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Old 09-06-2011, 01:21 AM
Parallax Parallax is offline
Join Date: May 2011
Posts: 219
Default Re: Booze and Money (Tim Fernholz & Megan McArdle)

Originally Posted by sugarkang View Post
An updated CPI has been suggested, but is not used. I don't know why that would make the point moot. I think that's fairly critical when saying something like inflation hasn't moved for 30 years. Even if you don't want to track dollars to gold because gold is in a bubble, you can still measure against platinum. Inflation is real; CPI is an illusion.
What is fairly critical? Low stable inflation since Volcker tamed it was called the great moderation. People wrote thesis on this subject.

Speaking of gold if you adjust for inflation it is still below its peak in 1980. But what makes gold or platinum so special? Can't we use rice instead? Or how about canned soup? My favorite is the price of a McDonalds Hamburger, which has actually experienced a bit of deflation since 1950s. If you are arguing for the prices the citizenry has to pay these are more relevant than gold and platinum.

Krugman is relevant because he and all Keynesians have been repeating the same mantra. I'm not saying he's wrong. What I'm saying is that there are other smart people who say we ought not be so sure. I agree, however, that we have a demand problem. This could also be fixed by letting house prices plunge like they're supposed to.
Let me see how this goes:

1. Krugman says X in 2002.
2. Krugman and I both say Y in 2011.
3. You don't like X.
4. Since I agree with Krugman on Y I am also responsible for X.

Ah, I see it now! Nicely deduced.

At BBC4, those were economists at the debate. I'd like to know your reasons for dismissing Hayekians and extending credibility to Keynesians.
I have provided evidence that Hayek would favor very strong easing by the Fed right now.

I'm not so sure after the manufacture of an artificial housing bubble. That was the easing.
Again, Hayek was not talking about bubbles and housing. He supported NGDP targeting. US has been well below target for nearly 4 years, so we need more easing.

But we were talking Sumner. France has a generous welfare state and they've been at 9-12% unemployment for a quarter century. Sumner acknowledges the demand problem. After easing, what if unemployment stays high? Because I'm betting it will.
So in your opinion even with easing unemployment would stay high. Ignoring the fact that QE 2.0 lowered unemployment from 9.8% to 8.8% for a moment. I don't see what the downside of easing is then. We have 9.1% unemployment already! And it would also help exports by weakening the dollar.

Our debt is closer to 100% of GDP if counting intragovernmental holdings. Could you tell me why it's okay to ignore $4.5 trillion?
Consistency. The figures for EU countries don't contain the debt you are adding to US public debt.
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