"When the government makes loans or subsidies to business, what it does is to tax successful private business in order to support unsuccessful private business."
Henry Hazlitt (via europeanlibertarian)
Which isn’t an easy thing to do. This is the biggest problem facing the country. Most people don’t know and/or understand basic economics. Either that or they have been brainwashed by government propaganda that it is the governments job to spur the economy.
Every economics class should involve Henry Hazlitt’s Economics in One Lesson and Bastiat’s The Law. That would give everyone the basic knowledge and know enough not to buy into letting the government run the economy rather than the market.
ECONOMICS ON AN ISLAND
Most everything can be broken down to its most basic components in order to simplify things. When faced with a large question always try to break it down. Let’s do that with economics to show how simple it is and why central banking is a central tenet of communism and is an abomination that makes no sense in a free market.
Let’s say that you and four other people live on an island. As far as you can tell there are no other humans on Earth. Each of the people on the island do things which help the collective although they have selfish reasons for doing so (ie. they want something in return).
Perhaps you fish. Another gathers coconuts. And another is good at building and repairing thatch huts and collecting rainwater for drinking. Amongst yourselves you trade. You offer some fish for coconuts, water and a nice maintained hut. The others offer their services in trade for your fish.
In comes the fourth person – a bearded man with no particular skills who thinks he is better than everyone else. He produces nothing but tells you that he has come up with a better system using “money” where you don’t have to wait until the man who gets coconuts wants fish before you can get coconuts. Instead you can trade money… perhaps a piece of paper that the fourth person has inscribed with pictures and denominations on it.
So far it doesn’t sound too bad. But here is where he becomes a “central banker”. First, he pulls out a spear and tells you that you must, under all circumstances use his money and no other money. Then, during times when the fishing is poor or there is a drought he tells you that he can help everyone out by “stimulating” the economy of the island by drawing up more money.
If things got really tough he could double or triple the amount of money on the island. At first, everyone thinks they are richer, so they buy more fish or water or housing than they otherwise could afford. This ends up using up more resources than would otherwise be prudent. Soon the money has circulated and now coconuts just cost twice or three times more than before in currency units. The same for fish… the same for water and housing.
How has this central banking scheme “helped”? It hasn’t. It actually ended up destroying scarce resources as it fooled the participants in the economy for a period of time into thinking they were more wealthy than they really were.
That is all there is to central banking. Of course, what then happens is the entire island gets corrupted and people begin to look to get favors from the central banker to get the newly created money first. And, then, if the printing of money begins to get out of control and the central banker stops printing money in order to salvage the “value” of the money before hyperinflating it into worthlessness, because of the fact he uses violence to enforce its use, all of a sudden there will not be enough money in the system to transact basic transactions and people will not be able to survive. There will be either war (over the resources) or starvation as the denizens of the island find themselves unable to acquire the currency they are forced to use to survive. Either that or the banker will take control of your future productivity in exchange for some easily printed cash today effectively putting you into slavery just to survive.
The only thing missing on the island at this point is someone to start a fascist media conglomerate who, in cahoots with the central bank, put out this magazine cover showing the one non-productive member of the island as being the hero.
“Ben Bernanke saved the economy, so why does everybody hate him?”
First of all, not enough people know enough about him to hate him. If they did, however, a public sodomization and lynching like Hillary did unto Khadaffi would be in order.
Here is the man who destroys economies. The man who funds and makes all wars possible. The man who puts senior citizens on treadmills and makes them run just to be able to eat cat food. And he does it all with a smug look on his face reminiscent of the last time this kind of nonsense was attempted.
Remember that one? Three of the smuggest looking conmen in the world posed as saviors just months before the collapse of the global economy – which they all brought about. That Slime cover story came out on February 15, 1999 proclaiming that the money changers had saved us all from the global economic meltdown.
How’d that all work out for everyone?
"I’m not a full anarchist. I’ve agreed that the government has got to step in because there’s one market failure and that is that not everyone has read Atlas Shrugged; Man, the Economy, and the State; and Human Action. The sole function of the government is to coerce everyone to read those three books."
Walter “Moderate” Block (via freebroccoli)
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.”
This is delicious
Applauds. Great read.
"The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploitation, the cheating, the more or less open robbery of others. Never under any circumstances admit that your own failure may be owing to your own weakness, or that the failure of anyone else may be due to his own defects – his laziness, incompetence, improvidence, or stupidity."
Henry Hazlitt (via cerebralicious)