Ben and his friends

by Russ Roberts on December 6, 2011

in Crony Capitalism, Financial Markets, Monetary Policy

Here is genius from artist Billy Walsh:

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{ 47 comments }

Jon Murphy December 6, 2011 at 10:23 am

Poor Ben. Can’t get no love

Methinks1776 December 6, 2011 at 10:29 am

looks to me like he’s getting plenty of love from some very fluffy kitties.

Jon Murphy December 6, 2011 at 10:53 am

As much as I don’t like the Fed’s current monetary policy, so do feel kinda sorry for Ben. He’s kind of like a tragic figure, I think.

Jon Murphy December 6, 2011 at 10:54 am

**I do fell kinda sorry for Ben

Methinks1776 December 6, 2011 at 11:32 am

Look, Ben is an adult man who chose his job. He’s not some child stuck in a situation he cannot get get out of. It’s not like he inherited it from his father and is duty-bound to print until it hurts.

Jon Murphy December 6, 2011 at 11:54 am

True. Ah well, c’est la vive.

J Cortez December 6, 2011 at 10:59 am

Big Ben shouldn’t get any love from us, only contempt.

Greg Webb December 6, 2011 at 9:24 pm

Ben needs an ass whipping!

Jack Fraser December 6, 2011 at 10:45 am

Love the GS vampire cloak and the floored BofA, very appropriate.

Jack Fraser December 6, 2011 at 10:46 am

On closer examination it appears to be a chair. Not as wonderful, but still fun.

Invisible Backhand December 6, 2011 at 11:30 am

Paul says yesterday what I’ve been saying, more politely:

“These days, you constantly see articles that make it seem as if there was a great debate in the 1930s between Keynes and Hayek, and that this debate has continued through the generations. As Warsh says, nothing like this happened. Hayek essentially made a fool of himself early in the Great Depression, and his ideas vanished from the professional discussion.

So why is his name invoked so much now? Because The Road to Serfdom struck a political chord with the American right, which adopted Hayek as a sort of mascot…”

Things That Never Happened In The History Of Macroeconomics

http://krugman.blogs.nytimes.com/2011/12/05/things-that-never-happened-in-the-history-of-macroeconomics/

Jack Fraser December 6, 2011 at 12:32 pm

You mean there was no rap battle in the 30s!? Say it ain’t so good sir (or madam).

SheetWise December 6, 2011 at 12:53 pm

“These days, you constantly see articles that make it seem as if there was a great debate in the 1930s between Keynes and Hayek, and that this debate has continued through the generations.”

Clever. It continued, it just didn’t continue between Keynes and Hayek. It certainly continued between my grandfather, my father, myself, and now with my children. Not sure it has been a “great” debate — but it did and will continue to take place. Maybe Krugman or you can identify for me that time in our history where we were all in agreement with Keynes. I read Keynes in the ’70′s, and argued with my teachers that people were fools to take him seriously — and I wasn’t alone, not by a long shot.

Henri Hein December 6, 2011 at 1:17 pm

Yes, and by making it specifically about macroeconomics. Saying Hayek’s ideas are absent from macroeconomics is like saying Feynman’s ideas are absent from astrology.

REP December 6, 2011 at 4:30 pm

PURRFECT !

GAAPrulesIFRSdrools December 6, 2011 at 1:18 pm

I’m really, really waiting to see what happens to Krugman when he discovers that FDR was regarded as a dolt by Keynes.

I normally don’t engage in schadenfreude, but waiting Pauly’s head explode in a fit of explosive schizophrenia will be fun to watch.

Of course, cleaning up the brown stuff that will splatter everywhere won’t be fun for whoever is saddled with the custodial duties where it happens.

g-dub December 6, 2011 at 11:30 pm

I normally don’t engage in schadenfreude, but waiting Pauly’s head explode in a fit of explosive schizophrenia will be fun to watch.

Pauly’s cognitive dissonance won’t ever let him see his inner schizo. He’ll never see the empty vamp he really is.

Bret December 6, 2011 at 3:02 pm

This has to be BS because I listened to an entire Planet Money about Keynes and Hayek and NPR NEVER LIES.

Also, I guess this book is just full of blank pages:

http://www.amazon.com/Keynes-Hayek-Defined-Modern-Economics/dp/0393077489

More seriously, it’s not about the historical record, it’s about concepts and ideas. You can’t dismiss an idea simply based on the behavior of proponents. That’s a logical fallacy.

Jon Murphy December 6, 2011 at 3:07 pm

That books is a very good book, by the way.

Bret December 6, 2011 at 3:46 pm

So I’ve heard. It’s on my Amazon wishlist. Maybe Santa will be good to me …

SheetWise December 7, 2011 at 4:13 pm

I’ll be Santa — promise you’ve been nice and email your address to greg-at-sheetwise.com.

W.E. Heasley December 6, 2011 at 12:00 pm

Bernanke’s hand on the lever……

“Keynes believed that economists (and others) could best contribute to the improvement of society by investigating how to manipulate the levers actually or potentially under control of the political authorities so as to achieve desirable ends, and then persuading benevolent civil servants and elected officials to follow their advice. The role of voters is to elect persons with the right moral values to office and then let them run the country“.

– Milton Friedman, Richmond Federal Reserve Economic Quarterly, volume 83/2 Spring 1997.

http://www.richmondfed.org/publications/research/economic_quarterly/1997/spring/pdf/friedman.pdf

Darren December 6, 2011 at 2:14 pm

…manipulate the levers actually or potentially under control of the political authorities so as to achieve desirable ends

Desirable to who?

nailheadtom December 6, 2011 at 12:15 pm

Who can detect any political overtones in Krugman’s writing? He seems pretty politically ambivalent.

Jack Fraser December 6, 2011 at 12:31 pm

If only he’d tell us how he REALLY feels.

Methinks1776 December 6, 2011 at 1:17 pm

Oh, is that what smells?

GAAPrulesIFRSdrools December 6, 2011 at 1:21 pm

Methinks, It doesn’t smell, it reeks.

Bizet Bastiat December 6, 2011 at 12:49 pm

Tah rah rah boom dee ay. I can’t come out today.
It happened yesterday. The boys across the way.
They paid Ben fifty cents. To go behind the fence.
They said it wouldn’t hurt. And pushed it up my skirt.
The market was surprised. To see my belly rise.
And hear the bastard cry. Tah rah rah boom day eye.

Jon Murphy December 6, 2011 at 1:22 pm

I have a question I would genuinely like to hear people’s responses to. Let’s go back to 2007. You have been appointed Chairman of the Federal Reserve. You are looking recession in the face. You can see the systemic risk in the financial institutions and you fear about repeating the same mistakes that lead to the Great Depression (namely lack of liquidity and bank runs). The economy is on the precipice of recession.

What do you do once the hammer falls?

Sam Grove December 6, 2011 at 1:40 pm

Cut government spending, reduce taxes.

Jon Murphy December 6, 2011 at 1:52 pm

The Fed cannot do that. That is the realm of Congress (fiscal policy). The Fed can only control monetary policy (interest rates, money supply, bank liquidity, etc).

Greg Webb December 6, 2011 at 9:32 pm

Let the bad banks fail, apply consistent bank regulatory and monetary policies, and advise the President and Congress to reduce spending, simplify the tax code, cut marginal tax rates, and abolish the GSEs.

Chucklehead December 8, 2011 at 1:41 pm

Since the fed can not fix the root cause, why is it it’s job to “cure” the symptoms?
Failed banks should go to a resolution trust. Fed provides liquidity to FDIC to “bail out” depositors.

simon... December 6, 2011 at 2:12 pm

Jon, you are absolutely correct, it’s not a particular person, it’s an institution that is inherently evil.

Jon Murphy December 6, 2011 at 2:16 pm

Actually, that wasn’t my point, but thanks!

vidyohs December 6, 2011 at 6:50 pm

Why wasn’t it your point?

“he Fed can only control monetary policy (interest rates, money supply, bank liquidity, etc).”

The fed cannot inject dollars into the economy willy nilly at its whim. This part of it is also on the shoulders of Congress, they have to borrow it. Hell not only do they have to borrow it, they also have to print it and sell it to the Fed just so the Fed will have it for Congress to borrow.

As simon said, Congress is an institution that is inherently evil.

Jon Murphy December 6, 2011 at 9:12 pm

Well, the point I was more going for is that it is easy for us to sit back with three years retrospect and say what should have been done and what could have been done, etc etc etc., but if we were in Ben’s shoes, it’d be a lot harder to make those choices.

But I’m down with the whole Congress bashing

g-dub December 6, 2011 at 11:38 pm

The fed cannot inject dollars into the economy willy nilly at its whim. This part of it is also on the shoulders of Congress, they have to borrow it.

There is plenty of US debt already “out there” that the congress need not do anything “new” for a good while. I mean, there is no mechanical resistance for the Fed to inject a great deal as far as relying on congress to create new debt.

vidyohs December 7, 2011 at 7:10 am

@g-dub

Curiouser and curiouser. You quote me, but then write something that has nothing to do with the quote. As a matter of fact, what you wrote was so brilliant that I wonder if you know what you said. Particularly that last sentence.

g-dub December 7, 2011 at 7:30 pm

vid> Curiouser and curiouser. You quote me, but then write something that has nothing to do with the quote.

Well I think it had something to do with it! lol

Anyway, it had nothing to do with Jon’s original Q, and I was making a *very minor* distinction on only the two sentences.

I took your first sentence as having a sort of *future* dependence on the second: the fed creates new dollars mainly (or completely?) by purchasing US debt created by congress. And I constrain the distinction for “until there is no more *existing* US debt on the open market for the Fed to buy.”

I was only saying that the Fed can indeed print almost at willy nilly whim because there is enough debt already issued (“out there”) to do a lot of printing. The congress doesn’t have to do *more* borrowing *first*; I mean, they’ve done enough already, as I have understood the balance sheet (outstanding debt versus how much the Fed holds, even minus the intragovernmental debt). Yes, the congress is responsible for the borrowing — past or future. But for some time in the future, the Fed doesn’t depend on any *new* congressional debt creation, as far as I know. So there isn’t a tight near-future dependence of your first sentence upon your second. That is the minor distinction I added to your statement — your statement that I think is basically correct.

Also,I don’t think the Fed normally buys debt straight from the treasury — I had thought they mostly bought it on the open market. Now maybe the TARP deal was different. I frankly don’t know about that particular… and a lot of particulars for that matter. They are not exactly open/transparent in way to make it easy for me to understand what exactly they are doing. So I probably have some stuff skewed, at least. hahah

And I don’t know what this meant: …just so the Fed will have it for Congress to borrow. I don’t understand how Congress then borrows their own debt back from the Fed. All they can do then is extinguish it by paying it off. (Like that is going to happen.)

Not very familiar with the institution and its practices, I ponder if the Fed ever pays more than the face value of the debt.

g-dub December 7, 2011 at 7:35 pm

What do you do once the hammer falls?

I will need to be properly mirandized before I answer any such questions!

simon... December 6, 2011 at 2:06 pm

Eyesight test for OWS: “Find a villain in this picture.”

John Papola December 6, 2011 at 9:08 pm

Why, Dad?!? Why!!!!

Methinks1776 December 6, 2011 at 11:02 pm

Because, son, what choice did I have? How long would I have lasted if I hadn’t? I didn’t want to change the world. I just wanted to be powerful.

Warmly,

Papa Ben

g-dub December 6, 2011 at 11:39 pm

You drank the money, da!

Kevin December 6, 2011 at 10:49 pm

Go read Bloomberg’s response to the Fed’s response to their story. It’s pathetic.

Socrates December 7, 2011 at 10:18 pm

Okay, after a[n admittedly quick and dirty] google search, I can’t find this guy’s website. Where does Billy Walsh live on teh intarwebs?

Also, did anyone else immediately think of the director of Medellin? Or am I too lowbrow for this website?

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