^ this and they'll always be wrong while they ignore it.

It's not just price inflation that the anti-Krugmans got wrong. They also said interest rates on US bonds would skyrocket due to concerns of the runaway deficit. These tards simply can't grasp that a government that issues its own currency doesn't have to account for spending the way a private household does.


"When the facts change, I change my mind. What do you do, sir?" -- John Maynard Keynes

To which the answer is generally to mutter something about the price of gold and scuttle off, I believe.

Do you have any clue what the fed purchasing bills notes and bonds from the treasury does to rates? Any clue how purchasing trillions in mbs may impact rates on pretty much everything. Funny that you use the word tards imo

Economic debate.

Schiff v Academics.




Lol at put floor on stock market.

Very timely article

http://www.bloomberg.com/news/2011-1...ard-pinto.html

Its sad how few people can formulate it as you just did. Should be introductory college stuff.

Here is an image I like concerning the Fed and inflation

FWIW, Mish, who's an Austrian, got all of the above right (including record lows across the U.S. yield curve).

Right the part that Schiff is missing is that you're not going to get the price inflation when money printing is going on if people are deleveraging at the same time.

Deleveraging is not really happening. Debt is slowly decreasing but at a slower rate than the underlying assets(houses for the most part) are decreasing in value.

When companies go bankrupt after the owners strip them of their assets, it's basically outright theft:
http://www.businessweek.com/magazine...1040876189.htm

Imagine I buy a local farm for $10mm with $1mm of my own money and $9mm in bank loans. I then layoff many of my workers, stop paying my bills and pocket all of my revenue until I take out $2mm. Now the farm is in shambles, debt is through the roof and there is no product to sell. I ditch the farm, keep my $1mm and let it go bankrupt. Because I didn't personally guarantee any loans, the bankruptcy has no effect on my credit and I'm $1mm richer. Meanwhile all the employees, banks, suppliers, etc. are out over $12mm. I had to steal a lot of money ($12mm) to make $1mm.

lol @ people arguing that Schiff and other Austrians are wrong because "we're not seeing inflation". I used to wonder how people have such a hard time figuring out and seeing what's going on. This thread helps to shed light on that. We've got central banks printing like crazy and a financial system on the verge of a collapse and people still aren't connecting the dots. Reminds you of the clowns arguing in 2007/early 2008 that the housing market is sound all because the bottom hadn't fallen out yet.

Also, it's impressive how the "Farmer" guy in the youtube video posted above can say the stuff he does with a straight face or if he's being serious then that's entertaining as well.

Most of the deleveraging has been occuring because of defaults on loans. When this happens there is less money floating around. When loans are made, money supply increases. When loans are defaulted it decreases.

Which is borne out in the 15% rate we're now suffering under, right?

This thread shows exactly what is wrong with how people think about inflation.

There has been significant inflation/price increases in numerous commodities. It might not be feeding into CPI (neither did the housing bubble), but this does not mean economic problems are not being created or stored up for the future.



Also we are holding up Economists to a ridiculous standard. Its obvious that no one has watched the UCLA debate, the mainstream economists come of clearly worse, its not debatable.

Thats not the point though, what comes across is how much economists are all grasping in the dark. If we had a record of all economist predictions circa 2008, we would be able to pick out lol moments for 99% of them. Same if they had to propose solutions/future actions based on those predictions. The solutions put forward by one of the academics in the debate make both Schiff and Krug seem moderate and balanced. The other seems very uncomfortable and anxious about having to say anything concrete about the economy.

Both Schiff and Krug are on record so they get loled LDO. This however is due more to the limits of economics as a "science".

Your chart is a YTD chart from 2010. You might want to check the performance of some of those categories since then. For example, Cotton (BAL) is down about 30% in the last 12 months, giving up a lot of the gains from 2010. Commodity prices are just too volatile to look at individually over short periods of time expecting to draw any sort of conclusion.

2011 has been bad for most commodities:
http://seekingalpha.com/data/commodities

38% Inflation is still hoooge. Most of the items in the graph are still well above 2009 levels. Impressive if we consider downturns in Europe and USA. Its my hunch that you see inflation where "new" money enters the system. Thats definitely not at the malwart tills, its in speculation. China will be bidding prices up sure, but that must be offset significantly by the downturn in the Western economies.

Copper more than doubles in price 24/Dec/2008 to 24/Dec/2011

The reality is who lent them the money. Ackman lost a ton of money on Borders. Does not matter, they own the company. That is why you let banks fail.

Today many see checking accounts as an investment. They got burned in the stock market and housing, so they are allowing their M1 to rise. But, overall Mish is wrong I would say inflation is at about 6% now on staples. YoY change in revenue at Exxon-Mobile about 30%. YoY change in revenues at Walmart 2012Q3 about 8%.

What I realize today treasuries do not equal inflation. Banks/government can set their rates to whatever they want. The government runs a deficit. They try to sell the debt on the open market, and if they don't like the interest rate, the fed will just ease so it can be bought at 0% if they want. The only danger to this is poor grandma is going to lose her life savings to inflation.

Now when the post office worker goes to the bank they deposit their check at it becomes part of M1. When they spend the check it becomes part of M1 of all the employees and people of the country.

For every dollar of debt, there is M0, M1, M2 or M3 out there. M0 being the base money of money held at the federal reserve, actual cash, and actual cash at banks. This base money is all the "real" money in the system and it is very dangerous for Kucinich and Alan Grayson calling for it to be loaned out. Most likely the fed will sell the mortgages back to the banks and receive some of those reserves. M0 might actually be larger than M1 now.

M1 is both checking accounts and cash. Since checking accounts are now being used as savings accounts, I think cash will be the more accurate predictor of inflation.

Yoy change in cash is about 8%. Yoy change in national debt is about 10%. Those are your inflation rates. Yes, it depends on total debt too.

Clearly you do not since the entire point of my post was missed by you. See the article I linked in my previous post. Rates are artificially low, can't really be denied. Next time you want to make a smart ass remark learn what you're talking about first

I think it has to do with the limits on what people will listen to. A person with views similar to Schiff but who acknowledges that there is uncertainty in trying to forecast the future don't get on TV.

I don't think I was ever as bombastic as those guys, but I certainly found the Austrian perspective persuasive and still think there is merit to that way of thinking. I will freely admit that I admit that I thought they were on to something and that price inflation was very likely, and that I was wrong about it. I don't think there's any shame in admitting I learned something. I think the lesson from the last few years is that the simplified Austrian view of inflation/money supply is probably right in certain circumstances, but there are a lot of assumptions built in that don't always hold. I don't think they're so much wrong in their thinking, just in their degree of certainty.

I think the lesson that this episode exposes is the the economy is a complex system of multiple cause and effect relationships. Just because something hasn't happened (inflation) yet doesn't mean it won't happen in the future if some other effect is suppressing it (debt deflation). Also I think austrian theories coming into this recession were heavily influenced by the stagflation of the 70s and we can see the danger of making macro economic predictions from one time historical events. But no matter how wrong some Austrians have been they will never look as foolish as all the inflationists are gonna look when this is all over.

Krugman correctly called the liquidity trap conditions we are currently experiencing back in 2008, complete with (gasp) models and math and the like which predicted that the Fed would run into the zero bound and could literally not print enough money via QE to do anything but barely stave off a deflationary spiral let alone cause hyperinflation. Moreover he correctly called the 2010 commodity price surge as demand side pressure from emerging economies rather than a precursor to general inflation, looks to have been right about the effect of fiscal austerity in Europe (austerity led expansions are not possible, see Ireland and the UK), and has been yelling from the rooftops that the problem with the Eurozone periphery is not fiscal profligacy but a balance of payments problem that will be next to impossible to solve if those countries retain the Euro.

I would expect at some point a bit of circumspection from his critics would be called for, at the very least they should stop dismissing him as Krugtard and start thinking about a world in which he might actually be right.

Thinking that the solution to a debt crisis is more debt is way worse than not predicting a liquidity trap. If the crisis cannot be resolved until the debt is liquidated then you will always be able to predict that the debt stimulus "wasn't enough". In addition Krugman is notorious for selectively picking posts that make it seem like he predicted things. I don't hate everything he says but when it comes to solutions he's not really at the top of the macro economic game. Search me in the other thread for some better critiques.

I agree with BDDVO, the deflationist Austrians like mish have the best of both worlds in their view and are better to listen to.

The main point is that just cause you made some predictions that seem true it doesn't increase your chances of predicting the next macroeconomic Movements, the economy is simply too complex to maintain a consistent track record.