Via Greg Mankiw's blog (note that Mankiw has collaborated with Christina and her husband David Romer over the years.
Random Observations for Students of Economics
Monday, November 24, 2008
Christy Romer to the CEA
Posted on 11/24/2008 4:02:29 PM PST by Free ThinkerNY
It’s Peter Schiff, Cassandra of the collapse, sounding off on Bloomberg TV over the weekend. He also predicts a bear market for another five to 10 years, with lows for the Dow somewhere between 4,000 and 6,000 but actually much worse in real dollars as the U.S. is crushed by hyperinflation. The only solution? Bring on the apocalypse and let’s muddle through.
If anyone needs me, I’ll be out back killing myself.
(Excerpt) Read more at hotair.com ...
The Good news is that my house payment will be almost nothing. The Bad news, I will never be able to afford the insurance or property taxes.
Hate to burst his bubble:
WSJ has been writing editorials about Fannie Mae & Freddie Mac malfeasance for about 6 years now.
The 2007 Economist was chock full of articles about how the world banking system was facing collapse.
It was just a matter of when, and how far, the fall would come.
I’m ahead of you there. I got a smart songwriter buddy looking at filing the paperwork to become “Emmett’s Hi-Fidelity & Stereo Bank & Trust”. I plan to stimulate the economy (and maybe a few blondes and redheads) and can do it for less than $50 million. That’s a bargain and the government would be foolish to pass it up. We plan to invest in American cars, motorcycles, musical instruments and beach-front property.
WELL, THANK YOU VERY KINDLY
I agree with your post. However, the leaf blower analogy is kinda funny because as a firefighter I use a leaf blower to blow leaf litter away from wildfires to put them out.
...I went out back, on walk-about, in 1973. Thinking about going back out back, for another walk-about...
Thank you for that laugh. I may not be long before we long for the days when we could.
Paying off your own debts before cash disappears is a good plan, a la Dave Ramsey.
Don’t know where you are but here you can run across a Water Moccasin on a nice day in January, It keeps the riffraff away. I think they have lost control and will probably be swept away by events, the trick will be to fill the vacancies with the right people. I think that there are people, probably the ones who helped create this mess who are poised to take advantage of any opportunity to seize control. Might be the most strenuous test our system of government has faced in over 130 years.
Unfortunately, I think he (and they) are right. How do we get out of this mess? How is the government going to pay for all of this spending - both the bailout spending by Paulson and the planned make work spending by Obama? It won't come from taxes, the money's just not there. So they'll try to borrow, but not only are there fewer dollars out there to borrow, but dollar holders are increasingly less likely to want to give 'em to the US federal government, knowing that the likelihood of getting paid back is decreasing.
So that leaves printing as the only solution. Hello inflation. Goodbye dollar purchasing power.
Does anybody else see any more likely outcome? I'm dying to hear it, but I don't think it's out there.
I don’t find anything about Peter Schiff on the Von Mises link but I am glad to know he’s not a Democrat congressman from California.
Hyperinflation and the DOW 4000-6000? I don’t think so. The price of equities will increase as well. Whether or not the value keeps up with inflation is another matter.
Don't forget that the dollar is the primary world reserve currency. So there are lots of dollars out there being held by foreign central banks.
In his book Crash Proof, Schiff suggest that as the dollar weakens foreign holders will divest themselves of the dollar, dropping out of US treasuries and buying up everything they can get their hands on. All of those extra dollars in our domestic market will mean WAY higher prices for goods.
If he's right, mighty hard times are on the way.
You might be interested in listening to this.
That’s to remove fuel from the path of the fire, when it’s directed towards the fire (as I do when the charcoal is stubborn) it increases oxygen to the fire. Learned that from watching my grandfather used a bellows on his coal fires. We also used to “beat” a fire out with a small pine sampling, also smothered (remove oxygen) from the fire. On another topic (since you are a firefighter and probably know all this), never had seen a flash over until I was stuck in the parking lot at a grocery store fire, the firemen knocked the front window out and were going in with two hoses and poof, it was like someone doused the whole store with gasoline (luckily they were only singed). The same area lost several firefighters (believe it was nine) in a furniture store fire a couple of years ago.
Whatever comes, please don’t lose your ability to laugh. If that happens, we begin to die and do so quickly. And what’s worse, nobody misses the guy who never laughed when he was alive!
Via Greg Mankiw's blog (note that Mankiw has collaborated with Christina and her husband David Romer over the years.
Random Observations for Students of Economics
Well, at least we’ll get some good songs out of this deal.
Hard times always make for good songs.
I’ve come back to reading my Austrian textbooks from my finance undergrad days.
There are some great powerpoint presentation that make the case for the Austrian school at the following url:
http://www.auburn.edu/~garriro/tam.htm
TIME AND MONEY
THE MACROECONOMICS
OF CAPITAL STRUCTURE
by ROGER W. GARRISON
If anyone is interested in a introduction to the Keynesian vs Hayek arguments being played out in the world’s economic policy makers offices, I strongly suggest viewing the 2006 editions* of this professors powerpoint slides:
http://www.auburn.edu/~garriro/cbm2006.ppt
Sustainable and Unsustainable Growth
Keynes and Hayek: Head to Head
*The 2006 editions require PowerPoint 2003 or later.
Personal investment/savings strategy would need to be different, depending on the type of depression, should one occur. Gold would be an outstanding play in a Schiffian scenario, but in a deflationary depression, not so much.
Anyone here brave enough to take a net short position in equities?
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