Some readers may recall the “Peter Schiff was right” campaign of 2009, a sort of public-relations blitz claiming that Schiff, an Austrian-oriented commentator, had foreseen everything correctly. It wasn’t really true even then...Krugman goes on to discuss Schiff's warning on price inflation---and that we haven't had the expected inflation, yet. It's coming and Schiff will be correct again--exact timing is always difficult in a complex world.
But I really want to focus on Krugman's whopper about Schiff not calling the housing bubble, becasue that's what he is talking about when he refers to the " 'Peter Schiff was right' campaign of 2009."
Here's the clip Krugman is referring to, which appeared in February 2009:
It simply astounding that Krugman would make up such a whopper when the video proof smacks him right in the face, particularly when he is clearly referencing the video. Does he really think his NYT readers are that clueless?
When you are preaching to the choir, you can say anything.
ReplyDeleteI can't believe you asked if he thinks his NYT readers are clueless.
ReplyDeleteHe's banking on it.
"Does he really think his NYT readers are that clueless?"
ReplyDeleteThat's a rhetorical question, right?
yeah, he thinks they are clueless... because they are clueless
ReplyDelete"Does he really think his NYT readers are that clueless?"
ReplyDeleteHate to say it Robert....but many of them are that clueless. They'll never fact check Krugman but rather take his ramblings as truth.
Not all of them obviously....but I'm convinced at least 50% will....
PK mentioning Peter and having people who don't know about Peter google him just created a bunch more new Austrians. Koodoos to Paul.
ReplyDeleteYup. The Keynesian Krugman is the Austrian MVP.
DeleteKind of like my local gun shop's employee of the year being Obama...
Awesome.
DeleteI enjoy the NYT for the funny page. Page 1.
DeleteKrugman has clearly demonstrated time and again that he is completely and entirely pathological. The man lives in his twisted bubble of a reality where as long as the voices in his head say it, it's considered gospel.
ReplyDeleteWhat's worse - his readers, the readers of MSM rags such as the NYT - have zero ability to think objectively and verify any "facts" discussed. Our culture is beyond brainwashed and quite frankly it's terrifying.
Even if Schiff was "wrong," he could just say he was kidding right?
ReplyDeletebravo!
DeleteNYT reads are not only clueless, but also ignorant. Bob Dylan said it well back in 1965. Although he was speaking about Time Magazine or Newsweek, it applies to the entire mainstream media (including NYT).
ReplyDeleteListen until about 1:40 mark:
www.youtube.com/watch?v=mnl5X5MQKTg
Krugman never bothered searching Youtube for "peter schiff mortgage bankers" to hear it from the horse's mouth, before the crash, and in specific detail.
ReplyDeleteGovernment worshippers always cry foul when Austrian, that is to say, REAL economists are unable to provide a specific date for their market calls. Meanwhile, morons like Krugman can't even get the simplest shit right even after the fact.
Similarly, they'll whine that a 100% free market has never existed anywhere, therefore, it's utopian nonsense to be mocked or ignored. That a society without murder or crime has also never existed, however, does not mean that humanity shouldn't strive for peace and freedom.
Statists are clueless beyond redemption, and will defend tyranny in all forms until their final breath (as long as the perpetrators are part of their collective/political party, of course).
I say let them have it. Let them perish in that fire.
DeleteBut let those of us who love peace be left in peace.
How many of Schiff's customers made money when the bubble popped?
ReplyDeleteIf they didn't make money, he wouldn't have much of a business now, wouldn't he?
DeleteI did. Not a lot of money, but when my parents lost 80% of their retirement, I was still pulling in 2-3%.
DeleteNow they're with Euro-Pac.
You write, "exact timing is always difficult in a complex world." Seriously? Schiff and you have been predicting "price inflation" (I guess that's what Austrians call it) since the Zero-Lower-Bound was reached in late 2008. You have been wrong, wrong, wrong, and wrong for the last four years. Trying to wiggle your way out of this when other such as Bernanke, most of the rest of the FOMC, and yes, also Krugman on this point at least, have been right, right, right, and right is intellectually dishonest.
ReplyDeleteWhat does it take for you to admit that your worldview is incorrect on this issue ("price inflation")? One more year, two more years, how many? What's the time frame? And saying next year "may" be the time for significant "price inflation" is not cutting it. The Federal Reserve puts money where their mouth and policy are and releases detailed forecasts for inflation. Where are yours? Give the public a tools to compare the accuracy of your thinking on this point with the mainstream. Many Austrians had a good model of the vulnerabilities of financial markets. But you can't just celebrate the one success and ignore blatant failures elsewhere and expect to be taken seriously.
the federal reserve prints money where it's mouth is. if you give Peter the ability to print up money and manipulate market interest rates and asset values, I am sure he too can be right, right, right, and right again.
DeleteIt's been 4 years. And price inflation is there, but the "right, right, right, and right" FED cherry picks its numbers, leaves out food and fuel, and says there is no inflation.
DeleteDishonest, at best.
Further, there is no tool to predict human nature. No one person knows the thoughts, desires, and perceptions of every other economic actor, and therefore no one person can tell you exactly when the market will crash. When the general public realizes that the currency is devoid of value, there will be a rush to buy... Anything. Prices will spike. Interest rates will absolutely spike. And the dollar will implode.
And there will be another "Peter Schiff Was Right" video for Krugman to laugh at.
No inflation? Where do you buy food and fill up your gas tank? What have the prices of everything done since Greenspan printed the problems of the Nasdaq malinvestment away. Name something that’s gone down in price over the last 10 years. You can point at the CPI and claim “see, no inflation!” but let’s forget about food and energy.
DeleteWell for one we export our inflation through the dollar reserve system. Two we receive the benefit of being on top of the currency calamity pile; people are still buying bonds. Certain areas (with large gov involvement btw) are seeing huge inflation (higher education and sickcare). Gold has been suppressed for years due to central bank leasing as well. When the demand for dollars drops off, that is when the across the board inflation will arrive.
DeleteThe time frame can't really be pinpointed accurately, which is a fundamental premise of the Austrian theory. It also depends on the actions of individuals (e.g. the Federal Reserve), which are also not predictable. Just wait and see how it plays out.
DeleteDo we get to count Energy and Food prices in that inflation number or do we only get to use Core inflation? Here's a suggestion: go through every commodity chart since late 2009 and let us know what you find. You'll find at least a 50% increase in price in nearly every commodity except natural gas and cocoa. It's incredible when all of the input prices to highly marketedable goods goes up 10% per annum.
DeleteAre you seriously saying there has been no price inflation?
DeleteFood is an obvious place to see it but there are other places where it is more discrete. I spot examples ofmanufacturers designing around the challenge of rising commodity cost almost everyday. Look carefully at the things you buy and compare it with the same items you were buying 5-10 years ago. This isn't just profit taking and making more from less for some environmental cause. This is about dealing with the rising cost of everything. And only one thing can cause that. I know, it's all those people in China taxing the world's resources... puhleeze.
This is where the confusion always arises and you can sniff out someone that isn't familiar with the Austrian point of view very easily...
DeleteInflation is an increase in the money supply. Inflation causes prices to be higher than they OTHERWISE WOULD HAVE BEEN. The current price level is a reflection of a thousand things, one of which is the amount of dollars in circulation. Predicting whether prices will fall or rise is tough business. But predicting whether an increase in the money supply will increase or decrease prices is very easy. It is a simple ratio of money/goods. More money, ceterus paribus, ALWAYS equals higher prices.
We have "price inflation" or rising prices of 2-3% according to the lying Fed. That is INCLUDING the monetary base increasing by 50% or more. I'd say its fairly safe to assume that without all the inflation, "price inflation" would have been lower or negative even.
Do you disagree with the above Anon?
I'm the author of the original post addressing the replies.
DeleteTo all the people who state the Federal Reserve (not the "FED", if you need to abbreviate write Fed) ignores food and energy. That's just absolutely false. Their target is for a 2% annual increase of the PCE Price Index, all of it, including food and energy. It's amazing that the people here are so misinformed to not even know the basics of what they claim to be experts on. Currently, the PCE for all goods and services (yes, including food and energy) is up by 1.5% (Oct.), below target. Excluding food and energy "price inflation" is actually higher, 1.6%. But that's NOT the Fed's target, just read one of their statements!
To all people claiming that it's all a big conspiracy by the government. It sure would involve a whole slew of people at the BLS and elsewhere. Completely non-credible and in my opinion outside of any rational discussion.
To the comments about Austrians being right about inflation rather than "price inflation". Everybody else in the world talks about "price inflation" only. No consumer cares about increases in the money supply unless it affects consumer prices. I don't care what "price inflation" otherwise would have been. I want credible monetary policy to give me a target which they then achieve. Rapidly decreasing prices would have been a disaster for the economy. Congrats to the Fed for fulfilling its mandate and delivering on "price inflation" of about 2%. Derrick, I agree, the Fed's record has been impeccable in this. The Fed's prediction has been very good also, "price inflation" has been very, very stable.
The CPI, like the unemployment metric, has been changed over time. It is a completely different metric than it was in the 1970s. It is not difficult to keep and index on prices low if you keep taking out the very factors that rise in price. Housing and tuition fees were excluded, which of course has a significant impact on the index. And energy is certainly not included in the CPI.
DeleteAs for price inflation in general. Look at the Dow, it up above 13,000. Do you seriously believe that would be the case, hadn't the Fed printed another couple of trillion dollars? Look at the bond valuations. Again, would the yields be so low (and the value so high), hand't the Fed bought bonds through its QE programs? Not to mention mortgage-backed securities.
What "everyone else in the world talks about" isn't the issue. Inflation is and always will be a monetary phenomenon. It is the creation of high-powered money which then feeds the credit expansion. The enormous money creation has indeed affected prices, everything is going up, including gas and food. The only way Fed is being "right" is through constant manipulation of the metric it uses to measure its own "success". Anyone can get an A if you are allowed to grade your own paper (pun intended).
As for falling prices being disastrous for the economy, please explain why that would be the case. In a world when more and more people are finding it hard to get by, why would falling prices be so terrible for them? And how come falling prices coincided with the greatest growth period in the history of the US?
You're way out on thin ice here, but that is of course normal for shills and liars for the regime.
Your last paragraph...
Delete"No consumer cares about increases in the money supply unless it affects consumer prices. I don't care what "price inflation" otherwise would have been"
Increases in the money supply DO AFFECT consumer prices. Everything costs more than it would have. You are telling me that you don't care that you are paying twice what you were for a steak 2 years ago? And that no one else cares either?
It seems like people would care a lot about that.
Also, it's not real hard to predict outcomes when you are the one controlling the outcome. The Fed has cancelled out all deflation, which eases the load on poor families. The actual rate of inflation must include the percentage increase from the negative rates that obviously would have occurred. It's not 2-3%, that's the increase in prices only. Inflation has been much higher.
"No consumer cares about increases in the money supply UNLESS IT AFFECTS CONSUMER PRICES. I don't care what "price inflation" otherwise would have been."
DeleteIt does affect consumer prices. They are all higher than they otherwise would have been.
Read this again to yourself. You don't care that steaks at the grocery store cost twice as much as they did 2 years ago? And you think no one else cares either?
This is either a total lie or you are so ignorant that you are talking about something else and are using the wrong terminology.
I'm beginning to think that Krugman is a fucking moron on top of being just plain evil.
ReplyDeleteWe should never be surprised by what Keynesians do or say. They are liars and scoundrels. If they go completely over the top, who on their side or in the media is going to call them on it?
ReplyDeleteLunatic MMTer Mike Norman recently posted the video from Dec 2006 of Peter Schiff predicting the housing crash as Mike Norman mocked Schiff under the title "MMT and my videos getting under Peter Schiff's skin!" [around the 5:00 mark].
http://mikenormaneconomics.blogspot.com/2012/11/me-mmt-and-my-videos-getting-under.html
We should only act shocked and surprised when we discover that very first Keynesian who understands the slightest aspect of Austrian analysis.
To understand Austrian Economics is to cease to be Keynesian.
DeleteHoly shit this has gotten to the point where its not ignorance, it blatant dishonesty by Krugman.
ReplyDeleteWatch Peter Schiff's mortgage bankers speech and tell me he didn't predict the housing bubble.
http://www.youtube.com/watch?v=jj8rMwdQf6k
Yahtzee!
DeleteWell, it is the NYT and their subscriber base is rapidly shrinking.
ReplyDeleteAll the news that's fit to line the litter box.
DeleteKrugman is a schyster economist. He doesn't care about communicating a true understanding of what he is writing about. He is there to grind an ax. He should be listed with all of the most notorious money cranks such as John Law.
ReplyDeleteLOL, Krugman is such a joke. I can't wait to hear Peter respond to this on his radio show today.
ReplyDeleteThat video was absolutely astounding. It's just crazy to see everyone one else on the video disagree vehemently with him and even laugh at him. Common sense is not so common even when facts are smacking you in the face. I (unfortunately) live in CT and did everything I could to get him into the Senate, but again, common sense is not so common.
ReplyDeleteSo Peter is wrong about Fed money printing causing inflation. But if the inflation is a good thing, so the Fed should continue printing money? It's beginning to feel like Krugman wants it both ways. He criticizes companies for supposedly sitting in cash, so create a negative real interest rate so they dump it back into the market to increase demand. But then you know where all the money went from the previous period printing: people are parking it.
ReplyDeleteFeels like he lives in math world where it's only true if a model he wrote says so. Though I've never seen a model for "slack" in the economy. It gets better everyday.
Krugman's post did not say anything about Schiff's prediction on the housing market.
ReplyDeleteThe point of his post was to question whether a prediction about the onset of hyperinflation that has gone terribly wrong would cause Austrian economists to question whatever model or methodology they use to make such faulty predictions.
So the real question is to the Austrian model: how can the Fed triple the monetary base without inflation budging upward?
Instead of confronting the inherent failures in your Austrian model, you bring up
red herrings (some prediction about the housing market), and the commenters here resort to ad hominem attacks on krugman.
You (internet Austrians) will only drive yourselves further into irrelevance with such tactics.
your reading comprehension is terrible. Krugman said "It wasn’t really true even then..." meaning he did not get the housing bubble correct. Sheesh.
DeleteThere are exactly zero references to the housing market prediction in krugman's piece.
DeleteThat's because he is a sneak, so people like you can make comments like this. His reference is to 2009, which is when the Schiff video on his housing prediction was posted. Krugman knew fill well what he was doing by referencing Schiff's housing video and not using the word housing: He was being dishonest.
DeleteThe Fed has been able to triple the money base because much of that money has ended up in excess reserves. I'm not sure how this would reflect an 'inherent failure' in Austrian theory (which is what I assume you mean by 'model'), rather than a failure to forsee a certain historial development.
DeleteThe entire post is a discussion on inflation. Schiff's hyperinflation prediction was flawed then, as Krugman knew full well, and it is demonstrably flawed now.
DeleteSchiff's runaway inflation predictions began in 2008 and the evidence of this hyperinflation should have begun showing itself by 2009 (and certainly by the end of 2012). I think krugman's reference to 2009 should be taken in reference to this fact alone.
the whole "Peter Schiff was right" thing is ALL ABOUT THE HOUSING BUBBLE you numbskull. "Peter Schiff was right" had nothing to do about inflation. Holy shit you are pathetic trying to defend Krugman on this one.
DeleteThat is precisely how the Fed controls the monetary base -- through reserves. Schiff (I imagine) knows this.
DeleteThe commerical banks have parked their monetary injections with the Fed, for something like 2% gains. They are being subsidized so they do not make heavy loans. If they begin to do so, then hyperinflation is far more likely.
DeleteRunaway inflation/hyperinflation cannot be timed because it is based on the human decision making of powerful individuals (who should not have this power in the first place).
Your demand to confront "Austrian models" is absurd. The Austrians don't go around building models and algos/equations to 'prove' some contrived phenomenon in the world of human action.
DeleteIt's not possible.
Also, your understanding of inflation is rather limited. Any expansion of the money supply is considered inflation by the Austrian school. You are referring to price inflation, which I would consider an effect of inflation.
Furthermore, you are ignorant of where most of that Fed money has gone. If you are referring to the QE billions, it's right in front of you parked in excess reserves AT THE FED. If you are not referring to the QE money, please see the explanation above about how the dollar reserve system masks the inflation created by the Fed. Remember, all those Federal Reserve Notes are IOUs on some good or service. And one day, they are going to start coming home.
When that happens, hold on to your butts.
There's more to it than what I've written but that should get you started in actually figuring out what's actually going on.
Robert, Schiff supports Rand Paul AND supported Gary Johnson in the last election! He is clearly part of the establishment and NOT an ally to libertarians. If anything our greater ally of the two is Paul Krugman for sticking it to this phony establishment lackey!
ReplyDeleteHaha, very funny...
DeleteI get a kick out of the Schiff haters. He talks up Ron Paul constantly as the best option. He's very clear if you listen very often that he has problems with Rand and Gary.
DeleteHell, I considered voting Johnson (I wrote in Paul). Schiff "supported" him the same way I "supported" him. I suspected that he was about 20% better than the alternatives and that was ALMOST enough for me to vote for him. But I didn't go around ringing his bell, and Schiff doesn't either.
If you have a choice between 100 lashings and 99 lashings, you might not care. Johnson represented only 80 lashings to me. For some that's enough to pull the lever.
Lighten up. If you really think Schiff, who has opened the eyes of thousands an thousands to Austrian economics, is part of the problem, then I'm not sure where we have to turn.
Lew Rockwell even lets Schiff post on LRC...does this make Rockwell an establishment hack in your mind?
Krugman did not say Schiff didn't call the housing bubble. He said Schiff didn't get it all right. And Peter wasn't right about everything. He didn't get decoupling, Hyperinflation, he overestimated the implications of the S$P downgrade... He has been wrong so many times since the crash. Krugman's statement stands correct. 'Schiff didn't really get it all right'
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