Nobel economist Krugman on bitcoin and crypto-currencies.

[elewton]

If Bitcoin dominates, Economics will be very interesting.
I assume most transactions will not bother obfuscating, and that some corporations (probably Google et al.) will reward you for registering purchases (this being an opt-in service), and accepting advertising.
By throwing enough processing power at that much data, I'm sure the smart people can do a very good job linking you with someone with whom you would like to trade.

Could be equally interesting to economics or comp sci students.

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And by the way, I think you have a cartoonish view of Keynes.  One reason why I lean more towards Keynesianism than other schools is because it acknowledges that there is no such thing as a perfectly rational Homo economicus.  Coupled with information asymmetries in markets, this means that a pure market-lead economy will result in sub-optimal global outcomes.

This is obvious with even a moment's thought, and you aren't likely to find an Austrian denying it. The problem is, Keynes didn't have a better solution. And "sub-optimal" is subjective anyway.

[Distribution]

And by the way, I think you have a cartoonish view of Keynes.  One reason why I lean more towards Keynesianism than other schools is because it acknowledges that there is no such thing as a perfectly rational Homo economicus.  Coupled with information asymmetries in markets, this means that a pure market-lead economy will result in sub-optimal global outcomes.

This is obvious with even a moment's thought, and you aren't likely to find an Austrian denying it. The problem is, Keynes didn't have a better solution. And "sub-optimal" is subjective anyway.

 I would consider a world wide depression caused by over allocation of money into a few sectors a sub optimal outcome. But maybe if we had more central bank intervention and more of government encouraging lending for homes we would be better off.

[billyjoeallen]

And by the way, I think you have a cartoonish view of Keynes.  One reason why I lean more towards Keynesianism than other schools is because it acknowledges that there is no such thing as a perfectly rational Homo economicus.  Coupled with information asymmetries in markets, this means that a pure market-lead economy will result in sub-optimal global outcomes.

This is obvious with even a moment's thought, and you aren't likely to find an Austrian denying it. The problem is, Keynes didn't have a better solution. And "sub-optimal" is subjective anyway.

yes, that's correct. Austrian economics (praxeology) only claims that man acts purposefully, which may or may not be rational.

[benjamindees]

I would consider a world wide depression caused by over allocation of money into a few sectors a sub optimal outcome. But maybe if we had more central bank intervention and more of government encouraging lending for homes we would be better off.

Dammit now I don't even know whether this is sarcasm or stupidity.

Surely everyone understands the real estate crisis by now.  Are you saying it was not a Keynesian phenomenon?  Individual investors blew up the housing bubble?

[Distribution]

I would consider a world wide depression caused by over allocation of money into a few sectors a sub optimal outcome. But maybe if we had more central bank intervention and more of government encouraging lending for homes we would be better off.

Dammit now I don't even know whether this is sarcasm or stupidity.

Surely everyone understands the real estate crisis by now.  Are you saying it was not a Keynesian phenomenon?  Individual investors blew up the housing bubble?

The first part is completely serious. The second part is what I would say if I was Paul Krugman. It's been pretty well established that central banks cause massive bubbles and the subsequent recessions.

[economicsjunkie]

Nevertheless, my opinion is that when eventually Economics does become a science it is more likely to resemble Keynesianism than the Austrian school so favoured by this forum's hivemind.

That is quite a fascinating statement to make.

Aside from the fact that you seem to assert that a field of study is not a science so long as YOU don't declare it one, would you care to share how you arrived at this conclusion?

What empirical and logical (=scientific) criteria did you apply to both those schools in order to infer that the Keynesians' theories are more accurate than the Austrians'?

[economicsjunkie]

And by the way, I think you have a cartoonish view of Keynes.  One reason why I lean more towards Keynesianism than other schools is because it acknowledges that there is no such thing as a perfectly rational Homo economicus.  Coupled with information asymmetries in markets, this means that a pure market-lead economy will result in sub-optimal global outcomes.

Interesting, maybe you know more than I do, and I always thought I had read a lot of Austrian literature.

Could you maybe just point out real quick a paragraph that is representative of the Austrian School where it says that all humans are what you call "perfectly rational" (I'm not even sure what that is supposed to mean so maybe that's another thing that you could help me understand) ?

[hugolp]

I, for one, am very much curious about what Krugman would say about the economic aspects of Bitcoin.

And by the way, why all the disdain for Krugman expressed in this thread?  As far as mainstream economists go, I have the utmost respect for him.  He has been consistently been correct on his predictions and he has always been coherent with his arguments.  Case in point: he clamored against the irresponsible build up of the deficit during the Bush years, because the Keynesian doctrine argues (correctly in my view) that during the "good times" one is supposed to reduce the debt so that a larger margin of maneuver is gained for increasing government spending during the "bad times".  Remember that many other economists (Greenspan et al) were actually against having a government surplus and cheered on the irresponsible Bush tax cuts.

Another point of reflection for this forum's hivemind: despite goldbugs having for many years been constantly raving about hyper-inflation, the fact is the US continues to have a rate of inflation that is extremely low by historical standards.  A rate so low that deflation is actually a bigger worry.  This is exactly the sort of outcome that Krugman predicted given the liquidity trap situation the US found itself in after the 2008 crisis.

I was not expecting to find a krugmanbot in this forum.

Krugman was not a bad economist, but now he is a political hack, a sold out. He has consistently lied and defended the status quo and the central bank by lying to the people that read his blog. For example, his big prediction during the crisis has been that the danger was price deflation or at least some kind of 0% price inflation ala Japan. He said at the end of 2010 that he saw no danger of price inflation and the danger was still price deflation. After 3 or 4 months price inflation jumped up.

But the part that shows more about Krugman is that he blocked long comments in his blog posts because he was getting hammered and riduculed even by fellow keynesians showing how ridiculous his arguments were. So he decided that was not acceptable and shortened the accepted lenght of the comments so no argument was posible. The guy is a political shill with no self respect.

PS: Btw, I would qualify as a goldbug and I have been predicting since the beginning that we wont see hyper-inflation, but stagflation (as we are seeing). As have many other goldbugs. This hyper-inflation thing is just another strawman from Krugman to rally the krugmanbots.