Now, Paul is unique among the GOP contenders, or for that matter among politicians in general, in making monetary policy his signature issue. So it’s worth noting that he is among those who have been wrong about everything in this slump.
Here’s a sample from earlier this year: Ron Paul: Gold, Commodity Prices “Big Event” Signaling Economic Collapse. Oh, and for fun: Understanding Why Ron Paul Knows More About Inflation Than Does Paul Krugman.
He then goes to post a screen capture which shows that commodity prices are down 3.63%, since May. He continues:
The second of those articles [my article-RW], by the way, predicts a surge in consumer prices in the second half of 2011. Not according to either the CPI or, for those who are convinced that the government is lying, billion price index, both of which show prices leveling off in the second half. But hey, there are still 17 days left!Got that? He posts a commodity prices chart and then switches to a discussion of consumer prices. Here's the data for the increase, year over year, in the consumer price index for each month of this year:
2011-01-01 3.604
2011-02-01 4.708
2011-03-01 5.879
2011-04-01 6.808
2011-05-01 7.484
2011-06-01 7.439
2011-07-01 7.804
2011-08-01 8.200
2011-09-01 8.528
2011-10-01 7.793
Current CPI level 226.763
What you see is a steady increase in the CPI month after month the entire year, except for a minor slowdown in November and even smaller dip in May. As I regularly write in the EPJ Daily Alert, you never want to look at any specific data point but the trend. Which raises the question, Is Krugman making his entire anti-inflation case, at the consumer level, on the dip in one month's data point?
Or does he have a reading comprehension problem? In my post back in May, which he links to, I specifically call Krugman out on this:
The further problem with Krugman's analysis is that he mixes commodity prices with consumer prices...Headline inflation is about consumer prices not commodity prices. Because Krugman doesn't understand Austrian economics, he tends to aggregate all prices together. For him, all prices in the aggregate move together, which takes the richness out of the data. Austrians don't make this mistake. They understand that when new money enters the system, it enters the capital goods sector and the raw commodities sectors first. Only later, does it works its way to into consumer prices.Got that? He shows a post of declining commodity prices, when I am discussing consumer prices.
It is the inflation from earlier money printing that is now starting to hit the consumer sector, Krugman will never spot this by looking at commodity prices. Krugman has his eye on the wrong part of the ball park. He is watching the grounds crew move off the field and is not watching the stands fill up. He is declaring the game over before it even starts.
But even with commodity prices, which are notoriously volatile, as the Fed prints and prints and prints more money. Prices go up and up, with minor violent pullbacks:
I don't know about Krugman, but I am grateful that price inflation has not increased at a faster pace. As the Austrian economists Ludwig von Mises and Friedrich Hayek taught the world is a very complex place, that's why we can never know for sure exactly when or how the massive destructive force of huge money printing will hit the price level in dramatic fashion. When a doctor gives a man dying of cancer 6 months to live, the man should not celebrate he has lived six months and a week. It does not mean he has been cured. It isn't that the Grim Reaper has forgotten about the man. It may take 7 months, 9 months or 11 months, but if the cancer continues to progress, the Grim Reaper will eventually knock all to soon at the door.
Helicopter Ben continues to spread new money as though the banksters need to use it for toilet paper. The price inflationary consequences of this will eventually be severe and make a fool out of Krugman's comment much better than I can in this post.
UPDATE: Relative to the comments a few of view have pointed out that Krugman's reference is only to today's plunge in commodities, which was 3.63%, and not the entire period of his chart which goes back to May. I apparently was giving him more credit than I should have, according to you guys. In error, I simply took the reference off the chart as being for May, which I shouldn't have, but if you think a one day drop in commodities proves anything, them I'll be sure to blast a chart the next time commodities climb in one day by MORE THAN 3.63%, for your amusement and pleasure.
As for my "lying" about the increase in the CPI, I link to the data, and call it data, not the percentage change, since I was focusing on absolute increase and not the percentage change. My point was that the absolute price level was increasing regularly. But, hey, if you guys are Krugman followers, I understand how you would only look at the surface of an argument rather than dig into the references that point out what data I was referring to.
I guess we've all been completely refuted by both Krugman and the MMTers.
ReplyDeletehttp://mikenormaneconomics.blogspot.com/2011/12/fed-prints-29-trillion-dollar-goes-up.html
Just kidding, of course.
Posted to NYTimes website - we'll see if they deem to accept it. (doubt it)
ReplyDeleteThe whole premise of this (Krugman's) article is based on a rhetorical sleight of hand.
Krugman starts off by critiquing Ron Paul, charging that he's been wrong about 'everything.'
The specific critique Krugman moves on to as his example, is, "The second of those articles, by the way, predicts a surge in consumer prices in the second half of 2011," only this wasn't written by Ron Paul, but by a blog called Economic Policy Journal.
Beyond this conflation, Krugman's specific disagreement is with a sentence that is not 'Austrian,' and which Ron Paul wouldn't have agreed with.
How can we show that the quote is not representative of the Austrian economic theory which Krugman is attacking out of his own ignorance?
Because Mises wrote extensively that making economic predictions and giving them some timeframe is not possible.
Example, which almost sounds like Mises was writing specifically about Krugman:
http://mises.org/efandi/ch23.asp
"Economics can only tell us that a boom engendered by credit expansion will not last. It cannot tell us after what amount of credit expansion the slump will start or when this event will occur. All that economists and other people say about these quantitative and calendar problems partakes of neither economics nor any other science."
Yet somehow, we're supposed to take Paul Krugman's word as a supposed expert in his critique of an economic theory whose most basic principles he demonstrates ignorance of.
I am still looking for that elusive Keynesian price theory.... A capital theory would be a nice bonus....
ReplyDeleteAll Liberals have a "reading comprehension problem" when they get agitated...They are mental children. They read it the way they want it to read...Just like weak children with discipline/morality problems.
ReplyDeleteHaha! Victory Wenzel! You've just garnered a feather in your cap.
ReplyDeleteAn attack from Krugman means that you're influencing people and he doesn't like it.
He's just giving your encouragement now. lmao!
Right, there you go nutjobs. You guys are all lords of economics, and Krugman, with his silly medal, knows nothing. That makes lots of sense.
ReplyDeleteAs for your "refutation" of Krugman, you made your prediction of sharply upturning consumer prices for the later half of the year in May, 2011. Now, you're showing us data going back to January, because from May - December, there is no evidence of increasing prices. Revisionist nonsense!
cool story bro
ReplyDeleteEpic. Ironically for krugman, his attempt at refuting you will draw more interest to the link, this post, ur blog, more followers of rw and therefore, Austrian school of economics.
ReplyDeleteWill he dare mention rw & a link to this blog again in an attempt to strengthen his argument? in this one and likely only instance in reference to Krugman, I say "you can do it krugman!"
Isn't the relevant data for your argument the percent change in CPI, as opposed to the absolute change? The percent change has been in the 3-4% range all year. Looking at this graph puts current inflation in context.
ReplyDeletehttp://research.stlouisfed.org/fred2/graph/?id=CPIAUCSL#
It is only slightly higher than the average in the 1990's, and lower than almost every year from 1968-1991.
Also, while Krugman posts a graph of the commodity index, he also links to the CPI graph which shows a similar trend. I think he is making the point that neither consumer nor commodity prices have shown rapid inflation in the second half of 2011.
"commodity prices are down 3.63%, since May"
ReplyDeleteNo, they are down 19% since May. They were 370 on CRB in May and now they are 300.
Regarding your headline inflation numbers, you change the units on the St Louis Fed graph you link to "percent change from a year ago", you see the annual rate of inflation is 3.5%.
Krugman was right and you are wrong.
I have a question. If the Fed is continually increasing the supply of money, then should that mean commodity prices, as measured by CRB BLS Spot Index continually increase?
ReplyDeleteGrowth in M1: http://research.stlouisfed.org/fred2/series/M1SL?cid=25
Growth in M2: http://research.stlouisfed.org/fred2/series/M2SL?cid=29
According to the M1 and M2 charts, the Fed has been increasing the money supply fairly constantly since the 1970s, but according to the CRB BLS Index chart posted above, commodity prices have not continually gone up.
I expect I may find myself in the middle of a wordstorm here, but here goes. I'm here from the link on Paul Krugman's blog, trying to find my way through the economic thicket.
ReplyDeleteIf I've understood the article correctly, your critiquing Krugman for not being clear enough in distinguishing commodity price inflation from consumer price inflation. As a non-economist I'll take it on trust that this is significant, and I'm grateful to you for making the distinction.
But here's where you lose me: you seem to think that showing this confusion somehow means your prediction was correct.
Your original post stated: '...the price inflation at the consumer level will continue to increase [in the second half of the year - going from the context]', and I don't see that in the data, going from the date you wrote that original sentence. Yes, CPI does increase slightly between May-Oct, but compared to the change in the previous five months it seems to be levelling off more than anything.
I may read misreading the data, but it seems there's a case to be made that your original prediction has not come to pass. And Paul Krugman's lack of specificity regarding types of inflation doesn't alter that.
Would you be willing to comment?
Many thanks
"It may take 7 months, 9 months or 11 months, but if the cancer continues to progress, the Grim Reaper will eventually knock all to soon at the door."
ReplyDeleteWhat about years?... specifically 3? (since the "new money entered the system")
seriously... does your entire argument boiled down to
'Eventually everyone will act the way I think they SHOULD act and runaway inflation will eventually happen. Might not be today might not be tomorrow... But NO DURATION of it not happening will ever allow me to question my world view?'
I mean you predicted that;
"It is just now starting to heat up consumer prices and will heat them up even more in the second half of this year. "
Do you have an economic explanation (other than "just wait and see") for why the consumer prices DID NOT "heat up" even more?
Michael Kors IPO Prices at $20 a Share, Above the Range (Story developing) - CNBC
ReplyDeleteO.K. - I'll bite. Didn't happen yet, but will soon, or sometime? In the meantime, while we're waiting for you to be PROVED RIGHT, could we actually try something, on the off chance it might, you know, work?
ReplyDeleteTo be fair, you did say in your original post that consumer prices would "heat up" even more in the second half of the year, which wasn't the case. By your own numbers, the increase was much slower in the second half of the year and the last point isn't much above what it was in May. You also expected the trend for commodities to be higher, which also isn't the case.
ReplyDeleteIt's seems to me you can only say Krugman is being too short-sighted in his analysis, and if that's the case, time will indeed make Krugman's comments look foolish. If that's not the case it will make you comments look foolish.
As you can see from the FRED graph you linked to ("the data"), the CPI *index* always goes up, up, up. A low level of inflation is the norm. When you have actual price deflation, you're in trouble.
ReplyDeleteThis is why the normal statistic reported is the percentage *change* in the index, usually on an annualized basis.
For example, here are the annualized rates for the 3-month periods ending in January, April, July, and October of this year:
3.9% 6.2% 1.8% 2.4%
http://www.bls.gov/news.release/cpi.t02.htm
Or, here is the year-over-year percentage change in the CPI (available by modifying the settings of your FRED graph):
http://research.stlouisfed.org/fredgraph.png?g=3QM
And I don't see why the confusion about consumer prices vs. commodity prices. Commodities are inputs to the goods that consumers purchase, whether it's corn chips, sneakers, or televisions. Krugman's point is that the increase in consumer prices has a lot to do with the increase in commodity prices.
@Adam M,
ReplyDeleteSome astute observations.....which go to show that Krugman's problem is not reading comprehension, but economics comprehension.
He's such a tool....
Nice article RW.
LOL...you post a graph that shows a 12% decline in prices this year, down to pre-crisis levels, and say that you're glad that inflation hasn't hit harder!
ReplyDeleteYou've clearly picked your graphs well--oh, excuse me, GRAPH--and made it hard to read by having the time axis start at 1947...ooOOOOoooOO it's so scary that the graph looks like it's going up up up up at the end!!!
hmmm....so, what, your graph shows a gap of about 10 points out of 450...so 1/45 or slightly more than 2%...over three years...
LOL...'tards are funny
I believe you are confusing absolute amounts with rate of change. Krugman is not claiming that there is no inflation, but that the rate of inflation has not shot up and has not exceeded what has historically been considered "normal" or "acceptable."
ReplyDeleteThe numbers you provided are absolute change in the CPI since a year prior. In terms of percent change, the numbers are 1.6%,
2.1%, 2.7%, 3.1%, 3.4%, 3.4, 3.5%, 3.7%, 3.9% and 3.5% respectively. These are also the headline numbers, change to core CPI since January have been been: 1.0%, 1.1%, 1.2%, 1.3%, 1.5%, 1.6%, 1.8%, 2.0%, 2.0%, and 2.1% respectively. Neither set of numbers are out of the ordinary compared to the previous 10 years of economic data and are actually relatively low compared to much of US history (at its peak in 1980, annual core inflation was 12.4%).
We simply are not facing runaway inflation.
First they ignore you, then they fight you, then you win.
ReplyDeleteTell Krugman to go to the grocery store instead of his butler and he'll have all the empirical evidence he needs to see inflation at work. Or, I guess he could get a one year subscription to Shadow Stats if going to the grocery store is out of the question.
ReplyDeleteMr. Wenzel, first as a disclaimer: I am coming from a neutral position on the various economics schools and only a basic understanding of economics (I am interested in the hard sciences but occasionally dabble in reading about economics).
ReplyDeleteNow on to my question, if as you say, you must never look at a single data point, but rather the trendline, then shouldn't your thesis be that the CPI is rising faster than the overall trendline?
It does not take any advanced statistics program to see that the general rate of inflation since about 1982/83 has been almost constant ("creep inflation" I believe its called). I think that Krugman's point isn't that inflation isn't occurring at all, rather I think he is arguing that we are only seeing the regular levels of "creep inflation."
Krugman didn't conflate consumer prices and commodity prices. He showed a figure of commodity prices, but he also linked MIT for consumer price data. And the consumer price data show a) that annual inflation rate is under 4%, and b) that on a month-to-month basis inflation fell after May. The fact that you use a year-over-year data to support a prediction about what would happen in the second "half" of the year raises huge red flags.
ReplyDeleteYou're lying. Consumer Price Index for All Urban Consumers: All Items (CPIAUCSL), Monthly, Seasonally Adjusted Year over year percentile change is:
ReplyDelete2011-01-01 1.66%
2011-02-01 2.16%
2011-03-01 2.70%
2011-04-01 3.13%
2011-05-01 3.44%
2011-06-01 3.43%
2011-07-01 3.59%
2011-08-01 3.76%
2011-09-01 3.90%
2011-10-01 3.56%
No, you seem to be wrong in accusing Krugman of a sleight of hand in moving from commodity inflation to CPI inflation. My reading of Krugman was that he discussed Paul's views of commodity price inflation (and given that you quoted Paul prominently as a reference in your article, that's not unreasonable.) Thereafter, as an aside, he takes a poke at you.
ReplyDeleteNow, you can claim that you were right in predicting higher inflation in the 2nd half of the year; you can claim that you never make forecasts because it would be foolish to do so, but claiming that Krugman is being dishonest just doesn't cut it this time.
BTW, before ridiculing Krugman for being ignorant of how fast financial markets can change, you might want to read some of his scientific work on exchange rate crises. The Nobel Prize committee thought it was good enough to mention.....
"Grim Reaper" in an economic discussion??!? Hard evidence should take precedence to literary style in these posts.. Unfortunately the abundance of the latter does not compensate the desert of the first.
ReplyDeleteYou folks might want to note that in the graph provided that is supposed to "prove" that commodity prices are in full on run away inflation has almost exactly the same slope starting in 1980 - with a very steep spike followed by a steep drop in late '10 early '11 and then back to trend after the drop. I am pretty sure that negates or at least damages the argument above. Furthermore, the writing in this article is nearly impossible to follow, contains no math or even a model that demonstrates the prediction being made - just some lose fluff about new money causing inflation no matter what, which frankly makes no sense at all. Frankly, this article sounds like something written by a seminary student about the holy ghost or something - not about economics which usually contains some quantitative and qualitative analysis.
ReplyDeleteIs Krugman intellectually dishonest or just that confused?
ReplyDeleteAs a matter of fact, Krugman is right and you cannot even understand what Von Mises was writing about.
ReplyDeleteFor example, you cite the following passage:
"Economics can only tell us that a boom engendered by credit expansion will not last. It cannot tell us after what amount of credit expansion the slump will start or when this event will occur. All that economists and other people say about these quantitative and calendar problems partakes of neither economics nor any other science."
When Bernanke started QE and the Obama Administration passed the Stimulus Bill, there was already a recession heading towards a deflation.
Fiscal and monetary policies were aimed at stabilizing the economy back to its normal level after a huge financial crisis.
Their aim was not to create an artificial boom! The slump already started on Bush and Greenspan watch!
Von Mises's citation could eventually be used to criticize Greenspan and Bush back in 2005. But you haven't. Why? Ideology?
But, ops, Krugman was also criticizing Greenspan in 2005. But not thanks to Von Mises.
Your problem is that you turn the history of economics upside down.
Pre-keynesians economists and Keynes agree on a lot of things, but Keynes understood that there are at least one situation in which things start to run contrary to normal and it is exactly after the perfect storm: a credit or financial crisis followed by a confidence crisis, recession, deflationary pressures, deleveraging, interest rates at the zero bound.
Keynes was innovative and right about how to manage the perfect storm. This intuition was totally absent in the works of pre-Keynesian economists (ok, with relevant exceptions, but not with the same clarity).
About the causes of the perfect storm, Keynes would have probably agreed with pre-Keynesian economists with some difference: the intensity and frequency of financial bubbles is also influenced by income inequality and too much capital freedom, only in part by Greenspanesque monetary policy.
Ok, and he was against the Gold Standard, but against flexible exchange rates. He designed the Bretton Wood system of fixed, but adjustable exchange rates.
If you think that you can go back to Von Mises and find something new about economics, you won't find too much. Ok, von Mises believed to be an innovative economist, but I also believe to be the sexiest man alive.
And, Schumpeter, not a friend of Keynes, explicitly admitted later on that, during a deflationary spiral, the government should step and the Central Bank as to accomodate as much as it can and unconventionally.
Bob - Congratulations! Is this the first time Krugman has attacked you?
ReplyDeleteThe fact that Krugman's attack on Austrian Economics amounts to a childish mocking of the more bullish market predictions made by 'Austrians' (aided by cherry picking of data) shows he doesn't actually understand AE enough to critisice it. Or perhaps he does and is smart enough to know he can't argue with the fact that money creation distorts markets and enriches some at the expense of others. As an earlier commenter already pointed out Mises (not to mention others) have explicitly stated AE is not predictive.
ReplyDeleteIn a world of infinite and ever changing actions it is ridiculous to claim anyone can predict accurately because nobody can forsee 'black swan' events such as the decision for no QE3 and the collapse of MF Global.
Nonetheless, I'd say the massive increase in commodity prices as per the CRB BLS Index chart posted since ZIRP in 2001 vindicates Austrian Business Cycle Theory far more than a 3% fall in commodity prices since the end of QE2, collapse of Europe and MFG invalidates it.
What in the world are you folks talking about?
ReplyDeleteAnd where the heck does this guy get his CPI data? The BLS says "headline" inflation is 3.5%, not 4, 5, 6, 7, or 8% as this guy is at least trying to imply. Core inflation is even lower:
http://www.bls.gov/news.release/cpi.nr0.htm
We've been hearing about impending "hyperinflation" for several years now. Where is it?
(And for God's sake, who has "reading comprehension problems"? Look at the BLS data!)
"He then goes to post a screen capture which shows that commodity prices are down 3.63%, since May."
ReplyDeleteIt's down 3.163% since yesterday, not since May. It closed at 296 today. It reached 372 in May 2011. It is down 20.5%.
Please post a correction on this blog.
Are you implying that commodity prices have no impact on consumer prices? The idea that it's somehow inappropriate to infer that a decrease in commodity prices would lead to a decrease in CPI, is asinine at best. Input cost increases that arise from an overall increase in commodities are passed on to consumers and has a direct impact on CPI numbers. Evidence of this can be seen in the consumer staple and personal goods industries, companies like Proctor and Gamble have been forced to raise prices on many business lines to offset the increase in commodity input costs.
ReplyDeleteOn the company's last earnings call management pointed to the decrease in commodity prices as beneficial to profit margins, and could lead to price reductions.
So both commodity and consumer prices seem very related to me...
What is wrong with Dr. Kurgman's inference that lower commodity prices could lead to lower consumer prices?????
Dr M,
ReplyDeleteCan you leave Krugman's silly medal out of this?
Maybe RP needs to write an article to NYT pointing out PK’s intellectual dishonesty. Linking to RP’s comments to the FED Chairman in March 2000 (Nasdaq), 2002 and 2005 (Housing) and 2007 (recession). Linking to gold price last 10 years and wholesale and consumer prices in Nov 11 vs Nov 10.
ReplyDeleteAlso point out how the Keynesian medicine has failed in the 1930’s, 1970’s and in the current recession and how the stimulus has benefited the 1% over the 99%. Furthermore point to the inflationary policies of Wilson during WWI and how the U.S. tackled that depression in 1921. Finally, politely ask PK to at least read a few books on the subject of Austrian economics before writing further attacks on a theory he knows nothing about.
Besides being dead wrong (and Krugman 100% right) in your predictions, you post deceptive data.
ReplyDeleteFor example, you post a table of year-over-year inflation by month in 2011, but without the denominator (that is 2010). Then you say the data is a chart of cumulative inflation back to 1948! But what I see in that chart (in a tiny slice that is obviously intended not to be seen) is a big dip in the latter half of 2010 -- there are your denominators! And that's why the ratios are growing.
But the numerators (this year's inflation) is actually very very modest, falsifying your prediction and confirming Krugman's. I'm not talking ideology here, just numbers.
You, sir, are a charlatan or an idiot -- or both! G'bye.
Is anybody else getting the feeling that we've been through this before? That, oh say, 3-4 years ago the same arguments were going back and forth, and that when the shit hit the fan the only ones not soiling their trousers were the Austrians.
ReplyDeleteIt seems to me that the problems are now much broader (i.e. they have crossed borders) and that the problems are also much bigger (trillions).
Are Keynesians (and, Krugman) willing to say that this isn't going to end badly? Furthermore, if it does end badly, are they willing to give up their careers and take up painting, dancing, palm-reading, etc; anything other than economic theory?
Krugman predicted deflation. He was wrong and has been wrong since 2008.
ReplyDeleteEPJ predicted and more importantly predicts inflation. EPJ is right.
EPJ predicted rising inflation.
ReplyDeleteKrugman predicted continued low inflation.
Here's the chart:
http://research.stlouisfed.org/fredgraph.png?g=3R3
Krugman obviously wins. The striking thing is the extent to which austrians try to convince themselves they were right.
@Joseph Fetz,
ReplyDeleteNow Joseph! Why did you have to point out those elephants in the room?
And why not give them another career choice? Say, writing for the NYT in the entertainment section?
"EPJ predicted and more importantly predicts inflation. EPJ is right."
ReplyDeleteReally? All this hyperventilation is about 3% inflation?
If so, EPJ must have been hyperventilating for some time now...
"Relative to the comments a few of view have pointed out that Krugman's reference is only to today's plunge in commodities, which was 3.63%, and not the entire period of his chart which goes back to May. I apparently was giving him more credit than I should have, according to you guys.
ReplyDeleteOh ffs. You made serious grade school blunder. Trying to blame it on him is ludicrous and destroys what little credibility you may have had.
Larry,
ReplyDeleteKrugman has always stuck me as more of a dancer than an economist. He'll always pull his panties to the side for a paycheck.
Don't be so loss averse. The data clearly show you were wrong, and Krugman was right. Does that mean he's right about everything, and you're wrong about just as much? No. But refusing to acknowledge when you've been incorrect just makes it harder for anyone to take you seriously when you actually are right.
ReplyDeleteAll this fighting over charts and such.
ReplyDeleteWhen I go to buy groceries, I notice that a head of lettuce that use to cost about .89¢ about 7 or 8 years ago now cost almost $2.
Aside from the increased cost of living, which is a very regressive form of taxation, inflation makes saving and planning for ones retirement all the more difficult. Don't all of these Krugmanites see how this is the very thing that robs the middle and lower class of their wealth and security?
Paul "there is no way commodity prices will rise unless QE2 stimulates demand" Krugman has been owned again. The good thing is Krugman is only opening up EPJ to a far wider audience with the publicity, sort of like when foxnews attacks ron paul. They are much better off pretending their intellectual superiors don't exist...
ReplyDeleteI still remember when Krugman predicted that there was no way commodity prices would increase with QE2 unless demand was stimulated -- demand wasn't stimulated, but commodity prices skyrocketed afterwords.
ReplyDeleteTo respond to your update:
ReplyDelete"As for my "lying" about the increase in the CPI, I link to the data, and call it data, not the percentage change, since I was focusing on absolute increase and not the percentage change. My point was that the absolute price level was increasing regularly. But, hey, if you guys are Krugman followers, I understand how you would only look at the surface of an argument rather than dig into the references that point out what data I was referring to."
--
"Data" is a neutral word. "percentage change data" is no more and no less "data" than what you linked to.
But the fact that the absolute price level is regularly increasing is not remotely in dispute. Seriously, not at all.
What is in dispute is how fast that price level is changing. You predicted it would increase more quickly in Q3-4 2011. It isn't. It's changing more slowly compared to the first half of the year.
If you want to preach to the choir, go right ahead. But if you're interested in educating the 'Krugman trolls' who are now over here (of which I guess you'd count me one, since his blog has been required reading for me for a while now), you need to reckon with your mistake.
That isn't to say that the rate of change in the rate of inflation won't suddenly increase. It might well. But it hasn't yet, despite oodles of extra money being pumped into the system.
"But the fact that the absolute price level is regularly increasing is not remotely in dispute. Seriously, not at all."
ReplyDeleteYet Krugman has been repeatedly warning of the concern for deflation. I guess we can excuse his being wrong on that like on a number of other issues because there wasn't enough (fill in the blank with spending, stimulus, etc) by the Fed or government.
anonymous at 12:58am - yup, anyone who actually pays attention at the grocery store or at restaurants notices both a modest increase in prices, but more importantly a big difference in quantity and quality of the food. The fact that every single chain restaurant I have been to in the last year or so has both raised prices somewhat and made the amount of food much smaller is all the proof that is needed.
ReplyDeleteOf course the krugman followers will believe it isn't true because government stats show otherwise -- well, not the stats from the 1970s, but the "new and improved" stats -- but i am sure many of them also still believe there is an inverse relationship between unemployment and inflation and that the 1970s never happened.
2 big number mistakes in your post.
ReplyDeleteFirst, these are the absolute changes in price index year over year:
2011-01-01 3.604
2011-02-01 4.708
2011-03-01 5.879
2011-04-01 6.808
2011-05-01 7.484
2011-06-01 7.439
2011-07-01 7.804
2011-08-01 8.200
2011-09-01 8.528
2011-10-01 7.793
That´s just wrong. should have been in percentage rates, as it was already posted.
Second:
"He then goes to post a screen capture which shows that commodity prices are down 3.63%, since May. He continues:"
I know Math isn´t really the strong point of americans, but really? 3.63% was the DAILY change.
How are you supposed to get ANY credibility when you make mistakes as easy to spot as these?
@Anonymous 12:58 AM,
ReplyDeleteRe: "Don't all of these Krugmanites see how this is the very thing that robs the middle and lower-class of their wealth and security?"
These things don't seem to matter to Krugmanites; it's about "models".
Who cares if the old and disabled and poor are hurt the most with inflation? We need more and more of it because that is what the same economic models that taught us about the Phillips Curve and that destruction to assets is good because it causes a boom.
ReplyDeleteIn fact, I am going to take Krugman's advice and just tearing the hell out of my neighborhood to create a mini economic boom around here. It won't be as big of a boom as what krugman said would happen with the japanese earthquake or his bizarre war against space aliens, but it should bring jobs here, right?