@Morganside Do you know that Christianity is correct? The world around us reveals that G-d DOES exist, and the historical evidence reveals that Jesus Christ really did come to this earth and there is overwhelming evidence that Jesus Christ really did physically rise from the dead. Jesus is coming again and the signs of the end times that were foretold in the Bible are coming to pass.
@Krugmanistheking Third, just because a hypothesis and a result line up does not mean it is 'proven'. Rather, it fails to reject the null.
While I would agree with Krugman that macroeconomics often relies too much on model at expense of theory, his analysis is somewhat shortsighted, failing to even consider that loose monetary policy is responsible for the initial excess liquidity that turned into the recession.
Paying someone to splash water around in a pool does nothing but empty the pool..
@Krugmanistheking First of all, you misunderstand what rational behavior is. It is not always being right, the ability of foresight, or omniscience. Second, as almost any academic economist (I'm a PhD candidate) will tell you, macroeconomic forecasting has been very inconsistently predictive.
Krugman's analysis is of business cycles is generally somewhat sophomoric. He makes broad statements that assume firms are necessarily isolated from monetary policy. See next.
Oversimplifications often lead to very, very false statements. Keynes' old model rested on a whole host of assumptions including that spending stopped altogether, that demand is for money (money is demanded -- it is merely a unit of exchange) and it aggregated an entire economy into one. Central bank attempts to subvert 'liquidity traps' are the problem.
I hate when high schools and undergraduate programs keep perpetuating this...
Ahh so I should just read any paper...You do not know of any particular paper you can recommend? Probably you have not read them yourself then. Well, thanks, that's so helpful.
Well Krugman isn't here, and you entered the discussion on his behalf. But ok..
Do you have a link to any of those papers you talk about? My understanding was that Business Cycle theory was not actually his particular area of expertise.
I don't actually need to read papers to know that directing resources from real production to useless production is a bad thing.
Stealing effects the incentives in the economy, so you should not disregard it.
Now why don't you discuss the points I brought up? You say I have not proven my point. Well you have not convinced me that redirecting scarce resources from companies (production) or employees (demand) to meet artificial demand for holes in the ground causes real growth (in usable production goods).
Exactly, to a Keynesian it better to steal money from productive people who create real products and wealth and give the money to people digging holes or people who prepare for alien invasions. Digging holes create no wealth and hinders the corrective behavior of the healthy bit of the free market, who now have fewer resources. Result is that the crisis will be prolonged (the analogy is that it takes longer to pay of your credit card debt if you are being paid less or taxed).
Digging holes or preparing for for invasions which will not happen does not make us richer. It is a waste of resources. Your name does not suggest that I take you seriously.
oh and then there is the 2 million homes pending foreclosure...those have to stop too. this economy won't get better anytime soon because nothing has been done to stop the bleeding from multiple wounds. and tax cuts will only make things worst, and cutting spending will only make things worst.
This is the same Paul Krugman who's opinion it was to inflate a housing bubble after the crash of 2000? Oh and not ALL GDP is good, it GDP rises due to debt-financed consumption and government spending it decreases Capital available to create productivity and wealth. What you are saying right now is that we need to stimulate our economy to re-inflate our service sector driven economy and exacerbate the economic imbalances we already have. Americans are broke & you want inflation
@WalkProp yes, we want inflation because that will lessen the burden of the debt Americans carry right now. If you have a link of Krugman advocating to inflate the housing bubble in 2000 i would like to it.
Though it should be noted that was a different time and he has been very consistent in explaining his view and his thinking...even when criticisms such as the one you mention come up. if he said it explicitly then he has a good logical explanation.
@BarrySlisk looked at your link...context matters. you are using 2 totally different financial situations and ignoring the different solution that he proposes to say he is wrong bases on this bad logic.. CONTEXT MATTERS. and in 2001 there was no bubble. the earliest bubble talk was in 2004. biggest difference? back then in 2001 the fed had the ability to lower rates. now it doesn't. you can achieve the effect you need with inflation. hardly anyone says what PK has been saying.
Yes there was a bubble in 2001 just no burst yet. Due to the crash of the tech bubble Greenspan lowered interest rates to avoid the consequences of the bubble thus inflating a new (or arguably the same) bubble which lead to the housing bubble.
But this is another story. Can you document that PK was against low interest rates from 2001-2011 ? I doubt it as he is keynesian but I'm willing to be persuaded.
@BarrySlisk also, nobody told the FED to continue lowering the key interest rate for years, at no point did PK continue to advocate for lowering the rate just to create a bubble. in fact in 2005 he was already questioning it...meaning the fed went overboard. something else was at work...deregulation, derivatives, greedy banks, lowered lending standards...thats how you get the crisis we in now. fed rate is .25% because they can't go any lower. ZERO LOWER BOUND, liquidity trap. diff problems.
"But the bankers also had a more substantive demand: they want higher interest rates ... because they say that low rates are feeding inflation. And what worries me is the possibility that policy makers might actually take their advice."
@BarrySlisk again, you are talking about 2 different scenarios. krugman has been saying since 2008 inflation won't be a problem for a while. so far he has been right. as long as you have declining wages and high unemployment and all this debt households are carrying the inflation threat won't show. and yes he advocated for keep rates low for a while. i can't find a spot where he is against low rates explicitly but i can implicitly find it.
@BarrySlisk inflation is determined various ways. for FED policy purpose something called CORE inflation is used for logical reasons. The number you hear most in the news is called Headline Inflation and includes fuel and food prices that can swing wildly from one month to the next.
Inflation hasn't been a problem. Anybody who in 2008, 2009 and 2010 screamed "inflation is coming" (and there are many) is currently silence because they can't explain it. don't want to admit Krugman was right
@BarrySlisk That's not at all what I am saying. For policy making purposes CORE inflation is more steady and reliable.
Headline inflation can vary wildly month to month. So while you care headline most because as an individual you buy food and gas. An Economist at the macro level cares more about Core when figuring out whether to raise or lower rates.
Since this crisis started there have been a few points where headline shot up and talking heads were screaming inflation was coming.
@BarrySlisk if these inflation hawks were in charge the fed would have raised rates a long time ago, making out problem worse. The ECB has raised rates recently, keep an eye out on what happens in Europe in the near future.
One of the worst things in media and news today is that people make all sorts of wild predictions and when they don't play out they don't come back, admit they were wrong and reexamine their ideology.
Here is Paul Krugman explaining it....he literally has to make a post every 3 to 6 months explaining the concept. krugman.blogs.nytimes.com/2010/02/26/core-logic/
But inflation will be a problem and has been a problem. This entire crisis is because of borrowing and inflation (monetary inflation). And this will result in high price inflation. It must! Because USA cannot and will not pay it's foreign debt by lowering their living standards very much.
Low interest rates and inflation are two sides of the same coin is it not? It sounds like you think they are totally separate. The central bank lowers interest rates by supplying new money (monetary inflation) which it lends out. This process forces the interest down.
The banks are broke, it's not liquidity trap. Try raising the rates to where they should be in this country, like what the market would suggest, and every bank would fail. Look at the numbers anyway, not the CPI, go out to the mall or the grocery store & gas pump. Inflation is way above 4% annually already. This nonsense will be put to rest when they'll be enormous pressure to inflate as you suggest which will be more burden on the economy, or higher rates which bankrupts the system.
Check out on youtube. Keynes vs. Hayek rap anthem. And start studying real economics i.e. from the austrian school. It's funny how you think we're gonna be Japan. Oh man, you wish. This is going to make Japan look like a gum-drop house on lollipop lane. Think plummeting asset prices (measured in gold, not dollars), and sky rocketing goods prices (in dollars, same in gold)... and everyone with U.S. dollars get poorer. Japan will be laughing at the U.S..
but these things are politically impossible. so we'll muddle along like Japan for years. at current gdp growth rates full employment will be achieved after 2020 based on all estimates i've seen. oh and we also need to stop firing government workers. if i have to sit here and explain all this...then you haven't been looking at the right articles, outside your ideology, at what makes sense.
Paul Krugman did a paper in 1999 about Japan's liquidity trap, i encourage everyone to google it and read it. it is scary how similar it is to our current situation. this is a very complex, hard to explain/convince people of what needs to happen, situation. That's why we are doomed to repeat the mistakes of the past. i mean you need stimulus, inflation of about 4% maybe %, debt write downs for anyone underwater on the mortage, tax increases on the rich...it just goes on. there are things to do.
This was a pretty sound explanation of it. But they failed to explain what it means in the context of policy. ie the fed can't do anything through the normal channel of setting the key interest rate.
further, to get the money moving the fed would have to be irresponsible on purpose and promise to raise inflation to 4% which goes against everything in conventional wisdom. but if believable would get banks and businesses hoarding money to spend it today because it will do less tomorrow.
increase in consumption..."an increase in GDP... which we all know, it good for the economy".
FAIL. Look at the increase of our GDP right. It's a debt-driven consumption. How is that good for the economy. This model creates blind malinvestment.
@WalkProp not all debt is bad. an increase in gdp would mean the economy is growing and a healthy economy leads to higher wages. higher wagers negate the effect of the debt you are concerned about. Just like if we didn't have a financial crisis in 2008 we wouldn't be talking about the deficit 24/7 these days. The best way to fix our problems is getting the economy growing again and tax cuts or spending cuts aren't the answer.
@stonecast Read something other than JUST Hayek. I mean, disagree with the material by actually critiquing it instead of just name dropping some ideology. That's for mindless Ron Paul drones on YouTube, not economists.
@jrs89 I read plenty of authors, that isn't of any relevence here. Why should I take the time to try to explain what Hayek explained so elegantly. So if you agree with the people in this video it's because you most likely have never read Hayek's explanation on the Liquidity trap or you weren't smart enough to interpret it correctly. If the latter option is correct then nothing I write will change anything... Read some Hayek. Bye.
@stonecast If you feel you shouldn't take the time to attempt to explain Hayek's works maybe you shouldn't have taken the time to comment that we should read it. What I agree or disagree with is not relevant. What's relevant is that your comment was of no value.
So if one believes in the liquidity trap as depicted within Mundell-Fleming framework, they likely have not read Hayek or are familiar with Austrian economics? So after one reads Hayek, all other economics is false? Interesting
@jrs89 It's not only about time, it's just that it cannot be explained accurately in a few paragraphs. My comment was valueble for all those who have never heard of Hayek and believe that there is such a thing called " a liquidity trap". Yes after one reads Hayek's view on the so called liquidity trap that person will understand why what is explained in this video is false. Read some Hayek. Bye.
nice
Morganside 2 months ago
This has been flagged as spam show
@Morganside Do you know that Christianity is correct? The world around us reveals that G-d DOES exist, and the historical evidence reveals that Jesus Christ really did come to this earth and there is overwhelming evidence that Jesus Christ really did physically rise from the dead. Jesus is coming again and the signs of the end times that were foretold in the Bible are coming to pass.
marionetemanJ 1 month ago
@Krugmanistheking Third, just because a hypothesis and a result line up does not mean it is 'proven'. Rather, it fails to reject the null.
While I would agree with Krugman that macroeconomics often relies too much on model at expense of theory, his analysis is somewhat shortsighted, failing to even consider that loose monetary policy is responsible for the initial excess liquidity that turned into the recession.
Paying someone to splash water around in a pool does nothing but empty the pool..
Ooftyman 2 months ago
@Krugmanistheking First of all, you misunderstand what rational behavior is. It is not always being right, the ability of foresight, or omniscience. Second, as almost any academic economist (I'm a PhD candidate) will tell you, macroeconomic forecasting has been very inconsistently predictive.
Krugman's analysis is of business cycles is generally somewhat sophomoric. He makes broad statements that assume firms are necessarily isolated from monetary policy. See next.
Ooftyman 2 months ago
Oversimplifications often lead to very, very false statements. Keynes' old model rested on a whole host of assumptions including that spending stopped altogether, that demand is for money (money is demanded -- it is merely a unit of exchange) and it aggregated an entire economy into one. Central bank attempts to subvert 'liquidity traps' are the problem.
I hate when high schools and undergraduate programs keep perpetuating this...
Ooftyman 2 months ago
@Krugmanistheking
Ahh so I should just read any paper...You do not know of any particular paper you can recommend? Probably you have not read them yourself then. Well, thanks, that's so helpful.
BarrySlisk 3 months ago
@Krugmanistheking
Well Krugman isn't here, and you entered the discussion on his behalf. But ok..
Do you have a link to any of those papers you talk about? My understanding was that Business Cycle theory was not actually his particular area of expertise.
I don't actually need to read papers to know that directing resources from real production to useless production is a bad thing.
BarrySlisk 3 months ago
@Krugmanistheking
Stealing effects the incentives in the economy, so you should not disregard it.
Now why don't you discuss the points I brought up? You say I have not proven my point. Well you have not convinced me that redirecting scarce resources from companies (production) or employees (demand) to meet artificial demand for holes in the ground causes real growth (in usable production goods).
BarrySlisk 3 months ago
@Krugmanistheking
Exactly, to a Keynesian it better to steal money from productive people who create real products and wealth and give the money to people digging holes or people who prepare for alien invasions. Digging holes create no wealth and hinders the corrective behavior of the healthy bit of the free market, who now have fewer resources. Result is that the crisis will be prolonged (the analogy is that it takes longer to pay of your credit card debt if you are being paid less or taxed).
BarrySlisk 3 months ago
@Krugmanistheking
Digging holes or preparing for for invasions which will not happen does not make us richer. It is a waste of resources. Your name does not suggest that I take you seriously.
BarrySlisk 3 months ago
More unicorn ADAS nonsense.
qwertypoiu4321 7 months ago
yay!! someone call Glen Beck!
Theocrasuck 7 months ago
oh and then there is the 2 million homes pending foreclosure...those have to stop too. this economy won't get better anytime soon because nothing has been done to stop the bleeding from multiple wounds. and tax cuts will only make things worst, and cutting spending will only make things worst.
fausto412 7 months ago
@fausto412
This is the same Paul Krugman who's opinion it was to inflate a housing bubble after the crash of 2000? Oh and not ALL GDP is good, it GDP rises due to debt-financed consumption and government spending it decreases Capital available to create productivity and wealth. What you are saying right now is that we need to stimulate our economy to re-inflate our service sector driven economy and exacerbate the economic imbalances we already have. Americans are broke & you want inflation
WalkProp 7 months ago
@WalkProp yes, we want inflation because that will lessen the burden of the debt Americans carry right now. If you have a link of Krugman advocating to inflate the housing bubble in 2000 i would like to it.
Though it should be noted that was a different time and he has been very consistent in explaining his view and his thinking...even when criticisms such as the one you mention come up. if he said it explicitly then he has a good logical explanation.
fausto412 7 months ago
@fausto412
Not 2000 but 2001/2002:
blog.mises.org/10153/krugman-did-cause-the-housing-bubble
BarrySlisk 7 months ago
@BarrySlisk
add h t t p + colon and 2 slashes in front of link. Stupid Youtube gave an error so I could not post the link otherwise.
BarrySlisk 7 months ago
@BarrySlisk looked at your link...context matters. you are using 2 totally different financial situations and ignoring the different solution that he proposes to say he is wrong bases on this bad logic.. CONTEXT MATTERS. and in 2001 there was no bubble. the earliest bubble talk was in 2004. biggest difference? back then in 2001 the fed had the ability to lower rates. now it doesn't. you can achieve the effect you need with inflation. hardly anyone says what PK has been saying.
fausto412 7 months ago
@fausto412
Yes there was a bubble in 2001 just no burst yet. Due to the crash of the tech bubble Greenspan lowered interest rates to avoid the consequences of the bubble thus inflating a new (or arguably the same) bubble which lead to the housing bubble.
But this is another story. Can you document that PK was against low interest rates from 2001-2011 ? I doubt it as he is keynesian but I'm willing to be persuaded.
BarrySlisk 7 months ago
@BarrySlisk also, nobody told the FED to continue lowering the key interest rate for years, at no point did PK continue to advocate for lowering the rate just to create a bubble. in fact in 2005 he was already questioning it...meaning the fed went overboard. something else was at work...deregulation, derivatives, greedy banks, lowered lending standards...thats how you get the crisis we in now. fed rate is .25% because they can't go any lower. ZERO LOWER BOUND, liquidity trap. diff problems.
fausto412 7 months ago
@fausto412
This article states otherwise: (add h t t p : //)
economistsview.typepad.com/economistsview/2011/01/paul-krugman-a-cross-of-rubber.html
BarrySlisk 7 months ago
@BarrySlisk
"But the bankers also had a more substantive demand: they want higher interest rates ... because they say that low rates are feeding inflation. And what worries me is the possibility that policy makers might actually take their advice."
Paul Krugman, january 2011
BarrySlisk 7 months ago
"even with a really strong recovery (which almost nobody expects), the Fed should keep rates on hold for at least two years.", Paul Krugman
(add h t t p : //)krugman.blogs.nytimes.com/2009/10/11/when-should-the-fed-raise-rates-even-more-wonkish/
BarrySlisk 7 months ago
@BarrySlisk again, you are talking about 2 different scenarios. krugman has been saying since 2008 inflation won't be a problem for a while. so far he has been right. as long as you have declining wages and high unemployment and all this debt households are carrying the inflation threat won't show. and yes he advocated for keep rates low for a while. i can't find a spot where he is against low rates explicitly but i can implicitly find it.
fausto412 7 months ago
@fausto412
"krugman has been saying since 2008 inflation won't be a problem for a while. so far he has been right. "
How do you determine this? Do you think that things have been going great since 2008? What would make you come to the opposite conclusion?
BarrySlisk 7 months ago
@BarrySlisk inflation is determined various ways. for FED policy purpose something called CORE inflation is used for logical reasons. The number you hear most in the news is called Headline Inflation and includes fuel and food prices that can swing wildly from one month to the next.
Inflation hasn't been a problem. Anybody who in 2008, 2009 and 2010 screamed "inflation is coming" (and there are many) is currently silence because they can't explain it. don't want to admit Krugman was right
fausto412 6 months ago
@fausto412
So inflation numbers should only cover prices which do not change? Then what is the bloody point?
BarrySlisk 6 months ago
@BarrySlisk That's not at all what I am saying. For policy making purposes CORE inflation is more steady and reliable.
Headline inflation can vary wildly month to month. So while you care headline most because as an individual you buy food and gas. An Economist at the macro level cares more about Core when figuring out whether to raise or lower rates.
Since this crisis started there have been a few points where headline shot up and talking heads were screaming inflation was coming.
fausto412 6 months ago
@BarrySlisk if these inflation hawks were in charge the fed would have raised rates a long time ago, making out problem worse. The ECB has raised rates recently, keep an eye out on what happens in Europe in the near future.
One of the worst things in media and news today is that people make all sorts of wild predictions and when they don't play out they don't come back, admit they were wrong and reexamine their ideology.
fausto412 6 months ago
Here is Paul Krugman explaining it....he literally has to make a post every 3 to 6 months explaining the concept. krugman.blogs.nytimes.com/2010/02/26/core-logic/
fausto412 6 months ago
@fausto412
Stupid of me. I wasn't thinking :)
But inflation will be a problem and has been a problem. This entire crisis is because of borrowing and inflation (monetary inflation). And this will result in high price inflation. It must! Because USA cannot and will not pay it's foreign debt by lowering their living standards very much.
BarrySlisk 6 months ago
@fausto412
Krugman wants to prepare for an Alien Invasion. This should save the economy. What an idiot. How can you listen to this man?
watch?v=fyW-o-Pr92M&feature=feedu
BarrySlisk 6 months ago
Low interest rates and inflation are two sides of the same coin is it not? It sounds like you think they are totally separate. The central bank lowers interest rates by supplying new money (monetary inflation) which it lends out. This process forces the interest down.
BarrySlisk 7 months ago
The banks are broke, it's not liquidity trap. Try raising the rates to where they should be in this country, like what the market would suggest, and every bank would fail. Look at the numbers anyway, not the CPI, go out to the mall or the grocery store & gas pump. Inflation is way above 4% annually already. This nonsense will be put to rest when they'll be enormous pressure to inflate as you suggest which will be more burden on the economy, or higher rates which bankrupts the system.
WalkProp 7 months ago
Check out on youtube. Keynes vs. Hayek rap anthem. And start studying real economics i.e. from the austrian school. It's funny how you think we're gonna be Japan. Oh man, you wish. This is going to make Japan look like a gum-drop house on lollipop lane. Think plummeting asset prices (measured in gold, not dollars), and sky rocketing goods prices (in dollars, same in gold)... and everyone with U.S. dollars get poorer. Japan will be laughing at the U.S..
WalkProp 7 months ago
but these things are politically impossible. so we'll muddle along like Japan for years. at current gdp growth rates full employment will be achieved after 2020 based on all estimates i've seen. oh and we also need to stop firing government workers. if i have to sit here and explain all this...then you haven't been looking at the right articles, outside your ideology, at what makes sense.
fausto412 7 months ago
Paul Krugman did a paper in 1999 about Japan's liquidity trap, i encourage everyone to google it and read it. it is scary how similar it is to our current situation. this is a very complex, hard to explain/convince people of what needs to happen, situation. That's why we are doomed to repeat the mistakes of the past. i mean you need stimulus, inflation of about 4% maybe %, debt write downs for anyone underwater on the mortage, tax increases on the rich...it just goes on. there are things to do.
fausto412 7 months ago
This was a pretty sound explanation of it. But they failed to explain what it means in the context of policy. ie the fed can't do anything through the normal channel of setting the key interest rate.
further, to get the money moving the fed would have to be irresponsible on purpose and promise to raise inflation to 4% which goes against everything in conventional wisdom. but if believable would get banks and businesses hoarding money to spend it today because it will do less tomorrow.
fausto412 7 months ago
hahahahaha this is bs read austrian economics
Coteincdr 8 months ago
increase in consumption..."an increase in GDP... which we all know, it good for the economy".
FAIL. Look at the increase of our GDP right. It's a debt-driven consumption. How is that good for the economy. This model creates blind malinvestment.
WalkProp 9 months ago
Comment removed
fausto412 7 months ago
@WalkProp not all debt is bad. an increase in gdp would mean the economy is growing and a healthy economy leads to higher wages. higher wagers negate the effect of the debt you are concerned about. Just like if we didn't have a financial crisis in 2008 we wouldn't be talking about the deficit 24/7 these days. The best way to fix our problems is getting the economy growing again and tax cuts or spending cuts aren't the answer.
fausto412 7 months ago
nice one!
o00Adam00o 10 months ago
thanks friends
ragaplus 10 months ago
Read some Hayek. Bye.
stonecast 11 months ago
@stonecast Read something other than JUST Hayek. I mean, disagree with the material by actually critiquing it instead of just name dropping some ideology. That's for mindless Ron Paul drones on YouTube, not economists.
jrs89 10 months ago
@jrs89 I read plenty of authors, that isn't of any relevence here. Why should I take the time to try to explain what Hayek explained so elegantly. So if you agree with the people in this video it's because you most likely have never read Hayek's explanation on the Liquidity trap or you weren't smart enough to interpret it correctly. If the latter option is correct then nothing I write will change anything... Read some Hayek. Bye.
stonecast 10 months ago
@stonecast If you feel you shouldn't take the time to attempt to explain Hayek's works maybe you shouldn't have taken the time to comment that we should read it. What I agree or disagree with is not relevant. What's relevant is that your comment was of no value.
So if one believes in the liquidity trap as depicted within Mundell-Fleming framework, they likely have not read Hayek or are familiar with Austrian economics? So after one reads Hayek, all other economics is false? Interesting
jrs89 10 months ago
This has been flagged as spam show
@jrs89 It's not only about time, it's just that it cannot be explained accurately in a few paragraphs. My comment was valueble for all those who have never heard of Hayek and believe that there is such a thing called " a liquidity trap". Yes after one reads Hayek's view on the so called liquidity trap that person will understand why what is explained in this video is false. Read some Hayek. Bye.
stonecast 10 months ago
@stonecast You're an amazing human being.
ShirtlessLocke 9 months ago
@ShirtlessLocke Thank you sir.
stonecast 9 months ago
@stonecast While were recommending great economists, how about you read some Piero Sraffa?
GolumTR 9 months ago
beautiful
rhuntingdon 1 year ago
thanks guys
1ivan100 1 year ago
great! thanks :)
ledgebox 1 year ago