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> even thought (sic) some of them might agree that B were right If you have a citation for that, I'd love to read it. But I think cats and dogs will start rain

> even thought (sic) some of them might agree that B were right If you have a citation for that, I'd love to read it. But I think cats and dogs will start raining from the sky first. You don't go anywhere if consumers expect prices to remain the same or deflate.

dimitar 12y ago
Oh wow, it is certainly a challenge to find a public intellectual to admit something like that, especially considering that not everyone can be neatly placed in one of the two camps. But you can get close to that by reading between the lines, by the viewing the context. Enjoy reading Kenneth Rogoff: http://www.project-syndicate.org/print/austerity-and-debt-realism http://www.project-syndicate.org/print/austerity-and-debt-re... A close reading will show him admitting, quite begrudgingly : * we aren't that close to a "sudden stop" after all. * homework shows that rates do seem to stay low, when having high debt. It is "sobering". * more inflation is desirable (to be fair, this was always his position) * balancing the budget "tomorrow" is "facile" But if you look at my post carefully, the case for him looks stronger: * Cumulative costs - more debt, more problems. Now its worse. * there are other factors beside monetary and fiscal policy (this is definitely true, but a distraction, no reason why B shouldn't agree) * no admission that inflation is hard to do So here you go, Rogoff admits he was wrong, but finds his case only strengthened. Since he was wrong the other side was right, correct? Not exactly, since he invents a straw-man (simplistic Keynesian) to deny how much common ground there actually is. There might be a better admission somewhere, maybe in private or after a bit more time, but this is pretty close. edit: for a typo
- hindsightbias 12y ago
  Brilliant
cturner 12y ago
Why is this? Computers get rapidly cheaper for example.
- mc32 12y ago
  I think because while average prices for individual devices go down, you make up for that with volume in an expanding market. Once you saturate the market, then you have to diversify, create new markets or consolidate (buy more market share).
  - xorcist 12y ago
    A computer manufacturer doesn't need to increase their market share to keep the same profit when a process technology matures and therefore gets cheaper. It is trivially possible to keep making money selling computers even if the total market share doesn't expand.
    - mc32 12y ago
      As an entity, yes, but overall as an economy this does not work. How will you be able to afford giving employees raises? Cut the workforce, and then what happens when everyone 'cuts the workforce'? what happens to total buying power?
- lottin 12y ago
  It's a myth propagated by certain economists who believe there is an optimum inflation rate and that this optimumum is around 2%. They also predict a great calamity if inflation falls below zero. In practice, experimental evidence tells us that this theory is complete rubbish.
  - hnnewguy 12y ago
    >In practice, experimental evidence tells us that this theory is complete rubbish. Please, provide us with examples of a sustained deflation that didn't harm the economy. The supply of money has to grow at the same rate as the real economy, otherwise you can end up with "problems" associated with having "too few dollars". In other words, we need to keep increasing the supply of dollars to buy the growing output of goods we produce. This is common sense. Because it's impossible to hit that growth target exactly, we err on the side of caution and produce some inflation, which has the side benefit of preventing the hording of currency, as it naturally diminishes in value over time. For whatever reason most governments have decided on ~2% to be a safe, stable target. One of the common misconceptions of deflation is that the lower prices should be good for consumers. Which is true, if terms of consumer goods. But keep in mind that wages and debt are also affected, which is where the real pain from deflation for the average person stems from.

dimitar 12y ago

Oh wow, it is certainly a challenge to find a public intellectual to admit something like that, especially considering that not everyone can be neatly placed in one of the two camps. But you can get close to that by reading between the lines, by the viewing the context. Enjoy reading Kenneth Rogoff: http://www.project-syndicate.org/print/austerity-and-debt-realism http://www.project-syndicate.org/print/austerity-and-debt-re... A close reading will show him admitting, quite begrudgingly : * we aren't that close to a "sudden stop" after all. * homework shows that rates do seem to stay low, when having high debt. It is "sobering". * more inflation is desirable (to be fair, this was always his position) * balancing the budget "tomorrow" is "facile" But if you look at my post carefully, the case for him looks stronger: * Cumulative costs - more debt, more problems. Now its worse. * there are other factors beside monetary and fiscal policy (this is definitely true, but a distraction, no reason why B shouldn't agree) * no admission that inflation is hard to do So here you go, Rogoff admits he was wrong, but finds his case only strengthened. Since he was wrong the other side was right, correct? Not exactly, since he invents a straw-man (simplistic Keynesian) to deny how much common ground there actually is. There might be a better admission somewhere, maybe in private or after a bit more time, but this is pretty close. edit: for a typo

hindsightbias 12y ago
Brilliant

cturner 12y ago

Why is this? Computers get rapidly cheaper for example.

mc32 12y ago
I think because while average prices for individual devices go down, you make up for that with volume in an expanding market. Once you saturate the market, then you have to diversify, create new markets or consolidate (buy more market share).
- xorcist 12y ago
  A computer manufacturer doesn't need to increase their market share to keep the same profit when a process technology matures and therefore gets cheaper. It is trivially possible to keep making money selling computers even if the total market share doesn't expand.
  - mc32 12y ago
    As an entity, yes, but overall as an economy this does not work. How will you be able to afford giving employees raises? Cut the workforce, and then what happens when everyone 'cuts the workforce'? what happens to total buying power?
lottin 12y ago
It's a myth propagated by certain economists who believe there is an optimum inflation rate and that this optimumum is around 2%. They also predict a great calamity if inflation falls below zero. In practice, experimental evidence tells us that this theory is complete rubbish.
- hnnewguy 12y ago
  >In practice, experimental evidence tells us that this theory is complete rubbish. Please, provide us with examples of a sustained deflation that didn't harm the economy. The supply of money has to grow at the same rate as the real economy, otherwise you can end up with "problems" associated with having "too few dollars". In other words, we need to keep increasing the supply of dollars to buy the growing output of goods we produce. This is common sense. Because it's impossible to hit that growth target exactly, we err on the side of caution and produce some inflation, which has the side benefit of preventing the hording of currency, as it naturally diminishes in value over time. For whatever reason most governments have decided on ~2% to be a safe, stable target. One of the common misconceptions of deflation is that the lower prices should be good for consumers. Which is true, if terms of consumer goods. But keep in mind that wages and debt are also affected, which is where the real pain from deflation for the average person stems from.