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Never Mind Their Distrust Of Data And Forecasts; Austrians Can Help You Predict The Economy

Tyler Durden's picture


Submitted by F.F.Wiley of Cyniconomics blog,

[O]f all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.
From The Economist, July 16, 2009.

It’s been five years since the The Economist magazine published the critical commentary  excerpted above. In hindsight, the noted reputational damage was neither lasting nor spectacular. As of today, we’d say it’s almost non-existent.

Mainstream economists continue to dominate their profession and wield huge influence on public policies. They merely needed to close ranks after the financial crisis and wait for people to forget that their key theories and models were wholly discredited.

Meanwhile, heterodox economists who stress credit market risks and financial fragilities – the Austrians, the Minskyites – remain stuck on the fringes of the field. It doesn’t much matter that the crisis validated their thinking.

There may be no better example of mainstream economists’ Machiavellian preservation of position than in the cadre of left-wing, Keynesian bloggers led by Paul Krugman. We say “led by Krugman” because he seems to set the tone and tactics that many of his cohorts mimic. If you happen to read a blog post that attacks ideological foes through a combination of ridicule, name-calling and false narratives – such as the absurd claim that all conservatives (alternatively, all Austrians) predicted rising inflation in recent years – it was probably inspired by Krugman.

Readers of this blog know that we would welcome a genuine shake-up in the field. Wouldn’t it be nice to have a Colonel Jessup moment – when the code of silence breaks and everyone finally knows the truth?

Lt. Kaffee: “Did you order the Code Red?”
Col. Jessup: “I did the job I…”

In other words: we want the impossible. Hollywood endings only happen in Hollywood studios. The real life Jessup would have denied the Code Red, smirked through his acquittal and caught the first flight back to Gitmo. He may have even felt the need to send a message to his troops by ordering another Code Red at the first opportunity. That’s pretty much what we’ve witnessed in the economics profession.

“Mythbusting” the theories of mainstream economists

Nonetheless, we’ll continue to explain why we think a shake-up is overdue. In prior posts, we demonstrated the risks of Keynesian fiscal policies using 200 years of government budget balances and 63 high debt episodes, and by working through the implausible arithmetic in Krugman’s debt reduction formula. More recently, we argued the Austrian/Minskyite position that bank lending is riskier than lending funded by prior savings, and also discussed many economists’ ignorance of the way that bank lending works.

We’ll tie the last two points together here, by taking a closer look at what happens when credit growth disconnects from naturally occurring (not through bank money creation) or “prior” savings.

This time, though, we look further back than the inception dates of the BEA’s National Income and Product Accounts (NIPA) and the Fed’s “flow of funds.” For debt, we include older Census Bureau data recorded in the Historical Statistics of the United States. With adjustments, we can show that the Census Bureau series tracks a similar “flow of funds” series fairly closely during the overlap:


We also look at pre-NIPA savings rates, calculated from data on disposable personal income and consumption:


The earlier savings rates don’t match NIPA exactly because: 1) they’re calculated from different surveys, and 2) they ignore personal interest and transfer payments, skewing the figures higher than they should be. In any case, true savings rates were surely low during the late 1920s – when both consumer credit and durable goods purchases were in bubble mode – and quite possibly even lower than the data in the chart.

Which brings us back to our reason for looking at history – to consider what happens when savings and credit run in opposite directions.  Here’s our answer:


Although there are only two episodes combining low savings with rapid credit growth, the outcomes couldn’t be clearer.

What’s more, quarterly data available from 1952 tells a similar story. With this more complete data set, we can cleanly separate total credit growth into two components:

  1. “Risky lending” financed by bank money creation or foreigners (as discussed in “3 Underappreciated Indicators to Guide You through a Debt-Saturated Economy.”)
  2. Lending from domestic, “non-money” savings (essentially prior savings).

Here’s the chart:


Risky lending tends to peak before lending from domestic, non-money savings, and also before recessions. In other words, once risky lending maxes out, the ensuing weakness feeds into the broader economy.

Moreover, the earlier chart running from the Great Depression to the global financial crisis adds a giant exclamation point to the post-WW2 results. It seems clear that risky lending is a key driver of the business cycle, while extreme differences between lending and savings lead to fully-fledged busts.

Needless to say, our conclusions aren’t exactly mainstream when it comes to economic theory. There’s no place in mainstream models for the idea that money-creating bank lending is any different to lending from prior savings. Nor is there a place for other fundamental features of credit booms, such as the malinvestment that deepens recessions or balance sheets that are unsustainably swollen with debt. Mainstream models don’t include balance sheets, after effects of malinvestment or even the very existence of banks!

To take the most basic steps towards understanding booms and busts, you need to venture outside the mainstream. The Austrian school, in particular, stresses key differences between money creation and lending from prior savings, matching the real world results in the charts above.

About the title

If you happen to show this post to your favorite Austrian economist, we wouldn’t be surprised if you’re told it’s too empirical. The Austrian school’s distrust of empirical research is well-defended by our friend Detlev Schlichter here, and we don’t completely disagree with him. But we do believe that many ideas in economics are reasonably refuted by observing real world happenings, while others are reasonably validated (though never proven). At least that’s how we see it, as you may have guessed from our content.

Think of the show Mythbusters, where all kinds of theories, rumors, adages, movie scenes and more are tested through experiments. While the experiments are often inconclusive, they’re informative enough for the presenters to make a judgment call – is the myth “busted” or not? We take essentially the same approach. Our experiments can’t be controlled, for obvious reasons, and this is the greatest limitation to empirical research in economics. Nonetheless, it shouldn’t prevent us from gleaning whatever information we can from history, and then considering what it tells us about the accuracy of economic theory.

Even Murray Rothbard, we might add in closing, made the occasional empirical argument.

Data sources and Q&A

See “Technical Notes for ‘Never Mind Their Distrust of Data and Forecasts…’.”

More from A Few Good Men



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Wed, 07/16/2014 - 11:05 | 4962651 gdiamond22
gdiamond22's picture

Trade as a Keynesian, live as an Austrian (economically speaking that is)

Wed, 07/16/2014 - 11:17 | 4962680 Pladizow
Pladizow's picture

"While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit from such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting the case. And it will finally either convince the general public that the case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.” – Henry Hazlitt, Economics In One Lesson - Page one, 1946.

“It is often sadly remarked that the bad economist present their errors to the public better than the good economists present their truths.” - Henry Hazlitt, Economics In One Lesson, 1946.

Wed, 07/16/2014 - 12:18 | 4962903 Boris Alatovkrap
Boris Alatovkrap's picture

Often is confusion of betterment of marketplace for citizenry and how to making money in marketplace at expense of citizenry. When Boris is watch CNBC, is often observe obnoxious commentor spout "but market is up, market is up" as proof economic is improvement. Boris is not argue market is not up, is not argue piece of excrement can making money in market, but economic is not healthy. Boris is only need observe how much wealth is creating by country, and how much wealth is wasting by government, to know economic is NOT improvement!

... but what is Boris know!?

Wed, 07/16/2014 - 13:01 | 4963157 economics9698
economics9698's picture

Austrians do not control the Federal Reserve.  Can you predict the next Fed move, a $4.3 trillion move?

What is obvious to Austrians is we had a new monetary injection in November 2008.  About 5 years, give or take.

November 2008, 2009, 2010, 2011, 23012, 2013, and whalla Q1 2014 is negative 2.9 and the world is all of a sudden falling apart 7 months later.  We did not miss 2009, 2010, 2011, 2013, or 2013.  I personally told everyone that the Fed was using the false prosperity to print enough money to separate the political and economic elite from the peasant masses, and they did.  Never let a crisis go to waste.

It is not fucking rocket science.  Can the bubble continue?  Can the Fed print more?


The bubble has blown, the only question is will the Fed allow it to deflate or will inflation eat up paper gains, Germany 1923, stocks gained nominally but lost 33% in real terms.

Are we Venezuela, 1929, 1941, or do we really cut spending?

Wed, 07/16/2014 - 15:34 | 4963963 BuddyEffed
BuddyEffed's picture

This is just as good a place as any to recall these two classic music videos comparing Keynes and Hayek.  I've heard that it was a top notch production from the git go.

Keynes vs. Hayek Round One :

Keynes vs. Hayek Round Two :

Thu, 07/31/2014 - 01:04 | 5026226 MeelionDollerBogus
MeelionDollerBogus's picture

I can predict it.

  1. print
  2. print
  3. print
  4. moar printing
  5. print

That was easy.

Wed, 07/16/2014 - 11:53 | 4962793 midtowng
midtowng's picture

I used to listen to Austrian. But they completely missed the market from 2009-2013 and I was guilty of believing and passing on their opinions.

Until Austrian can admit and explain why they missed this call, then they've lost me.

Wed, 07/16/2014 - 12:12 | 4962868 booboo
booboo's picture

I don't think they missed the call, they underestimate the insanity of the MMT (Magic Money Tree or Modern Monetary Theory as they like to call it) retards or the depth of depravity that they would stoop to in order to be "proven correct". If you feel "guilty" you must therefore believe that the path they have chosen is the correct one and be willing to pay for cost of the misallocations and distortions without nary a word of complaint.

Wed, 07/16/2014 - 12:22 | 4962932 Boris Alatovkrap
Boris Alatovkrap's picture

Smart Austrian is making money on market volatility while continuing recognition of market truths and holding fast to sound economic theory. Boris can look at reality and see how to benefit and same time as seeing why thing is so.

Wed, 07/16/2014 - 12:11 | 4962869 NOTaREALmerican
NOTaREALmerican's picture

Austrians focus on what SHOULD BE way too much.   It ends up being a moralistic guide to proper economic behavior, which is useless, as most people are duplicitous assholes when it comes to money.

Wed, 07/16/2014 - 12:30 | 4962988 Boris Alatovkrap
Boris Alatovkrap's picture

Austrian is not focus or care for what SHOULD BE, but only causality. If understanding how economy is function, you are can make best decision free of ideological entrapment.

Wed, 07/16/2014 - 12:42 | 4963056 NOTaREALmerican
NOTaREALmerican's picture

That may be true of the Austrian "system" but the Austrian "priests" tend to be moralistic.   (as you'd expect of a priest).

Wed, 07/16/2014 - 13:59 | 4963485 NidStyles
NidStyles's picture

Yes, keep telling the world how other people think and behave to distract from your own inadequacies.

Wed, 07/16/2014 - 14:33 | 4963643 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is recommending of Vodka or Absinthe for distraction from inadequacy. Of course is risk also of distraction from everything important in life...

Wed, 07/16/2014 - 13:54 | 4963467 HardAssets
HardAssets's picture

@midtowng - your statement is unsound because it is too general and undefined.

What followers of the Austrian school of economics are you talking about ?  There are many people who say they adhere to that school that hold various opinions on various subjects. (Note that many people are called Austrians - who haven't actually studied the details of that school of thought in depth enough to be an economist. I've heard people make statements supportive of Austrian economics, while they didn't have an indepth knowledge of the subject.)

What specific 'their opinions' are you talking about ?

What do you mean by 'this call' ? 

One basic and foundational principle of the Austrian school is that central banks are responsible for creating asset bubbles through money printing. Central banks are the cause of the extreme business cycle.

But that doesn't mean they can predict where the Dow will be next month.

Wed, 07/16/2014 - 11:10 | 4962661 Ghordius
Ghordius's picture

 Empiricism is not a bad attitude, for itself. Medicine's greatest achievements were won through empirical methods. Yet real Austrians always warned of the folly of economic prediction, particularly when it's about timing

Wed, 07/16/2014 - 11:23 | 4962690 Augustus
Augustus's picture

Experienced economist and not so experienced economist are walking down the road. They come across a pile of horse manure lying on the asphalt.


Experienced economist: “If you eat it I’ll give you $20,000!”

Not so experienced economist runs his optimization problem and figures out he’s better off eating it so he does and collects money.

Continuing along the same road they come across another pile of horse manure.
Not so experienced economist: “Now, if YOU eat this I’ll give YOU $20,000.”

After evaluating the proposal experienced economist eats it and collects the money.

They go on. The not so experienced economist starts thinking: “Listen, we both have the same amount of money we had before, but we both ate horse manure. I don’t see us being better off.”

The experienced economist replies “Well, that’s true, but you overlooked the fact that we’ve been just involved in $40,000 of trade.


Wed, 07/16/2014 - 12:02 | 4962832 Mempo of Twilight
Mempo of Twilight's picture

The problem with GDP is that it measures everything in life except what that makes life worth living.

Wed, 07/16/2014 - 12:28 | 4962965 joego1
joego1's picture

It doesn't even measure anything very well. Monkeys a the keyboard, bannas come out when they type the correct sequence.

Wed, 07/16/2014 - 11:31 | 4962703 macroeconomist
macroeconomist's picture

Austrians can predict the economy? hahahhahahhahaha.

What a full load of bollocks...Where is the inflation? Don't try to go around the question, don't try to redefine inflation, don't come up with idiotic conspiracy theories that FED is misrepresenting the data, just answer straight:

Where is the fucking HYPERINFLATION?

Wed, 07/16/2014 - 11:32 | 4962710 Pheonyte
Pheonyte's picture

Had a walk through the grocery aisles lately?

Wed, 07/16/2014 - 11:39 | 4962722 macroeconomist
macroeconomist's picture

I am asking a very clear question, you've started dancing around it immediately. Monetary Base has tripled, FED has monetized ridiculuous amounts of government debt:



Not 2,3,5 or 10% inflation. I've lived through 70-80% annual inflation elsewhere in the world, I know how inflation looks like.

Where is the hyperinflation?

One must be proper faceless to claim that Austrians can predict the economy after what they've been calling for over 5 years has turned out to be utter nonsense.

Just look at those comments below mine. Still the same song "But Keynesian, Krugman, Socialism, bla bla bla bla."


Wed, 07/16/2014 - 11:47 | 4962745 NOTaREALmerican
NOTaREALmerican's picture

What is the stock market?

I'll take Survival of the Fittest for a bazillion, Alex...

(Actually, I agree with you that Austrian economics is as much an exersize in religion as Krugmanism)

Wed, 07/16/2014 - 16:39 | 4964205 economics9698
economics9698's picture

Microeconomist when you put 12 million people out of a job it tends to keep inflation low.

Wed, 07/16/2014 - 11:44 | 4962752 macroeconomist
macroeconomist's picture

Go on, let everyone know: The more negative votes for this post, the more inflation will go up :)

Wed, 07/16/2014 - 15:18 | 4963695 NidStyles
NidStyles's picture

Inflation all around the world as other countries do trade in USD. Your not very bright, or you're obviously politically motivated. 

Wed, 07/16/2014 - 11:44 | 4962756 tolivian
tolivian's picture

You are confusing Monetarism (Friedman) with Austrian economics. Never a good idea with a snarky attitude. Learn your economics before bringing your snark.

Wed, 07/16/2014 - 11:51 | 4962787 macroeconomist
macroeconomist's picture


perfect: I recommend you do a quick google search with the key words "zerohedge & Mises institute and hyperinflation",  and read the archives of of this blog and Mises Institute in the last 5 years.

So now you're calling your beloved friends here monetarists?

Some dignity please. Just some dignity...

Wed, 07/16/2014 - 14:43 | 4963686 NidStyles
NidStyles's picture

You realize those articles are mostly talking about actual Hyper-Inflations from history right? Economics is the study of history after all. 

Wed, 07/16/2014 - 11:44 | 4962758 headhunt
headhunt's picture

The only reason we do not have hyperinflation is because the dollar is still the safest port in the world.

Paper money is a belief system, once people no longer believe 'Hello Zimbabwe'.

Wed, 07/16/2014 - 12:11 | 4962863 economessed
economessed's picture

Headhunt nailed it.  Inflation is too much "money" chasing too few goods.  Hyperinflation is a loss of confidence in the "money" that is used to acquire goods.

When there is no natural phenomenon of scarcity in money, hyperinflation renders it worthless.  Which brings to mind that nasty fact that gold has never been the source of hyperinflationary events.

Wed, 07/16/2014 - 12:13 | 4962875 ILLILLILLI
ILLILLILLI's picture

The sole currency of fiat money systems...confidence.

Wed, 07/16/2014 - 12:33 | 4962962 macroeconomist
macroeconomist's picture

How about Japan, which has monetized debt for over 20 years and has engaged in the biggest QE ever seen in history of capitalism? How about UK? How about Eurozone that has started a huge printing spree?

Japan is this, UK is that, US dollar is safe heaven, bla bla bla.

If you have a theory of something, and you defend it so fiercely, you will not come up with excuses for every case that disproves it. That is the standard reaction of neoclassical economics to every crisis they cannot predict. I recommend Austrians do not take the same path and genuinely think where the mistake is.

Lesson: Printing money, monetizing debt DOES NOT ALWAYS LEAD to inflation. And I will stress it once again. It does not ALWAYS lead to inflation. Economics is not that easy, capitalism is much more complicated than that. I am not saying it never leads to inflation, all I am saying is you need other conditions to be satisfied as well for that theory to hold.

Wed, 07/16/2014 - 14:03 | 4963506 NidStyles
NidStyles's picture

Only to the religiously bound are explanations of circumstances excuses.

Wed, 07/16/2014 - 14:17 | 4963558 macroeconomist
macroeconomist's picture

hehhehehe. just like the Austrians, isn't it Nid? The ultimate religious cult blinded by the Randian philosophy of sociopathy. 

Keep it up, and let me know when your long awaited inflation finally comes. Rest assured, it will eventually come. If you predict something for 20 years in a row, you'll be right one day. 

Wed, 07/16/2014 - 14:41 | 4963682 NidStyles
NidStyles's picture

Look you have nothing but fallacies and insults to throw. Maybe in your circle of jerks that passes for intelligent discourse, but sorry it doesn't here. 


Your bias and Marxism is plainly obvious for all of us to see. 


PS, gas prices at the pump, up 40% in the last 6 months. Inflation is all around you and you are the sole blind person in the room. 


Wed, 07/16/2014 - 15:03 | 4963758 macroeconomist
macroeconomist's picture

Look who is talking, the king of insults!! Have a quick look at the comments below, what percentage of the comments/posts on this website are merely insults to Keynes and Marx? And you still have the face to call me a jerk? Fantastic. Everyone here knows I like Marx, I have never hidden it. So don't think you've just uncovered a secret truth.

This blog entertains me so much. I recommend it to my students all the time so that they can see the true face of Austrians and what level of  libertarianism-masked sociopathy they will be facing if they fall into this trap.

Don't worry, if Austrians appreciate what I say one day, I will doubt my personal dignity.

Wed, 07/16/2014 - 14:31 | 4963631 TheRedScourge
TheRedScourge's picture

I have a theory that if you pour water into a pool, it will eventually overflow. It is not disproven merely because the pool is large or the water flow is relatively slow, or because you're first pouring the water into a reservoir that only drains into the pool once it itself becomes full.

Wed, 07/16/2014 - 14:59 | 4963784 JailBank
JailBank's picture

For those 20 years Japan was an export nation. The US exports debt and paper that is about it.

Wed, 07/16/2014 - 11:45 | 4962759 Pheonyte
Pheonyte's picture

A can of sardines, which cost .99 back in '06, is now 1.99. That's 100% inflation. Bread, the shitty nutritionless kind that used to cost .99 a loaf, is now 2.25, so there's 125% inflation. Hyper enough for you?

Wed, 07/16/2014 - 11:48 | 4962777 macroeconomist
macroeconomist's picture

Clearly, Austrians need a lesson in maths.Excel would do the job for you.

From 2006 to 2014 --> 8 years

That is 8.5% annual inflation in sardines, and 9.5% annual inflation in bread. 


Wed, 07/16/2014 - 11:55 | 4962805 Pheonyte
Pheonyte's picture

I'm not an Austrian dickwad, I'm someone who's sick of seeing my savings being eaten up by the shithead policies you endorse. And while we're at it, how about that 8.5% and 9.5% annual inflation is a zirp regime? Run that through your excel and see what happens to savers.

Wed, 07/16/2014 - 12:00 | 4962820 macroeconomist
macroeconomist's picture

I have not said anywhere that I support QE, or lawless bank bailouts so this demagoguery will not work unfortunately...I have only asked a very simple question.

Wed, 07/16/2014 - 12:03 | 4962834 NOTaREALmerican
NOTaREALmerican's picture

Re;  Run that through your excel and see what happens to savers.

Savers wear many hats.   And, as the wisest of the wise bearded ones says:  Macroeconomics isn't a morality play.  There are winners and losers and if those with the best access to free government money win, well that's the price we pay to have an Economic model that works. 

And, for every down vote you've got to repeat the Keynesian Prayer of Perpetual Prosperity !

We must borrow more money,
To stimulate demand,
So that jobs are created,
And prosperity ensues,
Then we pay off our loans (unless we don't have enough prosperity, in which case, keep praying)

Wed, 07/16/2014 - 12:02 | 4962833 More Lint than Coin
More Lint than Coin's picture

I don't really know if you are serious, but just in case.....

Inflation is an increase in money supply, not prices...rising prices are likely, but not necessarily going to happen.  The trend would say yes, sooooo where is the inflation you asked?

Let us begin with the fed balance sheet...was 900B, now 4.3T, excess reserves were 100B, now 2.6T...assuming that money is loaned at the current reserve rate of 4%....well now that might lead to rising prices.  The real question is where will the prices rise, u figure that out and we will make some FRN's.


note the 64% increase in debt (money) in the past 10 years.


I digress, you are right...I'm wrong

Wed, 07/16/2014 - 12:10 | 4962860 macroeconomist
macroeconomist's picture

I put the disclaimer in my first post because I knew this Austrian nonsense of defining inflation as the increase in money supply would come up immediately: INFLATION IS THE INCREASE IN PRICES. PERIOD. I could not care less about your definition of inflation. 

When one does not really understand how the monetary system works and tries to learn it from Austrians, of course one will think bank lending has got something to do with the level of bank excess reserves. I recommend you read some correct economics

Wed, 07/16/2014 - 12:31 | 4962989 AMack
AMack's picture

Terrible article. How does the endogenous theory of money explain the impressive (non-bubble) economic growth periods preceding central banking? Of course, it doesn't.

Wed, 07/16/2014 - 12:38 | 4963011 macroeconomist
macroeconomist's picture

Excuse me? What an irrelevant question that one is. 

A few basics: Endogenous money is a theory that explains how the current monetary system works. It was developed to understand how fiat money systems operate. It does not recommend anything, it does not defend the presence of central banking or fiat money, it attempts to explain the world as it is now. You might not agree with it, and I will respect that, but your question is unfortunately not appropriate.

Wed, 07/16/2014 - 14:16 | 4963560 NidStyles
NidStyles's picture

The only irrelevant question is the one you posed here while ignoring reality and how value is determined.

Wed, 07/16/2014 - 13:16 | 4963243 More Lint than Coin
More Lint than Coin's picture

now money supply was stagnate before fiat, lmfao....laters


Wed, 07/16/2014 - 13:15 | 4963193 More Lint than Coin
More Lint than Coin's picture

Ok, so let us use your assumption.  Inflation is price increases, we need a's wrong, but ok.  Now for inflation rate, should we use food prices by dept of agri, CPI, PPI, GDP deflator, Shadow stats, bank lending, the stock market...which one?  All, none?  

For giggles I wrote this a couple years ago:


Please note that my definitions do not account for supply and demand (price points). I think the English language is lacking in regards to the definitions for inflation and deflation. Clarity of words would make this a much simpler process and much easier to understand. Golfers may grasp this easier since golf is also lacking in clarity. If someone slices their club face is open, unless their swing path is in to out, in which case it called a push. Personally, I think golfers should focus more on the terms push, pull, and straight, since those are the only ball flights that are perfectly accurate (a slice for example leaves a lot of latitude for interpretation).

I will stop short of calling for new words for the English language, I will leave that to people smarter than me, but clarity must be given to Economics. The following is a list of how I will refer to money supply/supply and demand combinations throughout the rest of this writing:


Inflation with Prices Rising (IPR)

Inflation with Prices Falling (IPF)

Inflation with No Change in Price (INCP)

Deflation with Prices Rising (DPR)

Deflation with Prices Falling (DPF)

Deflation with No Change in Price (DNCP)

Zero with Prices Rising (ZPR)

Zero with Prices Falling (ZPF)

Zero with No Change in Price (ZNCP)

As you can see, price level and inflation/deflation are not synonymous. Golfers have done a much better job of defining the possibilities than economists. (Push, pull, straight, slice, hook, fade, draw, duck hook, and power fade. Golfers also have a club angle to worry about, but for economist there are only 9 possible outcomes.) In economics it is inflation and deflation, in my opinion that is not very descriptive. Though I have seen the phrase “inflationary deflation” which is an attempt to give a definition to DPR, but it seems cumbersome.

Wed, 07/16/2014 - 14:39 | 4963664 TheRedScourge
TheRedScourge's picture

Two can play that game.


INFLATION IS THE INCREASE IN THE MONEY SUPPLY. PERIOD. I could not care less about your definition of inflation.


If you convince a billion people to say "noodle" instead of "gravity", it does not change how gravity works in reality. In this regard, same is true with inflation (granted, economics is by no means a hard science like physics).

Wed, 07/16/2014 - 14:33 | 4963637 TheRedScourge
TheRedScourge's picture

Remind me again what the "official" CPI was during those years?

Wed, 07/16/2014 - 12:02 | 4962837 moonman
moonman's picture

Your hyperinflation is in the price of stocks. The same place the tripling of the monetary base ended up.

Wed, 07/16/2014 - 12:25 | 4962942 AMack
AMack's picture

Anyone (austrians, keynesians, etc) who says they can use their theory to time the market is full of shit. It doesn't invalidate their theory. It means they've gone beyond the scope of the theory. Timing has to do with psychology, which is not within the scope of economic theory. But, bad economic practices can lay the groundwork for a major correction, and an economic theory can inform us about the nature of the correction, even if it can't tell us when it will happen. This is why Austrians like Schiff and Ron Paul warned that a housing bust was coming, even if they didn't know when.

With respect to the current business cycle:

The cash is sitting in excess reserves at the fed, and/or its been offset by a declining velocity of money since the financial crisis. Had these things not been true, inflation rates would have been much higher. Just look at all the historical examples of CBs monetizing debt and what that has done to inflation rates.

Eventually, the banks will begin spending the cash they've got in excess reserves or and/or the velocity of money will pick up. Unless the fed is at that time able to drain money from the system, it will result in significantly higher inflation.

The hyperinflation prediction wasn't based per se on the assumption that the money printing would cause it (unless the fed started printing much faster than it already was). It was based on the assumption that a loss of confidence in the dollar would cause the dollar to lose reserve currency status and for foreign central banks and investors to dump dollars. That has also been subverted by the fact that much of the world is also engaging in QE of some sort. Other things being equal, massive money printing in the US would be terrible for the dollar. Austrians like Schiff simply failed to take into account that other CBs would be printing at the same time.

Wed, 07/16/2014 - 14:20 | 4963544 HardAssets
HardAssets's picture

Please cite an actual Austrian economist with his prediction of hyperinflation within a certain time frame. Given that the school warns against the ability of empirical methods to predict human action, I would be curious to see your evidence on which you base your charges.


P.S. - I personally think its a bad idea to identify yourself with a line of thought. When doing this, people tend to feel the need to 'defend' that line of thinking. Its a form of tribalism (and the need to be 'right'). This interferes with being open to different and new ideas, or to question your past thinking.

Wed, 07/16/2014 - 14:42 | 4963683 TheRedScourge
TheRedScourge's picture

On the other hand, the fact that most people by default have a strong preference for truth over incorrectness says something positive about us as a whole.

Wed, 07/16/2014 - 11:51 | 4962785 Death and Gravity
Death and Gravity's picture

Agreed. Even Peter Schiff, the icon of internet Austrians, pulled his prediction of hyperinflation.

Of course, not too loudly, lest the hyperinflation horsewhippers hear...

Wed, 07/16/2014 - 14:08 | 4963526 NidStyles
NidStyles's picture

According to his last video, he did not pull it. He merely stated that predicting the timing was far more difficult than predicting what would actually occur. 

Wed, 07/16/2014 - 15:25 | 4963691 macroeconomist
macroeconomist's picture

Which is the definition of what we call "psuedo science" or what Lakatos called "degenerate reserch programme". Great confession Nid, so Austrian economics is simply identical to religious hogwash where anything goes! Keep in mind, you can never criticise a Marxist after this confession. just like hard core Marxists would tell that capitalism will collapse one day because of its contradictions, we just don't know when.

Well done!

Wed, 07/16/2014 - 13:32 | 4963345 Seize Mars
Seize Mars's picture

Do you, um,

Wed, 07/16/2014 - 14:43 | 4963613 TheRedScourge
TheRedScourge's picture

They are not predicting hyperinflation in the short term, the money supply has only been doubled or so since 2008, which is not enough to bring on hyperinflation. You are thinking in too simplistic terms. The true long-term inflation rate is the difference between the rate of money creation and the rate of cost efficiencies. Since inflation leaks into the economy slowly from the top and builds up once it reaches the bottom, the majority of it is probably not going show up for most people until about 2-3 years after the Fed starts trying (and most likely fails) to unload their balance sheet, and when those excess reserves start to come out.

Wed, 07/16/2014 - 11:32 | 4962706 Reaper
Reaper's picture

Economics is neither scientific, nor mathematical, nor capable of reliable predictions. Economics is an analysis of the past acts of man towards the possessions of other men. Man is a part of an ever evolving nature where new methods are perpetually generated. Economics analyzes the past acts of a caterpillar to project them onto the future butterfly. Most economists hawk snake oil.

Wed, 07/16/2014 - 14:35 | 4963616 HardAssets
HardAssets's picture

@ Reaper - that is one of the basic premises of the Austrian school - that the study of economics is not like that of the true physical sciences. Empirical methods are not predictive of human action. So, the methods they use are built on logic - one statement of truth connected to another statement of truth. Statements of truth, necessarily leading to truth filled conclusions - - - and moving on from there.

Wed, 07/16/2014 - 11:32 | 4962707 MilwaukeeMark
MilwaukeeMark's picture

Thing about academics like Krugman are .. They really don't create anything of lasting value. They simply peddle theories, which unlike ignition switches in Chevy Colbalts, don 't have to stand any test of real world experience or get recalled. Academics simply restate their prior utterances after the fact claiming that all along they would have been right if only people had listened.

Wed, 07/16/2014 - 11:36 | 4962720 NOTaREALmerican
NOTaREALmerican's picture

Re:  Thing about academics

Sure,  but let's have a show of hands of how many believed Greenspan when he said banks were self regulating because Ayn Rand showed that people with very expensive suits are virtuous? 

Bullshit,  it's not JUST for academics anymore. 

Wed, 07/16/2014 - 17:47 | 4964545 Augustus
Augustus's picture

Greenspan was not exactly incorect.  However he failed to understand that the large banks did not really understand their own balance sheets and certainly did not understand the balance sheets of other banks.  Of course the TBTF assurances made any thorough analysis somewhat unnecessary. 

Swap this, Swap that, Insure this, Buy insurance on that, counterparty risk not understood, government paper over rated.  All traded from offices in London, New York, Mumbai, Manila, Dubai, Naorobi.  It is just a long way from looking at a book of loans that were typical in 1960.

Wed, 07/16/2014 - 11:32 | 4962713 NOTaREALmerican
NOTaREALmerican's picture

First law of bullshit, gentlemen.

Anything + bullshit = $ ^ bullshit.

Or, as somebody famous once said:   Never underestimate the power of the bullshit.

Wed, 07/16/2014 - 13:59 | 4963484 NeoLuddite
NeoLuddite's picture

Bullshit is asymmetrical - it takes at least 10X the effort to refute it as it took to create it.

Wed, 07/16/2014 - 14:37 | 4963640 HardAssets
HardAssets's picture

I'd say the opposite is true . . . that it takes a lot less effort to refute the bullshit than it took to built up the pile. It only takes a revealed contradiction or two to refute bullshit

This is only true if your audience has the brains to understand that the bullshit has been refuted, and is willing to admit they were wrong however.  And that's the problem. (Look at all the hardcore believers in Bush and in O today.)

Wed, 07/16/2014 - 11:40 | 4962736 headhunt
headhunt's picture

More graphs and theory but nobody can figure out what the hell will happen next week.

We are using probability engines with the same predictability algos as global warming. If your prediction is based on a false premise everyone receives the same results.


Wed, 07/16/2014 - 11:44 | 4962753 kurzdump
kurzdump's picture

Economics is not a science. There is nothing complicated about it. Once you learn to think out of the box it's all common sense and you will understand that ANY kind of 'problem-solving' society is bound to fail. Complexity cant be increased forever. And economics will NEVER be about trading, it's a toolset to maintain hierarchical power structures. Economics is more like a religion.

Analyzing debt charts will not help to predict the future. Focus on (real) employment instead. The society ends when the ability (creativity) to make meaningful use of all the 'hands' has gone.

Wed, 07/16/2014 - 14:09 | 4963537 NidStyles
NidStyles's picture

Yeah, let me guess next you will say Marx is our savior.

Wed, 07/16/2014 - 14:29 | 4963621 kurzdump
kurzdump's picture

Hehe, no. It doesnt matter if the society is based on capitalism or socialism, as both of them are 'problem-solving' (solve problems resulting from complexity by increasing complexity).

Wed, 07/16/2014 - 14:47 | 4963714 HardAssets
HardAssets's picture

@kurzdump - interesting thoughts. I agree with much of them.

Where I disagree is your idea that the current system is run based on 'problem solving' and that it runs up against 'complexity' as its greatest threat. 

IMO it's really an old story. Some men choose to grab the physical wealth of other men and to rule over them. Since these men are very few in number, they must convince other men to help them in their personal objectives. This is the job of hired intellectuals - priests, lawyers, professors, and economists.

Wed, 07/16/2014 - 15:58 | 4964064 kurzdump
kurzdump's picture

Absolutely, thats the basic idea of a state. States originated from pastoral tribes subduing agricultural tribes.

Joseph Tainter wrote an interesting book about complexity. His arguments are quite convincing.

Wed, 07/16/2014 - 11:56 | 4962810 frank H
frank H's picture

My article fits well with this one: from   

Wed, 07/16/2014 - 11:58 | 4962815 novictim
novictim's picture

"Alan Greenspan made the most important statement of his career and one of the most important statements of any “free market” economist ever. When it’s significance becomes fully recognized it may have the potential to atone for some of the damage his naiveté has caused over the past two decades. It’s important for President Obama (who is said to have high respect for economists) to understand Greenspan’s error.

The Statement was to the effect that he was wrong when he didn’t favor regulation and believed the markets would automatically solve such problems because he trusted the people in control of the financial system to act in their long run self interest, and that of their shareholders. That’s why he supported unregulated free markets, which have led to the financial debacle and World economic meltdown.

What’s remarkable about this is that same erroneous belief is THE key pillar of all free market ideology. Without this, the Austrian School, and most economists collapse into rubble, just as our financial system has collapsed."




Former U.S. Federal Reserve Chairman Alan Greenspan said that the founders of the Austrian School "reached far into the future from when most of them practiced and have had a profound and, in my judgment, probably an irreversible effect on how most mainstream economists think in this country."


In older days Austrian Economists would say Governments hate the Gold Standard. Alan Greenspan, one of the more famous Austrian Gold loving Bankers, wrote in 1966: “An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions.


Wed, 07/16/2014 - 14:11 | 4963545 NidStyles
NidStyles's picture



You basically just said that our free-market system can not last and must be saved because it's not free-market enough...


You kids make this too easy.

Wed, 07/16/2014 - 15:38 | 4963978 tolivian
tolivian's picture

Sorry to make things so easy, but let me clarify. We do not now nor have we ever had a free market. Ours is a "mixed economy" with some aspects of a free market and some of a controlled market. The maze of government agencies from FTC to FDA to BATF to IRS and on and on and on are all proofs of a non-free market. The free market argument is "Get the Hell Out of Our Way," and things would improve. (I stole that saying from a think tank publication. I just can't find the thing presently.) The rising interventionism of the past 75 years has failed. Give freedom a chance. 

The argument goes that the maze of ever increasing regulations and innterventions are strangling the free market. Let's see how it operates without mindless bureaucrats making critical economic decisions - see GM, Obamacare, Citibank, B of A and all the rest. 

Wed, 07/16/2014 - 15:23 | 4963890 tolivian
tolivian's picture

The actual point is that he was wrong but not in his belief in the free market. He was wrong in never letting the free market work its wonders. From the day he donned the cloak, or whatever Fed Chairmen don, he was actively involved in trying to manage the economy. That was the very thing he had written so brilliantly against when he was a mere theoretician. Murry Rothbard in his newsletters of the time, REASON and LIBERTY magazines carried regular free market critiques of his non-free market approaches once he had the reins of power. 

Greenspan's own numbers/data driven consulting practice before ascension to the Fed throne was contrary to Austrian theory and practice. Greespan was just another person corrupted by power into believing HE could manipulate and guide the economy though he doubted that anyone else could! In power he was just another Keynesian interventionist ready to bend, fold and multilate the economy driven by his own warped vision. He never gave the very free market, that he understood intellectually to work better than any Keynesian abomination, a chance to work. 

Wed, 07/16/2014 - 17:17 | 4964399 novictim
novictim's picture

yaaahhhh, Nope.

Try again on some other topic.  We can see what Greenspan said in his own words on YouTube.

I get it that you want reality to conform to your ideology.  Sadly, spin and a-historic fairy tales you tell youself don't change the facts the rest of us recognize.

Greenspan felt the same as you and apologized for this urge.  Maybe you could contact him as a pen-pal?  

Wed, 07/16/2014 - 12:03 | 4962824 kurt
kurt's picture

Dear Von Mises Austrian Fan Club

It's too late, you already published all those ugly old guy's pictures last week. Did you think you could clean up that image with more squiggley charts and some young shots of  has been screen actors.  Everybody knows you're doomed to the the Ayn Rand Memorial Scrap Heap.

Wed, 07/16/2014 - 12:14 | 4962880 novictim
novictim's picture

Give it up, kurt.  These silly people dry-hump Ayn Rand pictures twice daily.

There is no cure for their affliction. 


Wed, 07/16/2014 - 14:13 | 4963549 NidStyles
NidStyles's picture

Only you commies think Rand is an Austrian supporter. You like having people think that so that you can continue the divide and conquer campaign in support of your government stooges. 

Wed, 07/16/2014 - 15:51 | 4963979 macroeconomist
macroeconomist's picture

Well done kurd and novictim. lmfao here. 

Btw, I am now positive Nid is either a professional troll or gets paid for this job, otherwise you really cannot be so daft.

"Walter Block discusses three subjects Rand deals with in Atlas Shrugged—antitrust regulation of business, money, and government. Her stands on all three are staunchly "Austrian." 

"As to government, Block points out that "there is ambivalence on minarchism and anarchism both within Rand and Mises."  However, "[o]n the overwhelming majority of other such issues, ranging from welfare to economic regulation to fairness and justice, they [Rand and Mises] are as alike as two peas in a pod." 

Wed, 07/16/2014 - 12:11 | 4962862 Keltner Channel Surf
Keltner Channel Surf's picture

The only Austrians I can listen to every week are the two greatest Austrians:  Mozart and Schubert.

Wed, 07/16/2014 - 12:16 | 4962887 realWhiteNight123129
realWhiteNight123129's picture

No need to be from Austrian economics school. You can be from the XIX banking school, that would work too. But Keynes is notorious for having only 1 semester of Marshall Economics at Cambridge. Clearly Marshall was not exciting economics and Keynes never read Thornton. He also ignored the work on inflation by Thomas Tooke (who had compiled centuries of commodities price statistics) and was the chair of statistics at Oxford in the XIX century. Keynes has ridiculous concept about backwardation. In short Keynes did not have enough monetary and currency principles schooling. 

Wed, 07/16/2014 - 12:36 | 4963014 novictim
novictim's picture

Strange, then, that such an "idiot" like Keynes could have turned around the entire US economy and took it from high unemployment, debt, and terrible wealth inequality to surplus and shared prosperity. And did that until your Republican Tricky Dick Nixon scuttled his philosophy!

I'm sure you will give us a 100 and one excuses for why this success had nothing to do with Keynes. *yawn*

Meanwhile, your boy Greenspan apologized for his "naivete". Don't you think it is about time you joined him and begged for our forgiveness?

Wed, 07/16/2014 - 12:39 | 4963033 NOTaREALmerican
NOTaREALmerican's picture

"Keynesian" works until the sociopaths realize how to game the system.   Which is true for ALL human systems which have repeat loops.

Wed, 07/16/2014 - 12:41 | 4963045 novictim
novictim's picture

sorta begs the question:  What was your point?

Wed, 07/16/2014 - 15:05 | 4963819 tolivian
tolivian's picture

Actually it was Tricky Dicky who said "we are all Keynsians now." This just as he was disconnecting the dollar from any connnection with gold in true Keynes fashion. The idea that Nixon was a critic of government intervention in the economy is more tha a bit absurd on its face. 

The idea that Keynesian policies ever led to sustained prosperity, reversal debt (?!?!), and reversed high unemployment rates is so absudly contrary to reality that is hard to know where to start. Let's try this: Government and Fed policy has been in the thrall lof Keynesian nonsense from LBJ. FDR was no proponent of any consistent approach. He delighted in trying new things that often proved disastrous. But when they seemed to work, he got the old PR machine rolling to give him credit. He was excited to learn of Keynes, though there is no evidence he actually read any of Keynes. He like the fact that there was an academic he could use to justify his many and varied interventions into the econmy.

The fact that most of US economic history demsontrted that the Depression would have just been another short recession barring the nitwit interventions first by Hoover and then FDR is well acceptednow. Try reading, or in your case perhaps have someone read it to you: THE FORGOTTEN MAN by Amity Schlaes. Not an economic treatis but rather a pretty good and accurate history of the time. You want more technical economics try Gene Smiley's RETHINKING THE GREAT DEPRESSION. The Great Society certainly turned ou to tbe agrand success for no one.

Nixon with wage and price controls and a maze of other idiotic Keynesian interventionist solution managed the economy right into the toilet.

Hazllitt's THE FAILURE OF THE NEW ECONOMICS is a virtual page by page destrction of of Keynes' GENERAL THEORY. It remains the single best detailed refutation of Keynesian theory. As for destruction of Keynesian claims there are about a million texts. For a readable non-specialist level text see Robert Murphy's THE POLITICALLY INCORRECT GUIDE TO THE GREAT DEPRESSION AND THE NEW DEAL. Plenty of citations in both books for books both pro and con Keynes.

Carter continued government interventionism leading to the great inflation of his time. He actually began to see the error of his interventionist way late in his term and began to cut back on costly regs primarily in transportation by the end of his disastrous term. 

Reagan has too often be viewed as a "pure capitalist." His regime actually saw rising government spending, but there were at least sporadic effots to stem the fascist tide of overgrown Keynesianism interventions.

Bush1 was a pure interventionist (remember his VooDoo economic critique of Reagan's free market brand). Bush was a Keynesian despite his occasional paens to the free market. Reagan's trimming of some of the maze of government regulations, cutting taxes and what little freeing o the economy he accomlished, led to the great recovery that was then experienced. 

But after years of Clinton, who happily for America and perhaps unhappily for him, was restrained somewhat by a Republican Congress which, at least in those days, seemed to have some idea of what it was doing.

That leads us finally to the great Bozo. His Keynesian solutions have led to the slowest recovery from a deep recession in history. In fact I would argue that there has been NO recovery except in the empty minds of statisticians. 

Income inequality, which you mention but obviously have no clue as to its cause was increased substantially in the Bush2 and then skyrocketed in the Obozo years. Starting with Bush and increased substantially with Obozo has been the rise of government bailouts to those poor bankers and other mega-industrialists with billions even going to foreign banks. Perhpas there is some unwritten rule that if you bail out some bankers you should make the effort to bail out all the bankers. AFter all who wants to see a poor, criminally prosecuted banker on the streets?

The riisng stock market - the sole economic positive that can be attributed to the current Obama police state primarily benefits the very 1% that makes for the income inequality that you apparently think is such a dire issue. 

*yawn* all you want, but when your chielf spokesman is a self-evident clown like Krugman you'll be yawning your way to a destroyed dollar. Patience my testy little vermin. Greenspan was philosophically a free market guy but once in power he acted like the most demented Keynesian around. Watch what they do, not what they say. He has no respect among Austrians or other free market economists. 

If you buy the Keynesian arguments then this is the time for you to buy buy buy as the latest Keynesian interventions wend their killing way through the economy.  Why look they've pushed the stockmarket to record highs! Buy buy buy Keynes has apparently unveiled the holy grail. After all, this time it is differentm right?

Wed, 07/16/2014 - 17:05 | 4964337 novictim
novictim's picture



Wed, 07/16/2014 - 12:18 | 4962897 orangegeek
orangegeek's picture

Krugman needs a code red

Wed, 07/16/2014 - 13:35 | 4963365 ejmoosa
ejmoosa's picture

It's always funny to watch how hard they scream "Where's the inflation?"


Here's a better question?  What's my total net worth today?  That includes all liabilities that I expected to pay for or fund going forward.


My net worth inclusive of all that debt is NOT rising.  It is falling dramatically.  There's the hiden inflation you want to dismiss.  My total lack of true purchasing power going forward.


And what have we gotten for all of that debt?




So forget all of your "where's the inflation" comments.  Look at the whole picture.  Cherry picking is for losers.


And unlike soccer where all you have to do is run out the clock, this game is not even close to being over.

Wed, 07/16/2014 - 14:15 | 4963556 NidStyles
NidStyles's picture

Exactly, and most of them will not understand it and still blame Mises for them not understanding it. 

Wed, 07/16/2014 - 17:27 | 4964449 mraptor
mraptor's picture

>> What's my total net worth today? <<  and who stole it ?

well said, who cares what is the today propaganda number for inflation ?

--- to the maxist guy : give us back the 150 000 000 dead.. caused by your state-religion.

Wed, 07/16/2014 - 14:29 | 4963580 Clueless1
Clueless1's picture

The current orthodox view of economics that is held by the academy, is little better than Lysenkoism; a distortion of a scientific discipline in order to push a political or ideological agenda.  In this particular case, it forces an ideology of centralised control and a continual growth of the apparatus of the state, for better or worse.  Put another way, the 'privelleged' position always seeks to justify itself and will always adopt a doctrine that serves its interests.


As another poster pointed out, parasites have figured out how to game the system, to everyone elses detriment.


In todays society, Marxist economics is viewed by the majority to be a joke.  Marx was smart and made some interesting observations about the world, but the narrative he was pushing tainted any redeeming qualities that could be derived from his work (also, fuck Communism, srsly).  With any luck, my decendants will be looking at the past, 50 years from now, giving backhanded compliments to the statist crackpot, Keynes, barely credulous that people were stupid enough put his ideas into action... 

Wed, 07/16/2014 - 15:02 | 4963803 JailBank
JailBank's picture

Who counts the votes? There is no inflation becuase the few people that can't have it say  there isn't inflation. However these same people forgot to tell my utility company and local grocer. It seems those bills continue to rise by the month.

Wed, 07/16/2014 - 15:56 | 4964056 OC Sure
OC Sure's picture

The hurdle that the austrians are having trouble with is their precise definition of money as taught in their modern curriculum. Mises defines it as just a "medium of exhange and nothing else." This may have been okay to say when money was represented by gold, either directly or indirectly with receipts for gold.

However, now that there is no more standard of gold to measure the receipts against what used to be paper receipts for money (the gold) are now easily counterfeited. That is to say that we no longer are in an environment of the medium of exhange being just money because money, as a medium of exchange now competes with another medium of exchange, counterfeit.

Opponents of counterfeiting are not identifying the counterfeit because they don't use the definition of money that caused the invention of money. Instead, they are saying that "bankers" are printing money but they are not printing money; they are counterfeiting.

The purpose of defining terms correctly is so that opponents of tyranny can communicate effectively among themselves and especially when discussing economic issues to ill informed fence sitters. The purpose of tyranny keeping the terms obfuscated is not to allow the ill informed to jump the fence.

By pointing out that money must represent an exchange of productive work for productive work, something for something, then it is easier for fence sitters to understand how tyranny is counterfeiting; that is, exchanging nothing for something. When they lower interest rates and the fractional reserve multipliers kick in, or by any other means that they conjure, they are not printing "money" or doing productive work but instead are stealing from productive work.

Introducing this understated link into the curriculum of the austrians and explaining it to fence sitters or the unintiated is an easy and quick tool to aid in understanding how tyranny steals from wage earners and that the counterfeiting is the primary reason of the widening gap between the richer rich and the poorer poor.

Wed, 07/16/2014 - 16:15 | 4964130 Loophole
Loophole's picture

Where is the inflation?

Being hidden by phony govt inflation figures and by the fact that we are in a severe economic downturn that is being papered over by the Fed's money printing, the downturn itself holding prices down somewhat.

Essentially, in terms of real wealth, the Fed is stealing trillions from people with money holdings and the right to receive money in the future and using it to partially prop up segments of the economy like the stock market, the housing market, the bond market, and the govt itself.

When this resource runs dry, the dollar will collapse and we will have hyperinflation, I predict.

Although there may be war first.

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