Lest anyone think that Krugman actually tries to make an economic argument from his New York Times perch, well, think again. Here is someone supposedly of intellectual stature trying to claim that if governments only spend enough money, that the spending somehow will permanently revitalize the economy. In other words, we spend ourselves rich.
When Barack Obama was elected President of the United States two years ago, Krugman was among those shouting the "hosannas" and throwing palm branches at the feet of the Messiah. (Of course, Obama did not ride into Washington on the back of a donkey colt, but rather in a gas-guzzler limo.)
Today, however, the hosannas have stopped, at least on Krugman's page, and while he is not yet in the mob shouting, "Crucify him!" nonetheless, I can see that the Messiah already has lost favor and most likely Krugman will be looking elsewhere -- perhaps to Hillary Clinton. In today's column, Krugman essentially rejects Obama because he thinks that the president is not doing enough to spend ourselves into recovery.
This is couched in the language of the federal deficit of course, and Krugman's view that the government under Obama is not confiscating enough income from everyone else:
After the Democratic “shellacking” in the midterm elections, everyone wondered how President Obama would respond. Would he show what he was made of? Would he stand firm for the values he believes in, even in the face of political adversity?Now, given that millions of Americans have lost their jobs or taken pay cuts, the fact that federal employees will not be receiving pay raises for a couple of years is pretty mild stuff, and Krugman's over-the-top reaction tells us more about his priorities and agenda than it does about anything Obama has done. He goes on:
On Monday, we got the answer: he announced a pay freeze for federal workers. This was an announcement that had it all. It was transparently cynical; it was trivial in scale, but misguided in direction; and by making the announcement, Mr. Obama effectively conceded the policy argument to the very people who are seeking — successfully, it seems — to destroy him.
So I guess we are, in fact, seeing what Mr. Obama is made of.
The truth is that America’s long-run deficit problem has nothing at all to do with overpaid federal workers. For one thing, those workers aren’t overpaid. Federal salaries are, on average, somewhat less than those of private-sector workers with equivalent qualifications. And, anyway, employee pay is only a small fraction of federal expenses; even cutting the payroll in half would reduce total spending less than 3 percent.Of course, it is political theater, as though anything a president does these days is anything but. However, Krugman goes to his own political theater in his insistence that we pretty much can cure all of our economic ills if the tax rate for families making $250K or more a year goes from 35 percent to 39.6 percent, and we steeply raise capital gains taxes and inheritance taxes.
So freezing federal pay is cynical deficit-reduction theater. It’s a (literally) cheap trick that only sounds impressive to people who don’t know anything about budget realities. The actual savings, about $5 billion over two years, are chump change given the scale of the deficit.
I have no idea as to the tax revenue that would be "lost" if the current tax rates are made permanent (although "permanent" in federal budget language is rather a fluid concept), but I do think that the political theater that Krugman is making is rather telling. You see, Paul Krugman really does want us to believe that we don't need capital investment (other than "massive public works"), and that our economy can prosper just as long as the government spends and spends and spends.
For that matter, I wonder why Krugman does not advocate a 100 percent tax on all of our income, and just let the government spend money, given that the "multiplier" would be at its highest level with such a scenario. Given that governments are not "income constrained," we can end this recession immediately.
Krugman's "no tax cuts for the rich" rhetoric largely is symbolic, as his real beef with Obama is that the government has not confiscated enough of our wealth. As he has written before, if it were up to him, he would let ALL tax rate cuts expire and then have the government go on a spending spree.
So, to follow Krugman's chain of logic, Obama is now out-of-favor because he is not spending and taxing enough. Maybe Hillary Clinton will be the Chosen One. Or maybe Krugman himself.
Unfortunately, with this response, I need to spend my comments pointing out the lies and misrepresentations my Prof. Anderson. Since there is no real economic thought in his post, I can’t respond with actual economic thought and analysis. However, I do want to challenge anyone on this blog to find an accurate prediction made by Prof. Anderson since he started this blog. I have made two (lower treasury yields when Prof. Anderson and his hero Guido were claiming higher rates and a rising dollar when Prof. Anderson and his hero’s got their panties in a bind over QE2. I’m 2 for 2). Here’s some more Free Advice: stay long treasuries and the USD
“Luskin was joking, of course”
Actually, the real joke is Don Luskin. It baffles me who you idolize. Do results matter at all, or do you just agree with the folks that say what you want to hear, regardless of how bad their track record may be? I have about a dozen more links showing Luskin’s idiocy and ignorance if you are interested.
“When Barack Obama was elected President of the United States two years ago, Krugman was among those shouting the "hosannas"”
False. Why do you keep repeating this lie? Krugman was on the Edward’s bandwagon, then Clinton, and never, never fully endorsed Obama. Never. Krugman said Obama was just a moderate disguised as a liberal. Again, just because you want something to be true, does not make it true. This is getting embarrassing.
“I have no idea as to the tax revenue that would be "lost" if the current tax rates are made permanent”
Since that would require analysis, which is lacking on this blog. You’re a great spokesperson for a narrow minded ideology. And you do a really good job of copying and pasting the definition of Says Law and other theories that are not supported by empirical evidence. But analysis? Nah..who needs analysis!
“our economy can prosper just as long as the government spends and spends and spends.”
That because spending = income. I mean, someone who receives their income from government, should recognize this. Why don’t you get basic accounting?
“Given that governments are not "income constrained,”
Revenue constrained. Big difference. You can’t even accurately misrepresent me!
“wonder why Krugman does not advocate a 100 percent tax on all of our income”
One of the dumbest misrepresentations you have made in a while.
“his real beef with Obama is that the government has not confiscated enough of our wealth.”
My mistake, this is the dumbest misrepresentation you have made in a while.
Hey, AP "Hut Tax" Lerner:
Since you don't understand basic Austrian theory whatsoever, why are we expected to know the minutiae of MMT? Further, I don't see Mosler and Krugman on the same page at all. Mosler’s Law: “there is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.”
I've been reading some MMT original source material and it is 10 times less obscure than your silly rants. In fact, they may be on to something regarding how the morally insane fiat monetary system actually "operates" mechanically. However, none of that changes or refutes basic Austrian insights which, like always, are completely ignored by MMT writers. And their description of the monetary system is of a system completely unhinged from the rule of law, basic morality and the Constitution.
Regardless of MMT, Krugman remains a partisan hack incapable or unwilling to seriously and fairly address Austrian School issues.
I love how Dr. Krugman dismisses $5 billion in savings as "trivial in scale." Nobody is saying that this one action is going to balance the budget, but a few dozen cuts of a similar magnitude and Uncle Sam is on the road to something resembling fiscal sustainability.
I think this attitude is a demonstration of Dr. Krugman's "all-or-nothing" understanding of causality. If a single cut won't fix the economy, we shouldn't do it. If there's evidence that insufficient demand is a major cause of unemployment, then concerns about regulation, taxes, etc. necessarily do NOT contribute to unemployment. If failure to adequately regulate mortgage securitization contributed to the housing bubble, then aggressive HUD "affordable housing" mandates, etc. did NOT.
Dr. Krugman lives in a very neat, tidy world, in which every possible effect has a single cause, and every problem, therefore, has a single, simple solution.
"Bad kings and bad ministers ... have not caused so much misery as bad crowns and bad shillings." Google reveals that this is from A History of England from the Acession of James II by Thomas Babington Macaulay Macaulay (sic). His description of the inflation in England in the 1600's caused by coin-clipping is a persuasive refutation of Krugman's view that there is no downside to inflation.
For everyone's interest, Taylor Conant is working on a series of posts refuting Mosler.
I'm not sure Conant gets the core MMT concept (the Hut Tax theory) that all rules change in a fiat money regime and that the state must ALWAYS run a deficit to provide the rabble with "savings" in funny money necessary to pay their taxes as the funny money is otherwise worthless. The tax rule is what gives funny money its value (MMT'ers admit this).
The tax rule is what gives funny money its value (MMT'ers admit this).
Bob, you mean if I were to press a gun into your back, and tell you to use my otherwise worthless paper slips for transactions, you would do it? Yes, the fact that fiat money ultimately depends upon force and coercion is mentioned.
My goodness, I'm not defending the "Hut Tax" theory of money. And Conant does get that "deficits = money savings" is not the same as "deficits = real savings". A few days ago, I had my finger on some basic MMT explanations from other original sources and did not keep track of the citations. I guess my point is that there are MMT sources other than AP Lerner and Mosler who are less opaque in stating the basic MMT concepts and due to their clarity, this makes them easier to understand and refute (as in "OMG, is that all you are really saying!"). Maybe Conant gets it and I'm so dumb I needed it spoon-fed. But after four months, I finally got it.
Conant also gets that it very hard to understand the basic underlying economic theory that is apparently guiding Mosler (if there is one.)
As with Keynesianism, I find that I have to attempt to translate MMT stuff into a real world Austrian explanation.
Actually, it was Mosler who provided me with this central MMT "insight" into "Hut Tax" theory:
What is the point of taxation, as taxes are not needed to ‘finance’ spending? Taxes, at the macro level, serve to cause people to offer real goods and services for sale to get the thing needed to comply with tax liabilities. This allows the government to spend its otherwise worthless currency. So in this sense taxes are the very source of value for a floating exchange rate currency. The currency can be considered tax driven. Without taxes, the currency would have no value, much like Confederate $.
"you mean if I were to press a gun into your back, and tell you to use my otherwise worthless paper slips for transactions, you would do it? "
Of course, there is no gun. And of course, I can only assume you pay your taxes. And while you may not like it, you pay them. And because you pay them, the currency has value. There is no theory about this. There is no debating this. It's operational fact. If you stop paying your taxes, and the government is no longer legitimate enough to enforce tax rules, the currency collapses. I know the reality pains you because your blinded by your ideology, but there is no questioning what I or Mosler has ever written about the monetary system of the US. It is 100% verifiable with your own two eyes operational fact. And if you spent 10 minutes sitting on a money trading desk, and took 10 minutes to understand basic accounting, it becomes pretty obvious. Describing reality is not an endorsement of reality. It's just reality.
You guys go back and forth about morality and coercion and blah blah blah and completely ignore the operational realities of the world you live in. The irony behind your claims to moral and intellectual superiority is you criticize the current monetary despite not having an utter clue about how it operates, and then you lobby for a return to the gold standard. You think the Fed is corrupt. Ha! Let's hand over monetary sovereignty to foreign powers via a pegged currency. That's true liberty. Instead of lobbying for the gold standard, save your breath and just pull your pants down, bend over, and point your ass eastward.
On the bright side, I'm glad to see at least a few folks have the intellectual curiosity to expand their reading lists beyond Mises.org.
Of course, there is no gun. And of course, I can only assume you pay your taxes. And while you may not like it, you pay them. And because you pay them, the currency has value. There is no theory about this. There is no debating this. It's operational fact. If you stop paying your taxes, and the government is no longer legitimate enough to enforce tax rules, the currency collapses. I know the reality pains you because your blinded by your ideology,
It may very well be true that taxes are the source of "value" for fiat currency. Since no one can ever know why anyone thinks or values anything, it might be true. Whether it is or isn't true has nothing to do with Austrian principles and does not refute them. Further, even if true, this is not an "operational fact" like the government's present ability to create money out of thin air.
And we pay "our taxes" because we indeed have a gun in our back. Think Wesley Snipes. And there is a theory behind everything.
Fiat currencies cannot exist without guns, hence the "fiat" prefix. And I'm not claiming intellectual superiority, or lobbying for a return to the gold standard.
And Bob, I know that you don't defend the Hut Tax theory; I didn't mean to imply that.
And I don't "lobby for a return to the gold standard" or "pegged currency". I want a separation of money and state and the state can go to hell. To the extent it exists at all, make it tax real assets out in the open before it can transfer those assets to its favorites. No more unseen wealth transfers through funny money creation. The point is to cut off the source of its funding. The idea that the state can fund itself by creating its own funding out of thin air is demonic and insane.
" Federal salaries are, on average, somewhat less than those of private-sector workers with equivalent qualifications"
yeah because I was just going to hire someone to name post offices for me and pay them 175,000 a year!
HATE this argument.
APLerner, your first comment is right. But one criticism.
When William L. Anderson makes this comment:
Given that governments are not "income constrained," we can end this recession immediately.
he is showing his utter ignorance.
Krugman is a New Keynesian. Monetary monetary theory (MMT) is a branch of Post Keynesian economics.
Krugman does NOT subscribe to MMT, and in fact criticized James Galbraith when Galbraith provided an analysis of US federal deficit using MMT:
Daniel Hewitt said...
Fiat currencies cannot exist without guns, hence the "fiat" prefix
And parenthood can't exist without coercion.
Is that an argument for abolishing parenthood?
You can't enforce the law or contracts without coercion either.
Clearly the only even remotely plausible argument is that unjustifiable coercion is immoral.
A moral case has to be made for coercion. Just like the case for policemen, the case for taxes for state enforcement of law and basic welfare is moral.
It's good to see that LK knows the difference between New and Post Keynesianism (such as it is).
Too bad he's too lazy to understand Austrian School anti-Keynesianism.
As are all New and Post Keynesians.
From LK's blog, it seems as if LK is accusing Krugman of misrepresenting his opponents' views. Who knew?
AP lerner and LK,
I have some questions for you,
Given that taxes drive the initial demand for a currency in the MM framework, exactly WHICH taxes create fiat currency value? Is it real estate, or income? or capital gains, or sales taxes? couldn't I in theory ask for part of my salary to be paid in foreign currency and avoid some of my tax liabilities?
Second, if the only source of money is exogenous provided through the state, how do you explain the dollarization phenomenon, in some countries. Shouldn't the taxes over there drive out competing currencies? Also how do explain currencies? Also, how do you explain commodity money evolving endogenously in primitive cultures or war torn countries? Look, i'm not saying its not operational fact in a modern fiat currency system. I've always wondered what drove the demand for fiat money. You've provided an answer. (Thanks for teaching me something) but your model is incomplete. After all HOW do you explain endogenous currencies evolving naturally. (Don't say this has never happened, because you know it has
I think the claim that people work to get US currency to pay their taxes is nonsense. People work to make money to survive. They pay taxes because they have been brainwashed by government schools or are afraid of prison. Do drug dealers work so they can pay taxes in US currency (if they don’t pay taxes?). If you make your money as a gold trader, you will pay your taxes with US currency because you would rather dump the funny money instead of real money.
People have tended to value fiat money because of the prior years’ experience when the paper notes were redeemable in specie. They’ve been tricked by the statists and Keynesians into thinking that fiat money is the same thing. Hopefully, they will wake up soon. The MMT’ers, with their explicit explanations of the how our horrible fiat money system really works, will be helping that process along.
In fact, I think a major problem with convincing the masses about the Austrian School is their natural resistance to believing that things are really as horrible as the MMTers’ explanation. Yes, the government is not revenue constrained! OMG. Isn’t that horrible!
They pay taxes because they have been brainwashed by government schools or are afraid of prison.
Wrong. The evidence of well sampled surveys shows people regard progressive taxes are moral because they get public goods in return.
Of course, people always truthfully answer polls by explaining that their own stupid answers were induced by brainwashing at government schools.
I note that they didn't answer that they worked so they could get US dollars to pay their taxes and give value to otherwise worthless funny money.
Of course, people always truthfully answer polls by explaining that their own stupid answers were induced by brainwashing at government schools.
What an idiotic statement.
When actually do children get "brainwashed" into supporting progressive taxes?
In reality, you have zero evidence that they don't say what they really think - as an Austrian committed to a subjectivist theory of value, you are obviously livid that a vast number of people subjectively value public goods.
"Wrong. The evidence of well sampled surveys shows people regard progressive taxes are moral because they get public goods in return."
What this shows is that the majority is acting irrationally. That means that they are simultaneously choosing to act for their own well being and supporting a measure that adversely impacts their well-being. Considering taxes of any kind as morally sound is an error in judgement for anyone who wishes to enhance their own well-being.
What this shows is that the majority is acting irrationally.
It is entirely rational to give up a small part of your income now (say, in taxes) for protection against uncertainty in the future (e.g., state unemployment insurance and health care).
If that were irrational, then all forms of private insurance would also be irrational, you idiot.
"It is entirely rational to give up a small part of your income now (say, in taxes) for protection against uncertainty in the future (e.g., state unemployment insurance and health care)."
It is irrational to expect that government using coercion to make this happen would either succeed or leave people better off.
"If that were irrational, then all forms of private insurance would also be irrational, you idiot."
No. It wouldn't, you jelly-brain. The difference is that private insurance is voluntary while taxation is coercive. Your attempt to equivocate reveals your stupidity in its entirety.
It is irrational to expect that government using coercion to make this happen would either succeed or leave people better off.
What utter rubbish.
People have tremendous benefits from old age pension, unemployment payments and universal health care.
That's why they vote for them 0 they succeed and people are better off.
"People have tremendous benefits from old age pension, unemployment payments and universal health care."
Your complete lack of understanding of economics is totally exposed. You have spoken of the "seen" while completely ignoring the "unseen". You have taken short-term effects into account while completely ignoring the long-term effects. How Keynesian!!!
"That's why they vote for them 0 they succeed and people are better off."
The moot point is whether people become better off BECAUSE OF or IN SPITE OF the intervention.
So, you are the one spraying rubbish all over the place.
The difference is that private insurance is voluntary while taxation is coercive.
Taxation for public goods is moral.
You are already exposed as a fool who believes that morality is subjective.
Bala said... 3:54 PM
He however completely ignores the point that morality is the subjective assessment of "right" and "wrong".
If our assessment of right and wrong is 'subjective,' then when the majority believes that taxes and state welfare is moral, you have ABSOLUTELY no means and no argument against their subjective belief that it is right.
All arguments like yours above are utterly pointless - if 90% of the public "subjectively" think taxes are right, your subjective belief that it is not is totally irrelevant to them.
"Taxation for public goods is moral."
Only if you use a moral framework divorced from rationality, i.e., irrational, and choose a standard of value other than the life of the choice-making individual.
"You are already exposed as a fool who believes that morality is subjective."
Subjective does not mean irrational. In fact, your "ethical' code is the irrational one for all your claims that it is "objective".
"then when the majority believes that taxes and state welfare is moral, you have ABSOLUTELY no means and no argument against their subjective belief that it is right."
Rationality backed by sound economics shows that choice to consider taxes and state welfare as as moral is an irrational one because such support diminishes their well-being in the long-run. Hence, while they are free to believe that it is moral and hence support it, they are not free to escape the detrimental consequences of such support.
"if 90% of the public "subjectively" think taxes are right, your subjective belief that it is not is totally irrelevant to them."
It is not about my "belief" vs their "belief". It is that their choice is irrational and poorly-made and will not help them meet their objective while my choice is rational and well-made and will therefore help meet my objective. The poor souls don't realise how much they are hurting themselves.
Subjective does not mean irrational.
So now you just run away from the argument about morality??
It is not about my "belief" vs their "belief". It is that their choice is irrational and poorly-made and will not help them meet their objective while my choice is rational and well-made and will therefore help meet my objective.
You have just conceded my point.
This evasion and shift of the argument to ideas about choices being "irrational and poorly-made" evades the point that your earlier
statement about ethics being subjective is nonsense.
If there ethical choice that it was moral was really subjective,
then you have NO moral argument against taxes and basic welfare.
The fact you now shift the argument to talk of it being "irrational" shows total defeat.
And as I said: it is entirely rational to give up a small part of your income now (say, in taxes) for protection against uncertainty in the future (e.g., state unemployment insurance and health care).
You lose again.
"So now you just run away from the argument about morality??"
No, you moron! I am talking of a rational moral framework where man uses his MIND to know right from wrong.
"You have just conceded my point."
"If there ethical choice that it was moral was really subjective, then you have NO moral argument against taxes and basic welfare."
No. The choice is irrational and actually harmful. In a rational moral framework where the individual's own life is the standard of value, such a choice would be irrational and wrong. They can't claim that their life is the standard of value and simultaneously choose something that harms them.
"The fact you now shift the argument to talk of it being "irrational" shows total defeat."
You moron! You still don't seem to realise that I am talking of a rational moral framework.
"And as I said: it is entirely rational to give up a small part of your income now (say, in taxes) for protection against uncertainty in the future"
Not if the means you choose harms you, as would be the case with state unemployment insurance and health care.
In a rational moral framework where the individual's own life is the standard of value, such a choice would be irrational and wrong.
How stupid can you get.
Giving up a little bit of tax money now to hedge against starving when you are unemployed IS rational and right.
Not if the means you choose harms you, as would be the case with state unemployment insurance and health care
It doesn't "harm" you, anymore than payment of private insurance harms you.
The majority supports taxes and the basic state welfare.
If the majority felt "harmed" they would vote in Ron Paul or some other libertarian to abolish taxes and the state.
You are the one being really stupid.
'Giving up a little bit of tax money now to hedge against starving when you are unemployed IS rational and right."
When the money is taken through coercion, the person who is robbed is losing in utility. If he weren't, he wouldn't have to be coerced in the first place.
"It doesn't "harm" you, anymore than payment of private insurance harms you."
You still fail to see the difference between a voluntary purchase and a coercive expropriation.
"If the majority felt "harmed" they would vote in Ron Paul or some other libertarian to abolish taxes and the state."
The majority don't "feel' harmed because they do not understand economics.
"The majority supports taxes and the basic state welfare."
Yeah!! We know this. That's the problem. Too many victims have sanctioned their own sacrifice.
'The majority don't "feel' harmed because they do not understand economics."
And neither do you. Incidentally, how's your economic chronicling going?
When the money is taken through coercion, the person who is robbed is losing in utility.
Pure rubbish. You been shown again and again the MAJORITY of voters do not regard taxes as "robbery" - if they did they would vote for abolition for taxes.
Taxes are payment for public goods - this is how most people see them.
And now your final comment here totally destroys you:
The majority don't "feel' harmed because they do not understand economics.
So now they don't feel harmed??? They don't feel it was theft?
Yet you say actually that above, you complete idiot!
Which one is it, for ***$#* sake.
Bala, et al, does the real world ever intrude upon your abstractions?
The universal experience of mankind is that governments provide healthcare superior to the a private system, at lower cost. Having a private healthcare system adds up to more death and fewer dollars & real resources in the short run. It is often forgotten that Americans have a healthier lifestyle overall than Europeans & Japanese - they smoke much less, which outweighs every other lifestyle difference. But the benefit of socialized medicine outweighs even the effect of smoking. And in the long run this adds up to many more deaths and much fewer dollars and resources. What is the long run damage that outweighs all the death & waste caused by a laissez-faire, entrepreneurial, fringe of Austrian-economics favored or USA-type system?
I'm awfully glad personally that I have a dual citizenship thanks to my dad, so I won't rely on sh*tty - even for the well-to-do - US healthcare in my old age.
There is something subtle here.
AP Lerner said "You can't even accurately misrepresent me" instead of "you can't even accurately misrepresent him".
Is he Paul Krugman in disguise?
Just joking, but that was a strange and funny choice of words.
You are certainly the biggest moron I have ever engaged in any sort of discussion. I said
"When the money is taken through coercion, the person who is robbed is losing in utility."
Did you notice the little word "when" in the beginning of that sentence? That word indicates that the conclusion I have drawn in that sentence is applicable to those who need to and are being coerced to pay. So, when you say
"Which one is it, for ***$#* sake."
you are revealing that you have completely failed to understand that the statement
"The majority don't "feel" harmed because they do not understand economics."
applies to the majority (though the sentence includes this word) that, as per your claim, does not see anything wrong in taxes and, I presume, pays voluntarily.
It is especially stupid to pick up 2 sentences that apply to 2 different sets of people and claim that there is a contradiction.
"So now they don't feel harmed??? They don't feel it was theft?"
applies to the brainwashed majority that (like you) has no idea of economics. They (like you) think taxes are moral, see the "public goods" being provided and pay happily. What they fail to see (on account of their ignorance of economics) is how they are harming themselves. Since they do not know the downsides of taxation, they do not feel harmed. Why is this this difficult to grasp? Maybe because you have a brain less capable than that of a jelly-fish?
Another Anonymous 1:33 am
"The universal experience of mankind is that governments provide healthcare superior to the a private system, at lower cost."
Which "private system" are you comparing government healthcare with? Do you realise that you ought to compare government healthcare with a free-market in healthcare? Are you aware of the distortions induced by government intervention in the market for healthcare and how they adversely affect the economics of healthcare and thus ordinary people seeking healthcare? Do you realise that the US is NOT and has not been (for quite some time now) an example of a free-market in healthcare? Have you read this?
Lerner, you congratulate yourself for predicting a rising US dollar... rising against what?
The Australian Dollar has been kicking the backside off the USD. Brazil (another resource-backed currency) has been doing the same. The Japanese Yen keeps getting stronger and stronger. Oil prices are back up and the SPDR Gold Trust shows an almost straight line up for the past 5 years. iShares Silver Trust also generally upwards over five years but with sudden acceleration in the past 6 months.
So the only rising US dollar is the rising pile of banknotes you need if you want to buy a stick of gum.
"Lerner, you congratulate yourself for predicting a rising US dollar... rising against what?"
The dxy was at 75 when I made that prediction in early Nov. It's now @ 79. Take 5 minutes and google what it's up against. FYI-it's up against the yen, which I'm short.
Pay attention before criticizing me.
The dxy was at 75 when I made that prediction in early Nov. It's now @ 79
LMAO. Wow, did you get a medal for that prediction? That's quite the resume builder.
What other amazing predictions have the MMT crowd made? Did you predict the rise in gold prices? The rise in the PPI? The rise in other commodity prices? The rise in taxes? The rise in education costs? The rise in medical costs? The rise in the JOC-ECRI Industrial Price Index (23%!)?
Or did you predict DEFLATION?
Why don't you walk us through some significant MMT predictions that have come true, not your middling 5% temporary gain of one piece of paper against another?
And then, why don't you explain to us what the word SAVINGS mean, and how your economic framework accounts for the ACT of savings?
The primary failing of Keynesian economists is that they let their virtuosity with abstract thinking take precedence over simple logic. A recent article in my newspaper suggested that such experts were in favor of extending unemployment benefits because it would increase consumer spending.
Apparently such theoreticians have studied past statistical data and concluded that when the public is spending freely, the economy is robust, and when they are spending sparingly, the economy is not all that strong. Thus, when a prior month shows an increase in spending they say the economy is improving (or was improving) and if the next month spending declines, they conclude the economy is deteriorating--but they never admit that they have no way of knowing whether next month it will go up or dowm!
Nevertheless, ignoring any attempt to link causation with their supposed correlations, they assume that if there is someway they can get that monthly consumption number to be a higher amount they will have turned the economy around and made it stronger.
Now any practical mind knows that consumer spending does not build national economic strength. Thrift, investments in productive infrastructure, and R&D spending are what will over the long-term build a strong and productive economy. In fact,less spending on consumer expendables, luxuries, imports from China, and reduced payrolls for unproductive (almost all) government employees are what are needed for real growth.
But the abstract thinking geniuses like Krugman just want to raise that monthly number--consumer spending--because that number, however poorly assembled by the government statistical department, and no matter how much it gets revised a few months later, that number alone will indicate whether the economy is getting stronger.
So, in their fantastical minds, if the government prints money, then distributes it to the public, consumer spending should increase, and that will indicate (to them)that they have made things better. Of course if there was any merit to their logic, we should not just extend unemployment benefits, we should double them, perhaps triple them. Then that beloved number would skyrocket! It might go up almost as fast as the deficit and our national debt
There should be a government warning emblazoned on all Krugmanesque economic policy: "Do not try this at home!"
@bill greene Well said.
Welcome to the Blog, Bill Greene!!!
Very nice introduction!
Lerner, I took a moment to check a few things, and you made your prediction on this blog on the day of Nov 10. Historical records show the DXY was hovering between 77 and 78, nowhere near 75.
Besides that, the DXY is mostly weighted to Euros, and Euros have their own instability issues (e.g. Ireland), your original Nov 10 prediction did not specifically mention DXY, you merely predicted a "big dollar rally". The DXY really doesn't give much indication of any of the BRIC economies, nor any commodity backed currencies.
(I sent a longer comment which vanished, apologies if it does pop up sometime in future, making this redundant).
cutting govt spending won't solve the bigger problem which is that globalists are orchestrating the intentional collapse of the US. Cutting spending on entitlements isn't going to change that fact or save/rally the economy.
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