Some people are just blowhards.
There’s a guy named Gary North. He writes about matters economic. He’s a good writer. He keeps his sentences very short. And pointed.
He’s very sure of himself. If there’s nothing else you can glean from his writing, you can glean this: he knows everything there is to know about anything that’s important. He’s made a fortune, he tells us, writing his newsletters and buying and selling properties and operating daycare centers.
He’s been having this ongoing, online/offline tiff with Ellen Brown – lawyer, best-selling author, amateur economist. Brown and North agree on a lot of economic problems, but not about the solutions. Brown doesn’t like a central bank, neither does North. But Brown thinks money-issuance should be a purely government function. It’s not clear what North thinks, other than that he disagrees with Brown on this point. North may tend towards a gold standard with no government money issuance. But he’s sort of cryptic about it all.
The reason for that? Before he publicly commits, he wants to be sure he is in a position to profit and crow about it.
Sometimes I think some people were picked on as children and never get over it. They become misanthropic adults. They silently, maybe subconsciously vow to attain power so that they won’t be vulnerable to others’ cruelty anymore. That approach to life and to others increasingly comes to define their opinions, their emotions, their thinking, and their relationships with others. Their very personalities, in other words.
Before Ellen Brown, there was “Mish” Shedlock, North’s bete noire of 2009. North engaged in a spirited and somewhat less acrimonious debate with the very popular economics blogger over whether the world was looking at inflation or deflation.
The pattern is the same. After a few public exchanges, North declares victory and maintains he has demolished his opposition.
In his debate with Shedlock, North tackled the problem of “pushing on a string”, sort of. But he doesn’t really understand the concept, since he doesn’t really understand how “money” is created in a central bank system, like the one we have.
All money, every last red cent, is loaned/borrowed into existence. Thus a breakdown of lending and borrowing is simultaneously the curtailment of money creation.
Is that “deflation”? Kind of. What difference does it make? Both inflation and deflation are monetary phenomena. And monetary phenomena are a proxy for reality, not reality itself. To the extent you have inflation or deflation the monetary system is not reflecting reality, and since it is supposed to reflect reality that’s a problem, but not as big a problem as when reality itself is deteriorating. As when people go to war, for example.
Economics is a really important subject and people have strong opinions about it. Fine. But it is not the most important subject. It is a social science. It is subordinate to philosophy. Law. Mathematics. Physics. Biology. It – the discipline of economics – is required to conform to them, not the other way around.
In that sense, North and Shedlock and all the other economists are making the same mistake. Ellen Brown may not be making the same mistake, but she is making others.
I was over at Crime & Federalism yesterday, offering my opinion (a terrible and foreboding thing, I know) in the comments section that lawyers, not economists, are the key to the financial crisis thing, as long as we don’t abdicate.
But we have abdicated so much, for so long. I don’t think that pattern is going to change. And it’s a pity.