Treasury

Inflation Deniers See Nothing!

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Coming from RonCo: A touchscreen you CAN eat cake off of!

Matt Yglesias, world-bestriding colossus of political pontification, still says there's no inflation. I'm surprised Yglesias – who takes special meetings with Treasury Secretary Tim Geithner and is able to repeat Federal Reserve wish lists with remarkable specificity, down to Chairman Ben Bernanke's fond standing request for an official inflation target – hasn't gotten the new talking points: Even Bernanke admits that notable price inflation is real but "transitory." 

Yglesias, however, won't even give that inch, urging increasingly hamstrung Americans to eschew food and just consume high tech. Here's his rebuttal of Niall Ferguson's argument that you can't actually eat an iPad:

But you also can't send email from a banana or watch streaming video on a bag of rice. When electronics, communication technology, and entertainment get cheaper then you have more money left over for bananas. 

Also resolved: Yglesias is lactose intolerant and walks to work. Now are you convinced? 

By singling out Ferguson (who last I heard of him was urging America to act more like an empire and would, I think, be a natural ally to a beltway bright boy) for abuse, Yglesias misses some of the value in his own example. Mobile phones are almost a textbook deflationary widget. But focusing on the cost of devices (which falls rapidly – a pattern common in hardware not supported by the U.S. government) while ignoring how much money is being paid on data plans (which since 2004 have increased substantially in terms of carrier revenue and share of total carrier revenue), is stacking the deck. 

This doesn't mean users on balance are paying more for the same or less for mobile telephony now than they were in 2004, for the simple reason that a 2011 phone adds value that didn't exist back when watching video on a phone was still uncommon. (In my experience it's not really an everyday thing even now, outside of TV commercials.)  

But those damn Americans, it turns out, almost never respond to stimuli the way the models said they would. As a recent Fed study noted, most people haven't even made big changes to their real and financial holdings since the correction began in 2008. Two-thirds of U.S. mobile users are not using mobile internet at all. You can condemn anti-Stakhanovite consumers for not grabbing the real benefits of the substitution effect. But the purpose of CPI voodoo is to get an accurate measure of the cost and value experience of the average American. 

Whoever the average American may ultimately turn out to be, the substitution effect favors people who can afford to swap out items in the basket, including the one item many people prefer to swap out right now: The Dollar. Some of Yglesias' commenters have noted his argument's intellectual bias against lower net worth people – and thank Zoroaster some lefties still believe their loyalty is to the poor. 

But I propose a wider definition of the problem: CPI is voodoo. To believe WashingYork can get an accurate measure of price experience that is meaningful to any American, let alone every American, is to believe in a flat earth. And only Thomas Friedman still believes in that. Where's Thornton Melon when we need him? 

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  1. Not only does Yglesias know nothing about inflation, he doesn’t the first thing about Kurt Vonnegut.

    1. Should have asked Robert Ludlum.

  2. Matt Yglesias?

    Isn’t he the smug prick that Lillian Rearden invited to her parties to piss off Hank?

    1. No, that’s Dana Milbank.

      1. Speaking of Dana’s – Dana Wynter died this weekend at 79, of heart failure. For those who may not know, she was the female lead in the original version of The Body Snatchers.

      2. I thought it was Paulie Krugnuts.

        -jcr

  3. Progressives love inflation. Being economic illiterates and functional inumerates they really “grok” the idea that full employment can be attained through monetary policy.

    1. I thought it was the end of poverty that could be achieved through monetary policy.

      1. Poverty will never end as long as there is a lowest 20th percentile!

        1. Well, let’s renounce the term “lowest 20th percentile” – POOF! Poverty eradicated – AGAIN, on Obama’s watch, for the record.

          That guy is SO gutsy….

          1. we’ve reached the point where virtually no one in America willing to work is poor by the historical standard of not having food to eat or a roof over their head. “poor” now is, at least for guys, about not being able to purchase enough in the way of status symbols to have access to better pussy. the consequence of being in the lowest 20th percentile is mainly in who you get to bang, not in being hungry or getting rained on because there’s no roof over your head.

            1. I missed four meals last week. I’m not starving, but money is very much an issue and if I couldn’t go to work (for being sick) it would be really bad, as I’m paid hourly. In fact, part of the reason why it took six months for me to get out of the hole I was stuck in because I was unemployed was because I got sick four times. I attribute this to stress, since, being marginally employed is pretty stressful. Usually I’m not getting sick all that much.

              1. (oh, right, I should probably mention that I missed those meals because my bank account sat at zero)

                1. also I am almost certainly not getting top quality pussy anymore, but that’s because I moved from DC to Man Diego, and the competition is fiercer.

                  1. You must be living in Hillcrest.

                2. And you’re reading Hit &Run; on the computer down at the public library, I assume.

                  1. no, I have a job now. I’m reading it from work. I’m a libertarian, not a hipster, so, public libraries are out. Drink!

                    1. of course, they aren’t paying me to be an academe. It’s a good thing I’m not a liberal, because I would call this off-clocking business you see in the science enterprise “wage slavery”.

                    2. s/an academe/here on the weekend/

        2. “Poverty” will never end as long as someone has a dollar more than someone else – under the Progressive view anyway.

          1. come on, only a monocle-and-tophat libertarian would ignore that Gini in the US has been getting worse. the question is why? And what is the remedy.

            1. No, the question is who has any right to care? Equality doesn’t matter in a system without a fixed quantity of wealth.

              http://www.youtube.com/watch?v…..re=related

              1. your right to care ends when you reach the bottom of your wallet.

            2. About forty-odd years ago I actually knew a libertarian who sported a monocle – no top hat though. 🙂

      2. SomeWHERE over the Phillips curve, full employment will be,
        a WPA ditch crew on a road to Somalia away.

        1. Worst Dorothy spoof evar!

          1. Yeah, but I was going for Annie there, so that some how makes it even worse.

        2. Something tells me we aren’t in Kansas anymore, Toto.

      3. The goalposts shift to “income inequality” when poverty is reduced or eliminated.

    2. Funny how the self-styled champions of the poor vigorously defend an institution whose stated goal is to reduce peoples’ purchasing power and discourage them from saving “too much”* money.

      *What “too much” means is up to a committee of enlightened bureaucrats, of course.

      1. Not too mention that the stated goals of said institution benefit government, banks, and the wealthy. They really put the “idiot” in useful idiot.

        1. Yes but poor people are in debt, and the inflation will make the real value of their debt go poof!

      2. Right. You have to think of the horrors that would be unleashed if everyone acted like a little capitalist, instead of a little consumer. Poor people might actually be able to grow their net worth instead of being little mouths designed to consume.

        1. You remember that economics is at bottom the science of how people live. Yglesias has made it clear he’s forgotten that: When electronics, communication technology, and entertainment get cheaper then you have more money left over for bananas.
          Buy food with what’s left over from luxuries? Iglesias has even forgotten the little mouths that consume must first see to consuming what goes in their little kitchens, not what goes in their little living rooms and little cars. Without enough food, they sicken and die. Without enough of his precious electronics — egad! — they might have to pick up a magazine.

          1. it is amazing that these people still think they are the champions of the poor.

            Are gentry liberals really anything anymore but just power hungy people who think they are smarter than everyone else?

  4. Tim if you would just move to Riverside, get off the bus, and onto a Metrolink, you would see people watching movies on phones and iPods all the time.

    1. The low use of mobile data is primarily due to old people. Ironically, those are the wealthiest age demographics on average.

  5. Off topic – GREAT World Superbike races today – Eugene Laverty with the dbl win = teh AWSUM!

    And – WINGS WIN! Still alive – suck it, bitches!

    OK – now, where were we….oh, yeah – MAtt Yglesias is a King Size douche. Yep – he is.

    No inflation here on the intertoobs! Nothing to see here – except TEEVEE!!! – move along, losers looking for food. You’re all lardass Americans who need to lose weight anyway.

    GET A SMART PHONE AND WISE UP, TUBBY!!!!

    /Yglesiastomy

    1. That hockey game was the tits. Shame is, they should be up at least 3-2 right now.

      Oh well, back to the Joe. Good for me I got Game 7 tix after the Sharks went up 3-0 on a whim. Paid $25 each for them. Going for $150 and up on Stubhub, but I want to go to the game after the Wings win Tuesday at the Joe.

      1. Glad to hear this was one interesting sports event today. Can’t say anything good at all about the demolition in Dallas.

        Stoopid Lakers.

        1. Stoopid Lakers.

          In the immortal words of Nelson Muntz: Ha-ha!

  6. But you also can’t send email from a banana or watch streaming video on a bag of rice.

    Yglesias is a RACIST!

    1. fucking shit how did I miss that??

      LACIST!!!

      1. But you arso can’t send emair from a banana watch stleaming video on a bag of lice.

        1. the funniest thing was when I switched to a dvorak layout and literally started switching my rs and ls in IMs, and started typing asian.

          http://en.wikipedia.org/wiki/D…..d_Keyboard

          1. That’s hirarious.

            1. true stoly.

  7. The neo-Keynesian view of inflation:

    You can solve ___________ by expanding the money supply.

    Options typically chosen are “unemployment”, “recessions”, “low productivity”, and “perpetual virginity”.

    Ignore Say’s law, ignore optimal money supply theory, ignore the monetarist and Austrian criticisms of the Philips curve, ignore essentially any empirical or theoretical evidence to the contrary: inflation is the panacea for all of society’s woes. Except virginity. You can talk to Tony and Chad about that.

    1. First of all, it’s logically possible to be a neo-Keynesian and a libertarian. That’s where I stand, in fact. It’s also a gross mischaracterizaton of the Keynesian position to say that it amounts to “expanding the money supply will cure what ails ye!”

      Keynesians look for ways to restore aggregate demand when it has been destroyed due to recessions, not “increase the money supply.” And they strive for that because they see that it’s absurd to have 9% of people unemployed in a world where millions of economic needs are not being met.

      1. it’s not possible to be a neo-keynesian and a libertarian. Full stop.

        It’s also not possible to be a neo-keynesian and give a rat’s ass about the poor.

        So perhaps, you are the worst of both worlds. You wear a monacle and a top hat AND prefer an economic system that disproportionately takes from the poor and redistributes to bankers, bureaucrats, and indirectly, wall street (who tend to be disproportionately rich).

        1. Yes it is. It’s possible to value liberty in a world in which federal governments and fiat currencies exist – and to understand that there is unlikely to be a revolution in which those things are substantially changed or overthrown. To want a better life, and more liberty, in a seriously imperfect world.

          Neo-Keynesianism is literally baked into any fiat monetary system. Saying you don’t accept it is like covering your ears and humming loudly when you hear something you don’t want to hear, because you fear it might be true.

          1. It’s possible to value liberty in a world in which federal governments and torture, improper arrest, are practiced and basic civil liberties don’t exist – and to understand that there is unlikely to be a revolution in which those things are substantially changed or overthrown. To want a better life, and more liberty, in a seriously imperfect world.

          2. Communism is literally baked into our economic system. Saying you don’t accept it is like covering your ears and humming loudly when you hear something you don’t want to hear, because you fear it might be true.

            1. Shorter Drago: “I must break you.”

          3. Neo-Keynesianism is literally baked into any fiat monetary system.

            I would like to see a demonstration of that proposition, if you do not mind. You can do it syllogistically or in narrative form, if you so choose. And do not shy away from econometrics: we can handle it.

            1. It seems to me the alternative to “Neo-Keynesianism” is “Chicago School”, which also requires fiat money. You could also have a successful moderately-Austrian gig running, if your fiat money is backed by gold. forcing debts to be backed by gold is still as fiat-tey as FRNs.

              1. Exactly – that is why I want to see Draco’s proof. What is wrong with monetarism from that neoclassical school of thought?

                1. Well, monetarism is objectionable for this reason: It attempts to artificially create stable prices. The “natural trend” is declining prices. Technology creates _declining prices_. Yes. It will also cause unemployment, but because technology displaces people doing jobs which have become obsolete.

                  To artficially create a regime where prices are static (even under “chicago rules”) basically is robbing the beneficial effects of natural deflation, and doling out the marginal utility in huge chunks to those the government favors.

                  We have to realize that unemployment isn’t the worst thing in the world, especially if our money system is such that one can afford to save up and spend some time retooling or just having a bit of leisure space. And if we have actually EFFECTIVE forms of social justice (i.e. private charites), and people are empowered (by not having to fight inflation all the damn time) to give to them.

                  Studies have shown that what kills compassion is preoccupation with self, and inflation creates an environment where economically, you must be extremely preoccupied with the self in order to stay on the rolling treadmill.

                  http://www.ted.com/talks/danie…..ssion.html

                  1. I am not defending monetarism, for what it is worth, I am just pointing out that “Keynesianism” is not a necessary component of a fiat currency system: there are other theories.

                    1. still that ted video is really great to watch in the context of inflation and charity.

          4. Using either the mechanism of inflation or future taxation, you would force me to exchange my savings for goods I do not value, and call it libertarianism? You can’t be serious.

      2. First of all, it’s logically possible to be a neo-Keynesian and a libertarian.

        Sorry, how in the world can you be a Keynesian without advocating force or fraud?

        -jcr

        1. I view libertarianism as a tendency, not a deontological system. Not every person who leans libertarian accepts the NIFP, or any of the other rigorous deontological schemes, as the basis for their position. Think about people such as Charles Murray, Milton Friedman… hell, even David Friedman is a consequentialist.

          I want as much liberty as we can get consistent with increasing prosperity and the avoidance of horrible revolutions, implosions, depressions, pogroms and other devastations.

          In other words, not everyone is an anarcho-capitalist.

          1. Thanks for admitting that you’re not a libertarian, you pompous ass.

            -jcr

            1. Enjoy your next gathering of 100% pure unadulterated ACist libertarians. But don’t try to stop the rest of us from trying to make the world an incrementally better place. Don’t make the perfect the enemy of the good. It’s old advice, and I’m guessing you are not hearing it from me for the first time. But it’s good advice.

              Also, ad hominems don’t impress me.

              Ok, over and out for the night. I need to get up early, get my top hat back on, and get back to oppressing the proles.

              1. I don’t understand the argument here. I do not think a fiat currency system with built-in “incremental” inflation is compatible with libertarianism, but I also do not see how I have to be an anarchist to believe that. If I believe in “let the free market decide” when it pertains to currency, I fail to see how that makes me an anarchist.

                1. > I do not think a fiat currency system with built-in “incremental” inflation is compatible with libertarianism

                  How do you get anyone to accept a fiat currency without legal tender laws?

                  QED.

                  -jcr

              2. look, I don’t consider changing over to a non-fiat system to be my top priority, but I also understand that liberty is not possible without that, and that a fiat economy empowers the most powerful to control everyone else in a way that “not one man in a million can diagnose” (-JMK, btw).

                So, you cannot be a libertarian and a keynesian. Period. You can be a libertarian whose realistic, political priorities are ordered differently, but to be a keynesian means to reject libertarianism in a fundamental way.

              3. look, I don’t consider changing over to a non-fiat system to be my top priority, but I also understand that liberty is not possible without that, and that a fiat economy empowers the most powerful to control everyone else in a way that “not one man in a million can diagnose” (-JMK, btw).

                So, you cannot be a libertarian and a keynesian. Period. You can be a libertarian whose realistic, political priorities are ordered differently, but to be a keynesian means to reject libertarianism in a fundamental way.

            2. You do realize that being a pompous ass is virtually a requirement for commenting here.

              Not saying that Draco is making any sense of course.

              1. that’s showbiz!

          2. I’d have to argue that to the extent that you are willing to decrease liberty by using force to increase net prosperity and decrease revolutions/depressions/etc., that is the extent to which you are NOT a libertarian.

            You are a civil-libertarian liberal.
            These may be some utilitarian libertarians, but NONE of them, to my knowledge, favor Keynesian economic policies as a means to regulate the boom and bust cycle of the economy.

            Now, as a libertarian, I might say that *classical* (not neo) Keynesianism is better that inflationary monetary policies, because it better to pey people to do something productive than hand out cash to stimulate consumption. And this is an argument that I have made, given the administration current degenerate neo-Keynesianism they’ve pursued in which paying people Unemployment benefits is idiotically supposed to produce a “multiplier effect”.

            But in that case, I’m eliding the arguments about optimal resource allocation in a free market that are central to most libertarian economics.

            1. eh, there are utilitarian libertarians, who don’t know any better, haven’t formed an opinion, are going with the tide, etc. End the Fed talk is associated with all sorts of kookiness and the social pressure to conform is really powerful when a concept gets labeled in that way.

              1. Monetarism wouldn’t be so bad if the freshly printed money was evenly distributed throughout society. Or better, proportionally to everyone’s bank account balances.

                Personally, I don’t see why people don’t recognize the gross injustice of printing money and essentially giving it free to the banks – who are private parties. The net effect is to benefit the wealthiest people in society at the expense of everyone else.

                Printing money in order to coerce people with a little savings to spend more rapidly is pretty grotesque too.

                Doing both simultaneously is monstrous. It turns banks into aristocracies and citizens into serfs.

          3. Well said. And only a little pompous.

          4. Fuck Utilitarianism.

            1. BTW, that was pretty damn awesome. Thanks for the link.

              1. Shortly after learning to read I checked a book about money out of the “adult section” of the library because I loved playing with old silver coins and the book was full of pictures.The Yap were a revelation about how the world works.

                1. I saw a Rai once at the bishop museum in hawaii; it wasn’t impressive and I had actually mistaken it for a stepping stone on a previous visit. Then, I saw the Rai at the smithsonian (natural history museum). Now, that’s a rai. Couldn’t believe I hadn’t noticed it on earlier trips (used to live in DC and the fam is in HI).

                  1. Rai arent nearly as impressive as a Ningi, but no one wants to deal in fiddling small change.

      3. Keynesians believe in “aggregate demand” rather than in “producing the goods or services that people actually desire, or the precursors to producing those goods and services”

        “If we can just produce enough crates of lettuce, comrade, we can bump up our production figures and end hunger.”

        “Umm, we don’t have any refrigerated boxcars or trucks. They’ll all rot before we get them to market. We need to produce those, not more lettuce.”

        “Dammit, we just have to meet our quota of lettuce, and no one will go hungry!”

      4. it’s logically possible to be a neo-Keynesian and a libertarian

        NO it isn’t. Fuck off slaver.

        1. Fuck off slaver.

          top o the hat

          1. tip, dammit, tip!

      5. STOP AGGREGATING THINGS!

      6. Is it possible to “restore aggregate demand” without experiencing hideous distortions in the market?

        1. Yes, of course. But not when Timmy and Barry are running the show!

          As Hazel Meade mentioned above, it’s possible simply to distribute money according to some reasonable scheme like apportioning it according to the income tax you’ve paid in the last few years or something. The Democrats aren’t interested in such simple remedies because their entrenched friends wouldn’t get anything for themselves, specifically, and they wouldn’t get to increase the power and reach of government. It’s not worth playing the game for these people unless you can put something over on someone else, or further entrench people like themselves in government for decades to come. Now that is something that I can join the rest of you (except Tony and Chad) in condemning.

          Keynesian economics is much like Newtonian physics – it doesn’t have moral content. It’s what you do with it that has moral (and practical) implications.

    2. You seem too invested in Austrian theory to recognize that empirical reality does not support Say’s law but it does support the multiplier effect.

      1. Sock puppet, calling it. Even a tool like Tony has to admit that the multiplier effect exists only in Keynesian macroeconomic models, and that denying a concept like Say’s law is the chemistry equivalent of saying, “There are no atoms”.

  8. There is a commenter on the original Ramesh Ponnuru post with the handle “JasonC” who not only shows that Ramesh is right – and therefore that Niall, Tim, and most of the Reasonoids (not me!) are wrong – but in addition he explains why, and he utterly destroys any notion that we are currently experiencing hyperinflation. He also makes a great point about how conservatives/Republicans (and I would say libertarians) used to be the ones who prided themselves on understanding economics, but now let themselves be led by moronic populists who don’t know what the hell they’re talking about.

    In short, JasonC gets the Draco seal of approval.

    1. nobody says we are in hyperinflation.

      1. Yet. Give it a few more trillion dollar deficits, monetized by the Fed, though.

        1. nah, a few won’t do it. Private debt markets still give us a few tens of trillions of dollars of cushion to brake monetary expansion. I say one more round of deflation, and -then- hold on to your hats.

          1. mechanism: Headline prices on food and fuel increasing causes people to decrease spending, and default. Loss of business cause large scale defaults, and loss in especially the CRE market which failed to pop hard last time around. All of this is a contraction in the money supply.

            We already saw CRE consumers such as blockbuster, sbarro go titsup. Who is next?

      2. Yeah, it’s pretty easy to beat strawmen. Funny how Draco threw that in there.

        Yglesias=”WE’RE NOT EXPERIENCING INFLATION BECAUSE YOU CAN BUY THAT LED TV FOR $600! FOOD DOESN’T MATTER BECAUSE I SAY IT DOESN’T!!!”

      3. In the end, what matters is that some guy I don’t know approves of a comment on a blog I don’t read, and that’s enough for me. Even if nobody says we’re in hyperinflation.

    2. …but in addition he explains why, and he utterly destroys any notion that we are currently experiencing hyperinflation.

      Doesn’t take much to accomplish that, since we are not currently experiencing anything remotely resembling hyperinflation. Even 20 percent annually isn’t considered high enough. It is when prices are changing daily or even hourly that an economy can be said to experience hyperinflation.

    3. So, are you denying that there is active above-average inflation occurring right now? Commodities prices say that there is. It is not the textbook definition of “hyper”, but it is nothing good.

      1. We don’t have hyperinflation. I’d say we don’t even have late 70s levels of inflation. My guess is the average inflation rate is running about 10% annually for most people, depending on the mix of goods they buy.

        1. and, yes, that is higher than average inflation.

        2. Prices arent inflation.

          We are running about 5% right now, REAL inflation.

          http://research.stlouisfed.org/fredgraph.png?g=qK

          But we did break 10% back in ’09.

        3. And as usual, the generals will fight the last war. Inflation this time will not be characterized by wage increases. It will simply be US workers being poorer every month.

      2. No, I’m not denying that, but it certainly is nowhere near hyper…yet. They’ll raise interest rates before that happens – even if it throws us into a double-dip recession and increases the government’s cost to service the debt; but that might end up being as bad.

  9. Never mind inflation, Trump fired Star

    1. This is an outrage for fatties like me.

    2. I would post a response, but your credentials aren’t sufficient to merit one.

  10. I’m so, so, so very high at the moment, so maybe I’m just confused:

    What I don’t understand about phones is how the fuck does *anyone*, even 1/3 of people with smart phones, afford the fucking data plans?

    Also, I’m still not getting Sir Tim’s whole inflation gripe… at least not the particulars.

    Which measurements exclude gas and food? Throw those out because those are bunk.

    Whichever measurements that are left over – aren’t those the ones that might possibly be related to reality?

    Isn’t that the biggest single flaw in the whole parsing inflation game?

    Then there’s the whole CPI-doesn’t-count-the-fact-that-new-cars-park-themselves issue of how the basket or baseline for a “good” doesn’t reflect how much spiffier it has become. But Cavanaugh seems to be arguing the other way… As though, data plan aside, an iPhone doesn’t have a camera or feel awesome in my hand the way old phones didn’t use to.

    Beyond that, I’ll have to reread all this “substitution effect” mumbo jumbo. Later, that is. Stargate’s on.

    1. What I don’t understand about phones is how the fuck does *anyone*, even 1/3 of people with smart phones, afford the fucking data plans?

      I’m so, so, so very high at the moment

      Hmm, I guess they don’t spend money on shit

      1. Yes, only people who buy drugs can’t afford date plans.

        Of course smartphone users might spend their money on alcohol, but never mind that, such facts might interfere with your judgement.

        1. Dude, if you’re paying for a date plan . . .

          1. fucking typos. And this comment system doesn’t allow for edits. sigh.

    2. Which measurements exclude gas and food

      http://en.wikipedia.org/wiki/Core_inflation

    3. Which measurements exclude gas and food

      http://en.wikipedia.org/wiki/Core_inflation

      1. effing squirrels. At least this time it was important enough to say twice.

        1. Doesn’t matter how many times you say it, the deniers just gotta deny – their guy in the WH and all that.

          1. nah, I was mostly trying to help IH there. He was actually not a denier but curious about mechanism. The more you know, and all that, right?

            1. Thanks, but i meant that more rhetorically. As in, if we’re going to call pols out on their inflation BS, their biggest evasion is their use of indexes that exclude normals’ biggest expenses.

              But Tim’s whole iphone thing seems like its completely backwards, or at least distracting. Why is it problematic to ignore those expensive data plans when you simultaneously note that people aren’t buying them? Iphones *still* have more feautres than typical cell phones of a few years ago, even without the plans… Either compare all the features people get when they buy one against the products they’d have had to buy to match today’s feature set, OR compare a simple burner against older phone. You can’t mix and match the comparison – you gotta hold something constant to make the comparison. I don’t think Tim is doing a careful job of trying to hold the features set constant over time…. Or maybe I’m just not following it correctly. It’s happened before, I’m not going to lie.

              1. Why is it problematic to ignore those expensive data plans when you simultaneously note that people aren’t buying them?

                Part of the problem is the “price” of the phone is hidden from the purchaser because most of the price is in the monthly charges. There is no such thing as a free cell phone, but shit-for-brains like Yglesias tend to ignore such things in order to “prove” their lame-brained theories.

                The more important part Yglesias et al miss is that they are focusing their
                “lack of inflation” arguments on non-fungible, highly competitive items – there is very little government interference in the markets of those items. Whereas the government interference in fungible items like, say, food and energy, is so rampant that we are actually seeing large price increases in those areas.

                The problem isn’t that Yglesias is wrong about the items he has cherry picked, it is that he conveniently ignores the majority of a consumer’s daily purchases – items which he and his ilk have for decades advocated market interference by the federal government. Every market in which the government has interfered has caused consumer end prices to escalate. So while Ynflatias wants to consider “inflation ex government” he not only narrows his list of items to a statistically insignificant number of items, he also asks people to ignore everything has advocated in the past and present. The smartest thing to do is simply ignore Yglesias.

                1. Damn, read the second half of the sentence you quoted:

                  Me: Why is it problematic to ignore those expensive data plans when you simultaneously note that people aren’t buying them?

                  You: Part of the problem is the “price” of the phone is hidden from the purchaser because most of the price is in the monthly charges.

                  Me: Not when you note that people aren’t buying them, ? la (French!) Tim’s reference to the 2/3rds of phone users that duck a huge chunk the very hidden costs you (and he) are talking about by opting out of the data plans.

                  Yes, baseline subscriptions are in a sense “hidden” from the inflation count on cell phones qua (Latin!) cell phones. But even if you include those, the grand total, multiyear cost of even the most expensive cell phone is at least an order of magnitude less now than it was 25 years ago… So, I’m still confused why this is the issue to put front and center in the three-card monty game of inflation counting. It’s the food and fuel!

    4. Look at the rapid growth of companies like Boost Mobile and Cricket. They’ve exploded because they offer the same services as AT&T and Verizon at a fraction of the cost and they have no long-term contracts.

      1. Don’t kid yourself, they don’t offer the SAME services. They offer a similar, pared down service at a lower price. They’ve found a customer base that finds that price attractive enough to trade away other things.

        1. For 90% of what the normal person uses, they offer the same services. I just bought my daughter a phone from Cricket because it was cheaper than adding her to my plan. She’s almost 13 (no Steve Smith jokes, please) and seeing as that’s the level of intelligence of the average American, I think the service is pretty fucking good. And their LG smartphone is every bit as good as the ones at Verizon I would have considered buying her.

          That, and their billing is a lot more honest. Pay every month or they cut you off. Roam too much and they cut you off. (Their data plans are all unlimited.) That’s a lot better than getting that $475 Verizon bill when you accidentally pocket dialed a call while out of the country and your girlfriend listened for 3 hours because she thought you were getting drunk and picking up other women.

          1. Their data plans are unlimited, but include throttling after 1GB of use.

            Their nationwide coverage is kind of b.s. as well since a large amount of their “coverage” is with a roaming partner that you pay an additional $.25 a minute for.

            On top of that, they have a reputation for having VERY poor customer service.

            I love how you call their billing process unfair, and your best example comes from a very unlikely occurance. For most crazy bills, the companies are almost always willing to work with the customer, provided the customer is able to be respectful and hasn’t had perpetual problems in the past. I’ve seen adjustments made to bills ranging into the thousands of dollars.

            1. From personal experience, I have no idea how a company could in any way, shape or form have a customer service department as bad as Verizon.

              I cringe whenever I have to call for any reason at all.

              1. Sprint is worse. I promise you.

                1. god damn it, I’m on T-Mobile and I want to switch off because I made a blood vow to never use ATT again after they screwed me royally.

                2. The chief complaint against cricket service is that their service is overly automated and talking to a person is incredibly difficult.

                  Then you have the standard incompetence and rudeness, etc. when you finall find a way through.

                  1. Then you have the standard incompetence and rudeness

                    Unlike the airlines which charge extra for that.

              2. At least you talk to a human being.

              3. From personal experience, I have no idea how a company could in any way, shape or form have a customer service department as bad as Verizon.

                You, my friend, are lucky if that is the worst customer service you have ever experienced.

                I have run across companies where I wanted to go fire some RPGs into their corporate office, except they wouldn’t disclose where their corporate office was, and made it virtually impossible to talk to a real person.

                1. I have run across companies where I wanted to go fire some RPGs into their corporate office, except they wouldn’t disclose where their corporate office was

                  Can you say you blame them?

              4. Verizon can be bad, but if you want truly horrendous, try dealing with eBay.

              5. I am with Really? I stopped paying Sprint after a fight with customer service. I paid the collections agency who bought that unpaid bill the day they contacted me, but I decided to never give Sprint money again. Verizon and AT&T have never inspired me to that level.

        2. curiousgeorge|5.8.11 @ 11:24PM|#
          “Don’t kid yourself, they don’t offer the SAME services. They offer a similar, pared down service at a lower price. They’ve found a customer base that finds that price attractive enough to trade away other things.”

          How about a cell phone that has keys for “on”, “off”, “send” and “answer messages”? I’d take that.

          1. This was probably tailor-made for you, sevo. Well, you and 9 year olds.

            (I keed. I keed.)

          2. http://www.wireless.att.com/ce…..tech+Ease+(TM)+-+Blue&q_sku=sku4730251#fbid=8_K84qf_lUo

            The name says it all.

            Though, it does have a touch-screen…might get complicated.

            1. I think his point was that all the extra bells and whistles aren’t worth the extra money.

              Seriously, I built most of our department cluster from parts — so I’m no tech illiterate — and I’m with him about having a phone that just makes calls and sends texts. If you need to do a computer task you should do it on a computer, not a 4-inch imitation of a computer. Wifi is widespread enough that the 3G data use is really unnecessary for most of us. If you do a ton of traveling that changes things, but that’s not most people.

              1. Amen Tulpa. I just a want mobile phone that I can hear. My first career (US Army) left me with a wicked case of tinnitis and the audio fidelity of mobile devices seems to be getting worse. I don’t care if the phone has a camera, I don’t care if the phone can show me web pages, I don’t care that the phone has a flashlight, I just want a clear duplex voice signal.

              2. Who still makes phone calls?

                I live in Philadelphia, wi-fi is not nearly widespread enough for me. I love being able to read what I want no matter where I am. Relying on wi-fi for data is simply nothing my generation is interested in.

          3. I want one with a built-in taser that will activate when I hand it to someone. 🙂

        3. Exactly. Now where does that get captured: that you get substitution effect but also that your substitution is downward rather than lateral? Who’s to say that the few gigs given up are worth more to any user than the few microdollars saved?

          1. Who’s to say that the few gigs given up are worth more to any user than the few microdollars saved?

            Well, to be fair, if you break a plan to go prepaid, you’re gonna lose so much in early termination fees, you’ll kiss most microdollar savings goodbye. But two years from now, data offerings/basic smartphones are probably gonna be even better than the Verizon iPhone plans are currently. You can really cut the price then of what you’re getting currently, unless there’s some must-have coming down the pike.

            Better question might be: what’s the total cost of cellphone w/ data+cable+Internet? We know cable’s up (municipal monopoly rent-seeking bastards). If you’re subbing out a copper landline for a cellphone, you’re probably paying more; and if you went from dial-up to DSL, you’re almost certainly paying more.

            Yglesias doesn’t really get that, ‘cuz like Ezra Kline, apart from a few White House types who find him a useful idiot, Yglesias doesn’t know anyone who’s ever had a real job/paid a mortgage.

            /Not quite the same substitution, but I wonder how customers switching from name-brand to store-brand cereals/hygiene products affects inflation rankings. Also, the way name brands have decreased quantities offered… like how “1/2 gallon” of ice cream is now 48 ounces instead of 64… instead of increasing prices. ‘Cuz, really, that’s a 33% hike in the cost of ice cream. Same shit happens to milk, there will be angry moms out there.

    5. better stats:

      http://www.shadowstats.com/

      about substitution, etc:

      http://www.chrismartenson.com/…..zy-numbers

    6. Hello, high person. I’ve also noticed that a lot of young(ish) people can’t afford data plans. Then I explain to them about ViginMobile. VM is $25 a month for 300 minutes + “reasonably” unlimited data over a sorta-outdated 3g network, though good luck watching any lengthy videos that aren’t side-loaded. (Can happen, but you’ll find that you’ll be seeking out wifi.) Coverage has been spotty in Manhattan, where I go a lot, non-existent at Ravens stadium, where I twitpic, but almost 100% elsewhere else.

      VM has been so successful in the States, that the biggies (T-Mobile, Verizon, AT&T) are also now offering data plans to pre-paid customers.

      As a fairly happy VM user (especially since the Android 2.2 update), I think there’s a point to be made for technological innovation fighting inflation–particularly at the low end. My Samsung Intercept, though hardly an iPhone, was $125 for a device w slide-out keyboard, plays Angry Birds just fine, has gmail, twitter, facebook, camera, and includes good navigation. Also, the Kindle App remembers where I am in the Anabasis when I’m riding the subways in Brooklyn, very drunk, mumbling “Warriors, Come Out and Play” to myself, heading to Coney when, really, I should be Greenpoint bound.

      What’s interesting is that despite the extraordinary gains in mobile productivity–apart from Angry Birds, gmail lets me answer customers faster, and I mostly use Facebook to figure out where the hell my designer/authors are–cost reductions from technology boosts to data plans are greatly diminished by the inflation in taxation of said data plans.

      Few years ago, for Mother’s Day ironically, I got my wife a “good” plan from T-Mobile. The cellphone cultists said so. Taxes added another 25% each month to the price (or close to $150 a year, to, like, use the air). As it works out, she mostly calls me. So, I got her the T-Mobile Comet for Xmas, and another $100 prepaid card. Her Angry Birds works out great, too, and she still has $25-30 from her $100 card of a year ago. She does her twittering from work + Starbucks, so I just configged wifi for her, (data plan activation is “complicated”).

      I’ve heard, but am not actually sure, that taxes on my VM data plan are up quite substantially of late, possibly another 25-30% (or, half again the cost of my $25 a month unlimited data plan.) Interestingly, you can avoid said taxes by, err, never registering your credit card w/ Virgin, so they don’t know where you live, but eventually give up trying to figure out.

      /However, either VM or Ebay has banned the practice of selling pins electronically, so the best deal you’ll get on a $90 topup card is 1% off at CallingMart… still saves $5 in sales taxes, but not the 30% off of a few years ago.

      //Seriously, I get raped by my county on my uber-FiOS plan; as a home-based business, I will not also pay any kind of “airwaves” levy. Those taxes, which mostly affect young people and not the olds, are unfair and regressive as hell. Fucking county also charges “rents” to the cellphone towers.

      1. Virgin Mobile is a brand of Sprint. Same with Boost and a couple others.

        The biggest complaint about those pre-paid brands are the prices of the phones. Most idiots, er Americans, would rather get a “free” phone and pay through the nose for the monthly service – they wind up paying MORE with a 2-year agreement + free phone than with a pre-paid plan + full-price phone.

        The lazy and his money are soon parted.

  11. Chairman Ben Bernanke’s fond standing request for an official inflation target

    Which part of “0%” do you need official authorization to do?

    1. Geez, you’d think a mandate to maintain a stable currency would give him a clue.

      Stable, not depreciating, you illiterate nob.

      1. An appreciating currency would be nice…providing I had a supply of it. Wouldn’t need to worry about earning interest on my money to preserve my purchasing power.

  12. Iggy is an idiot and a liar. Did anyone not already know this?

    -jcr

    1. Andrew Sullivan didn’t. But then, I suppose that just makes it worse, doesn’t it?

  13. The Fed doesn’t use CPI as their measure of inflation. They use the PCE, which does show, in aggregate, how people are spending their money.

    1. It took me six months (november-april) to undo the damage caused by three months of uemployment. Finally, I have paid off one credit card and am no longer cheating on my rent by paying via my first paycheck of the next month. so, “measures of inflation” mean very little to me right now.

      1. (see prolefeed, two comments down)

  14. How about the culture? Dies it see anything?

  15. The is no “The Inflation Rate”. There is at best “each person’s inflation rate”. If you are rich enough to spend almost none of your income on food or gasoline, then the average core inflation rate excluding those basic items, calculated by the government, might make sense. For everyone else, it’s patent bullshit.

      1. You 3 plussed something that is that wrong?

        Prole – you are better than that, you know inflation is monetary.

    1. Ironically, manipulating the CPI is probably the easiest way out of our Social Security debt. It’s a subtle means of reducing the benefits while pretending we’re not.

      In other words, the debts we are monetizing are our unfunded paneion liabilities.

      Course, that still leaves Medicare up shit creek.

      1. not ironic. part of the plan.

      2. not ironic. part of the plan.

    2. If you are rich enough to spend almost none of your income on food or gasoline

      Have the rich figured out how to do that? Those clever bastards.

      1. Mint.com says I spend 20-30% on my income on food and gasoline. The biggest pie slice is 25% which goes to the rent check, and 10% on paying back old debts. My saving rate is pretty much zero right now, so a 10% per annum increase in food/fuel prices means that I’ll go into debt 2-3% just on that category alone.

        1. I live very close to work, and drive a hybrid (2003 civic saved my ass moneywise many a time) so I might not exactly be the most representative consumer.

      2. As a relative percentage, Tim. I hope you knew that.

      3. If your income is $10M a year, and you commute in a limo, the gas for that limo, even though it is a gas-hog, is a negligible part of your income.

        Same for food.

        You would almost certainly spend more money overall than a poor person on food and gas, but it would likely be a tiny portion of your income.

  16. The data plan thing is awful, really. Just when it appears that paying $60/month for cable is a thing of the past, you’re now obligated to pay $80/month for a data plan just so you can have a smart phone.

    I’d love to have a pay-as-you-go or prepaid smartphone, but nobody offers such things. It’s a monthly subscription or nothing.

    1. I still have a cell phone that I just use to make phone calls. They tried to talk me into upgrading to one that took pictures and accessed the internet and whatnot by asking, “so, what do you use your phone for?”

      looooong pause, accompanied by one of * those * looks.

      “i use my phone to make phone calls.”

      i was thinking of adding “… to line up booty calls”, but she looked easily shocked, so I let that slide.

      end of the upsell session.

      1. You know what else drive me crazy? Expiration dates on prepaid minutes.
        If you have to put $10 a month on the phone to stop them from deactivating it, then it might as well be a monthly plan.

        What’s more, if you aren’t using up yiour minutes you end up in a situation where you account balance keeps getting bigger and bigger, so you have more to lose by switching companies or failing to put more money on the account. It’s sort of like doubling down in a gambling debt. You keep hoping you’ll use up the minutes, and then one day, you forget to add money and Verizon walks away with every penny.

        For people who are poor enough that a $70 dollar balance is a lot of money to lose, it can be quite coercive. You’re chains to the same company and force to cough up cash periodically or they cut you off.

        1. I’ve found they’re more interested in avoiding “slippage”–lost customers kill these companies w/ Wall Street.

          Both Virgin and TracPhone have contacted me, repeatedly, over “saving my balance + number”–months after the phones should have expired.

          /One was for a relative visiting from UK; the other ‘cuz I’d be in TN for a week, had left my phone at home, discovered it was cheaper to buy a $10 TracPhone + $20 card than to call my wife for 3 minutes from the hotel…

          //Emails from Virgin only stopped after I donated the phone.

      2. You know what else drive me crazy? Expiration dates on prepaid minutes.
        If you have to put $10 a month on the phone to stop them from deactivating it, then it might as well be a monthly plan.

        What’s more, if you aren’t using up yiour minutes you end up in a situation where you account balance keeps getting bigger and bigger, so you have more to lose by switching companies or failing to put more money on the account. It’s sort of like doubling down in a gambling debt. You keep hoping you’ll use up the minutes, and then one day, you forget to add money and Verizon walks away with every penny.

        For people who are poor enough that a $70 dollar balance is a lot of money to lose, it can be quite coercive. You’re chains to the same company and force to cough up cash periodically or they cut you off.

        1. You know what else drive me crazy?

          Double posting? :-p

    2. I’d love to have a pay-as-you-go or prepaid smartphone, but nobody offers such things. It’s a monthly subscription or nothing.

      Not true. But you have to pay full-price for the phone. Over 2 years you will save money with a pre-paid smartphone.

  17. Perhaps we should think outside the box on what money is. Given its abstract nature, not every applicable concept of ‘money’ has been tried or even invented.

    Fiat money is obviously a ruinous joke for any society that tries it. In context of decades, it slaughters buying power by an order of magnitude.

    But gold is archaic. That sounds like a lefty-argument, but for modern economy Roman money is outdated. To paraphrase Charles Munger ‘If the Martians looked at us through telescopes dig gold out of the ground, refine it into tiny bars, and then…put it back in the ground, they’d be stumped.’

    Perhaps there is a different concept of money, one more durable to resisting conscious input yet scalable to dynamic real-world input in ways gold isn’t, that hasn’t been invented yet. Innovation in the very nature of money is slow in history; after all, the room for innovation in the ‘money business’ is stifled by cartels always.

    1. be careful, certain, uh, infamous arizonans were planning things like this.

      1. What’s that expression about broken clocks?

    2. It seems to me that the most important criterion for money (as a store of value) is that it be a reliable claim on the future labor of others. Humans have consistently been willing to work for gold, but I suspect that fiat money can be pretty damn reliable, considering that it’s needed to pay future taxes. If you accept the necessity of taxes, the trick is to keep government from making as much new money as it likes. This would appear to require restriction by law at the highest level, e.g. constitutional law.

      1. I’d say fungibility and divisibility are more important criteria. The past 3000 years or so has seen plenty of inflating currencies but very few if any that weren’t interchangeable or able to be split into smaller chunks.

        1. And the component has to be unchanging through time and certifiable, and gold’s chemical inertness and density are what make it so ideal for money in that context.

          But ‘stable’ money I don’t think is possible long-term with gold. You can’t print more, but you can sure find more if you look. The bimetallic standard of the 19th Century was under constant strain with silver lodes being discovered in the American west.

          A ‘new’ money could be a synergy between both securities (stock) of a bank and a claim on the bank’s assets. The ‘certificate’ would represent the claim on whatever was on the bank’s balance sheet…which in turn could be a vast combination of things the bank holds. Could be part gold, part foreign fiat, part barrel-of-oil.

          The only stipulation there would be certificate can only represent assets with no counter-party claim or incomplete transactions (i.e. debt).

          There would be big indexed exchange – like the Dow as example – where the ‘price’ of these certificates would be represented as a composite ratio of what one was worth to another. The spread on how many (or few) BoFA certs it takes to buy Chase certs etc. would be that ratio. There would naturally be indexed fund notes (like SPIDR’s) available so people could buy a composite of those various banks in one security. And that would be ‘money.’

          That’s a ‘money market’ where no currency is declared, much less propped up. There’s a lot of possibilities out there…I’m not particularly advocating the one I just elucidated above, its just an example of how wide-ranging the possibilities are in this subject.

  18. Inflation, like flouride, is a cammunist plot. I read that somewhere in Ron Paul’s newsletters.

    1. skee skee skee skee

  19. urging increasingly hamstrung Americans to eschew food and just consume high tech.

    Ok it that is bullshit. I bought a phone line spliter today and the fucker was priced at over $7 at 3 different stores. Radio shack, Staples and Office Depot. I eventually got one for under 5$ at walmart. Also USB hubs are way to expensive at $14 and higher.

    And I could not find a key board with a built-in USB port at any price.

    What is up with all this Wireless keyboards and mice? Don’t people know batteries cost money and wireless can screw up when playing video games!?!?

    1. Go to newegg.

  20. Mobile phones are almost a textbook deflationary widget.

    The left have to ignore the deflationary nature of gadgets and PCs.

    If they admitted they existed then they would have to drop the whole myth of the deflationary spiral and their FDR/WW2 saved us fairytale.

    1. technology, in general. In fact almost all goods are fundamentally “deflationary”

      1. TVs jumped up quite a bit a couple of years ago with the switchover. It was nearly impossible to find a TV capable of receiving broadcast signal directly for less than $100.

        1. New television prices bumped, however, 27+ inch CRT Sony Trinitrons are often free on Craigslist, they’re heavy as a TV can get but those Trinitron tubes are some of the best ever manufactured and will last for decades.

      2. Food and energy should drop in price from more efficient production and extraction methods.Everything else even more so.

        1. I take it back. Limited resources should increase in prices. This will be a problem with fuel in the mid-to-near term. (yes I am a neomalthusian)

          1. Just to clarify: I am a libertarian, when I say it will be a problem, it’s because the gov’t will exacerbate things by laying on fuel prices, and hasn’t made anything better by obscuring our ability to correctly judge for ourselves via enterprise and speculation the actual value of fuel.

            1. *laying on inflation on top of fuel prices

          2. This will be a problem with fuel in the mid-to-near term.

            The US has enough coal that can be converted to oil at $40 a barrel to last the whole world 200 years.

            We will not run out of fuel. We will stop using it long before it ever runs out.

            1. quantity is not the only factor. Extraction cost ratio (i.e. energy consumed to extract:energy produced) is also important.

    2. So were 8-track players.

  21. Niall Fergeson is an obnoxious jackass. But he really is a smart guy and a legitimate scholar. Yglesias is the retarded kid liberals let play with them so everyone feels better about themselves.

    This really isn’t a fair fight.

  22. You have to think of the horrors that would be unleashed if everyone acted like a little capitalist, instead of a little consumer.

    http://www.wholesale-order.com

  23. Inflation and deflation can hurt depending on if one has too much debt or “too much” savings. Guess who has loads of debt, government, inflation is a nice way of getting rid of that debt, so obviously governments will support inflation and continuously remind people of the terrible evils of the deflationary spiral.

    1. True. The problem is that inflating your way out of debt has the same effect on bond holders as defaulting. The marks get wise and see inflation coming and start charging higher interest accordingly.

      1. Not if I can help it.

    2. Inflation can hurt EVEN if you have debt. let’s say you’re poor and are spending 80% of your income on food fuel and shelter. and 20% on servicing debt (so you’re marginally surviving). 10% inflation hits and now you’re spending 88% on food fuel and shelter, and 20% on servicing debt, but unfortunately that adds up to 108%.

      It’s not so bad for the rich you see, because someone spending 20% on food fuel and shelter and 60% servicing debt will go to 22% + 60% which is a 10% drop in expendable income.

      Inflation is bad whether you have debt or not, *if you are poor*.

      1. My guess is that the poor person paying to service that debt doesn’t have a fixed APR (e.g. debt is on credit cards) so it’s actually probably even much worse on them because those rates are going to skyrocket when everyone realizes that inflation is in fact happening.

        1. I was trying to keep the math easy, but you are absolutely right.

  24. Morning Update.

    John C. Randolph doesn’t seem to recognize that there are all sorts of non-radical libertarians, and that Reason has historically catered to those non-radicals, whereas something like Liberty magazine has catered to the radical libs. I don’t really have a problem per se with anarcho-capitalism, I just don’t waste much time (these days!) thinking about how glorious it will be when the future of pure AC libertarianism arrives. I’m more concerned with finding ways to be more free in the world we’ve got.

    “Really?” and others want to know what I mean by Keynesianism being baked into fiat currency economies. I’ve been meaning to post an essay on this to my blog “when I find the time” – I guess I haven’t found it yet. But here’s something for you to mull over: our currency only has ultimate value as a credit against tax obligations to the federal government. That’s it. So, the US dollar would literally have no value if it weren’t for the fact that the feds can levy taxes on us that we are obligated to pay. From this fundamental monetary fact, much derives. Including that you can’t be a “pure” libertarian (advocating the NIFP) while being perfectly happy with fiat money – since it depends on the use of force to maintain its value.

    For myself, whatever I may think about how things “should” be set up and run in an ideal world, I am pragmatic enough to realize they are what they are, and are unlikely to change much, for now. So I take the Fed and the US dollar as a given, and then try to get to the most liberty and prosperity possible consistent with that.

    And for that, people like Cytotoxic call me a “slaver” and tell me to “f*ck off”.

    I’ll say it again: “Don’t make the perfect the enemy of the good.”

    1. John C. Randolph doesn’t seem to recognize that there are all sorts of non-radical libertarians,

      What I recognize is that many different flavors of statists are masquerading as libertarians these days. Hell, even that commie rat bastard Markos Moulitsas has claimed to be a libertarian at one point.

      In a related story, a ham and cheese sandwich claims to be a kosher meal.

      -jcr

    2. But here’s something for you to mull over: our currency only has ultimate value as a credit against tax obligations to the federal government. That’s it. So, the US dollar would literally have no value if it weren’t for the fact that the feds can levy taxes on us that we are obligated to pay.

      *facepalm*

      I am not quite sure where to start.

      1. Since the last tie with gold was severed in 1971, the US dollar has had value only as a credit against tax obligations. It is therefore a suitable unit of exchange, tax obligations being pretty near universal.

        Connoisseurs of monetary history know that British imposed a hut tax in Africa in part to get the natives to accept British currency and be willing to trade labour and goods for it.

    3. Draco: It’s not that the money is fiat and backed by force so much that keynesianism is anti-libertarian (although that isn’t so great). It’s the notion that a select few can steer the economy by twiddling a couple of huge dials (money supply, interest rate) that is fundamentally non-libertarian. We’re not fucking machines, you know. (although some of us are probably fucking machines).

      1. “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

        -JMK

        The man said it himself!

  25. I have always thought that macroeconomics itself, not just the CPI, is voodoo. The notion that an economy as complex as ours..for that matter, as complex as anybody’s…can be reduced to handful of aggregated statistical figures, by their very nature artificial, which can then be manipulated by the central government to yield economic nirvana is magical thinking, plain and simple.

    Modern macroeconomic theory was developed in the 1940s and 1950s to give intellectual cover for governments seeking to “seize the commanding heights” of national economies. One would have thought that the experiences of the 1960s and 70s would have discredited mainstream macroeconomic theory once and for all. That it is still given credence in intellectual/government circles is proof of the vested interest that government insiders have in perpetuating it.

    1. Modern macroeconomic theory was developed in the 1940s and 1950s to give intellectual cover for governments seeking to “seize the commanding heights” of national economies.

      In earlier eras, that cover was provided by priests and astrologers.

      -jcr

      1. And we had as much success “stimulating” the economy by sacrificing sheep to the gods as we do by creating stimulus programs.

        1. We sacrifice windows nowadays.

    2. ^^+++^^ This. The idea that billions of individuals conducting trillions of transactions with billions of other individuals can somehow be aggregated into a single controllable collective entity called THE ECONOMY is the height of hubris. Seems like the same failure of all collective ideologies, the ascribing of predicates to groups (something that is applicable only in pure mathematics).

      To ascribe predicates to a people is always dangerous.” – Nietzsche 1873

    3. It is somewhat akin to asking “how’s the weather in the United States today?”

      But JCR nails it. Almost makes you pine for the oracle stirring the chicken entrails.

  26. As soon as I saw “Zoroaster,” I knew this piece could only be written by Cavanaugh.

    1. the correct name for the deity is Ahura Mazda, which sounds way cooler, IMHO.

  27. I know Draco has come in for a kicking around here, but I think its been somewhat unfair.

    Yes, there can be moderate or even part-time libertarians. If you can’t find them and partner with them, you will never make any progress.

    Incremental change always occurs piecemeal and through compromise. If you reject incremental change, then you are essentially betting that there will be societal collapse, followed by a revolution, and that libertarians will prevail after the revolution. Those are not good odds.

    Success in politics is taking what you can get, when you can get it. The alternative, it shouldn’t need to be said, is failure.

    1. that’s why I said this upthread:

      “You can be a libertarian whose realistic, political priorities are ordered [in such a way that ending the fed is not a priority], but to be a keynesian means to reject libertarianism in a fundamental way.”

  28. Yeah, the CPI calculation is nonsense. Printing is just a way for the bank to rip off consumers.

  29. People are still saying there’s been no inflation? Do they buy food?

    http://www.intellectualtakeout…..use-effect

  30. Yglesias is a fool. INflation is present at all price levels and all price movements. If the price of an ipad fell 25% during a time of 10% inflation, then it should have fallen 35% and we’d have more bags of rice to fill our bellies.

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