More from Krugman

[B-Man]

Since I admittedly, do not know a lot regarding the many economic theories that you gentlemen go on about, I always like to look up whose opinion I am reading.

 

Here is what comes up when you google the author that declares Krugman "the winner"

 

 

 

 

 

New York and Washington, DC, Apr. 28, 2003 -- The Securities and Exchange Commission, NASD and the New York Stock Exchange — following a coordinated investigation of allegations of undue influence of investment banking interests on research analysts at brokerage firms — today announced that Henry Blodget, a former managing director at Merrill Lynch, Pierce, Fenner & Smith, Incorporated and the senior research analyst and group head for the Internet sector at the firm, will be censured and permanently barred from the securities industry, and will make a total payment of $4 million to settle the charges against him.

 

http://www.sec.gov/news/press/2003-56.htm

 

 

Now, of course, this doesn't mean that Mr Blodget isn't an economic authority, but

 

it does mean that I do not need to trust him or cede any "final judgement" to him......lol

 

 

.

[meazza]

GS Elevator Gossip ‏@GSElevator26m

Krugman orders a pizza. Guy asks if he wants it cut into 6 or 8 slices. Krugman says, '8 please. I'm very hungry today.'

[3rdnlng]

 

GS Elevator Gossip ‏@GSElevator26m

Krugman orders a pizza. Guy asks if he wants it cut into 6 or 8 slices. Krugman says, '8 please. I'm very hungry today.'

 

 

My mouthful of vodka just barely missed the keyboard with that one!

[/dev/null]

In other news the Fed will hold to it's policy of QE4ever

http://www.cnbc.com/id/100695681

 

All Glory to The BenBernanke

Forward!

[meazza]

In other news the Fed will hold to it's policy of QE4ever

http://www.cnbc.com/id/100695681

 

All Glory to The BenBernanke

Forward!

 

http://http://www.project-syndicate.org/commentary/the-federal-reserve-s-policy-dilemma-by-nouriel-roubini

[/dev/null]

http://www.project-s...nouriel-roubini

 

If I may borrow a phrase from Thomas Jefferson...

The Fed has the wolf by the ear

[DC Tom]

In other news the Fed will hold to it's policy of QE4ever

http://www.cnbc.com/id/100695681

 

All Glory to The BenBernanke

Forward!

 

I've got to find a way to quantitatively ease my own finances.

[TakeYouToTasker]

I've got to find a way to quantitatively ease my own finances.

It's called "counterfeiting".

[TPS]

It's called "counterfeiting".

It's been a relatively ineffective policy, but it hasn't led to what you inflationistas predicited...

[TakeYouToTasker]

It's been a relatively ineffective policy, but it hasn't led to what you inflationistas predicited...

First of all, it has to a degree, and Magox and myself have absolutely blugeoned you with evidence of this despite your empty protestations.

 

Secondly, what business do you have limiting anyone else's predictions to your own narrow timeline?

[/dev/null]

 

GS Elevator Gossip ‏@GSElevator26m

Krugman orders a pizza. Guy asks if he wants it cut into 6 or 8 slices. Krugman says, '8 please. I'm very hungry today.'

 

 

I forwarded that joke around work today and got a few laughs

Thanks

[DC Tom]

 

GS Elevator Gossip ‏@GSElevator26m

Krugman orders a pizza. Guy asks if he wants it cut into 6 or 8 slices. Krugman says, '8 please. I'm very hungry today.'

 

 

When I worked in a pizzeria, I actually had people ask me "Can you cut that in to eight slices? I don't think I'm hungry enough to eat twelve."

 

So I find it less funny than I do sad...

[TPS]

First of all, it has to a degree, and Magox and myself have absolutely blugeoned you with evidence of this despite your empty protestations.

 

Secondly, what business do you have limiting anyone else's predictions to your own narrow timeline?

Yes, very good theory; it will happen eventually....

[3rdnlng]

Yes, very good theory; it will happen eventually....

 

Do you think that its ineffectiveness may have delayed or mitigated its inflationary nature?

[JuanGuzman]

Do you think that its ineffectiveness may have delayed or mitigated its inflationary nature?

 

Research from the federal reserve has shown QE has pushed down long term bond yields which helps supports investment. Its not earth shattering but the reality is its a net positive to stimulate economic activity, we need more of this unconventional monetary policy when you hit the zero lower bound. It still remains to be seen what will happen when QE is unwound but those predicting massive inflation when QE was first introduced have a lot of egg on their face.

[TPS]

Do you think that its ineffectiveness may have delayed or mitigated its inflationary nature?

No. Monetary Policy is simply not effective in a severe balance sheet recession.

[TakeYouToTasker]

Research from the federal reserve has shown QE has pushed down long term bond yields which helps supports investment. Its not earth shattering but the reality is its a net positive to stimulate economic activity, we need more of this unconventional monetary policy when you hit the zero lower bound. It still remains to be seen what will happen when QE is unwound but those predicting massive inflation when QE was first introduced have a lot of egg on their face.

So is investment for investment sake a good thing? Or does investment need to be sound, and accompanied by good timing to be a positive?

 

Spending is simply king? It doesn't matter what you buy? Or if you buy it at a beneficial time?

[TPS]

No. Monetary Policy is simply not effective in a severe balance sheet recession.

I wanted to give you a better explanation 3rd.

Inflation, as measured by rising consumer prices, has several sources:

1. Too much financed demand relative to the ability to produce goods.

2. Supply shocks (like oil prices) that raise the cost of production.

3. A depreciation of the $ exchange rate can increase the price of imports.

 

3. Since we import about 20% of our goods, then a depreciation of the $ will tend to raise the price of imports, which also means domestic competitors can raise their prices a bit.

2. I've argued that short run commodity prices are now heavily influenced by financial "bets." That means price spikes caused by those bets can filter into the core CPI by raising input costs. The impact from QE2 is a perfect example of this influence. However, since financial bets can't influence the underlying demand, it's a temporary influence; investors can't influence longer run prices.

1. This is the key driver of inflation--increased demand for goods and services relative to our ability to produce them. As I've constantly argued, inflationary pressures will remain subdued as long as we have high unemployment and low capital capacity utilization rates.

 

What the Fed has done:

1. Bought several trillion dollars in bad assets from Wall Street banks, which increases "excess reserves" held by the Fed--these are electronic credits on the Fed's balance sheet. They represent potential loan power of banks. These have no impact on inflation; bank loans for spending on goods and services does. The level of reserves has almost ZERO influence on bank lending.

 

2. Bought several trillions of dollars of mortgage assets and treasuries from banks, HFs, and other investors. These are investment funds, so the key question is what those investors will do with the cash? They buy more assets, but which ones? They've "invested" in commodities (especially precious metals), they've taken advantage of the "carry trade" investing in foreign assets (causing the $ to decline); and they buy stocks, because there are very few opportunities for double-digit returns. Much of the activity here was based on "expectations" that the Fed's actions would cause inflation, so the actions of investors can bring about what they expect, but only temporary if the underlying demand is not there.

 

3. All of the Fed's actions have kept interest rates at historic lows. This is the traditional channel for how monetary policy is supposed to stimulate the economy, but not in a severe balance sheet recession when consumers and firms are focused on paying down debt.

 

Conclusion: the Fed's ineffectiveness has to do with the fact that monetary policy doesn't directly impact aggregate demand, so it's main tool--low interest rates--has not been effective.

 

Balance sheet recessions take longer to recover from. My recent prediction of recovery was based on (for one) the fact that consumers have started borrowing again, which is one of the key economic drivers, but this has recently been tempered by the impact of the payroll tax and sequestration spending cuts. However, it appears to me that the underlying momentum is still there.

 

Conclusion2:

Dopes like Tasker have to fudge numbers (of commodity indices) to support their religious economic belief that the Fed's "money printing" has indeed caused inflation. Commodity prices experienced a bubble in 2008 and the recession caused a dramatic collapse in those prices (from a value of 220 in July 08 to 98 in Feb 09). Of course they recovered somewhat from the bottom as the economy stabilized. In my view, the Fed's QE2 caused commodities to rise from nov2010 to May2011, but it was driven by investor bets. His view can't explain why commodity prices are lower today than they were over two years ago DESPITE the ongoing QE3 to infinity. All he can say is don't put him into a "narrow timeline." Rather than admit his worldview from his hilltop is wrong, he has to stubbornly hold to it and say "eventually." And eventually he will be right, but not because of his failed theory.

 

Inflationary pressures will emerge as the economy picks up steam over the next couple years and the Fed's only defense is to raise interest rates in order to reduce the demand for loans. I look forward to that day so he (and Magox) can tell me "I told you so."

[....lybob]

So is investment for investment sake a good thing? Or does investment need to be sound, and accompanied by good timing to be a positive?

 

Spending is simply king? It doesn't matter what you buy? Or if you buy it at a beneficial time?

Tasker your problem is the same one that I had 7-8 years ago - believing that free markets exist, when you realize trades are not making prices but that prices are being set and trades are made to reach that price you'll find things make more sense , the market manipulation isn't by secret cabal it's right out in the open if you care to look, and you can believe in market fundamentals all you want but to slightly change a famous quote the markets can stay manipulated longer than you can stay solvent.

[TakeYouToTasker]

Oh course free markets don't exist, which is why they need to be freed.

 

This doesn't mean that investment for investment sake is a good thing. Infact, it means it's a worse thing, because malinvestment is both driven and hidden leading to huge bubbles, which when they burst cause things like what happened in 2009.