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Millicent Taylor's avatar

I hope I can expound on your thoughts. Keynes had everything right. He has been unjustly maligned. My dissertation was on Keynesian monetary theory. I agree with some of your earlier posts that said PhD students today are forced into quantitative everything without understanding anything, except that they must obey the "rules" set down by the masters. No questioning allowed. So many non-economists (like you) generally understand better.

I've seen some things along the lines of "are you kidding?" First, inflation is a rise in the price level--this cannot be caused by supply chain issues or an oil shortage. If spending is predictable and steady, and appliances suddenly spike in price because of a shortage, or even because people want a computer on their ice maker, sure, that price will rise. But, if people buy a more expensive appliance, they will have to cut back spending on other stuff, and those prices will fall. Unless there is an increase in the means of payment, the price LEVEL will not rise. So, Janet, the only way a society can experience INFLATION is if TOTAL spending rises because an increase in the money supply finances higher spending--people can then spend more on everything. So simple.

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Rudy Havenstein's avatar

Yeah, I am completely self-taught on economics, so I may be wrong, but I'm wrong in my own way :) I agree with the you that - like Marx - Keynes makes much more sense than his followers. My point was that his followers should pay attention to his comments on inflation. Even Brainard says that inflation is a monetary phenomenon. Of course we've had massive asset price inflation over the years, in things like housing, and the CPI doesn't even count that (e.g., 4% or 5% OER while rents/house prices are going up at 20% rates).

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Sybren van der Horn's avatar

Nice piece Rudy.

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John McCullough's avatar

Love the Davos crowd's future concerns. MIne are a little different: food and energy shortages cause worldwide famine with deaths/riots/murders; US political divide results in same; stock market crash leaves all except 1% devastated; autocratic govt completely controls our lives eliminating free speech,etc--Constitution and checks and balances gone. In short, full makeover of US and most of world into autocratic "utopian" nightmare, with riots/murders etc part of the process.

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bigfatpop's avatar

This whole piece is fucking brilliant, but if I had to pick a favorite line: "I’d rather own Dogecoin than bonds . . ."

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Bitcoin Fortress's avatar

Krugman is a total clown.

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The Rational Walk's avatar

Speaking of IYIs, here's an article on "fixing" social security that you might (not) enjoy, written by a guy who's first name is also Rudy: https://www.wsj.com/articles/social-security-needs-saving-again-retirement-planning-wages-earnings-benefits-eligible-savings-11654631767 Of course, messing with inflation adjustments is part of the formula.

And now private equity is getting into mobile home parks and hiking rents. I'm a free market supporter, but this sort of thing is really sick, especially because ZIRP is what encouraged these firms to get into niches that were long mom & pop industries (rental housing, now mobile home parks, etc)... https://www.washingtonpost.com/business/2022/06/06/mobile-manufactured-home-rents-rising/

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John McCullough's avatar

Puts these investors right there with the people buying drugs and raising prices to whatever they can get from govt which can't say no. Special spot in Hell awaits

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The Rational Walk's avatar

Just another consequence of the Fed's ZIRP policies that no one will ever acknowledge. Ground rent on mobile homes going from $350 to $1000 overnight ... I wonder what CPI component that goes into.

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Rudy Havenstein's avatar

Aargh!

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Jun 9, 2022
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Rudy Havenstein's avatar

Oh yeah. I gotta do some of those. Probably on Reddit.

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Jun 10, 2022
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Rudy Havenstein's avatar

For now, Reddit is just where I put random stuff that would've been tweets

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