tag:blogger.com,1999:blog-582368152716771238.post5055866862089686628..comments2024-03-18T07:59:05.430-05:00Comments on The Grumpy Economist: Krugman, Delong and InflationJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger71125tag:blogger.com,1999:blog-582368152716771238.post-2048504428464199112015-01-06T23:14:55.666-06:002015-01-06T23:14:55.666-06:00Yeah, inflation has hit the US and Europe really h...Yeah, inflation has hit the US and Europe really hard.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-48938991874684188642014-09-05T20:08:19.933-05:002014-09-05T20:08:19.933-05:00To avoid deflation....
To avoid deflation....<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-8119888307517754552014-09-05T20:07:27.485-05:002014-09-05T20:07:27.485-05:00See any inflation yet????See any inflation yet????Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-80295810369375457542014-02-23T22:06:48.947-06:002014-02-23T22:06:48.947-06:00There is no hurry about paying it off, which means...There is no hurry about paying it off, which means there is no hurry about inflating it away. At 2%/yr., inflation is not a problem for anyone who doesn't keep his money under his mattress, so "inflate it away" becomes a perfectly innocuous solution. <br /><br />The arithmetic is fine. It's the pejorative, moralistic "inflate it away" argument by connotation that holds no water.Lawrence J. Kramerhttps://www.blogger.com/profile/06765377230733211459noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-12731529447737388812013-12-01T14:54:49.744-06:002013-12-01T14:54:49.744-06:00In winter I advice my toddlers to wear coats. In s...In winter I advice my toddlers to wear coats. In summer I advice them to leave their coats at home. Only someone who really, really wants to sees a contradiction.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-62493133008881381162013-06-20T15:30:17.071-05:002013-06-20T15:30:17.071-05:00The way Delong also put it was that TIPS are sayin...The way Delong also put it was that TIPS are saying and have been saying that the markets don't expect much in the way of inflation. Now, this might be a market failure, or markets working in odd ways, but if so Professor Cochrane needs to explain that.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-68858881110454028492013-06-20T15:29:03.160-05:002013-06-20T15:29:03.160-05:00Cochrane: "They made fun of Shiller when he ...Cochrane: "They made fun of Shiller when he said in 2005 that house prices looked awfully high, and they went up for a few more years. "<br /><br />Delong: "I gotta interrupt again: Who are the "they" who were making fun of Shiller when he said that house prices looked awfully high and that expected returns from housing were negative as it looked like the housing bubble would collapse over the medium term? Was one of them John Cochrane, denying that expected returns on a positive-beta asset like housing could ever be negative?"<br /><br /><br />(from: http://delong.typepad.com/sdj/2013/06/john-cochrane-what-chicago-does-know-is-scholarship-we-take-a-little-time-to-research-what-people-actually-have-to-say.html)<br /><br />The link he gives is: http://faculty.chicagobooth.edu/john.cochrane/research/papers/Bubble_Bloomberg_Cochrane.pdf<br /><br />Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-80067947710254829872013-06-20T00:13:42.060-05:002013-06-20T00:13:42.060-05:00They are not entitlements, they are earned benefit...They are not entitlements, they are earned benefits, and like Heston said about the cold dead hand thing . . . EliRabetthttps://www.blogger.com/profile/07957002964638398767noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-1051220390094138652013-06-20T00:08:10.980-05:002013-06-20T00:08:10.980-05:00The problem in 1981 was that the tax and spending ...The problem in 1981 was that the tax and spending policy of the Administration (Reagan) was pulling in the opposite direction from the Fed (Volker) while everyone else sufferedEliRabetthttps://www.blogger.com/profile/07957002964638398767noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-47665892107486624772013-06-19T13:34:30.416-05:002013-06-19T13:34:30.416-05:00What happens when software and hardware become 100...What happens when software and hardware become 100x cheaper, and a lot of the cost of medical care goes way, way down<br /><br />I imagine everyone here has had their blood pressure taken: a highly trained, $ person wraps a cuff around your arm...it has to be that that process can get 10x cheaper.<br /><br />In other words, the "entitlement" crisis is another phony republican scare tactic whoose sole purpoise is to enrich the already wealthy.<br /><br />Also, you may not realize this, but much higher taxes on the upper ~~ 0.1% will increase growth (!)<br />if you live in the real world, it is easy to see this: when marginal rates on income are >80%, the CEO, instead of distorting the entire activity of hte company to his or her personal benefit (as happens now), actually runs the company to make a product<br /><br />home builders, instead of focusing on a few small, $$, high margin homes, build better lower cost housing for the middle class, which means more money is left to said middle class for education, investment, etc etcSoccer Dadhttps://www.blogger.com/profile/10745967553131454562noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-50752591812983995732013-06-19T12:53:30.263-05:002013-06-19T12:53:30.263-05:00What John Cochrane was doing was what a blogger on...What John Cochrane was doing was what a blogger on Crooked Timber called the 'Two Step of Terrific Trivality', namely making a claim, and then when pushed, making a very trivial version of a claim. 'Risk of inflation' meaning 'a non-zero probability of slightly higher than desired inflation' is rather different than 'substantial probability of very high and very damaging and hard to control inflation'.<br /><br />Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-44026359491108913742012-08-03T08:00:41.116-05:002012-08-03T08:00:41.116-05:00@Lehman
"The chief economist of a regional b...@Lehman<br /><br />"The chief economist of a regional bank recently told me that they were holding more bank reserves than existed in the entire U.S. banking system in 2007. So where is the inflation?"<br /><br />Where is the inflation? The answer is in your own post.<br /><br />If they're holding those reserves, by definition they are not lending those reserves. If those reserves are not being lent, they cannot be spent and bid up prices, nor are they multiplying through fractional reserve.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-36257743483822299642012-07-30T16:40:06.189-05:002012-07-30T16:40:06.189-05:00Ok, right, cutting entitlements will cause "f...Ok, right, cutting entitlements will cause "far bigger deficits". The problem is indeed arithmetic.Falstaffhttps://www.blogger.com/profile/06865552505521389155noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-22378047715993579832012-07-30T00:30:28.179-05:002012-07-30T00:30:28.179-05:00the many will always have an interest in stealing ...the many will always have an interest in stealing from the few...<br /><br />often the few are the wealthy but in this case it is anyone who didn't put themselves in debt, anyone who saved for their retirements or college for their kids<br /><br />actually im on the wrong side of that debt, and i would love hyperinflation...but i know that i would be no better than an opportunist if it happened and if I ever voted for it I would be little more than a thief (and the kind that has to hide behind other thieves to do it)LALhttps://www.blogger.com/profile/08196675112184615614noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-39455235690468695442012-07-28T21:18:10.015-05:002012-07-28T21:18:10.015-05:00Comment removed for insulting language, which I mi...Comment removed for insulting language, which I missed the first time around.John H. Cochranehttps://www.blogger.com/profile/04842601651429471525noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-49068643656846109172012-07-28T17:36:33.365-05:002012-07-28T17:36:33.365-05:00In his blog Paul Krugman makes this point in respo...In his blog Paul Krugman makes this point in response to Professor Cochrane's post:<br /><br /> "For the most part, however, the economists who got it wrong [said something] . . . along the lines of 'if we have a massive increase in the monetary base and continue running trillion-dollar deficits, we’re going to see soaring inflation and interest rates'. <br /><br /> But here’s the thing: the conditions for their prediction have been met. The monetary base has more than tripled; trillion-dollar deficits have gone on for years. I suppose you could offer some explanation in terms of other factors for the failure of these events to produce the predicted results — but I don’t see the Cochranes etc. doing that.<br /><br /> The point is that it’s not a very good excuse to say that you didn’t specifically predict runaway inflation if you gave an 'if-then' story and your if came to pass without your then."Johnhttps://www.blogger.com/profile/13718398994164216979noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-90498717423417695872012-07-28T11:58:46.656-05:002012-07-28T11:58:46.656-05:00You (and Tabarrok) reveal once again your obtusene...You (and Tabarrok) reveal once again your obtuseness about Keynes and the various schools spun from him (Old, New, Minsky-Fisher, & Australian) with this "gotcha quote" from Krugman criticizing Bush in 2003 for creating a huge structural deficit with his tax cuts while engaging in two foreign wars demonstrates it. As another economist once said, when "the facts change, I change my opinion, what do you do sir?" The economy was growing in 2003 with a huge housing bubble that was about reach the fever pitch stage. We Keynesians have always argued that when economic growth is near or above trend, that is the time for Government austerity, reducing spending when it is optional, and raising taxes if you have to spend money on wars. Since it hurts your eyes to read Keynes or Krugman, perhaps you can tolerate wikepedia. http://en.wikipedia.org/wiki/Keynesian_economics<br /><br /> We now face a world wide labor/over investment surplus with a desperate hunger for safe assets and falling demand, with economic growth well below the old trend. Factually, the situations between December 2003 and August 2012 are different. See http://www.economonitor.com/danalperts2cents/2012/07/24/another-summer-of-discontent-the-four-factors-that-explain-why-what-were-doing-isnt-working/ <br /><br />And when Romney runs his far bigger deficits when 1) he cuts taxes as planned on capital gains and corporations 2) increases defense spending to 4% of GDP, 3) starts his war in the Middle East (from Syria to Iran), and 4) his cuts in entitlements and income security (unemployment compensation and the latest bete noire of the right, food stamps - nothing like starving kids to encourage the others), I some how imagine you will find a way to write article in the Wall Street Journal that the deficits don't matter or are all someone else's fault.)rickstersherpa@msn.comhttps://www.blogger.com/profile/14489905720399087036noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-78855390903003247182012-07-28T11:23:07.466-05:002012-07-28T11:23:07.466-05:00Excuse me if I amy ask, but in reading Krugman qui...Excuse me if I amy ask, but in reading Krugman quite a lot, he would then counter that people have been warning about Japan experiencing this inflation showing up for 20 years, and it hasn't materialized there, and still hasn't.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-71311799028418875642012-07-28T08:23:57.026-05:002012-07-28T08:23:57.026-05:00Fat man and LAL, which is more important to the pu...Fat man and LAL, which is more important to the public at large: more people working or the value of your savings declining?Anonymoushttps://www.blogger.com/profile/07904132869021579763noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-80060857266381674232012-07-27T17:55:52.810-05:002012-07-27T17:55:52.810-05:00Inflation is a very bad antidote to unemployment. ...Inflation is a very bad antidote to unemployment. I lived many years in Argentina, there you get 25% inflation every year. At first it was a little, then a little was not enough, because inflation can lower unemployment as long as someone is fooled. But people can not be fooled forever, so they adjust. In Argentina, wages are raised three times every year to catch up with inflation. The result: the financial system is inexistent. Forget about a mortgage, you wanna buy a house, put cash in the table (literally)<br />Cochrane has it right when he says that the issue is GROWTH. The economy needs to GROW, but some liberals hate rich people too much to see this. If the economy GROWS, you have more money to help the poor, provide health care, whatever. If the president says "I can afford to pay more taxes because its fair" capital runs for his life. No one wants to pay more taxes. It might be very romantic, but investors are scared, they see in Obama a guy who is after their wealth.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-2653567498349799382012-07-27T17:13:46.440-05:002012-07-27T17:13:46.440-05:00"At least Krugman, I don't know about DeL..."At least Krugman, I don't know about DeLong was critical of the economy that we had in the 200's and pointed it was being built on a housing bubble"<br /><br />Not so fast. Krugman *called for* a housing bubble to be created (2002) before he later blamed Greenspan for creating one (2006).<br />http://econlog.econlib.org/archives/2011/08/paul_krugmans_s.htmlFalstaffhttps://www.blogger.com/profile/06865552505521389155noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-12369659494581490992012-07-27T17:09:16.265-05:002012-07-27T17:09:16.265-05:00'Professor, Don't be so sensitive. Krugman...'Professor, Don't be so sensitive. Krugman refers to the "numbskull quality of Mulligan's argument" and you refer to the "insane idea of fiscal stimulus."'<br /><br />Cochrane made his statement verbally at a round table discussion, naming no one. Krugman makes his outrages in print in the NYT, naming individuals. Is that the same thing?<br /><br />"If you don't present a specific mechanism or timeframe for your dire predictions, why should anyone take them seriously?"<br /><br />Continue the analogy in the article. If there is insufficient information or know how to predict an earthquake, is there no benefit to knowing that one has built on a fault line? That maybe its not prudent to dismiss the dangers of building a nuclear reactor on tsunami prone seashores because we are unable to predict the "timeframe" of the next tsunami?Falstaffhttps://www.blogger.com/profile/06865552505521389155noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-34272716814313835302012-07-27T16:58:31.738-05:002012-07-27T16:58:31.738-05:00"So long as the economy grows as fast as or f..."So long as the economy grows as fast as or faster than the DEBT, the DEBT can grow indefinitely. "<br /><br />Which is an unhelpful tautology. Cochrane's possible solution a), pay off the debt via long term growth, goes to the *relevant* question of how much growth is required to maintain or turn around the debt, i.e. arithmetic. <br /><br />Visibly the current anemic growth rate is insufficient to zero the deficit, even with an across the board tax hike (to pre Bush). And, should interest rates return to historic levels the current US growth rate will be catastrophically insufficient, forcing solutions b) or c) quite quickly.Falstaffhttps://www.blogger.com/profile/06865552505521389155noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-74804606868388163662012-07-27T16:22:23.696-05:002012-07-27T16:22:23.696-05:00"I happen to dislike inflation. Krugman and D..."I happen to dislike inflation. Krugman and DeLong are all for it." What do you think is an appropriate level of inflation 0%? 1%? 2%?<br />i don't think Krugman and DeLong are arguig for hyperinflation. I don't think they even arguig for 10% inflation. Just a little higher inflation than we currently have<br />Wouldn't you agree that the optimal rate of inflation depends on the particualr situation the economy is going through?? do you think it should always be 2%<br />and what if a bit higher inflation could alleviate the unemployment rate??JCEhttps://www.blogger.com/profile/09270393535746081359noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-14853514856283523892012-07-27T15:44:57.813-05:002012-07-27T15:44:57.813-05:00"All I am saying is, there are icebergs out t..."All I am saying is, there are icebergs out there in the middle of the night"<br /><br />The real tradeoff right now is between a broken engine (high unemployment) and a potential iceberg (which may or may not exist). The sensible risk policy would be to fix the broken engine first and keep vigil for icebergs. Maybe you should do a post on addressing the short term instead of just pontification about potential long term issues. Or a post that puts everything in context.Anonymousnoreply@blogger.com