before. Link is http://blog.mises.org/12576/oh-wow-it-turns-out-that-we-can-print-our-way-to-heavenly-bliss

However activity has ended at that post since it was one month ago.

Colok May 30, 2010 at 4:32 pm

It looks like sitting in that ivory tower with James Galbraith has made you a bit autistic. You’re going to have to beg for votes here, buddy.

Marco May 30, 2010 at 4:42 pm

Man, I’d love to see Peter Schiff debate this guy.

FatBeard June 2, 2010 at 12:15 am


I don’t claim to have your understanding of monetary operations but I like your solution of abolishing the Pay Roll tax so people won’t be booted out of their homes. I’ve bookmarked your site and I expect to learn a lot there. Thanks.

King George November 5, 2010 at 4:35 pm

So, anyone going to debate Mosler? I’ve been looking through the Mises archives and there is a dearth of material about MMT. Why is that?

Nate May 30, 2010 at 11:28 pm

While I appreciate the debunking of some of HuffPo’s more outrageous arguments, you throw in some ridiculous claims of your own. Primarily, the one about how government spending is “political” and private sector spending would somehow be inherently more productive. Just because politicians are the public face of the government doesn’t make every dollar it spends “political”. That’s nonsense.

For the majority of government spending, it’s on infrastructure services that are either productive themselves, or directly foster productivity in the private sector. Roads, GPS satellites, health care services, police and firemen.

I’m not even sure I’d consider private sector to be as productive as government spending. We, the not-very-intelligent members of the private sector, piss away lots of our money on nail salons, professional football players, porn, and $4 coffees. So, please, let’s not replace some bad HuffPo myths with even worse libertarian myths, like the private sector being the all-knowing, pareto optimal God-figure of the economy.

Matthew Swaringen May 30, 2010 at 11:56 pm

That claim that private sector spending is inherently more productive is core. I know you may not like porn, nail salons, or 4$ coffees but many people do like these things and that’s why the free market produces them. Certainly people also want roads, GPS satellites, health care, etc. but those things are limited by government monopoly, not by free market choice.

We only get as many roads, as many satellites, and soon enough as little health care as the government wants to pay for. In a purely free market system roads would be built much the same as the market produces porn, nail salons, etc. They would be made in accordance with the desires of the market.It is not that the private sector is all knowing, but it doesn’t need to be all knowing either. It functions by individual exchange made on mutually beneficial terms, not based on taxation (theft by threat of force).

You seem to have a problem with the way that people spend their own money, which is why you believe the government can do better for us than we can. I personally find the notion that some bureaucrat hundreds or thousands of miles away knows my needs/desires better than I do ridiculous. If you don’t like nail salons by all means avoid them, but you have no right to force me to change my spending or to steal my money by taxation simply because of some democratic voting process.

If you think the government is so much more efficient than you are at spending your own money, by all means donate to them judiciously.

Spectre January 26, 2011 at 5:47 pm

As one who considers himself an Austrian, I happen to find the MMT’er view of MONEY is consistent with Austrian logic, let me explain.

I think especially relevant to this discussion, yet seem to be lacking, is how MMT’ers vs. Austrians defines MONEY… Mosler, a head hauncho MMT’er has this interesting article from “The Banking Law Journal, May 1913 defining MONEY: http://moslereconomics.com/mandatory-readings/what-is-money/
It is suggested by the article that “MONEY” is merely a means of record keeping (whether gold, paper, sea shells etc.) of who is indebted to whom and who is a creditor to whom.

In terms of exchange, one must hold or “manifest” value in order to exchange for the value in someone else’s possession. The problem in “monetary systems” is finding that “standard” by which to measure value. On an individual level, not everyone see’s gold as a standard and no doubt the same can be said about fiat money. The solution, according to the article, is an “exchange-credit system.”

For example, Mr. Farmer needs fuel for his tractor, his individual value possession is growing beets, so he goes to Mr. Diesel whose value possession is fuel. Mr. Diesel however, does not want to trade his fuel for Mr. Farmer’s beets, but has ascertained that Mr. Farmer is a good “credit-risk.” Because of Mr. Farmer’s excellent credit rating, Mr. Diesel offers Mr. Farmer “fuel-credit.” Mr. Farmer accepts Mr. Diesel’s offer and signs a contract (note) with mutually agreeable terms. On Mr. Diesel’s balance sheet, the signed note shows up under assets, and on Mr. Farmer’s balance sheet, the note shows up under liabilities. MONEY defined in this sense, is the contract or legal record of who lent value and who owes value. Mr. Farmer is expected to pay Mr. Fuel (or whomever happens to be the debt holder at the time of repayment) in the value specified in the terms of the contract at a future date. Many have dubbed the concept as a “debt-based” monetary system. There is truth in that statement, but do not get the wrong impression.

Yes, money (a contract, hence the word “NOTE” as in Federal Reserve NOTE) is created whenever credit is granted. BUT, the solitary quantity of credit issuance is not the determinant of the value of MONEY (i.e. a debt contract). What determines the value of money (debt contracts) is the credit-quality of those debt-contracts (money) and market interest rates.

Given the aforementioned context, I still have a few questions:
1.) How does money/Federal Reserve Notes (debt-contracts) come to be in the possession of individuals?
2.) If individuals are debt-holders of “The FED” (i.e. Federal Reserve NOTES), what is it that “The FED” owes us?
3.) In addition, what is the influence of fractional reserve banking in this context?

Anybody’s comments are much appreciated.

Comments on this entry are closed.

Previous post:

Next post: