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[mainiac]

Those Germans really are clueless, advocating monetary policy that doesn't create asset bubbles or the potential for runaway inflation. They're clearly a bunch of backwards barbarians for opposing the ideal of a thousand dollar cup of coffee, or the resources of the economy being redirected directly into the wallets of politically connected construction magnates and the like.

A grab bag of accusations by vague association devoid of any actual analysis.  I wonder, would you pass the Turing test?

[GreatJustice]

Those Germans really are clueless, advocating monetary policy that doesn't create asset bubbles or the potential for runaway inflation. They're clearly a bunch of backwards barbarians for opposing the ideal of a thousand dollar cup of coffee, or the resources of the economy being redirected directly into the wallets of politically connected construction magnates and the like.

A grab bag of accusations by vague association devoid of any actual analysis.  I wonder, would you pass the Turing test?

You have a new comeback line every time. Do you get your "rebuttal of the day" from a 25 cent "Rebutt-o-matic" machine?

Also, I'm tired of your disingenuous assertions

Also, you say while comparing German economists to Creationists for not Krugmanning it to the max

[XXSockXX]

Those Germans really are clueless, advocating monetary policy that doesn't create asset bubbles or the potential for runaway inflation. They're clearly a bunch of backwards barbarians for opposing the ideal of a thousand dollar cup of coffee, or the resources of the economy being redirected directly into the wallets of politically connected construction magnates and the like.

A grab bag of accusations by vague association devoid of any actual analysis.  I wonder, would you pass the Turing test?

To be fair, you have been doing the exact same thing, comparing German monetary policy to intelligent design and thinking any undergrade student could easily solve the Euro crisis by inflicting a massive inflation over the whole Eurozone, so you can't complain too much.

Of course German monetary policy (with it's aversion to debt and inflation) was hugely influential in the creation of the Euro convergence criteria, with the purpose being the creation of a stable and strong currency, modelled after the D-Mark. That was fine with the Southern European countries as long as the economy was good and they were happy to have a stable currency, but when they realized they couldn't inflate their debt away anymore like they used to, they started undermining these criteria. That is a core problem here, but the initial cause of the crisis was the same speculation bubble that hit the US a few years ago, not the monetary policy. Everybody was very happy with Germany having a strong economy and paying a lot to the EU until Germany started questioning some of the things it paid for, especially since there aren't meant to be any bailouts in the Eurozone.

Actually it is political goodwill that Greece hasn't gone bankrupt or been kicked out of the Euro (which it joined illegally by submitting sugarcoated numbers). None of these things will happen, for the sake of the EU, but it isn't unreasonable to ask that they make some effort on their own for some reforms that might get them out of the debt spiral. With the current ridiculous level of systematic corruption and tax evasion, while at the same time maintaining a military bigger than Germany's, every stimulus is just bound to disappear without making any change.

Also, despite what Paul Krugman says, 4% inflation would be a disaster for the German economy. Savings (Germans tend to save and invest rather conservatively) are already getting eaten up by inflation now, with inflation at a low. German fear of inflation, stemming from some quite disastrous historical experiences, is even now causing a climate of distrust that is detrimental to spending, even if that may seem counterintuitively, there is a tendency to seek "safe" investments in case everything goes to shit, rather than consume. Keeping the cost of labour down is what made the German economy work in the last decade. If that goes up, even just a bit like with the upcoming minimum wage, it will likely rather cause more unemployment and thus actually decrease domestic demand even further.

[Helgoland]

Let's say Greece had never joined the fiscal union. Would they be any better off? The only difference would be that the value of the Drachma would plummet, making imports impossible to afford - giving the same net effect as a crash in Greek wages/income in the current system. Greece is suffering, and Germany (or the Netherlands, or Belgium, or...) isn't - they all have the Euro, so the difference must stem from the countries' different situations and backgrounds. Greece has had these problems for ages - they were just aggravated by the crisis of '08. And so any true solution must alter the strucures within Greece, not the structures Greece is embedded into.

[mainiac]

Also, I'm tired of your disingenuous assertions

Then stop doing the same cheap tactic over and over again.  Because I'm going to keep pointing it out and doing nothing else.  Expending actual thought responding to your tired old guilt by association which you do at each and every opportunity is not an activity I am interested in.

To be fair, you have been doing the exact same thing, comparing German monetary policy to intelligent design and thinking any undergrade student could easily solve the Euro crisis by inflicting a massive inflation over the whole Eurozone, so you can't complain too much.

I'm sorry but there is an underlying logic behind what I say, I don't just take any random bad thing that happens in Germany and lump it together.  And I'm not talking about a massive headline inflation.  The thing is that the Eurozone has been underneath it's target for the duration of the crisis.  This is utter stupidity and completely repeating the mistakes of the great depression.  These are mistakes that would have been considered barbarically ignorant 60 years ago.

Actually it is political goodwill that Greece hasn't gone bankrupt or been kicked out of the Euro (which it joined illegally by submitting sugarcoated numbers). None of these things will happen, for the sake of the EU, but it isn't unreasonable to ask that they make some effort on their own for some reforms that might get them out of the debt spiral. With the current ridiculous level of systematic corruption and tax evasion, while at the same time maintaining a military bigger than Germany's, every stimulus is just bound to disappear without making any change.

This isn't even a coherant economic argument, your just prejoratively asserting that you can't trust those shiftless greeks.

You don't need to trust those shiftless greeks.  There are tons of mechanicisms by which this can be solved without trusting them.  And germany has given a middle finger to them.

Also, despite what Paul Krugman says, 4% inflation would be a disaster for the German economy. Savings (Germans tend to save and invest rather conservatively) are already getting eaten up by inflation now, with inflation at a low.

Return on savings are a function of real interest rates, not nominal inflation.  The return on savings sucks because the economy sucks.  You propose to help savers by preventing the economy from improving.

Let's say Greece had never joined the fiscal union. Would they be any better off? The only difference would be that the value of the Drachma would plummet, making imports impossible to afford - giving the same net effect as a crash in Greek wages/income in the current system.

No that's not how trade balances work and I'm too tired at this point to try to explain another basic econ subject.  But as long as a country doesn't keep debts denominated in the wrong currencies (which they don't anymore after learning the lessons of the 90s), the devaluation actually helps unemployment.

It would be much better for you to seek this out for yourself.

[Helgoland]

In real terms, wages would have gone down by the same amount. Economics isn't affected by notation. What you're saying is that they should inflate away their debt. That, however, would lead to Greece only being able to take up new loans (which are needed because of their imbalanced budget) denominated in hard currency, which is - again - functionally the same as what's happening now.
Or, saying it the other way around: If control over one's inflation is all that's needed to avoid an economic crisis, why do any crashes happen outside the EU?

[mainiac]

In real terms, wages would have gone down by the same amount. Economics isn't affected by notation. What you're saying is that they should inflate away their debt.

No, Greece should reach a competitive trade balance in the Euro.  It would help the debt situation (though I'd have to do a fair bit of math to show why) (actually it would improve real interest rates because right now the risk premium on greek debt is so high and it would come down) but that's not the primary purpose.  If Germany has 2% inflation and Greece has 1% inflation it will take a long time for the trade imbalance to correct.  If Germany has 5% inflation and Greece has 1% inflation, the imbalance is getting corrected 4 times faster.

[Helgoland]

In real terms, wages would have gone down by the same amount. Economics isn't affected by notation. What you're saying is that they should inflate away their debt.

No, Greece should reach a competitive trade balance in the Euro.  It would help the debt situation (though I'd have to do a fair bit of math to show why) (actually it would improve real interest rates because right now the risk premium on greek debt is so high and it would come down) but that's not the primary purpose.  If Germany has 2% inflation and Greece has 1% inflation it will take a long time for the trade imbalance to correct.  If Germany has 5% inflation and Greece has 1% inflation, the imbalance is getting corrected 4 times faster.

Trade balance has nothing to do with the currency being used, though - if anything, stable exchange rates are conductive to business.

And there's more countries in the world than Greece and Germany. If Germany had 5% inflation to 'catch up' to Greece, the German exports to the rest of the world (read: virtually all of them) would suffer very much.

[XXSockXX]

I'm sorry but there is an underlying logic behind what I say, I don't just take any random bad thing that happens in Germany and lump it together.  And I'm not talking about a massive headline inflation.  The thing is that the Eurozone has been underneath it's target for the duration of the crisis.  This is utter stupidity and completely repeating the mistakes of the great depression.  These are mistakes that would have been considered barbarically ignorant 60 years ago.

Well, German fear of inflation is rooted exactly in policies from the great depression era, when savings were wiped out several times by inflation, with disastrous political results.

This isn't even a coherant economic argument, your just prejoratively asserting that you can't trust those shiftless greeks.

You don't need to trust those shiftless greeks.  There are tons of mechanicisms by which this can be solved without trusting them.  And germany has given a middle finger to them.

Actually "shiftless" and (earlier) "lazy" are your words, not mine. I don't trust Greek politicians to do any reforms if they are not forced to, because they really haven't done anything if they weren't forced to, mostly because they benefit a lot themselves from the existing structures.
And I wouldn't call pouring billions into Greece giving it the middle finger. If questioning what your billion investment does isn't an economic argument, I don't know what is.

Return on savings are a function of real interest rates, not nominal inflation.  The return on savings sucks because the economy sucks.  You propose to help savers by preventing the economy from improving.

If you want to fix the economy by disowning savers, that doesn't create a climate where domestic spending will increase. Rather the opposite, plus it creates a climate of distrust and disenfranchisment. If you manage to turn German voters against the EU in that way (so far the last ones who don't totally hate it at this point), then that was that.

[Descan]

Something someone mentioned in this conversation before it came here, about giving up austerity... Uhm... Wasn't there a scandal a few years ago, about how the numbers that made austerity look good economically were fudged, and it's actually a pretty shit thing to be doing? What happened to that? >_>

[mainiac]

Trade balance has nothing to do with the currency being used, though - if anything, stable exchange rates are conductive to business.

And there's more countries in the world than Greece and Germany. If Germany had 5% inflation to 'catch up' to Greece, the German exports to the rest of the world (read: virtually all of them) would suffer very much.

I'll be brief.  On the first point, wrong.  On the second point, wrong.

Pretty please learn the economics.

If you want to fix the economy by disowning savers, that doesn't create a climate where domestic spending will increase.

Again, the return on savings is a function of the real rate of return.  Nominal inflation rates are a part of that but only a part.

Well, German fear of inflation is rooted exactly in policies from the great depression era, when savings were wiped out several times by inflation, with disastrous political results.

Actually, the inflation was solved long before the Nazi's came to power and the nazi's actually came to power during the hard money policies of the early great depression.

Hey, maybe you should learn from your own countries history!

And I wouldn't call pouring billions into Greece giving it the middle finger. If questioning what your billion investment does isn't an economic argument, I don't know what is.

You help with one hand and hurt with the other.  It's the economic profession you are flipping off.

[Helgoland]

Well, German fear of inflation is rooted exactly in policies from the great depression era, when savings were wiped out several times by inflation, with disastrous political results.

Actually, the inflation was solved long before the Nazi's came to power and the nazi's actually came to power during the hard money policies of the early great depression.

Hey, maybe you should learn from your own countries history!

Don't try to argue about Nazis with a German. We generally know that stuff.
The Weimar Republic was kaputt way before 1933. Faith in the Republic had never been great, but the economic turmoil pushed the people towards the extremes - large portions of parliament consisted of nationalists and Communists, and the government had been semi-dictatorial for quite a while before Hitler became chancellor. The NSDAP may have risen after the main crisis had passed, but the climate in which it could rise like that was in part created by the economic turmoil of the Great Depression.

Also,

I'll be brief.  On the first point, wrong.  On the second point, wrong.

Pretty please learn the economics.

Seriously?

[GreatJustice]

Also, I'm tired of your disingenuous assertions

Then stop doing the same cheap tactic over and over again.  Because I'm going to keep pointing it out and doing nothing else.  Expending actual thought responding to your tired old guilt by association which you do at each and every opportunity is not an activity I am interested in.

Apparently pointing out the obvious consequences of Krugmanite macro (as well as the ludicrous logical leaps required to accept it as "effective" at all) is now "guilt by association". I'd advise you educate yourself on the meaning of that, since I do not think it means what you think it means.

I admit to not being terribly serious right now, but I seem to recall the last time I offered a serious analysis of Keynesian macro you threw a blog at me and called me names, leading to our posts being deleted.

To be fair, you have been doing the exact same thing, comparing German monetary policy to intelligent design and thinking any undergrade student could easily solve the Euro crisis by inflicting a massive inflation over the whole Eurozone, so you can't complain too much.

I'm sorry but there is an underlying logic behind what I say, I don't just take any random bad thing that happens in Germany and lump it together.  And I'm not talking about a massive headline inflation.  The thing is that the Eurozone has been underneath it's target for the duration of the crisis.  This is utter stupidity and completely repeating the mistakes of the great depression.  These are mistakes that would have been considered barbarically ignorant 60 years ago.

Funny, the Great Depression was among the first to be preceded by artificially low interest rates, as well as the first to receive a "response" in the form of massive public works projects. It's almost as though there was some form of correlation between these, or between the relatively quick end to economic troubles in the US in the previous decade and the lack of vigorous activity from the Fed. It's great to hear that the brilliant men who created stagflation and the 1970s oil crisis would disapprove of German monetary policy, though.

Also, no opinion on gift bearing Greeks, so I'm just gonna avoid that topic altogether.

In real terms, wages would have gone down by the same amount. Economics isn't affected by notation. What you're saying is that they should inflate away their debt.

No, Greece should reach a competitive trade balance in the Euro.  It would help the debt situation (though I'd have to do a fair bit of math to show why) (actually it would improve real interest rates because right now the risk premium on greek debt is so high and it would come down) but that's not the primary purpose.  If Germany has 2% inflation and Greece has 1% inflation it will take a long time for the trade imbalance to correct.  If Germany has 5% inflation and Greece has 1% inflation, the imbalance is getting corrected 4 times faster.

Spoken like a true mercantalist. Also, seeing as how the Germans and Greeks share a common currency, trying to generate five times the inflation in one country but not the other would be a bit like trying to inflate the left half of a balloon, unless you've discovered a miraculous method of devaluing the same currency by different amounts in different areas (besides price controls, but even Keynesians aren't dumb enough to institute price controls, at least I hope they aren't).

I'll be brief.  On the first point, wrong.  On the second point, wrong.

Pretty please learn the economics.

I like how your every response is some variation of "I tire of your arguments, for there are economists that disagree with you! Look upon their blogs, ye mighty, and despair!"

I'll happily admit there are plenty of dumb economists that advocate for dumb policies, but the fact that they're economists doesn't make their dumb ideas any less dumb. Also, you're severely overstating the unity of the economics profession, as there are many exotic and exciting varieties of dumb, ranging from the Monetarists and their dopey Efficient Markets Hypothesis to Post Keynesians that deny the existence/relevance of such basic concepts as diminishing returns. I'd imagine you could find a reasonable number of economists that advocate for just about anything if you look around, so in this case you have to actually provide evidence for your statements rather than hiding behind credentials.

[mainiac]

I'll be brief.  On the first point, wrong.  On the second point, wrong.

Pretty please learn the economics.

Seriously?

Yes, seriously.  There is a limit to how much I'm willing to explain.

Don't try to argue about Nazis with a German. We generally know that stuff.
The Weimar Republic was kaputt way before 1933. Faith in the Republic had never been great, but the economic turmoil pushed the people towards the extremes - large portions of parliament consisted of nationalists and Communists, and the government had been semi-dictatorial for quite a while before Hitler became chancellor. The NSDAP may have risen after the main crisis had passed, but the climate in which it could rise like that was in part created by the economic turmoil of the Great Depression.

I would agree with this summery of history completely.  It was the great depression that lead to the nazis gaining strength and eventually winning.

Now what does that have to do with the period of hyperinflation that was done five years before the great depression?

[Helgoland]

I would agree with this summery of history completely.  It was the great depression that lead to the nazis gaining strength and eventually winning.

Now what does that have to do with the period of hyperinflation that was done five years before the great depression?

Economic hardship is economic hardship, wherever it comes from. The failure of the Weimar Republic was a consequence of the average German not doing well economically. When you're in the voting booth, choosing between Communists and fascists, it doesn't matter that much whether the reason you couldn't buy a birthday present for your kid was a crash of the American stock market or a dumb politician with a printing press.

That 'Seriously' was mostly referring to style, btw