Sunday, August 3, 2014

The Absurdity of Paul Krugman's Fear of Deflation in One Chart

Paul Krugman continues to fear deflation. That said, there is really nothing wrong with deflation (SEE: Ludwig von Mises on the Meaning and Significance of Deflation).

But let's take a look at Krugman's fear in relation to the Fed's favorite price index, the Personal Consumption Expenditures: Chain-type Price Index. Outside of a dip during the Great Recession, which, by the way, was caused by a fall in the durable goods sector, which I would classify as a capital goods sector, not a consumer goods sector, and a fall in the energy sector, there has been no deflation, even to this distorted price inflation measure.


1 comment:

  1. It Is Much Bigger Than You Think

    The gold price manipulation scheme will go down as the biggest financial market scandal in US history for numerous reasons. They include the destruction of the free market system in the United States. The manipulation of the gold and silver prices eventually led to the manipulation of US interest rates via the Fed, the stock market via the Plunge Protection Team, and to the currency markets. GATA has been on this case for more than a decade, pounding the table about what was going on. Because there is no free financial market press, our views, backed up by as much evidence as any prosecutor would have in a slam dunk murder case, are not allowed to see the light of day. CNBC, on which I was interviewed by Ron Insana in February of 1999, has boycotted us. So has BNN in Canada. Veteran Bloomberg gold reporter Claudia Carpenter, whom I met in the spring of 1999 in New York, told John Embry, Chris Powell and I in London in 2010 that she cannot mention GATA. And she and Bloomberg never have. It is the rarest of times when Reuters will mention GATA, even though we have been in contact with them for 15 years. I could go on and on. But, perhaps the most telling was the email my colleague CP received from the Financial Times that our subject was "too sensitive" to make mention of … as in we are too right!

    Actually, GATA has been on this case for 15 ½ years. And guess what has surfaced the past few years? One financial market scandal after another about market manipulation. Can you say Libor? Can you say the trillion dollar scandal about "rigging" in the forex market? And then we have the mounting lawsuits and charges over the London gold and silver Fixes.

    And yet with all the evidence GATA has collected about the manipulation of the gold and silver markets, we are still persona non grata with the press, and even the mainstream gold community.

    So, what’s the deal?

    One of my favorite quotes emanates from CP: "The United States would rather reveal its nuclear secrets than what it is doing in the gold market."

    It is THAT big a deal!