Sunday, July 29, 2012


Today, one of my dreams is coming true. For this evening (July 29, 2012), I will watch Megadeth live at the World Trade Center in Pasay. For closure of a dream, if nothing else.

I could not possibly express the significance of this to me. Even after reading this brief outline of my aesthetic-philosophical growth, you would only grasp my story in the most general, that is, imprecise, terms. 


‘Youthanasia’ (1994) was, if not my first experience of, then my first sustained recognition of the sublime.

I first knew fickle, elusive passion: passion as the definitive experience of individuality (it took several years for me to describe it in such a way), passion as essential in the giving up and replacing of paradigms. Passion deactivates mechanisms such as fear that otherwise restrict the integration of new ideas.

My musical experience would only grow from that point, finding much to love in both pop music and classical music, with Mozart as the pinnacle.


I also learned something upon trying to convey the joy I was undergoing: no one understood. Mention the name ‘Megadeth’ and people typically think it’s a childish joke.

Passion could not be transmitted. There is nothing social about passion. Passion is the impression of the unique. Reason, the linking of a unique thing to another unique thing, is the social.

Realizing the non-conveyability of passion was very instructive in my discovery of other uncommon things, such as the philosophies I hold today. It has made me less narcissistic so as to somewhat condescend and dumb things down if I did attempt to impart these ideas.


From the mid-1990s onward, this sense of ‘more than this’ would be reflected in intellectual interests. I started out enjoying reading New Age literature, not so much for the aliens and astral voyages and whatnot, but for its non-literal reading of Scripture.

In college, I gradually moved to reading Eastern religions, specifically Hinduism and Buddhism.


In 2002, I was drawn to studies of mysticism, which most people mistakenly think is about fortune telling or hallucinatory visions. 

Mysticism is the purest impression of individuality. The attempt to recount mystical experiences necessarily misleads ‘second-handers,’ who misapply such ‘knowledge’ in dogma, or who devise a Hegel-type vision of humanity as controlled by the state.

“These are really the thoughts of all men in all ages and lands, they are not original with me, If they are not yours as much as mine they are nothing, or next to nothing” ― Walt Whitman


Also in 2002, I finally came around to Western philosophy, Nietzsche in particular. He helped refine my expression of ideas, orienting them to the more apparent or worldly.

I always looked down on Ayn Rand’s Objectivist philosophy, but her individualist politics did interest me, just in time that the burden of having to make political judgments was thrust upon me.

It took a while, more than a couple of years, before I grew out of Rand’s narrow explorations, to discover Austrian economics and a formidable framework for the market order. It was from Ludwig von Mises that I first really knew Kant, and my thinking processes are better for it.


Quite fascinatingly, my interests have never really deviated. From music to economics, it has always been about an expansion of the experience of the individual.

Life is an integration of both the individual and the social, of the passionate and the rational. Freedom of markets and the decentralized processes involved happen to be the means by which power is best harnessed for what is recognized with our greater foresight as ‘good,’ which can then be said after-the-fact to be most moral.


When I began listening to Megadeth all those years ago, I thought, amazingly, that my heart had room for just this one band.

My perspective has completely changed, so as to embrace so much more of music and of life. In 1995, I could not have foreseen how this journey would turn out, and the next 17 years from now are just as much a mystery.

Little did I realize in my early adolescence that art, and all things that empower, reflect myself above all, and there are no limits to self-contemplation. Like the great mystic William Blake, I can declare that “all deities reside in the human breast.”


Post-concert update: Dave Mustaine, a former representative of the Democratic Party for MTV, gives Obama two thumbs down. I am guessing Alex Jones, who has interviewed Mustaine a couple of times, has been an influence. 

Quote: “If I could get away with saying he was a cocksucker…”

Friday, July 27, 2012


Hey there. If you’re reading this, it’s either you’re one of the four people, me included, who read this blog regularly, OR someone you know has linked you here to save you from your pathetic status as a Keynesian (I keed, I keed).

Let’s get started.



The Keynesian blames economic crises on a ‘lack of aggregate demand.’ During a depression, many people and much equipment are rendered useless because no one is there to patronize their goods and services.

This demand gap is to be filled by increasing government spending, or lowering interest rates to make spending more affordable. And by boosting demand to meet supply, money flows around once more, raising employment and productivity.

Who’s to argue with this? Who could possibly oppose spreading the wealth and giving people back their jobs?



It’s such a pleasant scenario, that I’m hesitant to ask:

With the stimulation of demand, what happens to prices?

(Prices go up).

What do high prices indicate of supply?

(That supply is falling)

Why would supply fall in spite of more money/’wealth’ in the system?



Because the entry of new monetary notes into the system does nothing to increase resources.

More cash means merely redistributing resources, as desired by policymakers, who do not recognize, or care about, the unsustainability of their efforts as indicated by the demand-price-supply dynamic enumerated above.



But, it might be argued, supply is only a problem when there is full employment. In a crisis, what a waste to not use these additional plants/people, when they’re just lying there!

The implication of this ‘full employment’ argument is that prices could not possibly rise for anything, unless people and existing equipment are employed to the point that price/wage increases will not boost employment levels.



Prices don’t rise just to spoil the party or make you Keynesians look stupid, but are indications that supply is really not sufficient for whatever endeavors are stimulated. And the more that consumption is encouraged, less investible resources remain by which to sustain an economy. This explains the net loss, and not a mere return to previous conditions, come depression time.

But, you say, the consumer price index doesn’t show the price increases I’m claiming. The c.p.i. is rather stable at 2-ish%, or nothing beyond 5%.


Friedrich Hayek’s great works
on the business cycle.

But price increases remain only a symptom of the monetary manipulation going on. If sometimes prices don't rise, this indicates an increase in supply of goods offsetting the monetary expansion.

But don’t rejoice about such an increase in output either. These are goods the sustained purchase of which is doubtful when credit tightens, when price signals are corrected to reveal poor demand for these stimulated sectors (e.g. construction materials).



Leaving aside as well that there is no such entity as a ‘general price level’ in an economy, the c.p.i. necessarily neglects some consumer products in favor of others. The c.p.i. also ignores other upward price distortions, in real estate, stocks, bonds, etc.

Besides, price increases do not go up immediately after the lowering of interest rates, or according to anyone’s time frame. It may take years for the newly printed money to move from bonds to ‘real’ capital and consumer goods, but this delay does not make the consequences of monetary expansion any less adverse.

Recognizing that prices are merely symptomatic, wouldn't focus be better placed on the source of price changes, that is, monetary policy?



During crises, there is a drop in demand indeed, that is, demand for existing goods in certain sectors, the production of which was spurred by the impression of profitability as signaled by below-market interest rates (e.g. housing).

Without manipulating interest rates, such production of otherwise-unprofitable goods would have not been undertaken, in favor of goods more in line with consumption levels and preferences.



The trouble with Keynesianism actually begins with methodology, or rather, the lack of it. Hence, the quickness to point to the c.p.i. in defense of credit expansion, or interpreting unused ghost neighborhoods as a cluster of private-sector errors in calculating demand for goods. As an aside, why then isn’t ‘excessive aggregate demand’ (i.e. undersupply) just as common an entrepreneurial blunder?

Bad methodology allows for malleability in the face of contrary theory, even if such theory withstands logical tests and empirical interpretations. It is thus not too surprising to hear that this present crisis is a perfect Keynesian model. But could we expect anything more reasonable from a model premised on the notion that spending makes for prosperity?



And so ends my attempt at getting into the head of a Keynesian.

As an additional note, it is a great aid to go beyond categorizing goods by either-consumption-or-production. One should also consider a producers’ good; from what products it is derived; and the products of which it is a component. Hence the saying, capital is heterogeneous, which you probably never read in your macroeconomics textbook.

To understand my very specific choice of terms in the brief exposition above, read further on capital and interest ― the latter’s level of which is as much a signal of scarcity as the price of any good ― and their crucial relation to the business cycle.

If you think I missed some points in my refutation, e.g. Paul Krugman’s baby-sitting coupon fantasy ― which simply assumes an unchanging level of utility derived from the rest of the non-coupon world, and assumes that the health of a single sector matters to an economy ― let me know.


Suggested books/selections:

Time and money: The macroeconomics of capital structure by Roger Garrison.
Austrian business cycle theory in the language (and diagrams) of Keynesians and monetarists. Ask to be furnished a copy.

Money, banking and economic cycles by Jesus Huerta de Soto. 
Within this masterpiece on money is a Keynes-specific chapter (Ch. 7).

Dissent on Keynes, ed. Mark Skousen. 
Each contributor discusses a particular Keynesian topic, e.g. Phillips Curve, the multiplier, paradox of thrift.

The critics of Keynesian economics, ed. Henry Hazlitt. 
A compilation of essays by various economists before, during and after Keynes, disputing in principle his refutation of Say’s Law. E-mail me for a selection of relevant quotations.

A section-by-section critique of Keynes’ ‘General theory.’ Not that it matters to you, but this is the first ‘Austrian’ book I read.