Inflation, deflation, and disinflation are all in the eyes of the beholder, and all depend on the definition. Still I expect another round of deflation possibly with prices but more importantly with credit, my preferred measure of "flation".
Regardless of how one measures "flation", the hyperinflationists missed the boat by a mile.MISH'S Global Economic Trend Analysis
Lowest Core PCE in History; "Flation" Perspective
Mike "Mish" Shedlock
8 comments:
Tom, or anyone,
do you know of a really good, comprehensive and detailed analysis of the financial fraud that went on leading up to the 2007/8 crisis? (liar's loans, fraudulent derivatives, etc).
I'd start with Charles H. Ferguson, Predator Nation: Corporate Criminals, Political Corruption, and the Hijacking of America
Ferguson also made the documentary Inside Job.
Janet Tavakoli published a lot of articles too, some of which are available at her site, Tavakoli Structured Finance and edited and published as The Robber Barons. She was one of the only ones documenting this as events unfolded.
All Bill Black's work is also seminal. Most of the details are in his blogs. He describes the process in The Best Way to Rob a Bank is to Own One (2005).
Bill calls attention to "The Organization as 'Weapon' in White Collar Crime." Wheeler & Rothman (1982) and Big Money Crime. Calavita, Pontell & Tillman (1997)
Also of importance
ECONned by Yves Smith
Infectious Greed: How Deceit and Risk Corrupted the Financial Markets by Frank Partnoy
The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy
by George Cooper
The Bubble And Beyond by Michael Hudson
I also recommend All The Devils are Here by Bethany McLean and Joe Nocera. A good history of the crisis with an emphasis on the personalities involved from Angelo Mozilo to Alan Greenspan.
y - "The Big Short" by Mike Lewis is a good read also.
Since we're all Shedlockians now: Intellectual Dishonesty and Insanity on Steroids
I just finished reading The Smith/Klein/Kalecki Theory of Austerity by Paul Krugman and I believe it is the most disingenuous piece he has ever written.
Krugman comes out blazing with the statement "Noah Smith recently offered an interesting take on the real reasons austerity garners so much support from elites, no matter how badly it fails in practice."
He then cites various sources who suggest "business interests hate Keynesian economics because they fear that it might work".
While halfheartedly dissing a similar thesis in Naomi Klein’s Shock Doctrine, Krugman goes on to say the "thesis really helps explain a lot about what’s going on in Europe in particular."
Paul, Please Be Serious
The first problem I have with the article is Krugman knows damn well that no Austrian-minded economist on the planet supports what is commonly, and mistakenly (on purpose) referred to as "austerity".
Please take a look at what Austrian economists want vs. what the nannycrats in Brussels delivered.
What Austrians Want
• Lower taxes
• Less regulation
• End of Fractional Reserve Lending
• Sound money
• Smaller government
• Work rule reform
• Pension reform
• Free trade
What Brussels Delivered
• Higher income taxes
• Higher VAT
• Proposed financial transaction taxes
• More regulation
• No free trade
• Little if any work rule reform
• Little if any pension reform
• Reluctant (at best) cuts in government jobs
• Reluctant (at best) cuts in government spending
• No sound money
• No end of fractional reserve lending
• Bailouts at taxpayer expense
Krugman and others parade that mess as "austerity". It's not austerity. Rather, it's insanity on steroids, and every Austrian economist on the planet knew it would not work.
Yet, month in and month out we have to listen to the likes of Krugman saying or implying "I Told You So".
Well, la de frickin' da. I told you so too. And so did thousands of others, Keynesians and Austrians alike.
Krugman would have you believe it's austerity as implemented vs. Keynesianism. Well, it's not, and he knows it, because any thinking mind knows tax hikes in the middle of a recession is insanity.
No, Paul, we do not fear Keynesianism or Monetarism will work, because theory and practice alike say neither will work. If they did work, Japan would not be a basket case after 20 years of trying.
I have asked this simple question of Krugman for what seems like a decade "When does it stop Paul? When?"
I have asked this simple question of Krugman for what seems like a decade "When does it stop Paul? When?"
Krugman has never answered, but one can presume "never". Japan is supposed to keep on spending money it does not have on wasteful projects "until it works". The US supposedly needs to do the same.
The average 7th grader knows that paying people to dig holes and then others to fill them back up again is economic idiocy, but the average Keynesian doesn't.
With Japan leading the way, we are about to witness the results of such foolishness, but the comfort to the US is Japan will blow up first. Will that change Krugman's mind?
Hardly. And I have an ironic suggestion: Krugman does not want to try Austrian solutions out of fear they might work.
http://globaleconomicanalysis.blogspot.com/2013/05/intellectual-dishonesty-and-insanity-on
Japan is supposed to keep on spending money it does not have ... Mish Shedlock
That's the way sovereign money is created, Mish, by spending it into existence. Taxation by the monetary sovereign is how it is destroyed.
Of course the counterfeiter-in-chief, the central bank, can also create sovereign money - for the benefit of the banks.
• Sound money Mish Shedlock
Sound money is ethically created money. Government money (for the payment of government debts) MUST be inexpensive fiat or else someone is getting a free ride on the taxation authority and power of government since it is THAT which is the true backing of fiat.
Private money, for the payment of private debts ONLY, never government debts, could be common stock, store coupons, purely private credit, futures contracts and who can imagine what else? Some have even used a scarce, shiny metal mined at great expense and damage to the environment as money. Go figure!
Of course, fiat can be used for the payment of private debts too but we should take care that fiat has no unavoidable advantages over other private money forms else one of the chief purposes of private money, as a hedge against potential government money mismanagement, is subverted.
Bob, raising taxes whilst reducing government spending reduces the govt budget deficit, and thus the net income received by the private sector. This is what is referred to as 'austerity', and it is the opposite of what many 'Keynesians' advocate in a recession.
You could have a smaller government which runs a larger budget deficit by, for example, cutting taxes more than you cut spending.
"Less regulation, End of Fractional Reserve Lending, Sound money, and Free trade" don't really have much to do with 'austerity' as such.
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