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There Ain't No Stinkin Inflation
Paul Krugman has yet another rant out today where he argues that there
is no inflation and unless we get some soon we will all be in trouble.
Give it a read. (Link)
I made this comment:
PK, What cave are you living in? CPI-W is up at a 7% annual rate in the past six months. (215.262 - 222.954)
Just how high do you want inflation PK? You like 9% maybe? 10% would be better?
Stop blogging. Go shopping. Inflation is very real. You just refuse to see it.
A few minutes later I saw this headline:
Krugman and those who think we ought to be printing more and spending
more than we have will not be fazed by the fact that electricity prices
are rising at low double digits on an annual basis. PK and his crowd have conveniently excluded both food and energy from their calculations.
Talk about making the data fit one’s conclusions. And this (no less) from a Nobel economist. I guess I should not complain. After all, PK is just another blogger. When it comes to sandbagging on what is happening to inflation in the country the biggest liars of all are sitting at the Federal Reserve Board.
I’ve got one thing to say for the inflation naysayers and manipulators. Just one word covers it all:
Rent
This component of core CPI is about to jump higher. When it does, it’s
going to cause the core inflation to catch up with what is happening in
the broader measures of price change. Given that Bernanke is very much
stuck on his promise to respond to core inflation “a little below 2%” he will be forced to react as this happens. At a minimum, it will tie his hands on additional easing measures.
Should things unfold like this over the next nine months or so it will
be an excellent example of just how flawed our monetary policy is.
Today, monetary policy for the USA and consequently for a significant
part of the rest of the world is totally dependent on a very flawed
yardstick. Why?
Bernanke and his cohorts want desperately to develop a methodology where
policy is made by a robot. I think that is a cheap way out of their
responsibilities. A pragmatic approach is needed. Yes, some ground rules are necessary. Ones that are understood by the markets. But, there is a degree of finesse that is required as well.
Bernanke has created a trap for himself. Rent (of all things) may well trip him up. If he lives up to his word on inflation, he may just end up tightening at the very worst time.
That would be in conflict with his other promise. This “scholar” of the
depression has said again and again that he will not make the same
mistakes of 1936 when policy was tightened and that action precipitated a
second leg of the depression.
As its stands now, one promise made by Bernanke is going to be broken. It has to. Either he will fold on his pledge of containing inflation or he will nudge policy (5-7 months from today) and history will repeat itself.
I wish he would recognize that he has created this bind and do the right thing. Go back to Princeton and write a book.
The way that the Fed manages policy requires that it always looks
backward. We need a central banker that can look forward as well. We
don’t have that today.
»
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We need to print at least another $10 trillions before we see inflation ...this meager price rise ain't nothing. Gas is still so cheap ain't funny.
Bruce, keep in mind you are trying to reason with the same people who believe that the oil price inferno can be battled with the SPR garden hose....
+ fuku
What amuses me about the inflationist/deflationist drama is how the inflationist camp sees things in terms of passing centuries. Deflationists seem to have the memorial capacity of the average goldfish.
BINGO!
I have belabored this point countless times in that debate, here and elsewhere.
It is notable and significant that the deflationary flat-earthers NEVER use history to buttress their feeble and laughable arguments, because they cannot --- an examination of the historical record will clearly demonstrate that governments in the untenable fiscal position in which ours are today, under a purely fiat monetary regime in particular, have and will always end up with a debased or collapsed currency --- ALWAYS. There has never been an appreciating fiat currency --- the very suggestion is absurd and insulting to anyone with even a passing acquaintance with monetary history. The historical record is unequivocal in this matter, yet the deflationary flat-earthers plow ahead regardless, raging against common sense, history and reality itself.
Does seem to be the story over and over and over. So when is this one over
Sooooooo.... if we actually have deflation, the currency will survive, as has been historically shown? Hmmm. I think my thinking is illogical but I can't show my work as to why. Gotta be some Latin phrase to describe my logical fallacy. Probably one of those trying to prove a negative thingies.
Rocky, you are correct. I think I'm seeing your direction here. Deflation pulls money supply, higher rates follow based on demand. I like your theory! Good old ECON. 101.
Yen
Logically then, if the currency survives, what we had was deflation.
No, just not "hyperinflation". Inflation doesn't always self-correct, and sometimes goes into terminal hyperinflation, at which point you get rampant devaluation/replacement of the currency. The 1970's were inflationary, but not hyperinflationary, at least in the US.
I don't think that you are not actually not fully not incorrect. Or something.
My brain hurts.
In a contracting econ, a little inflation is a good thing.
Higher rents may put a floor under housing as specs buy the homes to rent.
Krugman is batting about ten to one versus the Austrians.
So in other words, just a little theft from savers and pensioners, not to mention from the rest of us via a commensurate hit on our standards of living, is a "good thing", eh?
Fuck you and the Keynesian jackass you rode in on.
(Was his name Leo, perchance?)
oldman,
I agree, have a friend that has bought 3 locally(in the last 120 days) just for rentals.
No, Bruce, what we REALLY need is an end to the whole corrupt, parasitical and evil system of central banking itself, along with the dangerous and woefully naive and ignorant belief that central economic planning is desirable, or can even work. I thought the collapse of the USSR was supposed to have taught us that?
What he knows is that it's easier to play beat up the incoherent Krugman in Pretendland, than it is to get out of it himself.
Why? Because as you've noted, real solutions don't require central planning, limiting the ability of a Krugman or Krasting to influence them. They need central bankers to fill in the hole where reality would otherwise be.
Oh please. The CPI components will just be "adjusted" to change from rent to housing prices. They've done these things before, they will do tham again.
G Marx,
When and Until, the CPI figures include the two most BASIC necessities of life, all is lies.
With this I cannot disagree.
Shhh... You're getting in the way of the storyline.
No inflation-Hedonic Adjustments Bitchez!
edit: (sarcasm on)
Over six million views of this ...
Wonderfully eloquent US New York politician Jimmy McMillan, running for New York governor for the 'Rent is Too Damn High Party' ...
The most talked about candidate in NY, but the Americans with their rigged elections claim he only got some few thousands, 1% of the vote, ha! While MILLIONS love him on YouTube.
Great short governor's debate vid here, where McMillan even gets the audience to answer his question, with McMillan's own trademark slogan, the crowd chanting:
'The Rent is too Damn High'! -
http://www.youtube.com/watch?v=x4o-TeMHys0
bank guy,
This old man was on Fox News, and that was about 6mos ago, the rents here have Doubled easily over his original rants.
Esp in Texas.
The Three Stooges are funny, too, but I don't want them running for office.
Hey, I resemble that remark!
And also:
"We Dont Need No Stinking Badges!" from the classic 1948 film with Humphrey Bogart « The Treasure of the Sierra Madre »
The famous clip, 46 seconds, wherein, fittingly for this article, the man says, "We are Federales ... " (!)
And then, of course: "... Badges? ... We ain't got no badges ... We don't need no badges ... I don't have to show you any stinkin' badges!"
http://www.youtube.com/watch?v=nsdZKCh6RsU
Uh hmmm.
http://www.youtube.com/watch?v=yKtWMqW4ICM
JOHNNY 'GUITAR' WATSON AIN'T THAT A BITCH LYRICSEew, Lord have mercy, I can't get ahead, no way I try
Everything is out of pocket, somebody do somethin'
The brother's situation is abstract, listen, mm
Listen
I'm workin' 40 hours, six long days
And I'm highly embarrassed ev'rytime I get my pay
And they're workin' everybody
Lord, they're workin' poor folks to death
And when you pay your rent and your car
Note, you ain't got a damn thing left
Ain't that a bitch - yes it is
Somebody doin' somethin' slick -
It's got me wonderin', which is which
Might as well go uptown and dig a ditch
Ain't that a bitch - yes it is - now ain't that a bitch
But let me tell you about my qualifications
I program computers
I know accounting and psychology
I took a coarse in business
And I can speak a little Japanese -
Got to work two years to get one week off with pay
And when I'm on my job, I better watch every word I say
Ain't that a bitch - ha ha, boy
Somebody doin' somethin' slick - downtown
It's got me wonderin', which is which
Might as well go uptown and dig a ditch
Ain't that a bitch - it's way too cold - ain't that a bitch
Make me wanna holler
Ah Lord, Lord, Lord, have mercy to see
Won't somebody please help me to see now, Lord
I wanna play the guitar, come here guitar
Aw, somebody doin' somethin' slick
Now listen at this
Stopped at the supermarket to get myself somethin' to eat
And when I looked at the prices, it knocked me off of my feet
I was in the baloney section, and I had to take myself a close look
Now Abdul Jabar couldn't have made these prices with a sky hook
Ain't that a bitch - he he, yes it is
Somebody doin' somethin' slick -
It's got me wonderin', which is which
Might as well go uptown and dig a ditch
Ain't that a bitch - hm - so ain't that a bitch
Oh, ain't that a -------- bitch
Sure is somethin' slick goin' on, sure is somethin' slick
Sure is somethin' slick goin' on, sure is somethin' slick
Ain't that a -------- bitch
Sure is somethin' slick goin' on, sure is somethin' slick
Sure is somethin' slick goin' on, somebody sure is slick
Ain't that a -------- bitch
Sure is somethin' slick goin' on, sure is somethin' slick
Sure is somethin' slick goin' on, sure is somethin' slick
Sure is somethin' slick goin' on, sure is somethin' slick
Ain't that a -------- bitch
Sure is somethin' slick goin' on, somebody sure is slick ....
I can tell you this much...a friend of mine is in the business of financing, building and managing apartment complexes and business is VERY GOOD!
i guess you live in the northeast, robtheslob. if anyone doubts you, all they need to do is take a look at a 1 year chart of AVB because they own aprtments in the high rent northeast.
Just got off the phone with our landlord's realtor. They are sad to see us go, but happy b/c they're raising the rent. The rental market for the nicer parts of Houston is very hot. Job uncertainty is such that buying is just plain scary.
Incidently, we're going to the suburbs. Here's what we saw: Most of the McMansions are junk. Frankenstein homes slapped together with cheap parts. Or else, there are older, remodelled homes likely full of asbestos. I wouldn't want either. And it occurs to me that inflated gasoline prices could cause a lot of pain in the suburbs.
Look at the rates on 1 and 3mo bills, people.
That is all you need to know and probably the only useful information on CNBC.
Bernake says theres little to no inflation because he doesn't regard speculation in the markets as 'real' inflation. He knows damn well what measures count: Employment, wage growth.
This is a joke because the corporate dictatorship will never allow real nationwide wage growth; just like the banks wont allow interest rates to go over 6% because thats bad for wall street and encourages more passive income savers (i.e. banking liabilities) and less speculation..
It's all just clowning and profiting from bubble economics.
How to destroy any economy anytime you want!
written by Dr. Ben S. Bernanke
Hope & Change in Flash Mob, USA.
bought and paid for by the new campaign manager... goldman sachs;
http://www.nypost.com/p/news/local/bam_recruits_corzine_to_woo_back_rhuD...
Hope & Change.
Requisite:
Most of the targeted population are cabbages.
carrots
Interesting. There was an article in today's paper pointing out huge rent increases from the biggest landlord in Monroe County, NY, Farash Corporation.
http://www.democratandchronicle.com/article/20110705/NEWS01/107050315/Some-Farash-tenants-seeing-big-rent-hikes?odyssey=tab|topnews|text|Home
You can only hide the salomi for so long before it starts to poke out.
Almost Solvent
the rent increases are not a sign of CPI inflation, they are a sign of a fundamental and important change in the housing market. The same change and rental increases happened near the outset of the 1929 Great Depression
What happened then, precisely as now, was people left home ownership as prices collapsed and moved into rental accomodation. Despite the worsening economy Landlords were rushed with demand and, like any decent business, put prices up. The 'between a rock and a hard place' citizens quite naturally couldn't understand the Landlords "greed" with the economy so bad and their incomes under severe pressure
...the result was many street protests and indeed riots in the Depression over rent hikes and "Landlords Greed"
The same will no doubt happen in the coming few years