"Tomorrow is Lalaland, doing Bill Maher. Also on, Art Laffer.
This might be an occasion to revisit some of the predictions various parties made a few years back. Here’s Laffer three years ago, Get Ready for Inflation and Higher Interest Rates:
But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.OK, it’s only three years, so I guess there’s still time for the hyperinflation — but it had better get a move on. I think my take is doing a bit better:
Let me add, for the 1.6 trillionth time, we are in a liquidity trap. And in such circumstances a rise in the monetary base does not lead to inflation."He DID NOT say that 1.6 trillion times. That is blatantly false. Geez, I wish this hack would just quit it already.
[If this post confuses you (1.) don't worry about it, and (2.) why the hell aren't you reading Bob Murphy? He's got some of the best blogging on the internets!]
To quote Bill Maher: "I kid Bob Murphy".
I do think this will be a particularly good thing to talk about. The European comparisons are so wishy-washy to me because of the damn counterfactuals. But what Krugman is pointing at here is a solid qualitative difference in prediction. Not dueling, dubious marginal effects. I don't think economists have crystal balls for complex systems - I'm suspicious of forecasting. But this sort of qualitative forecasting oughta mean something and oughta be possible. And if I recall even Bob Murphy has backtracked on some of the stronger claims of the sort that Laffer is quoted on above.
btw - here's a great performance of another wonderful economist on Bill Maher. Krugman is long overdue:
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"she" got what "she" got based on the evidence "she" provided
ReplyDeleteit seems convenient to say that even if "I/we" did my/our job better (for whatever reason)-- had I/we presented a more accurate assessment of the situation it would not have mattered
personally I think it would have mattered and appreciate the shortcoming -- but this is beside the point
At least Laffer was wrong in the right direction and in only one way. Krugman has done more than dismiss the likelihood of high inflation over the last few years. He has made repeated warnings about impending deflation whilst on occasion making guarded references to situations in which high inflation might appear. This is just Krugman's usual trick of waiting to see what happens then choosing which of his many 'predictions' are closest.
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