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Monday, August 3, 2015

Have the Inflationphobes Learnt Anything in Seven Years?

     Krugman doesn't think so:

     "Derp — views that just keep being repeated in the face of overwhelming contrary evidence — has always been with us, but the derp quotient has really soared since the crisis of 2008, which made nonsense of doctrines too dearly held to be reconsidered. This is especially true of inflation derp: has any prominent figure who warned of runaway inflation from the Fed’s efforts admitted having learned anything from being wrong year after year?"

     http://krugman.blogs.nytimes.com/2015/08/01/inflation-paranoia-as-a-tribal-marker/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body

    Yet, I disagree. If you want to see a Freshwater inlationphobe type that has learnt something from all the wrong predictions of runaway inflation see Stephen Willaimson and John Cohrane's Neo-Fisherianism.

    http://lastmenandovermen.blogspot.com/2015/07/neo-fisherism-rbcs-brilliant-trojan.html

    Krugman has commented on the NFers some.

   http://newmonetarism.blogspot.com/2014/11/neo-fisherians-unite-and-throw-off-mvpy.html

   However, I feel like just like he doesn't fully appreciate the phenomenon of Market Monetarism, he doesn't get that the inflationphobes have learnt-they are now NFers. What's brilliant about this move is they can now claim to be on the same side as the Keynesians. They too want to increase inflation but the only way to do that is to increase interest rates.

   You could say that the Neo-Fisherian phenomenon is those economists and Wall St pundits who just want an interest rate hike because it's 'not normal' for them to be this low this long. For years they argued for raising interest rates based on the inflation bogey man. Now they've switched to arguing that the only way to beat lowflation is to raise interest rates.

   So the policy is the same but the rationale has changed. In this the inflationphobes have proven to be shrewder than Krugman gives them credit for.

  He also underestimates the MM movement and in this way he underestimates the current standing of the Right. They are much shrewder than he gives them credit for. They have made adjustments.

 All things considered you'd rather even want to overestimate your enemy then underestimate them which Krugman is currently doing I think.

 His buddy SW thinks NF can get rid of both the Phillips' Curve and MV=PY.

 On another front, Paul Romer is accusing Freshwater types of mathiness.

 http://krugman.blogs.nytimes.com/2015/08/02/freshwaters-wrong-turn-wonkish/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body

 A lot of these fights you have to understand the inside politics to really make sense of but once you do I find them very interesting. A lot is at stake.

   
     

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