Yes, I Am Calling Brad DeLong a Name, Because He Deserves It

Brad DeLong is a professor of economics at UC Berkeley. He is a Keynesian. He is also a vicious, no-class jerk.

I shouldn’t call people names, you say. But what if he really is a vicious jerk with no class?

Proof: economist Bob Murphy wrote a lengthy and quite persuasive piece in response to the Krugman/DeLong victory dance over the CPI figures. DeLong then selectively quotes from Bob’s piece in order to make Bob look like an idiot, and then refuses to link to Bob’s original article so people can see the selections in context and read Bob for themselves.

This is pretty low, even by Internet standards.

Brad, when was the last time Bob acted that way toward you? I’ll make it even easier: when was the last time he acted that way toward anyone? I’ll wait.

UPDATE: DeLong has relented, though naturally he couldn’t resist one last insult: “UPDATE: I have a complaint that I am unfair to Murphy because I only quoted 170 words from Murphy rather than the full 5000 words of his reply to my 70 word note that he had (a) lost his bet and (b) failed to update his beliefs.

“Well, here’s the whole thing. It doesn’t make him look any better balanced:”

Really? Read Bob for yourself. Does he sound insane to you? Or does it sound like he is taking down Krugman and DeLong in systematic fashion?

Anonymous

You do realize that Keynes didn’t understand Say’s Law don’t you? He disproved what he thought Say’s Law was implying but missed the premise.

BTW, if the last 80 years There has been a number of economic disasters including .the longer than necessary Great Depression, the stagflation of the 70′s and the early 80′s and the last and continuing debacle of the economic bubbles and busts of the last decade plus. Your premise that “last 80 years of knowledge we’ve acquired in economics” falls flat, regardless of the continually patching of failed economic theory. and a bevy of excuses. Indeed, that is where Keynesian economists truly shine! Excuses.

Fact is that if Keynesian and neo- Keynesian theory did not serve to empower the political class world wide, these concepts would have been abandoned decades ago. Only various technological advances have kept the economy from even greater disasters. But, I will give Keynesians a credit. Their economic theories are less malignant than Marxian economics. It follows that if technology and innovation fall below a certain point , the economic systems of those countries that follow these principles will fail also.

Indeed, we may just be seeing that happening now.
Anonymous

You are kidding right? The Fed has institutionalized too big to fail with guarantees of future support allowing . That gives these institutions lower funding costs via bods, The Fed loans created money to the banks and pays more back as reserves. By preventing asset prices from falling, the Fed supports underwater loans.

You cannot get past the simplistic straw man argument that you used earlier that somehow I thought the Fed was showing up with bags of cash. The results of the Fed’s policies have resulted in a windfall for the banks. And yes, I know how banking works. You however, don’t seem to understand the effect of these policies. At any level.
Alex I.

Ummm if you actually bothered to sift through data (impossible given just how badly you butchered that one Bloomberg article you put up; you’re about 10 steps from understanding anything, but that’s beside the point), the Great Depression was a pretty great validation of what became Keynesian theory. Too-tight money from the Fed in response to a large shock in financial markets, combined with the Hoover-Mellon caucus’s conviction that the budget had to be balanced in the face of a recession left the economy in dire straits.

If you’d bother to actually look at the data (I can send it along if you’d like, but based on you folks’ aversion to data and repeated failure to understand even the most basic data, I doubt you’d find much use in it…), you’d see that there was a pretty rapid recovery between 1933 and 1937, when there was a fairly sustained fiscal expansion (unemployment dropped from 25% to under 15%), which turned into a double-dip when, you guessed it, FDR decided to balance the budget when the economy was still depressed (watch the economy slow if the sequester is allowed to hit in full– that’s a prediction for you). Then the economy returned to full employment thanks to… that giant fiscal expansion known as World War II.

After which, for a good 30 years, we experienced the greatest period of extended expansion and prosperity in recorded economic history. Were there things Keynes got wrong? Of course. And there’s a good reason the Keynesians of 2013 think substantially differently from the Keynesians of 1945– the notion of a fixed Phillips Curve is out after stagflation, and the effects of expectations are much better-understood. The Efficient Market Hypothesis has come and (mostly) gone. But, for all the changes in response to unpredicted events, the basic premises have remained remarkably resilient. And not because Keynesians have gone the Austrian route and decided that reality failing to conform to expectations is a reason to update their beliefs rather than complain about reality.

Which is why no one worth a dime takes Austrian “economics” seriously– nothing useful to economists has come out of that school since… probably before World War II. I guess your groupthink is a nice exercise in psychology though…
Anonymous

Laughable. There were a number of people who realized there was a housing bubble starting. Truth is, it is more difficult to know when it will burst. .But I am not surprised that you think it cannot be seen in the very early stages. Or, given the disaster that it led to, and the failure of so many economists to understand it even AFTER it was well underway. Kind explodes up the idea that there has been 80 years of great advances in economic theory as you have claimed.

Kind of make one wonder about your premise in general. If it cannot be understood that over expansion of the money supply usually leads to economic froth and bubbles, Then what is the merit of the theories? Of course, all the people that missed the housing bubble are the same people that you look up to. So, you go on to give them a rational that it is impossible to predict. Automatic absolution for their failures.
Gerard Macdonell

Insane, if forced to choose.
Anonymous

One other thing Brad. It is pretty sad to pretend that because others do not share your views that they are uneducated or ignorant. I happened to have made quite a lot of money with my understanding of the markets. Including shorting institutions making mistakes in the housing and mortgage markets.
Alex I.

Ummmmmm no. Again, stop trying to debate this, go pick up Banking and Finance for Dummies, read thrice, then we’ll talk. This isn’t a debate– this is you making a mockery of yourself. STOP. This is verbal diarrhea. What parts of it actually add up to a semi-coherent sentence are factually dead wrong.

You have no clue what you’re talking about again. What “guarantees of future support” has the Fed institutionalized…? Please. I’m all ears. The TBTF subsidy referred to in the article, even if you take it at face value, refers to the idea that the TREASURY won’t allow the biggest banks to fail due to the catastrophic effects that would have on the national (and global) financial system, and the associated economies. The place to start might be the basics– the Fed NEVER BAILED OUT THE BANKS. The Treasury bailed out the banks. The reason Hank Paulson had to go to Congress and get that nice slip of paper signed was that the Fed, as an institution, WAS NOT ALLOWED TO BAIL OUT THE BANKS UNDER THE LAW. Got it? Good. That’s why Lehman was allowed to fail in September 2008 (to great effect for the global economy, which finally recognized that the government would allow any failed institution to fail, right? Oh wait, no, DEAD WRONG).

The TBTF subsidy refers to the idea that, if Citigroup were to call up the New York Fed and Treasury tomorrow and tell them that they won’t be able to open for business on Monday without support, lenders to Citi believe that the Treasury would be able to come up with a way to keep them from failing. Whether those creditors are right is an open question– at this point, I’d say probably, but regulators are trying to move away from that (Dodd-Frank gave them plenty of powers to deal with failing megabanks; it’s a work-in-progress, obviously, but it’s getting there), and even now there are significant signs that the too-big-to-fail belief is evaporating (CDS spreads are one indicator, the credit rating agency signals are another).

But none of this has anything to do with the Fed’s monetary policies– only the Treasury can bail out the banks. Oh, and if you’re referring to the Fed’s role as lender of last resort, you do realize that the Fed made, you know, big profits in its loans to distressed banks during the crisis, right? To the tune of tens of billions every year from 2008-2010. Meaning that it was, you know, doing its job very well in that regard. This job, as Sir Walter Bagehot put it way back when, was for central banks to lend freely to institutions during a panic, at a penalty rate against good collateral. And that’s exactly what the Fed did.

http://thehill.com/blogs/on-the-money/banking-financial-institutions/151227-fed-turns-record-profit-in-2010

So yeah, I have no clue what “guarantees of future support allowing” or “created money to the banks” or “pays more back as reserves” means– that’s verbal diarrhea. But we can talk once you’ve picked up that “For Dummies” book, read it a bunch of times, and learned everything in it. Until then, you’re out of your element, man.
Alex I.

So, um, what is “overexpansion of the money supply”…? Interest rates at 3%? 4%? 7%? There have been speculative bubbles before central banks, and there will continue to be speculative bubbles no matter what interest rates the central bank sets, unless it decides we should live in a state of permanent depression.

Here’s a(nother) nice lesson for you (you can thank me later). The danger isn’t even that there will be speculative bubbles, per se– sure, a lot of crummy investments were made during the tech bubble… but there was no post-tech bubble crisis, and a lot of valuable companies came out of that period. Amazon, eBay, Yahoo, etc. were all products of the tech boom period. If people wanted to plant their money in pets.com, who’s to say they shouldn’t…? The issue in this case was leveraged investment into a single sector that in turn went bust. The best way to prevent that was… to adequately regulate that sector. But also notice that there were housing bubbles in Ireland and Spain but not in Germany or France, which had THE SAME EXACT MONETARY POLICY. Or, looking more closely, you could notice that there were housing bubbles in Nevada and Florida and parts of California… but not in Texas, which had tighter restrictions on lending and no zoning laws. Hmmmm. So it looks like monetary policy is neither necessary nor sufficient for bubble formation. Time to re-mark your beliefs to market (again), my dude.

Oh and lastly, while economists (Austrians aren’t economists, you’re more of a religious cult) don’t make declarations about the “proper” price of particular assets, plenty of very Keynesian economists did see a bubble forming in the housing market (when it, you know, was actually overvalued)– Bob Shiller, Paul Krugman and Nouriel Roubini were among the most prominent, but there were plenty more.
http://profiles.google.com/brad.delong Brad DeLong

???????????????????????????????
http://profiles.google.com/brad.delong Brad DeLong

You think Irving Fisher was a Keynesian? Irving Fisher was a monetarist. This is really embarrassing.

Jeebus save us from the ignorance of the Paulites!

DeLong 80, The Tom Woods Posse 0
Luke Sunderland

Calling someone “stupid” isn’t name calling?
Luke Sunderland

So, the fact that Keynesians embrace his work means nothing, right? But then again, even if I grant you that victory, how does that excuse Keynesians from all the other failures I mentioned? They said that cutting the budget after World War II would destroy the economy and sink the country back into the depths of the Depression. Instead, what happened was that the government slashed spending drastically and 1946 ended up being the single greatest year of prosperity the country has ever experienced. They said high inflation and high unemployment could never happen. Then the stagflation of the 1970s happened. Ben Bernanke himself said that the housing market was robust, then the current crash happened.
Luke Sunderland

Oh, and by the way, that’s twice now you’ve resorted to calling me names.
Anonymous

Check the monetary base and excess reserves, then compare that to M2 and get back to me.
George

AUSTRIAN ECONOMICS DOES NOT MAKE EMPIRICAL PREDICTIONS YOU STUPID MORON.

The predictions Austrian economists make are as speculators, entrepreneurs, betters, etc.

Austrian econ is just the foundation for how we come to know the truth of economic propositions in a logical sense.
George

“We agree! Now if only you would write that in the first sentence of everything you write–”Readers should know that Austrian economics has nothing to do with predictions about the future”–I would have no beef with you at all.”

If you KNOW that Austrian economics doesn’t make predictions about the future, then why in the hell did you trash talk Austrian economics after Murphy’s prediction turned out wrong? You’re either lying or an idiot.

Murphy is not obligated to put a silly caveat before every one of his prediction posts, as if he has to make clear to any ignorant readers that he isn’t speaking “on behalf of” Austrian economic theory.

If Murphy has to put that caveat before every prediction so that you can get a psychological fix in reading it, then you might want to put “Please note upfront that I am a jerk and a lie about what I say. So please read the following with that in mind” before every one of your blog posts.
george

“Good. HH Hoppe’s question–as he asked it–answered successfully. DeLong 7, HH Hoppe 0.”

Krugman “answered” HH’s question by saying that money printing is only justified during certain times, during recessions.

Maybe he’s so clueless that he didn’t realize that he just threw ONGOING monetary policy, price inflation targeting, etc, under the bus, and contradicted his own worldview that requires constant money printing.

The value of the medium of exchange does NOT have to be “stable.” It should reflect the individual preferences of market participants, WHICH CAN CHANGE. The value of money should fluctuate to the extent that individual preferences concerning money fluctuate.

Should the value of copper or ham or plastics stay “stable”, apart from individual preferences? Of course not. Neither should money. Stabilizing money by non-market force DISTORTS markets.

Everyone else 999, DeLong 0.
george

“I explained why it is that society is richer when you have currency that allows you to trade and extend the division of labor”

No you didn’t. You just made a fool of yourself in making an ASSUMPTION that money has to be kept stable by non-market means, and you used a ridiculous post hoc ergo propter hoc fallacy to get there.

You’re still at zero.
george

“if you keep changing the supply of money relative to the demand, you produce large fluctuations in the value of money, all of which are bad”

Changing the quantity of money….BY WHAT MEANS?

You can’t answer that a change is optimal or not optimal in a non-market monetary system.

You’re just asserting something is “bad” without taking into account other individual preferences.

DeLong is still at zero.
George

“The *value* of a currency unit needs to remain constant so that market actors can make the right decisions.”

No no no no no no no no NO! NO! NO! NO! NO!

The *freedom to compete in laissez-faire money production constrained to respect for private property rights* needs to stay constant so that market actors can make the right decisions.

Market actors require market actor money producers, not non-market central bankers who do NOT act within the stable condition asterisk’d above.

Quoting John Stuart Mill and JB Say? Hahahaha, is that before or after you throw them under the bus by claiming Keynesianism overturned their theories? Or you just want to quote them selectively for rhetorical effect?
George

“Easier” and “efficient” are not proper metric for societal richness, UNLESS individuals in a voluntary market setting prefer them (in their respective contexts).

Since central banking is based on force, on violations of property rights, it is NOT an institution that is “ease” nor “efficiency” promoting.

You’re just asserting that is does this because you’re completely ignoring other individual property owners, and lumping them all into some vague and non-defined “social contract” BS that would justify fascism if it occurred.
Alex I.

What’s a “market means”? Digging it out of the ground? Taking it off a dead horse? Fishing it out of the water? You’re confused about what money means, champ. It makes for some terribly embarrassing statements on your part.
Alex I.

You’re still confused. Really embarrassing. Of course you can say that a change is optimal or not optimal– when an economy has a lot of unused capacity because market actors’ desired savings are greater than aggregate desired investment, the money supply is suboptimal and should be increased. When an economy has spiraling wages and prices because desired investment outstrips desired savings, the money supply is suboptimal and should be contracted.

Simple, right? No? That’s because you’re confused. Go get un-confused.
Luke Sunderland

You do realize, don’t you, that the non-Austrian position didn’t even think there was a problem until the bubble was literally bursting in peoples’ faces, right?
Luke Sunderland

Exactly. The only reason we all live to see another dawn is because the government, in all its benevolence, allows us to do so.
Luke Sunderland

Given how he’s responded to me in these comments alone, I have to agree with you.
Luke Sunderland

Are you serious? Please name just one wealthy, politically extremist billionaire who favors Austrian economics. Surely that’s not too hard of a task.
Luke Sunderland

Well of course they are. Didn’t you read your seventh grade civics book?
Alex I.

… Except for those that did. You know, Krugman in 05, Roubini, Bob Shiller… But even if we ignore all that (deciding that assets are or aren’t overvalued isn’t what economists do), I’m confused about this stuff again.

Seems that the 98% of the time that Austrians make predictions and those predictions have no bearing on reality (because, you know, their religion looks nothing like the real world), the defense is always “AUSTRIAN ECONOMICS ISN’T ABOUT MAKING PREDICTIONS”. Then they turn around and declare that ONLY Austrians were the ones that predicted the housing bubble (even though, you know, when Ron Paul first started yelling about a housing bubble, by any conventional measures (rent to price ratio), there was no housing bubble yet.

So, um, which is it? Do Austrians not make predictions? Or do they only make predictions on those rare occasions when, if you squint really hard and turn your head just right, the world looks a little kinda like what they predicted?
Alex I.

Peter Thiel.