Janet Yellen or Rock-a-Doodle?

[Stringbean]

@WillFarnaby

Is it your assertion that Japan will “never” escape zero rates?

Is it your assertion that anybody of any respectable intellectual acumen interpreted Yellen’s remarks to mean that she truly meant that the fed funds rate will never for the rest of eternity be raised?

One of us is being disingenuous in our characterization of Yellen and her remarks, which were (like all Fedspeak) calculated and equivocated.

[MEBuckner]

@WillFarnaby

The only answer should be that it is physically impossible for rates to stay this low forever, and that that scenario is akin to asking if there is a possibility the sun does not come up tomorrow.

It’s physically impossible for interest rates not to rise? Like, it will violate Conservation of Mass-Energy or the Laws of Thermodynamics or something?

:dubious:

“Obivously a Perpetual Motion Machine is impossible–why, that would violate the Law of Supply and Demand!”

[BrainGlutton]

The weird thing is that today’s goldbugs, who want a gold standard because they think it will prevent inflation, are in a kind of continuous lineage with the 19th-Century Free Silverites, who wanted unlimited coinage of silver because they thought it would cause inflation. The common element is fear and suspicion of the “money power.”

From A History of the American People, by British conservative Paul Johnson:

The Founders, particularly the Virginians, Washington, Jefferson, Madison, Monroe, et al., equated property, as a moral force, with land. Their views were articulated by John Taylor (1753-1824), like them a Virginia landowner who served in the Senate and published in 1814 a monumental work of 700 pages, An Inquiry in the Principles and Policy of the United States. Taylor distinguished between ‘natural’ property. such as land, and ‘artificial property’ created by legal privilege, of which banking wealth was the outstanding example. He saw the right to issue paper money as indirect taxation on the people: ‘Taxation, direct or indirect, produced by a paper system in any form, will rob a nation of property without giving it liberty; and by creating and enriching a separate interest, will rob it of liberty without giving it property.’ Paper-money banking benefited an artificially created and parasitical financial aristocracy at the expense of the hard-working farmer, and this ‘property-transferring policy invariably impoverishes all laboring and productive classes.’ He compared this new financial power with the old feudal and ecclesiastical power, with the bankers using ‘force, faith and credit’ as the two others did religion and feudality. What particularly infuriated Taylor was the horrible slyness with which financiers had invested ‘fictitious’ property, such as bank-paper and stock, with all the prestige and virtues of ‘honest’ property.

Taylor’s theory was an early version of what was to become known as the ‘physical fallacy,’ a belief that only those who worked with their hands and brains to raise food or make goods were creating ‘real’ wealth and that all other forms of economic activity were essentially parasitical. It was commonly held in the early 19th century, and Marx and all his followers fell victim to it. Indeed plenty of people hold it in one form or another today, and whenever its adherents acquire power, or seize it, and put their beliefs into practice, by oppressing the ‘parasitical middleman,’ poverty invariably follows. Taylor’s formulation of this theory fell on particularly rich soil because American farmers in general, and the Southerners and backwoodsmen in particular, already had a paranoid suspicion of the ‘money power’ dating from colonial times, as we have seen. So Taylor’s arguments, suitably vulgarized, became the common coin of the Jeffersonians, later of the Jacksonians and finally of silver-standard Democrats and populists of the late 19th century, who claimed that the American farmer was being ‘crucified on a cross of gold.’ The persistence of this fallacy in American politics refutes the common assumption that America is resistant to ideology, for if ever there were an ideology it is this farrago.

[Measure_for_Measure]

@BrainGlutton

From A History of the American People, by British conservative Paul Johnson:

hijack: Does he discuss early 20th century and late 19th century conservatism? Because I have been having difficulty getting good sourcing on the history of conservative thought: most tomes with that topic start with Buckley at the earliest, with only a little exaggeration. I’ve tried Perlstein and Kabaservice.

I can draw a fairly straight line from Voltaire to Obama. But for modern conservatism the path grows weedy during the 1950s. /hijack

[BrainGlutton]

@Measure_for_Measure

hijack: Does he discuss early 20th century and late 19th century conservatism? Because I have been having difficulty getting good sourcing on the history of conservative thought: most tomes with that topic start with Buckley at the earliest, with only a little exaggeration. I’ve tried Perlstein and Kabaservice.

I can draw a fairly straight line from Voltaire to Obama. But for modern conservatism the path grows weedy during the 1950s. /hijack

It’s a while since I read the book, but IIRC, Johnson does discuss (from his own conservative POV) the politics of every period.

Perhaps a good source for what you’re looking for would be To Make Men Free: A History of the Republican Party, by Heather Cox Richardson, which tracks the GOP’s various ideological twists and turns from its founding to the present.

Right now, without getting up from your chair, you can read a good thumbnail sketch of the history of conservative (and of all Western post-Enlightenment political) thought (not limited to the U.S.) by clicking the TVTropes “Useful Notes: Political Ideologies” page.

[BrainGlutton]

You’ve “tried Perlstein” – but have you read Before the Storm: Barry Goldwater and the Unmaking of the American Consensus? It does not begin with Goldwater, it begins in the 1950s, with Senator Robert Taft.

[Stringbean]

@BrainGlutton

The weird thing is that today’s goldbugs, who want a gold standard because they think it will prevent inflation, are in a kind of continuous lineage with the 19th-Century Free Silverites, who wanted unlimited coinage of silver because they thought it would cause inflation. The common element is fear and suspicion of the “money power.”

Well, when your whole life’s saving has been fucked by financiers (a la the numerous bank busts of the 19th century, the Great Depression, and most recently the Great Recession), suspicion of the “money powers” is very legitimate.

The fact that Bernie Sanders and Elizabeth Warren have tapped into this populist suspicion refutes the argument that it is a “conservative” ideology to be wary of large moneyed interests manipulating fiat money.

[BrainGlutton]

@Stringbean

Well, when your whole life’s saving has been fucked by financiers (a la the numerous bank busts of the 19th century, the Great Depression, and most recently the Great Recession), suspicion of the “money powers” is very legitimate.

The fact that Bernie Sanders and Elizabeth Warren have tapped into this populist suspicion refutes the argument that it is a “conservative” ideology to be wary of large moneyed interests manipulating fiat money.

Well, I didn’t actually call it “conservative,” and neither did Johnson. It transcends the left-right divide as generally understood. However, Warren and Sanders notably are not complaining about the Federal Reserve manipulating interest rates or the value of the dollar, which seems to be where WillFarnaby is coming from. That’s all far-RW-and-Libertarian territory nowadays, though similar thinking (without involving the Fed, which did not yet exist) was once the territory of the somewhat lefty Populists and Free Silverites.

A good source for the pre-Fed history of all this is The Money Men: Capitalism, Democracy, and the Hundred Years’ War Over the American Dollar, by H.W. Brands (a surprisingly short book, BTW). In a nutshell, there have always been conspiracy theories about the “money power,” and they have always been bullshit; which does not mean there has been no corruption or venality among financiers.

As for the Fed:

** Austrian school and free banking proponents**

Much of the opposition to the Fed in non-conspiratorial circles (though there is some overlap) comes from the Austrian school (a less pejorative-sounding name for gross economic illiteracy), who are free banking proponents and generally draw on Ludwig von Mises’ arguments against central banking. Ron Paul is particularly known for his multi-decadal anti-Fed crusade in Congress. In short, they claim that the Fed creates the business cycle through the expansion of the money supply which leads to “market distortion” and “malinvestment” due to easy money; they’ve been proven wrong ever since.

Ignoring lessons from the US Free Banking Era (1837 to 1864)

The biggest flaw with the free banking proponents is they either are ignorant or ignore the many problems seen in the Free Banking Era of the US.

The first problem was that during this era banks issued bank notes based on the gold and silver in their vaults effectively printing money. Since these bank notes could only be redeemed at face value at the bank that issued them the result was the actual value of the note decreasing the further from the bank it got. Then there was the issue if the bank failed these bank notes became worthless. This made any form of long distance commerce difficult, if not impossible.

The second problem was since the laws were set up by the individual states there was no consistency with regard to reserve requirements, interest rates for loans and deposits, capital ratios, or anything else. Worse enforcement of what laws there were was highly variable within a state. This resulted in some states what was later called “wildcat banking,” where the bank notes were not backed by precious metal at all, but by mortgages or bonds.[26] In other words the exact same problems as are claimed regarding the Fed but with even less oversight.

Ignoring the original Great Depression (1873–79 or 96)

Before the Crash of 1929, the term “Great Depression” referred to the period of 1873–96 which was marked by deflation (largely because the US shifted from a bimetallic standard to a de facto gold standard in 1873) and the rapid industrialization of the country. The term Gilded Age is also applied to this period and sometimes in a pejorative manner – a shiny golden cover hiding a rotting or rotted core. The deflation that marked this period is why some wanted to return to a bimetallic standard, as hammered home in William Jennings Bryan’s Cross of Gold speech in 1896. Even the shorter range of 1873–79 stated by the NBER is longer than the 1930’s Great Depression by 22 months. This era is now called “the Long Depression”; the lesson it gives us is that switching over from a bimetallic standard to a gold standard (which the Coinage Act of 1873 effectively did) triggers deflation for extended periods of time.

After the establishment of the Fed

The US only saw three major banking crises after the establishment of the Fed (Great Depression, S&L crisis, 2008 financial crisis) and only two since the creation of federal deposit insurance, compared to one about every decade prior to that.[27] The business cycle had also seen shorter and smaller contractions.

Essentially, what this demonstrates is that the minority of libertarians[28] and Austrian schoolers who believe in free banking, like Ron Paul seem to love the idea of going back to the 19th century and having us all stuff gold bricks under our mattresses every time it looks like there’s going to be a run on the bank.

[puddleglum]

@Measure_for_Measure

hijack: Does he discuss early 20th century and late 19th century conservatism? Because I have been having difficulty getting good sourcing on the history of conservative thought: most tomes with that topic start with Buckley at the earliest, with only a little exaggeration. I’ve tried Perlstein and Kabaservice.

I can draw a fairly straight line from Voltaire to Obama. But for modern conservatism the path grows weedy during the 1950s. /hijack

William Graham Sumner was an important conservative thinker in the late 19th century. Russell Kirk has a good history of the conservative idealogy from Burke to the 1950s.