Commandeering The Punchbowl

[koganbot]

Krugman on why he doesn't think we're heading into an inflationary spiral, and why he thinks it's dangerous if too many people think we are.

I don't think there's any fundamental inflation problem, just a one-time hit on food and energy. I suspect that Ben Bernanke believes the same, but he has a problem - namely, that many people inside and outside the Fed believe in (2), even though there's no sign of it in the data. Any day now, they warn, inflation is going to break out all across the economy, and the Fed needs to take the punchbowl away NOW NOW NOW, never mind the weak economy.

Also, he links this piece by Louis Uchitelle, which he thinks is quite good; it's more detailed but on the same topic.

Comments

[dubdobdee.livejournal.com]

i forget if i've pointed you towards tis guy before: he doesn't have krugman's gift for clarity (and then some!) (haha he reminds me of me) but he has (i think) a much broader scope of the dynamic relationship between markets, technology and resources -- i like that, instead of translating economic terms into ordinary language, he (plausibly) expands their usage out into other areas of discussion -- there's a kind of poetic challenge for the reader in the bluntness of the way he ends this particular piece, for example: "… no risk investment demand, which has turned the capital markets into markets for risk, which is to say, rent."

(that's not to say i wish he didn't do a lot more translation -- tho this is partly my laziness i guess -- and that i also wish he was less addicted to ambiguous and/or plain careless grammatical formations)

anyway, with caveats on extensive bits flying way over my head still, i recommend him as a kinda counter-krugman (who is too much of an optimist for my taste i think)

[koganbot]

You're the first person to call Krugman an optimists. (He thinks Bernanke's running out of tools to use in case of meltdown, and that the dipshits around Bernanke will make it harder for him to use the tools he has.)

[koganbot]

E.g.:

A year ago, as the outlines of the current financial crisis were just becoming clear, I suggested that this crisis, unlike a superficially similar crisis in 1998, wouldn't end quickly.

and

Ben Bernanke and his colleagues at the Federal Reserve have cut the interest rates they control repeatedly since last September. But they haven’t managed to reduce borrowing costs for the private sector. Mortgage rates are about the same as they were last summer, and the interest rates many corporations have to pay have actually gone up. So Fed policy hasn’t done anything to encourage private investment.

http://www.nytimes.com/2008/08/04/opinion/04krugman.html