Saturday, September 20, 2014

Fed Haters vs. Fed Cheerleaders: Schiff vs Wiesenthal


  1. I'm surprised that Peter even lets them try to argue points using the GDP as any type of point of reference.

    Everyone here knows the GDP is ridiculous metric. "Government spending" is a stupid component and distorts the picture so badly I'm not sure it's worth anything. I think Rothbard's case that is should be deducted twice holds.

    In fact RW, as a recommendation to you on some something to add to EPJ, I'd really like to see you put out an adjusted GDP type number that separates fact from fiction...not only throwing out the government spending but specifically targeting/removing the monetization.

    1. That adjustment works against Peter since real public investment and consumption fell this past year. From Q2 2013 to Q2 2014, real GDP grew 2.48%. If you subtract the public component from the measurement of real GDP, you have real GDP growth of 3.2%.

      real GDP q2 2013: 15606.6
      real GDP q2 2014: 15994.3

      real GDP growth: 2.48%

      public component Q2 2013: 2901.2
      public component Q2 2014: 2878.7

      GDP - public Q2 2013: 12705.4
      GDP - public Q2 2014: 13115.6

      real GDP growth without govt spending = 3.2%

    2. "That adjustment works against Peter since real public investment and consumption fell this past year."

      No,it doesn't. You missed my comment:

      "I think Rothbard's case that is should be deducted twice holds."

      In both cases you list above(Real GDP & just GDP) the GDP would be shrinking, just at a slightly slower rate.

      Here's the two different sources explaining why, based on Rothbard's work:

      ""Murray Rothbard always made the point in his class lectures that GDP figures were suspect because government outputs are included. Of course, government doesn't produce anything that consumers will pay for willingly, thus it must take from the productive economy to provide these services. So there is at least double counting of the outputs.

      "GDP can record how much money we spend on health care or education; it cannot tell us whether the services we are buying are any good," writes McArdle."

      There is also a good explanation here:

      Also, you ignored this comment, "not only throwing out the government spending but specifically targeting/removing the monetization.", which I posit is a significant factor, especially when considering the money multiplier and it's impact on consumer spending under which don't immediately and homogeneously impact inflation(both price increases and money base, given the definition varies) figures, making an adjustment for "real GDP" difficult at best.

      In fairness to RW, I might ask for the impossible based on a quote from my first source:

      "But of course putting numbers and measurements to these subjective values is nonsense. As Ludwig von Mises wrote, "The attempts to determine in money the wealth of a nation or of the whole of mankind are as childish as the mystic efforts to solve the riddles of the universe by worrying about the dimensions of the pyramid of Cheops.""

      In light our exchange, I rescind my request to RW....instead perhaps I'll just be content with the continual poking of holes within the process of GDP calculation and leaving it at that.

  2. I've always thought this emphasis on predicting high CPI inflation was a strategic mistake. There was no CPI inflation in fact or in the Rothbardian explanation of the 1929 bust. In 2009, I never predicted high CPI inflation. The primary problem caused by artificial credit expansion is FALSE prices not HIGH prices per se. Our opponents have no understanding of that argument and it should be shoved in their faces.

    1. Pretty sure everyone understands that argument Bob. Since Austrians believe deflation is natural, it's obvious that you believe the prices are FALSE any time they are not falling. Anytime your opponents explain why they believe deflation is bad, they are explaining why that FALSE prices is preferred over the natural price as you define it.

    2. Excellent point. They keep short stroking the "there is no price inflation" argument but there IS massive inflation. Without the fed inflating the money supply by trillions, there would of been massive price deflation to their true market based value.

  3. Notice how the yes/no ratio gets as high as 99/1, but then after schiff takes over he wins.

    1. He wins? he says energy prices are going up and on this blog we were told a few days ago that energy prices fell this past month. Energy prices fell 2.6% with gasoline prices falling 4.1% this past month.

    2. Well, if you were to actually watch the video, you would see a little meter at the bottom of the screen. It tallies yes vs no votes. From who? I don't know. But yes, at the end, peter wins.

      But beyond that, he is correct anyway you look at it. For Wiesenthal to come out while the fed is still doing QE and say that the FED haters are wrong, is just retarded. And schiff says the dollar has lost a lot of ground to gold, food and energy in the last TEN years. (hey, has there been a boom in oil production somewhere lately?)

      If you're going to fill jerrywolfgang's shoes, you'll have to try harder than that.

  4. What do you do for a living Mak?

  5. Peter gets his kicks from being loud and boisterous.. it's obvious he's got a bit of an ego. Some of his predictions, then, are going to be exaggerated. What he is right about is the inability for the US to be able to afford higher interest rates. Get off this "manipulated CPI" nonsense, it makes people automatically label you as conspiracy theory cook - right or wrong.