The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth.
Niels Bohr
Chart of the Day
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| Via Being Classically Liberal |
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| Courtesy of Carpe Diem |
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| via Libertarian Republic |
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| Via Libertarian Republic |
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| Via Don Boudreaux of Cafe Hayek |
Inflation, Carpe Diem, etc.
I have a love-hate relationship with Mark Perry and his Carpe Diem blog, which has been run more recently out of the AEI portal. He runs a number of recurring themes, e.g., the shale oil revolution, 3D printing, gender-related issues, protectionism--and inflation. In particular, I've criticized him as being a promoter of "perky economics". He has especially been critical of "inflation cranks": people who are suspicious that the Fed's mad money printing will inevitably ignite inflation beyond their capacity to control, that existing CPI measures understate much higher real inflation. Bob Murphy, an Austrian School economist, made a couple of inflation-related bets (double-digit inflation within a set number of years), the first of which was lost. I'm not an Austrian, although I have been strongly influenced by their views.
This unpublished excerpt expresses my perspective on activist Fed policy:
I believe that free market principles apply to money and don't believe in monetary intervention than any other kind of government intervention. Thus, I don't support activist monetary policy, in particular, the Fed. When in the 2000's I saw house prices raising higher than incomes and a slowly growing, aging population, I knew we were in a bubble and easy money and related government policy were to blame. When I see the Fed effectively making a put on interest rates while I faced increasing rents, gas prices, and food in Baltimore post-2008, I knew that government policies are at fault.In part, my dispute with Mark Perry deals with the implication that Fed meddling with money supply was a success; this is the same Fed that presided over a 97% decrease in purchasing power of the dollar over a century; the same one that eventually ended up with multiple asset bubbles over the past 15 years. Just over the past day, I ran across a property flipping ad on one of the social networking sites. Obama has not served a day in office where the Fed has allowed interest rates to float; yes, the inflation data are mixed but we've had a tepid recovery, and many recent stock gains have more to do with capital consumption (e.g., increasing earning per share by buying back company shares) than growth, not to mention investors desperately looking for yield, given mediocre fixed-income alternatives. If the economy has rebounded, it reflects more the resiliency of the economy, despite the stupifying blunders of Obama, Congress, and the Fed.
Perry for some reason goes after Amity Schlaes, best-known for her stunning biography of Calvin Coolidge, in a National Review piece:
Shlaes then goes from complaining that the nominal prices of three different goods (gas, coffee, stamps) and three services (haircuts, college tuition, movies) have risen in the last 14 years (no big surprise there), to buying into the fringe-crank conspiracy theory of John Williams (and his Shadow Government Statistics website) that the BLS has been manipulating its calculation of consumer price indexes to intentionally present biased, and significantly understated official measures of inflation. Both Jimmy Pethokoukis (“Why Amity Shlaes is dead wrong about inflation”) and Romesh Ponnuru “(Inflation Cranks Keep Cranking”) responded to Shlaes, and then Paul Krugman, in his typical conservative attack style, responded to both of them on his post “Understanding the Crank Epidemic.”Actually, I've cited John Williams' website multiple times. In theory, he makes a good case about varying cost indexes' methodological changes, but one of the most interesting critiques comes from this source:
I think there is a general consensus (at least among Jimmy, Ramesh, Krugman and myself) that we should: a) “stop using John Williams and his ShadowStats site as source for inflation arguments” (Jimmy), b) “stop paying attention to statistical cranks” (Ramesh) and c) “stop turning to cranks peddling conspiracy theories about inflation” (Krugman). Case closed there.
Now, I don’t disagree with the idea that some people have experienced a higher level of price inflation than the CPI. Everyone experiences a different rate of inflation based on their purchasing habits, so by definition everyone’s individual rate will diverge from the official rate to some degree; some will be higher, and some will be lower. And I don’t disagree that rising food and fuel prices have been a problem for welfare recipients and seniors on a fixed income, etc, who spend a higher proportion of their income on food and fuel than, say, young professionals with a lot of disposable income.... But Shadowstats is not calculating inflation any differently.They are not using the 1980s or 1990s methodology that they believe would be higher. All Shadowstats is doing is taking the CPI data and adding on an arbitrary constant to make it look like inflation is higher!...In fact, according to James Hamilton of Econbrowser, John Williams admitted in 2008 that his numbers are just inflated CPI data:..Here’s what John said to me: “I’m not going back and recalculating the CPI. All I’m doing is going back to the government’s estimates of what the effect would be and using that as an ad factor to the reported statistics.”Mark Thornton, an Austrian economist, has an interesting reflection:
Let us ignore the problems with the concept of the price level and all the technical problems with CPI. Let us further ignore the fact that this has little to do with the Austrian business cycle theory (ABCT), as the critics would like to suggest. The basic notion that more money, i.e., inflation, causes higher prices, i.e., price inflation, is not a uniquely Austrian view. It is a very old and commonly held view by professional economists and is presented in nearly every textbook that I have examined. This common view is often labeled the quantity theory of money.He then points out under the quasi-gold standard (the dollar was convertible and exchange rates were pegged to the dollar), prices for oil, gold and commodities had remained fairly stable.
Austrian economists like Ludwig von Mises, Benjamin Anderson, and F.A. Hayek saw that commodity prices were stable in the 1920s, but that other prices in the structure of production indicated problems related to the monetary policy of the Federal Reserve. Absent the Fed’s easy money policies of the Roaring Twenties, prices would have fallen throughout that decade.
High prices seem to be the norm. The US stock and bond markets are at, or near, all-time highs. Agricultural land in the US is at all time highs. The Contemporary Art market in New York is booming with record sales and high prices. The real estate markets in Manhattan and Washington, DC, are both at all-time highs as the Austrians would predict. That is, after all, where the money is being created, and the place where much of it is injected into the economy.This reminds me of the Boy Scout skit of the lost quarter:
This doesn’t even consider what prices would be like if the Fed and world central banks had not acted as they did. Housing prices would be lower, commodity prices would be lower, CPI and PPI would be running negative. Low-income families would have seen a surge in their standard of living. Savers would get a decent return on their savings....In other words, the reason why price inflation predictions failed to materialize is that Keynesian policy prescriptions like bailouts, stimulus packages, and massive monetary inflation have failed to work and have indeed helped wreck the economy.
Scout #2: Man, I just don't see it. Are you sure you lost that quarter here?
Scout #1: No, I didn't lose it here. I lost it over there.
Scout #2: What? Then, why are we searching over here?
Scout #1: Because the light is better over here!
Inflation is there--we're perhaps looking in the wrong places. And why should we be surprised when it involves anything the government touches--like the college loan bubble, healthcare, home mortgages, etc.?
Hall of Shame's Greatest Hits
For more on this story, see here.
An Independent Lifestyle
Facebook Corner
(Libertarian Republic). ICYMI: Father Publicly Whips 13-Year Old Girl For Disappearing For Three Days: "You 13 Hoe!" http://buff.ly/1jYR77o
The first question I would ask is, what would the father do if he saw any other man do that to his daughter. Physical violence, abuse of your own child is an abomination. It sends the wrong message: "Maybe I'll run away for good next time." This father needs to check his anger and reread the parable of the prodigal son.
[I have to comment here: you would not believe how many people sympathized with the out-of-control dad. At least 3-4 people came after me for that response, a few multiple times and could you have imagined if I had admitted I don't have kids of my own? I'm not going to repeat the subsequent thread because this isn't a parenting blog; the basic gist of their argument was handling the situation patiently but firmly ends up with pregnant 13-year-old daughters. When a lady insisted there wasn't a nonviolent way to make a suitable impression on a young teenager, I was curious what Dr. Phil McGraw's thoughts were on the thought of corporal punishment; I found an advice URL where he sidestepped a formal position on spanking, except to say you don't use the occasion to stage an adult temper tantrum and then discussed alternatives, e.g., tailored to a child's reward system. So I posted the link and got a response back: "Dude, I can't believe you went 'Dr. Phil' on us! LOL..."
I used to be a 'cool uncle'; when I used to visit my married younger siblings, the kids acted a little more hyper than usual when I was around. When my newly married niece [see below] was younger, she and her 2 little sisters argued over whom got to sit next to me at dinner; I found it endearing. But one little incident stands out: I was visiting my baby brother's home. My older nephew, whom I'll call 'Jay', was a little excited and knocked over his full glass of milk. In horror, he looked back and forth between my brother and sister-in-law for a reaction and got none. I think they didn't want to discipline Jay in front of me, but I could tell that my brother wasn't happy. In the meanwhile the mess was spreading. I said, "Jay, why don't you get a dish towel and clean up the spill?" Jay immediately dashed off for the kitchen.]
(LFC.) "The double cheeseburger provides 390 calories, 23 grams of protein – half a daily serving...all for between $1 and $2"
The point isn't McDonalds: The point is market-produced efficiency, technology, and economies of scale. The economic problem of every society in history was that calories were too expensive. The problem now is they're too cheap, if you even want to call that a problem.
A big part of the cheapness is the huge subsidies on corn and other agricultural products. Our actual food cost is much higher than our out of pocket cost, but since so much of the cost is hidden behind taxes, we consume more than we otherwise would.
Here's a clue, economically illiterate progressive "troll": look up marketing orders (Hint: think quotas, and ask yourself why they exist.) Next, look up the 1942 Filburn SCOTUS decision. Finally, despite this idiocy, why do Americans spend under 7% of their household budget on food at their home, on average--lowest on the planet? You with a Facebook account are like a 2-year-old left with a razor blade.
(Mercatus Center). Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. http://bit.ly/1qRpuLQ
Why does Mercatus Center attract "progressive" know-nothing trolls? The parasites are not the economically successful but the rent-seeking government class, the political populist whores, the self-serving bureaucrats and regulators. If we privatize the public school system, have people vested in their own retirement and healthcare solutions, if we declare unilateral free trade and open borders, reinstate free immigration, sound money and free banking, embrace free markets, we could restore the promise of America. What Cowen is pointing out is that the tide of global prosperity lifts all boats. The rising middle class around the world expands the market for innovative American goods and services--provided the economic fascists controlling the White House and Senate don't fritter away our opportunities with economic-killing policies like unsustainable, morally corrupt social welfare programs and other "Politics of Envy" dysfunctional, divisive policies. Our states are choking under unsustainable liabilities for the benefit of a corrupt class, public sector crony unionists. As long as the fascists impair economic liberty, create pushing-on-a-string paternalistic regulation, imitate the even worse ills of social democrat Europe, we will fall into the same traps as Europe and Japan.
Where I disagree with Cowen, I think he concedes too much to the "we can't afford to do nothing" idiot egalitarians, the contrived Occupy Movement, the revolution fearmongers, etc. I don't know if that's the price for publishing in the Gray Lady. But the neo-mercantilistic nonsense of the economic fascists is part of the problem, not the solution.
More Marriage Proposals
This is part of an ongoing celebration of traditional marriage. It went briefly on hiatus when I seemed to run out of fresh videos, but it's been a recurring feature over the last few weeks. I briefly explained the countdown in context; today is the wedding day of one of my oldest nieces, the first-born of my 14-month-younger sister, the first of my 4 sisters. [I was unable to attend due to scheduling and other reasons.] She was a premie, and I went to see her as soon as I could drive home from Houston, where I was a doctoral student. Of my 21 nephews and nieces, I saw her the earliest after birth. Hospital policy was that since I was not part of the immediate family or a grandparent, I couldn't visit her, but my sister, an RN, managed to sneak me in so I could see my niece in her incubator. (My brother-in-law, career enlisted USAF whom served in military hospitals, was stationed at a base within easy driving distance from my folks' home at the time.) On subsequent visits home during the first few months, my brother-in-law would lug around some medical equipment on visits to my folks. But she was strong enough to attend my doctoral graduation several months later. My sister let me hold the baby; she looked up at the gold tassel draped over my cap and with an impish grin on her face yanked down on the tassel as if a lamp chain, pulling off my cap.
I promised my niece that I wouldn't publish details about her in my blog. Her fiancé/husband proposed to her at the elementary school where she teaches, and supposedly there was a video, but she claims they haven't been able to get it off her principal's iPad. So I haven't seen it but probably wouldn't embed it anyway unless they made it public and even then I wouldn't identify her. Her fiancé/husband did this interesting Facebook post daily countdown to the wedding using numbers on uniforms from famous professional baseball, football, basketball and soccer players--even Triple Crown horse numbers!
I will probably taper down this segment in the near future, like I've done on the "welcome home" videos, depending on how many decent videos I come across. I have to admit the Bruno Mars song is beginning to run thin on me.
Political Cartoon
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| Courtesy of Steve Kelley via Townhall |
Anne Murray, "Just Another Woman in Love"
