.
Professor Krugman, “Three Roads to Hard Money“:
So, a hedge fund manager, a right-wing politician, and a freshwater economist walk into a restaurant and order wine. No, this isn’t the setup for a joke — it’s a real story. We don’t actually know what they talked about, but all three have been prominent in warning that the Fed is embarked on a dangerously inflationary path. And as I have written many many times, this inflation paranoia has proved remarkably resilient, enduring despite five-plus years of utter empirical failure. Why?
What strikes me here is that we have three seemingly different stories about the roots of hard-money mania, which happen to be embodied in the persons of the three diners. One is that the wealthy hate monetary expansion because they fear that it will reduce their returns and erode their wealth, and money buys influence. One is that movement conservatism has become a closed intellectual space, within which leading political figures can and do imagine that the truth about economics can be found in Atlas Shrugged. And one stresses the internal evolution (or devolution) of the economics profession, in which the rise of rational expectations led to a great forgetting of even the most basic macroeconomic concepts….
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” — Adam Smith
***********
Apart from that, Mrs. Lincoln, what’s on the agenda today?
Poopyman
Taking five cats in for their checkups and shots, and it’s too damned hot to armor up. Hopefully not too much blood (mine) will be spilled.
Botsplainer
Nice piece.
raven
Today marks 45 years since I came home. If you had asked me then if I’d still be kickin I’d have said “hell no’!
raven
Also, too Ho Chi Minh died.
OzarkHillbilly
@raven: Congrats, hope coming home was worth the trouble. ;-)
@Botsplainer: Krugman is an American treasure, if only because he drives the right frothing mad.
tybee
WTF is
?
raven
@OzarkHillbilly: “Ah, what trouble. . .” Jeremiah to Bear Claw.
raven
Joe supporting Obama while wearing a pink warmup. Damn.
raven
@tybee: brackish
OzarkHillbilly
@raven: Kin you skin griz, pilgrim?
Botsplainer
BTW – I turned off my cloud share on photos. There was some vague threat of “deletion” that caused me to avoid doing it before. I just gritted my teeth, and all that happened was that some duplicate album disappeared.
tybee
@raven:
estuarine?
raven
@OzarkHillbilly:
He was a young man and ghosty stories about the tall hills didn’t scare him none. He was looking for a Hawken gun, .50 caliber or better. He settled for a .30, but damn, it was a genuine Hawken, and you couldn’t go no better. Bought him a good horse, and traps, and other truck that went with being a mountain man, and said good-bye to whatever life was down there below.
raven
@tybee: New word for me!
MattF
@tybee: There’s a distinction in the economics profession between ‘freshwater’– i.e., from economics departments away from either coast, like Chicago) and ‘saltwater’– from economics departments on the coasts, like Berkelely or Princeton. In caricature, freshwater economists are descendants of Milton Friedman and are right-wing ‘rational expectation’ ideologues, and saltwater economists are like Paul Krugman.
Gene108
@tybee:
http://en.m.wikipedia.org/wiki/Saltwater_and_freshwater_economics
raven
@MattF: And a new phrase as well! thx
JPL
@MattF: Thanks!
Alex S.
@tybee:
There are two schools of economists, those at the coast and those at the lakes (Chicago). Those at the coast write from right to left, wear green skirts and use the hexadecimal system. Those at the lakes eat kangaroo meat on Thanksgiving, collect the model trains of their foes and enjoy long walks on the beach.
Poopyman
@MattF: Thank you. A little too inside baseball to pick that up on my own.
OzarkHillbilly
@raven: I, Hatchet Jack, being of sound mind and broke legs, do leaveth my rifle to the next thing who finds it, Lord hope he be a white man. It is a good rifle, and kilt the bear that kilt me. Anyway, I am dead. Sincerely, Hatchet Jack.
Baud
@raven:
Welcome back! Happy you could make it.
raven
@OzarkHillbilly: Have you ever watched it with the commentary? The original DVD and whatever they showed on TV was an awful print but the Bluray is great. Pollack, Redford and Milius do the voice over and it is really a great addition. If you saw Big Wednesday the scene where they are drunk in the graveyard was filmed on Jeremiah’s grave in the LA Vets Cemetery. Shortly after they dug him up and buried him in Montana.
raven
@Baud: thx
Baud
And ISIS is streaming across the Mexican border. The rich love being afraid as much as the plebes.
BillinGlendaleCA
@MattF: There are “Chicago Schools” on the west coast. I’m a graduate of two of them(UCLA and Washington). When I was a grad student, I took a course in International Trade; one of the readings was authored by a young economist working in the Reagan Administration named Paul Krugman.
OzarkHillbilly
@raven: No, I find commentaries terribly distracting from the movies.
Botsplainer
I clicked through the links. Asness seems like such a charming fellow.
Normally, I disdain capital punishment for economic malefactors, but in his case could make an exception.
JPL
Since it’s an open thread, I’ve already canceled my debit card because of the possible breach at home depot.
I’ll order a new credit card tomorrow.
When will the freshwater economists support regulation to improve credit safety?
Schlemizel
The question I wish one of those clowns would answer is simply this: 75% of the US GDP is consumer spending and consumer income is flat or slightly decreasing where is this inflationary pressure coming from?
If income is limited then even small price increases will cause a decrease in sales, what magic is applying any upward pressure on prices?
Baud
@BillinGlendaleCA:
The Chicago school at one time probably made some contributions to the field. Like much of conservatism (and, to be fair, a lot of groups), they became stale when fealty to the model became more important than the underlying reality those models are supposed to represent.
Schlemizel
@raven:
Worst bender I ever went on was a welcome home for my best friend in high school. We stayed blind drunk for 3 straight days. I remember snippets of places, his girlfriend coming & picking us up when the bars closed and dropping us off at my apartment where we drank some more. I think he talked a lot about is time in country but all I remember is him showing me pictures he had taken, mostly jungle & rice paddy. Later he told me he was glad I listened to him but the sad fact was I don’t think I did. I was sick for a week once I sobered up.
Schlemizel
@Botsplainer:
I disagree with you. Economists, like soothsayers of old, should be dashed against the rocks if too many of their predictions turned out to be incorrect. It would work wonders for the profession and society at large.
BillinGlendaleCA
@Baud: I tend to agree with your assessment. Mind you, I was in grad school 30 years ago.
Botsplainer
@Schlemizel:
For a shitheel like Asness, any notion of even discussing inequality or ensuring security presents an astroglide slope toward slowing the aggregation of numbers in his ledger and thereby depriving him of his ability to measure his dick alongside all the other sociopaths.
I blame Bill Ayers and the Weathermen for selling out and failing to expand their movement to the extent necessary for guys like Asness to have legitimate fear of loud and messy public assassinations. His forehead is the perfect dimension for a bullet.
Raven
@Schlemizel: I bought 100 hits of organic mesc in SF and went to college!
BillinGlendaleCA
@Schlemizel: “Chicago Schools” tend to look more, in this case it seem exclusively, at monetary policy. What they’re failing to see, is that fiscal policy for the last 5 years has been drastically deflationary.
Botsplainer
@Baud:
My recollection was that in the before-time (before it became evil), the Chicago school was all about cost-benefit analysis, and applying that to all policy. It was a rational goal, even if applied sociopathically.
I haven’t decided if what happened to it was an inevitable result or designed, but it is a malignancy.
Bill E Pilgrim
@OzarkHillbilly: Say what?
Great movie.
Re back on topic, I also liked this short but brutal opinion piece in the NYT about Eric Kantor getting a cushy job on Wall Street weeks after he resigned, with no finance experience but was hired to use his connections and “open doors” as the hiring firm put it. In other words:
BillinGlendaleCA
@Botsplainer: In the beginning it was more about monetary policy as a means to control inflation; think stagflation from the 70’s. The stuff you referred to came about later along with rational expectations. I got some of that stuff in grad school.
ETA: Most of the reading about rational expectations was by Robert Barro( you might have heard of his son Josh).
Baud
@Botsplainer:
I don’t think they were limited to cost-benefit analysis. In a number of areas, I would say their main goal was to bring more rationality to governmental decisionmaking in regulation, monetary policy, antitrust policy, etc., at a time (1970s) when a lot of people felt that policymakers didn’t really know how to handle modern economic problems. I think the Chicago School was partly successful in that effort. However, like a lot of conservatives, they’re stuck in a 1970s mentality,
Bill E Pilgrim
@OzarkHillbilly:
I always watch them in a completely different run through, and I think I’ve only done it on movies I’ve seen a number of times, since those would be the only ones I’m interested enough to hear insider commentaries about. In other words not trying to watch the movie and listen at the same time, the commentary is the focus on that run through. I find a lot of them fascinating.
Too much self-congratulation sometimes, that would be my complaint. “This part was brilliant” “I loved this scene”, and this by the person who directed it. It’s a Hollywood trait, hard to imagine someone showing you, I don’t know, a painting, and saying “I love this part” and “Isn’t it great how this part over here looks?”. When they don’t do that and talk shop it can be great though.
RSA
I never get tired of that Krugman poster.
On my agenda is a visit to the doctor to get a physical this morning. I’ve lost maybe 10 pounds this past year, mostly around my middle, and I exercise and feel pretty healthy, but just to be safe.
Botsplainer
Here’s another thing that scorches my ass – Asness was deep in the implementation of and market policies toward the instruments which lost value, yet he still has a voice. Had he been heeded regarding the Chrysler bondholders, not only would Chrysler be gone, the domestic parts chain would go and taken out the others as well. At that point, you’d be looking at millions added to unemployment, the economy gutted across all sectors and entire cities becoming ghost towns.
We’d be living in a dystopian São Paulo, where you have some hyperwealthy folks living in towers and behind walls, having their asses wiped by servile retainers, while everybody else ekes an existence from the dirt.
Bill E Pilgrim
@BillinGlendaleCA:
Krugman has had a series of blog posts just the past couple of days trying to puzzle out why Freshwater economists and conservatives in general are so obsessed with stagflation and the 70s to this day, framing everything in reaction to that, living in abject terror of it, etc. Refers to it as “Septaphobia” in fact, a term Kevin Drum coined.
http://krugman.blogs.nytimes.com/2014/09/01/inflation-septaphobia-and-the-shock-doctrine/
http://krugman.blogs.nytimes.com/2014/09/02/class-interests-and-monetary-policy-take-ii/
http://krugman.blogs.nytimes.com/2014/09/02/three-roads-to-hard-money/
Bill E Pilgrim
(My comment went into moderation so here it is without the links – it’s Krugman’s blog at the NYT, easy to find)
@BillinGlendaleCA:
Krugman has had a series of blog posts just the past couple of days trying to puzzle out why Freshwater economists and conservatives in general are so obsessed with stagflation and the 70s to this day, framing everything in reaction to that, living in abject terror of it, etc. Refers to it as “Septaphobia” in fact, a term Kevin Drum coined.
SFAW
OT (but can you be OT in an OT?), but: apparently Charles C. Johnson is suing “The Department of Protecting Darkies What Got Shot Because They’s Criminals” or some such to have Michael Brown’s juvenile records (if they exist) released. Of course, the Charter (Fox junior) feed says “Teh Media” are suing, because Johnson runs “GotNews.com,” which they are characterizing as news media.
Is it inappropriate to ruminate on the idea of Johnson going to a range in AZ, and giving a nine-year-old (white) girl an Uzi on full auto (or whatever the correct term is)? [Because giving it to a black boy or girl would be aiding and abetting the New Black Panthers, of course.] The guy is a fucking weasel. The only question is: is he worse than O’Queefe?
danielx
At least the asshole hedge fund guy had some kind of rational basis for his dislike of expansionary monetary policy – to wit, the increased risk of lower returns and hence less of what he already had more of than he’d ever need. With the other other two, the zombie-eyed granny-starver and the U of C economist, it’s more a matter of faith* as opposed to rational thought.
*As with so much of what passes for thought and philosophy in wingnut circles, economic and otherwise.
OzarkHillbilly
@Bill E Pilgrim: If, like with JJ, I am watching a movie for the 17th time, it’s because I enjoy the movie. Really great films don’t need any help, and the films that need the help aren’t worth watching a 2nd time.
That’s just me. I am sure there is stuff I am missing, but I don’t know it so I don’t miss it. Ignorance is bliss and all that.
raven
@OzarkHillbilly: Well, when you have seen a film 100 times it doesn’t really hurt to learn about how it was made.
Bruce K
Some days I don’t know whether or not to be fatally embarrassed that my great-uncle Frank was involved with the original Chicago School that gave birth to the current Chicago School. (I was one year old when he died in ’72; sometimes I wonder what his opinion of the current state of economics would have been.)
raven
The 8 year old daughter of a friend had a dream that there were Bohdi’s doing the same thing so I made a movie.
Iowa Old Lady
@Bill E Pilgrim: I learned a lot from the writers’ and director’s commentary on LOTR because they talked a lot about how, in the service of story telling, they shaped some things differently from the books. I could see the contrast and see what they were talking about.
raven
@Bill E Pilgrim: The commentary on The Last Picture Show was great.
Botsplainer
@danielx:
An interesting question – over 80 years ago Roosevelt’s advisors crafted economic plans that leveraged scale and public assets. Who/what school formed their thoughts considering that they’d have come of age toward the end of the gilded age?
Schlemizel
@Raven:
Must have been a good year, maybe not for grades, but hell, nobody pays attention to those a couple years after school anyway.
raven
@Schlemizel: 3 f’s and a d. Flunked out immediately. I had no business in a Big 10 university 10 days after I came home but I did graduate 9 years later.
Schlemizel
@raven:
Listened to Peter Bagdonovich do the commentary for Citizen Kane – it was dreadful & he told stories contradicted by many others, even by Baggy himself in other media. OTOH, Mel Brooks doing Blazing Saddles was a hoot & educational. Smith on Dogma was an eye opener as he talked a lot about the death threats & protests over the movie.
There are not many movies I wast 2 hours for commentaries, it is interesting to see how different people handle them.
Schlemizel
@raven:
Thats not bad! We have friends whos kids did much worse & without combat duty or mescaline!
My buddy got discharged about 6-8 months later & lived on his savings for at least a year before he did anything. I don’t know that I ever saw him sober/straight in that time. There are days I was grateful for my spina bifida.
raven
@Schlemizel: Ya pays your money ya takes your chances I guess. I wonder if there is somewhere reviews commentary on movies?
eta Google is MY friend!
[ratethatcommentary.com]
raven
@Schlemizel: This is the 1st review on that site:
This is really an excellent commentary. There are plenty of behind-scenes stories. It also talks a lot about style (scenes shot in deep focus and why, the use of long takes and why, the reasons for using Addie’s point of view so often and for using black-and-white photography) and is always interesting in doing so. Why don’t more filmmakers ever talk about the way they film this or that scene–where the camera is put and why? Bogdanovich does, casually but insightfully. His comment about the scene when Addie discovers in the car the newspaper obit, a box of Bibles, and a print kit while Mose at the same time is conning a lady at her front door into buying a Bible her recently deceased husband supposedly ordered for her explains that in the script the information was presented as two different scenes–the discovery by Addie and Mose’s con. Bogdanovich combined them so that two things would be happening simultaneously in one scene. It enriches the thought. It shows the audience a “2” and then another “2,” but lets them add it up. Nice.
OzarkHillbilly
@raven: Like I said, it’s just me. I can understand why somebody would want to listen with out ever wanting to listen myself.
WaterGirl
@raven: The reaper’s loss is our gain! What a great life you made, Raven.
Ruckus
@JPL:
What possible breach? Obviously haven’t heard about this one. But my card was used at an ATM 3000 miles away for $49.95 and I shopped at HD in the last 3 weeks. Canceled, disputed the charge and am waiting for the reissue.
Of course $49.95 is under the $50 that normally raises flags at credit/debt/banks. They have your info, address, card #, so there are no big flags as being fraudulent. $49.95 from a few hundred thousand people does start to add up.
Fred
@Botsplainer: “We’d be living in a dystopian São Paulo, where you have some hyperwealthy folks living in towers and behind walls, having their asses wiped by servile retainers, while everybody else ekes an existence from the dirt.”
Yeah, that’s the idea. What’s the point of being obscenely rich if everybody else isn’t destitute? Just takes all the fun out of it.
Linda Featheringill
Speaking from a Marxist point of view, I’d say that the Fed and some other government agencies are behaving in inflationary ways and have been for quite some time. However, inflation has not occurred to a significant extent. This means that the deflationary forces are so strong they would rule the day without the inflationary band-aids applied by the government.
And I don’t want that because those who would suffer the most are the members of the working class.
patrick II
The essential difference between the freshwater and saltwater schools is the idea that the free market is part of the natural order, and that the market will return to equilibrium if only it is not disturbed by outside forces. And when in equilibrium, the free market is vibrant and justly distributes goods. Saltwater economists, the inheritors of Keynes, believe that what we call the free market evolves, exists only in the context of laws and institutions, and needs adjustments by something outside of the market itself (government) to both distribute justly and to moderate market cycles (and thus movement into depression or the overly optimistic upcycle that precedes them).
The “natural order” boys hate market interference and thus big government — and thus give an “intellectual” challenge to a government that interferes with such things as 45,000 people a year dieing from lack of more profitable free market medical insurance, or the natural order of wages below a minimum amount, or the ownership of slaves if one can afford them.
ThresherK
@Poopyman: Five at once! How many carriers are they going in? And how many of them are littermates?
My one experience with two cats (who weren’t best buddies at home), in two separate carriers, led to me ending up at my own doctors’ office.
JoyfulA
@Bill E Pilgrim: Doesn’t Mrs. Kantor work for a Wall Street bank?
Lurking Canadian
@Schlemizel: This baffles me, too. In the 70s, people spoke of something called a “wage-price spiral”. In those days, if prices went up, you got a raise, so you were able to afford the new prices, but that meant your employer had to raise its prices still further, so prices went up, so you got a raise, so…
But that was the 70s. People don’t get raises anymore. Minimum wage isn’t indexed to inflation. Most people’s income isn’t indexed to inflation. Unions have very little power. So there’s no price-wage spiral anymore. Oh, prices went up? Fuck you, you should have gone to business school.
The monetarists are convinced that if we could just make interest rates low enough (Yglesias has a plan to make interest rates negative), people with money would start spending it rather than lose on their investments. However, T-Bill real interest rates have been negative for years, and yet people keep buying T-Bills, instead of spending. I am the first to admit I don’t understand finance, but I think the underpants gnome has to be involved somewhere.
Bob In Portland
Hmm. Conspiracy theory, but only in the theoretical. That’s a safe position.
Another Holocene Human (now with new computer)
@Baud: It’s not at all clear that those initiatives from the 70s were actually successful or that they actually understood what the problem was in the first place.
What did deregulating the airlines accomplish, exactly? Take your time.
Another Holocene Human (now with new computer)
@Bill E Pilgrim: It’s very, very, very simple. The 70s were the only decade in the 20th century in which the rentier’s share of the economy crumbled. That terrified the rentiers and the reaction was swift and decisive.
I should have a graph for times like this as a graph really explains it all.
Working class people didn’t hate the 70s. They talk in glowing terms about how easy it was to get jobs and how much pay they were making–more than now in nominal, and that was 70s dollars. Middle class people bitch about the aesthetics (also affirmative action) and gas rationing.
If you take a more bird’s eye view of a American history, inflation or superhigh taxes always follow a big war–usually the inflation because Americans don’t care to pay the taxes. Viet Nam was on the credit card so the bill had to be paid. The “outrageous” part was that this time, the inflation wasn’t bankrupting blue collar workers, because they had unions and were demanding that their pay keep up. This was the original sin, all of the 80s reaction and Rentiers Strike Back descends from this. African American households gained wealth for the first and last time since WWII (probably the entire century, but who’s counting). Just a little coinkydink that it’s popular to say that music and clothing were never worse. Hmm.
Stag-flation is just that constellation of circumstances by which rentiers lose. Keynes wept.
Another Holocene Human (now with new computer)
@Lurking Canadian: Ah, the price-wage spiral, the nightmare of industrialists everywhere. Somehow, magically, German workers have not created a price-wage spiral in Germany despite demanding wages. Because, again, the industrialists are confusing the issue to hide the sausage. A good inflation is supposed to make the workers’ wages worth less, while convincing them theyr’e actually making more and it’s just life that went up, sort of like how the wages of the 1%, I mean “capital gains”, have been exploding over the last 20 years and real income for working families has gone down.
The cause of the 70s inflation was a war that had to be paid off and oil shocks in an economy addicted to and dependent on cheap oil. That’s it.
The tragedy from the capitalist’s point of view was that the union blue collar workers kept their heads above water, at the expense of the owners who were now not being properly “compensated” for, you know, owning things.
mack
I guess the open thread is the place to post this: This here blog seems chock full of cat people. I have a cat question. 13 years ago, we adopted two male cats, looked half siamese, and they were brothers, though one had long hair and the other did not. They were indoor/outdoor cats, and Gary lived with us for ten years, his brother Dandy lived with us for nearly twelve. The remarkable thing about these cats was their disposition. Calm, easy-going, but hell on anything that didn’t belong. Never saw a mouse or gopher. Great cats to have on the farm. They would actually walk with me to the main barn, and sit there with me all day if I was working. Later, they would return with me, just like a dog might. Also, the kids could pick them up, tuen them upside down, and they never raised a claw in anger. Best cats ever.
Come to find out they are called rag-doll cats. I’d like to have another pair of them. Anybody else familiar? Is it acceptable to contact a breeder? All of our animals are rescue animals, but we just lucked out with these cats. The idea of purchasing animals is a little repulsive…but these cats were worth a fortune if you ask me.
Yes, no?
Mnemosyne
@mack:
There are plenty of Ragdoll rescue organizations out there — you can check Petfinder.org for ones local to you. That way, you get the best of both worlds: the cat breed you want and a rescue cat.
henqiguai
@mack (#75):
Yes, yes they are; or so a friend who looked into buying a Rag Doll Cat informed me. Quite a small fortune, for those of us who have to work for a living and put kids through college.
mack
@Mnemosyne: I will definitely look into that, and thanks!
@henqiguai: Yeah, I may have to rethink it after looking at prices, and I AM putting a daughter through Vandy.
Mnemosyne
@mack:
One of my co-workers had three Ragdoll kittens show up on her doorstep, so it’s not beyond the realm of possibility that you may chance to cross paths with some again. Also, when checking local rescue places, give the “Siamese” cats a second look, especially if they seem to have more white patches or longer hair than a normal Siamese. They could be mislabeled Ragdolls.
evodevo
@tybee: One who is in the sphere of influence of the Milton Friedman bunch at the U of Chicago. As opposed to those librul economists from a “coastal” – hence saltwater – school.