Magnificent post. Regarding the press, I don't think the media care about econ 101 or higher numbers in econ. I think they are trying to assign blame. I believe it was Milton Friedman who said that politicians would try to assign blame for inflation to anyone except those who are responsible
My understanding is that there are truckers but they left the market due to various regulations making the work less attractive or their trucks not compliant with emission standards. It’s going to take a large increase in compensation to get them back in the market if ever
Why wouldn't the Fed continue to offset the government's spending? Is it a matter of will or ability?
As to ability, the Fed can effectively expand its balance sheet to any degree it wants. It can simply tell member banks to buy every new Treasury that gets issued, and the Fed will give them a small benefit for doing so. Without obviously better ways to spend their reserves, banks will continue to do this. It's basically free money for them. So the Fed has nearly infinite ability to do this.
As to willingness, the Fed is ultimately appointed by and works at the leisure of Congress. Who are the guys spending the money. And, of course, if the Fed suddenly said, "hey, we're not buying any new Federal debt, it would dramatically reduce the value of their existing holdings of debt. And cause a sudden and dramatic change in the allocation of economic activity in general. In short, a crisis.
In some sense prices are rising but in time rather than money. Part of the price of a new couch or car is the need to wait six months for it. This has a lot of downsides and an uncomfortable directional resemblance to old Eastern Bloc conditions, but it also has psychological upsides when it feels better to wait than spend more, and/or feels better to make people wait than make them pay an "extortionate" price.
I'm glad you disagree with NS. I don't read NS's blog and columns and every time that Tyler Cowen has quoted NS as if NS knew what he was talking about I laughed at what he wrote. NS's knowledge of econ theory and history is grotesque.
Let me go back to what I commented on in one of your posts last June. I still believe that what is going on today is largely due to a large change in relative prices but it may become persistently high inflation in countries where governments are going to finance deficits by printing money (that is, by resorting to the inflationary tax). Today, most of these governments can rely on borrowing or forced appropriation of private savings accumulated before the pandemic. But stocks soon will be exhausted and additional borrowing will lead to large premia increases (anyone that doubts about all these changes I suggest them to read about Argentina since 1951 but especially what is going to happen in Buenos Aires THIS WEEK after yesterday mid-term elections -I should add in IMF HQS also). Again and again, we have to remember Stern Law.
Magnificent post. Regarding the press, I don't think the media care about econ 101 or higher numbers in econ. I think they are trying to assign blame. I believe it was Milton Friedman who said that politicians would try to assign blame for inflation to anyone except those who are responsible
Spending will rise faster if the govt injects more *money*—not “paper wealth”— into the economy. You can’t spend bonds.
My understanding is that there are truckers but they left the market due to various regulations making the work less attractive or their trucks not compliant with emission standards. It’s going to take a large increase in compensation to get them back in the market if ever
The problem is surely not so much journalists ignorant of freshman economics, but 'economists' who are ignorant of the same.
Why wouldn't the Fed continue to offset the government's spending? Is it a matter of will or ability?
As to ability, the Fed can effectively expand its balance sheet to any degree it wants. It can simply tell member banks to buy every new Treasury that gets issued, and the Fed will give them a small benefit for doing so. Without obviously better ways to spend their reserves, banks will continue to do this. It's basically free money for them. So the Fed has nearly infinite ability to do this.
As to willingness, the Fed is ultimately appointed by and works at the leisure of Congress. Who are the guys spending the money. And, of course, if the Fed suddenly said, "hey, we're not buying any new Federal debt, it would dramatically reduce the value of their existing holdings of debt. And cause a sudden and dramatic change in the allocation of economic activity in general. In short, a crisis.
In some sense prices are rising but in time rather than money. Part of the price of a new couch or car is the need to wait six months for it. This has a lot of downsides and an uncomfortable directional resemblance to old Eastern Bloc conditions, but it also has psychological upsides when it feels better to wait than spend more, and/or feels better to make people wait than make them pay an "extortionate" price.
I'm glad you disagree with NS. I don't read NS's blog and columns and every time that Tyler Cowen has quoted NS as if NS knew what he was talking about I laughed at what he wrote. NS's knowledge of econ theory and history is grotesque.
Let me go back to what I commented on in one of your posts last June. I still believe that what is going on today is largely due to a large change in relative prices but it may become persistently high inflation in countries where governments are going to finance deficits by printing money (that is, by resorting to the inflationary tax). Today, most of these governments can rely on borrowing or forced appropriation of private savings accumulated before the pandemic. But stocks soon will be exhausted and additional borrowing will lead to large premia increases (anyone that doubts about all these changes I suggest them to read about Argentina since 1951 but especially what is going to happen in Buenos Aires THIS WEEK after yesterday mid-term elections -I should add in IMF HQS also). Again and again, we have to remember Stern Law.
That would be Stein's Law--things that can't go on forever, don't
Yes. Thanks.