Paul Krugman "Inflation Scare"

[BigBagel]

http://www.nytimes.com/2009/05/29/op...29krugman.html

PauL Krugman on the "inflation scare". I'd be interested in Ituliper responses.

[ax]

Re: Paul Krugman "Inflation Scare"

http://www.nytimes.com/2009/05/29/op...29krugman.html

PauL Krugman on the "inflation scare". I'd be interested in Ituliper responses.

Perhaps he was in Amsterdam during the late 70s/early 80s. No inflation?

[cjppjc]

Re: Paul Krugman "Inflation Scare"

Oil hitting $66.00 this morning. Seems inflationary to me. I think during that dinner with the President, Krugman drank the Kool-aid.

[ax]

Re: Paul Krugman "Inflation Scare"

Oil hitting $66.00 this morning. Seems inflationary to me. I think during that dinner with the President, Krugman drank the Kool-aid.

And gold near $980.

[rjwjr]

Re: Paul Krugman "Inflation Scare"

Oil hitting $66.00 this morning. Seems inflationary to me. I think during that dinner with the President, Krugman drank the Kool-aid.

Agreed. Me thinks it's Krugman who is being political...

"But it’s hard to escape the sense that the current inflation fear-mongering is partly political, coming largely from economists who had no problem with deficits caused by tax cuts but suddenly became fiscal scolds when the government started spending money to rescue the economy."

[BadJuju]

Re: Paul Krugman "Inflation Scare"

And gold near $980.

And silver up to 15.5. :eek:

[walenk]

Re: Paul Krugman "Inflation Scare"

FT has a similar piece today:
http://www.ft.com/cms/s/0/58c7e606-4...nclick_check=1
US not in bondage

Published: May 28 2009 19:32 | Last updated: May 28 2009 19:32

Shock, horror: US government bond rates are jumping. Soon, goes the story, long-term interest rates will leap, the Federal Reserve will monetise, inflation will soar and civilisation will end. Actually, no. What is happening is precisely the normalisation the Fed has sought. The government is not off the fiscal hook. But it does have at least some time."

Looks to me like the transition from Ka to Poom. They're both saying "still plenty of Ka". I hope EJ and others will elucidate on what they think will trigger the transition.

[flintlock]

Re: Paul Krugman "Inflation Scare"

What Krugman basically is saying is that the economic equivalent of the perpetual motion machine can really exist. That we can spend more than we take in forever with no lasting consequences. You don't need to be an award winning Ivy league economist to sense something completely out of touch with common sense is going on here. :rolleyes:

I love it when people use historical examples out of context. Sure, we had debt exceeding 120% of GDP after WWII and paid it off. Of course what he fails to mention is the massive difference in the size of government between now and then. Or the much larger percentage of unproductive members of society we now have. All who must be cared for an nurtured by the nanny state. After WWII it was still possible to pay off the debt. Now the sheer size of our debt and other obligations like SS and medicare means its impossible without inflation. He has to know this.

Then he uses the Japan example. Like they have thrived since?:eek:

Anyone who knows politicians knows that once they turn on the money faucet, the handle always seems to break off in the on position. The US is going to eat itself with all this spending, and there aren't enough taxpayers to give us a chance in hell of taxing our way out of it. But just wait. They'll try anyway, and end up running the productive segment of our society offshore.

[GRG55]

Re: Paul Krugman "Inflation Scare"

http://www.nytimes.com/2009/05/29/op...29krugman.html

PauL Krugman on the "inflation scare". I'd be interested in Ituliper responses.

After reading the article I came away with the impression that Krugman's basic message is "Deficits don't matter"...:rolleyes:

[BK]

Re: Paul Krugman - August 1998 Predictions

I don't get - why anyone reads this guy - he is a talking his book and relying on his information can be hazardous to your financial future.

Krugman clearly believes that Government intervention is Good and is positive for the economy. No concern for the side affects of that Government intervention - no need to worry when you are a tenured Princeton Professor with a number of successful book deals to pad your bank account.

His best comment is " In the end, a global slump is quite an easy thing to prevent"....

Highlights from the 1998 article "Let's Not Panic -- Yet"

"Even if financial markets do continue to tumble, Alan Greenspan and his counterparts in other advanced countries have the tools they need to prevent paper losses from turning into a slump in real output. Mr. Greenspan turned a stock market crash into a real-economy non-event in 1987; he can do it again."

"But will he? That's where I start to worry. The real risk to the world economy comes not from bad fundamentals but from rigid ideologies -- ideologies that might make policy makers fail to respond, or even move the wrong way, if a global slump starts to develop."

"In the end, a global slump is quite an easy thing to prevent. The only way it can happen is if the people who have the power to prevent it fail to take the risk of such a slump seriously, and continue to cling to ideologies inherited from a more benign era. If Mr. Greenspan and his colleagues have an appropriate degree of nervousness -- if they understand that while a replay of 1929 is unlikely, it is possible -- then everything will be more or less all right. The only thing we need to fear is the lack of fear itself."

[Thailandnotes]

Re: Paul Krugman "Inflation Scare"

I read him in part because he's been inside the White House.

[metalman]

Re: Paul Krugman "Inflation Scare"

I read him in part because he's been inside the White House.

ha, ha! brilliant!



krugman... another deflationist dope.

[metalman]

Re: Paul Krugman "Inflation Scare"

FT has a similar piece today:
http://www.ft.com/cms/s/0/58c7e606-4...nclick_check=1
US not in bondage

Published: May 28 2009 19:32 | Last updated: May 28 2009 19:32

Shock, horror: US government bond rates are jumping. Soon, goes the story, long-term interest rates will leap, the Federal Reserve will monetise, inflation will soar and civilisation will end. Actually, no. What is happening is precisely the normalisation the Fed has sought. The government is not off the fiscal hook. But it does have at least some time."

Looks to me like the transition from Ka to Poom. They're both saying "still plenty of Ka". I hope EJ and others will elucidate on what they think will trigger the transition.

already happened...

Deflation fare thee well, we hardly knew ye – Part I: In search of real returns in an unreal world - Eric Janszen

Everyone is wrong, again – 1981 in Reverse Part I: The Great Divide – Eric Janszen

[Bangstick]

Re: Paul Krugman "Inflation Scare"

Move to correct thread

[coolhand]

Re: Paul Krugman "Inflation Scare"

I don't understand why the Japanese example should make Krugman & others feel good about QE vis a vis the risk of inflation.

Japan was a net exporter/creditor to the world; their consumers' savings rate was very high; & the most of the rest of the world's collective economies were among the strongest they ever were, including the world's biggest, the US.

We are the world's greatest debtor; our consumers have high levels of debt. Gov't tax receipts are falling sharply; we have massive & growing (& politically untouchable) "off-balance sheet liabilities" (Medicare & Soc Security), & our biggest export markets' economies are in as bad of shape or worse than ours (esp Europe). Our biggest asset seems to be the reserve status of the USD, & there are various signs that reserve status seems to be under early stages of attack.

Objectively, to a non-economist but a pop-historian, the position of the US going into the QE looks a heckuva lot more like the position of the Weimar Republic in Germany in 1921 than the position of Japan in the 1990's, but very few people are talking about that. (Medicare & Soc Security look a lot like Germany's WWI War Reparations - except the Germans stiffed foreigners by inflating/not paying - we would be stiffing Mom, Dad, Grandma & Grandpa, all of whom vote - our "reparations" are arguably WAY more politically untouchable than Germany's in 1921.)

I've read a bit on the Weimar Republic, & what most people don't realize when I talk about it is how fast the rate of inflation accelerated in Germany. They went from sub-10% inflation to 1,000%+ inflation in less than a year. People seem to think that there will be some big flashing light warning everyone that hyperinflation is coming, & that everyone will have time to prepare. History shows that is just not true.

The experience was similar for my friend whose father was in Russia in the early 1990's - one day everything was fine, the next day you were buying anything (ink was popular) you could with your money because anything tangible was better than rubles to hold its value.

I don't think hyperinflation is likely, but it is the most contrarian investment opinion on Wall Street right now, & just about everyone I ask (investment professional & non-investment professional) doesn't realize how fast prior cases of hyperinflation have spun out of control.

Lastly - an interesting observation after meeting with an industry contact who was in Brazil during high/hyperinflation in the early-mid-90's (it's intuitive, but I really hadn't thought of it till he described it): In hyperinflation, the yield curve goes vertical. There are no 10-year loans for anything. Period.

Any thoughts?