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Guest Post: Mark Carney's False Ideology

Tyler Durden's picture





 

Submitted by Caleb McMillan of the Ludwig von Mises Institute of Canada,

Neil Macdonald of the CBC recently did an investigative piece on central bankers and what they’re doing to the world’s economies. Mark Carney was featured heavily. He told Macdonald, “there is no secret cabal orchestrating things,” despite CBC’s own findings earlier in the program. Central bankers around the world meet in Basel, Switzerland for secretive meetings. Of course, central banks have – and have always had – enormous power that remained more-or-less hidden until 2008. A paradigm shift is occurring where a large number of people (particularly young people) are questioning their assumptions. Some of them are even beginning to read economists like Ludwig von Mises and Murray Rothbard. The “economics” of central bankers can now be revealed for what it truly is: statistical propaganda. Not only is the “Keynesian school” of economics unsound – the entire social science is bunk. Only the Austrian tradition can explain economic phenomena in such a way that makes common sense, scientific. Carney is asking us to trust him. This cannot be done. He is not speaking truth; he is speaking nonsense.

 

Who is Mark Carney?

Mark Carney: Bank of Canada governor, soon-to-be Bank of England governor. He was born in the Northwest Territories 48 years ago. He graduated from the University of Alberta in Edmonton before studying economics at Harvard and getting his master’s and doctorate from Oxford. He spent 13 years with Goldman Sachs in London, Tokyo, New York and Toronto. He then worked for the Department of Finance under both the Liberal and Conservative governments. He joined the Bank of Canada as a deputy governor before moving on into the top position. This was in 2007, just in time for the bursting of US housing bubble. Like every other central banker in the wake of the crisis, Mark Carney lowered interest rates and helped governments bail out large institutions.

What makes Carney unique is that he bumped up rates by a percent in 2010. Hardly a radical reversal, but it is something the US Federal Reserve has yet to accomplish. Carney got away with it because, at the time, Canadians were not as heavily indebted. The “boom” was still in its infancy. Carney still threatens to raise interest rates, but nobody believes him. All he does is give verbal warnings to Canadians that “taking advantage” of low rates is a bad idea. Despite all those educational institutions under his belt, Mark Carney does not understand human action.

Now he is bailing himself out from Canada’s certain crash and heading across the pond to lead the Bank of England. An already depressed economy, Britain won’t be any better under Carney’s rule alas he dismantles the Bank or at the very least raises interest rates to astronomical levels. Carney won’t do either of those things though because Mark Carney is a Keynesian. That is, the work of John Maynard Keynes influence his decision-making in macroeconomic analysis. This ideological view of society and its economic structure is one where no capital structure exists. Absurd given that nearly all consumer goods need some kind of input of capital stock. Keynesians also have a peculiar view on scarcity – a view that makes no economic sense whatsoever.

 

Economics

The public tend to have an unfavourable view of economics and economists – and for good reason. “Economics” is as dismal as it sounds; making economic sense is a whole other ball game. For Mark Carney, “economics” resembles something like physics and history. Although Carney would probably concede to the notion that an economy needs entrepreneurs and capital accumulation, his ideology assumes inherent failures in this process that must be corrected by state intervention. In actuality, it is state intervention that inhibits entrepreneurship, savings and investment. Therefore the Bank of Canada publishes nonsense. Their CPI indexes and growth estimates are results of computer models that produce the results they expect. Lately, this method has been failing as economies stagnate where the BoC’s arithmetic predicts growth.

Mark Carney’s economic methodology mimics the “hard” sciences like physics and chemistry. But economics is not a mathematical discipline; it involves agents who have free-will. Making economic sense requires understanding praxeology. Praxeology is the scientific study of human action. It is empirical but not in the sense of quantitative data. Praxeology begins with what we know is true and broadens its horizon through deductive reasoning. Instead of making a hypothesis of what we don’t know and then using empirical testing to validate the hypothesis, praxeology begins with what we do know – such as individuals act on purpose and value is subjective – to build logical constructs. The axioms – and the deductive reasoning built from them – are not trying to “prove” a hypothesis. They are true because of human language and the semiotic sign-systems we use to communicate and validate what’s real. Therefore the logical constructs in praxeological economics don’t need empirical testing since they can be traced to their irrefutable origin.

The Austrian tradition studies economics as understood through praxeology. This method has a long history, starting with the Late Scholastics and revived later by Austrians such as Carl Menger, Eugen Böhm-Bawerk and Ludwig von Mises. It survived the 20th century by a small group of Americans before exploding worldwide via the internet. With this school comes a deeper understanding of how we know. Human perception is a filter of information – five senses experiencing infinite possibilities. Language is crucial for understanding ideas. When individuals communicate we are quickly guessing and making decisions. Guessing if the words correspond to an objective reality and whether to choose those words. The process happens so fast that most of us are unaware of it; we do it instinctively.

Generations of state education have perverted the language to a degree that knowledge from logic is questionable, open to interpretation or deemed utterly unscientific. Bureaucratic schooling demotes common sense to the lowest common denominator. Mark Carney is a product of this conditioning but with a more intellectually rigorous indoctrination from Harvard and Oxford. It’s quite possible that he truly believes in what he’s doing.

Austrian Capital Theory

The Austrian School of Economics could in some cases also be called capital-based macroeconomics. Building from the irrefutable axioms that individuals act, value is subjective and the assumption that leisure is valuable good – the Austrians can build an entire framework on the structure of production and interest rates. The most clearest example I’ve ever come across is from Murray Rothbard’s Man, Economy & State. Particularly Figure 41:

Figure41

This figure is showing an “evenly-rotating economy,” a logical construct where certain things are assumed as to make economic principles more clear. In this economy, Mark Carney would experience reality as if every day were the same as the last. Risk, opportunity and uncertainty cease to exist. People still act – there is interest income, income to land and labour and consumer expenditure. But it is a closed system; everything behaves like clockwork.

On the right-hand side of the figure there are numbers ascending 1-6 starting with C. C is consumption, above it is the first-stage of production, then the second, third, etc. etc. Whereas C may be a nicely cooked t-bone steak, the stages of production are the process in which a cow becomes a steak on your plate. The cow is at the top, 19 ounces of gold to land and labour.

At each stage of production, a capitalist is purchasing capital goods (the shaded blocks) to be transformed by land and labour (the white blocks with numbers 8, 13, 12, 16, 15). For example, at the 1st stage of production a capitalist is purchasing t-bone steaks for 80 ounces, using 15 ounces worth of land and labour to cook it and collecting 5 ounces in interest. 80 + 15 + 5 = 100 ounces, which is what consumers spend on the product. If we trace the t-bone steak back to its nature-given resource we find cows. The capitalist at the fifth stage of production buys a cow for 20 ounces, earns 1 ounce in interest by investing in the 8 ounces (land and labour) required to butcher the cow and sell it to the next capitalist for 30 ounces. At each stage of production, value is added to the goods. This value is determined by the consumers willing to spend 100 ounces on cooked t-bone steak each period.

In Man, Economy & State, Murray Rothbard constructs sound economics step-by-step. Prices, he shows, are determined by individual valuations. This process is evident in this construct which has features to it that are not accidental. 83 ounces to land and labour and 17 ounces in interest equal the 100 ounces on consumer expenditure. While in the real world of uncertainty these price ratios would be constantly changing – the reality of human action keeps the economy heading in the direction of this stationary economy. However the evenly-rotating economy will never arrive due to people’s ever-changing valuations and actions.

 

Keynesian Logic

Mark Carney’s low interest rates are messing up the production structure. If the Bank of Canada analysed Figure 41, they’d conclude that GDP every period is 100 ounces and driven completely by consumer spending. If the economy were in a slump, the BoC would report that GDP is 100% consumer spending therefore we need consumers to drive us out of recession. But how do they get that GDP figure? By comparing consumption to net investment, where Y= 100 ounces, Y=C+I+G+(X – M).

In this economy, the Keynesian framework would tell central bankers that there’s no investment and that everything is driven purely by consumption. But that’s not true. Consumption is 100 ounces each period, but 318 ounces are being invested. There are 418 ounces spent each period, only 100 are directed to consumption.

Keynesians, if they are intellectually honest, must take this absurdity further. It takes six stages of production to get to this consumer good, but Keynesians would say everybody should consume as much as they can and that will grow the economy. But if all those capitalists at those various stages said “okay, let’s consume more,” and they went to buy t-bone steaks instead of reinvesting, that would a) push up the price of t-bone steaks, and b) create a shortage of t-bone steaks since the capitalists didn’t bother replenishing their capital stocks.

A Keynesian may argue, “but this is good; higher prices entice producers. Bigger, final demand.” But this is nonsensical. There aren’t more goods to go around just because people are spending more. There can only exist what’s actually been produced. If more buyers enter the market and push up the price, we won’t have more goods, just higher prices.

But won’t that stimulate production? No, it can’t because the capitalists invested less in production and more in consumption. There is no way around the physical reality of scarcity. The Keynesian solution is to dilapidate the capital structure by diverting resources out of gross investment and into consumption. Sometimes people change their preferences and consume more in the present and less in the future. This naturally changes interest rates and businesses adjust accordingly. When Mark Carney manually lowers interest rates, he’s leading you to believe that we can get a free lunch.

 

Carney’s Fallacies Exposed

Neil Macdonald sat down to interview Mark Carney for his CBC report. Although the full interview has yet to be released, it’s evident from excerpts that Mark Carney did not like Macdonald’s reasoning.

Carney says, “There is a logic to some of your questioning which is that wouldn’t it be better if interest rates were really high? … You wanna talk unintended consequences, I’ll give you the intended consequences of that scenario which is let’s get interest rates back to historic levels, so that the money you saved and the return on that in your bank account is going to commence with what you expected.” In other words, let’s make it so your money isn’t losing its purchasing power. Carney continues, “and we have double unemployment in this country, hundreds of thousands of people losing their homes, their businesses because we have deflation.

Mark Carney’s ideology is illogical: An economy with high unemployment can be fixed by printing money because mass unemployment and mass inflation never occur together. The 1970?s pretty much ended this Keynesian argument until the ’08 crisis revived the monster. The paradox of high unemployment with high inflation is corrected by changing how governments and banks measure inflation. No longer defined by the money supply, inflation in Canada is defined by the Consumer Price Index. A collection of prices of goods chosen by central bankers. Naturally, food and energy prices are excluded. The bias is blatant.

Mark Carney has no capital theory. The effect on savings in a low interest rate environment is to him, “a distributional implication.” Interest rates are an objective expression of individual time preferences – not tools to be wielded. It’s true, high rates will cause immediate recession if not depression, but this is temporary and necessary as the malinvestments liquidate and labour and capital find more productive uses. When savers are no longer punished, economic growth can occur.

In additional footage of his CBC interview, Mark Carney reveals that he really has no idea what he’s talking about. For example: The US Government issues bonds to finance their massive debt. Increasingly, only the Fed is willing to buy them. So the US Federal Reserve is the bond market. They might as well print money and mail a cheque to everyone. But according to Carney, this is a monetary stimulus where the Fed buys all the bonds to encourage investors to go into something risky. Without risk, says Carney, economies don’t grow. “You find risk in lending money to corporates or buying their shares,” he says, “or… by investing in another country.” He doesn’t elaborate much further, simply stating that, “that’s how economies grow and that’s the process by which central banks are trying to restart real growth in the economy.”

The financial crisis, according to Carney, was not a result of a government and central banking interventions. Carney thinks that money – “created in the private sector” – collapsed. By creating new money central banks are merely “leaning into” this collapse of money that threatened a repeat of the Great Depression. When Macdonald asks about central banks causing asset bubbles through quantitative easing, Carney answers in the affirmative. He says, “those are intended consequences, not unintended consequences.”

 

Conclusion

Mark Carney has no scientific backing to justify his actions. He is in a position that is dangerous and should not exist in a free society. Money is a commodity; not magic wand created by state decree. Is there an exit strategy for the Bank of Canada? What is Mark Carney’s plan to get England out of depression? It looks as if he isn’t too worried. Carney believes that everything depends on how governments act. “People can elect governments that do what they want,” says Carney. Funny, coming from the head of an institution that is supposed to remain independent of government influence.

 


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Sun, 06/02/2013 - 17:27 | Link to Comment Motorhead
Motorhead's picture

Dump the Central Banks, bitchez!

Sun, 06/02/2013 - 17:30 | Link to Comment Stackers
Stackers's picture

“there is no secret cabal orchestrating things,”

 

He's right. It's a well known cabal orchestrating things.

Sun, 06/02/2013 - 17:38 | Link to Comment negative rates
negative rates's picture

Just call it the where else was I going to put it bubble.

Sun, 06/02/2013 - 18:26 | Link to Comment Richard Chesler
Richard Chesler's picture

Once Goldman always a crook.

Sun, 06/02/2013 - 19:51 | Link to Comment economics9698
economics9698's picture

I just refer to it as banker bull shit.

Sun, 06/02/2013 - 20:21 | Link to Comment chumbawamba
chumbawamba's picture

To you youngsters just discovering Mises and Austrian Economics: don't stop there, it's a dead end.  Keep moving on.  There be Rothschild banker skeletons in his and Murray Rothbard's closet.  And for fucks sake, stay away from the Randian brothel; that bitch was the love interest of Philip Rothschild.

The answer lies beyond any one economist, beyond economics itself, and into the spiritual.  It is to there you must wander if you wish to find the answers.

I am Chumbawamba.

Mon, 06/03/2013 - 00:01 | Link to Comment Pinto Currency
Pinto Currency's picture

 

Step right up folks.

(Just another carney).

Sun, 06/02/2013 - 18:04 | Link to Comment Cheyenne
Cheyenne's picture

Exactly. The plans for world domination are published openly by the FSB, which is chaired by none other than Mark Carney.

http://www.financialstabilityboard.org/about/overview.htm

Sun, 06/02/2013 - 18:09 | Link to Comment akak
akak's picture

I never trusted carnies.  Now I know why.

Sun, 06/02/2013 - 18:15 | Link to Comment The Thunder Child
The Thunder Child's picture

Never trust a Goldmanite...

Sun, 06/02/2013 - 18:15 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Don't forget fellow ex Goldmanite, and NYFED President and CEO, William Dudley. 

"In 2012, Mr. Dudley was appointed chairman of the Committee on the Global Financial System of the Bank for International Settlements (BIS). Previously, Mr. Dudley served as chairman of the Committee on Payment and Settlement Systems of the BIS from 2009 to 2012. He is a member of the board of directors of the BIS and a vice chairman of the Economic Club of New York."

http://www.newyorkfed.org/aboutthefed/orgchart/dudley.html

Sun, 06/02/2013 - 21:07 | Link to Comment drdolittle
drdolittle's picture

There it is, the official denial! Now we know it's real

Sun, 06/02/2013 - 23:13 | Link to Comment Buck Johnson
Buck Johnson's picture

No kidding, they are well known and well wrong.  Many think that they can get out of this by just defaulting on the people.  The problem is that you don't know how it will come about and what may happen.  Countries and govt. are being overthrown all over the place, it will be something to see a EU country pushed over because of economic chicanery.

Sun, 06/02/2013 - 17:30 | Link to Comment falak pema
falak pema's picture

you cannot dump the power meme and human nature; get over it.

The only thing you can do is ensure separation of powers and ensure transparency.

If the counter powers to state power can ensure that we will never revert to totalitariansism.

Sun, 06/02/2013 - 18:11 | Link to Comment akak
akak's picture

Bullshit.  One can and one should, by always advocating for a greater degree of voluntary interaction within society as opposed to involuntary, coercive social interaction, i.e., statism.

Sun, 06/02/2013 - 19:21 | Link to Comment DaddyO
DaddyO's picture

Double Bullshit! Where in the F*ck did you come up with that drivel? End the Fed and coercive regulations and see how fast the unfettered capital markets start picking winners...true economic recovery would be sure and swift.

DaddyO

Sun, 06/02/2013 - 22:05 | Link to Comment prains
prains's picture

QUADTRIPLE BULLSHIT unfettered capital markets rely on a level of honesty in transaction that is beyond human capability, the oligarch will always try to tilt the game, so it will never happen

Mon, 06/03/2013 - 07:53 | Link to Comment The Wedge
The Wedge's picture

Super duper quad bull shit.

...unfettered capital markets rely on a level of honesty in transaction that is beyond human capability, the oligarch will always try to tilt the game, so it will never happen

The only unfettered markets period are those of the illicit nature like drugs, laundering etc. and they self regulate just fine. So it is possible. Although, the quite visible hand of consequence is certainly a market force where it is not in legal, traditional markets [at least for most; zero prosecutions so far since 2008].

But who am I to dissuade you from your willing acceptance of bondage. There will always be meat suits that seek to subjugate others and those that resist. Then there are those all to willing to capitulate. I'm not sure which is worse.

Sun, 06/02/2013 - 18:25 | Link to Comment Totentänzerlied
Totentänzerlied's picture

"separation of powers and ensure transparency"

HAhahahahahahahahaahahahahahahahahhaaaaaaaaaaaa.

Sun, 06/02/2013 - 17:33 | Link to Comment ekm
ekm's picture

The only ideology Carney had was to do whatever Stevie Harper told him to do.

 

That's why the britts hired him. He obeys quickly.

Sun, 06/02/2013 - 17:58 | Link to Comment The Thunder Child
The Thunder Child's picture

Harper was passing orders along like a good little puppet bitch...chain of command goes much higher.

Sun, 06/02/2013 - 19:09 | Link to Comment dogbreath
dogbreath's picture

just like martin took credit for lowering the debt yet it was mulroney GST revenues and a robust economy that did it. 

Sun, 06/02/2013 - 19:27 | Link to Comment ekm
ekm's picture

Absolutely correct.

 

Mulroney did it, no doubt.

Sun, 06/02/2013 - 19:29 | Link to Comment The Thunder Child
The Thunder Child's picture

Former PM of Canada Paul Martin - Where Does Money Come From?

http://www.youtube.com/watch?v=0mgs_n9mh84

Good for a laugh! Almost EVERYTHING that encompasses gubbamint is crooked...

Sun, 06/02/2013 - 20:15 | Link to Comment Yen Cross
Yen Cross's picture

 Well done Gents. Thunder and EKM get it!

Sun, 06/02/2013 - 19:12 | Link to Comment dogbreath
dogbreath's picture

ekm

I think I know what you are trying to say but where I normally enjoy your posts, not this time.  

If you think Harper sucks just wait till Troodough or Mulcair take over

Sun, 06/02/2013 - 19:25 | Link to Comment ekm
ekm's picture

Agree

Mulcair and Troudaugh are communists.

Harper sucks, but between 3 bad things Harper is the least bad.

 

My points was that Carney is not genius and is a yes man.

 

 

Sun, 06/02/2013 - 21:40 | Link to Comment dogbreath
dogbreath's picture

agreed

Sun, 06/02/2013 - 20:23 | Link to Comment nmewn
nmewn's picture

"That's why the britts hired him."

Canadians seem to think they are no longer the subjects of the Queen for some reason...its like some mass psychosis...lol.

Sun, 06/02/2013 - 21:43 | Link to Comment akak
akak's picture

Yeah, really --- I mean, they don't even have the balls to kick that foreign figurehead bitch off their own currency!

If I were Canadian, I would be as embarrassed as Hell every time I opened my wallet.

Sun, 06/02/2013 - 17:38 | Link to Comment q99x2
q99x2's picture

Mark Carney was featured heavily. He told Macdonald, “there is no secret cabal orchestrating things,”

Right and Obama says there is no "Tyranny."

And I can't wait for when the instant reset of the evolutionary process of survival of the fittest takes place and 7 billion people, armies, drones nations, mobs, police forces all go out to collect what was stolen from them by the 400 wealthiest individuals in the world.

A return to the natural order of things. All in a few short years.

YeeeeeeHaaaaaa.

Sun, 06/02/2013 - 18:23 | Link to Comment otto skorzeny
otto skorzeny's picture

That's funny - because I find it hard to believe the unwashed masses will have much sympathy for the cops and armies and assorted governmental thugs that are paid to do the bankers' bidding with their tax dollars. 

Sun, 06/02/2013 - 19:00 | Link to Comment Abraxas
Abraxas's picture

I'm surprised you didn't claim that Carney was a Muslim or black, you bigoted pig.

Here's a list for you, so instead of spewing your racist neo con posts you can just circle one of the below listed to blame:

1. Socialists

2. Muslims

3. Democrats

4. Blacks

5. All of the above

 

Get out of the basement and try and find something to do with your life.

 

Get out of the basement and try and find something to do with your life.

Sun, 06/02/2013 - 19:29 | Link to Comment Dasa Slooofoot
Dasa Slooofoot's picture

Sounds like there is an echo in your mom's basement.  

Mon, 06/03/2013 - 09:09 | Link to Comment The Wedge
The Wedge's picture

When I see accusatory posts that don't fit with the original comments, I can't help but wonder if the person is real or some bot generating non sense. Does it matter? I could imagine their inclusion with roving bands of dumb asses wreaking havoc on otherwise semi intelligent forums. In the future, I fear we will be deluged with mass stupidity and a system that thwarts Darwin at every turn. 

 

Future News Cast

This just in...

Today in the town of Mountain Dew roving bands of cognitively impaired individuals or non-cogs, burned down the the last remaining public library. One non-cog was asked why they burned down the library, "I-ah-know thought this was du hospital". Local semi cogs say no one has been in the building for 90 or 35 years and the search for survivors is ongoing. "We are searching all across the county for those that may have died". At this time a super cog arrived on scene and informed local authorities that first the fire must be put out, then search for the dead at the library only.

Madonna Beyounce  reporting for Semi-Cog News.

 

Sun, 06/02/2013 - 18:27 | Link to Comment Totentänzerlied
Totentänzerlied's picture

Dangerously insane. You are.

Mon, 06/03/2013 - 05:50 | Link to Comment grove_orchard
grove_orchard's picture

"Excusatio non petita accusatio manifesta" 

Sun, 06/02/2013 - 17:37 | Link to Comment granolageek
granolageek's picture

Garbage. In the Austrian world, praxeology is a five syllable word for "Postulating your conclusions." 

Doing that sure makes those syllogisms zing.

Sun, 06/02/2013 - 17:49 | Link to Comment granolageek
granolageek's picture

I have seen Austrians claim that inductive economics is meaningless. You must deduce from human nature. 

1. Real sciences, Physics and Chemistry, are inductive. What does that say about Austrian Economics?

2. What if your understanding of human nature is flawed. Where is the feedback mechanism that will catch that?

3. Do you know what 'falsifiable' really means? Is Austrian Economics falsifiable? If not, it is bullshit, not science.

4. If it is falsifiable, what is the observation I can make that confirms or denies it? Note, if the Keynesians and the Friedmanites agree with you, the claim is worthless. Bill O'Rielly to the contrary, tides do nothing for creationism.

Sun, 06/02/2013 - 18:11 | Link to Comment ebworthen
ebworthen's picture

Only problem being that behavior is unpredictable.

Do you intuit that people will still believe in an economic system that punishes individual responsibility and saving while rewarding government and corporate corruption and legerdemain?

If I am nothing but a debt serf to a corrupt kleptoligarchy what motivation do I have to produce or contribute anything?

Sun, 06/02/2013 - 18:28 | Link to Comment bombdog
bombdog's picture

Your behaviour seems fairly predictable to me. You have no incentive to be productive so this is just the kind of situation that Austrian school tends to address. Keynesianism is an attack on human volition (e.g. saving for the future) with many damaging consequences to society.

Mon, 06/03/2013 - 05:16 | Link to Comment Acet
Acet's picture

The error of Keynesianism is not in using the Scientific Method, it's in how they use it:

- They have built a pseudo-scientific structure around something which they can't measure properly. Worse, macroeconomic events happens over such long timeframes that through their own actions, economists - mostly central bankers - deeply affect macroeconomic events so there is never a "clean experiment" from which conclusions can be derived about how certain inputs affect certain outputs.

The closest in economics there to a real Science is Behavioural Economics, which is not part of mainstream Economics and can't make predictions about macroeconomics (since they actually run experiments, which are always at the level of a small number of individuals under well defined conditions).

So the only branch of economics with any kind of scientific rigour is not mainstream and does not participate in macroeconomic decision-making.

What we have as our economic decision makers are not scientists, they're quacks: snake-oil salesmen wearing the trappings of science but not practicing it, which are only there to cheat others out of their money through fraud and deceit.

Mon, 06/03/2013 - 06:01 | Link to Comment Ghordius
Ghordius's picture

not only this, we are at the point where macroeconomic symptoms - like price inflation - are being sought as if producing a symtom would magically conjure the usual cause for the symtom

similar to the request for the consumer to spend more - regardless - because spending as such (which is a symptom of affluence) would conjure the cause for it (affluence itself, which is usually a sign of productivity)

Sun, 06/02/2013 - 18:29 | Link to Comment Totentänzerlied
Totentänzerlied's picture

None, but the serfs will never realize that, they never have before.
Generally when people realize this, they join the other team. That's just how it works.

Sun, 06/02/2013 - 18:15 | Link to Comment bombdog
bombdog's picture

1. Nothing. That's that whole point, economics is not a physical science. geddit?

2. Your peers as human beings can examine your work. You can agree on axioms and rules like marginal utility. Marginal utility is universal. Man acts purposefully, has preferences, always has preferences, always acts... falsify away!

3. It's not the same as a physical science. see 1

4. History can be explained in terms of Austrian principles. The future can be planned for.

Hans can explain it to you better than I can:

https://www.youtube.com/watch?v=hiXcO3pcR8I

Enjoy!

Sun, 06/02/2013 - 18:49 | Link to Comment jon dough
jon dough's picture

+1, well said

Mon, 06/03/2013 - 09:03 | Link to Comment Lebensphilosoph
Lebensphilosoph's picture

 

You can agree on axioms and rules like marginal utility. Marginal utility is universal.

 

No, it isn't, because 'utility' is subjective. It's thought up. 'Utility' can do absolutely anything from one moment to the next and back again without any regard to principles or laws like 'diminishing', when it even exists in the first place, since it doesn't when it isn't thought of. Even something so banal as a fat kid stuffing his face full of chocolate cake until he vomits on himself runs circles around such ideas.

 

Man acts purposefully, ... always acts

A definition of the Austrian sense of 'action' as humans taking 'conscious action towards chosen goals' sounds like acting 'purposefully' to me. In that case, man certainly does not always 'act'.

 

has preferences, always has preferences,

 

... against which he will sometimes act, and no, not in favour of some other preferred 'utility' but in and for the aciton itself.

 

... falsify away!

 

In your own words! Of course Austrian 'science' can't be falsified. That's because it's bunk.

 

4. History can be explained in terms of Austrian principles. The future can be planned for.

 

As everything under the sun can be 'explained' in terms of Freudian pinciples. All such 'explanation' will ever be is the fitting of a conceptual scheme onto a reality that is inexhaustible in the way sone might think of it. Why don't you tell us then, armed with your understanding of history, what forms art, music and fashion will take in Europe 100 years from now, what its borders will look like, what political systems will be in place, when the next Napoleon will be born, or what some man is going to do ten minutes from now that might have consequences for the rest of human history like a butterfly flapping its wings before a storm rises halfway across the world. You play Ludwig von Mises - I raise you Oswald Spengler. Choke on that. History is an expression of life, in all its essential incomprehensibility, not a function of 'principles'- and much less of 'Austrian' ones.

Sun, 06/02/2013 - 18:15 | Link to Comment Vidar
Vidar's picture

Physics and chemistry are totally different from economics. In the physical sciences we deal with things which have no motivation, that move only because outside forces act on them. We have no knowledge of 'why' the physical universe is as it is, and no way of learning why. We must simply form theories and test them out. This is not true of the social sciences that deal with human action. In these sciences, we can determine, by introspection or by observing other humans, why human beings act in a certain way. This is impossible with regard to rocks or atoms, and forms a basic distinction between the two types of science. Methods that are appropriate in one field are not appropriate in the other.

Economics is a science of human action. It deals with independent individuals who are self-motivated. They do things not because of an outside force acting on them, but because they choose to act a certain way. Your entire mode of thinking is based on a false analogy between the sciences of human action and the physical sciences.

Mathematical axioms are not 'falsifiable' and yet everyone understands that they are true. The same thing goes for economic laws. Economics is a deductive science, like math, not an inductive one, like physics. This is the fundamental distinction that the Keynesians and monetarists fail to make. Only Austrian economic is real economics, because only Austrian economists understand what economics really is. It is not physics, it is not chemistry, it is a deductive science, like math or formal logic. This does not make it any less of a science, it simply means that it is different, and different methods are needed to arrive at the truth.

In the end, the Keynesian and other types of 'mainstream' economics exist not to expand human knowledge, but to justify and defend the existing power structure. The attacks on Austrian economics are not motivated by a desire to understand, but a desire to keep people from understanding that they have been coned. The politicians and the banksters have created this entire ideology, and given it the name of a real science, economics, in order to deceive people and to make it more difficult for real economics to be understood.

Sun, 06/02/2013 - 18:50 | Link to Comment jon dough
jon dough's picture

+1, nice addition to bombdog's posts above.

Mon, 06/03/2013 - 09:47 | Link to Comment Lebensphilosoph
Lebensphilosoph's picture

In these sciences, we can determine, by introspection or by observing other humans, why human beings act in a certain way.

No, we can't determine, we can only hypothesize about others and even of ourslves. I suggest Nietzsche for anyone who is still living blissfully unawares of the self-deception that exists in attempting to explain even ones own actions. Moreover, what you are suggesting, insofar as it consist of making observations and forming propositions about reality from them, is every bit an attempt at empirical, though in this case shoddy, science.

 

This is impossible with regard to rocks or atoms, and forms a basic distinction between the two types of science.

 

You are conflating purpose and the answer to the question why. Contra Netwton there are, moreover, thousands of why's asked and purportedly answered in something like physics. It's entire system depends upon employing concepts that contain within them a history of human thought which goes far beyond merely asking how.

 

Mathematical axioms are not 'falsifiable' and yet everyone understands that they are true.

 

Its axioms are merely rules definining the logical game that is mathematics. That's it. They aren't generally treated as 'true' or 'false' statements in any absolute sense. That is to say, they are the assumptions from which mathematics is deduced. It's all true by definition. It's all an invention of the human mind. But that's alright, because mathematics is not a theoretical science purporting to make propositions about the actual world. Its speaks only of itself. Austrian philophastering, on the other hand ...

Your retort makes it painfully obvious that you haven't understood Popper's logical motivation for demanding the falsifiablity of theoretical propositions. We can turn to Wittgenstein's pondering that the meaning of a proposition is to be found in its truth conditions, that is to say, the picture of reality under which the proposition would be determined to be true or false. If you can't specify these, what are you even saying by it? A tautology or contradiciton, perhaps? Tautologies propose nothing, because they contain no information, while contradicitons are, propositionally, incomprehensible nonsense. You can't weasel your way out of it with the third-rate philosophy of a believer in rationalism and ontological materialism.

Mon, 06/10/2013 - 14:30 | Link to Comment hit_the_bid
hit_the_bid's picture

+1 great posts, i would like to read more

Sun, 06/02/2013 - 17:58 | Link to Comment Bay of Pigs
Bay of Pigs's picture

So, you shoot the messenger? Is that it? Or are you actually trying to defend the actions of Mark Carney?

 

Sun, 06/02/2013 - 17:43 | Link to Comment A Lunatic
A Lunatic's picture

When I think 'Carney' I imagine a greasy, untrustworthy, chain smoking, alcoholic douche-bag who is charged with the task of piecing together terrifying rides which bilk working class ignoramuses out of their discretionary income........

Sun, 06/02/2013 - 17:45 | Link to Comment noless
noless's picture

This felt like an over simplified and pontificated hit piece. I only skimmed it.

It seems more relevant to me to point out to people that they live under an unelected global form of governance, which although illustrated by this piece, is at the same time glossed over.

Mark Carney is a governor of what and by who?

Sun, 06/02/2013 - 18:19 | Link to Comment tradewithdave
tradewithdave's picture

Mr. Carney's forte seems to be the ability to converse while not tipping his hand until the counterparty has committed to a position. Watching his expressions is like watching those of a master illusionist. He is near-flawless in his misdirection. A Kung Fu banking narrative that is likely more dangerous than even he can appreciate. A modern day Midas unable to touch his own dog in the absence of destruction.

Sun, 06/02/2013 - 18:24 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Central bankers are public servants doing God's work.....HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA.... Go To Hell you psychopathic, sociopathic white-shoe scumbags!

Sun, 06/02/2013 - 18:24 | Link to Comment AccreditedEYE
AccreditedEYE's picture

THAT was f-ing fantastic... Fantastic! Here is to hoping this week is the beginning of the end for the Grand Illusion.

Sun, 06/02/2013 - 18:29 | Link to Comment smacker
smacker's picture

 

Carney is one of those people who can talk out of both sides of his mouth at the same time. I'm surprised he hasn't gone into politics.

Sun, 06/02/2013 - 19:22 | Link to Comment medium giraffe
medium giraffe's picture

His politico-pals were trying to groom him for the Lefty top spot:

 

http://www.torontosun.com/2012/12/17/mark-carneys-judgment-in-question

Sun, 06/02/2013 - 19:43 | Link to Comment smacker
smacker's picture

I'm not surprised...

Since Carney was appointed to take over the BoE later this month,  I have yet to read anything about him which could be described as "good". Still, if he's another Keynesian Lefty, he'll get on well with most Brit politicians, especially the current Conservative Chancellor Osborne who keeps telling us "we're all in this together", which I understand to mean he supports collectivism. Like his boss Cameron, the socialist Labour Party and Lib Dem Party. And they wonder why the economy's in a huge mess with no growth.

God, give me strength!

Sun, 06/02/2013 - 20:26 | Link to Comment medium giraffe
medium giraffe's picture

The final moment in Britain's downfall will come when the cerebrally inert populace vote Labour back in.  Corporatocracy with Keynesian sympathies as seen through a Marxist lens. A clusterfuck, essentially.

Mon, 06/03/2013 - 04:23 | Link to Comment smacker
smacker's picture

 

That's very VERY likely to happen...Cameron is losing support...

Shadow Chancellor Ed Balls, is already out on the stump later today giving a speech to Reuters when he will promise "iron discipline on spending [if Labour wins the next election]". ho-ho.

Some of us are old enough to remembr Gordon 'Jonah' Brown promising the same thing back in 1995.

I hope they nominate someone to turn the lights out...

Mon, 06/03/2013 - 04:34 | Link to Comment Seahorse
Seahorse's picture

Labour? That's a perfect description of the UK under any of the parties.

Mon, 06/03/2013 - 04:11 | Link to Comment bozzy
bozzy's picture

what do you mean "hasn't"? What other profession is there where you can spout endlessly, get paiud a fortune, and never have to do a days proper work or come up with a result?

Like Bernanke - they are in position to do schoolboy experimentation without any practical basis to support their actions. This is no accident.Cntral banks and their "bankers" whatever that means - operate in secret - or if not, then show us the transcripts - lets hear teh Watford Bilderberg sessions on live Broadcast.

Mon, 06/03/2013 - 04:32 | Link to Comment smacker
smacker's picture

Well, from that earlier link to the Toronto article, Carney obviously has Lefty political affiliations or sympathies.

The difference is that he's not subject to the ballot box as BoE Governor. As a politician, he would be.

At the BoE, he will be the same as all the other unelected, faceless and nameless Civil Servants who actually run Britain's Treasury, Foreign Office & Home Office et al. Although they wield enormous power, none of them are subject to democratic elections and are essentially not accountable to the people. Our elected politicans are mostly Departmental figureheads to give the impression of democracy, but in many cases they haven't got a clue what's going on.

Mon, 06/03/2013 - 04:29 | Link to Comment Seahorse
Seahorse's picture

He has, bank 'independence' being what it is.

Mon, 06/03/2013 - 04:55 | Link to Comment smacker
smacker's picture

Right.

Anybody who believes that Gordon Brown really made the BoE independent of government back in 1997 simply doesn't understand how the power structure operates in the British system of government.

Brown's action was simply to appease and calm down The City and MSM because of Labour's disastrous track record of gross economic mismanagement. It worked. The City got behind him and MSM went back to sleep.

When the economy crashed 2007-8, QE & Zirp would not have been actions taken by the independent BoE without explicit agreement from the Chancellor & Prime Minister at the time (Darling & Brown respectively). Exactly the same continues today under the Conservative Coalition. Nothing ever changes.

Sun, 06/02/2013 - 18:29 | Link to Comment blindman
blindman's picture

money is a social contract where you work for and at your master/s
pleasure, by law, and then enjoy/suffer the potential resulting surplus/deficit
alone and together.
what is the problem? elitist preferential systemic distribution , granted, is highly
suspect. (fraud and crime at the root of money creation and the bells are
ringing here..)
the carneys will say anything for a snickers bar and a dollar
if it convinces people that this arrangement is as close to
justice and god's gift to the common man as he, the common man,
will ever get from his owners.
.
what more could one ask for without violating either man's law or natural law?
requests are ignored or laughed at, demands are different.

Sun, 06/02/2013 - 18:34 | Link to Comment Yen Cross
Yen Cross's picture

   I wish Mr. Carney the best. /s

Sun, 06/02/2013 - 19:02 | Link to Comment Cacete de Ouro
Cacete de Ouro's picture

Carney is lying through his teeth. Just look at the BIS Governors' Basel meetings minutes...

Who the fuck do you think we are Carney? Jerk!

Sun, 06/02/2013 - 19:07 | Link to Comment Cacete de Ouro
Cacete de Ouro's picture

And also, since Carney is a G30ite, he dances as a good little Rockefeller puppet in the G30 puppet show...

Sun, 06/02/2013 - 19:26 | Link to Comment pitz
pitz's picture

Carney got lucky that the Government of Canada was willing to extend the CMHC deeper and deeper into the abyss of guaranteeing subprime loans to people who were so poor they couldn't even come up with anything but minimal downpayments. 

Now that the CMHC limit has been hit ($900B of subprime loan guarantees, which is nearly twice the size of Fannie Mae/Freddie Mac on a per capita basis), it is becoming apparent that the Canadian RE market is falling apart and Canada is falling into a deflationary abyss. 

Sun, 06/02/2013 - 19:53 | Link to Comment robertocarlos
robertocarlos's picture

I think the limit is 600B. And we have almost hit it. I could be wrong.

Sun, 06/02/2013 - 23:19 | Link to Comment pitz
pitz's picture

$600B + $300B of 90% re-insurance of private sector mortgage insurers (Genworth, etc.)

Sun, 06/02/2013 - 19:39 | Link to Comment Yen Cross
Yen Cross's picture

 A good insight. "Merv The Swerve" , exit BoE thoughts.

Sun, 06/02/2013 - 19:47 | Link to Comment ponzisaurus
ponzisaurus's picture

"A paradigm shift is occurring where a large number of people (particularly young people) are questioning their assumptions. Some of them are even beginning to read economists like Ludwig von Mises and Murray Rothbard."

 

Oh yes flocking to it.  Its right behind the new book "MOAR MOAR" on the NY times bestselling list. /sarc

Sun, 06/02/2013 - 19:51 | Link to Comment robertocarlos
robertocarlos's picture

That's an eye-opener. I did not know Carney is a moron. He is a moron. What is the point of his big education when he is that clueless.

Sun, 06/02/2013 - 20:28 | Link to Comment MarcusAurelius
MarcusAurelius's picture

Haven't posted in a while but finally someone with some real intelligence (ie. the author), depiciting Carney for what he really is, "a puppet of the FED". I am not sure that anyone read the article in the Readers Digest calling marc Carney, "the only responsible central banker", but if you did you very well may have been as enraged as I was. Glorifying a villain to the Candian people. 

     I have written a few articles to the Honorable (amazing that they all call themselves this) Mr. Carney telling him that indeed he has very little understanding of "addictions" or as our author states "human actions". However they are two different things. The credit spigots have been on for a long time (30-40 years unabated) and in Canada it was and is no different.

     There is a simple chart which shows housing prices increasing with credit expansion here in Canada. If you really want to know what is happening then I recommend Brian Ripley's site called "plunge-o-meter". He has a pretty good handle on it. When our wealth evaporates because you tap out the very last consumer with debt then our own house of cards here in Canada will collapse. We are simply a little late to the party and so we have been a little late to put away the bottles and sober up. However sober up you must. The scenario he is describing above in hundreds of thousands out of work and businesses collapsing will happen anyway. Except with central bank heroine it will be that much more painful. If he was truely worrried about this scenario then he should have done what Australia did in 2008. Very little. If I am not mistaken we (Canada was at about 4% or 5% interest rate. There was still no need to chase assets. However the 2008 crisis hit. Down went the US rates and down went Canada's rates with them. Why? Who knows. Fed pressure would be my guess so Americans would not run cross boarder to buy stable Bonds at high rates and punish their own inept bankers and Federal Reserve. So we joined the party as Canadians whined pretty loud in 2008 and out came the new Champagne bottles instead of helping us off our addiction. Nope lets do the "easiest thing" and the most peopular thing, not necessarily the "right thing". 

    To be a real leader (which none of the western countries have had in a very long time measured in decades) sometimes you have to do what is unpopular even if it means giving up your cushy job and beign ridiculed as a "fool". Davis did it in the 90's when Canada was facing serous debt challenges. He was not liked but people respected that he was correct and that maybe we had made too many mistakes. Paul Martin even battoned down the hatches at the Fedral government. It was a time of fiscal responsibility and repair. Now all that good work that Canadians had sacrificed and cut back for in the 90's and early 2000's os all for naught. We are now the most indebted of the G8 countries. Why?

     Credit Expansion=Population/society indebtedness.

   A still proud Canadian, but one who feels for his fellow journeyman.

Sun, 06/02/2013 - 20:43 | Link to Comment chumbawamba
chumbawamba's picture

Hint, Bro: they're all puppets of the Fed, and the Fed itself is a puppet of the international banksters.

I am Chumbawamba.

Sun, 06/02/2013 - 20:41 | Link to Comment Herdee
Herdee's picture

And that's why Bernanke has his hands tied.His hands are tied by politicians with a trillion dollar a year excess spending habit and an overall deficit of 17 trillion.What do you expect of him under the circumstances?Americans elected these deficit spending war mongers so now the price is being paid.Do you know how many years it took for the U.S. economy to readjust from Vietnam.Try 15.Iraq and the losing war against a plant(afgan-land) has dessimated any political credibility.Ya,like Japan,try raising interest rates on your deficit.There's no longer the tax base is there?All the jobs went to the G.D. F'n commies in Red China who are now freely hacking all the defence industries suppliers.

Mon, 06/03/2013 - 00:50 | Link to Comment Pareto
Pareto's picture

But according to Carney, this is a monetary stimulus where the Fed buys all the bonds to encourage investors to go into something risky. Without risk, says Carney, economies don’t grow. “You find risk in lending money to corporates or buying their shares,” he says, “or… by investing in another country.” He doesn’t elaborate much further, simply stating that, “that’s how economies grow and that’s the process by which central banks are trying to restart real growth in the economy.”

 

But the problem that Carney doesn't understand is that the commitment to the so-called risk taken by the market as a result of CB distortions, is that the commitment, (as John Hussman argues), isn't durable.  As a reuslt of market coercion, Carney is forcing to people and institutions to take bets that they would ordinarily never take.  So the economic result is a staggering misallocation of resources with no commitment to the economic returns of an investment, rather a commitment to short term bets that are indifferent to the economic commitment of value adding wealth producing activity. 

Mon, 06/03/2013 - 04:21 | Link to Comment bozzy
bozzy's picture

The idiot Bernanke bangs on about  how ohters should take on more risk too.

Risk implies a probability distruibution of more than one outcome. What he is porposing is therefore complete bollocks and a lie to boot, because what he is really suggesting is that everyone esle take on UNCERTAINTY. It has to be uncertainty because outcomes are completely governed by whatever piece of fiction or deceitful bullshit they decide to let spil out of their disgusting maws. 

Mon, 06/03/2013 - 05:50 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

Mark Carney was hired because he is a money printer,UK government debt is currently approx £1 trillion,in the next few years despite faux austerity, that is predicted to rise to around £1.5 trillion,by then interest rates around the world should be rising,but of course countries like the USA, JApan and the UK with massive debts will be wiped out as most or if not all government revenues would the be accounted for by interest payments.Consequently interest rates cannot be allowed to rise in these countries.

There is no way the UK government can meet the interest payments on this level of debt let alone pay it back,Carney is going to devalue sterling massively,I stick by my prediction of at least 50%(on top of the 30% stealth devaluation by King in 2008) in order to inflate away the governments debts and restart the UK housing market,which is THE Uk economy, inflation in house prices is how most Brits value their wealth and indeed is where most of their wealth is tied up,and the prospects of any UK politician for the last 50 years has been inextricably linked to the housing market,any government that failed to deliver an increase in house prices,has been swiftly removed,this government is no different and Osborne has already started the UK governments version of Fannie and Freddie, by the UK government guaranteeing mortgages for new first time buyers.

This tacit agreement between the electorate and politicians will always override other economic policy,the Uk is on a path to devaluation and hyperinflation hell with Carney printing more and more money to pay for UK welfare it cannot afford and to maintain the populations belief in the housing "money machine" alive.

Mon, 06/03/2013 - 07:00 | Link to Comment smacker
smacker's picture

Agreed.

Add to that, there's a significant proportion of UK house-buyers who move upmarket and overly extend themselves by taking on bigger mortgages than prudence says they should, and others who speculate in BTL (Buy To Let) properties.

All of this is pure speculation to maximise capital gains on the rising housing market. I have no objection to their investment/speculation activities BUT very many of these people are now enjoying artificially low mortgage rates, paid for by savers/depositors thru Zirp.

Mon, 06/03/2013 - 09:38 | Link to Comment Red Herring
Red Herring's picture

He told Macdonald, “there is no secret cabal orchestrating things"

 

The quote is missing a comma and a word "is".  Should be like this:

 

He told Macdonald, “there is no secret, cabal is orchestrating things”.  Now just to find the definition of the word "is".  Bill? Anyone? Bill?

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