PeakTrader.com

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VangelV said...

When, The Conscience of a Liberal, makes the list credibility goes out the window.

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PeakTrader said...

VangelV, biased information (which both Krugman and Perry provide, and supported by sound mathematical and empirical models) is more credible than misinformation (which is provided by too many people, and supported by nonsense).

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juandos said...

Hey PT when has Krugman a Keynesian (or any Keynesian for that matter) ever provided anything but noise?

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PeakTrader said...

Juandos, for example, you may want to read Krugman's Nobel Prize paper (it's short). Here's a partial summary:

Traditional trade theory assumes that countries are different and will exchange only the kinds of goods that they are comparatively better at producing — wine from France, for example, and rice from China.

This model, however, dating from David Ricardo’s writings of the early 19th century, was not reflected in the flow of goods and services.

Krugman set out to explain why worldwide trade was dominated by a few countries that were similar to one another, and why a country might import the same kinds of goods it exported.

In contrast, the lawyers micromanaging the economy offer nonsense.

Two years ago Obama stated we cannot afford another bubble.

Now he says we cannot afford to extend the tax cuts on the rich.

After squandering trillions of dollars, in spending and lost output, the nonsense has been delivered.

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VangelV said...

Nonsense. Krugman is a Keynesian who has gotten most things wrong and has turned away from economics and towards political advocacy.

What kind of an idiot writes this:

...To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

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PeakTrader said...

VangelV, so, in August 2002, Krugman concludes "Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

He was correct, and we needed another bubble to combat this recession (i.e. more of a production than consumption bubble, or more of a 1995-00 bubble than a 2002-07 bubble).

Asset bubbles compensate for flat real wages, much like higher dividends compensate for lack of raises in real wages, to improve living standards.

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VangelV said...

Money printing does not create wealth. If it did Zimbabwe and most South and Central American countries would have enjoyed a very high standard of living.

What money printing does is help borrowers by robbing from savers. As such, there is no real incentive to save so people begin to spend money as rapidly as they can. While the process can be manageable, it can get out of hand and destroy the currency and the credit markets. That makes the country worse off and individuals much poorer.

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PeakTrader said...

VangelV, sustainable growth helps create wealth, because there's neither strain nor slack utilizing resources.

Economic boom-bust cycles (not to be confused with asset boom-bust cycles) use resources inefficiently, both in the boom and bust phases.

It's better when global imbalances correct slowly rather than suddenly. Similarly, a soft-landing is better than a hard-landing, particularly in a high-skilled economy, where more time is needed to acquire new skills.

Also, I may add, was there economic strain in the U.S. economy in the 2000s?

For several years in the mid-2000s, U.S. actual output was roughly equal to potential output, and the country was at full employment. However, the U.S. didn't overproduce throughout the 2000s.

The U.S. did overconsume, because foreign goods and capital became cheaper and cheaper, which spurred demand. More money was needed in the U.S. economy, because U.S. consumers bought foreign goods and foreigners used those dollars to buy U.S. Treasury bonds, i.e. money was drained out of the U.S. economy and flowed into the U.S. government.

The housing bubble (and related goods) help raise U.S. actual output towards potential output, which caused export-led economies to overproduce even more, although the U.S. economy didn't overproduce.

Why did the banks fail?

There was too little money in the economy. We had restrictive monetary policy and contractionary fiscal policy, which caused the recession.

If there was a $5,000 per worker tax cut (for 150 million workers at the time, or $750 billion), they would've paid-off or paid-down their highest interest rate debt first and increased their monthly incomes. The recession and financial crisis would've been averted, or at least postponed.

https://www.blogger.com/comment.g?blogID=28997633&postID=4950742770361755439

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PeakTrader said...

This country needs another asset bubble, not quite like the Information-Age bubble of the 1990s, but more like a Biotech Revolution bubble.

However, we need to scale back on regulations, taxes, and educate and import more biotech workers to get the bubble going.

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US household net wealth rises
But remains below the record level set in Q3 2007.
15 June 2010

At the end of Q1 2010, the value of US household assets amounted to $68.53 trillion.

At the end of Q1 2010, the level of US total household debt was $13.97 trillion.

US net wealth now represents a very respectable 491% of household disposable income. The current ratio is actually exactly in-line with the long-term ratio, which dates back to 1952, although there have been times when the ratio has risen over 600%.

Overall the US consumer remains extremely wealthy by historical and international standards; despite the high level of debt.

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geoih said...

Quote from PeakTrader: "This country needs another asset bubble, ..."

Yeah, that's what we need, more fairy tale solutions.

A persistant recession, unending pumping of money, and a bull market. Can anybody see the reality? Where do you think all that new money is going? Straight into the stock market. There is no where else for the money to go.

The bull market is completely inflation driven. You have your asset bubble. Watchout when this one pops.

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PeakTrader said...

Geoih, the Nasdaq bubble, from 1995-00, poured vast amounts of capital into high-tech firms, and then we had a quick and massive Creative-Destruction process mostly from 2000-02.

The result: The U.S. leads the rest of the world combined, in both revenues and profits, in the Information Revolution. The U.S. has the strongest and biggest high-tech firms in the world.