tag:blogger.com,1999:blog-17232051.post4609919083656598223..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: Learn to stop worrying and love (moderate) inflationNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger114125tag:blogger.com,1999:blog-17232051.post-55119526423382911352013-11-22T14:19:43.752-05:002013-11-22T14:19:43.752-05:00I’m not an economist but I can make the observatio...I’m not an economist but I can make the observation that Australia’s higher and more flexible inflation target hasn’t seen it’s growth lag behind the US or Europe. Australia hasn’t had a recession for more than two decades and for the bulk of that time, as I understand it, the Reserve Bank has been tasked with keeping core inflation between 2% and 3% on average over the course of the business cycle, a task I think it has achieved. <br /><br />During that time the RBA has been content to let inflation track towards the top of that range for long periods, unlike the Fed and the ECB who have seemed to treat their more fixed 2% targets as upper limits if you believe the liberal economics blogosphere. Inflation in Oz once got away a little, just before the financial crisis, but it was brought back under control without recession. Flexibility may have helped here – the RBA could look through the inflation that resulted when Australia’s currency plunged and keep slashing rates.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-26332276272824460382013-09-03T12:32:21.096-04:002013-09-03T12:32:21.096-04:00There is actually another cost associated with inf...There is actually another cost associated with inflation: it increases the real cost of providing interest free credit between firms (e.g. in the form of 30 day payment terms), which is an important tool for businesses seeking to manage their cash flow. TACJhttps://twitter.com/TACJnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-53067527154053118372013-08-25T12:05:44.692-04:002013-08-25T12:05:44.692-04:00In what weird intellectual funhouse is that statem...In what weird intellectual funhouse is that statement not true? If the government decided to fully pay off the debt next year, by what mechanism would it do that? I think the real question is 'why does Noah's stated accounting identity bend you so far out of shape?' If you think the identity is wrong, what do you propose instead?Conscience Warriorhttps://www.blogger.com/profile/13487448481194494386noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-74468249324645039782013-08-25T11:58:07.402-04:002013-08-25T11:58:07.402-04:00Why is 'saver granny' hiding her money in ...Why is 'saver granny' hiding her money in her mattress? If she were to seek productive investments, she'd be fine. We ought to tax the hell out of 'mattress money.'Conscience Warriorhttps://www.blogger.com/profile/13487448481194494386noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-63782533051710244352013-08-25T11:53:46.482-04:002013-08-25T11:53:46.482-04:00@Yeah: I hope you understand that transfers are no...@Yeah: I hope you understand that transfers are not included in spending, as measured. Transfers are 'negative taxes.'Conscience Warriorhttps://www.blogger.com/profile/13487448481194494386noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-51900087187633331182013-08-25T11:45:06.333-04:002013-08-25T11:45:06.333-04:00Remember that there is no such thing as "redi...Remember that there is no such thing as "redistribution." There are only different distributions.Conscience Warriorhttps://www.blogger.com/profile/13487448481194494386noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-79508823171173608522013-08-25T10:17:42.280-04:002013-08-25T10:17:42.280-04:00"Also, if you have an ARM on your house, you&..."Also, if you have an ARM on your house, you're screwed."<br /><br />FTFYConscience Warriorhttps://www.blogger.com/profile/13487448481194494386noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-83820649372369585132013-08-23T09:03:05.134-04:002013-08-23T09:03:05.134-04:00And by the time he got his wheelbarrow full of cas...And by the time he got his wheelbarrow full of cash to the bread shop it was highly likely the price increased by 100%.<br /><br />Also, what about the unemployed and those on fixed incomes? How is inflation good for them?<br /><br />And finally, what is worng with deflation, why would people have a problem with falling prices?A.K.A. Damo Mackerelhttps://www.blogger.com/profile/02617877822938199052noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-37489194216630779222013-08-22T22:09:28.235-04:002013-08-22T22:09:28.235-04:00"today's government debt is tomorrow'..."today's government debt is tomorrow's taxes"<br /><br />Noah has declared that it is so, so it must be true.<br /><br />No evidence or argument is needed. Simply state something, Noah, and it is true, right?<br /><br />After all, everyone *knows* it's true. It's just "common sense", right?<br /><br />Why not try to substantiate your arguments instead of just stating things as if they were a given?philnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-27450501293773405122013-08-22T18:08:44.449-04:002013-08-22T18:08:44.449-04:00Generally speaking, my view on government spending...Generally speaking, my view on government spending, is as local as possible, and were people can't or aren't willing to use market forces, to get goods/services collectively. Centralization of spending creates disconnects, where the citizens will individually is not enacted collectively.<br /><br />The problem with "increasing wealth inequality" is the assumptions in the data itself. It is not an accident, in the US, at the time of 91% marginal income brackets, that inequality was squeezed out, but only because of tax evasion, tax shelters, etc.<br /><br />The plain fact is that the people do NOT consent to the levels of government spending, and the forms they are taking, that is the problem, but everybody likes everybody elses money. The irony here is that most economists on the left are pushing for "infrastructure spending," basically supply side government spending. My position is we don't need to spend any more money, we just need to reallocate.Yeahnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-50369941666026578702013-08-22T16:37:23.493-04:002013-08-22T16:37:23.493-04:00Dude, Noah,
Some of your blog posts are interestin...Dude, Noah,<br />Some of your blog posts are interesting to read. But, this was not "going out on a high note" before taking your break.<br />It was basically lots of reasons why inflation is good or not as bad, and then a paragraph giving passing recognition of its costs. And then it ends by simply calls people names if they happen to disagree. This leads to absolutely nothing constructive because it does not advance the debate forward and it immediately goes on the offensive since some people might disagree with you.<br />Those last three paragraphs turn it into the format of "here's what I think and those who disagree are dummies." I have yet to see any serious writer make any lasting difference using that formula. It weakens the argument and takes it down to Jerry Springer's level.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57234965578716642102013-08-22T15:00:56.337-04:002013-08-22T15:00:56.337-04:00Excuse me but I don't see your point.
You giv...Excuse me but I don't see your point.<br /><br />You give an example of inflation jumping to 4%, RGDP going down to 1% and stating that this does nothing to help/hinder borrowers...<br /><br />Well, hold on. If I got nominal $ debt, 4% inflation helps. Period. If that inflation happens to happen during a stagflation, my debt load getting a bit smaller might not be my main concern (losing my income might) but that's besides the point.<br /><br />Basically, I think inflation is quite clear a concept. We can argue about sectorial inflation inasmuch as I disagree with Noah on the fact that saying 'asset X' or even wage-inflation are fairly clear and understandable narrowing of the term. But I get his counter-arguments. Yours. not so much...Anonymoushttps://www.blogger.com/profile/02635749385748660522noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-6203322798457938082013-08-22T14:46:55.964-04:002013-08-22T14:46:55.964-04:00Hi, Anonymous
To be fair (and I acknowledge this ...Hi, Anonymous<br /><br />To be fair (and I acknowledge this in my blogpost), I am not sure how nominal wages track inflation so well... It could be correlation. Inflation went down and nominal wages slowed down for maybe joint reasons (imported deflation, for example, could explain both phenomenons) but, one, I have the sneaky feeling that inflation does not represent correctly the fact that important stuff like education, healthcare and (till recently) housing was getting more expensive way faster than nominal wages and, two, I am still not sure on how to reconcile this data that seems to suggest that things aren't so bad on the wage front with the fact that wages have been stagnating for the great majority of people.<br /><br />As to your point about class warfare and imperfect markets, I am not sure I was consciously referring to this in my reasoning above but it is, imho, a fundamental problem in our economic set-up. So maybe my views seep through? :)Anonymoushttps://www.blogger.com/profile/02635749385748660522noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-76096146454062920972013-08-22T14:08:06.875-04:002013-08-22T14:08:06.875-04:00Your limit of 42% seems highly arbitrary and I thi...Your limit of 42% seems highly arbitrary and I think misses the point of government spending entirely.<br /><br />Yes I would agree that most government spending is a transfer of wealth or reasources but why is this undesirable?<br /><br />If global economic forces and technology have been the main culprits of increasing income/wealth inquality (which is a popular conservative/libertarian argument) why is it inherantly wrong for a government thru consent of the people to counteract these measures via wealth transfers to maintain a level of equality we as a society find desirable?Rpeershttps://www.blogger.com/profile/12531315055088140280noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-5547552940043166082013-08-22T12:48:54.389-04:002013-08-22T12:48:54.389-04:00"Who are creditors? Mostly the old and the ri..."Who are creditors? Mostly the old and the rich.<br /><br />Now you hopefully see why many conservatives don't like inflation!"<br /><br />Oh, so it's ok if the retirement savings of those who are in (or near) retirement are wiped out? Thanks for pointing that out. <br /><br />Of course, most of these people aren't rich. (They also aren't necessarily conservative). We ARE people who have followed the standard advice of financial advisers and have allocated a large share of their investment portfolios to "safe" investments like Treasury securities. Well, "safe" only to the extent that idiots like you aren't in control of monetary policy, in which case you will have to stand by helplessly as the value of your retirement portfolios are destroyed by inflation.<br /><br />Many such people also are on fixed incomes (e.g., pensions that don't adjust to inflation). They, too, will be wiped out.<br /><br />So, please, stop pretending that this is an "old and rich" versus "young and poor" issue. <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-75923330484148249582013-08-22T11:07:53.579-04:002013-08-22T11:07:53.579-04:00Popular Inflation Myth 2: "Inflation punishes...<b> Popular Inflation Myth 2: "Inflation punishes savers." </b><br /><br />If this is (partially) a myth, ie, future savers are not harmed, by implication, future borrowers don't benefit either. Thus, when you say<br /><br /><b> Inflation Benefit 1: Your debt goes away. </b><br />or <br /><b> Inflation Benefit 2: The federal government debt goes away. </b><br />or<br /><b> Inflation Benefit 3 (?): "Balance sheet recession" might go away! </b><br /><br />these are also only partially correct; in that, once the inflation expectation is settled, none of these benefits will materialize. The past govt debt will decrease initially, but without a change of behavior, the interest rates would go up, and the debt servicing cost.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-71673581293166927072013-08-22T09:35:40.256-04:002013-08-22T09:35:40.256-04:00"Who are creditors? Mostly the old and the ri..."Who are creditors? Mostly the old and the rich."<br /><br />Not true. Although almost by definition a net holder of nominal claims cannot be described as "poor", the less well-off (eg the old and financially unsophisticated) do tend to hold a larger proportion of their wealth in nominal claims, especially bank accounts.<br /><br />But I would also question whether inflation benefits debtors (and cheats creditors) in general anyway. That is because, not least in view of the fact that the state tends to among the beneficiaries, further inflation is anticipated and factored into interest rates. So the effect of surprise inflation is to benefit today's creditors at the expense of tomorrow's creditors.<br /><br />And let's be honest, that is the real motive of most inflationists; not the lubricating or deflation trap avoiding purposes - 2% is enough for that. The call for higher inflation (including engineered by NGDPLT) is just another way of kicking the can down the road a bit further.RebelEconomisthttps://www.blogger.com/profile/13241098878248190971noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-75449167280547698732013-08-22T08:49:17.526-04:002013-08-22T08:49:17.526-04:00The author shows what is wrong with economists (es...The author shows what is wrong with economists (esp. Keyensians). They live in a fairy-tale land where equations based on phony assumptions take the place of common sense. Please name the country/era in which high inflation has not been politically and socially destabilizing? Here's the real world: The German inflation that the author minimizes brought down the Weimar government and led to the rise of Nazi Germany. That's the real world. BTW, you actually have no idea if the money in that wheelbarrow was that person's life savings or not.Biotrekkerhttps://www.blogger.com/profile/13823556763051918815noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-39964592648275996092013-08-22T08:28:06.335-04:002013-08-22T08:28:06.335-04:00Frederic: What you seem to be implying is that th...Frederic: What you seem to be implying is that there is an element of class warfare going on. Free market purists sometimes can't conceive of the possibility of imperfect markets and so never address the sources for why real wages track productivity and by implication inflation...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-27861133754793293582013-08-22T05:34:57.959-04:002013-08-22T05:34:57.959-04:00nice post here
i also love your style of blogging ...nice post here<br />i also love your style of blogging here on noahpinionblog.blogspot.com :)<br />you see, there are 2 blogs that i've found so far to be very helpful and have something interesting for me whenever i visit, this one and <a href="http://danieluyi.com" rel="nofollow">http://danieluyi.com</a> <br />Keep it up. I will be visiting again.Daniel Efosa Uyihttps://www.blogger.com/profile/07207528724158754856noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-74418683484450768222013-08-22T04:06:27.984-04:002013-08-22T04:06:27.984-04:00Don't find any possible reason to cheer up wit...Don't find any possible reason to cheer up with inflation going up the rates of general commodities is also increasing day by day.<br /><br />Thanks <br />William Martin<br /><br /><a href="http://www.getppiclaimsback.co.uk/" rel="nofollow">PPI Claims Made Simple</a><br /> Anonymoushttps://www.blogger.com/profile/02074793478078871872noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-44394474146820064552013-08-22T03:57:46.053-04:002013-08-22T03:57:46.053-04:00Too bad a middle income family couldn't enjoy ...Too bad a middle income family couldn't enjoy a 13% discount for one year on health expenses. But what if the breadwinner is a Business Analyst at a health insurance company? HORROR! JOB LOSS!YEAHnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-12643148703394835342013-08-22T03:50:40.090-04:002013-08-22T03:50:40.090-04:00Too many Keynesians are focused on the wrong stuff...Too many Keynesians are focused on the wrong stuff. Throwing money, whether it be "deficit spending" from people like Summers, or "targeted (federal) capital investment" from people like Stiglitz, show a sore ignorance of political economy. Government spending is already high, and most money just gets transferred, not invested in infrastructure.Yeahnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-30050809596621785832013-08-22T03:44:56.017-04:002013-08-22T03:44:56.017-04:00Inflation stats are really only helpful to two gro...Inflation stats are really only helpful to two groups of people, and people who watch those two groups; People who do monetary policy, and the Treasury. We have a weird disconnect now, where Economists claim "low inflation," which is true, on average, but people, especially middle income earners, are facing large price increases in areas of health, education, and food.<br />The mainstream economist consensus of deficit spending I think is simply wrong. Most federal government spending is income transfer, not on programs for infrastructure. There is no need to spend more; US citizens are not willing to pay more, the deficit is too high, the debt is too high, and total government spending is about 42% of GDP, enough in my opinion. There is a need to move money around to capital investment, no subsidizing ag. or special parties.Yeahnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-61614726705186158882013-08-22T03:35:40.393-04:002013-08-22T03:35:40.393-04:00I have come to the conclusion that the BLS inflati...I have come to the conclusion that the BLS inflation statistics are skewed downwards for low, middle, and high middle income earners. Why? Three major areas that eat a large portion of these groups income due to price increases: College, health insurance AND health care, food and sometimes gasoline. The baskets don't accurately account for these expenses, and the federal subsidies in all cases are probably making the situation worse by perversing incentives (ie getting a college major that is not in demand, corn in places where it shouldn't be).<br /><br />Would it be possible to have inflation states based on income? Rather than an "average" rate?Yeahnoreply@blogger.com