My $0.02 on Krugman's and Delong's Inflationista Potshots

Here's Delong's OH BOY: NIALL FERGUSON PRACTICING ECONOMICS WITHOUT A LICENSE DEPARTMENT

And my comment (which for some reason won't load onto Brad's blog so I'm posting it here):

I'll readily admit that I'm not an expert on CPI methodologies, and I am inclined to believe that the BLS has many well intentioned and highly educated professionals using defendable methodological practices. However, I share Ezra's feeling that something doesn't smell right on inflation numbers.  

Over the past decade how can official cost of living figures have gone up so little when they supposedly take into account the following items: 

-Housing
-Medical
-Fuel
-Food
-Education 

These are some of the largest cost items for most consumers, and in the last decade up to the financial crisis many saw double digit price increases (in some cases in a single year). 

The BLS's CPI calculator says that $1 in 2001 has the same buying power as a $1.17 in 2007, so yes, the BLS is picking up at least some of the perceived inflation in these categories. However, do the BLS number capture the full picture? 

One thing is for certain: the CPI was utterly useless with respect to the housing bubble as it does not include housing prices, only rent. This despite the fact that nearly 70% of all American homes are owner occupied.

It's convenient to dismiss anyone questioning official government statistics as a conspiracy crank. However, under reporting of inflation by a government bureaucracy would be useful in terms of reducing that same government's expenses in the form of lower cost of living adjustments for government workers and TIPs expense. Under reporting inflation also provides ammunition for the Greenspan-Bernanke Fed to not have to raise interest rates and thereby dampen exuberance. 

In other words, many stand to benefit from the under reporting of inflation. It is therefore reasonable to cast a skeptical eye on these numbers, especially when they fly in the face of everyday experience.

A final point I'd add is that economics is too important to be left to economists, particularly with most of the 'license' holders (econ PhDs) having completely failed to identify in advance the biggest economic event since the Great Depression.

Jeremy Grantham's Full December 2011 Quarterly Letter

JGLetter_ShortestLetterEver_3Q112

Video: Kyle Bass' Full BBC Hardtalk Interview

"Capitalism without bankruptcy is like Christianity without Hell" and other choice comments from the hedge fund manager profiled in Michael Lewis' most recent book, Boomerang.

h/t Zerohedge

Is the Bernanke Put Kaput?

As Barry suggests, have we just seen the end of the Bernanke put? Based on the way markets are trading today it would appear Ken Rogoff was right that Bernanke doesn't have the stock market's back.

However, in all likelihood Soros is right about how policymaking powers-that-be will be forced to bailout Too Big To Fail banks should the financial system begin to teeter again. In which case the only real question is for how long can the current central bank shell-game be sustained in a low-to-no growth economic environment?

No one -- not Ben Bernanke, not Alan Greenspan, not Milton Friedman if he were alive, nobody -- knows for sure just how much more room the Fed's balance sheet has before non-negligible inflation kicks in. However, former Fed Chair Paul Volcker for one is starting to get nervous.

Federal Reserve Total Assets ($s Trillions)

(click to enlarge)

Continue reading the full article at SeekingAlpha here.

Video: Alan Greenspan on Charlie Rose - 'Greek Default Almost Certain'

This is just a sample clip; full interview should be up soon here is here.


Alan Greenspan Says a Greek Default Would Hurt... by Bloomberg

Video: Merle Hazard's Feelin' Lousy music video

Video: Atlas Shrugged Movie Trailer Disappoints

My first reaction: it has the look and feel of a Left Behind type film in terms of production quality (not good). And please don't ask how I know what a Left Behind movie looks like.

Second reaction: setting it in the modern world is a questionable call. It's easy to criticize Atlas Shrugged today, but it's important to remember the context and historical period in which it was written. Aesthetically, there's not enough art deco in this trailer, and it should be in black and white, preferably filmed in a Sky Captain and the World of Tomorrow grain. 

Also for such a long-winded story to have any chance of holding the attention of a general audience it probably needs A-Listers. While I'm not a huge fan of Angelina Jolie, perhaps she could pull off Dagny; maybe Antonio Banderas could play Francisco, etc.

Atlas Shrugged and its characters in particular captured my imagination when I was younger, but as I blogged previously Rand's ideas are (for starters) inconsistent.

Last word on the film adaptation of Atlas Shrugged goes to Tiger Beatdown:

I myself am greatly looking forward to the movie. Because the whole point of it – superior people make superior products and earn superior money because they're superior! – is going to be really complemented by the spectacle of this broke-assed movie made with former WB stars for like five cents.

Greenspan's Opinion on the Gold Standard and Where's Gold Heading Now?

Some choice comments on gold from the former Federal Reserve Chairman previously made on Fox Business News:

"We have at this particular stage a fiat money which is essentially money printed by a government and it's usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity. There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard." 

During the interview Greenspan also wondered aloud whether we really need a central bank.

Contrary to what the occasionally conspiratorial and always hyperbolic 'Tyler Durden(s)' of ZeroHedge would have you believe, these quotes (while perhaps deserving of a muted 'wow' from those hearing them for the first time) aren't nearly as big of a surprise as World Bank President Bob Zoellick's recent call for a return to the Gold Standard.

Throughout his career Greenspan hasn't exactly been shy about making his feelings about Au known. Further, Greenspan is a highly paid private consultant right now without any official government responsibilities or gag orders. He (and his clients) are no doubt aware that his words still carry significant weight in the marketplace, and he can say whatever he likes and even talk his own book.

Having said that, as a close student of Greenspan's philosophy and personality I can say with a high degree of certainty that he very much cares about his place in history, particularly at this stage in his career.

In other words, the likelihood that the former Chairman is going on television and talking up gold the past few years just to earn a few bucks from hedge funds is low, in my opinion. And with outgoing Fed Governor Thomas Hoenig also recently weighing in on the yellow metal's merits one can't help notice the growing chorus for a reconsideration of the gold standard.

Continue reading the full article published on SeekingAlpha here.

Who's Confused: the Atheists, or the Agnostics?

Ricky Gervais

'Tis religious high season in the western/Christian parts of the world, and Ricky Gervais has taken a time out from comedy to share his reasoning on why he's an atheist.

Ricky's explanation for his atheism brings to mind a question I've previously raised with individuals who claim that their atheism, like Ricky's, is rooted in scientific rational thought.

A little over a decade ago during Alan Grenspan's heyday -- a time when I would like to believe that I was not only younger but also much less wiser -- my question even managed to get me thrown out of the Ayn Rand Institute in Southern California.

Here's the short story: after asking the managing director a sincere question about about the atheism of the institute's namesake, I was quickly escorted to the exit with his parting words "I don't have time to be talking to mystics".

Ricky believes God does not exist because there is no provable, scientific evidence which verifies the existence of God. No argument here from me on this point.

My question is this: what scientific evidence does Ricky have to counter the belief that God does in fact exist? The answer is none. Ergo, the logical default is not in fact to be an atheist, but to be an agnostic.

Atheists -- by believing that God does not exist -- are making the same error in logic which believers in God make. Neither of them have scientific evidence to support their beliefs. So the only logical consistent and scientifically supported view is agnosticism.

Are the science-believing atheists simply confused? Or is it the science believing agnostics, like myself, who have it all wrong?

I'll close with an interesting atheist/agnostic factoid and another question: in the U.S. Congress it appears that every 'major' minority group in the United States is represented. There are jews, muslims, blacks, latinos, asians, homosexuals, disabled, left-handed, etc.

However, there is not a single avowed atheist or agnostic among the 535 members of Congress. Vermont Senator Bernie Sanders is rumored to be an atheist, but to my knowledge he has never publicly outed himself as one.

Given that atheists and agnostics represent perhaps as much as 5-10% of the U.S. population, would it be fair to say that atheists and/or agnostics are discriminated against? And in regards to election to the U.S. Congress, is there a reason why they are discriminated against more than any of the other 'major' minority groups?

Alan Greenspan Explains Why Investors are Running to Gold

As Congress considers approximately $200 billion in new stimulus, Alan Greenspan sounds the alarm that America spending beyond its means cannot continue indefinitely, and that there are severe consequences if this continues much longer.

Meanwhile gold is currently trading at an all-time high of $1,262/oz.