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In Fed and Out, Many Now Think Inflation Helps

nytimes.com

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Re: In Fed and Out, Many Now Think Inflation Helps

#221

Post by eli_gottlieb »

mbesto wrote: post #209
eli_gottlieb wrote: post #184

Earlier quoted context omitted.

Let's imagine what happens in a world where Austrian Economics is true, but economists are lying to the rest of us for personal gain. First prediction: the economists will tell us that Austrian economics is wrong, but then use the Austrian theories they secretly know are actually true to invest their own assets. Anyone got an economist's portfolio to look at?

http://en.wikipedia.org/wiki/Glenn_Hubbard_(economist)#Insid... http://www.youtube.com/watch?v=CaXNqGgIc-g It's also worth noting that economics is arguably a pseudo-science, as the theories themselves cannot be reproduced independently by external parties. So it's really hard to argue whether Austrian economics is "right" or "wrong".

I find it pretty hard to count him as evidence for anything, considering that he comes from the supply-side school. They're kind of known for being paid propagandists for particular business and political interests. Hell, he doesn't even seem to use Austrian Economics, or any other economics, himself, if he mixes himself up with entirely conventional financial firms like Blackrock and MetLife.

Re: In Fed and Out, Many Now Think Inflation Helps

#222

Post by betterunix »

jswinghammer wrote: post #8

Given that the entire point of the Federal Reserve is to promote inflation it's probably good that they think it's a good idea-otherwise why do they think that they exist? The whole problem is that inflation is theft. You are basically having your property taken out from under you without realizing it. It's historically been very popular as a means of taxing the public without them realizing that's what you're doing.…

"The whole problem is that inflation is theft"

That is like saying that if you run a lemonade stand and someone else opens a lemonade stand next to you, they stole from you. A reduction in the value of what you own is not theft by any stretch of the word.

"It's historically been very popular as a means of taxing the public without them realizing that's what you're doing."

Ah, but inflation is not truly a tax, because it is driven by market forces and not by the law. Actual taxes reduce the rate of inflation by increasing demand for money.

Re: In Fed and Out, Many Now Think Inflation Helps

#223

Post by judk »

eli_gottlieb wrote: post #171
7Figures2Commas wrote: post #107

Earlier quoted context omitted.

> ...the use of quantitative models and such. But without them, how can you measure the efficacy of your policies? Here's a better question: if you measure the efficacy of your policies and find that they have not achieved the intended effect, on what would you base the extension and expansion of those policies? Faith? Insanity? The reason I ask is that a few months ago, two senior economists at the SF and NY Feds pu…

And strangely enough, nobody outside of neoliberal bank-interest lobbyists has actually wanted quantitative easing. Keynesians want the labor market and consumer demand propped up, social democrats want infrastructure investment towards those ends, and radicals are looking for a debt jubilee.

Indeed, the term Keynsian has been uselessly spread to cover both New Deal style stimulus spending and printing money and giving it to the banks.

The two are not the same, they are connected only by the theory of trickle down Reaganomics.

Re: In Fed and Out, Many Now Think Inflation Helps

#224

Post by jswinghammer »

betterunix wrote: post #222
jswinghammer wrote: post #8

Given that the entire point of the Federal Reserve is to promote inflation it's probably good that they think it's a good idea-otherwise why do they think that they exist? The whole problem is that inflation is theft. You are basically having your property taken out from under you without realizing it. It's historically been very popular as a means of taxing the public without them realizing that's what you're doing.…

"The whole problem is that inflation is theft" That is like saying that if you run a lemonade stand and someone else opens a lemonade stand next to you, they stole from you. A reduction in the value of what you own is not theft by any stretch of the word. "It's historically been very popular as a means of taxing the public without them realizing that's what you're doing." Ah, but inflation is not truly a tax, because…

No but if you reduce the quality of my lemons then yes you did do something akin to theft. That's what inflation does it. It debases the quality of money.

Inflation can't continue in a free market forever because eventually a crash occurs because inflation kicks off a boom bust cycle. Taxes have nothing to do with inflation and don't change anything on their own. They may reduce the pool of capital and may force people to the credit markets but we need more information before saying such a connection exists.

Re: In Fed and Out, Many Now Think Inflation Helps

#225

Post by greeneggs »

7Figures2Commas wrote: post #107
cotsuka wrote: post #60

Earlier quoted context omitted.

Austrian school not holding much weight with academics is like wondering why creationism doesn't hold much weight with academics. Lots of things can be explained with creationism, but it doesn't mean it's right. Many Austrian economists rail against the use of quantitative models and such. But without them, how can you measure the efficacy of your policies? Faith that the policy works... But most academics like to be…

> ...the use of quantitative models and such. But without them, how can you measure the efficacy of your policies? Here's a better question: if you measure the efficacy of your policies and find that they have not achieved the intended effect, on what would you base the extension and expansion of those policies? Faith? Insanity? The reason I ask is that a few months ago, two senior economists at the SF and NY Feds pu…

What is your argument exactly? You say, "If you measure the efficacy of your policies and find that they have not achieved the intended effect, on what would you base the extension and expansion of those policies?" But then your example, QE2, achieved the intended effect. As you say, it had a moderate effect on economic growth, and with only a moderate effect on inflation. Nobody claimed it would be a magic bullet. Monetary policy without coordinated fiscal policy can only have moderate effects.

Re: In Fed and Out, Many Now Think Inflation Helps

#226

Post by Mikeb85 »

nullc wrote: post #220
Mikeb85 wrote: post #214

Earlier quoted context omitted.

> Because quantitative easing is totally pro-equality? Quantitative easing increases the money supply. Which does favour the lower classes more than the already wealthy (decreasing the money supply would favour the wealthy). So yes, economists would say it does favour equality. Keep in mind this is on a macro scale...

So depositing the QE money directly into Donald Trump's bank account would "favour the lower classes more than the already wealthy" because it increases the money supply? :)

Depends how much of it Mr. Trump spends.

Seriously though, it doesn't work quite like that...

Edit - thought I'd be more helpful:

QE is when the Fed engages in open market transactions, buying bonds, and thus putting reserve money into the market. It's not free money for anyone, certainly not for Mr. Trump, and it doesn't involve printing money...

Re: In Fed and Out, Many Now Think Inflation Helps

#227

Post by hannibal5 »

elchief wrote: post #156
7Figures2Commas wrote: post #100

Earlier quoted context omitted.

Here's a question: how many "professional" economists sounded the alarm about the last bubble?

Krugman, Schiller, Roubini were the prominent ones.

There was long main article in the Economist about housing bubble few years before the bubble bursted. I remember reading it and being somewhat worried because arguments were convincing. I then forgot it because it was not in other news.

It would be nice to find it again. The issue in question had picture of green? man/gigant weighted down with heavy weights.

Re: In Fed and Out, Many Now Think Inflation Helps

#228

Post by hannibal5 »

7Figures2Commas wrote: post #100
enoch_r wrote: post #53

Absolutely no discussion of inflation is complete without recognition of the fact that inflation and inflation expectations are at historically low levels [1] right now. Economists aren't arguing that we should inflate our way out of debt--they are arguing that we should return to the historical norm. Of course, it's possible that these economists are secretly just pushing inflation as the "hidden tax" we're all up i…

Here's a question: how many "professional" economists sounded the alarm about the last bubble?

Many.

Here is multiple lists with sources:

http://investorhome.com/predicted.htm

Re: In Fed and Out, Many Now Think Inflation Helps

#229

Post by judk »

enoch_r wrote: post #53

Absolutely no discussion of inflation is complete without recognition of the fact that inflation and inflation expectations are at historically low levels [1] right now. Economists aren't arguing that we should inflate our way out of debt--they are arguing that we should return to the historical norm. Of course, it's possible that these economists are secretly just pushing inflation as the "hidden tax" we're all up i…

Cutting real wages is in no way the intended desirable effect of inflation. Inflation is a disincentive to sittin on imaginary cash, am incentive to productive activity/investment.

In an inflationary stimulus theory, wages rise with inflation, and cash-rich spend cash to move a worker to produce.

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