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President Biden, "I called this press conference today to tell you of the steps I'll be taking to lower inflation". Now I want you to all understand that this is what my advisors are telling me but I don''t actually believe this nonsense about "to much money chasing to few goods". So, IF that is true and let me repeat, I don't believe it's true, we will have to raise un-employment to make this happen but make no mistake, we have now due to my policies, the strongest economy the country has ever seen. So I'm going to ask you all to do your part and give up your jobs until we reach 7.5%. I have no idea where they got that number but again, this is what I am being told by people with economic degrees.
OK, Looks like I need to provide the rebuttal I alluded to previously. Both these gentlemen have economic degrees though. And actually it was written by Arthur Laffer, and Stephen Moore, not Phil Gramm and Stephen Moore.
Economic Growth, Not Austerity, Is the Answer to Inflation
Lawrence Summers was right about the danger of excessive spending. But now he wants high unemployment.
Lawrence Summers, who served as Bill Clinton’s Treasury secretary, rocked the Democratic establishment last year by predicting that his party’s excessive spending would cause inflation. He was right. But he’s wrong now. On June 20 he told Bloomberg that “we need five years of unemployment above 5% to contain inflation”—or perhaps one year of 10% unemployment. That would throw millions of Americans out of work.
Mr. Summers echoed the advice of his uncle, the Nobel economics laureate Paul Samuelson, who famously wrote in 1980, a time of double-digit inflation, that “five to ten years of austerity, in which the unemployment rate rises to an eight or nine percent average and real output inches upward at barely one or two percent per year, might accomplish a gradual taming of U.S. inflation.”
Walter Heller, chairman of the Council of Economic Advisers under Presidents John F. Kennedy and Lyndon B. Johnson, similarly predicted that the 1981 Reagan tax cuts “would soon generate soaring deficits and roaring inflation.” He, too, was wrong. From Jan. 1, 1983, when the tax cuts took effect, to June 30, 1984, U.S. real gross domestic product grew at an average annual rate of 8%. Inflation collapsed.
Catalysts for inflation vary—excessive government spending, printing too much money, currency devaluations, specific and general shortages of goods and services. Once embedded in an economy they can create long-lasting inflation. The secret to curing inflation isn’t economic collapse and high unemployment but the opposite: pro-growth policies that create incentives for more goods, more employment, less government spending and sound money. As the economy produces more, prices go down.
Conversely, austerity means less goods produced and less employment. How does putting people out of work and reducing the supply of goods cause the prices of goods to fall?
History proves growth doesn’t cause inflation. In the 1920s, when the highest tax rate was cut from 73% to 25%, real GDP soared and the price level fell. In the 1960s, tax cuts and pro-growth policies led to an economic expansion, stable prices and budget surpluses.
The one mistake of the Reagan plan was to phase in tax cuts rather than implement them immediately. That contributed to the severe recession of 1982. Congress and President Trump avoided this pitfall in the Tax Cuts and Jobs Act of 2017, which avoided a downturn and kept inflation very low. Before Covid hit, we had the best of all worlds: the lowest unemployment rate in 50 years, 2% inflation and steady growth in real income for almost all Americans.
We don’t need austerity. An end to President Biden’s war on energy, permanent tax cuts, deregulation, less government spending and an immediate tightening of monetary policy by selling off some of the trillions of dollars of assets on the Federal Reserve balance sheet—that’s the formula for low inflation and low unemployment.
Was he being stalked by Krugman's henchmen? A victim of "woke" cancel culture? Did he undergo a personality reassignment? Is he in the Witness Protection program?
Inquiring minds want to know!
Nah, nothing quite that dramatic. Seems he just decided that since it's now been more than 65 years since he last read the comic books detailing the adventures of a swashbuckling hero pilot out to take on the world's bad guys, it might be high time for a handle change!
Maybe "Texas Contrarian" is a decent fit for a guy who for more than 40 years has found the idea of contrarian investment strategy very appealing and interesting.
Came across the Dreman book on contrarian strategy in a bookstore around 1980, and it made a lasting impression.
I just snuck a peak at lumber prices. The front month futures contract is down from $1400 earlier this year to $660. But still way above the long term average up to 2020.
Contrarian, where do you think the delicious bargains will be found? Real estate? Stocks? Or maybe Bitcoin!!!
Well, maybe one who decides to "HODL" bitcoin for a long time will do very well. But I'll leave that to others. Just not my cup of tea. I prefer earnings, free cash flow, and dividends.
If You Suck at Forecasting, the NYT Will Hire You as a Columnist...
Quote:
Originally Posted by Tiny
Mr. Summers echoed the advice of his uncle, the Nobel economics laureate Paul Samuelson, who famously wrote in 1980, a time of double-digit inflation, that “five to ten years of austerity, in which the unemployment rate rises to an eight or nine percent average and real output inches upward at barely one or two percent per year, might accomplish a gradual taming of U.S. inflation.”
Well, I'll be cow-kicked! Paul Samuelson was Larry Summers' uncle? I didn't know that!
Btw - that wasn't the first time Samuelson was way off in his predictions. As a much younger economist, he also famously flubbed it by warning that the end of WW2 would usher in a sharp & prolonged downturn, as I noted in this forum a long time ago:
Quote:
Originally Posted by lustylad
You mention the “iconic Paul Samuelson”. He was a brilliant economist whose thick best-selling textbook introduced me to the discipline years ago. Yet like all economists, he often got it wrong. Based on Keynesian theory, he warned that a sharp recession would occur once the government's WW2 spending binge was over. As it turned out, the US economy adjusted fairly smoothly and converted to peacetime production without a serious downturn, even though federal spending nosedived from 43% of GDP in 1944 to only 9% of GDP four years later! I like to point out this history when Keynesians today whine about the supposed economic damage inflicted by what they define as “austerity”.
Here's an even better summation of Samuelson's WW2 forecasting error:
While scrolling down through the comments in the above link, I found an interesting post by "English Professor" that reads as follows:
And let’s not forget the famous memo from Paul Krugman and Larry Summers (dated September 9, 1982), while both were working in the Reagan White House, which predicted “a significant reacceleration of inflation in the near future.” They were completely wrong on what would happen in 1983. Their “rough guess” was that distorted prices “will add five percentage points to future increases in consumer prices and about two percent to the GNP deflator.” This they called a “conservative” estimate. If your macro assumptions are faulty, your predictions will inevitably be nonsense.
^^^ Holy cowkick! This opens the door for a fresh bout of Krugman-bashing!
Why pick on poor Samuelson for his wayward Reagan-era forecasts when we can beat up on the Krugtron (along with Samuelson's nephew Larry Summers) for: 1) concealing the fact they both served on Ronnie's Council of Economic Advisers under conservative economist Martin Feldstein and 2) being so spectacularly wrong in the above-mentioned September 9, 1982 memo.
Here's a fun analysis of that memo, written by Donald Luskin back in 2004... enjoy!
Not only that, Samuelson and a few of his esteemed colleagues were opining ... in some cases as late as the mid-1980s(!) ... that lessons could be learned from Soviet planning commissions that may have had a number of excellent ideas (in their view).
In reality, the Soviet economy was far more of a basketcase than western journalists knew at least as long ago as 1980. (And that was when oil prices were peaking!)
I pointed this out in the "How are we going to pay for all this shit" thread. (Oops, sorry! CaptainMidnight pointed this out.)
Although our media had no idea what the fuck was going on, one elite group of USSR escapees certainly did -- defecting Soviet grandmasters. They knew damned well that the "evil empire" was well on its way to implosion and were eager to hit the exit ramp at the earliest opportunity.
Hot damn! Excellent news. Looks like the meltdown timetable has been accelerated. Let's get the party started!
Quote:
Originally Posted by Tiny
The numbers are out. YoY CPI inflation is 9.1%. MoM is 1.3%, or 16.7% annualized with no seasonal adjustments.
Yep! What a world. Now the 10-year UST is trading at a real yield of negative 6+%. In what kind of Alice-in-Wonderland world is that even possible?
Just a few weeks ago, pursuant to the Fed's tightening guidance and announcement of bond-buying cessation, the 10-year yield spiked to almost 3.5%. Now it's backed up 0.5% and the 2/10 UST curve is hanging in this morning at about 15-bips inverted.
What is it that the late Herb Stein said about stuff that can't keep going on? (Oh, yeah! Now I remember ...)
Then there's the unemployment rate/GDP bifurcation that has all sorts of random financial world commentators saying that we can't be in a recession given the relatively favorable jobs report last week.
Really? Are they not aware that employment didn't peak until we were already six months into the 1973-74 recession?
Either inflation comes down hard within the next 6-12 months (and prospects for economic growth along with it), or the bond markets simply get slaughtered. (What then happens to the capital bases of all the major banks, insurance companies, and the rest of the world's institutions?)
This is the sort of radical imbalance that can run the monetary system off the rails while taking whole economies with it.
And the sort of environment within which you could suddenly see a black swan come crashing right through the windshield.
Uh-oh! Looks like he just said the "quiet part" out loud!
Toughen up, cupcake! There's a "liberal world order" that's apparently in need of support.
Comes now the estimable Brian Deese, Biden's CEA chair, to mention your responsibility to our nation -- and indeed the world.
13-second video clip:
Oops! Didn't he just "say the quiet part" out loud?
If gasoline prices don't start dropping in a hurry within the next three months, you're likely to see that clip all over the place in Republican campaign ads.
Toughen up, cupcake! There's a "liberal world order" that's apparently in need of support...
Yup. Meanwhile, here's what the whacked-out far-left radical socialist dim-retard "climate justice" teachers union is spoon-feeding our school kids up here in SW Pennsylvania:
Can you believe this shit?
These morons have everything backwards!
If we want to have any chance of stopping Putin's war machine, we need to DRILL, BABY, DRILL!
If we want to have any chance of stopping Putin's war machine, we need to DRILL, BABY, DRILL!
Here's some more shit that under ordinary circumstances would be hard to believe. (Although I suppose it's not today, given the ship of fools at the helm!)
Nice going, Joe! Nothing like snubbing oil and gas CEOs and instead meeting with wind energy crony capitalists.
Also, nice trip you made to Jeddah a couple of days ago, Joe. Very impressive performance on the world stage. But if you actually wanted to speak to those with the ability to do something substantial about supply, shouldn't you have gone to Houston and Midland?
But, Joe, I can understand why you wanted Secretary Granholm on the job, especially since she has so much valuable experience in the energy industry.
You might see this clip in Republican campaign ads this fall
Here's our esteemed Secretary of Energy doing a fine job of answering a topical question:
(Although note that this occurred way back when people were complaining about $2.89 per gallon gasoline.)
Way to go, Jennifer! Right out of the Hillary-Kamala school of interview conduct. I guess if you rear your head back and launch into an episode of goofy giggling, no one will notice that you dodged the question!
(But in all likelihood, tens of millions of Americans struggling with their personal budgets will not find this quite as funny as Ms. Granholm apparently does.)
in keeping with the thread's title, "are we heading for a world wide meltdown"
and in light of the fact america had been the leader of the world in so many respects
so the question comes to me, who is the worst member of biden's administration
of course there is biden himself...who should win hands down as he is the cause of it all...but stopping there would leave out some contenders in their own right and blaming him pre-supposes his competency
kamala takes the cake in so many ways
then there is the reckless monetary policies of yellen,....i place inflation squarely in her ample lap
the soros backed merrick garland, who, with a free hand, would have prosecuted parents, is prosecuting people for political opinion, wants to criminalize any opposition to the joe biden administration, wont enforce laws protecting the supreme court, overlooks anything tied to blm or antifa, a handcuffed arrest of peter navarro over a misdemeanor even the judge wonders about, and is desperately looking for an out on hunter biden
the above mentioned granholm. energy secretary who knows nothing about anything, including her job, who is cheering on high gasoline prices, who's plan for energy was likely hatched in the faculty lounge at berkley
mayorkas, a practiced liar who must also be delusional, in his homeland security job he denies an open border with a straight face while known terrorists stroll through, along with criminals, trafficked young people, drugs and violence and the highest amount of an illegal invasion ever
little pete buttigieg, transportation secretary, who in the face of a logistics quagmire and supply chain breakdown, took a long maternity leave, who knows nothing about his job, but can identify racist roads and bridges
who might i be missing? little lord fauntleroy bliken perhaps? the understanding soul Milley?
in keeping with the thread's title, "are we heading for a world wide meltdown"
and in light of the fact america had been the leader of the world in so many respects
so the question comes to me, who is the worst member of biden's administration
of course there is biden himself...who should win hands down as he is the cause of it all...but stopping there would leave out some contenders in their own right and blaming him pre-supposes his competency
kamala takes the cake in so many ways
then there is the reckless monetary policies of yellen,....i place inflation squarely in her ample lap
the soros backed merrick garland, who, with a free hand, would have prosecuted parents, is prosecuting people for political opinion, wants to criminalize any opposition to the joe biden administration, wont enforce laws protecting the supreme court, overlooks anything tied to blm or antifa, a handcuffed arrest of peter navarro over a misdemeanor even the judge wonders about, and is desperately looking for an out on hunter biden
the above mentioned granholm. energy secretary who knows nothing about anything, including her job, who is cheering on high gasoline prices, who's plan for energy was likely hatched in the faculty lounge at berkley
mayorkas, a practiced liar who must also be delusional, in his homeland security job he denies an open border with a straight face while known terrorists stroll through, along with criminals, trafficked young people, drugs and violence and the highest amount of an illegal invasion ever
little pete buttigieg, transportation secretary, who in the face of a logistics quagmire and supply chain breakdown, took a long maternity leave, who knows nothing about his job, but can identify racist roads and bridges
who might i be missing? little lord fauntleroy bliken perhaps? the understanding soul Milley?
Sounds like you're headed for a ww meltdown.
The honest answer to the subject is that all Chicken Littles think we are headed for a meltdown.
They're problem is they do not know the difference between a business cycle and a meltdown. It is why they didn't have a pot to piss in before or after Trump nor will they after Biden!
"The report found that 62 percent of Biden appointees who deal directly with business matters - economic policy, regulation, commerce, energy and finance, have 'virtually no business experience.' Only one in 8 were found to have 'extensive' business experience and their average business experience was 2.4 years.
Quote:
Originally Posted by Texas Contrarian
Here's our esteemed Secretary of Energy doing a fine job of answering a topical question:
(Although note that this occurred way back when people were complaining about $2.89 per gallon gasoline.)
Way to go, Jennifer! Right out of the Hillary-Kamala school of interview conduct. I guess if you rear your head back and launch into an episode of goofy giggling, no one will notice that you dodged the question!
(But in all likelihood, tens of millions of Americans struggling with their personal budgets will not find this quite as funny as Ms. Granholm apparently does.)
.
Hmm, Well what do you do if you're a lawyer, with no experience outside of government. And the President of the United States appoints you as Secretary of his Department of Energy, with a $7.5 billion annual budget. And someone asks you a question and you really don't know the answer, because you don't know jack about fossil fuels and nuclear, which are mostly what we use for energy in America. Well, you can laugh a lot, and not answer the question. Makes sense. It works for Kamala too.
Quote:
Originally Posted by nevergaveitathought
the above mentioned granholm. energy secretary who knows nothing about anything, including her job, who is cheering on high gasoline prices, who's plan for energy was likely hatched in the faculty lounge at berkley
If the woman had been hatching plans about energy in the faculty lounge of the engineering department at Berkeley, I might give her a little credit. But that's not the case.
