Robert Wenzel reports on Roubini Attacks Austrian Economists at Economic Policy Journal:
Nouriel Roubini is very well connected in the world of the financial power elite, but that doesn’t mean he knows is ass from his elbow when it comes to Austrian economics. He tweets:
“The austerians’ Austrian austerity will not lead to Schumpeterian ‘creative destruction’ but rather ‘deadly destructive depression’”
First of all, modern day Austrians see Schumpeter as a marginal player when it comes to the Austrian school of economics…
Second, there are no Austrian economists who would be in favor of the current austerity programs…
Austrians view the IMF etc. as bankster enforcers, who exist for one reason and one reason only, to ensure that the banksters are paid…
Rather than banksters getting paid, Austrians would rather see the the PIIGS countries go into bankruptcy, default on their debt and free the people…
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If by, “deadly destructive depression” he means, “Austrians would prefer to see that the owners of artificially and vastly overpriced assets should as soon as possible go through a process in which their assets are repriced to the correct levels as determined in a free market”, then I suppose there is something in what he says.
But if the man thinks that market prices can be abolished forever through the magic of continual, government-induced inflation then he is clearly both ignorant of Austrian theory (that is to say, common sense) and ignorant of history.
When he dismisses “austerians” is he seriously claiming that austerity, that is, prudence and discipline, can be abolished through money printing? Roubini is the Gilbert Gottfried of economics.
http://www.youtube.com/watch?v=e0sEgRr3tek
Have to tip my hat to the ‘Austerians’ though. Nice play on words. And while it may have been meant as an insult, I regard it as a compliment!
His latest tweet continues the fear mongering:
“To avoid a Doomsday Deadly Destructive Deflationary Devaluationary Defaults/Depression we need urgent policy actions”
Then he provides a link to his big government solutions:
http://www.project-syndicate.org/commentary/roubini42/English
Austerity – the process by which government raises taxes to close deficits (this is what Greece has done). How does this describe Austrians?
Here is how it goes:
1. Austrians like stuff he is against
2. He believes he is against bad things
3. Modern austerity approaches are misguided and thus are bad
4. Therefore Austrians like modern austerity programs.
That’s logic!
It’s more like “Austrians don’t like government spending and like inflicting pain upon people through adjustments of the economy during a recession – liquidationists!”. Thus they must be pro austerity, no?
He hasn’t got a clue.
I think that in this case he is associating austerity and Austrianism with government spending cuts, laying off surplus workers, allowing interest rates to rise, liquidating bad investments, and defaulting on and writing off bad loans (even if they cause subsequent bank failures). These policies are of course not just eminently sensible but inevitable.
Mainstream economists do not believe in the sensibility and inevitability of discontinuing unprofitable investments and letting prices readjust themselves accordingly. Common sense, the recognition of obvious facts and the application of simple logic to financial problems are therefore to be found only in the domain of the cruel, heartless “Austerians”.
Or, maybe he was just drunk when he tweeted.
It wouldn’t harm him to put down the liquor and look up the fact that Greece and other nations going through “austerity” have yet to lay off a single public worker or cut any spending.
He’s as dumb and serving the establishment/bankers as Krugman is.
http://twitter.com/#!/Nouriel/status/106494610548862976
http://twitter.com/#!/Nouriel/status/106485969489891328
LOL
Everyone just turn off your computer, grab a beer, sit back and wait for the value of your home and 401k to resume their exponential growth. People with PhDs are hard at work, creating wealth by secretly giving trillions of dollars to insolvent banks and governments. BECAUSE ECONOMETRIC STUDIES SAID SO.
So what about the other 2 and the PhDs behind those?
The Depression of 1920-21 proves it doesn’t.
I’m guessing these are the same sort of studies where they assume the stimulus would work and then “prove” it does.
Also look how the inflationist Keynesians ‘understand’ commodity backed money:
“Proponents of the gold standard thus face a Goldilocks problem: the porridge must be neither too hot nor too cold but just right. What temperature exactly, pray tell, might that be? And even if we are lucky enough to get it right at the outset, consider what happens subsequently. As the economy grows, the price level will have to fall. The same amount of gold-backed currency has to support a growing volume of transactions, something it can do only if the prices are lower, unless the supply of new gold by the mining industry magically rises at the same rate as the output of other goods and services. If not, prices go down, and real interest rates become higher. Investment becomes more expensive, rendering job creation more difficult all over again.”
http://nationalinterest.org/article/critique-pure-gold-5741?page=4
“Not surprisingly, there were proposals along these lines, labeled “narrow banking,” in the wake of the recent financial crisis. But it is not hard to see why they failed to take off. Where, under such a system, would firms go for working capital? One answer is nowhere: they would be starved of funding”
http://nationalinterest.org/article/critique-pure-gold-5741?page=5
I suppose they skipped the chapter on the purchasing power of money at university. Is it bad for prices to be lower? I also like the “magically”. Does he know where the interest rate “should” be? Does he know how much paper money should be out there? No? Well he should shut his piehole. Austrians advocate letting the market determine these things. The only institution shackled by a gold standard is the one most in need of it.
Of course a Keynesian knows what the interest rate ought to be. If there is no full employment, it ought to be lowered until there is full employment. Unless, there is such a price level increase that even CPI cannot hide it anymore, then the interest rate ought to be increased. Just don’t mention the stagflation or you will embarrass them.
And look how he claims that new currency somehow is capital when he says that if we abolished FRB, firms wouldn’t be able to get capital. Funny that, Zimbabwe had so much currency to lend, yet somehow companies were starved of capital.
Don’t confuse apparent ignorance with what’s actually going on there: knowingly accepting employment as a charlatan.
I’m almost tempted to sign up for Twitter just to respond to this man with the following:
“As a child, I built a model of an X-Wing fighter from Star Wars, but that doesn’t prove that we can build a functioning one any more than your stimulus models prove it will help our economy.”
Then I realized that signing up for Twitter isn’t worth it.
You’ll just get banned. He bans people who tweet him Failure of the New Economics etc. No dissent or discourse allowed in the status quo echo chamber.
And besides … if Keynesianism “worked” wouldn’t the stimulus following the shock of the peso crisis have prevented the ruble crisis, and the remedies following the ruble crisis have prevented the Asian flu? (or whatever the order was of those crises)
And why did the stimulus undertaken because of the supposed Y2K crisis not prevent the tech meltdown shortly afterward? The stimulus following the tech meltdown didn’t prevent the real estate meltdown a few years later, in fact it appears to have been a direct cause.
And if Keynesian stimulus works, then why was QE2 necessary? Was QE1 a failure? Why is Operation Twist now necessary following the evident failure of QE2? Why is the EU having an existential crisis after years of government stimulus, bailouts, transfers and make-work spending, borrowing and inflating?
What about the original Operation Twist – if interest rate jiggery-pokery had such a great effect on the US economy then why were the 60s followed by the collapse of Bretton Woods, the oil shock and 10 years of stagflation?
“Econometrics” may prove that government spending, borrowing and inflation in the face of a recession works, but the real world constantly proves that it doesn’t.
Standard excuse – it wasn’t big enough. All it seems to prove is that old joke that Einstein told at a party once about insanity.
Federal Reserve Chairman Ben Bernanke was equally sanguine. “I’ve asked some of my fellow academics at CERN to begin modeling the equations with an array of neutrinos, mixed with a small amount of unconventional policy. Even without the helicopter, it should be theoretically possible to achieve an economic growth rate faster than the speed of light. Einstein was a monetarist, so I’ve always been skeptical of his Special Theory. It is now painfully obvious that he should have raised ‘c’ to the power of infinity, not 2.”
http://www.zerohedge.com/news/startling-unpublished-keynes-equations-discovered-friday-afternoon-humor
Mr. Ptak might be confusing Austrian School economists with Austro-libertarians. As Walter Block has pointed out, one can be an Austrian School economists—i.e., recognise that government interference in the economy will lead to hardship—and still not be a libertarian. If you recognise that government interference leads to hardship, but want to see hardship arise, then you may very well support government intervention as a mean of promoting said hardship. Such a person would absolutely not be an libertarian, since libertarians oppose government interference in the economy; but such a person could still be an Austrian School economist, since economics is a value-free science.
Of course, the dreaded Dark-Side Austrian Economists
Yes, it’s value free! Let’s hear what those commies that use praxeology have to say
Economics may be a value-free science, but when given the chance be smart and decline the banking and finance positions as Mises did unlike Schumpeter who served briefly as the Austrian Minister of Finance and then in the early 1920′s as president of the Biedermann Bank which collapsed in 1924 leaving Schumpeter bankrupt.
Insanity is doing the same thing over and over expeting a different result; sheer idiocy is constantly refusing to learn from the past, and expecting a present which “is different this time.”
(From Meltdown Part 2 at http://www.zerohedge.com)
This includes not listening to the Austrians who saw this coming.
Everyone here is saying “Roubini doesn’t know what he’s talking about,” and “Roubini doesn’t know anything about economics.”
I suggest a different view. Roubini knows very well what he is talking about, and is being deliberately deceitful.
Bing. Go.
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