The Paul Krugman Thread


#1301

Why don’t you address the bold piece of my post – which is proof positive that structurally QE is, if anything, deflationary? Removing yielding safe assets from the private sector and replacing them with (almost) zero yielding reserves … that interest income should be entering the private sector but it does not because of QE.


#1302

‘Structurally’ deflationary, huh? As opposed to ‘actually’, I assume?

And what ‘safe assets’ are you talking about here? Remind me.

How about you give us a figure for ‘how much is enough’?
You should be able to knock it up in a spreadsheet shouldnt you… I mean, its all so logical, proven and obvious…


#1303

blogs.telegraph.co.uk/finance/th … he-asylum/


#1304

1)Structurally: By it’s structure; it’s design.
2)“Remind me”: You don’t remember how QE works, seriously? So why are you expressing opinions on it?
3)What are you talking about “how much is enough”? I’m arguing that *none *is enough! It’s impact is actually deflationary. And is a sop to large banks’ fixed income desks.
4)It is obvious. Again, and for the third time, all I ask is that you address my bolded point that interest return is evidently removed from the private sector. . . . . tick tock . . . . . .


#1305

Daniel, if you’ve just proven that structurally, QE is deflationary, I’m pretty sure that every Economics journal on Earth is going to want to hear from you (and probably a fair few Economics departments from top tier Universities).

QE can cause deflationary pressure in limited circumstances, QE structurally, is inflationary and has proven to be in the real world time and time again.

Which is the very man’s point.


#1306

Nonsense.
Dispute the point.


#1307

LOL! You’re such a kook, I always get a laugh out of your nonsense. You are so blinded by ideology you will keep peddling the same old crap no matter how often it is refuted. Milton Friedman who wanted to get rid of drug and food regulations? Seriously? Milton Friedman who wanted to get rid of licencing for doctors so anybody could set up in practice? Man, you are so doolally! You still deny deregulation of the finance industry contributed to the 2007/8 crisis, seriously pull your head out off your arse and accept reality. Actually, keep living in your deluded Tea Party fantasy land because it’s great craic laughing at you.


#1308

So your point is that QE is deflationary. Thats news to me.
I have to say, honestly, thats the first time I’ve heard that and backed up with the assertion that its by design. on purpose. That governments are actually trying to deflate their economies while expanding their borrowing and devaluing their currencies.
You got a bit of everything there, dont you?
Now, had you said that QE is designed to manage a deflationary economy, we’d be on the same page.

2)“Remind me”: You don’t remember how QE works, seriously? So why are you expressing opinions on it?
I forget t’intenet doesnt do subtle… I was implying that perhaps bonds (corp or gov) arent as ‘safe’ as people think.

4)It is obvious. Again, and for the third time, all I ask is that you address my bolded point that interest return is evidently removed from the private sector. . . . . tick tock . . . . . .
Its the tick tock bit that got me. Very clever. I feel compelled to answer now.


#1309

Sharp on the uptake.

And I didn’t say that QE is purposefully utilised to invoke deflationary pressure. The Central Banks that use it don’t understand it, nor the majority of market participants. Nor you.

Yet still… nothing.
Dispute the point or :-GC.


#1310

Von Mises was agnostic. The institute is libertarian.


#1311

Deregulation on its own was not the problem - it was the lethal combination of deregulation and the implicit promise of government bailouts for the banks that caused the current crisis. Bankers would very quickly behave themselves if they knew the government wouldn’t step in.

Why did so many smart institutional investors lend billions to Freddie Mac and Fannie Mae, even though they were private businesses operating with obscene leverage? It was because everyone knew/assumed the US government would bail them out.

Deregulation is great, but deregulation with bailouts is horrendous.


#1312

And the Friedmanites are wrong now too.

As a reflexive system, economies just can’t be treated with the same medicine they had before sometimes. Sometimes it needs to be something just new for the sake of it. That’s all there is really to the confidence trick.


#1313

Apologies for being so slow in grasping the extent of your genius, only its rare to find such a hairbrained theory on the web, .

And I didn’t say that QE is purposefully utilised to invoke deflationary pressure. The Central Banks that use it don’t understand it, nor the majority of market participants. Nor you.

But you clearly, and uniquely, have a full grasp of it…

Had I known I was in the presence of such greatness, I would have changed my font… or something.

Well, you being the boss of the internet and everything, it looks like I dont have a choice, doesnt it?
Should I turn off my computer too, O enlightenened one, or may I humbly beg Your Brilliantness’ permission to leave it on?

Incidentally, if you have any more globules of brilliance pertaining to as-yet-unresolved human conditions please allow me to be the vehicle to present them to mankind. Clearly even the skidmarks of your supermind are smarter than the rest of us put together.

etc…etc…etc… (bored now)


#1314

If you have nothing to say then please don’t post.


#1315

Of course you have a choice - you just don’t have the ability or the knowledge.
Your argument actually boils down to the idea that, because I’m on an internet forum, I must be as stupid and ill-informed as you.
You troll around here spouting financial dross that you picked up from an ideologue’s pamphlet, because it supports your biases and your doctrine, not because you actually understand how it works. You couldn’t explain the workings of QE with any more depth than you could a ham sandwich. And you’d probably be just as confused by that.

Touché.

Dispute the point? You can’t.


#1316

Got to agree with that one. In the 70’s the Keynesian lite approach did not work because, well, the economy had changed profoundly since the 30’s. Success for a theory in one generation breeds failure in the next.

As for now it more a matter of who is more wrong. To date it looks like the neo Austrians are less wrong than the ersatz Keynesians. But neither are right. I think this is more because of politics than theory. We need a new Keynes to create an updated general theory of money to reflect the new realities. I’m pretty certain it will look nothing like either the Krugmanite or pure Austrian view of the world.


#1317

Absolutely. MMT has posibilities, but many of its adherents are enamoured with the idea that money is magic, that it needs nothing to back it, that it is self-controlling and that if you leave it alone it’ll be fine (the bitcoin theory of money). I don’t subscribe to this point of view, it would be such an ignorant thing to do if the central banks love the future too.

Anyway, my point being that Central Banks need to get a new vision, and a collective vision, of how to get out. Until they are really co-ordinating, we’re going nowhere.


#1318

Forgive my wading into stuff I don’t understand, the following may be complete nonsense…

Quantity of money is irrelevant in itself, since its just a medium of exchange.

The problem is that a large older population have accumulated “assets” (savings, investments, pension entitlements, property) whose nominal value represents an expectation of future transfers from the youth.

Whether this expectation (encapsulated in ownership of assets with monetary value) is valid/fair/reasonable or not, there isn’t enough productive youth to effect the transfer.

Youth unemployment exacerbates the problem, because the unemployed are supported by the same dwindling pool of resources that the retirees had earmarked for themselves through their assets and entitlements.

The more austerity is imposed, the less employed are the youth, and the less they can support the old. Accumulating more govt debt just steals more future youth productivity. QE just inflates the assets of the old (e.g. share prices rise).

The only solution is to do somehow productively employ the youth of today in providing services to the old of today, directly or indirectly.


#1319

Well a lot of the proceeding stuff is so youre in good company.
I havent really got a breeze either (only ONE poster truely understands it all) so fire away.

And what would become of the internet if that happened?
Some of the biggest corporations on the planet are built on people having nothing to say and taking all day about it.

As it happens, I do have a reply to Mr ‘QE is Deflationary’ (lest we forget the brilliance of the assertion he wants me to refute) but I’m not going to bither posting it because he probably doesnt understand opportunity cost and mitigation strategies thereof.

In the meantime, if anyone wants me, I’ll be taking flak from the ‘moon is made of cheese so disprove my vague assertions’ thread.

Ahankoo, layen gemmen.


#1320

Go do a quick google search. Take the populist route and read the wikipedia article on it. Open literally any Economics textbook that mentions QE. Every single one will state that QE is inflationary by design. Some will mention that in limited circumstances it can have the opposite effect, but not many.

I don’t need to dispute the point, you’re essentially doing the Economics version of saying “The sky is green”.

Now, I could dispute the point. I could point you to an innumerable amount of articles, blogs and news reports - but I’m smart enough to know that you’re the type of person who will discount absolutely any evidence that runs contrary to your opinion - so I’m saving myself the wasted time.

Also, I’m 3 out of 4 years into a Business & Economics degree, what’s your economics background?