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Franco
05-01-2012, 10:07 AM
http://www.bloomberg.com/video/91689761

Wow, what a debate between two polar opposites!

Jason Glavich
05-01-2012, 11:44 AM
I watched that earlier. It is pretty funny really. I like the roman comparison. And the Delegate counting part. lol

Buzz
05-01-2012, 01:26 PM
Krugman has been going on about this for a couple days now.

Enjoy!!! ;-)


Don’t Know Much About (Ancient) History


The things I do for book sales. I debated, sort of, Ron Paul on Bloomberg.Video here. I thought we might have a discussion of why the runaway inflation he and his allies keep predicting keeps not happening. But no, he insisted (if I understood him correctly) that currency debasement and price controls destroyed the Roman Empire. I responded that I am not a defender of the economic policies of the Emperor Diocletian.

Actually, though, appeals to what supposedly happened somewhere in the distant past are quite common on the goldbug side of economics. And it’s kind of telling.

I mean, history is essential to economic analysis. You really do want to know, say, about the failure of Argentina’s convertibility law, of the effects of Chancellor Brüning’s dedication to the gold standard, and many other episodes.

Somehow, though, people like Ron Paul don’t like to talk about events of the past century, for which we have reasonably good data; they like to talk about events in the dim mists of history, where we don’t really know what happened. And I think that’s no accident. Partly it’s the attempt of the autodidact to show off his esoteric knowledge; but it’s also the fact that because we don’t really know what happened — what really did go down during the Diocletian era? — you can project what you think should have happened onto the sketchy record, then claim vindication for whatever you want to believe.

It’s funny, in a way — except that this sort of thinking dominates one of our two main political parties.



Milton’s Paradise Lost


Brad DeLong has a nice piece about the failure of Friedmanism. I thought I might add a bit on monetary policy and the Fed.

Link to DeLong: http://www.project-syndicate.org/commentary/re-capturing-the-friedmans

When wearing his professional economist hat, what Friedman really argued was that the Fed could easily have prevented the Great Depression with policy activism; if only it had acted to prevent a big fall in broad monetary aggregates all would have been well. Since the big decline in M2 took place despite rising monetary base, however, this would have required that the Fed “print” lots of money.

This claim now looks wrong. Even big expansions in the monetary base, whether in Japan after 2000 or here after 2008, do little if the economy is up against the zero lower bound. The Fed could and should do more — but it’s a much harder job than Friedman and Schwartz suggested.

Beyond that, however, Friedman in his role as political advocate committed a serious sin; he consistently misrepresented his own economic work. What he had really shown, or thought he had shown, was that the Fed could have prevented the Depression; but he transmuted this into a claim that the Fed caused the Depression.

And this debased and misleading version is what has filtered down to the likes of Ron Paul, who then use it to argue against the very activism Friedman was really advocating.

Bad Milton, bad.


On the Uselessness of Debates


A bit of meta on my “debate” with Ron Paul; I think it’s a perfect illustration of a point I’ve thought about a lot, the uselessness of face-to-face debates.

Think about it: you approach what is, in the end, a somewhat technical subject in a format in which no data can be presented, in which there’s no opportunity to check facts (everything Paul said about growth after World War II was wrong, but who will ever call him on it?). So people react based on their prejudices. If Ron Paul got on TV and said “Gah gah goo goo debasement! theft!” — which is a rough summary of what he actually did say — his supporters would say that he won the debate hands down; I don’t think my supporters are quite the same, but opinions may differ.

Tales of historical debates in which one side supposedly won big — like the Huxley-Wilberforce debate on evolution — are, in general, after-the-fact storytelling; the reality is that that kind of smackdown, like Perry Mason-type confessions in court, almost never happens.

So why did I do it? Because I’m trying to publicize my book, which does have lots of data and facts — but those data and facts don’t matter unless I get enough people to read it.

road kill
05-01-2012, 01:29 PM
http://www.bloomberg.com/video/91689761

Wow, what a debate between two polar opposites!

Talk is cheap, what have either one of them ever done?

RK

Franco
05-01-2012, 01:51 PM
Krugman has been going on about this for a couple days now.

Enjoy!!! ;-)

In case you missed it, they both were critical of the Fed in handling the Depression of 1929.

We enjoyed a zooming economy after WW2 not only because our debt was low but because we emerged from WW2 as the world leading economy thanks to mobilazation of industry and the lack of government interference.

Interesting that Krugman could not defend his monetary theories. And, as PR said, we can't fix anything by throwing money at it, it must be fixed at the core! Which is what RP has been trying to do for the last 30 years. But, as most of us know, it is much easier for politicians to throw tax payer money away than roll up their sleeves and tackle the real issues at their core.

P S
We do have inflation. It is the form of the devalued Dollar. It is why gasoline and food cost us so much more and will continue to go up until monetary sanity returns.

Franco
05-01-2012, 02:07 PM
Talk is cheap, what have either one of them ever done?

RK

Just becaue they aren't in the pizza deliver business doesn't mean they aren't qualified to debate monetary policy.

Krugmen is the most widely read Economist is the world and a Nobel Prize winner.

Dr Ron Paul is a Medical Doctor and 12 term U S House Of Representatives member.

Though not as qualified as your pizza guy, at least they aren't dumb enough to come out with a foolish 999 rhyme plan that doesn't address the core of our financial problems.

road kill
05-01-2012, 02:43 PM
Just becaue they aren't in the pizza deliver business doesn't mean they aren't qualified to debate monetary policy.

Krugmen is the most widely read Economist is the world and a Nobel Prize winner.

Dr Ron Paul is a Medical Doctor and 12 term U S House Of Representatives member.

Though not as qualified as your pizza guy, at least they aren't dumb enough to come out with a foolish 999 rhyme plan that doesn't address the core of our financial problems.
Nice cheap shot, but it doesn't change the facts, neither of these guys has done a thing.
12 terms in the house, 1 bill.:rolleyes:
Quite the over acheiver!

You make fun of him and his "foolish" plan, yet your guy wants to legalize pot.
Your insult does nothing to make Paul look better, quite the contrary.

Here's a tip, he ain't gonna be President!
Pizza or not!!

Buzz
05-01-2012, 03:27 PM
P S
We do have inflation. It is the form of the devalued Dollar. It is why gasoline and food cost us so much more and will continue to go up until monetary sanity returns.

Do you advocate zero inflation? Good luck with that. It's great for the financiers, terrible for the common man.

When besides during depressions have we not had inflation? I think Krugman wants to know when the hyper-inflation the Austrians keep predicting is going to hit. They have been saying that it's right around the corner, any day now, for how many years???

PS: Right after WWII, debt was at about 125% of GDP. A big part of reducing it as a percent of GDP was a fast growing GDP...

Franco
05-01-2012, 03:41 PM
Do you advocate zero inflation? Good luck with that. It's great for the financiers, terrible for the common man.

When besides during depressions have we not had inflation? I think Krugman wants to know when the hyper-inflation the Austrians keep predicting is going to hit. They have been saying that it's right around the corner, any day now, for how many years???

PS: Right after WWII, debt was at about 125% of GDP. A big part of reducing it as a percent of GDP was a fast growing GDP...

I am neither for or against inflation as flux is a good thing when the Free Market reigns. We should try the Free Market sometime since we haven't had it in the last 100 years;-) The problem is that the Fed keeping interest rates artificially low which was the enabler of the housing market crash. It encourged unqualified buyers to buy more house than they could afford. It also discourges saving money and forces some into the volital and manipulated stock market because they can't earn squat with their savings.

Can't compare the 125% of GDP right after WW2 and now. We were coming off of a war footing and had to place all of our resources in the war effort. No excuse today for having it at 125%!

Franco
05-01-2012, 03:48 PM
Nice cheap shot, but it doesn't change the facts, neither of these guys has done a thing.
12 terms in the house, 1 bill.:rolleyes:
Quite the over acheiver!

Here's a tip, he ain't gonna be President!
Pizza or not!!

You have asled this question several times and I have answered several times!!!

The man has been trying to enlighten and reform Congresss since he's been there. Had they listened to him, Congress' approval rating wouldn't be in the toilet!

RP has just as much of a chance as any of the three left in the race. If he doesn't win the GOP nomination, his supporters are hoping he'll run as a third party candidate. Because unlike R-money, RP appeals to a wider sepectrum of voters, not just white men over 50 years of age!

Besides, R-money isn't going to fix anything, he just represents more of the same failed policies and like the others he refuses to address the core of the problems!

Marvin S
05-01-2012, 05:41 PM
Enjoy!!! ;-)

He's at least as honest, he's pimping his book - as he says, if you have no readers your info is worthless :).


Krugman is the most widely read Economist is the world and a Nobel Prize winner.

Dr Ron Paul is a Medical Doctor and 12 term U S House Of Representatives member.

If you lay all the economists in the world end to end you will still not reach a conclusion.

If you play the dog games long enough you develop a dislike for what MD's do outside their chosen profession :).


Do you advocate zero inflation? Good luck with that. It's great for the financiers, terrible for the common man.

Before the Income Redistribution Act of 1986 inflation was about 3% a year, you could write off interest on loan balances if you itemized, you got a little bit on your savings & things were somewhat predictable & with astute management of personal finances you managed to gain ground. Look at the situation today :o.

The other day I get a fund raising letter in the mail from a supposedly conservative organization lumping SS, Medicare & Medicaid in the same basket, all as entitlements. I answered their appeal with a "How can you represent my interests when you do not know the difference in these programs?". I did donate the stamp to send the letter back :).

Buzz
05-01-2012, 06:35 PM
If you play the dog games long enough you develop a dislike for what MD's do outside their chosen profession :).

That made me smile a little! :p

Before the Income Redistribution Act of 1986 inflation was about 3% a year, you could write off interest on loan balances if you itemized, you got a little bit on your savings & things were somewhat predictable & with astute management of personal finances you managed to gain ground. Look at the situation today :o.


Marvin, you made me go look that up. I wasn't too long out of college back then and didn't at the time appreciate the impact of changes.

http://www.taxfoundation.org/news/show/777.html



Dang it, I have to write a sentence outside the quote to get this blasted thing to let me post...

LokiMeister
05-01-2012, 09:57 PM
The problem is that the Fed keeping interest rates artificially low which was the enabler of the housing market crash. It encourged unqualified buyers to buy more house than they could afford.

The Fed is not the cause for the low mortgage rates. Please explain how you come to this statement.

teddyg
05-01-2012, 10:15 PM
You have asled this question several times and I have answered several times!!!

The man has been trying to enlighten and reform Congresss since he's been there. Had they listened to him, Congress' approval rating wouldn't be in the toilet!
RP has just as much of a chance as any of the three left in the race. If he doesn't win the GOP nomination, his supporters are hoping he'll run as a third party candidate. Because unlike R-money, RP appeals to a wider spectrum of voters, not just white men over 50 years of age!

Besides, R-money isn't going to fix anything, he just represents more of the same failed policies and like the others he refuses to address the core of the problems!

He's not been very successful with the enlighten or reform.

If he runs as a third party candidate, it will be a self serving choice that will allow obuma another four years. As to appealing to a wider spectrum of voters, your math is very fuzzy, check the numbers. I'm no Mitt fan, but wrong Paul is the wrong man for the job.

wrong Pauls many years as a Congressman speak volumes as to his inept ability to make things happen.

Franco
05-02-2012, 06:36 AM
The Fed is not the cause for the low mortgage rates. Please explain how you come to this statement.

One of the functions of the Fed is to set the Prime Interest Rate. They think they are doing us a favor by keeping it artificially low.

http://www.bloomberg.com/news/2011-08-10/bernanke-s-interest-rate-timeframe-draws-most-negative-votes-in-18-years.html

Franco
05-02-2012, 06:41 AM
He's not been very successful with the enlighten or reform.

If he runs as a third party candidate, it will be a self serving choice that will allow obuma another four years. As to appealing to a wider spectrum of voters, your math is very fuzzy, check the numbers. I'm no Mitt fan, but wrong Paul is the wrong man for the job.

wrong Pauls many years as a Congressman speak volumes as to his inept ability to make things happen.

The only thing he has been unsuccessful with is cleaning up the corruption in the House. It takes more than a few Representatives to do so!

Check what numbers?

LokiMeister
05-02-2012, 08:08 AM
One of the functions of the Fed is to set the Prime Interest Rate. They think they are doing us a favor by keeping it artificially low.

http://www.bloomberg.com/news/2011-08-10/bernanke-s-interest-rate-timeframe-draws-most-negative-votes-in-18-years.html

That has little to do with mortgage rates though. The Fed has very little to say about them as they are tied to the 10 year Treasury rate.

http://www.homeloanbasics.com/articles/InterestRates/DoestheFederalReserveControlMortgageRates

It is a gross misrepresentation that the Fed controls the mortgage rate. Stop perpetrating it.

Franco
05-02-2012, 08:28 AM
From the article you posted.

"
So while the exact influence of the Federal Reserve on mortgage interest rates is hard to define, it is clear that it does have an impact on rates. Although if you are trying to determine which way mortgage rates are going to go, you would probably do better watching the bond market and monitoring the general economic trends."

The bond market pays very close attention to the rate set by the Fed!;-)
Just watch what happens to home interest rates if and when they are raised by the Fed.

I lifted this off of the Fidelity site....
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties

LokiMeister
05-02-2012, 08:56 AM
Just watch what happens to home interest rates if and when they are raised by the Fed.

Again, home interest rates are not set by the Fed.

Franco
05-02-2012, 09:34 AM
Again, home interest rates are not set by the Fed.



That is like saying, "cancer does not cause death".

The Fed very much determines what home interest rates are, no matter which entity assigns the rate!

LokiMeister
05-02-2012, 09:41 AM
OMG, talk to a banker.

Show me how the Fed DIRECTLY sets the home mortgage rates.

Buzz
05-02-2012, 11:51 AM
Sheesh. The Fed can impact mortgage rates by changing expectations about inflation, the cost of banks borrowing money, etc. But they certainly don't set mortgage rates, the market for mortgage backed securities does.

http://money.howstuffworks.com/personal-finance/financial-planning/mortgage-rates-determined.htm

Franco
05-02-2012, 12:16 PM
So Buzz, if the Fed raises interest rates, what happens to home mortgage rates?;-)

Buzz
05-02-2012, 01:13 PM
So Buzz, if the Fed raises interest rates, what happens to home mortgage rates?;-)

It depends... If there are fears of inflation and investors are unwilling to invest in mortgage backed securities for fear of losing money to inflation, and the rate increase quells those fears, then mortgage rates could drop.

Buzz
05-02-2012, 01:16 PM
Something else I came across...

http://www.thedailybeast.com/articles/2012/05/01/ron-paul-krugman.html


Ron Paul Flunks History



I've noticed that a few of my conservative Facebook friends have linked to the recent debate between Paul Krugman and Ron Paul on Bloomberg. Some of them are embarrassed to find that Krugman was the more convincing participant.

I have a theory as to why. In that short interview Ron Paul revealed that his school of Austrian economics is more about assertions and ideology then it is about empirical data.

I'll give one example that stuck out to me. In Part 1 of the Mediaite video (at 6:00) Ron Paul argues that there was a lot of economic growth after World War Two because:

After World War Two a lot of the debt was liquidated, but guess what else we did. The troops were coming home…big government liberals wanted to have job problems, they weren't put into place. we cut spending by some 60%, we slashed taxes, finally the depression ended.

Ron Paul's gloss over history has a grain of truth and a giant problem. The truth is that America did take a step down from having a war-time command economy. The problem is that Ron Paul makes it sound as if government then immediately shrunk. He even says taxes were "slashed".
Here is a chart from the Tax Policy Center showing what the historical highest marginal tax rates were. (see the link below)

During World War Two, the rate is between 81% and 94%. After World War Two, it is cut down to a low of 82% before being raised back to 91%, which is where it stays till the Kennedy years, during which it drops to a slightly lower 70%.

If this is what Ron Paul thinks it looks like when American liberals lose what does it look like when they win?

There are many more examples that have been cited by other writers about how government remained large long after World War Two. Airlines were heavily regulated, the interest on checking accounts was regulated, even the beer industry wasn't deregulated until 1979, and yes, that was by Jimmy Carter.
After World War Two government was bigger than Ron Paul admits. Krugman was making the point that during the era when taxes on America's richest were highest and the country was most regulated, the country as a whole was better off. That is a very important question to be able to answer, and it is not clear that Paul has even grappled with the implications of that data at all.


http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213

Franco
05-02-2012, 02:06 PM
It depends... If there are fears of inflation and investors are unwilling to invest in mortgage backed securities for fear of losing money to inflation, and the rate increase quells those fears, then mortgage rates could drop.

Can you cite a time when this senario has ever happened?

Also, interest rates were at historic lows for that time when the housing bubble was created.

Can you post a chart that shows how mortgage interest rates and the Fed's rate have paralled or not paralled? I think you will find that mortgage rates act in almost complete unison with the Fed rate. Or, direct me to a site where I might find this info and I'll post it.

Corey Capozzi
05-02-2012, 09:12 PM
If congress has an approval rating of 9% and Ron Paul has voted nay against all their bills, does that mean ron paul has a 91% approval rating?

BonMallari
05-02-2012, 09:41 PM
If congress has an approval rating of 9% and Ron Paul has voted nay against all their bills, does that mean ron paul has a 91% approval rating?



better check your facts....here is his voting record and he has NOT voted on many of the bills in the last year.....

http://votesmart.org/candidate/key-votes/296/ron-paul

Corey Capozzi
05-02-2012, 09:52 PM
better check your facts....here is his voting record and he has NOT voted on many of the bills in the last year.....

http://votesmart.org/candidate/key-votes/296/ron-paul Your right im sorry i should have used MOST.

LokiMeister
05-03-2012, 11:34 AM
Sheesh. The Fed can impact mortgage rates by changing expectations about inflation, the cost of banks borrowing money, etc. But they certainly don't set mortgage rates, the market for mortgage backed securities does.

http://money.howstuffworks.com/personal-finance/financial-planning/mortgage-rates-determined.htm

"Impacts" and "sets" are two entirely different ideas. IF the Fed has any impact, it is very little in the grand scheme of things.

LokiMeister
05-03-2012, 11:38 AM
Can you cite a time when this senario has ever happened?

Also, interest rates were at historic lows for that time when the housing bubble was created.

Can you post a chart that shows how mortgage interest rates and the Fed's rate have paralled or not paralled? I think you will find that mortgage rates act in almost complete unison with the Fed rate. Or, direct me to a site where I might find this info and I'll post it.

So basically what you are saying is that if we do away with the Fed, the mortgage rates could do anything?

In reality, I think correlation and not cause and effect are at play here. The Fed changes its rates but the 10 year Treasury, which mortgage rates are based on, was going change any way. Which caused which? Could have been the same thing, could have been different things.

LokiMeister
05-03-2012, 11:42 AM
Sheesh. The Fed can impact mortgage rates by changing expectations about inflation, the cost of banks borrowing money, etc. But they certainly don't set mortgage rates, the market for mortgage backed securities does.

http://money.howstuffworks.com/personal-finance/financial-planning/mortgage-rates-determined.htm

From your webpage above:

When the Federal Reserve, commonly known as the Fed, adjusts certain interest rates, especially the federal funds rate, this has an indirect effect on mortgage rates as well. The federal funds rate is the interest rate banks use when making overnight loans to other banks (to meet end-of-day requirements). To raise this and make borrowing more expensive effectively lowers the supply of available money, which can help stop a rise in inflation. The reverse is also true: lowering the federal funds rate increases the supply of available money and encourages inflation. (It should be noted that the Fed doesn't directly control the federal funds rate, but rather changes it by selling and purchasing securities. For more, see How Interest Rates Work.) As you can probably guess, such adjustments have such wide ripple effects that they affect mortgage rates as well.

in·di·rect/ˌindəˈrekt/
Adjective:

Not directly caused by or resulting from something: "an indirect effect".
Not done directly; conducted through intermediaries: "under indirect control".

In other words, the Fed doesn't set or cause the rate to change.

Franco
05-03-2012, 12:45 PM
Symantics!

Whether directly or indirectly when the Fed rate moves, the mortgage rates move with it!

LokiMeister
05-03-2012, 12:58 PM
So then stop saying that the Fed sets mortgage rates...

Franco
05-03-2012, 01:00 PM
So then stop saying that the Fed sets mortgage rates...

OK, I'll just say that mortgage rates move with the Fed rates;-)

Buzz
05-03-2012, 10:26 PM
Symantics!

Whether directly or indirectly when the Fed rate moves, the mortgage rates move with it!

Franco, do you remember inflation & mortgage rates in the 70's & 80's, and maybe a guy named Volker? What did inflation, inflation expectations, mortgage rates, and the fed funds rate do back then again?

Part of the reason mortgage rates are at historic lows is that treasury rates are so low, everyone around the world sees low relative risk in putting money here compared to the alternatives.

Franco
05-04-2012, 08:34 AM
Franco, do you remember inflation & mortgage rates in the 70's & 80's, and maybe a guy named Volker? What did inflation, inflation expectations, mortgage rates, and the fed funds rate do back then again?

Part of the reason mortgage rates are at historic lows is that treasury rates are so low, everyone around the world sees low relative risk in putting money here compared to the alternatives.

The only thing I know about Volker is what I've read is recent years. Supposedly, he was a good Fed chief from past accounts but, I can't really comment on him.

I purchased my first home in 76 and the interst rate was at 9%! One had to have great credit and 20% down back then. We were also experiencing high inflation.