I don’t want to prolong this “dialog” but a response with as many misconceptions as yours necessitates rejoinder.
Sorry! (Maybe you were complaining about Greenspan’s stupid monetary policies a decade ago, etc.!) But when I see someone who walks like a duck and quacks like a duck, you’ll forgive me for suspecting he’s a duck! I don’t know how many Nobel Prizes your “more intelligent commentators” have but when someone worries about a meager fiscal stimulus in the face of the biggest deflation threat since the 1930’s, “right-winger” is the most polite label which comes to mind.
Duhhh … the only point is that the spread isn’t bigger. I can see why you’re confused if you thought your role here was to teach junior-high level economics.
And your implication that the “bond bears” are happy to leave treasuries way over-priced for two years before making their move shows a misunderstanding of how markets work.
I’m sorry, I know you really, really want me to be a duck, but I’m not. It know it would be much easier for you to have an archetypal villian here, but… I’m IN FAVOR of the stimulus! I am concerned that their could be unforeseen consequences down the road due to policies enacted in response to the financial crisis- one of which could be inflation. Why do I think it’s OK to be concerned? Because what is being done has never been done before. I’m not arrogant enough to claim I know what will happen. I guess I’m just a skeptical person.
How many Nobel Prizes on the mantle of the specific commentator I was mostly thinking about? None. Though, he has put his money where his mouth is and actually ran a $6 billion fund and has outperformed the market by more than 40% since its inception.
You clearly want the amount of respectful interpersonal dialogue to be on a junior-high level. Whatever. Go for it, poopypants!
No. I’m saying there might come a time when a short Treasury position will look like a good idea. Now is not the time. How hard is that to understand?
Well, most of the commentary warning of inflation I’ve seen suggested that it was imminent. Admittedly, this precludes them from being described as “intelligent.”
This is just bullshit.
I’m a portfolio manager, and I have access to an extremely broad spectrum of research and analysis.
Krugman wasn’t saying anything that about half of Wall Street was saying. There was nothing particularly controversial or sensational about it.
It’s well understood that two possible nasty consequences of our Governments’ efforts to provide stimulus are a long term high inflation environment, or a long term deflationary environment.
So far we have neither. Hopefully we will not have either. At the moment we are slightly deflationary. A few months ago we were slightly inflationary. The European situation increased the relative value of the dollar as the de facto secure currency and US Treasuries as the riskless asset.
That was likely to be a very temporary thing. The jury is still out on the long term trend. Deflation is certainly the larger danger.
Those are the facts. That being the case I hate ignorant revisionist idiots who play games with the truth for political purposes.
You don’t know what you are talking about, so you should shut up.
Now, I only went as far in economics to get a minor in it so I’m far from an expert, but I’m having trouble understanding by which mechanism stimulus spending today is going to cause inflation three years from now.
Inflation results from either internal supply limits of, e.g. labor (that is not presently a problem!) or external supply limits, e.g. oil price shock. While a near-term jump in oil prices may be unlikely (because they’re already high!) some other unforeseen shock is possible, but probably not because of the stimulus. When the economy recovers, increases in taxes and/or interest rates may be necessary but politically unpalatable but, the “problem” of a recovered economy is the purpose of the stimulus, and it seems odd to view it as a dangerous side-effect.
With your inflation assumption, paper now selling for $107 will be selling for $90 in just a few years and those dollars will be worth less than current dollars. If the market agreed with your inflation forecast, buyers wouldn’t be maintaining that $107 price. How hard is that to understand?
I haven’t even brought up what I think might cause problems in the future. You really, really, really, really want me to argue that large government spending will always cause inflation and THE SKY IS FALLING! Go ahead and keep trying to play “gotcha” along those lines. You’ve got the wrong guy.
What’s my inflation assumption? You’re making shit up here.
That graph doesn’t show what you seem to think it shows. It only shows that the rate of job loss has slowed down and there have been some job gains very recently. That’s still a very far cry from what many stimulus advocates were touting, such as a steep reduction in the unemployment rate.
Also, much of the reason for the reduction in job loss were public sector jobs (the creation of which is hardly anything to crow about).
I know exactly what it shows. I’m trying to explain to you that the stimulus slowed the job losses.
Public sector jobs stimulate the economy. This is a fact. You need to understand basic fucking economics before you whine.
Thanks. Like I say, I understand the graph.
Do you actually think that tax cuts would be the smart thing to do? Do you know why that isn’t considered a good idea?
Also, the administration never promised 8% unemployment. That was a projection based on the most up-to-date numbers they had at the time. There were plenty of caveats with that projection as well, they knew they didn’t have enough info for a solid projection at the time.
In retrospect the stimulus should have been bigger. But uninformed douchebags on the right made that a political impossibility.
Right. When a Republican makes a prediction, it’s a promise and a guarantee, and you take them to task if it doesn’t turn out to be the case in all particulars. But Obama’s team was just making projections that turned out to be faulty, and that’s OK.
So, help me He Who Knows What He’s Talking About. By what mechanism would a stimulus package cause deflation? I for one cannot think of one. (Did you mean inadequate stimulus might cause deflation? In that case, my pitting is retracted.)
“A few months ago we were slightly inflationary.”
Oh. Let’s look at the percentage change of the core CPI (less the volatile food and energy categories, so as to understand underlying price pressures), year over year:
That looks to me like declining inflation. Heck, we could even be experiencing deflation now, given that we’re seeing 1 year percentage changes above.
Personally, I think the fears of hyperinflation that were circulating a year ago were delusional (or, rather, they were based upon a framework that has been resoundly refuted.) I find it highly plausible thought that core inflation could go to 3-4% – heck I think core inflation should go that high, so that we can avoid liquidity traps in the future. But 3-4% inflation is nothing to get hysterical about, unless you are predisposed to that emotion anyway.
You are correct that Krugman’s POV was consistent with that of the major forecasters. But they aren’t being pitted in the OP, are they?
Again, there were a fair number of Ron Paul freaks talking of imminent hyperinflation, as in the price of bread rising twice a day. I would say that hypothesis has been falsified.
We’re here to fight ignorance Mr. Rover, and that involves embracing the scientific method. I know it’s hard when the facts refute your cherished theories, but there comes a time when you have to buck up and compare your wishes with the facts. The scientific approach also involves distinguishing between baselines, forecasts and error bounds.
And ETA: “With respect to anybody (I’m not picking on Lobo), those who are unfamiliar with the term “Multiplier” might benefit from an introductory class in macroeconomics.”
Yeah! Because everyone knows that retail stores, banks, mortgage companies, car dealers and landlords won’t take your money if you have a government job.
What about government contractors? Are those public sector jobs? Are those jobs okay with you?
Okay, so what’s it called when you reflexively dismiss someone’s employment just because it’s “public sector”.
Explain to me why anyone’s work from city trash collector to Treasury Department clerk is any less important a contribution to the economy than your “private” sector job.
Not enough, not the right kind. “Inadequate.” Yes. Was that not clear?
That’s exactly what I was saying. We were mildly inflationary, now we are likely mildly deflationary.
I would think of that as “normal” if there is such a thing. I can’t recall any credible analysts seriously predicting “hyperinflation.” Are you sure that’s the word you mean?
What people are concerned about is high inflation. Numbers in the teens.
Well… Yes they are. “Conservatives,” “Mainstream Financial Analysts,” who by footnote serve the “Aristocracy.”
The OP paints a picture of the lone, brave, liberal economist as being the only one who is smart enough to see what’s in store, and the only one brave and honest enough to speak it.
