Welcome to another installment of Swamponomics: Liberty Nation’s dive into the week’s morass of top news stories and the stream of economic fallacies that have been accepted as conventional wisdom by swamp creatures for years.
Deflating the ‘No Inflation’ Fallacy
Many proponents of the zero-interest-rate policy (ZIRP) and vast-money printing schemes in the aftermath of the Great Recession believe they have been vindicated. Why? No inflation! Because there has yet to be hyperinflation as predicted by a considerable number of critics of former Federal Reserve Chair Ben Bernanke’s three rounds of quantitative easing, the Keynesians, inflationists, and interventionists think that these unconventional monetary policies work.
Bloomberg Businessweek featured this cover title on a recent publication: “Is Inflation Dead?” Then, here is Keynesian it-girl Paul Krugman in a recent NYT blog post, titled “The Sabotage Years”:
“Inflation never took off. Although almost none of the people who waxed hysterical over inflation have so much as acknowledged having been wrong, Bernanke, Fed economists, and Keynesians in general were proved right: printing money isn’t inflationary in a depressed economy.”
It is time to dismantle the Mises Institute, tar and feather every Austrian economist, and declare that Lord Paul Krugman blogs for our sins.
Sure, if you don’t live under a roof, eat food, wear clothing, receive medical care, and use transportation to get to places, then there hasn’t been any inflation. However, if you do enjoy these things, then you know that prices have gone up.
Indeed, there has yet to be any hyperinflationary signs, but that does not take away the prospect of price inflation spikes, which have occurred plenty of times since the end of the Second World War.
From 1950 to 1951, price inflation skyrocketed from -2.1% to 9.6%. From 1972 to 1973, price inflation soared from 1.9% to 7.4%. From July 2009 to December 2009, price inflation advanced from -2% to 2.8%. Simply put, there can be dramatic increases in inflation at any time – we’re already witnessing this in sectors where the government intervenes, from education to health care.
It is important to remember, too, that the Fed only recently started to unwind its $4 trillion balance, which was put on hold by Fed Chair Jerome Powell. So, the tsunami of printed money over the last decade might not hit the open market for another couple of years.
Like the stimulus policies advocated by Keynesians, the anti-inflationists are not concerned with short-term jolts; they’re more worried about long-term pain generated by these tools. Just because John Maynard Keynes believed in the idea that “in the long run, we are all dead,” it doesn’t mean everyone else is a nihilist.
Asian Women versus White Women
In the last couple of years, the left has obsessed over race and gender, proving who the real racists and sexists are in this toxic climate. According to leftists, life would be better off if Caucasians either sat in the back of the room or went extinct. Moreover, all men are Literally Hitler™ and they need to apologize for existing.
But to suggest that whites and men have an inherent advantage over everyone else is an asinine idea. The proof is in the data.
The Bureau of Labor Statistics (BLS) published new employment data for the first quarter of 2019. It found that Asian women earned roughly the same as white men and even more than white women during the January-March period.
These were the median weekly earnings for four specific demographics:
- Asian men: $1,299
- Asian women: $1,017
- White men: $1,033
- White women: $826
Asian men were superior to everyone else in Q1.
The gender earnings gap between Asian women and white men was negligible at -1.5%. The inequity between Asian and white females, however, was a whopping 23%.
So, when will the gender studies professors, lesbian dance theory graduates, and pink-haired feminists march the streets and demand an end to the pay disparity with Asians? That would be awkward.
It’s an MMT World
Billionaire hedge fund manager Ray Dalio is at it again. After complaining about capitalism on network television, Dalio is now promoting Modern Monetary Theory (MMT), the idea of having the government run the printing press to facilitate even greater budget deficits.
Writing in a LinkedIn post, Dalio says that it will only be a matter of time before MMT becomes a reality:
“To me the most important engineering puzzle policymakers around the world have to solve for the years ahead is how to get the economic machine to produce economic well-being for most people when monetary policy does not work.
It is inevitable that this shift will happen because it is inevitable that central bankers will want to ease when interest rates are pinned at 0% and when quantitative easing will be ineffective in achieving the goal.”
Dalio contends that MMT could stimulate the Main Street economy, comprised of individuals who do not own financial assets. Because the three rounds of QE and historically low rates drove asset prices and helped the top, MMT could eventually divert resources into public investments, ranging from infrastructure to education.
Suffice it to say, MMT is a disaster in the making, primarily because it exacerbates many of the problems the nation faces today. So, instead of cheap dollars flooding Wall Street, easy money will pour into Washington to expand the deficit to spend on some progressive cause du jour. MMT misallocates resources from productive assets and increases the country’s time preferences, which involves cutting capital accumulating, limiting saving, and increasing consumption.
The expansionary monetary policy kicks the can down the road. When the bills come home, it won’t matter to the MMT proponents because they will be dead anyway.
Facts Are Stupid
Big government advocates are no fans of facts because data, statistics, and logic contradict their conclusions. Krugman thinks there hasn’t been any inflation, but the numbers suggest otherwise. Feminists believe white men are oppressing them in the job market, but the Asian demographic is making more than everyone. The anti-capitalist billionaire thinks printing leads to prosperity, but this fairy tale isn’t even believed by one of the biggest beneficiaries of money supply expansion: Charlie Munger, Warren Buffett’s right-hand man. Facts are stupid, indeed!
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