4 ms·

Sure, let's talk facts. 1) Fixed the link to include the four year gas chart. Up from $2.03 to $3.57 in four years. Doesn't bode well for your case. Short link

by temphn 13y ago

Sure, let's talk facts. 1) Fixed the link to include the four year gas chart. Up from $2.03 to $3.57 in four years. Doesn't bode well for your case. Short link due to ampersands: http://goo.gl/R4r0f http://goo.gl/R4r0f 2) You seem to grant that inflation contributed to the rise in food prices. A one off drought can't explain the persistence of the rise since 2008, or the fact that food inflation caused the riots which led to the Arab Spring in 2011. http://www.telegraph.co.uk/finance/economics/8492078/How-the-Fed-triggered-the-Arab-Spring-uprisings-in-two-easy-graphs.html http://www.telegraph.co.uk/finance/economics/8492078/How-the... The first graph illustrates the correlation between the prices of food and the Fed’s purchase of US Treasuries (i.e. its quantitative easing programmes). (A widely- discussed graph illustrating correlation between QE and broader commodities indices can be seen here.) We see how the food price index broadly stabilised through late 2009 and early 2010, then rose again from mid-2010 as quantitative easing was re-started (QE2) following Ben Bernanke’s Jackson Hole speech of August 27 – with prices rising of about 40% over an eight month period. Similar correlations can be observed between Fed purchases and wider commodities indices, but let’s focus on food for now. ... But the reality is that a rise in commodity prices is precisely what theory predicts would be a consequence of QE2, and the data give the same picture – we aren’t investigating a contentious mystery in the data; we are seeing precisely what we ought to have expected. Indeed. The amazing thing is how vehemently people insist that tripling the monetary base in a few years won't cause inflation. This is a simple matter of ratios. Bernanke, Obama, Bush, Greenspan, and Krugman have pursued a policy that enriches banks and shields them from risk by diluting dollar holders. If you understand the concept of dilution in a cap table, you should understand this much: the printed dollars are deposited in the accounts of large banks, enriching the very richest and making everyone else worse off. Krugman himself is a knowing accomplice, one who always pulls his punches with respect to the banks: http://krugman.blogs.nytimes.com/2010/04/12/failure-is-a-failed-strategy/ http://krugman.blogs.nytimes.com/2010/04/12/failure-is-a-fai... One thing that keeps coming up in comments, both here and on my column, is the widespread belief that all we need to do on the banking front is (a) break up the big banks, so that none of them are too big to fail (b) promise not to bail out any banks in the future. That way, the claim goes, bankers will know that they will face dire consequences if they misbehave, and market discipline will do the rest. Dream on. ... But just letting banks fail isn’t going to happen — nor should it. In practice, talking about doing so is just an excuse to avoid real reform. At the end of the day Krugman is for the bailouts, for the banks, and against bank bankruptcy. No wonder he's against Bitcoin.

mav3r1ck 13y ago
I think with both the gas prices and food charts (thank @cdtwigg for pointing out longer-term historical food prices) I'm sorry to say but this is an extreme abuse of statistics. If you extend the chart you linked to by exactly one more year-"BOOM!" just as I said about a barrel of oil* being the same price is was exactly 5 years ago. The huge drop in price resulted from a full-blown recession that would have been worst if the Fed sat around and did nothing. *Price of a barrel of oil is a much more reliable measure because extreme environmental laws really get in the way of building refineries, which are also prone to being shut down, thus consumer gas prices are much more volatile than the price of crude. This reminds me that the price of oil is very strongly influenced by OPEC, so that is actually something I'd avoid looking at when measuring energy prices. Besides, oil is just one component of energy (although, probably the most important and largest one I'll say). Coal is still cheap as ever (discounting environment regulations) and natural gas prices has bottomed out due to fracking. PS: Link is a little off still (missing ampersand between USA/Average)
- temphn 13y ago
  Replaced with a short link. Thanks. Regarding gas prices, Bush's wars drove up the price of oil. And then just when our adventures in Iraq finally came to an end, the money printing began in earnest. Obama hasn't helped by keeping Keystone XL in political limbo, pushing offshore drilling outside the US, generally assaulting the energy sector with regulation, and setting fire to several more countries in the Middle East (Libya, Syria, Tunisia, Egypt, et alia). If I interpret you correctly, you state that prices would have fallen if the Fed had sat around and done nothing. I believe we may simply disagree on the desirability of this: some may prize debtors, but I value savers. And I thus generally think of falling prices for household goods (the dreaded deflation!) as a good thing. However, the Fed looks at one of its primary duties as propping up the prices of mortgages. The ostensible purpose is to protect "underwater homeowners" who spent beyond their means. The actual purpose is to take toxic waste off the balance sheets of banks and to put this hot potato in the laps of dollar holders (not just taxpayers, but all dollar holders, including the Chinese). Anyway, we can talk all we want about these macroscopic phenomena, but ultimately what it boils down to is that people want the Fed to "help the poor" and not simply stand there. And the optics look like they are helping the poor by diluting the dollar and thereby inflating away debts (i.e. the inflation which "doesn't exist" will soon be called a feature and indeed set as a goal by the likes of Krugman). However, the Fed is also inflating away earning power, and the banks are the first recipients of these inflated dollars, thereby profiting the most from said inflation. The result is a policy that actually hurts the poor far more than simple inaction and rewards the very richest - not entrepreneurs or technologists but the banks that receive direct deposits from the Fed for its "purchases" of mortgage-backed securities (meaning $1 purchases of things worth $.01, or $0). Bitcoin is a strike against the Fed and the banks by the Valley, perhaps a critical blow. It is very surprising to me that pg (or anyone) could think that USG could possibly have released something like Bitcoin, as it strikes at the very core of the US government's power: the ability to print money.

by temphn 13y ago

mav3r1ck 13y ago

I think with both the gas prices and food charts (thank @cdtwigg for pointing out longer-term historical food prices) I'm sorry to say but this is an extreme abuse of statistics. If you extend the chart you linked to by exactly one more year-"BOOM!" just as I said about a barrel of oil* being the same price is was exactly 5 years ago. The huge drop in price resulted from a full-blown recession that would have been worst if the Fed sat around and did nothing. *Price of a barrel of oil is a much more reliable measure because extreme environmental laws really get in the way of building refineries, which are also prone to being shut down, thus consumer gas prices are much more volatile than the price of crude. This reminds me that the price of oil is very strongly influenced by OPEC, so that is actually something I'd avoid looking at when measuring energy prices. Besides, oil is just one component of energy (although, probably the most important and largest one I'll say). Coal is still cheap as ever (discounting environment regulations) and natural gas prices has bottomed out due to fracking. PS: Link is a little off still (missing ampersand between USA/Average)

temphn 13y ago
Replaced with a short link. Thanks. Regarding gas prices, Bush's wars drove up the price of oil. And then just when our adventures in Iraq finally came to an end, the money printing began in earnest. Obama hasn't helped by keeping Keystone XL in political limbo, pushing offshore drilling outside the US, generally assaulting the energy sector with regulation, and setting fire to several more countries in the Middle East (Libya, Syria, Tunisia, Egypt, et alia). If I interpret you correctly, you state that prices would have fallen if the Fed had sat around and done nothing. I believe we may simply disagree on the desirability of this: some may prize debtors, but I value savers. And I thus generally think of falling prices for household goods (the dreaded deflation!) as a good thing. However, the Fed looks at one of its primary duties as propping up the prices of mortgages. The ostensible purpose is to protect "underwater homeowners" who spent beyond their means. The actual purpose is to take toxic waste off the balance sheets of banks and to put this hot potato in the laps of dollar holders (not just taxpayers, but all dollar holders, including the Chinese). Anyway, we can talk all we want about these macroscopic phenomena, but ultimately what it boils down to is that people want the Fed to "help the poor" and not simply stand there. And the optics look like they are helping the poor by diluting the dollar and thereby inflating away debts (i.e. the inflation which "doesn't exist" will soon be called a feature and indeed set as a goal by the likes of Krugman). However, the Fed is also inflating away earning power, and the banks are the first recipients of these inflated dollars, thereby profiting the most from said inflation. The result is a policy that actually hurts the poor far more than simple inaction and rewards the very richest - not entrepreneurs or technologists but the banks that receive direct deposits from the Fed for its "purchases" of mortgage-backed securities (meaning $1 purchases of things worth $.01, or $0). Bitcoin is a strike against the Fed and the banks by the Valley, perhaps a critical blow. It is very surprising to me that pg (or anyone) could think that USG could possibly have released something like Bitcoin, as it strikes at the very core of the US government's power: the ability to print money.