Everything I buy except steak and rental cars seems to be staying about the same. I just buy less steak and suck it up on the rental cars.
I tend to buy steak only when it's on sale and I haven't seen a sale lately.
Heebietake last: I'm less old than you, and I think exactly the same. We can't both be wrong!
My memories go back to the ancient days, when coke was a dime and $100/month was an average phone bill even when you couldn't carry your phone around.
The cheapest I ever remember coke machines being was $0.35. But that was one oddball clubhouse machine. Mostly $0.50 was standard.
I do remember that gas prices plummeted in the 90s for a bit and were under a dollar. It was definitely after I got my license, which would have been 1994.
I was there when the first person said, "It's not the heat, it's the humidity. "
Trapnel the other day turned out to be very relevant to the OP.
The Third Way centrists have eaten a lot of crow over the last decade or soIt is in fact very good, as is this companion piece. Without getting into the economic theory weeds, summarizing the Krugman-specific trajectory [my quotations throughout sloppy]:
Here's a very long article by Adam Too/ze on Krugm/an's public intellectual trajectory that's probably on point, and highly praised on twitter, but I keep putting off reading it. Feel free to summarize it for me!
1992...Clinton...Krugman first saw...prevalent protectionist mood...he gained a reputation as a scourge of left-leaning critics of globalisationTo generalize from Krugman to the economists of his cohort, and thence in varying degree to Democratic leadership, activists, and base: generations formed in peacetime in the 1970s and 1980s, rising to high office in the unipolar 1990s, their confidence eroding under a series of shocks:
The shock of the Bush administration radicalised Krugman's politics
[Krugman's] seventy-year political history... American norm was massive inequality... Reagan... dog-whistle...the US did not have a comprehensive welfare state [because of] racism.
2008...the fact that a comprehensive financial crisis could hit the US itself shook his confidence deeply
2009 Obama and the Democratic Congress passed a stimulus, but it was hopelessly undersized
2010...austerity...UK...Germany...Tea Party Republicans won the midterms
Obama's insistence on bipartisanship ran squarely against Krugman's darker vision of the roots of America's political divisions in racialised class inequality.
The Great Depression, Krugman wrote, 'ended largely thanks to a guy named Adolf Hitler. He created a human catastrophe, which also led to a lot of government spending.'
'I find myself believing, more and more, that ... we were in some sense doomed to go through this ... A regime that by and large lets markets work, but in which the government is ready both to rein in excesses and fight slumps - is inherently unstable. It's something that can last for a generation or so, but not much longer ... the result is the wreckage we see all around us.' For the policeman of orthodoxy of the 1990s it was a shocking admission to make.My question is, to what degree do you all see this actually sinking through the skulls of federal elected Democrats? The DC statehood and HR1 I'm still waiting for say, not much.
in Covid we have found an enemy of precisely the kind Krugman was imagining.
what is actually at stake is the future of the republic. In 2020 America came through something close to an existential social and political crisis. That crisis is now understood by large parts of the Democratic Party not as an unforeseeable shock, but as enabled by the forty years of 'responsibility' that Summers invokes as the gold standard: successive Democratic administrations failing to address inequality and handing the game to the utterly unscrupulous Republicans.
I think it has, but not too 100% of them and the margin is so narrow 100% are needed.
The first 10 years of the Consumer Price Index's existence: maybe not the best for reliability and comparability!
The demand for buggy whips is way down but they're super expensive!
Anyway, the subtext obviously is Write your critters! No inflation hawking!
I don't really worry so much if there is inflation so long as it comes with full employment
IMO, it's not Obama and the centrists who are behaving like ostriches, but the people who have unreal expectations of what a too-narrow majority can accomplish in our system.
The reason HR1 isn't going to be enacted is because the people of Montana chose to re-elect Steve Daines rather than sending Steve Bullock to the Senate. And this doesn't have anything at all to do with the failures of Obama, or of The Democrats. Or anything to do with inequality. It's because, by a substantial majority, people decided that owning the libs was more important than anything else. Well, there's guns and abortion too. But the impulse to blame Obama is just completely misplaced. Is it Obama's fault that Susan Collins was re-elected? There's just no set of dots to connect there: white people of Maine, like white people of Montana, are choosing the continuation of white supremacy.
Schumer doesn't have the votes to get rid of the filibuster, and doesn't have the leverage to get the votes. This too isn't Obama's fault. Or the fault of The Democrats.
OK, yes, it's LBJ's fault, because he didn't get rid of the filibuster when he had the chance. Or the fault of Sen. Thomas Walsh (D-MT) who modified the filibuster so the US could enter WWI, but didn't eliminate it entirely. No, actually the blame lies with Aaron Burr. Really.
And I suppose you can blame Connecticut for coming up with the idea of the Senate.
I blame science fiction dystopias.
Who fucked Connecticut, boys? Who fucked Connecticut?
Actually, the worst offender in Sen. Wherry (R-NE) who was responsible for changing the cloture rule from a percentage of senators voting to a percentage of the whole senate.
The bastard who took out George Norris.
15: TBC on Obama, I added the rhetoric, but Tooze attributes the view of failure to Krugman; and that view is widely shared, with a lot of good reason. More generally, Obama is only one shock of seven I extracted; and only two of seven are mostly or largely the fault of Democrats; and neither I nor Tooze are blaming current Congressional conditions on Obama.
Schumer doesn't have the votes to get rid of the filibuster, and doesn't have the leverage to get the votes.
Real question: why? Cash it out. How many votes does he need, exactly? Why precisely is it possible to pass a $2trn capex bill but not possible to pass state-targeted logrolls sufficient to secure those votes? Why for that matter is not possible to get HR1 and DC through via reconciliation?
The Senate can kill the filibuster with 50 votes. 50 senators are willing to vote for a whole bunch of things, including spending huge amounts of money for stuff. There are not 50 senators willing to vote to change the rules on the filibuster. There's no doubt at all that a bunch of people have been looking into whether this that or the other inducement could be passed to trade for the vote, but no one has found a formula that wins the needed votes.
Reconciliation is for budget bills. The Senate parliamentarian rules on whether particular bills, or provisions of bills, qualify under the rules. The Senate is free to disregard the parliamentarian on this, but there aren't 50 votes to do that either.
The actual answer is White Supremacy.
What is Manchin's price? What is Sinema's? And which Senators do you lose if you pay it? A lot of centrists are still sensitive about blatant bribery.
Did the Cornhusker Kickback ever actually get paid?
No. It backfired and made things worse for Obama and Nelson.
It's easier to bribe West Virginia because they are much poorer .
||
Experts, please help me evaluate:
the company had initially planned on following through the international norm, but Taiwan's Center for Drug Evaluation (CDE) and Food and Drug Administration (FDA) suggested that the company increase the number of participants to a larger-than-normal scale in the second phase of clinical trials instead. ... something that the CDE and FDA wished the company could do in order for the vaccines to get approved for an emergency use authorization (EUA). ... officials have recently argued that the number of participants in the first and second phases of the United Biomedical and another Taiwanese vaccine maker's clinical trials were more than the number of participants in those two phases of trials conducted by ... Pfizer/BioNTech, Moderna and AstraZeneca. ... numbers of participants involved in the first and second stages of clinical trials ... were 3,875 and 3,844, respectively ... the other domestic company ... involved 3,852 and 3,815 ... The Pfizer-BioNTech, Moderna and Johnson & Johnson vaccines had included over 35,000, 30,000, and 40,000 participants, respectively, in their studies at the time they obtained emergency use authorization in the United States|>
25 I think if they had a price, it would get paid. These big bills have a lot of money sloshing around, and even without earmarks, you could find ways to fund those senators' priorities if they had any. But they're already going to get whatever it is they want. And don't want to be seen at home as giving in to the coastal leadership. Are there 48 votes to eliminate the filibuster? I'm not sure.
There should be 50 votes to undo Wherry's provision on what the denominator should be. But maybe not -- it's not clear that this would change the results on actual votes, so maybe all it would do is inconvenience senators on all sides.
28 me.
23: How many, exactly, are not willing to vote on filibuster rules or the parliamentarian? (And is the latter a lower bar to clear, politically?) And correct me if I'm wrong, but did Schumer not decline to abolish the filibuster the last time he had the chance? The question here being aimed not at his good faith efforts, but at his sense of existential urgency.
What is Manchin's price? What is Sinema's?
Gin & Tacos: "The recent in-depth interview with Sinema in which she reveals (tellingly) that her office in Tucson is unoccupied sheds a lot of light on one of the most confounding aspects of the obstructionist legacy she and Manchin are building. Any read, even a favorable one, of this interview makes it perfectly clear that this person could not give a shit about anyone or anything but her own career. Being a Senator is meaningless except inasmuch as it might give her a the right springboard into whatever lobbying job she's dying to get. This is a line on a resume. There's no signature policy she wants to enact, no legacy she wants to leave behind - this is the Millennial politics of the near future. Sincerity doesn't even need to be faked and the question 'What's in this for me?' does not refer to one's odds of reelection. This is the fundamental issue with Manchin, and apparently with Sinema as well: it is impossible to figure out what it is they want. If they wanted something then some kind of political deal would be possible."
31: I agree with all of that except I'm steamed at them calling it "Millennial". Sinema is unambiguously an X-er!
Ha, I considered ellipsing that bit out.
30 I don't know what the actual whip-count is. I imagine, though, that if Manchin and Sinema signed on, everyone else in the D caucus would go along. But maybe an additional deal has to be cut. When would Schumer have had the votes before? Reid had the votes in 2013 wrt nominations (other than the Supreme Court) but only for the limited purpose.
Part of the problem is that its taken so long for the Democrats to come around on eliminating the filibuster. Some of us were making the case for getting rid of it from the beginning of the Obama administration, and we were shunned as outrageous lefties.
We were right, of course, but mainstream Democratic thinking took a very long time to catch up. Maybe if they had been quicker to recognize reality years ago there would have been time for the idea to penetrate even the thickest of centrist skulls by now. But the dumber path was chosen and here we are.
At least everybody is getting really good at ignoring Larry Summers.
I'm worried that events will prove Summers right (or "right"), and we'll have to hear about him until he's dead... or we are.
My view is that we'll probably get some elevated inflation for a year or two, but who gives a shit? We had unnaturally low inflation for over a decade, followed by a fucked-up thing. Two years of 4% inflation as the cost of recovery is nothing.
At least everybody is getting really good at ignoring Larry Summers.
I hope so. Reports today are that Joe is backsliding.
31: I followed the links. The underlying "interview" isn't an interview at all, let alone an in-depth one, so I doubt whether the Gin & Tacos blog post has any trustworthy insight into anything.
That said, Sinema seems like a very strange character with whom it may be difficult to make a deal. I hope someone in the Senate or White House can somehow figure out how to handle her.
Since my new thing is to post somewhat on-topic longreads that I haven't yet read, here's Yakov Fegin on "The Deflationary Bloc".
Also important to note that inflation is how we pay off the debt now, so we'd better have some.
Its either that or tax the rich, and I don't think the Republicans will go for that.
40: That article is nuts. If that view becomes dominant, we really will end up back in the 70s.
Monetarism, narrowly construed, is decisively refuted. Monetarism, broadly construed, looks better than ever. Certainly nothing over the past year is inconsistent with monetarism, and in some ways vindicates it. This is the first time ever that the Fed has gone all-in on monetary stimulus, and it helped reverse what should have been an unprecedented economic disaster. It adds credibility to Milton Friedman's idea that the Fed could have ended the Great Depression much sooner, and makes me think Bernanke deserves more blame for how slow the recovery was after 2008.
Monetarism is an example of what happens to a technical idea when it gets tied to a specific political agenda. Friedman was a libertarian, but he remembered the Great Depression, which inspired him to come up with the smallest possible government intervention to prevent a recurrence of the Great Depression. You can imagine an alternate history where liberals invent monetarism. Monetarism means that inflation is a problem that the government can solve, and not something we have to put up with. Macroeconomists in the 70s thought there was a long-term trade-off between inflation and unemployment, which would be easy to give a conservative spin to -- you can imagine a conservative rubbing their hands together and saying that we have no choice but to throw people out of work permanently to keep your grocery bill down. If there's no long-term trade-off, then it means we can achieve low unemployment and low inflation simultaneously.
Monetarism is also much closer to Keynesianism than anyone was willing to publicly admit in the 70s and 80s, because it got adopted as a convenient label by Reagan and Thatcher. The one person who acknowledged this was Friedman, oddly enough, who wrote that if Keynes were alive then, he would agree with him. Friedman thought that the government could (and should) act to stabilize the business cycle, he just phrased it a way that libertarians would find attractive, by blaming the government for the business cycle. The only time the two really disagree is in the narrow circumstances of the stagflation era, where we had persistent inflation and high unemployment. And liberals should work to avoid recreating that era, just because the politics of it is so deadly.
The underlying "interview" isn't an interview at all
The article links to the interview (under the first picture), but it's now behind a paywall.
The only true inflation is grade inflation.
40 et seq: the Tooze pieces get into the intellectual history on this.
Tooze on the intellectual history is not the worst thing I've ever seen, but it's not particularly correct, either. Tooze doesn't really know what "New Keynesian" means. Stiglitz is not a New Keynesian, and was always epsilon away from being a socialist. Krugman is only peripherally a New Keynesian. It's wrong to say that what Tooze calls the old neoliberalism is peripheral in the 90s, something that's clear if you read Krugman's books. After Reagan, there was a significant school of macroeconomics (real business cycle theory) that said that the government couldn't stabilize the business cycle, and could only cause inflation. In the realm of politics, the Republicans have reverted to a pre-Keynesian understanding of the economy, and in Europe is ordoliberalism peripheral, it is completely ascendant.
It's also a mischaracterization to call Krugman a defender of economic orthodoxy. His books are full of attacks on the leading macroeconomists of his generation. He was always a bomb-thrower. (For this reason, he was always personally disliked by Chicago-school types. John Cochrane left Chicago to go to Hoover because he's so angry that a dude he hates is a national celebrity, and he himself is not.) If he disagrees with someone, he attacks.
Stories of economic heterodoxy versus orthodoxy are almost always wrong. The problem with the heterodox is that they are lazy circle-jerks of buddies that cite each other, and never read anybody else. Every time I've ever looked in a heterodox paper, I invariably stumble over an empirical claim that was shown to be false 30 years ago, or a theoretical idea that 100 other papers have already talked about, or they argue against a straw mainstream that doesn't exist. What makes something mainstream is if it doesn't ignore the existing current scholarship on something. Prescott is mainstream because he called Samuelson an idiot, and Krugman is mainstream because he called Prescott an idiot, and Cochrane is mainstream because he called Krugman an idiot. MMTers dunk on papers that are 40 years old, because they haven't read anything more recent that wasn't written by one of their buddies.
The real weakness of economists is that they over-respond to events. They overreacted to the 70s. I don't know if they overreacted to the financial crisis, but in the wake of it the entire school of right-wing macroeconomics has been wiped away. (Good riddance.) If we get stagflation, they'll overreact to that. As a field, they have the exact opposite problem of everyone else, which is to work out how each individual event proves them right after all.
17 and 19 are both brilliant, and thank you again for making Unfogged the kind of place that it is.
That article is nuts. If that view becomes dominant, we really will end up back in the 70s. Monetarism, narrowly construed, is decisively refuted. Monetarism, broadly construed, looks better than ever.
I'm a bit confused by where you're drawing the lines. My sense is that the core of monetarism is "inflation is always and everywhere a monetary phenomenon". The narrowest version of it focused on the money supply quantities as the drivers of inflation or its lack, and was already decisively refuted in the 1980s when the Fed tried it for a bit, but realized the money velocities were too unstable for it to be helpful. (It is unfortunate that the strict-monetarist Volcker experiment, which was quickly dropped, gets mixed up with the broader Volcker "smash inflation with tight monetary" strategy, which was not dropped and in no way discredited, for those who shared its goals.) Is that also what you mean by monetarism narrowly construed? If so, I agree about that. But in the public sphere, this version lingers, for example in prophecies that QE just *has to* result in inflation, and similar claims with the ECB's activities in Europe. So being refuted hasn't banished it.
What, though, is your "broadly construed"? Is it "the Fed's tight policy was significantly responsible for the Great Depression" or more generally "tight monetary policy can be disastrous in a slump"? While this was a core Friedman historical claim, one can share it without at all agreeing that "inflation is always and everywhere a monetary phenomenon". And it seems to me that the post-2008 experience is hard to square with this core claim, even when it retreats from a singular focus on monetary aggregates. It seems to me that the last decade shows that it matters a great deal *where* the money is flowing to, and why, what the sources of demand for money or assets are, and not simply the flow of the monetary faucet. If you want to include this in "monetarism broadly construed", ok, but it seems so broad as to be meaningless.
And while it's true that monetarism's rejection of a long-run Philips curve is in some sense more compatible with left-wing ideas, as you say, because the rejection of the tradeoff means we can have both. But there are different ways to reject this tradeoff, and the monetarist one, AFAIK, is: "if unemployment is above NAIRU/natural rate, inflation would be constant, given stable monetary policy, at whatever its current rate is." It invited a fixation on a supposed NAIRU/natural rate that we now know to have been badly overestimated, if it even exists at all in a meaningful sense.
Feygin's project (I did finally read the article) seems to be to focus more on how actual changes to consumer demand and supply translate into inflation, versus asset bubbles, and who benefits, as opposed to what he sees as a post 1980s "running the economy too hot = inflation, and we'd better stay on the safe side, where safe means lots of unemployment" consensus. Could you say more about why this is nuts and will lead to 70s stagflation?
feMonetarism narrowly construed is as you say. Friedman thought you could just look at something like M2, and follow a rule. He wanted this to be true because then he could claim that the problem of the business cycle could be fixed by a rule, rather than by discretionary government action. And maybe it was true back when money consisted of cash or entries in actual paper ledgers, but it's not true now, as became clear in the early 80s.
Monetarism broadly construed is that ultimately the central bank determines the inflation rate, and when the economy is at full employment that's all it can control. The flip side is that if there's no inflation, then the economy is not at full employment, and it is free to stimulate. Nothing that happened since 2008 contradicts that, because we had no inflation, and the economy was below full employment, as you would expect from the employment-population ratio. From this we can conclude that Fed monetary policy was too tight. You can point to ancillary signs of this. Shadow banking is a money substitute that dried up, so you would expect the Fed would have to increase the money supply to compensate. The Fed switched to paying interest on reserves, which tightens the money supply (by rewarding banks for hoarding money), so the Fed would have to take large steps to compensate. The Fed also reversed QE and out of boredom raised interest rates a couple years after the crisis. But ultimately, the sign that the Fed was too tight is that there was almost no inflation for a decade.
I wouldn't have been fully convinced by this story before COVID, but look what's happened during COVID. The economy cratered, and the Fed slammed its foot on the gas, and everything reversed. We had the single biggest increase in unemployment and drop in unemployment in back-to-back quarters because the Fed went all out. This is even a less promising time than 2008, because COVID forced actual structural changes in the economy that the Fed can't do much about. But the Fed stimulated until we saw some actual inflation, and it worked.
The danger of the political explanation of inflation is that it makes high inflation a noble left-wing cause. Followers of Minsky look at the policies that gave us Reagan and Thatcher, and say "more of that". A pure class-based explanation of inflation ignores the fact that people fucking hate high inflation, and given the choice between inflation and brutality, they will choose brutality. By making inflation a left-wing cause, it makes eliminating high inflation a right-wing cause, and an extremely popular one at that. All to no good end, since high inflation results from central bank mistakes that are ultimately avoidable.
This seems like (maybe) a big deal: https://mobile.twitter.com/mattyglesias/status/1401655758278778881
But I'm on the fence about whether I should feel optimistic. That sounds like a not-terrible bargain, but far from ideal, and would it be a good or bad precedent about bipartisan negotiations.
Probably a lot depends on what "carbon pricing" means in practice.
You can buy a sack of it at Lowe's.
So, more infrastructure, capital gains tax cuts, and everybody gets a free bag of Kingsford.
You think Republicans would go for that?
Friedman thought you could just look at something like M2, and follow a rule. He wanted this to be true because then he could claim that the problem of the business cycle could be fixed by a rule, rather than by discretionary government action. And maybe it was true back when money consisted of cash or entries in actual paper ledgers, but it's not true now, as became clear in the early 80s.
The killer for this argument, I think, is in Charles Kindleberger's Manias, Panics, and Crashes, which documents financial market bubbles as far back as the 15th century (and into antiquity with less confidence). Even if you have a gold standard in the strongest form - a fixed-supply gold currency that only circulates as coin, or even an automatically deflationary crypto like bitcoin - and 100% reserve banking it's still possible to have a credit bubble through the simple device of invoice financing. When business A sells goods or services with 60-day terms or whatever, it creates credit and hence increases the money supply. If we make the invoices assignable, then, well, we've created something a lot like a banknote. And this happened a lot in early modern Europe, and quite possibly as far back as the Sumerians.
(It's still true today - the majority of credit is B2B trade credit, and economics basically has bugger all to say although you can't say the same for Lex Greensill!)
A major issue with the UK's experiment in trying to drive the economy through the money supply was that when they tried to squash this or that measurement of it, the others tended to shoot up, and one of the ways this happened was prezackly that kind of inter-company financing.
56 last: Also AIUI one of the vast known unknowns of the PRC.
Did you know I have an advanced degree in macroeconomics? The hamburger thing is just my field of specialization.
There's been a fair amount of research on trade credit, though I don't know what it finds or concludes. Trade credit was a hot topic after 2008 because it was a plausible mechanism to propagate the financial crisis. Trade credit is becoming increasingly financialized, i.e. if someone owes you know that's an asset, and that asset can be sold off to a hedge fund, something I learned from an economist, so it's not completely invisible.
It's the mesh boxers of financial records.
That's why "Naked Shorts" is trending on the Twitter.