Mailvox: from RGD to TIA

SS has three questions about The Return of the Great Depression:

I’ve been meaning to write for some time about your book, The Return of the Great Depression. First things first- it’s a great book, and I’d like to heartily congratulate you for writing a very valuable resource for those of us who are relatively new to Austrian economics. (The pricing for the Kindle edition helped too, even though I know you’re not exactly a fan of the proprietary .azw format.) I was particularly interested in your explanation of the Austrian Theory of the Business Cycle; it was simple, straightforward, and easy to understand. It’s become very clear to me over the last few years that most of what I learned about mathematical economics in London is simply wrong and needs to be discarded; the only coherent and empirically tested theory of the business cycle that seems to work is the one put forward by the Austrian School, in my experience. That said, I have a couple of questions for you regarding specific issues raised in the book.

First, you seem to argue (I believe it is in Chapter 9, but could be wrong) that the imposition of the Smoot-Hawley tariffs in 1930 weren’t actually much of a problem relative to the Hoover-FDR interventions. Yet in FDR’s Folly, Jim Powell specifically argued that unemployment peaked at 9.6% in January 1930 and was heading back down towards 6% by June; after Smoot-Hawley was passed, unemployment hit 14% by year-end. This is backed up in Gene Smiley’s Rethinking the Great Depression. Therefore, I am quite curious as to why you think that trade wasn’t a major causal factor of the collapse that followed between 1930 and 1933. Or have I misinterpreted your writing?

Second, in Chapter 11 you argue in point 6 that the Gramm-Leach-Bliley Act should be repealed. That Act removed the barriers between investment banking and commercial/personal banking that had existed since the days of the Glass-Steagall Act. Yet Jim Powell showed in his book that when Glass-Steagall was passed, one of its most immediate results was to significantly weaken the healthiest banks in the country. J.P. Morgan & Co. was particularly affected, as it had to divest its investment banking arm to create Morgan Stanley. I have no sympathy for the Masters of the Universe who messed up so badly, but it seems to me that weakening the banks yet further would be contraindicated at this point.

Third, it didn’t look like you raised any arguments for or against a return to an explicit hard-money standard in the US (again, I could be wrong). I see that you have argued in favour of auditing the Fed (which I strongly support), but why not go the whole distance and argue in favour of restoring the gold standard….

Finally, I’d just like to state that your work in RGD was more than enough to convince me to download The Irrational Atheist. As an atheist who has read The God Delusion and found its writing to be sub-par and its arguments to be vague, I look forward to reading your dissections of Dawkins, Hitchens, Denning, et al. Thank you again for the excellent work on RGD; I look forward to reading many more of your comments and works in the future.

SS is very welcome, of course. It’s encouraging to hear that those whose academic background is in economics also feel they have been able learn something from RGD. In answer to the first question, while I have not read their books, both Howell and Smiley would appear to be making an incorrect assumption about an intrinsic correlation between the timing of the passage of the tariff and the subsequent rise in unemployment. I can only conclude that they did not look at the more relevant import and export statistics for that historical period, (See International Transactions and Foreign Commerce, Series U 1-186, US Colonial to 1970), for as I did indeed mention in Chapter 9, the annual percentage decline in exports was smaller from 1929 to 1933 than it was from 1920 to 1922. Since that was insufficient to clarify the matter, I will point out that in 1929, US exports were 5 percent of GDP at $5,441 million, down 37 percent from the $8,664 million they had been in 1920. They declined another 16.7 percent to $4,013 million, or 3.6 percent of 1929 GDP, in 1930. So, it’s simply not credible that this one-year decline in exports, much less precipitous than the 1921 decline and equal at most to 1.4 percent of GDP could possibly be the culprit in producing such high levels of unemployment, especially given the equally large 26 percent decline in imports. (Non-economists, remember that a reduction in imports is GDP positive and the idea behind a tariff is to encourage the substitution of domestic goods and services for foreign ones.) The fact that exports began increasing again in 1934, long before the tariff was relaxed in 1937, shows that the tariff did not have the trade-limiting effects it is conventionally supposed to have had, as does the subsequent decline in international trade in 1937 and 1938.

In fact, after the tariff was CUT by two-thirds in 1937, exports dropped 9 percent in 1938. And the 26 percent decline in exports from 1929 to 1930 was nearly doubled by the 47 percent collapse in them from 1920 to 1921 which occurred nine years prior to Smoot-Hawley. So, while Smoot-Hawley may not have helped the unemployment situation, it is not credible to assert that it was the primary causal factor in the high level of 1930s unemployment.

Second, the fact that investment banking may have once helped strengthen a historical US bank does not change the fact that investment banking brought all the largest banks in the USA to their knees last year. The point of separating the functions of depository institutions and investment institutions is to permit the latter to take outsized risks and fail without destroying the stability of the former. It’s not a question of weakening the banks, but rather refusing to permit them to cut their own throats, then live on life support at the public’s expense. The historical example is simply irrelevant because modern investment banking, with all its default swaps and derivatives, now represents a weakness, not a strength.

Third, regarding monetary standards, I think that subject would merit a book in its own rights and there is no way I could have done justice to it in what would have been the very limited space provided. Moreover, because I do not feel that I have a sufficient grasp on all the various complexities of the concept of money and modern currency, that is a book I am unlikely to write. Despite my certainty about the unsustainable nature of the present debt-based system, I would be very hesitant to make any case for a return to the gold standard or any other hard money standard without doing considerably more research on the topic than I have done. Unlike most economics writers, I’m not even certain about the $57 trillion question regarding inflation/deflation, although as is clear from the book, I tend to lean towards the latter.

Finally, I am pleased that SS has reached the logical conclusion that a writer who is capable of credibly analyzing complex economic matters may have something reasonable to say about other subjects. I am, of course, dismissive of the notion that expertise in one subject necessarily grants any in another, unrelated subject, but it is ridiculous to assert, as some have, that anyone who has demonstrated the ability to knowledgeably discuss economics at this level could be incapable of contemplating science or making valid points in the atheism/religion discussion. One tends to suspect that those making the assertion simply don’t know enough about economics to understand that the issues involved tend to be considerably more complicated than those customarily disputed in the usual evolution, morality, and existence of God debates.

Given SS’s pertinent questions, it should be interesting to learn his opinion of TIA. Assuming, of course, that he manages to make it past Mount Chapter IV and finish the book without being inspired to seek employment in a house of ill repute in Southampton.

Addressing an RGD “review”

Jonathan Birge commits several errors in what he attempts to pass off as a “review” of The Return of the Great Depression, but they all stem from a single source. This is his inability to understand Paul Krugman’s purpose in writing the “Hangover” essay or connect that purpose to Krugman’s statement that total income is equal to total spending. This failure is the foundation of his bizarre attack on both my character and RGD; as he writes: “I’m simply pointing out that if Vox can’t even understand what Krugman is talking about, on simple matters like this, how can one trust his dismissal of Krugman? One can be right for the wrong reasons, and if Vox is right about Krugman being an idiot, it’s certainly not because Vox grasps what Krugman is trying to say.”

So, Jonathan’s “review” can be summarized as three basic claims:

1. Paul Krugman had no substantive reason to declare that total spending equals total income.
2. I misread what Krugman had written when he declared total spending equals total income.
3. This single “misreading” justifies the complete dismissal of RGD.

I will now proceed to demonstrate the falsity of all three of these claims. When I read his review, it was immediately obvious to me that Jonathan did not understand what Krugman was saying about income and spending, much less why he said it, but Jonathan helpfully proceeded to admit as much in his subsequent comments. “Krugman wasn’t making a big point: he was saying that whenever you get a dollar, some other entity gave it to you and had to consider that spending…. Why the hell Krugman brings it up is beyond me.” And yet, even when his erroneous assumptions were pointed out to him, Jonathan insisted that this supposedly inexplicable statement of Krugman’s was not merely true, but a downright tautology “because it’s simply a statement that when money changes hands, it’s a debit for somebody and a credit for someone else. Debt doesn’t change this, and time-preference isn’t even germane to the debate. The fact that Vox brings up time-preference proves he had no idea what Krugman was trying to say.”

This is incorrect on several levels. Unlike Jonathan, I not only understand what Krugman was saying, I also understand why he was saying it. Far from being an irrelevant tautology, Krugman’s statement that total spending necessarily equals total income is the basis of his erroneous argument against the Austrian concept of the business cycle. It is so important, in fact, that it was the only part of the essay that I deemed necessary to quote directly and in full. Although Krugman has since modified the position he took in his 1998 essay and admitted that perhaps investment bubbles do lead to economic contractions after all, the entire point of the essay was to prove that the Austrian school theory is wrong and that recessions are not a consequence of economic booms. Hence the title “The Hangover Theory”.

But before I explain why the assertion that total spending equals total income was both a) integral to Krugman’s case and b) incorrect, it’s worth pointing out that Krugman doesn’t even believe that the assertion is intrinsically true, let alone tautologically obvious as Jonathan insists. When asked in October if the dichotomy between statistical reports of rising consumer spending and higher unemployment numbers contradicted “the economic maxim that expenditures are equal to income” Krugman replied: “That ‘economic maxim’ is deeply misleading. Consumers can and do spend either more or less than their income. And even for the economy as a whole, in the short run income adjusts to match spending, not the other way around.”

Krugman admits what I originally stated: total spending does NOT necessarily equal total income. It cannot, obviously, since income has to adjust in order to match spending. Now, why does income have to adjust to spending and why doesn’t it work the other way around? We can only surmise that there must be some additional factor that would allow spending to take place without income… whatever could that be? Finally, why would Krugman declare something that he later states to be misleading? In this case, it is not an example of his occasional inconsistency or because he changed his mind since 1998, but because he needed to make the income-spending equivalence in order to attack a specific point of Austrian business cycle theory. While Krugman doesn’t know much about Austrian theory and mistakes malinvestment for “overinvestment” in “investment goods” (capital goods is the Austrian term), he knows just enough about it to understand that the Austrians place great theoretical importance on the shift from investment in the production of consumer goods to investment in the production of capital goods. However, because he has not actually read much, if any, Austrian theory, he does not understand the mechanism of that shift, which in its conventional formulation is the result of expanded bank credit producing false signals that encourage businesses to invest in producing higher-order capital goods rather than lower-order consumer goods. Since he doesn’t understand the mechanism, he wrongly concludes that a converse shift in investment from consumer goods to capital goods will have an equal but inverse effect as the shift from capital goods to consumer goods. If the former can cause a recession, he decides, then the latter should too.

This is why he wrote: “So if people decide to spend less on investment goods, doesn’t that mean that they must be deciding to spend more on consumption goods—implying that an investment slump should always be accompanied by a corresponding consumption boom?” This is a major sticking point for Krugman; earlier this year he wrote: “you ask why, say, a housing boom — which requires shifting resources into housing — doesn’t produce the same kind of unemployment as a housing bust that shifts resources out of housing.” He derives this false equivalence from the very statement for which Jonathan sees no point, the statement that is the foundation of his argument against Austrian business cycle theory.

“Here’s the problem: As a matter of simple arithmetic, total spending in the economy is necessarily equal to total income (every sale is also a purchase, and vice versa). So if people decide to spend less on investment goods….”

It should now be clear that Jonathan is incorrect, that Krugman’s statement is not a tautology and that Krugman was using it to make a big point, the central point of his argument. It should also be clear that I understand what Krugman is saying and why he is saying it. But, even if I didn’t misread Krugman, did I make a mistake in referring to individual decisions about equities and cars? Was it an error to highlight the facts that not every dollar of income must be spent today, and not every dollar that is spent today is earned? No, of course not. Here is why.

Let’s start with Jonathan’s assertion about the first point. “In no case would the actions of a single person possibly illuminate or refute the point Krugman was making (which is that each transaction requires two parties where each take the opposite side of the trade).” But, as I’ve already demonstrated, Jonathan failed to understand the point Krugman was using that statement to make. The actions of single person serve very well to illuminate the fact a failure to invest in capital goods does not require an investment in consumer goods, for the obvious reason that what is being considered is the sum total of all the actions of individuals. Krugman himself refers to precisely such individual actions when he writes that “if people decide to spend less on investment goods, doesn’t that mean that they must be deciding to spend more on consumption goods…?” These are individual decisions, nor can Jonathan claim they are not thanks to Krugman’s more recent distinction between “consumers” who can and do spend either more or less than their income and “the economy as a whole.” While there are a few areas that Keynesian theory insists on making a distinction between that which benefits an individual and that which benefits the aggregate, such as Keynes’s Paradox of Thrift, that does not apply to this example where the individual’s investment decisions will have a directly quantifiable effect on the aggregate.

Now to my two statements about the observable facts that puncture Krugman’s dilemma. Because Jonathan did not read the book, he is unaware that a great deal of attention is given to the nature of money, central banking and the fractional-reserve system. By his own admission, he does not understand how a modern monetary system works; he says: “I don’t know how the accounting works for things like Fed operations….” More importantly, his subsequent comments reveal that he doesn’t even know what money in a modern economy actually is, as after being given a hint of the magnitude of his error by Steveo, he attempts to equivocate by creating a false distinction between bank-created debt and money.

that makes it sound like banks can print money, which they can’t. they issue debt that, in our system of fractional reserve banking, is legally declared equivalent to money. when a bank issues a loan, the bank is not spending money any more than you’re getting income when using your credit card.

Had Jonathan actually read RGD, he would know that in the U.S. and most modern financial systems, money is debt, which is why the politicians around the world are so desperate to force the banks to increase their lending. This is the heart of the very important debate over inflation vs debt-deflation that has been going on for the past five years between economists who foresaw the crisis and actually understand what is taking place right now. But for the purposes of this explanation, it is sufficient to point out that when a bank issues a loan, it is not spending money, it is creating money. In fact, this fractional reserve-created money is by far the larger portion of the money supply; Jonathan’s knowledge doesn’t even rise to the level of Wikipedia, which states: “The different forms of money in government money supply statistics arise from the practice of fractional-reserve banking. Whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of money is created. This new type of money is what makes up the non-M0 components in the M1-M3 statistics… central bank money is M0 while the commercial bank money is divided up into the M1-M3 components”

Now, where does M1-M3 come from? From savings deposited in the banks, or in other words, “every dollar of income that is not spent today.” So, far from being equal to income, spending in a fractional-reserve system is always a multiple of income, the process which Paul Samuelson laid out in detail in the table entitled Multiple Expansion of Bank Deposits through the Banking System in his influential textbook. Jonathan’s mistake here is to assume that the mere fact of money changing hands causes it to be regarded as both income and spending. He writes: “You don’t need to know much about economics to grasp the simple idea that every buy involves a sell. It’s as simple as that. Your income is somebody else’s expenditure.”

Therein lies his fundamental mistake. Every buy does involve a sell and your income may be somebody else’s expenditure, but that does not mean your income is somebody else’s expenditure derived from their own income. In claiming that spending equals income, Jonathan has erroneously assumed a closed loop. If a company borrows money from a bank in order to pay me for my services, its expenditure was not derived from its income and only a fraction of it was derived from anyone else’s income. Spending can come from income, but it does not have to do so. And, as I have shown in past posts, the larger part of the growth in aggregate spending has come from this very bank-created non-income that Jonathan claims does not exist.

Perhaps it might have been easier on economic novices like Jonathan had I troubled to go into detail explaining that the existence of savings in a fractional-reserve banking system is sufficient to explode the false equivalency of spending and income. Perhaps it was too much to expect that the average reader would be able to correctly grasp the consequential implications of a failure to spend 100 percent of one’s income. Nevertheless, my failure to spell things out for the reader does not change the accuracy of my observation that unless every dollar of income is spent rather than saved, deposited, and loaned out, total spending will never equal total income in a modern economy with fractional-reserve banking. Nor would additional explanation alter in the slightest the correctness of my statement that not every dollar that is spent today has been earned. Because debt is not income and some spending is funded by debt, total spending does not equal total income, but rather, exceeds it. This is, of course, the very first thing I pointed out in addressing Krugman’s fallacious attack on the business cycle.

So, Jonathan’s first two points fail, which thereby causes his third point to fail as well. It makes no sense to dismiss a book for a nonexistent error and the only misreading of Krugman that took place was Jonathan’s. These were not his only errors, but this demonstration of the falsehood of his three primary claims will suffice to prove that his “review” of RGD is flawed to the point of utter irrelevance. And I will also take strong exception to his assertion that an error, even an egregious error, renders the entirety of a book useless. For example, if we were to accept Jonathan’s specious logic, we would have to conclude that Paul Krugman’s most recent book, The Return of Depression Economics, should be junked due to Krugman’s statement that “about half the banks in the United States failed” in 1931. The correct number was about 11 percent. Contra Jonathan, I assert that ignoring Krugman’s book would be a mistake and that despite his failure to account for debt or time preferences, Krugman is not an idiot, but is merely crippled by his past success, his stubborn dedication to an erroneous and outmoded economic model, and his willful refusal to consider other, more reliable economic theories.

As to the questions, credit yourself if you spotted Jonathan’s errors:

5 points: I did not interpret Krugman’s income-spending equivalence “to mean that every dollar of one’s income one must spend.”

10 points: Krugman’s income-spending equivalence was not an obvious tautology. Nor was it a pointless statement.

25 points: Fractional-reserve banking.

It is not my habit to copy and paste complete texts from other sites, but since Jonathan elected to question my “balls” for merely quoting the most relevant part and providing a direct link to it, here it is in its entirety:

Vox Day, for those who don’t know, is a libertarian Christian blogger, known more for his penchant for hyperbole than reasoned argument. However, he’s intelligent and well-read enough that it takes a little while to realize that he’s all bluster and little substance, and this, coupled with his supreme confidence in his own intelligence, has resulted in him attracting a moderately large legion of sycophantic followers to his website. No doubt it is such people who have given glowing reviews to this book.

However, anybody with a capacity for independent thought ned only peruse a few sample pages from this book to see what a charlatan Vox is, at least when it comes to economics. His prose is so self-consciously academic, that it almost lulls one into complacently following along. But where he is right, he is regurgitating the work of others. Where he strays from this, however, close inspection reveals profound mistakes. Styling himself an Austrian economist, a reading of his criticism against Krugman makes it clear that Vox is well out of his depth, so embarrassingly so that one need read no further. On pages 163-164, he make an ludicrous strawman rebuttal of an argument of Krugman’s. To be specific, he misreads Krugman’s statement that all income is spending (and vice versa) to mean that every dollar of one’s income one must spend. He then spends the next several paragraphs ackwardly informing us of the obvious, such as that when one doesn’t buy a factory, that doesn’t mean they must buy something else. I almost feel bad for Vox, as he gloats in his victory over an argument nobody would ever be dumb enough to make. (And I would think nobody would be dumb enough to think somebody with a Nobel Prize would make it, either.) He accuses Krugman of not understanding simple things like time-preference or the effects of debt, of essentially being a base moron.

Of course, what Krugman means is that one person’s income must come from somebody else’s spending, an obvious tautology. Sadly, I don’t think Vox was trying to pull anything. I think Vox really believes he understands this stuff enough to write about it, when it’s seems all he knows how to do is reference other works in a pseudo-academic tone and parrot the names of concepts he’s read.

It takes some serious guts to write a book insulting a Nobel Prize winning economist when you never worked a day as an economist, but if this book makes one thing clear (and it would be the only accomplishment of this book) it would be that Vox Day is a pathological narcissist. In fact, I’m sure if Vox ever comes across this review, he’ll make equally shoddy strawman arguments against it, skewer it to the front page of his website, and sooth his ego with the reassurances of those who are greater fools than he.

(For the record, I’m not defending Krugman or Keynesian economics. I’m a libertarian myself, and subscribe to Austrian economics to the limited extent I understand it. I actually came to this book thinking I’d like it and learn a lot from it. Unfortunately, I’m compelled to review it poorly. I’ve never written a review on a book I didn’t read completely, but sometimes it’s justified when the author makes such egregious errors in the first chapter one peruses. You don’t need to finish an entire turd sandwich to know the last bite is going to taste as bad as the first.)

This review goes to eleven

The Responsible Puppet provides 11 reasons to buy RGD:

1. It includes a simply told, but not simplistic account of the last 25 years in global economic history.

2. If you know nothing about economics (which I didn’t), the Glossary alone is worth the price of the book.

4. If you do not know nothing about economics, this book has a good primer on Austrian Economic Theory – which you may have never heard of, but probably should acquaint yourself with.

3. Are you thinking that nothing can stop our economic prospects from getting better? This book is a study on why you may be wrong.

It should be pointed out that the aforementioned glossary was the Responsible Puppet’s idea in the first place. When he heard I was writing a book on economics, he emailed me to suggest that a glossary might be of some utility to those innocent of economic theory and jargon, so I’m glad that he found it to be useful.

Easy read

Voodoojock reviews RGD on Amazon:

The first thing that stands out about this book is the delivery. It’s fluid, conversational, and devoid of economic jargon that permeates most books on the subject. The book also exhibits none of the haughty arrogance displayed in books more suited for overworked graduate students of economics than public consumption. The graphs illustrate and illuminate rather than confound and confuse. There are ample anecdotes used to illustrate Day’s points. Having read von Mises’ “Theory of Money and Credit”, “The Anti-Capitalist Mentality”, “Socialism”, and Rothbard’s “America’s Great Depression”, “Return of the Great Depression” is about as easy to read and understand as Hazlitt’s “Economics in One Lesson”.

As far as the book’s content goes, it’s thoroughly researched and uses cites numerous sources to illustrate his points. Though Day is a student of the Austrian School of economics, the manner in which he methodically examines the historical events and the personalities involved displays no trace of any personal bias.

In tangentially related news, Ben Bernanke decides that perhaps it is possible for a central bank to do what his predecessor declared impossible after all by detecting a financial bubble in the process of expanding.

“On the heels of a burst housing-and-credit bubble, Mr. Bernanke now calls financial booms “perhaps the most difficult problem for monetary policy this decade.” With Asian property prices soaring and gold prices busting records almost daily, the debate comes at a critical time. Mr. Bernanke wants to use his powers as a bank regulator to stamp out bubbles, but the Senate Banking Committee, which will grill him later this week, is considering stripping the Fed of its regulatory power.”

This is extraordinarily disingenuous rhetoric from the Fed chairman. Mr. Bernanke can stamp out the bubbles without having any regulatory power over the banks at all. Raise interest rates, reduce the money supply and the bubbles will pop in minutes, if not seconds.

Two RGD reviews

CM reviews RGD on Amazon:

If you’ve been a reader of Vox Day, you know his dry humor, and you also know his intellectual rigor – both are present in spades in RGD. If you haven’t read his stuff before now, you’re in for a treat. Did articles on the subprime mortgage crisis leave you thinking you had listened to people speaking in tongues? This will explain the process of how banks were enticed to jump off the cliff and the underlying political/economic assumptions of our time that led up to the jump. Furthermore, you’ll have the big picture, too, for Day is a fan of history as well as economics.

Ron Anderson reviews RGD at This Is Reno:

For the more politically minded, anyone still wondering what all the fuss over Ron Paul was about last year, this book provides the answers. It includes the best argument from the right against Reagan era monetarism that I’ve ever read. Like Keynesianism, monetarism requires government intervention and top-down management of the economy. For those on the left, former Labor Secretary Robert Reich comes through looking fairly reasonable, while Paul Krugman’s critique of Austrian theory is mercilessly dismembered point by point. There is also a nice section on the early development of Austrian theory, it being a response to the German scientific method that was being adopted by 20th Century fascists.

In fairness, I’m not sure my sense of humor can reasonably be described as “dry”. My friends usually refer to it as either “morbid” or “a deeper shade of black”.

RGD: a review from Norway

T. Tucker posts his thoughts on Amazon:

Vox Day’s latest book is both a refreshing and sobering look at the economy. Refreshing in that it throws off the straight-jacket of the Keynesian/Krugman lie that we can borrow our way out of a debt crisis and sobering as you realize that our politicos don’t have a clue about the right thing to do…. Interesting, well documented, and easy to read with points illustrated by easy to read graphs and charts, an excellent overview of the times we are in and the troubles to come.

I appreciate the review, especially because it’s always interesting to learn what aspects of the book appealed to different individuals. Since I created nearly all the graphs myself in OpenOffice Calc, it’s good to know they’re not completely illegible. And on a tangential note, behold the power of the basic economic concept known as price elasticity. Although today is only the second day since it was priced correctly, the Kindle version of RGD has already become the fifth-bestselling book in the Economics category at the Kindle store.

The conventionally priced hardcover, on the other hand, doesn’t rank in the top 100 in Economics and is #39 in Economic History compared to #3 for the ebook edition.

RGD on Kindle

Now that Amazon has finally gotten their act together on making the Kindle edition available and getting the price right, it appears that RGD is an even better bargain on Kindle than I had hoped.  While the retail price is $1.99, Amazon is selling it for only $1.59 in the USA; the international price is $3.59.  It will be interesting to see if more people give it a shot than they would have at the usual $9.99 price.  Personally, I don’t think any ebook should be sold for more than $4.99; higher prices are merely an artifact of old pricing patterns that should soon disappear.  If you have a Kindle, why not go ahead and give it a shot… it’s less than a bottle of Two-Buck Chuck!

In the meantime, Clint has posted a review there which should suffice to answer the frequently asked question of whether the book is suitable for non-economists or not:

I am not an economist. I do have a basic understanding of economic principles, but tend to glaze over when I start looking at economic charts and in depth analysis. In this book, there are various explanations and scenarios that are presented. I was able to follow each and every one of them. Not only that, but there was an appropriate amount of humor injected into the text to keep a non-economist entertained.

Here are the strong points from my vantage point: The highlights of various schools of economic thought were covered in an effective and fair manner. Potential outcomes for our current economic crisis are presented, with a “Vox-style” handicapping of each scenario presented. Historical data from not only the Depression of the 1930s, but similarities with the Japanese economic condition of 20 years ago and even other comparable situations were presented and explained in a way that helps to see why he draws the conclusions that he does. I know more about economics now than ever before because he does not rely upon any one economic school (Keynes, Austrian, etc) to dominate the conversation, but draws upon them all….

Conclusion: I highly recommend the book.

I know how it can be difficult to write an intelligent and meaningful review of a book, so I very much appreciate the time and effort spent writing them.  If you have one, don’t forget to send the link to me so I can post it here, and sooner rather than later, at the RGD book site as well.

UPDATE: RGD is now the 6th best-selling economics book on Kindle. Chalk up another one for price elasticity and the law of supply and demand.

“Mandatory reading”

Steveo reviews RGD on Amazon:

Nagging doubts about the economy? You can either trust those same bought & paid for priestly economists that the government trots out every day or you can read Vox Day’s book, “The Return of the Great Depression” and find out what’s in store.

On a tangential note, the FDIC is now reporting what I was saying six months ago. The DIF is insolvent and the reserve ratio is officially negative. Based on their third-quarter figures, actual losses are still exceeding estimated losses, but by a ratio closer to 1.5 than the 1.95 reported in 2008 and the first quarter of 2009. I suspect the reason for this declining ratio is not due to the assets of the banks that failed in the third quarter being in better shape, but because the recognition of actual losses to the FDIC are being delayed through the increasing use of loss-share agreements with the banks taking over the assets of the failed banks.

The ultimate endorsement

Chuck Norris gives a thumbs up to RGD:

Thanks to Ron Paul and others, last Thursday a House panel decided to audit the Federal Reserve, finally providing some accountability to this financial runaway train that doles out billions to whomever it pleases. Even with this mandatory audit, however, the Fed’s monetary policy deliberations will still need to be reined in. I recommend two insightful and strategic books toward that goal: Ron Paul’s “End the Fed” and Vox Day’s “The Return of the Great Depression.”

On a tangential note, there is no theory of evolution. There is only a list of creatures Chuck Norris has allowed to live.