Paul Krugman's Despair

Whatever you say, sparky. Keep pretending that the Democrats are somehow better.

 

do they call you up and tell you why they "do so" ?
That's pretty nifty.

why would I ask FOX news anything ?
Oh, I get it, you're one of those children who thinks anyone who disagrees with the Dems is a "con". How quaint.

who would they be ?

 

This statement is so dishonest of you. No one has said anything about forcing people to spend money. No one has said anything about not allowing people to hide money in their mattress. No one has said anything about having a reasonable savings account is bad. a reasonable savings account can be up to several million dollars as far as Im concerned. No one is saying any of that is bad. What is being said is that if people aren't spendng, it's bad for the economy. Some people have tried to come up with solutions on how to encourage people to spend money, but no one has said anything about forcing people to do anything. Why do you have to resort to dishonesty to try to make a point?

 

Demand can be created. There was no demand for smart phones, Ipads, or Ipods until they were marketed.

 

I would argue that the demand for those products existed before they where made and marketed. Demand for something comes before development. Companies put research and development dollars to work when they see the market has a need.

 

You are right in that no one was suggesting forcing people to spend on risk of charge or fine. I got carried away.
Keynesian talk does that to me - lol.

But what I did not get carried away with was the suggestion that interest rates should deliberately be kept at zero so as to force people to take money out of their savings accounts and take investment chances with them so that they can maintain their (in many cases) meager income just to survive.


Maybe you would care to explain to me what these seniors are supposed to do?
Were this idea to go through; the government would be essentially forcing people - many of whom have ZERO experience or idea on how to invest - to suddenly have to make proper investments for their very survival.
Undoubtedly, a huge number of them will do the wrong thing and end up losing much of their nest eggs and be faced with severe reductions in their modest incomes.
What then?


And btw - these looney tune low interest rates as they are are causing a terrible burden to many people on fixed incomes.

Throw in the ever growing inflation rate (it is now at 3.6% and climbing) - and these people are facing a desperate and impoverished future while the macro economic morons in government try these (imo) nonsensical ideas to try and revive an economy (that I might add is working horribly)...all the while causing terrible burdens for those that can least afford it while bailing out their banking/Wall Street buddies with taxpayer money.

How middle class and lower people can defend this behavior staggers my mind.

How incredibly gullible are some of you people?

'Oh, Obama is looking out for us. He is a democrat and democrats always look out for the little guy'.

Now where is that Florida swamp land online brochure of mine?

 

I don't want anyone who is retired or close to retirement to invest in anything. They should put their money in Cash or short term CD's or T-Bills. That would be foolish for someone who is retired to do anything that has risk of loss. The reason is the elderly don't have time to wait for a market recovery. The elderly don't need to worry about long term growth of their money so they can afford to put that money into low intrest accounts where the money is safe from loss but won't provide much return in the long run. I'm sure you knew all of that allready though so I probably wasted my time writing all of that.

When the economy is healthy and efficient we have inflation of about 3-4%. Right now are annual inflation rate is about 2%. Much better than the deflationary period we had in 2009, but still low and unhealthy. The only thing Krugman is suggesting in his article is trying to find unconventional ways to increase inflation. Not to something astronomical, but to a heatlhy growth level. When he says he wants to encourage people to invest, he's not talking about seniors who don't really need to worry about inflation. He's talking about the long term investors who are looking for substatial growth. As we stand now the mathematical model that has a 2% inflation rate makes the cost benefit analysis of investment favor cash. Again, he is talking about encouraging long term investors who use math models to determine their investment portfolios. Not elderly people or your average citizen who knows nothing about investment. Besides, it's the people who use those mathematical models who hold almost all the wealth anyways. Not my parents or my grandmother, that's for sure.

 

1) The CPI is 3.6%. Has been for months.

Sure, if you exclude food and gas it is lower - but that is nonsense to do that. Everyone eats and almost everyone buys a LOT of gas - so to exclude those from the inflation rate is, imo, nuts. Those are NORMAL cost of living items.

http://www.usinflationcalculator.com/inflation/historical-inflation-rates/


2) Krugman said:

'setting a target in the 3-4% range for inflation, to be maintained for a number of years,” which would encourage borrowing and discourage people from hoarding cash'

He is talking specifically about forcing people, through ultra low interest rates and higher inflation, into deliberately making it unprofitable to have savings.

At 4% inflation with 1% savings accounts - you cannot save money. Your nest egg will deplete. Seniors will be forced to seek greater returns on their money.

There is no way around it.

And what happens then to these people when they inevitably screw up - because they no nothing about investing - and end up losing much of their nest egg?

Plus, raising inflation by even a couple of percentage points can mean a HUGE difference for these people.

To do it by accident is one thing.

But to do it deliberately is borderline criminal, imo.

Paul Krugman's statement ignores the plight of lower income and especially fixed income people completely.

Sure, he is obviously assuming that what he says will work and make everything rosy.

But what if it doesn't?

He is asking tens of millions of Americans who are living on the borderline of poverty as it is to sink deeper into economic despair and uncertainty on a hunch.

That is INCREDIBLY irresponsible and selfish - imo.


And there is NOTHING I could possibly imagine you could say that would make me feel otherwise.


It does not matter whether his 'plan' would work or not (not that I think for a second that it would).

The point is it takes a tremendous risk with the very people that can least afford it.

Maybe that is okay with him...but not with me.

 

I want to address this part first and the rest later so I'm not ignoring it.

The food price increase and gas price increase are out of line with the rest of the CPI because they aren't caused by normal inflationary reasons. The food price increase has been attributed to drought and the oil prices being high are being attributed to the civil unrest in North Africa and the Middle East. Honestly as far as the oil prices I think there is some gouging going on, and because a big part of food cost is the price for transporting food the oil prices are efffecting those as well.

 

Oil prices per barrel are actually lower then when the Arab Spring began.

$88.02/barrel on Dec. 17/10.

$85.37/barrel today.

http://www.nyse.tv/crude-oil-price-history.htm


But either way, the CPI measures the change in prices/inflation...it does not measure why.

The CPI is 3.6%.

And is triple what it was a year ago.

Those are the facts.

And, with respect, all I am interested in is facts, not theories.

 

I remember several years ago an oil exec made a comment, We understand that you think we are not opperating fairly, but the easiest way to show that we have allways adjust prices based on oil cost is because you can allways use the multiple of 3 cents for every dollar for a barel of oil. Going by his theory we should be paying about $2.50 for gas right now. Looks like we are being gouged to me. People are continuing to drive though, so supply and demand I guess is working. Got to love oligopolies, they work so efficiently.

If annual inflation rate stabalizes at 3% than that's great, maybee we will start to recover much sooner than. We wouldn't even have to do any out of the box thinking on how to encourage the inflation rate. I allways look at the annual number because the aggregate average is more stable, while the monthly number tends to fluctuate wildly.

 

As far as your Oil Example I think your math is a little off but otherwise say we are missing around 50 cents per gallon, exactly where is that money going? I'm not sure about all of it but I betcha a big hunk of it is going straight into the hands of (drum roll) "Emperor Obama's " federal tyranny coufers as in the general funds of the USA or being spent to meet otherwise increasing government regulations may it be the various "Recipes" how many is there now within the borders of the US? Or say speculation since for some odd reason the Gulf of Mexico is otherwise shut down for drilling, sure the Refineries are going day and night with what Oil? (*)(*)(*)(*) sure not from the Guld of Mexico where China is dwilling now with Cuba but not us!

Yet one question about the original OP, now a lot of the senior 401k money (yes you got it the 401'k'ers are coming to retirement) is held in a certain type of fund called the "Mutual Fund" or what some say the "800lb Gorilla" in the room. How does something like this affect the Mutual Fund Industry, I'm sure they have a lot of money sitting idle or invested in say Gold and other Safeguard scenario since I'm sure many are gravating too. Now I bring this up because you are basically telling them (dare I say succesful investors) to change and start acting like Hedge Fund Managers, two destinct differences of personalities here. This could very well be a disaster, since we are talking about rather large funds that seem as inactive as any other source of capital that would naturally fall under the pressures of these economic regulations.

Now take SS, you are the Krugman's of the world said that Social Security funds being placed in these type of funds, the 401k would be far too risky? Now you are back seemingly with a backdoor policy that would do exactly what you said the Bush initative "Privatize SS" is bad yet Force 401k retirees now to reallocate by Proxy (meaning the management of 401k funds) to moderate or risky Stock Market from passive which is basically the choice in these funds. Not to mention how keeping bond rates low on the previous generation (entire generation use nothing but these devices) is real pain as in real lost of income! I'm mean it is not good enough just to get one form of savings now you are after the other!

Yet I am of the mindset that these people made error in judgement by selecting to be involved with any government identity involving their money, may it be Federal Bonds or Federally regulated 401k. Now we could mover over to annuities and see how this could effect them, while not as big as the other two but it is a vehicle often used to shelter money.

 

What the hell are you talking about? Did the 2008 crash not prove that SS funds should't be put into the stock market. 3x85=2.55, My rounding was much better than yours. I can't tell if you are talking about Gas Taxes in your first paragraph or some weird conspiracy theory. In any case, that's just a dumb statement. You appear to be of the let's blow up the government crowd. I have no intrest in debating with people that want undermine and destroy the country. I might not agree with DA60, but atleast he's not an idiot.

 

This is the comment I was referring to:
I remember several years ago an oil exec made a comment, We understand that you think we are not opperating fairly, but the easiest way to show that we have allways adjust prices based on oil cost is because you can allways use the multiple of 3 cents for every dollar for a barel of oil. Going by his theory we should be paying about $2.50 for gas right now. Looks like we are being gouged to me. People are continuing to drive though, so supply and demand I guess is working. Got to love oligopolies, they work so efficiently.

Yes something has changed, exactly what is it? Is it totall gouging of the Oil Company? Lets look at their ROI, has that changed? No I don't think it has, they still hovering I believe right around 6% to themselves, in otherwords their ROI hasn't changed so what else is effecting the higher cost of gasoline, deisel or anyother pertroleum product? If you are suggesting a lower ROI is called for then I believe the Oil Companies of a legitment complaint. Bottom line, the cost of business is increasing, why is that? Just a hint, Obama admitted that cost of business is going up on his watch and obviously he is making a promise come true, one we rather not but.....

In other words how to you blame CPI on the Oil Company and not those that are controlling the value of the dollar? Your dollar is simply buying less gas and while the Oil Company is achieving higher profits but those profits being dollars are worth less!

Now your other assertion, the Social Security, yes you all were against tieing that to the market but on the other hand you are gonna make the 401k money tied to unhealthy investment stragedy if they have to redefine their portfolios. As people age they tend to change their portfolio within their 401k plan to more secure investments such as "Safe" investments. If such allocations are changed by the 401k Managers on the requirement that park or safe money has to be placed inside of more aggressive investment stragedies then those seniors or near seniors loose the ability to redirect their money as in less choices being offered by the 401k portfolio. I have no doubt that this money as big as it is, is not being over looked or exempted in Krugman's idea he has suggested.

You are offering nothing more then a dog and pony show and everyone is seeing it for what it is!

 

I'd like to know what these so called regulations are on oil refineries that Obama all by himslef as emperor of the United States are. Hell I'd like to know what regulations on Oil Refineries have been enacted at all. Has their been an increase in gasoline taxes? New Tarrifs on Oil Imports I'm unaware of? I never even brought up social security, we were talking about retirement savings. Why are you trying to change the topic? We didn't talk about 401k either. Your only purpose in this argument has been to do what is called "liberal bashing" you have provided no substance what so ever. I don't even care for Obama, yet your forcing me to defend my President just like I had to defend Bush when idiots attacked him on baseless claims. I personally haven't cared for the politics of either. You are nothing but a partisan hack. Do yourself a favor and unglue yourself from Fox News and Rush Limbaugh. Your a hack, and you don't know what you are talking about. You have no idea what I stand for but you think that I will sit idally by while you attack my country and the democratic republic that governs it. You are one of the most unpatriotic people on this board. I can think of a couple of others that have directly said that they would rather destroy the government then allow Obama to have another term. Your fear mongoring is pathetic. You are pathetic. You know what, screw it, don't answer my post. You are nothing but a troll and I will do to you what trolls deserve. Say hello to my ignore list, troll.

 

Despite the above comment Ive really enjoyed the last few pages of discussion.

So good not to have to read ethereal or that other fellow anymore, given their recent withdrawal.

Please continue.

 

I never said Obama was the only culprit at all troll, yet he has not done nothing to limit the damage being done but has only worsen the problems we are facing. As far as Oil Production goes you shut down the Gulf of Mexico where in the hell are we making up production with troll? You got to refine something, if you take oil from the Gulf out of the equation this oil is coming from someplace, obviously there is more oil pumping in that region but price goes up due to government actions not oil company actions. Plus if you change the type of oil being refine you are adding yet another cost of adjusting the Refinery ability to produce if they are changing types of Crude Oil they are working with. Yet you go on about the CPI as if its a Energy Company doing and on the other hand have no clue that their ROI is not no different then it was years ago? Plus you seem to have no clue on if we are adding or subtracting "Petite" recipes to the gasoline pipeline which does increase prices for everyone and including to the refining of them, are they being lessen or increased? Last I heard several more are going to be added.

Yes the EPA is now in the Gulf demanding additional safeguards (which is debateable to a point) but they seem to be just adding more and more layers of beaurecracy to the problem which is not helping at all. So you tell me troll exactly how many of those platforms out in the Gulf is actually pumping? Yea Yea I know it is not because of new regulations or permit reguirements the Oil Company is hoarding cash! Yea Yea we all heard it a thousand times, go back to the rock you crawled out from TROLL.

Oh wait, let me sit here three years after Bush left office and keep harping on his domestic policies and lets just forget about Obama's total mismagement of the economy and blame everyone else of the American downgrade as if it was not the blame of the current Administration. Hey Troll I assume to complain about the administration that is going into its third year now and lets not forget the Oil Companies like all companies have to factor in things such as Obamacare and other factors that this administration is adding to business. Oh and yes the Finance Reform Act by this pitiful group is effecting the way banks and businesses deal with money, bank told me the other day I have to fill out IRS forms because I deposited more then two thousand dollars? It use to be 10 thousand then 5 grand now it 2 grand???

WTF is going on???

 

Please identify where there is "money that's sitting in reserve and not being utilized"?

Where would you 'invest' in order "to foster an increase of demand"?

 

I just can't decide which numb nutz is less deserving of a Nobel prize, Krugman or Obama.

 

I just love people like this, no matter how many times history shows us that government attempt to steer the economy via spending is a failed policy they just keep coming back suggesting the same fix, just bigger! The one Depression where the Government stood clear and enforced contractual law and allow economic course to take a natural direction no one remembers because the Depression of 1921 was so short lived and little pain spread out no one takes note?

 

Funny how youre so sure while so few people actually agree with that statement of yours.

Really, is there any economics department in the entire world who would back this claim or is it limited to a few fringe speakers?

 

In bold above, if you're talking stimulus/TARP, this policy was never to steer the US economy. It was solely to give the economy a temporary boost of consumer spending in order to buy some time for the root economy to get back on track.

If you wish to debate the negative side to using government stimulus, then quantify for us what would have happened to the economy/society if NO stimulus had been done...

 

1) Considering just about every economist in the world (outside of a few - many of whom were Austrian schoolers; Schiff, Rogers, Faber, etc.) completely missed the housing crash...including those leading Bernanke and Geithner; most economists credibility is shot, IMO. Heck, even I saw it coming years before it did - it was obvious.

2) Governments/politicians usually love power - the more the better. And Keynesian economics gives them tons of it. They get to do the the thing that many of them love to do more then anything - spend LOTS of money and have people tell them to spend LOTS of money so if it all blows up, they can claim they were just doing what the people said and the economists advised.

But following the 1921 economic model (which worked extremely well) of the government basically balancing the budget and getting out of the way disempowers politicians.
And most of them hate that.
Does anyone honestly think that politicians do not mostly have huge egos?

 

UH???

Allowing failures to fail by natural selection of the free economy has its merit since that was not allowed to happen I guess we can play monday night quarterback and say it would of been a great deal better if the govenment just did what they was suppose to have done and stayed out of the way.

Once again the prime example is the 1921 Depression, where the government did just as many have suggested, now how would of played out today? I'm thinking if you do the same thing you get a similiar outcome. Now we didn't and Obama and yes Bush played the 1930's playbook and look where we are at today, an extended recession/depression whichever word you like the best, both are identical just one is less severe sounding then the other.

 

Oh I see, when I stated "these people" I was referring to who you was in the post I didn't make that clear. Sorry for any finger pointing you might of thought was pointed at you, it was not but at Jwhitej toon.