Friday, November 5, 2010

Krugman Attacks Jim Rogers

Whoa! Paul Krugman is feeling the Austrian heat.

He has just blogged an off the wall attack on Jim Rogers, who was just recently awarded by the Austrian oriented  Mises Institute  the prestigious Schlarbaum Prize for the lifetime defense of liberty.

Krugman spews out:

It has been really interesting to watch some of the commentary over quantitative easing by the Fed: while people like me see the Fed’s actions as way too timid, there’s a substantial faction out there that sees them as the end of Western civilization. Right now the most popular story on Bloomberg is Jim Rogers saying that Bernanke doesn’t understand economics, that he’s “debasing the currency.”...

....please note that inflationistas like Rogers have been wrong about absolutely everything this cycle (and the last cycle, and the cycle before that).
But they have their devotees. And this means that monetary policy, our only real hope at this point, must climb a wall of stupidity..

Krugman is simply making things up. Rogers has been the most dead on market commentator out there, warning about inflation. But, hey, maybe Rogers and me are getting bad quotes on our machines, and you right are Paul, there is no inflation. So Paul take advantage of me, why don't you teach me a lesson and sell me at last year's prices, gold, silver, oil, sugar, corn, wheat and cotton. Go ahead sell me as much as you want. I'm really stupid about these things. I have no idea that deflation is all around. I'll buy it all.


  1. Krugman is a political hack. He should stop pretending he is an economist and just admit he is a politician.

  2. I love how it's "they have their followers", how about there are the "aware" and the "unaware", "I Paul Krugman like to keep the masses, unaware".

  3. As Reagan said, "There you go again!"

    Inflation = rising commodity prices?

    Oh Sacred Austrian Purity, where have you gone?

  4. Well taylor, you can add electric, cable, health insurance, car insurance, tuition, transportation, tolls, every product from Wal-Mart, cell phone service, internet service, and pretty much everything else outside of housing to that list as well. If you don't see inflation, you obviously don't keep track of your budget.

  5. Anon,

    People like you make me realize there are people out there with even lower reading comprehension than I enjoy.

    Inflation, as defined by the Austrian school of economics (which Wenzel subscribes to) is an expansion in the supply of money and credit. It may be accompanied by rising nominal prices but that's not always the case. It depends on what is happening to the supply of goods and services, as well. However, "prices" usually are higher in an absolute sense than they would be without inflation, regardless of whether prices ultimately increase or decrease.

    My point, which you didn't pay attention to-- Wenzel's use of inflation here is to conflate the term with rising prices, something that Mises and other Austrian figureheads have said "Tsk tsk" to since they started writing about the subject. It's frustrating to see someone who should know better stooping to this trick (because he's lazy, because it's the popular usage, because he thinks he can get away with it being otherwise straight on this subject, I don't know).

    As for your specific comments, which I think perfectly illustrate the dangers of saying inflation = rising prices... over the last year I have seen the following happen to MY frequent bills:
    electricity- spiked in summer, now dropping (my electricity bill is now variable and based off the natgas price primarily, which is depressed)
    health ins- has not changed over the year
    car ins- has not changed over the year
    tolls- have not changed over the year (keep in mind, these are priced by govt, so they're not as sensitive to "inflation")
    wal-mart- don't shop there too much but seemed decently inexpensive when I was there
    cell phone- hasn't changed over the year
    internet- hasn't changed over the year
    gas- varies with price of oil, has been slightly up over the year
    groceries- overall, remained pretty flat through the year

    I actually do keep track of my budget, monthly, on a spreadsheet where I maintain records of all my receipts. So, despite your presumptive, condescending tone, there's "no inflation in my neck of the woods", buddy.

  6. Taylor Conant

    Inflation is defined as "too many dollars, chasing too few goods and services". Palyi also showed that price inflation lags monetary inflation.

    To be sure, not every rise of prices qualifies as inflation. Sporadic oscillations should be disregarded. Nor is it of interest in our context if the rise has been brought about by an expansion of gold mining or gold imports. Price levels may rise under the purest gold standard, but to a limited extent only. Gold is a very scarce commodity; paper is not. "Gold-inflation," if any, is self-correcting;
    paper inflation is limited only by the total
    collapse and repudiation of the currency.
    It is the inflation of the money volume-paper
    currency. and bank deposits-that creates the fact and maintains the expectation of a disproportion between the total supply of goods for sale and the total amount of purchasing power people have and are ready to use. Hence the definition; Moneycreation is inflationary when the additional purchasing power has no counterpart in goods and services people want to buy-when too much money chases too few goods.
    In other words, inflation is a condition of the
    economy in which a rising volume of created
    money brings about rising production costs, higher prices, and increasing costs of living.
    Inflation tends to "feed on itself." The longer it lasts, the stronger the expectation that it will continue. People borrow, spend, and speculate more freely·than they otherwise would. The money circulation is accelerated, the average dollar does additional work, and prices are boosted additionally.