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FreeMarkets (97.61)

Economic Trajectory

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February 03, 2010 – Comments (7)

To some, the economy is getting better.  You can see it in the numbers!  To others, the economy isn't doing so good.  You can see it in the street!

But what is the trajectory of our economy?  Is it getting better, getting MUCH better, doing worse or going down the toilet?

You may find the answer here: http://tinyurl.com/yhwt6m6

7 Comments – Post Your Own

#1) On February 03, 2010 at 9:54 AM, leohaas (35.73) wrote:

Just another government hater yelling "The keynesians are WRONG, and I am RIGHT".

OK, if you are right, then the economy is going down the drain. We will know in less than 2 years (the article claims we will have hyperinflation in less than 24 months).

So here is what I propose: 2 years from now, we will revisit this issue. If we indeed have hyperinflation, I'll admit that Keynes has got it all wrong. Will you admit that Keynes was right if your doom scenario does not pan out?

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#2) On February 03, 2010 at 11:11 AM, cthomas1017 (77.02) wrote:

leo,

I don't know about freemarkets (afterall, he is a seahawks fan, so we have to question his sanity), but I'd be inclined to take your bet if we could agree upon what constitutes "hyperinflation".  

Question 1: if inflation rises to more than 10% in the next two years, would you concede?  Question 2:  If not 10%, what inflation rate would cause you to concede Keynes theories as incorrect?  Question 3: How does one measure "inflation?  (By strict definition, I usually refer to "inflation" to be an expansion of the money supply and that always begs the question by which criteria we measure it.  M1, M2, M3, etc.)  

My opinion, the definition of "hyperinflation" and the criteria we use to define it is as important as whether we consider Keynes right or wrong.  There is the possibility that a few of Keynes concepts are correct while a number of his theories could, at the same time, be tragically wrong.

I saw a quote the other day - something about people who poo-poo astrology being perfectly fine with the predictions of economists and weathermen. :o

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#3) On February 03, 2010 at 11:46 AM, FreeMarkets (97.61) wrote:

Leo,

I will be happy to agree.   I think CThomas is correct in creating an outline, but I will not accept gov't numbers as valid.  Why? Because they will substitute margarine for butter if that is what consumers are doing to save money.  Their inflationary numbers are designed to keep some voters in perpetual disbelief.

So what will I accept.  Something REAL, like the price of OIL or GOLD.  I will go on record that if GOLD or OIL are up less than 15% from today.  To make things easy, we can use the tickers GLD & OIL - currently at $109 and $25 respectfully (assuming they don't split). :-)

I would also be happy to use a gallon of milk.  In my location milk is costing $2.65/gallon.  Eggs are also acceptable at $1.50/dozen.

If you want, we could create our own basket of consumer items - might be fun.

I've said it many times - if the FED can keep the inflation genie in the bottle AND lower unemployment, I'm a Keynesian.  It's very important that in the next two years we get unemployment below 7%.  Right now their is a tug of war between inflation and deflation.  10% unemployment seems to be equalling out the increase in monetary supply.  If it goes below that I suspect inflation will grow by 50% with each percentage below 10% (eg: 3% inflation at 10% unemployment, 4.5% at 9%, 6.75% at 8%, 10.2% at 7%, 15% at 6%).

--FreeMarketst

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#4) On February 03, 2010 at 11:48 AM, FleaBagger (29.37) wrote:

I don't think we'll have recognizable hyperinflation. The government keeps revising the inflation measures to exclude whatever is rising in price the quickest, and will probably do so again; meanwhile, severe deflationary forces in the private sector will be met with expansion of government money, so the government will be free to try to "reflate" and grow in relation to the private sector with less evidence of inflation than normally would be the case.

Expect stagflation: reported economic growth clocking in negative while inflation is higher than we're used to (making the notional economic data even sadder), and the average standard of living going down, especially for the private sector.

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#5) On February 03, 2010 at 3:20 PM, cthomas1017 (77.02) wrote:

FM, I am sorely disappointed in you.  I hurled perfectly good seahawks trash talk, and you didn't bite.  I guess we can tell it's the off-season. :p

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#6) On February 03, 2010 at 4:41 PM, FreeMarkets (97.61) wrote:

Mr. Thomas,

I am too disappointed in the Seahawks to bite.  Now, if you said the Steelers beat the Seahawks in SBXL, I would have unleashed a tirade like no one has ever seen. :-)

--FreeMarkets

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#7) On February 03, 2010 at 8:42 PM, cthomas1017 (77.02) wrote:

You're talking to a Steeler fan.  he he he  From Detroit, no less.  I shall bite my tongue.  You've been through enough. :)

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