Wednesday, August 3, 2011

Krugman Spills the Beans on White House Economic Forecasters

Krugman writes:
Larry Summers puts the odds [of the economy headed back into recession] at one in three; I might be slightly more optimistic, but the risk is very real. Who, exactly, is at the White House who knows better?...And think about the politics here. For two years the White House has been determinedly cheerful, always declaring that the recovery was on track, that its policies were working fine. And all it did was squander its credibility...Spin is part of politics. But sometimes you have to know when to stop.
Of course, if the Fed continues printing money the way they are now (at 6% plus annualized growth), there is no chance the economy is headed back into recession. Just the opposite will occur, a manipulated boom with strong inflation. The weak aggregated numbers we are seeing now are the result of slowed money supply earlier in this year. That slowed money period is gone---especially given money growth over the last 4 weeks.

6 comments:

  1. ...QE3. Creating wealth from silver and gold is like taking candy from a baby.

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  2. Recession. I f#%king wish. Unemployment is 22%, these are depressionary numbers.

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  3. One cannot conclude that there is NO chance of a double dip on the basis of inflation of the money supply. It is possible that the new money may not spread throughout enough of the economy in time to stop a double dip.

    Granted, it is highly, highly unlikely given the inflation, but we cannot know for certainty that there will not be a double dip such that one can say "NO chance."

    What if a lot of the money finds its way to treasury bonds, after which the government spends much of the money overseas, or bailing out banks that will end up hoarding it, and only a small portion of the new money enters general circulation in the US? Highly unlikely, but not no chance. After all, the Fed created a gazillion dollars 2008 on, but that didn't stop M3 from collapsing for more than a year thereafter.

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  4. Not so sure the Fed can inflate their way back to another boom from this mess. If RW is right, and they manage another manipulated boom, I just can't see it lasting very long at all.

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  5. If this article from American Thinker is correct and I have no indication that it isn't- then this last budget deal was a game changer far larger than anyone has told us about. Basically Congress is irrelevant now. The POTUS can spend us into oblivion and there's not a damn thing anyone can do about it. Remember how no one wanted McConnell's bill that basically let Obama run wild without any restraint? Well from this description that's pretty much what we have now.

    http://bit.ly/nAJKUm

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  6. Wenzel, what are the odds of negative growth with accelerating inflation? If there are no "real savings" in the economy, additional money printing would just juice up prices and growth will plunge as a result. Right?

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