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Just a warning that this is an article by a hedge fund expressing a view of our current inflationary period that I would argue is heterodox among the economic m

by jolux 5y ago

Just a warning that this is an article by a hedge fund expressing a view of our current inflationary period that I would argue is heterodox among the economic mainstream. I suggest reading Paul Krugman and Claudia Sahm for dovish views, or Adam Ozimek for a more critical view. In particular, the idea that “inflation expectations” can perpetuate inflation via a self-fulfilling prophecy effect has been called into question lately: https://www.federalreserve.gov/econres/feds/files/2021062pap.pdf https://www.federalreserve.gov/econres/feds/files/2021062pap...

xyzzyz 5y ago
What is most definitely a heterodox economic view is taking Paul Krugman seriously. He has fully become a newspaper opinion pundit, and very few people among academic economists pay much attention to him because of that.
- deleted 5y ago
  [deleted]
- TheCowboy 5y ago
  This simply isn't true when it comes to the topic of economics, and there are heterodox-y economists (Tyler Cowen for example) who also respect Krugman as an economist even if they don't agree with him on everything. As for paying much attention to him in academia, afaik he's not really active in the publish or perish academic game anymore so I don't get this as a criticism, but his influences are still there.
ODILON_SATER 5y ago
Claudia Sahm? Krugman? I rather listen to the hedge fund guys, at least they have skin in the game, don't they? Claudia Sahm is extremely partisan, and so is Krugman. You know it's going to be bad when we are starting to hear from the media that inflation is actually a good thing --because people have more disposable income to spend on things. First, it was just a blip, then they told us it would go away in half a year, now it is here to stay --but it is a good thing, see? The reality is that the explosive demand, alongside with a lagging supply can lead to an inflationary pressure not seen since the 1970s. At least in the 70s the information technology revolution was just around the corner. Right now, it feels like the supply issue cannot be remedied or solved because of heavy regulations and a stagnant productivity.
- tubby12345 5y ago
  >I rather listen to the hedge fund guys, at least they have skin in the game, don't they Haven't you ever heard of "talking your book"?
- jolux 5y ago
  Nobody thinks inflation is a good thing ceteris paribus. The main questions are whether it’s better than the alternative, and whether it will be transient or not. “Any inflation at all is bad” is not a view held by any serious economist these days, especially not after the Fed has been below target for so long. I described Sahm and Krugman as dovish and I think that’s more than fair to people who disagree about what inflation means right now. I don’t like pieces like this one that speak authoritatively on so little evidence.
  - ODILON_SATER 5y ago
    What evidence do you need? It's been already spelled out. High demand coupled with lagging supply, which does not have the capacity to adjust to new behaviors in the short and medium run. Especially if you consider the regulatory barriers, such as ramping up energy production. What little evidence do you speak of?
    - jolux 5y ago
      It’s clear that demand is up. What’s not clear is the argument at the end of this article, that this will lead to an inflationary cycle with no clear way out in the long run. This is what they claim is their opinion. It is not widely accepted, and I find it insufficiently supported. It’s mostly just tucked away at the end.
      - ODILON_SATER 5y ago
        That's a fair take actually
  - 01100011 5y ago
    First off you have to define 'transient'. Fed supporters seem to define it as the level of inflation going up for a while and then reverting to a historical norm, leading to permanently higher prices. Fed critics define it as a temporary rise in prices followed by deflation back to pre-inflation prices. Fed critics like that definition because it lets them more easily paint the fed in a bad light. They claim the fed is crazy because prices never fall. I think that's disingenuous because of the improper definition of 'transient'. Will inflation be transitory? Probably yes, if you use the first definition. I don't think there has been a situation in modern history where prices in America have backed off significantly. Prices are sticky, especially when labor shortages combine with inflationary pressures to drive up wages and therefore the costs of production. I suppose you could take a few hits off Cathy Woods' pipe and claim robots will take all of our jobs and send us into a deflationary spiral next year, but I think that's likely several years away at best.
forgotmyoldname 5y ago
I also highly suggest reading Paul Krugman, and turning all his "wills" into "won'ts" and "won'ts" into "wills." His insights are worse than political talk between a couple drunk guys at a bar.
- defaultprimate 5y ago
  Agreed. Krugman should win an award for most incorrect predictions of any economist.
- colinmhayes 5y ago
  Krugman's political takes are scorching, but he's still a respected economist.

by jolux 5y ago

xyzzyz 5y ago

What is most definitely a heterodox economic view is taking Paul Krugman seriously. He has fully become a newspaper opinion pundit, and very few people among academic economists pay much attention to him because of that.

deleted 5y ago
[deleted]
TheCowboy 5y ago
This simply isn't true when it comes to the topic of economics, and there are heterodox-y economists (Tyler Cowen for example) who also respect Krugman as an economist even if they don't agree with him on everything. As for paying much attention to him in academia, afaik he's not really active in the publish or perish academic game anymore so I don't get this as a criticism, but his influences are still there.

ODILON_SATER 5y ago

Claudia Sahm? Krugman? I rather listen to the hedge fund guys, at least they have skin in the game, don't they? Claudia Sahm is extremely partisan, and so is Krugman. You know it's going to be bad when we are starting to hear from the media that inflation is actually a good thing --because people have more disposable income to spend on things. First, it was just a blip, then they told us it would go away in half a year, now it is here to stay --but it is a good thing, see? The reality is that the explosive demand, alongside with a lagging supply can lead to an inflationary pressure not seen since the 1970s. At least in the 70s the information technology revolution was just around the corner. Right now, it feels like the supply issue cannot be remedied or solved because of heavy regulations and a stagnant productivity.

tubby12345 5y ago
>I rather listen to the hedge fund guys, at least they have skin in the game, don't they Haven't you ever heard of "talking your book"?
jolux 5y ago
Nobody thinks inflation is a good thing ceteris paribus. The main questions are whether it’s better than the alternative, and whether it will be transient or not. “Any inflation at all is bad” is not a view held by any serious economist these days, especially not after the Fed has been below target for so long. I described Sahm and Krugman as dovish and I think that’s more than fair to people who disagree about what inflation means right now. I don’t like pieces like this one that speak authoritatively on so little evidence.
- ODILON_SATER 5y ago
  What evidence do you need? It's been already spelled out. High demand coupled with lagging supply, which does not have the capacity to adjust to new behaviors in the short and medium run. Especially if you consider the regulatory barriers, such as ramping up energy production. What little evidence do you speak of?
  - jolux 5y ago
    It’s clear that demand is up. What’s not clear is the argument at the end of this article, that this will lead to an inflationary cycle with no clear way out in the long run. This is what they claim is their opinion. It is not widely accepted, and I find it insufficiently supported. It’s mostly just tucked away at the end.
    - ODILON_SATER 5y ago
      That's a fair take actually
- 01100011 5y ago
  First off you have to define 'transient'. Fed supporters seem to define it as the level of inflation going up for a while and then reverting to a historical norm, leading to permanently higher prices. Fed critics define it as a temporary rise in prices followed by deflation back to pre-inflation prices. Fed critics like that definition because it lets them more easily paint the fed in a bad light. They claim the fed is crazy because prices never fall. I think that's disingenuous because of the improper definition of 'transient'. Will inflation be transitory? Probably yes, if you use the first definition. I don't think there has been a situation in modern history where prices in America have backed off significantly. Prices are sticky, especially when labor shortages combine with inflationary pressures to drive up wages and therefore the costs of production. I suppose you could take a few hits off Cathy Woods' pipe and claim robots will take all of our jobs and send us into a deflationary spiral next year, but I think that's likely several years away at best.

forgotmyoldname 5y ago

I also highly suggest reading Paul Krugman, and turning all his "wills" into "won'ts" and "won'ts" into "wills." His insights are worse than political talk between a couple drunk guys at a bar.

defaultprimate 5y ago
Agreed. Krugman should win an award for most incorrect predictions of any economist.
colinmhayes 5y ago
Krugman's political takes are scorching, but he's still a respected economist.