Sunday, March 11, 2012

Karl Denninger Confuses Sophistry With Truth

I love KD.  I really do.  I know too many people like him not to love the guy.  Personally, I am nothing like him, and perhaps that is why I can admire him for what he is, even when I'm repelled by it.

But KD made a really stupid statement today.  Specifically, he said "[t]his is a tautology, or something that is true no matter the interpretation."

Actually, according to Merriam-Webster, a tautologous statement (what Karl means by "a tautology") is "true by virtue of its logical form alone."

A more accurate definition of a tautology is "a statement that holds together logically but that practically makes no sense."  This is particularly true of the tautology that KD adopts, which is the quantity theory of money, or "MV = PQ."  This tautology was and is the basis of Chicago School monetarism and was rejected in practice by Paul Volcker in the mid 1980s when it was proven that "V" does whatever the fuck it wants to do, i.e., it is not bound by the values of M, P or Q.  Volcker killed the U.S. manufacturing sector in the early 1980s trying to slow the velocity of money by jacking up the interest rates, but it made no difference UNTIL businesses actually failed, triggering a deep recession.

To be fair, there are number of things that Karl gets right in the post linked to above.  I just can't get past the stupidity he displays in embracing sophistry as truth, even if it is to make a point that is more correct than not. I think KD is an example of a "progressive" conservative in the Teddy Roosevelt tradition.