Krugman: Rising commodity prices have nothing to do with Fed money printing

[lektrode]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

Krugman is the worst kind of political jackass. I really wish he would crawl up his own asshole and stay there.

SECOND!!!!

he's one of, likely the biggest FIREman-propagandist/apologist out there!

its simply HILARIOUS to listen to him browbeat osama..ooops, i mean obama&co for _not_ throwing even more trillions onto the bonFIRE - you know, just because borrowing trillions for consumption is how 'we' got into this mess, clearly the only way out is to blow trillions more????

esp after listening a few years back to him bash bush&co for their _huge_ deficits of 200billion?

the man is a fraud, wearing the sheep costume to bullshit his naive audience at the nytimes, the prime diseminator of the current distraction known as 'foreclosuregate'

read this one: http://www.marketoracle.co.uk/Article25256.html

While your favorite media hero continues to fool you as a consumer advocate, you need to ask why this individual did not warn you about the economic collapse. Furthermore, you need to ask why the big fraud is not being addressed; real estate securities fraud that resulted in the collapse of the global economy.
In my opinion, extensive coverage of this “foreclosure gate,” as it has been termed, is merely a distraction to keep Americans focused on smaller issues.
We still have not seen any of the Wall Street banking executives face criminal investigations for securities fraud. This remains as the biggest unresolved issue in the nation today.
Even Angelo Mozilo, former CEO of Countrywide recently settled with the SEC to the paltry sum of $67.5 million, much of which will be paid for by Bank of America. From 2002 to 2006, Mozilo landed nearly $400 million in salary and stock compensation, including millions of dollars (in excess of the amount of the SEC settlement) from stock he dumped just prior to the collapse of Countrywide.
This bailout by Bank of America shareholders allows Mozilo to escape facing charges of insider trading. This is preposterous, but should come as no surprise if you understand how things work in the U.S.

[nero3]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

In 1995 M3 was at around 4600, and in the peak in 2008 around 15000

Copper went from around 135 to 405 in 2008.


Krugman have a political way of writing, that's his biggest flaw and he seems less tuned to the markets than he was when he wrote about the Asian Miracle in the 1990-s. Of course the growth in parts of Asia is partly product of the increase in the the US money supply over the years. Not only did US money growth help the demand side in Asia grow , but it's also increasing the potential price as the total world demand meets supply, and you get a balance based on the reserve currency printed. Even commodity prices fell after the asian-crisis, the growth in the dollar of course increased the potential price as their economies recovered. It seems commodities can go a disconnected from the M3 for a long time, and then again find balance.

[Chomsky]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

amusing ranty retort to another recent Krugman OpEd:

No, Mr. Krugman, You're Eating America Alive

by Neeraj Chaudhary December 27, 2010

Here we go again. This week, Paul Krugman, the 2008 Nobel Prize winner in economics and the go-to guy for progressives who need a morale boost, launched another misguided attack on Austrian School economists. From his New York Times soapbox, he referred to the free-market Austrian "hard money" philosophy as a "zombie idea" that is inexplicably eating the brains of the voting public.

The attack would hardly be worth a reaction if it weren't for the fact that the column did create a buzz. In the piece, he repeated a refrain that has become common for the empirically defeated Keynesians. Said Krugman, "many economists, myself included, warned from the beginning that [President Obama's original stimulus plan] was grossly inadequate." He continued, "[a] policy under which government employment actually fell, under which government spending on goods and services grew more slowly than during the Bush years, hardly constitutes a test of Keynesian economics."

When looking for zombies, the first place Mr. Krugman should look is in the mirror. He has one answer to every problem: eat more taxpayers. He isn't even a true Keynesian. Mr. Krugman is the guardian of a system that died a long time ago. He is the walking undead of the New Deal era.

What Keynes actually said about government spending is that during recessions, governments should run budget deficits to boost aggregate demand, and during expansions, governments should run budget surpluses in order to save up for the inevitable recession years.

Now, whether you agree with this or not - and I happen to disagree with this approach - what we have actually done is run deficits, year-in, year-out, almost every single year for 40 years! And, as a result, we have accumulated a national debt approaching 100% of our annual gross domestic product.

This level of indebtedness has been shown to reduce the level of growth in an economy, no matter how advanced. Yet, Mr. Krugman argues that we should spend more money and run even higher deficits. So, who are the real zombies: those economists who mindlessly favor more and more government deficits in perpetuity, or those who have struggled to warn their fellow man that we are approaching a point of no return?

In the 1990s, the Austrians warned of a tech bubble. The Krugmanites urged lower interest rates and more government spending. In the 2000s, the Austrians warned of a housing bubble. The Krugmanites urged lower interest rates and more government spending. Today, the Austrians warn of a bond bubble that will lead to potential sovereign default. And, with the terrifying zeal of a flesh-eating corpse, Krugman urges lower interest rates and more government spending.

To me, it's very clear: just as a family or a business cannot continuously spend more than it earns, governments must live within their means as well. The US government has had special privileges since 1944 because our currency serves as the international reserve. But we are not behaving as good stewards of this responsibility, and, if we are not careful, the world is going to dump the dollar. If that happens, the trillions of dollars that are held by foreign central banks could come flooding back into the U.S. economy, causing an inflationary period that dwarfs the stagflation era of the 1970s. It certainly won't help that our nation is more dependent than ever on foreign oil.

Austrians believe foremost in sound money – the idea that the amount of currency in the economy should be relatively stable, so that its purchasing power is maintained over time. This minimizes inflation, and allows consumers, businesses, and lenders to make efficient financial decisions. It also keeps government in check, because the Treasury cannot run perpetual deficits and simply print new money when the bills come due. It is no coincidence that our nation's descent into near-constant annual deficits took place right around the same time as President Nixon took us off the gold standard.

Austrians believe that free markets are largely self-regulating. This means that people will tend to make choices in what they perceive to be their own best interest. Government interventions are almost always meant to override individual choice because politicians think they know better. This is not only personally offensive, but leaves us with an economy that can provide less of what people actually want and too much of what they don't want. Look at the housing bubble. Government incentives caused miles and miles of McMansions to be built across the country – houses that most people could not actually afford. In the meantime, productivity was diverted from producing things people actually need and can afford. The result is an economic depression and heart-breaking dislocation for millions of Americans.

Austrian School economists are not zombies. Our philosophy promotes life, liberty, and prosperity – last time I checked these are not the goals that get zombies up in the morning. Meanwhile, economists such as Mr. Krugman continue to argue for lower interest rates, more intervention, more spending, and larger deficits. He advocates for an economic system that feeds off the productive strata of society to support the unproductive. Now there's a philosophy that any self-respecting zombie could support!

Where does it end, Mr. Krugman? At what point do we stop running our deficits and start to pay back the money that we have borrowed? At what point will enough wealth be extracted from producers to support your voracious appetite for spending? Perhaps you think we should we mindlessly devour the purchasing power of our fellow nations until there is nothing left, but what happens when they take a shotgun to our heads?

Neeraj Chaudhary is an Investment Consultant in the Los Angeles branch of Euro Pacific Capital. He holds a B.A. in Economics from the University of California at Berkeley.

http://prudentbear.com/index.php/fea...w?art_id=10485

[c1ue]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

amusing ranty retort to another recent Krugman OpEd:

Indeed.

Grimy arse, cried the kettle to the pot

Euro Pacific vs. Krugman is like Alien vs. Predator: whoever wins, we lose.

[nero3]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

I really think understanding the markets are more of an art,than a science, still Krugman is much more of a scientist, the same is Bernanke. Greenspan was more of an artist and a player in the markets. They are like music professors trying to be a maestro in a big orchestra.

[Starving Steve]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

Not only should surplusses have been run by governments in the "good" years to pay for deficits run by governments in the "bad" years, but spending in the "bad" years was to be for worthwhile and productive public-works projects such as huge hydro-electric dams, atomic-power plants, bridges, roads, water-diversion projects, etc.

So what does this mean? Maybe by now, there should have been a diversion of the Eel River in north-western California to the California Water Project. Maybe by now, there should have been hydro-electric dams built and producing power along the Eel River. Maybe by now, there should have been atomic-power plants built and producing power, maybe with the help of the U.S. Dept. of Energy. Maybe by now, the St. Lawrence Seaway could have been re-dredged to accommodate ocean-going vessels with a 32-foot draft. Maybe by now, AMTRAC (and VIA RAIL in Canada) could have had their rail-beds up-graded to facilitate high-speed passenger rail-service across North America. Maybe by now, the levies protecting New Orleans could have been re-built to double what their former height was before Hurricane Katrina. Maybe by now, Freedom Tower in NYC could have been built. Maybe by now, with the help of the U.S. Dept. of Energy, natural gas could have been the fuel of choice for automobiles. Maybe by now (and with the help of the U.S. Dept. of Energy) Alberta's up-graded oil from its tar-sands could be lowering the price of oil across North America. Maybe by now (and with the help of the U.S. Dept. of Energy), there could be drilling for oil everywhere along the coasts of North America.

Somehow, bird-habitat preservation was a more important priority for the Obama bunch than providing real and productive jobs for people, to lower their cost-of-living.

The bottomline in the failure of the Obama bunch was that they did not have a plan for governing: not a Keynsian plan, not an austerity plan, nor a New-Deal Era jobs plan, but no plan of any kind--- except for bird-habitat preservation.

"Cash for Klunkers" and bird-habitat preservation was all that came out of the Obama Administration--- plus daily news-conferences and daily photo-ops.... And that is why liberals and progressives will vote with their back-sides in the next presidential-election.

[nero3]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

There is a desperate need for bubble to appear soon if Obama is going to have any chance. I have noticed a pattern with bubbles, as one bubble burst, the one that have usually been in the making for 5 years already, but not noticed takes a more active role, while the one that will take over as that one burst, will begin totally from scratch as a new 10 year cycle.

[DSpencer]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

Not only should surplusses have been run by governments in the "good" years to pay for deficits run by governments in the "bad" years, but spending in the "bad" years was to be for worthwhile and productive public-works projects such as huge hydro-electric dams, atomic-power plants, bridges, roads, water-diversion projects, etc.

I don't agree with the Keynesian strategy. But, I completely agree that if they are going to do counter-cyclical spending, it needs to be on something that is worthwhile.

I feel like they took our tax (and future tax) money for a risky business idea that I didn't think would work. Then they gave some of the money to their friends and blew the rest at a strip club. And then along comes Krugman to lecture us on how the problem is that they didn't spend enough.

[vinoveri]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

There is a desperate need for bubble to appear soon if Obama is going to have any chance. I have noticed a pattern with bubbles, as one bubble burst, the one that have usually been in the making for 5 years already, but not noticed takes a more active role, while the one that will take over as that one burst, will begin totally from scratch as a new 10 year cycle.

Agreed. Everyong wants another bubble (notwithstanding they are short term and end in disaster for many). A boom in some asset class for a few years yields optimism and the wealth effect.

Do you see any bubble forming or in mid stages at present?
It's hard to believe we can get another bubble in equities after we just left a busted one only a decade ago, but money needs to go somewhere.

[bobola]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

If interest rates stay just north of zero for an extended length of time, Krugman's idea may work.
If the rates rise, the plan fails.

Japan's spends 23% of its annual budget on debt service, but has had a very low interest rate for about 15 years.
If they can sustain this borrow-to-pay debt service indefinitely, why can't we do the same..??

[c1ue]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

Japan's spends 23% of its annual budget on debt service, but has had a very low interest rate for about 15 years.
If they can sustain this borrow-to-pay debt service indefinitely, why can't we do the same..??

Because Japan as a net trade surplus nation never has to use its own currency (yen) to buy imports - it can take the proceeds from its exports.

The US on the other hand has the repudiation issue - in the '70s the Arabs stopped accepting the same number of crap US dollars for a barrel of oil. This precipitated a decade long economic recession.

And the US' problems in the '70s were a tiny fraction of what they are now.

[touchring]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

If interest rates stay just north of zero for an extended length of time, Krugman's idea may work.
If the rates rise, the plan fails.

Japan's spends 23% of its annual budget on debt service, but has had a very low interest rate for about 15 years.
If they can sustain this borrow-to-pay debt service indefinitely, why can't we do the same..??

This is one thing which I can't understand. Can't the Fed create an unlimited amount of money to press down interest rates?

[nero3]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

Agreed. Everyong wants another bubble (notwithstanding they are short term and end in disaster for many). A boom in some asset class for a few years yields optimism and the wealth effect.

Do you see any bubble forming or in mid stages at present?
It's hard to believe we can get another bubble in equities after we just left a busted one only a decade ago, but money needs to go somewhere.

I think that's whats going to happen. First it's nasdaq shares, then it's housing, then it's gold, then it's bluechip's.

[lektrode]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

Not only should surplusses have been run by governments in the "good" years to pay for deficits run by governments in the "bad" years, but spending in the "bad" years was to be for worthwhile and productive public-works projects such as huge hydro-electric dams, atomic-power plants, bridges, roads, water-diversion projects, etc. ....
.....
The bottomline in the failure of the Obama bunch was that they did not have a plan for governing: ....
...
"Cash for Klunkers" and bird-habitat preservation was all that came out of the Obama Administration--- plus daily news-conferences and daily photo-ops.... And that is why liberals and progressives will vote with their back-sides in the next presidential-election.

couldnt have said it better steve!

BUT...
they had a plan alright: BAIL OUT THEIR BUDDIES IN NYC, BAIL OUT/PAYBACK THEIR VOTER BASE IN THE .GOV & AUTO UNIONS, while they _rob_ the prudent to bailout the profligate/reckless, _rob_ the savers to bailout the spenders, _rob_ the private sector to enrich the welfare class and their enablers in the political class, _shaft_ the productive to allow the parasitic to multiply!

oh yeah, they do have a plan: enslave the rest of us to fatten the DC aristocracy!

why there's only ONE WAY FORWARD AND IT BEGINS WITH ***TERM LIMITS*** in congress

[Starving Steve]

Re: Krugman: Rising commodity prices have nothing to do with Fed money printing

This is one thing which I can't understand. Can't the Fed create an unlimited amount of money to press down interest rates?

The Bernanke Fed is buying U.S. Govn't debt. The Bernanke Fed is "painting the tape" any way it wants to. According to the Bernanke Fed, we are well into recovery from the recession. And what is really troubling is that the B.F. uses its faked-rates and its faked-data and its faked-recovery to prove whatever it would like to prove. For example, the B.F. uses its faked i-bond rates (set by auction) to prove that there is little or no inflation worry in the debt market.

We just went through a similar round of data-faking to prove that "AGW" was real. Remember how the eco-frauds did it? It was circular logic and outright fraud at its worst. And then the eco-frauds took the faked-data to model the future climate to prove that Al Gore's hockey-stick was real. And then they went onto BBC News with footage of polar bears floating-away on icebergs, so that the public would be alarmed.

To prove that 2+2=5, the data is doctored. Then it becomes: "experts say;" or "models prove;" or "debt auctions show;" or "scientists say;" or "Who are you to ask a question?".

Wasn't it Gobels in Nazi Germany who said: "If you tell a lie long enough, it becomes 'the truth',"?