Answering Tom Woods
Recently Tom Woods has been on a crusade ‘debunking’ the critique on Austrian Economics by Wayne Walton and myself. Yesterday he reasserts his faith in deflation in an article also posted on Lew Rockwell. In this article we not only, again, disassemble the breathtakingly ‘naive’ Austrian view on deflation, we throw in a challenge too.
Yesterday Woods wrote an article, also posted at Lew Rockwell’s, regurgitating the same nonsense about deflation and basically claiming victory. Apparently assuming nobody would find out about what actually happened, because he didn’t provide the link to the Facebook debate Wayne Walton and I were having with him earlier, that led to this article of his.
Of course we’ll point out the obvious (for the readers of this blog) once more, by analyzing his article, but before we do, let me say this.
It’s high time for a full blown, man to man debate with some of these Austrians. I’m willing to meet Tom Woods, Gary North, Anthony Wile, Ron Paul, Lew Rockwell or any other Austrian of standing any time in a Skype debate. I have a few simple conditions, which will be as favorable to them as possible:
1. They can choose the discussion leader. There is a gentlemen’s agreement that this man will facilitate the debate in a civilized way, only somewhat favoring his own side. The public will be there to see if this gentlemen’s agreement is honoured.
2. The discussion is posted both on our sites (Makow, Truthseeker, Real Currencies, Daily Knell and all others who see fit to post) and on the Austrian outlets, with a mutual link to the analyses of the debate.
3. I will not go into the elite build up of Austrianism: I will just take out their stand on usury, deflation, Money Power and the State.
4. If anybody is ready to cover the costs, I’ll fly to the US, notwithstanding my fear of flying, which I will manage with a couple of stiff Gin-Tonics, and my utter disgust of the TSA. I’ll face them all on their own home turf any time, any place.
5. This offer will stand indefinitely.
Having said that, let’s get to the issue, which, in this case, is deflation.
More BS on Deflation
In the first place, Tom Woods refers to ‘us’ as ‘some in the End the Fed Movement’. That’s his prerogative, of course, but I prefer Activist Post’s Eric Blair’s 2010 framing of the debate, when it started with North’s assault on Brown and my rebuttal at the time.
It’s the Interest Free currency crowd against the Goldbugs. Basically a struggle that started in the late 1800’s. According to Blair, ‘this may indeed be the most important discussion of our lifetime’, and although I can think of one or two even more important issues, it’s still pretty important and ‘we’ are not just ‘some in the End the Fed movement’.
‘We’ are those who have tolerated the Austrians in the Truth movement, because they, at a superficial level, seemed to support some of ‘our’ positions, most notably their opposition to the FED. Meanwhile ignoring, downplaying or outright denying 9/11 ‘conspiracy’, like Kokesh, Paul, Paul, North, Rockwell and so many other Austrians infiltrating the real deal, facilitated by that traitor Alex Jones.
But, as I’ve shown elsewhere, their take on the FED has been taken from the populist movement and used to propose the insidious ‘Gold Standard’ (nowadays packaged as a ‘free market for currencies’) as the solution to FED usurious fractional reserve banking.
Secondly, in a speech that Tom Woods refers to in his article, he ‘debunks’ the notion that the Gold Standard was a disaster by quoting the Industrial Revolution. According to Woods, this was a great success while on a Gold Standard. This, obviously, is in the eye of the beholder. During the ‘Industrial Revolution’, the common man was relegated to 80 hour working weeks in the sweatshops, making just enough to feed himself (but not his family) on a spuds/grains only diet. His wife AND children were working long weeks also, just to feed themselves. From the point of view of those holding gold, those we call the Money Power, this was indeed a great success. This is capitalism at its best: all owned by a ‘happy’ few, with the many licking their boots in exchange for a horrorjob.
During the non-usurious age of plenty, called the ‘dark ages’ by the Money Power apologists, a working man worked 15 weeks per year to feed not only himself, but also his massive family.
Third, in this same talk (by the way, for some very, very well off individuals, while complaining Austrianism gained so little traction with the elite) Woods does the same thing that many Austrians do and which he tried to pull of in the mentioned Facebook discussion also: he tried to downplay the relation between deflation and depression by quoting the (in)famous Atkeson/Kehoe study which famously denies a relation between the two. There are two rather major problems with this study though. In the first place, it was commissioned by…………yes, you guessed it, or you knew: by the FED.
Now, I’ve said this before and I’ll say it again, because I like to rub it in: how disingeneous is this: our Austrian Fed busters quoting a Fed study when it serves their purposes, in this case defending deflation. The Fed, tirelessly exposed by valiant Austrian Knights for hiding their messing up the volume of money. When they mess up the volume in terms of inflation, that is. But when it comes to hiding their deflating the money supply it’s all of the sudden a trusted source and ally?
To be honest: these kinds of antics are typical of Austrians.
The second thing I have a MAJOR problem with is this: in this study deflation is defined as ‘declining prices’. And ‘t is true: in this day and age of obscuring truth about money, inflation is often defined as ‘rising prices’ and deflation as its opposite. But everybody with even negligable awareness of what is going on in terms of slanting definitions and hiding truth through wordgames in economics knows that inflation really means ‘a growing money supply’ and deflation ‘a dwindling money supply’. Sure, nowadays it’s hip to say there are two definitions. But Tom Woods is a ‘senior fellow’ of the ‘reputable’ Mises Institute, so I’m not going to give him ANY slack here. He’s just playing the game of make believe.
Fourth, Woods calls Walton ‘tone-deaf’ to the financial world, as, according to Woods, the financial world is paranoid about deflation and apparently fears nothing more than just that.
This is where we enter the, what I like to call, ‘ultra naive’ parts of the Austrian paradigm. It’s amazing how many Austrian positions are both utterly naive to the real world and simultaneously incredibly comfortable to the Powers that Be and this is a typical case in point. Obviously, the elite does not fear deflation. However, it is keenly aware the masses (us) absolutely deplore deflation. We hate it, because it broke our back in the thirties and many other depressions. So of course the Money Power and its shills cater to this by being very busy pretending they hate deflation too.
That’s why Ben Shalom Bernanke is very comfortable being called ‘helicopter Ben’, because he will be dumping cash on a deflated economy, calming the gullible. Of course the not so gullible clearly see his QE1, 2, 3, x do nothing to reflate the economy (and thus nothing to end deflation) but is solely focussed on allowing the ultra rich in unloading their busted ‘derivatives’ like Mortgage Backed Securities and other silly financial ‘products’ at full nominal value at the expense of the ultimately taxpayer backed Federal Reserve Bank.
Fifth, continuing in the same ‘naive’ vein, he then addresses Wayne’s very, very solid point that “Monetary deflation benefits the private bankers who wish the People to default in order to seize collateral with, or without govt force.”, saying that this is ‘clearly incorrect’, because banks surely would not want to get their hands on ‘potentially illiquid assets’.
He continues by saying: ‘When asset prices are falling, why would banks want to grab assets?’
Well Tom, let me explain this to you: not everybody is surviving from month to month. There are individuals and organizations that are actually capable of long term planning. And I’m not talking a year here. I’m talking not even several years, but decades. Centuries even.
So while I, and maybe even you, live day by day, the banks actually realize that at some point the deflation is going to end and their newly acquired assets are bound to gain a lot in value……. Yes, it’s called speculation and banks and their owners have shown to be quite good at that.
But this argument Woods apparently expects and he proceeds to say: “Ah, but couldn’t the banks coordinate the deflation together, and then when it hits bottom, grab all the assets at that moment, when their prices have nowhere to go but up? Even assuming that bankers would adopt such a far-fetched strategy, there is no way for them to know at what point in the deflationary process the defaults are going to occur.”
Ah yes…. far-fetched……….Like I said, their is a certain ‘naiveté’ to Austrianism that would even be quite touching, would one be unaware of the untold billions poured into disseminating these childish ‘mistakes’.
Nowadays, it’s a mainstream science matter of record that all the banks own each other and are one major cartel, no, monopoly.
So no this is not ‘far-fetched’. What IS far-fetched is Woods’ statement that ‘there is no way for them to know at what point in the deflationary process the defaults are going to occur.”
Utterly ‘oblivious’, probably because of the same ‘naiveté’, that the banks are causing the deflation willfully and know exactly when it will end. Because it will end when they will start lending again.
Tom Woods made a fool of himself. He comes up with the same nonsense and then some that Austrianism is now becoming famous for as many in the Alternative Media are waking up to their stupid ‘ideas’, that were generated at such a massive cost to the Money Power by Tom Woods’s employer Lew Rockwell and his Volker Fund buddies.
But of course we’re far too polite and far too interested in maintaining cordial relations with everybody even pretending to oppose the banksters. That’s why we propose a debate ignoring Austrian financing: just aiming at the issues themselves.
In this article we have not even mentioned that during deflation debts become worse in real terms, as do the interest costs related to them. We have not mentioned its disastrous effects on economic growth.
That’s because Deflation Apologist Tom Woods chose to ignore these rather important issues……
Discussing Gold and Interest with the Daily Bell
Austrian Economics, Apostles of Austerity Defending Deflation
the Austrian ‘Free Market for Currencies’ Hoax
The Inflation vs. Deflation Dialectic
Who is Ed Griffin?