Krazy Keynesians: to spend now and begin again to trust our economy and its institutions

(KarenDeCosterBlog) Krazy Keynesian Wants Shopping Subsidies

The key is realising that recessions are usually consumer cycles, not business cycles. They're driven by weakening demand first for homes, then for consumer durables, and finally for non-durables and services. As consumers stop spending, businesses stop investing, and the economy "recedes".

It was a surreal moment listening to Laurence Kotlikoff, a Professor of Economics at Boston University, on Bloomberg radio last week as he discussed his plan for curbing savings and triggering spending. This is a recent column of his (along with a co-writer) from the Financial Times that discusses his plans for a Keynesian salvation for America.

He invokes Keynes' Paradox of Thrift and says that evil consumers are hoarding every dollar as if it's their last. He says that these "collective and obsessive attempts to save" (the "panicked-saving trap") are undermining the economy.,(,,,)

Finally, he says his plan will give us "economic medicine where it's most needed - on consumer spending, giving everyone an incentive to spend now and begin again to trust our economy and its institutions.".

Nota: De facto, confiança na economia e as suas instituições é o que mais abunda neste momento. Pergunto-me se este professor terá já contribuído para "a economia" gastando a sua poupança... sei lá, em rebuçados.

Let them fail!

Henry Ford said on February 11, 1934: "Let them fail; let everybody fail! I made my fortune when I had nothing to start with, by myself and my own ideas. Let other people do the same thing. If I lose everything in the collapse of our financial structure, I will start in at the beginning and build it up again." (via LRCBlog)

Henry Hazlitt em 1946 sobre a crise actual

"Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to "buy" houses that they cannot really afford. They tend eventually to bring about a oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everyone (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in the long run they do not increase overall national production but encourage malinvestment." Economics in One Lesson

Ler a introdução de Walter Block: This Book is So Me

Hayek Speaks (contra a inflação em 1975)

Hayek on 'Meet the Press'

Se a quantidade total de moeda fosse fixa

1.  Todo o crescimento económico traduzir-se-ia em descida contínua de preços. Aliás, o próprio conceito de aumento de produtividade indica que com menos horas-homem de trabalho se produz o mesmo, permitindo então produzir-se mais com as restantes horas.

2. Esta descida de preços significaria um deflação benigna e nada tem de problemático, os preços finais descem porque os custos baixam. A estabilidade monetária na verdade, torna bem evidente como o crescimento económico não é um "jogo" de soma nula. Quando um custo baixa, os preços de determinados produtos baixam aumentando a capacidade de poder adquirir mais (dos mesmos ou outros).

3. Um sistema monetário livre tende a escolher como activos que servirão como meio de troca, aqueles cuja quantidade total é a mais estável e em especial que essa quantidade não diminua (deflação maligna). E por ordem dessa qualidade a que se juntam as suas características físicas (estável, divisível) encontramos o ouro primeiro e depois a prata. Assim, a produção de ouro mantém-se estável na ordem dos 3% do stock existente em cada ano, sendo que o stock não diminui (não é consumido). A prata já tem uma qualidade monetária bem inferior e por isso é mais adequada para trocas de menor valor absoluto.

4. Num sistema monetário livre, sendo o ouro e a prata usados como moeda, e como já penso ter demonstrado, sendo as reservas de 100% por inevitabilidade económica, o investimento por crédito é realizado na medida em que existe a correspondente poupança préviamente acumulada .

5. Pelo contrário, num sistema monetário não livre, onde é imposta a capacidade do sistema bancário em criar moeda para conceder crédito, a massa monetária sobe na medida em que o stock de crédito sobe e quando o ciclo de expansão arrebenta, existe uma pressão para que os bancos entrem em falência, provocando a destruição de massa monetária e assim induzir uma descida de preços pela via da destruição de moeda dado que os depósitos desaparecem.

6. E isso é a deflação maligna: descida de preços provocada pela deflação da quantidade de moeda, mas que tem lugar para corrigir o ciclo de inflação monetária anterior.

Public Choice

Hoppe: "Contrary to the claim of the public choice school, states and private firms are not
doing essentially the same sort of business, but instead are engaged in categorically
different types of operations. Both types of institutions are the outcome of different,
antagonistic interests. The "political" interest in exploitation and expropriation under-
lying the formation of states obviously requires and presupposes the existence of wealth, and hence an "economic" interest of at least one person in producing such wealth in the first place (while the reverse is not true). But at the same time the more pronounced and successful political interests are the more destructive of economic interests this will be.

The public choice school is perfectly correct in pointing out that everyone-a government
smployee no less than an employee of an economic firm-normally prefers a higher to a
lower income and that this interest explains why government should be expected to have
no less of a tendency to grow than any other enterprise. However, this discovery-that
politicians and bureaucrats are no more altruistic or concerned about the "public good"
than are people in other walks of life-is hardly new even if it has sometimes been
werlooked. Yet what is in fact new with public choice-the inference drawn from this
correct insight then, that all institutions should hence be regarded as an outgrowth of identical motivational forces and be treated analytically on a par with each other-is false. Regardless of a person's subjective beliefs, integrating one's actions into the
institutional framework of either the state or a "normal" economic enterprise and
pursuing one's wealth maximizing interests here or there will in fact produce categori-
cally different outcomes. On a representative statement of the public choice school
regarding the idea of the "state as a firm," and of "political exchange" as essentially the
same as "economic exchange," see James Buchanan and Gordon Tullock, The Calculus of
Consent (Ann Arbor: University of Michigan Press, 19651, p. 19; for a critique of this view
and the fundamental difference between economic and political means, see Franz Oppen-
heimer, The State (New York: Vanguard Press, 1914), pp. 24-27; Murray N. Rothbard,
Power and Market (Kansas City, Kans.: Sheed Andrews and McMeel, 1977), chap. 2.

Um dia chegam lá

“There seems to be an inherent tendency for financial systems to cause periods of booms, by building up imbalances, and then to go through busts,” European Central Bank President Jean- Claude Trichet said Nov. 13. “We need to introduce a framework to dampen this phenomenon.” Fonte: Bloomberg

E que tal acabar com um sistema monetário artificial imposto a todos os aforradores que permite a concessão de crédito pela pura criação de moeda em vez de captação de poupança prévia a esses mesmos aforradores? 

Trichet podia começar por ler a "Teoria de Moeda e Crédito" de Mises escrito em 1913. E deitar fora toda a literatura misticista acientifica que faz da moeda uma espécie de Santo Graal. É necessário crédito ao investimento? Emitir moeda. Crédito ao Estado? Emitir moeda. Surgem problemas monetários com origem no excesso de crédito (dada a emissão de moeda)? É emitir ainda mais moeda. Injecções. Um dia deixam de encontrar a veia.

PS: Claro que isso implicaria os Bancos Centrais deixarem de existir, ou se a existirem, podiam era auditar cada banco que  emitisse a sua própria moeda fosse totalmente claro e transparente quanto ao contrato implícito nas suas notas e depósitos, descrevendo que sistema de reservas aplicaria às suas emissões. 

O que faria com que qualquer emissão com reservas abaixo de 100% tivesse de ser trocado a desconto e não fungível com emitentes com reservas de 100%. E assim sendo, um sistema de reservas de 100% (ouro/prata/etc) seria o resultado natural da concorrência livre entre emissores.

Já agora, um argumento demonstrativo que me parece simples é que se as notas e depósitos dos emitentes com reservas parciais fossem aceites por alguém ao seu valor facial ou nominal (ex: notas para o qual o ouro realmente detido em cofre constituia apenas 20% do valor total em circulação), um investidor poderia contrair um empréstimo de notas (com reservas parciais, o que significaria que este banco estava a expandir a sua base de emissão e ao mesmo tempo a reduzir ainda mais as reservas) e comprar notas com reservas 100% (às notas e depósitos à ordem correspondia ouro realmente depositado e à ordem em custódia) com o qual concederia crédito pelo mesmo prazo (o que não faz por si expandir a quantidade de moeda como com o banco a quem pediu crédito). Trocaria assim uma moeda em inflação contra uma moeda sem inflação pelo mesmo valor facial. Isto até o mercado começar a aplicar um desconto ao emitente com reservas parciais, altura em que poderia voltar a comprar notas do banco de reservas parciais para pagar o empréstimo inicial e ainda sobrarem notas do banco com 100% reservas.

Questões eternas

Quem regula o regulador?

A outra Grande Depressão dos anos 20

"Between 1921 and 1922, there was a significantly faster drop in prices and GDP and a greater rise in unemployment than between 1929 and 1930. From 1921 to 1922, Unemployment advanced from 4 percent to twelve percent, the gross national product fell by a staggering 17 percent. All this was in one year. By contrast, unemployment was still well under 10 percent at the end of 1930.

Hoover may not have started his expansionary fiscal policy until later when, for example, he ramped up agricultural loans in 1930 and 1931 but his began his ultimately more destructive high policy only a month or so after the Crash.

During that period, he called the first of several White House conferences. He successfully used these to pressure employers to maintain nominal wage rates. Henry Ford actually raised wages for his workers after attending. Later, Hoover reinforced this high wage policy through Smoot-Hawley (which kept out low wage competition) and Davis-Bacon (which required prevailing (e.g. union) wages for federal contractors. The upshot, as I said, that nominal wages did not begin to fall into 1931 and real wages were actually 12 percent higher in 1932 than they had been in 1929. Even Keynes, Krugman's hero, often commented that "downward stickiness" of wages had not occurred during previous depressions.

By contrast, Harding allowed wages, prices, profits, and the GDP to fall relatively unobstructed from 1921 and 1922. As a result, by the beginning of 1923, unemployment was down to 1921 levels. By allowing the malinvestments to readjust, Harding, unlike Hoover, had prevented a very steep initial downturn from turning into a decade long depression." An Answer to Critics: 'Krugman's Prescription for Disaster', by David T. Beito

Novo Bretton Woods (diziam eles)... II

Declaração da cimeira dos G20:

"Strengthening Transparency and Accountability: We will strengthen financial market transparency, including by enhancing required disclosure on complex financial products and ensuring complete and accurate disclosure by firms of their financial conditions. Incentives should be aligned to avoid excessive risk-taking."

Espero que os Bancos passem a informar o público e clientes, quanto a:

- o nível de reservas de moeda para os depósitos detidos em cada dia, publicitado de forma visível nos balcões.
- o montante de qualquer tipo de financiamento requerido ao Banco Central, informando o colateral usado ("facto relevante" indiciador de reservas insuficientes)
- vendas de qualquer tipo de activo (como dívida pública detida no balanço) ao Banco Central.

PS: Podemos esperar sentados, é a minha previsão.

Henry Hazlitt: "Worse than the slump itself "

"What he forgot to add is that inflation must always end in a crisis and a slump, and that worse than the slump itself may be the public delusion that the slump has been caused, not by the previous inflation, but by the inherent defects of "capitalism."

Inflation, to sum up, is the increase in the volume of money and bank credit in relation to the volume of goods. It is harmful because it depreciates the value of the monetary unit, raises everybody's cost of living, imposes what is in effect a tax on the poorest (without exemptions) at as high a rate as the tax on the richest, wipes out the value of past savings, discourages future savings, redistributes wealth and income wantonly, encourages and rewards speculation and gambling at the expense of thrift and work, undermines confidence in the justice of a free enterprise system, and corrupts public and private morals.

But it is never "inevitable." We can always stop it overnight, if we have the sincere will to do so." What You Should Know About Inflation, Henry Hazlitt

Novo Bretton Woods (diziam eles)...

Mais crédito é o que querem todos:


"G-20 Calls for Interest-Rate Cuts, More Spending to Stem Financial Crisis"

Criar moeda para dar crédito

E nem sequer aumenta o déficit.

Fed Holdings of Commercial Paper Increased to $244.6 Billion The Federal Reserve's holdings of commercial paper issued by U.S. corporations rose $98.9 billion to $244.6 billion in the week ending yesterday, indicating the central bank is underpinning the market even as funding pressures ease.

Rothbard, The Man Himself: "The Gold Standard Before the Civil War"

Bibliografia sobre o debate Reservas 100% vesus Reservas parciais

Aqui os links. (Walter Block, LvMI)

Appendix 1, FRB

A. Anti–Fractional reserve banking (frb):

Barnett and Block, 2005, 2008; Block and Garschina, 1996; Hoppe, et al. 1998; Hoppe, 1994; Hülsmann, 2000, 2002a, 2002b, 2003; Rothbard, 1962; de Soto, 1995, 2001.

Barnett, William II and Walter Block. 2005. "In defense of fiduciary media – a comment; or, what’s wrong with "clown" or play money?" Quarterly Journal of Austrian Economics; Vol. 8, No. 2, Summer, pp. 55–69.

Barnett, William and Walter Block. 2008. "Time deposits, dimensions and fraud," Journal of Business Ethics; www.WalterBlock.com/publications (this one is more radical, in that is characterizes even some time deposit practices, not merely demand deposit practices, as fraudulent).

Block, Walter and Garschina, Kenneth M. 1996. "Hayek, Business Cycles and Fractional Reserve Banking: Continuing the De-Homogenization Process," Review of Austrian Economics, Vol. 9, No. 1, 1995, pp. 77–94.

Hoppe, Hans-Hermann, with Guido Hülsmann and Walter Block. 1998. "Against Fiduciary Media," Quarterly Journal of Austrian Economics, Vol. 1, No. 1, pp. 19–50.

Hoppe, Hans-Hermann. 1994. "How is Fiat Money Possible? or, The Devolution of Money and Credit," Review of Austrian Economics, 7(2), pp. 49–74.

Hülsmann, Jorg Guido. 2000. "Banks Cannot Create Money", The Independent Review: A Journal of Political Economy, vol. 5, no. 1, summer, 101–110.

Hülsmann, Jorg Guido. 2002a. "Free Banking and the Free Bankers." Review of Austrian Economics. Vol. 9, No. 1. pp. 3–53.

Hülsmann, Jorg Guido. 2002b. "Free Banking Fractional Reserves: Reply to Pascal Salin." Review of Austrian Economics, Vol. 1, No. 3.

Hülsmann, Jorg Guido. 2003. "Has Fractional-Reserve Banking Really Passed the Market Test?," Independent Review 7/3, Winter, 399–422.

Rothbard, Murray N. 1962. "The Case for a 100 Percent Gold Dollar," In Search of a Monetary Constitution, Leland B. Yeager, ed., Cambridge, MA: Harvard University Press, pp. 94–136, and Auburn, AL: Ludwig von Mises Institute, 1991. See also "The Logic of Action One" pp. 364–384.

Rothbard, Murray N. What Has Government Done to Our Money?, Auburn, AL: Ludwig von Mises Institute, 1990.

de Soto, Jesús Huerta. 1995. "A Critical Analysis of Central Banks and Fractional-Reserve Free Banking from the Austrian Perspective," Review of Austrian Economics, 8(2), pp. 25–38.

de Soto, Jesús Huerta. 2001. "A Critical Note on Fractional Reserve Free Banking," The Quarterly Journal of Austrian Economics, Vol. 1, No. 4, Fall, pp. 34–35

B. pro frb:

Sechrest, 1987, 1989a, 1989b, 1991a, 1991b, 1993, 2007; Selgin, 1994, 1998, 2007a, 2007b, 2007c; Selgin and White, 1996; White, 1992, 1995, 1999, 2003, 2007a, 2007b, 2007c

Sechrest, Larry. 1987. "White’s Free Banking Thesis: A Case of Mistaken Identity," Review of Austrian Economics, November, Vol. II, 247–57.

Sechrest, Larry. 1989a. Review of George Selgin’s The Theory of Free Banking, Journal of Economics, Vol. XV, 196–98.

Sechrest, Larry. 1989b. "Free Banking vs. Central Banking: A Geometrical Analysis," South African Journal of Economic and Management Sciences, November, Vol. II, 83–97.

Sechrest, Larry. 1991a. "Free Banking in Scotland: A Dissenting View," Cato Journal, Winter, Vol. 10, No. 3, 799–808.

Sechrest, Larry. 1991b. "Banking, Central and Free," pages 145–51, Magill’s Survey of Social Science: Economics, Salem Press.

Sechrest, Larry. 1993. Free Banking: Theory, History, and a Laissez-Faire Model, Westport, Connecticut: Quorum Books, 1993.

Sechrest, Larry. 2007. "Free Banking Basics," The Free Radical, July/August, Vol. 76, 40–41.

Selgin, George. 1994. "Free Banking and Monetary Control." Economic Journal 104: 1449–59.

Selgin, George. 1998. The Theory of Free Banking: Money Supply under Competitive Note Issue. Totowa, New Jersey: Rowman & Littlefield.

Selgin, George. 2000. "Should We Let Banks Create Money?" The Independent Review, v.V, n.1, Summer, pp. 93–100.

Selgin, George. 2007a. "Is fractional-reserve banking inflationary?" January 23. Free Market News Network.

Selgin, George. 2007b. "Notes on free banking: fractional reserves and economic development, part I" February 14. Free Market News Network.

Selgin, George. 2007c. "Notes on free banking: fractional reserves and economic development, part II" February 15. Free Market News Network.

Selgin, George A., and White, Lawrence H., 1996, "In Defense of Fiduciary Media – or, We are Not Devo(lutionists), We are Misesians!," Review of Austrian Economics, Vol. 9, No. 2, pp. 83–107.

White, Lawrence H. 1992. Competition and Currency: Essays on Free Banking and Money. New York: New York University Press.

White, Lawrence H. 1995. Free Banking in Britain: Theory, Experience, and Debate, 1800–1845, 2nd ed. London: Institute of Economic Affairs.

White, Lawrence H. 1999. The Theory of Monetary Institutions. Oxford: Basil Blackwell

White, Lawrence H. 2003. "Accounting for Fractional-Reserve Banknotes and Deposits," Independent Review 7/3, Winter, 423–41.

White, Lawrence H. 2007a. "Huerta de Soto's Case Against Fractional Reserves," Free-Market News Network (08 Jan).

White, Lawrence H. 2007b. "Huerta de Soto's View of the History of Banking," Free-Market News Network (30 Jan).

White, Lawrence H. 2007c. "Huerta de Soto on Attempts to Justify Fractional-Reserve Banking," Free-Market News Network (05 Feb).