Use access key #2 to skip to page content.

It's Playing Out As Expected



April 28, 2011 – Comments (9)

I could spend today handing out high-fives, but it feels akward.  Nobody likes to be the bearer of bad news. Oddly, it's even worse when you're bad news is proven correct.

Economic Growth Slows, (Price) Inflation Rises  <------- Read: Stagflation

Here's something I hope you will keep in mind going forward. We spent a lot of time arguing about whether prices would rise. But what do the (price) inflation reports tell us?  These reports tell us that while we were arguing, prices were rising.  The (price) inflation reports are merely historical reports. They tell us what happened.  This is now the past. 

So if you want, you can think back and try to remember who was telling you that there would be no (price) inflation.  While they were telling you that, prices were rising.  Humorous, isn't it?

There are a few economic models that are studied here. I emphatically agree with binve that you should try to understand as many as possible.  Find their strengths and weaknesses, since no model is perfect.

Demand Information

Going forward you are going to see the weaknesses of certain economic models, particularly ones that rely on aggregate demand (Keynesian and MMT).  The aggregate demand debate goes back way before Keynes, to Malthus and Ricardo in the 1800s.  If you want to get a firmer grasp on how the concept of aggregate demand came to dominate the academic economic profession, here is a lecture by Steven Kates. If you prefer the written word, here is the pdf.  I recommend getting to the root of all of the economic models (the main ones being Keynesian, Monetarist, MMT, Marxist, and Austrian. There are others, but this would be a start. 

And yes, I include Marxist. It is, at its core, an economic model. You should know it. As with all the others, how can you know they are wrong?  Are you going to rely on others to tell you they are wrong? 

The Cyclical Nature of Markets

I don't have a great deal to say today. Why would I? I feel like Emperor Palpatine. Everything has played out as we expected. 

Here is another thing I want you to consider.  Markets are cyclical.  Pretty much everyone on CAPS finds agreement here.

So why is this market special. Why is it taking so long for the American economy to recover?

It's not a lack of paper bills. That's at a record level.
It's not a lack of government spending. That's at a record level.
It's not a lack of deficits. That's at a record level.
It's not a lack of social safety nets. We have more than we ever had.
It's not a lack of regulation. We have the largest regulatory apparatus in American history.
It's not a lack of legislation. Cumulative legislation has to be at its highest level in history.
It's not a lack of taxes. America's tax receipts are always growing.
It's not a lack of bailouts. Outside of the USSR's impressive TBTF record (not one enterprise failed in 70 years), it's certainly at an American-record-level.

Perhaps what America lacks is liberty.

Reading List

Books I'm reading or recently finished. If you want to think like an anarchist, you need to read like an anarchist.

The Bubble That Broke the World - Garet Garrett
Great Wars and Great Leaders - Ralph Raico
Sun Tzu's Art of War
A Tale of Two Cities - 
Charles Dickens
Counter Hack Reloaded - Edward Skoudis
The Moral Conditions of Economic Efficiency - Walter Schultz
PGP & GPG: Email for the Practical Paranoid - Michael Lucas

David in Qatar

9 Comments – Post Your Own

#1) On April 28, 2011 at 4:10 PM, catoismymotor (< 20) wrote:

The Price by N. Machiavelli is a nice compliment to The Art of War by Sun Tzu.


We are in interesting times. I'm doing all I can to keep the bow pointed into the waves while I'm hit with the spray from QE and QE2: Bernanke Boogaloo.

Report this comment
#2) On April 28, 2011 at 4:16 PM, kdakota630 (29.22) wrote:


I think you mean The Prince

Report this comment
#3) On April 28, 2011 at 4:17 PM, kdakota630 (29.22) wrote:

Oh, BTW, David, I just found this, thought you might like it:

Report this comment
#4) On April 28, 2011 at 4:31 PM, catoismymotor (< 20) wrote:

Yes. I meant The Prince. :( I swear the N was in there when I typed it. Oh! I see the missing N! It's trying to romance the @.


Report this comment
#5) On April 28, 2011 at 4:40 PM, kdakota630 (29.22) wrote:


No harm done.  I was sure it was The Prince.  Metallica did a really good cover of it.  (The Price, however, was done by Twisted Sister.)

Report this comment
#6) On April 28, 2011 at 10:23 PM, whereaminow (< 20) wrote:


I have been so excited for that video! Thanks for posting. It is amazing.  I will have to dedicate a blog just to that.


I read The Prince many years ago, but I should add it to my re-read list. I'm doing this thing where I take a second look at book's I read when I was a statist and not the most critical thinker (those two things don't have to go together, but there's no doubt that I went to another level intellectually once I was challenged by the Austrians.) Hence, Art of War and Tale of Two Cities. And I am enjoying them so much more this time, especially Dickens. 

David in Qatar

Report this comment
#7) On April 28, 2011 at 11:24 PM, FleaBagger (27.43) wrote:

I love how, after Keynes is TKO'd the ref raises his glove in victory, even while he's helping him up.

Report this comment
#8) On April 29, 2011 at 10:22 AM, OneLegged (< 20) wrote:

There you DQ, promoting open mindedness again.  +1

Report this comment
#9) On April 29, 2011 at 3:26 PM, OneLegged (< 20) wrote:

There you go...

Report this comment

Featured Broker Partners