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Had read it. It's not serious at all. The arguments there are out of touch with reality. For example: "What that means is that if you measure prices in Bitcoins

Had read it. It's not serious at all. The arguments there are out of touch with reality. For example: "What that means is that if you measure prices in Bitcoins, they have plunged; the Bitcoin economy has in effect experienced massive deflation." For this argument alone, one may look at https://www.bitcoinmarket.com https://www.bitcoinmarket.com and see exactly what kind of person Krugman is.

dasil003 15y ago
Uh, where are the BTC prices on that site? If you want to come across as anything other than a froth-mouthed crackpot hurling ad-hominems at a respected economist, you need to offer up some actual data. Granted, Krugman didn't either, but he's got a reputation to fall back on, you've got nothing.
- gwright 15y ago
  I'm not sure Krugman's reputation is as reputable as you suggest. Some might even call him a "froth-mouthed crackpot hurling ad-hominems". Not me of course, I wouldn't want to hurl ad-hominems in place of a real argument. Better to appeal to authority.
  - St-Clock 15y ago
    > I'm not sure Krugman's reputation is as reputable as you suggest I know that winning the Nobel Prize is not the end of the world and that there are often political motives behind these prizes (Obama anyone?), but between believing a guy who won a Nobel Prize in economics vs. believing a random guy on HN with no real argument, the choice is easy (to me at least). To the best of my knowledge, Krugman rarely (if ever) hurls ad-hominems: he always tries to explain why he strongly disagrees with conservatives, tea party, or Obama. The adjective he uses for them almost always fit his explanations.
    - IanDrake 15y ago
      In economics people win for their work, not their winning personality. Krugman won for "his analysis of trade patterns and location of economic activity" - http://www.nobelprize.org/nobel_prizes/economics/laureates/2008/ http://www.nobelprize.org/nobel_prizes/economics/laureates/2... Hayek also won the Nobel Prize and would undoubtedly disagree with almost everything Krugman believes. He won for "pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena" - http://www.nobelprize.org/nobel_prizes/economics/laureates/1974/ http://www.nobelprize.org/nobel_prizes/economics/laureates/1... I don't believe the gold standard is a good for our mandated monetary system, but I also don't believe forced currency monopolies and gold confiscation should exist in a "free" country - http://en.wikipedia.org/wiki/Executive_Order_6102 http://en.wikipedia.org/wiki/Executive_Order_6102
      - cbr 15y ago
        The executive order you link to has not been in effect since the 70s.
        IanDrake 15y ago
        That's not the point. The point is that the government can make it illegal to own gold by executive order anytime it wants.
  - RyanMcGreal 15y ago
    I think David Frum put it best [1]: > Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? [1] http://www.frumforum.com/were-our-enemies-right http://www.frumforum.com/were-our-enemies-right
    - webXL 15y ago
      Using that hypothetical, you'd either think George W. Bush was the next coming of Jesus or Hitler. There was very little unbiased economic information in either opinion section. On his blog, Krugman is much less biased and inflammatory (perhaps because he doesn't feel the need to help sell newspapers there) and in this case, he brings up some valid points about the intentionally deflationary currency.
      - pessimizer 15y ago
        You're missing the point of the frumforum post. It was: if you were planning for the future, which source of predictions (the WSJ editorial page or Krugman's column) would have been a more accurate guide? It's about whether the horse would win, place, show, or be in the money at all - not whether the horse was pretty. Biased or unbiased doesn't matter. The truth is biased. If the WSJ or Krugman says the passage of X bill will destroy Thailand's exports, and Thailand's exports rise, that's a failure. If the WSJ or Krugman say that Thailand is a beautiful country, that's irrelevant to the question.
        webXL 15y ago
        And my point was that there was more opinion than useful information or predictions on those op-ed pages. Can you or Frum point out specific examples that might make one conclude that one op-ed page was more reliable than the other? BTW, truth is not biased. 2 + 2 = 4 is not biased. Only people can be biased. Using throw away cliches like that doesn't get us anywhere.
  - dasil003 15y ago
    Better than new HN account with negative karma? Yeah, I'm really sticking my neck out.
  - icebraining 15y ago
    An appeal to authority is only fallacious if the authority is not a legitimate expert on the subject or if the conclusion is said to be true, and not just probable. In this case, an appeal to authority is a perfectly valid way of asserting that a certain conclusion is more probable than the other.
    - gwright 15y ago
      Lots of people don't view Krugman as a legitimate expert. His opinions are not universally accepted and so I don't think his authority should be assumed. In any case, if the underlying argument is valid it really doesn't matter who is making it, right? An appeal to authority is really just a shortcut to avoid the full argument but it only works if the full argument (with no appeal to authority) can be made.
  - gwright 15y ago
    Sigh. Voted down because of a little humor and the fact that I'm not persuaded that Krugman is a accepted authority on economic matters. Certain circles of people do view him as an authority, but many others do not. There is no consensus as to Krugman's expertise and so relying on his authority (as opposed to his particular argument on a particular issue) is dubious. Economics is a difficult field in which to find concensus on many issues and so an appeal to authority in this area should automatically raise eyebrows.
- trevelyan 15y ago
  The title is a reference to the book "Golden Fetters" by Barry Eichengreen which discusses the role the gold standard played in transmitting deflation during the Great Depression. Krugman isn't citing statistics because Eichengreen does the heavy lifting here. He's just reminding people that libertarians who attack the Fed because they want a new gold standard are basically crazy. I agree with his assessment (bitcoin would be a disaster as a national currency), but don't think this is a problem since it is valuable as an asset store and transfer mechanism, and seems to be holding value.
  - foobarbazoo 15y ago
    Wait, the Fed is formed to finance WW1, goes on a massive inflationary binge through the 20s and causes the Great Depression, and the takeaway is that the gold is the problem? Genius.
    - trevelyan 15y ago
      Exactly. You pass reading comprehension. For bonus points, read the actual book. Informed discussions are always more interesting.
waitwhat 15y ago
So I went to bitcoinmarket. They appear to show 1 BTC = (exactly) 15.00 USD all day every day since the beginning of August, never changing. Meanwhile, MtGoX currently shows 7.00.
- stevenwagner 15y ago
  http://bitcoincharts.com/ http://bitcoincharts.com/
sirclueless 15y ago
You basically interpreted this backwards. When Krugman says that the bitcoin economy has experienced deflation, he means that a bitcoin is worth more now than it was in the past. The graph on bitcoinmarket certainly shows this. If I wanted to buy a motorcycle in bitcoins in 2010 I would have needed several thousand. Now I only need a few hundred. Which means that I would have been stupid to spend my bitcoins last year. If deflation continues and bitcoins continue to be worth more and more, then the rational thing to do is never spend my bitcoins at all. And most economic theory says that the more people spend money the healthier the economy becomes so Krugman is arguing that bitcoins are an unhealthy direction for the economy to head in.
- narkee 15y ago
  >And most economic theory says that the more people spend money the healthier the economy becomes Doesn't that seem like a bizarre theory since the economy is in shambles and debt-financed spending seems to be getting higher and higher (consumer/credit card debt, etc.) I thought people were supposed to be encouraged to save, pensions, 401k and Roth IRAs, etc. Is overall economic health inversely related to individual economic health?
  - endersshadow 15y ago
    The more people spend money that they have. Debt-financed spending means that future money is not going toward goods and services. Investment is a good thing to have, too: GDP = Consumption + Gross Investment + Government Spending + Trade Surplus/Deficit Paying back of credit card debt (at least principal) doesn't fall into this equation. The interest falls into the Consumption category (paying for a service). That's why consumer debt adversely hurts GDP when out of control.
    - sirclueless 15y ago
      > Debt-financed spending means that future money is not going towards goods and services. This is a major hole in my current understanding of economic theory. My gut reaction tells me that being in debt should be bad but if you think about it, it's really a good place to be. If the general monetary supply is inflationary, then money you owe is gradually losing value. Which is an excellent proposal for those in debt: do nothing and wait, and you will owe less material value. So when you say that "future money is not going towards goods and services" I am at least a little OK with that, because future money isn't worth as much as money today, in actual fact.
endersshadow 15y ago
He means prices of goods and services, not the price of Bitcoins.
- klenwell 15y ago
  Precisely. Imagine some arbitrary point in the past when Bitcoins (B) and Dollars ($) were at parity (around the time the Slashdot article appeared, IIRC). And imagine a product, widgets, that cost $10/ea. At that time: $10 -> B10 -> 1 widget Now move forward to a 10x increase in Bitcoin: $10 -> B1 -> 1 widget So the price of widgets went from B10 to B1. Deflation.

dasil003 15y ago

Uh, where are the BTC prices on that site? If you want to come across as anything other than a froth-mouthed crackpot hurling ad-hominems at a respected economist, you need to offer up some actual data. Granted, Krugman didn't either, but he's got a reputation to fall back on, you've got nothing.

gwright 15y ago
I'm not sure Krugman's reputation is as reputable as you suggest. Some might even call him a "froth-mouthed crackpot hurling ad-hominems". Not me of course, I wouldn't want to hurl ad-hominems in place of a real argument. Better to appeal to authority.
- St-Clock 15y ago
  > I'm not sure Krugman's reputation is as reputable as you suggest I know that winning the Nobel Prize is not the end of the world and that there are often political motives behind these prizes (Obama anyone?), but between believing a guy who won a Nobel Prize in economics vs. believing a random guy on HN with no real argument, the choice is easy (to me at least). To the best of my knowledge, Krugman rarely (if ever) hurls ad-hominems: he always tries to explain why he strongly disagrees with conservatives, tea party, or Obama. The adjective he uses for them almost always fit his explanations.
  - IanDrake 15y ago
    In economics people win for their work, not their winning personality. Krugman won for "his analysis of trade patterns and location of economic activity" - http://www.nobelprize.org/nobel_prizes/economics/laureates/2008/ http://www.nobelprize.org/nobel_prizes/economics/laureates/2... Hayek also won the Nobel Prize and would undoubtedly disagree with almost everything Krugman believes. He won for "pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena" - http://www.nobelprize.org/nobel_prizes/economics/laureates/1974/ http://www.nobelprize.org/nobel_prizes/economics/laureates/1... I don't believe the gold standard is a good for our mandated monetary system, but I also don't believe forced currency monopolies and gold confiscation should exist in a "free" country - http://en.wikipedia.org/wiki/Executive_Order_6102 http://en.wikipedia.org/wiki/Executive_Order_6102
    - cbr 15y ago
      The executive order you link to has not been in effect since the 70s.
      - IanDrake 15y ago
        That's not the point. The point is that the government can make it illegal to own gold by executive order anytime it wants.
- RyanMcGreal 15y ago
  I think David Frum put it best [1]: > Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? [1] http://www.frumforum.com/were-our-enemies-right http://www.frumforum.com/were-our-enemies-right
  - webXL 15y ago
    Using that hypothetical, you'd either think George W. Bush was the next coming of Jesus or Hitler. There was very little unbiased economic information in either opinion section. On his blog, Krugman is much less biased and inflammatory (perhaps because he doesn't feel the need to help sell newspapers there) and in this case, he brings up some valid points about the intentionally deflationary currency.
    - pessimizer 15y ago
      You're missing the point of the frumforum post. It was: if you were planning for the future, which source of predictions (the WSJ editorial page or Krugman's column) would have been a more accurate guide? It's about whether the horse would win, place, show, or be in the money at all - not whether the horse was pretty. Biased or unbiased doesn't matter. The truth is biased. If the WSJ or Krugman says the passage of X bill will destroy Thailand's exports, and Thailand's exports rise, that's a failure. If the WSJ or Krugman say that Thailand is a beautiful country, that's irrelevant to the question.
      - webXL 15y ago
        And my point was that there was more opinion than useful information or predictions on those op-ed pages. Can you or Frum point out specific examples that might make one conclude that one op-ed page was more reliable than the other? BTW, truth is not biased. 2 + 2 = 4 is not biased. Only people can be biased. Using throw away cliches like that doesn't get us anywhere.
- dasil003 15y ago
  Better than new HN account with negative karma? Yeah, I'm really sticking my neck out.
- icebraining 15y ago
  An appeal to authority is only fallacious if the authority is not a legitimate expert on the subject or if the conclusion is said to be true, and not just probable. In this case, an appeal to authority is a perfectly valid way of asserting that a certain conclusion is more probable than the other.
  - gwright 15y ago
    Lots of people don't view Krugman as a legitimate expert. His opinions are not universally accepted and so I don't think his authority should be assumed. In any case, if the underlying argument is valid it really doesn't matter who is making it, right? An appeal to authority is really just a shortcut to avoid the full argument but it only works if the full argument (with no appeal to authority) can be made.
- gwright 15y ago
  Sigh. Voted down because of a little humor and the fact that I'm not persuaded that Krugman is a accepted authority on economic matters. Certain circles of people do view him as an authority, but many others do not. There is no consensus as to Krugman's expertise and so relying on his authority (as opposed to his particular argument on a particular issue) is dubious. Economics is a difficult field in which to find concensus on many issues and so an appeal to authority in this area should automatically raise eyebrows.
trevelyan 15y ago
The title is a reference to the book "Golden Fetters" by Barry Eichengreen which discusses the role the gold standard played in transmitting deflation during the Great Depression. Krugman isn't citing statistics because Eichengreen does the heavy lifting here. He's just reminding people that libertarians who attack the Fed because they want a new gold standard are basically crazy. I agree with his assessment (bitcoin would be a disaster as a national currency), but don't think this is a problem since it is valuable as an asset store and transfer mechanism, and seems to be holding value.
- foobarbazoo 15y ago
  Wait, the Fed is formed to finance WW1, goes on a massive inflationary binge through the 20s and causes the Great Depression, and the takeaway is that the gold is the problem? Genius.
  - trevelyan 15y ago
    Exactly. You pass reading comprehension. For bonus points, read the actual book. Informed discussions are always more interesting.

waitwhat 15y ago

So I went to bitcoinmarket. They appear to show 1 BTC = (exactly) 15.00 USD all day every day since the beginning of August, never changing. Meanwhile, MtGoX currently shows 7.00.

stevenwagner 15y ago
http://bitcoincharts.com/ http://bitcoincharts.com/

sirclueless 15y ago

You basically interpreted this backwards. When Krugman says that the bitcoin economy has experienced deflation, he means that a bitcoin is worth more now than it was in the past. The graph on bitcoinmarket certainly shows this. If I wanted to buy a motorcycle in bitcoins in 2010 I would have needed several thousand. Now I only need a few hundred. Which means that I would have been stupid to spend my bitcoins last year. If deflation continues and bitcoins continue to be worth more and more, then the rational thing to do is never spend my bitcoins at all. And most economic theory says that the more people spend money the healthier the economy becomes so Krugman is arguing that bitcoins are an unhealthy direction for the economy to head in.

narkee 15y ago
>And most economic theory says that the more people spend money the healthier the economy becomes Doesn't that seem like a bizarre theory since the economy is in shambles and debt-financed spending seems to be getting higher and higher (consumer/credit card debt, etc.) I thought people were supposed to be encouraged to save, pensions, 401k and Roth IRAs, etc. Is overall economic health inversely related to individual economic health?
- endersshadow 15y ago
  The more people spend money that they have. Debt-financed spending means that future money is not going toward goods and services. Investment is a good thing to have, too: GDP = Consumption + Gross Investment + Government Spending + Trade Surplus/Deficit Paying back of credit card debt (at least principal) doesn't fall into this equation. The interest falls into the Consumption category (paying for a service). That's why consumer debt adversely hurts GDP when out of control.
  - sirclueless 15y ago
    > Debt-financed spending means that future money is not going towards goods and services. This is a major hole in my current understanding of economic theory. My gut reaction tells me that being in debt should be bad but if you think about it, it's really a good place to be. If the general monetary supply is inflationary, then money you owe is gradually losing value. Which is an excellent proposal for those in debt: do nothing and wait, and you will owe less material value. So when you say that "future money is not going towards goods and services" I am at least a little OK with that, because future money isn't worth as much as money today, in actual fact.

endersshadow 15y ago

He means prices of goods and services, not the price of Bitcoins.

klenwell 15y ago
Precisely. Imagine some arbitrary point in the past when Bitcoins (B) and Dollars ($) were at parity (around the time the Slashdot article appeared, IIRC). And imagine a product, widgets, that cost $10/ea. At that time: $10 -> B10 -> 1 widget Now move forward to a 10x increase in Bitcoin: $10 -> B1 -> 1 widget So the price of widgets went from B10 to B1. Deflation.