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Old 09-05-2011, 06:13 AM
sugarkang sugarkang is offline
 
Join Date: Oct 2008
Location: Cali, Small-Govt Liberal
Posts: 2,186
Default Re: Booze and Money (Tim Fernholz & Megan McArdle)

Quote:
Originally Posted by FatMan View Post
Uh...how is inflation real and CPI an illusion?
Money is only as good as what it buys. Relative to gold/platinum, the dollar has been losing value. It appears the FED has been keeping us in line with CPI, but everything might have gotten cheaper with real wages rising if backed by hard assets.

Quote:
So, we should let housing prices plunge without doing anything (like, say, a helicopter drop to every taxpayer), leading to an increased real debt load (since money will be tighter because homeowners will have to spend more on debt financing), which would depress household spending further, helping to exacerbate the demand problem. Sign me up!
When houses get cheap enough, people start buying them. The entire home construction market is idle because nobody wants to take a loss on their homes. A helicopter drop is more moral hazard. I'm not saying we shouldn't do that, but what makes you Keynesians so sure?

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One can't be Hayekian and Keynesian?
No.

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Housing bubble wasn't too terrible.
The current aggregate demand problem is a direct result of the housing bubble.

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How much of that will be because of skills deterioration from the fact that we're too busy being afraid of the deficit and non-existent inflation than trying to get to full employment.
I do worry about this.
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