The Fed Isn't Responsible For Runaway Inequality [View article]
1) By no means all assets the Fed buys from the banks are worthless. Normal QE involves buying long public bonds.
2) Insofar as they are, they were created and traded on unregulated markets that according to the likes of you, never fail, never need regulation. Could the lack of regulation have something to do with their sudden implosion in value?
3) The Fed has only been doing this on a sufficient scale for three years (that is, buying toxic assets of which the 'price discovery' of private markets broke down), hardly an explanation for four decades of rising inequality
4) {"Debt on debt never the solution"] Yes, when households decrease spending to repair their balance sheets, somebody has to spend more otherwise the economy plunges. We've been there before, it's called the 1930s depression. Richard Koo argues, convincingly, that if Japan hadn't embarked on public spending their economy would have contracted by 40-50%.
The Fed Isn't Responsible For Runaway Inequality [View article]
Not really. Where do I say that the poor don't suffer at all from inflation. I didn't say that.
You simply completely fail to take on board that inequality, by its nature, is a RELATIVE concept.
What I said is that since the rich save much more, they, on your logic, should be more affected by it, especially since in the period that the likes of you argue that inflation is supposed to increase (or even cause) inequality, the rich have started to save proportionally even much more of their income, while the rest is saving proportionally even much less.
I also gave plenty of empirical data that show that there isn't any link between inflation and rising inequality.
Comparing Argentina with Zimbabwe is overblown. It's undeniable that Argentina had a very successful decade. The economy grew at almost twice the rate of Brazil and the economy created many jobs and poverty was reduced substantially. The basis for this was led early by Lavanga, a sensible economist under the first Kirchner government. Exports of soya plays a much lesser role than is generally assumed (see links in my earlier article about Argentina)
However, (hence the title), they wasted this opportunity. They created an internal market via redistribution and social programs. In the Latin American context, where abject poverty is rife and inequality the highest in the world, this makes sense economically. They've basically had to re-create a middle class, with real spending power. (much of it was wiped out in 2002).
It's also part of why Brazil did so well. However, unlike Brazil, Argentina completely neglected the supply side. They should have invested much more, gradually decreasing subsidies, improving education and be much more market friendly, like Lula next door. They could have sustained their model if they've done that, but they wasted this golden opportunity. A real shame. For those of you arguing Argentina is like Zimbabwe, go to the Palermo Viejo district in Buenos Aires. And then ask residents there how it was even 10-15 years ago.
Thanks expat. Yes, I've been thinking on that, but I think one of the main, if not the main, barrier against which the Euro zone might derail is the tolerance of the population and that's very hard to predict. I would say 65-35 or more for the Euro to survive in its present form but there will be quite a few bumps before it blows over. For quite a number of countries, it has developed into a true nightmare already, with little light at the end of the tunnel.
The Underlying Causes Of The Financial Crisis Are Not Being Addressed [View article]
You've got to be kidding. Employer sponsored healthcare: 2001: 69.8% 2003: 66.3% 2007: 63.6% 2010: 53.5% http://bit.ly/H8Z6pz Or is that also a 'socialist narrative?' Alternatively, I could have asked you for some data, but on second thought, don't bother.
When you have ["I hate ARM hyperbole"] on your ID card here and are unable to recognize tablet inroads in the PC market and call the new iPad "pathetic" we suggest you come back when you've cooled down for a more rational and dispassionate discussion.
First of all, I'm not a Keynesian (it's too limited a concept for my rather eclectic views which are mainly data driven)
Secondly and much more importantly (all that labeling is no substitute for substantiation, rather a mask for the lack of it), I do belief the aftermath of the financial crisis can be explained MUCH better using a Keynesian view of the world. The simple fact that: - bond yields haven't spiraled upwards (in fact, are near historic lows) despite very large public deficits and debts - there hasn't been any hyperinflation (hardly a budge, as it happens) in countries embarking on massive QE.
All this is easy to explain within a Keynesian framework of a liquidity trap (or, as I actually prefer, using Richard Koo's balance sheet recession framework)
But it is absolutely confounding the 'hard money' people. It is funny to see the series of WSJ editorial predictions over the last three years arguing that either accelerating inflation and or ratcheting up of bond yieds are just around the corner.
This is something that has not only struck me, but also guys like David Frum: http://bit.ly/w2ZBXB
I like my public budget balanced, but, OVER THE FULL BUSINESS CYCLE, that is, running surpluses during booms and deficits during crisis, more important still during a balance sheet recession as monetary policy is near impotent and there is a very real risk of deflation setting in and ratcheting up real debt values, which would be a terrible ordeal.
Hello Lawrence, well, you're partly right, there are differences between the gold standard and the euro, mainly the cost of leaving it are way lower in the case of the gold standard. Could you imagine what would have happened in the 1930s if there wasn't a gold standard, but a euro?
But they enforce the same deflationary policies in already deflationary situations, which was my main point.
QE, Inflation, And The Case For Precious Metals, Revisited [View article]
["As usual, economics professors have no clue about anything."] Well, perhaps not, but anything apart from the economy.
I mean, why even study economics when it's just way easier to argue economists know nothing, without providing any substantiation, argument, data, fact, whatsoever.
Or could it be because you cannot actually disprove the data, facts, arguments we provided?
You guys just know you are right, one doesn't actually have to study economics, or provide any data or facts..
I don't know whether to laugh or to cry here, but there seem to be people who have a belief system that is impenetrable to any kind of fact or data contradicting it, en when confronted with that the only response is to lash out and brandish the heretic.
QE, Inflation, And The Case For Precious Metals, Revisited [View article]
Paulson my hero? Whatever gave you that idea? The rest is just an unsubstantiated rant, to which you are entitled, but as long as you don't provide a minimum of substantiation (just labeling and ranting), there isn't much to discuss..
QE, Inflation, And The Case For Precious Metals, Revisited [View article]
For clarity, here is the rest of the quote: ["Prices then completely erased their gains, sliding back to pre-meeting levels by February 8th, 2009. Equity prices likewise saw a short term boost, but gave back those gains even faster than bonds."]
1) 'Announced' is different from actual buying, apparently there were some people who 'believed' it would cause an effect, basically creating something of a self-fulfilling prophesy. 2) Correlation isn't necessarily causation 3) A 17% bond rally might seem a lot, in terms of changes in interest rates it's not. 4) Even if there was a causal link, the effect didn't last very long, now did it? 5) Subsequent changes in QE didn't cause as much as a blip 6) There is another, much better framework for explaining low interest rates, which is that of the balance sheet recession causing a savings glut and low inflation (and low inflationary expectations), see above.
QE, Inflation, And The Case For Precious Metals, Revisited [View article]
Yes, why even look at the evidence when you have absolute truth at your side. Care to explain what else was responsible for the remarkable turn around in the economic variables which were falling at similar, or even greater speed than after the 1929 crash?
What taxpayer expense is Bernanke responsible for?
Where is that inflation or currency debasement? I've been hearing people like you arguing that for years.
The Fed Manipulating Stock Prices? So What? [View article]
Yes, why deal with reality when you have Ludwig von Mises at your side, whose every word is taken as the ultimate truth.
You know who Irving Fisher is? Do you know what a debt-deflationary spiral is? But I guess you guys really prefer a 1930s style slump destroying millions of lives in the process in order to save some abstract idea of immaculate markets..
The Fed Manipulating Stock Prices? So What? [View article]
They're taking your medicine in Greece. See how that's working..
At least the discussion has changed from 'manipulation' to the right fiscal and monetary policy to combat a balance sheet recession, that is some progress..
Your argument depends entirely on a prediction though, I'm not terribly impressed by that (to put it mildly).
The Fed Isn't Responsible For Runaway Inequality [View article]
2) Insofar as they are, they were created and traded on unregulated markets that according to the likes of you, never fail, never need regulation. Could the lack of regulation have something to do with their sudden implosion in value?
3) The Fed has only been doing this on a sufficient scale for three years (that is, buying toxic assets of which the 'price discovery' of private markets broke down), hardly an explanation for four decades of rising inequality
4) {"Debt on debt never the solution"] Yes, when households decrease spending to repair their balance sheets, somebody has to spend more otherwise the economy plunges. We've been there before, it's called the 1930s depression. Richard Koo argues, convincingly, that if Japan hadn't embarked on public spending their economy would have contracted by 40-50%.
The Fed Isn't Responsible For Runaway Inequality [View article]
You simply completely fail to take on board that inequality, by its nature, is a RELATIVE concept.
What I said is that since the rich save much more, they, on your logic, should be more affected by it, especially since in the period that the likes of you argue that inflation is supposed to increase (or even cause) inequality, the rich have started to save proportionally even much more of their income, while the rest is saving proportionally even much less.
I also gave plenty of empirical data that show that there isn't any link between inflation and rising inequality.
Argentina's Wasted Chances [View article]
However, (hence the title), they wasted this opportunity. They created an internal market via redistribution and social programs. In the Latin American context, where abject poverty is rife and inequality the highest in the world, this makes sense economically. They've basically had to re-create a middle class, with real spending power. (much of it was wiped out in 2002).
It's also part of why Brazil did so well. However, unlike Brazil, Argentina completely neglected the supply side. They should have invested much more, gradually decreasing subsidies, improving education and be much more market friendly, like Lula next door. They could have sustained their model if they've done that, but they wasted this golden opportunity. A real shame. For those of you arguing Argentina is like Zimbabwe, go to the Palermo Viejo district in Buenos Aires. And then ask residents there how it was even 10-15 years ago.
Never Waste A Good Crisis [View article]
Next Up: Spanish Bailout? [View article]
You did notice the figure above directly contradicting this, no?
The Underlying Causes Of The Financial Crisis Are Not Being Addressed [View article]
2001: 69.8%
2003: 66.3%
2007: 63.6%
2010: 53.5%
http://bit.ly/H8Z6pz
Or is that also a 'socialist narrative?'
Alternatively, I could have asked you for some data, but on second thought, don't bother.
Death Of The PC Revisited [View article]
Austerity + Gold Standard = Greece [View article]
Secondly and much more importantly (all that labeling is no substitute for substantiation, rather a mask for the lack of it), I do belief the aftermath of the financial crisis can be explained MUCH better using a Keynesian view of the world. The simple fact that:
- bond yields haven't spiraled upwards (in fact, are near historic lows) despite very large public deficits and debts
- there hasn't been any hyperinflation (hardly a budge, as it happens) in countries embarking on massive QE.
All this is easy to explain within a Keynesian framework of a liquidity trap (or, as I actually prefer, using Richard Koo's balance sheet recession framework)
But it is absolutely confounding the 'hard money' people. It is funny to see the series of WSJ editorial predictions over the last three years arguing that either accelerating inflation and or ratcheting up of bond yieds are just around the corner.
This is something that has not only struck me, but also guys like David Frum:
http://bit.ly/w2ZBXB
I like my public budget balanced, but, OVER THE FULL BUSINESS CYCLE, that is, running surpluses during booms and deficits during crisis, more important still during a balance sheet recession as monetary policy is near impotent and there is a very real risk of deflation setting in and ratcheting up real debt values, which would be a terrible ordeal.
Austerity + Gold Standard = Greece [View article]
But they enforce the same deflationary policies in already deflationary situations, which was my main point.
QE, Inflation, And The Case For Precious Metals, Revisited [View article]
Well, perhaps not, but anything apart from the economy.
I mean, why even study economics when it's just way easier to argue economists know nothing, without providing any substantiation, argument, data, fact, whatsoever.
Or could it be because you cannot actually disprove the data, facts, arguments we provided?
You guys just know you are right, one doesn't actually have to study economics, or provide any data or facts..
I don't know whether to laugh or to cry here, but there seem to be people who have a belief system that is impenetrable to any kind of fact or data contradicting it, en when confronted with that the only response is to lash out and brandish the heretic.
QE, Inflation, And The Case For Precious Metals, Revisited [View article]
QE, Inflation, And The Case For Precious Metals, Revisited [View article]
["Prices then completely erased their gains, sliding back to pre-meeting levels by February 8th, 2009. Equity prices likewise saw a short term boost, but gave back those gains even faster than bonds."]
1) 'Announced' is different from actual buying, apparently there were some people who 'believed' it would cause an effect, basically creating something of a self-fulfilling prophesy.
2) Correlation isn't necessarily causation
3) A 17% bond rally might seem a lot, in terms of changes in interest rates it's not.
4) Even if there was a causal link, the effect didn't last very long, now did it?
5) Subsequent changes in QE didn't cause as much as a blip
6) There is another, much better framework for explaining low interest rates, which is that of the balance sheet recession causing a savings glut and low inflation (and low inflationary expectations), see above.
QE, Inflation, And The Case For Precious Metals, Revisited [View article]
What taxpayer expense is Bernanke responsible for?
Where is that inflation or currency debasement? I've been hearing people like you arguing that for years.
As it happens, were is even the increase in money supply?
http://tgr.ph/wAhC2V
The Fed Manipulating Stock Prices? So What? [View article]
You know who Irving Fisher is? Do you know what a debt-deflationary spiral is? But I guess you guys really prefer a 1930s style slump destroying millions of lives in the process in order to save some abstract idea of immaculate markets..
The Fed Manipulating Stock Prices? So What? [View article]
At least the discussion has changed from 'manipulation' to the right fiscal and monetary policy to combat a balance sheet recession, that is some progress..
Your argument depends entirely on a prediction though, I'm not terribly impressed by that (to put it mildly).