Japan is now in recession, so evidently Shinzo Abe's Monetarist policies aren't working as much as hoped.
http://www.cnbc.com/id/102191199
Just recently the Bank of Japan had announced some very impressive sounding shock and awe where the BOJ vowed not just to buy bonds but all kinds of other assets-like stocks. Sumner declared that this move was already a success-after all, the Nikkei rose 600 points that very day. At the time Sumner said that, Cullen Roche called his declaration 'silly.'
"But here’s the more interesting point he makes in reference to the idea that the BOJ’s announcement and the subsequent 4.8% rally in stocks proves something:
http://www.cnbc.com/id/102191199
Just recently the Bank of Japan had announced some very impressive sounding shock and awe where the BOJ vowed not just to buy bonds but all kinds of other assets-like stocks. Sumner declared that this move was already a success-after all, the Nikkei rose 600 points that very day. At the time Sumner said that, Cullen Roche called his declaration 'silly.'
"But here’s the more interesting point he makes in reference to the idea that the BOJ’s announcement and the subsequent 4.8% rally in stocks proves something:
“Of course Keynesian economics predicts the QE announcement would have no effect on stock prices, as the new money would just sit there as excess reserves. You are just swapping one low interest government asset for another low interest government asset. (In fairness, I don’t know what the BOJ is buying in this case, but we also see big market effects when central banks just buy government bonds.)”
"Sumner is saying that, just because the Nikkei rose 4.5%, then that means Keynesian economics has been wrong and Market Monetarism is right. How in the world can such a naive conclusion be made by such a seemingly intelligent person? Of course a Central Bank with legal authority to purchase assets on a secondary market (as the BOJ has) can cause the stock market to rise. If the Federal Reserve had the legal authority to buy out every S&P 500 firm that’s listed at a 100% premium then they certainly could. Does this mean that those firms are actually worth twice what they were before the Fed intervened? Does it mean the economy is twice as strong as before? Of course not. It just means that the Central Bank had the legal authority to buy stocks. The fact that Central Banks and markets often respond to events in silly ways does not prove or disprove anything. Scott is a big fan of looking at short-term stock market moves and then declaring a certain position to have been “proven”. It’s amateurish and silly – the sort of stuff you expect to hear from a day trading monkey with no real investment experience, not a macroeconomist…."
http://pragcap.com/scott-sumner-says-silly-things
It's obvious that today's announcement is pretty uncomfortable for Sumner.
"Another lesson from the last few years is that a combination of monetary stimulus and fiscal austerity is a recipe for economic stagnation. Japan is the latest case in point," David Kelly, chief global strategist at J.P. Morgan Funds, noted in emailed commentary. "Monthly data suggest a bounce-back in the fourth," Kelly added.
http://www.cnbc.com/id/102191199
Here is someone pronouncing Keynesianism 'dead' with every move of the market and gloating about an imaginary 'bet' Krugman lost. So how does he answer this? By saying 'Gee, what recession?'
The media says yes. I say if Japan is in recession it’s time to redefine the term
The unemployment rate in Japan is currently 3.6%, one of the lowest figures in decades. It’s true that the Japanese unemployment statistics are a bit peculiar, but so are all their other data. And when they are unquestionably in recession, as during 2008-09, the unemployment rate in Japan rises just as in any other country.
http://www.themoneyillusion.com/?p=28030&cpage=1#comment-371028
Ok so 'recessions' have nothing to do with GDP if the unemployment rate is low.
"Welcome to the new world of business cycles. Japan is a country with low productivity growth and a working age population that is shrinking by 1.2% per year. The trend rate of RGDP growth is somewhere near zero, perhaps negative. Japan will have lots more “recessions” during the 21st century."
So then maybe Japan never was in any recession and therefore what's the problem? For him to hide behind a low unemployment rate here is risible. The conservatives have for years been dismissing the low unemployment rate as due to crony capitalism and corporate nepotism-the Japanese corporate sector is held to be inefficient and in need of structural reforms-presumably these needed structural reforms would increase the unemployment rate. Basically, Sumner's whole performance is-big surprise-smoke and mirrors.
Next up-Sumner holds court on what the meaning of is, is.
"Another lesson from the last few years is that a combination of monetary stimulus and fiscal austerity is a recipe for economic stagnation. Japan is the latest case in point," David Kelly, chief global strategist at J.P. Morgan Funds, noted in emailed commentary. "Monthly data suggest a bounce-back in the fourth," Kelly added.
http://www.cnbc.com/id/102191199
Here is someone pronouncing Keynesianism 'dead' with every move of the market and gloating about an imaginary 'bet' Krugman lost. So how does he answer this? By saying 'Gee, what recession?'
The media says yes. I say if Japan is in recession it’s time to redefine the term
The unemployment rate in Japan is currently 3.6%, one of the lowest figures in decades. It’s true that the Japanese unemployment statistics are a bit peculiar, but so are all their other data. And when they are unquestionably in recession, as during 2008-09, the unemployment rate in Japan rises just as in any other country.
http://www.themoneyillusion.com/?p=28030&cpage=1#comment-371028
Ok so 'recessions' have nothing to do with GDP if the unemployment rate is low.
"Welcome to the new world of business cycles. Japan is a country with low productivity growth and a working age population that is shrinking by 1.2% per year. The trend rate of RGDP growth is somewhere near zero, perhaps negative. Japan will have lots more “recessions” during the 21st century."
So then maybe Japan never was in any recession and therefore what's the problem? For him to hide behind a low unemployment rate here is risible. The conservatives have for years been dismissing the low unemployment rate as due to crony capitalism and corporate nepotism-the Japanese corporate sector is held to be inefficient and in need of structural reforms-presumably these needed structural reforms would increase the unemployment rate. Basically, Sumner's whole performance is-big surprise-smoke and mirrors.
Next up-Sumner holds court on what the meaning of is, is.
Sumner is a perfect avatar for "modern conservative".
ReplyDeleteHis view is impenetrable to outside influence, which is seen as "strength" by the true believers. He is nominally smart, as in he achieved high numbers on some exams Im sure ..... and he has a quick ascerbic wit when dealing with his detractors at times, but he lacks a very important aspect of true intelligence.......... flexibility. He has decided that he already knows what needs to be known. Commercial banks are irrelevant, not worth examining in more detail, but CBs are omnipotent and all powerful entities orchestrating our economy through all the ups and downs. And he also is the only one who can decipher when some "downs" are actually "ups" ....... and vice versa.
I think Cullen has given up on him. He used to insist that he thought Scott was reasonable and had something to add to the discussion. He has since found out that Scott is rigid in his beliefs and a purely political animal just interested in his side winning, not on shedding light on our societies issues.
I tried to tell him ;- )
Well with Cullen, the one thing I do notice is that he's given jist to the Market Monetarist types by doing away with regular comments on his own blog. I know it's frustrating when some Sumner troll high jacks the conversation but why penalize everyone else? I don't think I like that move.
ReplyDeleteHowever, you and he are certainly right about Sumner. What I notice is that even his commentators have changed. When I used to leave comments that would question some aspect of something Sumner said, they would often answer my comments in a friendly, open way as if they accepted me as someone who genuinely wants to understand. They would try to clarify.
Lately though they've become more like Sumner. When I leave comments there now, it's like ice-they don't like me disagreeing with the great Sumner. The battle lines have become much more clearly drawn. Like Congress, his blog just gets more and more partisan
Yeah I was disappointed when Cullen closed off comments. He was pretty tolerant and allowed people room to disagree with him but he got tired of certain types of comments. I understand, you may want to read and answer peoples questions/comments but when it simply becomes like being a guest on Hannity or some of the CNBC shows, its not worth it. Some people just do not want to consider that what they think they know is wrong.
ReplyDeleteIm trying more and more to be like Neil DeGrasse Tyson. Stick just to facts/data points and stay away form opinions/ feelings/beliefs. There is a place for beliefs etc but one needs to be clear that they are simply stating a belief and not a fact AND consider that their belief is incorrect. Too many people invest way too much into their beliefs. Im trying to go the other way.
I haven't visited Sumners blog in months. Haven't heard much from the Big Sadowski either, not that I miss it.
I do keep track of Sumner's blog but I have noticed he himself hasn't left too many comments lately. Maybe he himself is tired of it all?
DeleteAs for facts vs. beliefs, I would point out that both have a point to play in taking intelligent and informed positions.
I understand you're reticence about beliefs right now but ultimately facts while important can't wholly do away with beliefs that are going to be tinged by feelings.
Still I think you're on the right track. For my part I try to always challenge myself as to why I hold certain beliefs.
If you're a policymaker, you have to also have beliefs. Of course, neither of us are currently policymakers, but this doesn't mean I don't hope i may someday be one...
I mean Sadowski hasn't left too many comments lately-not Sumner of course.
DeleteOne cant help but have beliefs obviously and I don't mean to try and eliminate them I simply want to be clear, and make others be clear as well, that they are expressing opinions and not facts. Then, we can get to the next question .... which is WHY do you hold that opinion. From where does it come?
ReplyDeleteDeGrasse uses the example of discussing age of the earth with someone. If they say I think the earth is 6000 years old, they obviously were told that by someone. They didn't do any experiments and come up with that age, they simply believed someone else. Why? I don't "believe" the earth is 4+ billions years old, using the best techniques we have to measure the ages of things on this planet, which involves a little geology, chemistry and physics and knowledge about how carbon atoms decay over time, we have come up with an age of over 4 billion and less than 5 billion. I think the experts might be a little more precise than that but there are still a few hundred million years of wiggle room. Now, new data might enable us to change this number in the future so Im not wedded to the 4.5 billion too strongly, it really doesn't matter for most discussions, but I KNOW that the 6000 years is ridiculously wrong AND that only people who insist that the bible is a science book hold this view.
So having beliefs is natural and unavoidable. We are scientists by nature, we are always asking why and wanting to predict the future as well as we can, which requires understanding the present as well as we can, but we simply have to determine where our beliefs about the present are arising and how strong is the evidence for that belief.
We also have to be constantly ready to update our probabilities as new info becomes available.
Ive decided that the reason I cant be a modern conservative is that I don't care about certainty enough. I embrace mystery, learning and exploration of ideas. Modern conservatives (probably conservatives through history really) simply want to life to be simple, easy to understand and have all mystery waved away by "gods will" or fate (for the less religious conservative).