On Sun, 18 Mar 2012 08:19:40 -0500, jim "sjedgingN0Sp"@m@mwt,net
wrote:



Ed Huntress wrote:

On Sat, 17 Mar 2012 20:57:26 -0500, jim "sjedgingN0Sp"@m@mwt,net
wrote:



Scout wrote:


Some Australians DO predict massive, even hyper, inflation.

You said and I quote "Even the Austrians can't fly to that level of
delusion..."

Go ahead take a stab at proving they are as crazy as you are

Read Ron Paul's book _Pillars of Prosperity_, to see the Austrian
School prediction of hyperinflation:

http://mises.org/books/prosperity.pdf

"Price inflation, although difficult to predict on a month-to-month
or even year-to-year basis, will reach unbelievable heights in
this decade."

He wrote that in 1984. Then he predicted in the same speech that we
would be at war with our major trading partners (Canada? Japan?) in
the 1990s.

Keep in mind Ron Paul is doctor not an economist.

He really knows his way around a vagina, all right.

Price inflation was high in the 80's.
Much higher than most of the 50's and 60's when
prices increased by about 1% or less per year.

"High," compared to what? When Ron Paul wrote that, Volcker had just
squeezed the crap out of the economy by driving up funds rates,
lowering inflation from 13.5% to 3.2%. It stayed under 5% throughout
the rest of the '80s. It had been higher in the early '50s and the
late '60s.

It was pretty much normal for the age when Ron Paul did his
Chicken-Little routine. He was blowing Austrian smoke.

What Paul
failed to predict was that people would get used
to high inflation.

What Paul failed to predict was that his theories were crap. Inflation
did NOT "reach unbelievable heights in this decade," or any other
decade.

Austrian School theory says that our economy is impossible and that,
by now, we should all be running around in rags, with roving bands of
marauders, killing each other and fighting over rotting rutabagas.
Look out the window.


Prices have steadily climbed up at this "new normal" until
the end of 2008 when the first significant downward
movement since the great depression occurred.
Today prices are still below the pre-2008 trend.

What does that have to do with "unbelievable heights"? Unbelievable
heights was the late 70s. Inflation was already back to the 30-year
trend line when Paul wrote that speech. What in the hell was he
talking about?

The answer is, a strange theory of economics derived from depression
and wartime economics and social philosophy by a couple of Austrian
philosophers. It didn't work out. But that doesn't keep them from
predicting more of the same baloney they've been peddling since around
1950.


But ordinary inflation wasn't the issue being discussed.
The question was "is deflation more likely than hyper-inflation"

That was not Ron Paul's "question."


The Austrians correctly view inflation as a product of the
money supply created almost entirely by private sector borrowing.

They ignored money velocity. That's why we can have money supply
growth in an economic downturn, and the predicted inflation just
doesn't happen. See "Beck, Glenn, economics, stupid."

And since they recognize private borrowing is practically
nonexistent today and not likely to return any time soon, the
Austrians don't see hyper-inflation as a real threat in near term.

What the Austrians see is ghosts in the mirror.

In their view the state has its hands full now keeping ordinary
inflation alive.

Which Austrian economist are you talking about?

--
Ed Huntress