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Thomas E. Woods, Jr., is the New York Times bestselling author of 11 books, including The Politically Incorrect Guide to American History and Meltdown (on the financial crisis). A senior fellow of the Ludwig von Mises Institute, Woods has appeared on MSNBC, CNBC, FOX News, FOX Business, C-SPAN, Bloomberg Television, and hundreds of radio programs... (Read More)



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A Debate to Watch

31st March 2013      by: Tom Woods     

Bob Murphy, who has the well-known challenge to Paul Krugman I’ve been talking about, will be debating Warren Mosler, an advocate of Modern Monetary Theory (MMT). Details will be forthcoming.

It’s fun to read the comments in the post announcing the debate. Here’s one:

“Robert Murphy is just going to parrot the same talking points that Peter Schiff has been using for years. He wants to cut federal spending by a trillion dollars the first year. Warren is wasting his time debating this guy.”

Translation:

“Human beings interacting with each other freely can’t possibly create a stable, prosperous economy. Stable, prosperous economies emerge only when people with guns make us fork over our dough to them. If we cut back on how many of society’s resources these people with guns may control, we’ll surely be impoverished. I can’t think of any way society could function or the economy could flourish without their wise oversight. Therefore, there is no way society could function or the economy could flourish without their wise oversight. Warren is wasting his time debating this guy.”

I especially like this one:

“Warren is a humble guy and sets the bar for polite public discourse, and while I think it may be beneath his stature to debate someone like this, the fact of the matter is that these people are standing in the way of progress, and some level of engagement is necessary to expose their own to the fallacies that dominate their views.”

Translation:

“Although the entire policy community is committed to fiscal and monetary stimulus, as are the Federal Reserve and both political parties, with even the 2012 GOP nominee insisting that budget cuts cause depressions, the Austrians, who have zero influence when set against the entire establishment, are ‘standing in the way of progress’ by thinking that there might be something wrong with the economy that can’t be solved by something-for-nothing trickery.”

Stay tuned!

Unlearn the Propaganda!

  • Bob Murphy

    But after Krugman’s treatment, it’s nice just to be noticed…

  • Anonymous

    Well if the MMT’s and Keynesian’s definition of “progress” is a completely unstable phony economy that will inflate to infinity to prop up criminal zombie banks who have complete disdain for the American people, then consider me old fashion. LOL

  • http://www.facebook.com/anthony.destro Tony Destro

    Mosler had an appearance on the mises forum…

  • Amfortas

    The comments are on Mike Norman’s blog? Isn’t he the guy who was dead wrong about the housing bubble when he laughed at Peter Schiff and then went completely crazy?

  • AP Lerner

    It’s telling you would pull these quotes in anticipation of the debate. You have managed to devalue what is a worthwhile debate with these childish, not referenced quotes. Please read the 7DIF and frame all future posts regarding this debate in an economic context (if that is possible) if you have any desire to be taken serisly (which you may not)

  • Matt H.

    “Childish, not referenced quotes”

    – Tom said he was referencing commentator quotes on Mike’s blog, he even provides the link where you can read them yourself.

    “Please read the 7DIF and frame all future posts regarding this debate in an economic context (if that is possible)…”

    – Tom is not the one debating; Robert Murphy and Warren Mosler are. This is Tom’s blog, he can write what he wants, in whatever context he wants, and whatever way he wants to; you are not required to read it or agree with it.

    “… if you have any desire to be taken serisly (sic) (which you may not)”

    – If you, sir, have any desire to comment seriously, I would suggest you brush up on your critical thinking skills and increase your reading comprehension. This is clearly a post announcing the debate (details forthcoming), with humor added by “translating” quotes from commentators on Mike’s blog. It is not meant to be a serious refutation of MMT.

  • http://tomwoods.com Tom Woods

    Now this is funny. I am the one at fault, not the people who actually uttered these inane statements? You don’t find that a bit of a stretch?

    Also, I think you don’t know what “referenced” means in such a context.

  • kirk

    for those annotated, they should be thankful that stupidity is not a crime.

  • AP Lerner

    Yes, you are at fault for minimizing what could be a worthwhile debate by cherry picking (and then misinterpreting) random blog comments to present a false narrative. Why not add value and quote Wray, or Mitchell or any other MMT economists? I mean, I could pull some silly commentary from Murphy’s blog and misrepresent Austrian economics as well, but I also have better things to do w/ my time.

  • http://tomwoods.com Tom Woods

    I am urging people to watch the debate! Man, you guys need to lighten up. And if Bob had commenters like these, he and I would chide them. Or did I miss your rebukes of those people? (Double standard?)

  • AP Lerner

    I would (and have!) rebuke them. Lighten up, I will. Terrific ‘free advice’

    I fully support anything you do, say, etc to promote this debate. This is an exponentially more important/fascinating debate than Krugman vs Murphy.

    Here’s a preview of what Murphy is in store for. More suitable for your Stockman post but I have your attention here.

    http://moslereconomics.com/2013/04/01/the-stockmans-big-swinging-whip/

    May I be the first to say ‘Mosler takes Murphy’s queen, checkmate.’

    :) cheers

  • Robert Roddis

    money4nothingchicks4free said…

    It all depends how is It carried out. On debates like this it is not that important who is right but who the audience thinks is right. Murphy has produced silly arguments against MMT so far. Coconuts and stuff. He is very afraid of Warren and he would rather not debate him, but he couldn’t say no. He is a monetary illiterate, at least few years back he was talking about money multiplier and Fed creating the danger of inflation by doing QE, once banks start lending again.

    Murphy would like to take the debate on unrealistic grounds, away from reality, fantacy freedom land. That’s how most of the ideological Austrians argue any way. IMO he is not up to Warren and this is not going to be an interesting debate.Kind of like putting Bob Roddis against Warren, not as bad but still. Looking forward of seeing It though. Promotes MMT too. There is not even anything I can think to suggest to Warren, he is the best there is to present logical arguments.

    http://mikenormaneconomics.blogspot.com/2013/03/lord-keynes-warren-mosler-to-debate.html

  • Robert Roddis

    We haven’t heard from AP “Hut Tax” Lerner in quite a while. By all means, let’s quote Randy Wray for an example of Wray’s analytic skills:

    Q: Austrians use a bait and switch operation—denying that what we have is capitalism and comparing it to some sort of ideal utopian capitalism.

    Wray: Agreed. That makes it easy to blame all of real world capitalism’s problems on its deviation from utopia. It is fundamentally an anti-scientific approach. Let’s analyze what we have and try to make it better. We cannot have utopia. We’re dealing with human society, after all.

    http://neweconomicperspectives.org/2012/03/responses-to-blog-41-mmt-austrians-and-ideology.html#more-1758

    It takes my breath away.

  • Robert Roddis

    MMT is based upon colonial enslavement according to Warren “Hut Tax” Mosler:

    The following is not merely a theoretical concept. It’s exactly what happened in Africa in the 1800’s, when the British established colonies there to grow crops. The British offered jobs to the local population, but none of them were interested in earning British coins. So the British placed a “hut tax” on all of their dwellings, payable only in British coins. Suddenly, the area was “monetized,” as everyone now needed British
    coins, and the local population started offering things for sale, as well as their labor, to get the needed coins. The British could then hire them and pay them in British coins to work the fields and grow their crops.

    Page 26:

    http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

  • Robert Roddis

    This analysis is used to justify the MMTers’ “state theory of money” which holds that the state invented money and money only has value because the rabble are required to pay taxes with the government money. Mises pointed out in 1917 that such a theory must rely upon ignoring the process of exchange (catallactics) which, to my understanding, is the subject of economics.

    http://www.econlib.org/library/Mises/msTApp.html

  • Robert Roddis

    As you can see, Mosler believes that prosperity is caused by government spending. Catallactics, Cantillon Effects and economic calculation do not enter the analysis anywhere. These guys are tough nuts to crack if only because you cannot get them to start at the beginning with human action, human interacting, creating wealth, exchanging goods and services and then at least claiming a market failure. MOSLER’S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

    They are truly serious about that. Further, the alleged fact that the government can create as many “dollars” as it feels like creating means to the MMTer that the law of scarcity has been abolished, except for the possibility of some price inflation in the future. Because the money creation causes prosperity, the prosperity so created means that our unfunded government obligations can be easily satisfied by the government spending that is the cause of wealth creation. What can you say about that?

  • Daniel

    I hope Murphy can include Gene Callahan on his debate tour at some point – now that would be interesting!

  • Anonymous

    While there’s a point to the Lerner-Mosler “State Theory of Money”, I appreciate the roots of money described in a much more libertarian manner, by Wray in a talk on Modern Money and Public Purpose. He presents slides of non-state money, which (iirc) is basically voluntary IOUs between willing counter-parties, such as one might imagine in early agrarian society.
    These were essentially accounting records, scratched onto shells, rocks, maybe papyrus.
    Eventually, these IOUs were stored centrally (primitive banking) and found to be trade-able between various creditors and debtors to satisfy obligations.

    With the emergence of primitive Govts — typically warlords and priests (ref Veblen, the Leisure Class as hunters of live protein engaged in exploit) — Rulers were able to both (a) impose a TAX on the subject population and (b) issue advance tax credits in the Ruler’s name or seal, to purchase scarce goods in the community (and make loans), and then tax back a PORTION of the Ruler’s advance credit.

    This beginning was in an age of scarcity. By the late 1800s, the crisis facing USA Capitalists (as Rothbard explained) was a crisis of abundance, over-production, or so they argued, and social conditions seemed to show that. Rather than the earlier fact of Govt’s seizing a portion of production (while providing defense and other perks to the community), then Capitalists in the Industrial Age of abundance began to demand that the Govt create additional Demand to purchase their Surplus production.

    This violates Austrian econ sensibilities, but Mosler didn’t create the age of Industry and large corporate conglomerates. If anyone did, it was J.P. Morgan (per Rothbard) and many of his peers. This shift was dominated by the Republican Party for years (per Gabe Kolko’s detailed notes), with appearances from a couple token Democrat-banker types — Woodrow and Franklin. The later dev of the Social welfare state was apparently an afterthought to the original welfare state, the one that served big corporate capital.

    Western nations are still operating in a paradigm of over-abundance and surplus production – albeit, capitalists have willfully sought out Third World hellholes for their cheap labor production, but a gross global surplus capacity exists. One of the problems this creates is shortfall of domestic demand in net importer states (with current account deficits) which REQUIRES that if they don’t become net exporters, then net macro gains must come from Govt “money printing” (payments to contractors or so-called “entitlements”). The private sector credit creation process seemed to work for a while, but blew it’s wad on financial speculation sans productivity, and private borrowing reached unsustainable limits, called a Crash of the Bubble.

    Keen: ‘Finance’s destructive tendencies arise because we let the banks finance Ponzi schemes — bubbles in real estate and shares — that add to debt without adding to the capacity of society to finance that debt.’

    This is merely MY snapshot on this, Tom and friends. Warren Mosler’s views may vary a lot from mine, and he may not have time to get down to the fundamental (libertarian) origins of money as “units of account” or “account credits”, rather than shiny rock “bullion” commodities.

  • Art

    Nothing but chirping crickets here?

  • Art

    “MOSLER’S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.”

    That’s essentially how the Long Depression was ended. Just substitute gold production for sovereign deficits. Massive discoveries in South Africa in 1896 ended the Long Depression (and put a brake on the bimetallist movement, among other things).

    One advantage of a fiat currency is that you don’t have to rape, kill, pillage and burn to resolve a financial crisis. Of course, we still do it for other reasons. And excessive leverage, financial crises, and institutional and individual abuses occur under all currency systems, unfortunately.

  • Art

    Wow. Nice post.



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