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Key Oil Figures Were Distorted by US Pressure: Whistleblower

Discussion in 'Sports and News' started by TrooperBari, Nov 11, 2009.

  1. BTExpress

    BTExpress Well-Known Member

    The worst inflation in my lifetime was the 13.5 percent we had at the end of Carter's term.

    If we have that in 2010 . . . I can pay the bills.

    If I get laid off . . . I can't. At least not without exhausting cash reserves I have spent a lifetime accumulating.
     
  2. The Big Ragu

    The Big Ragu Moderator Staff Member

    Cran, The effects of inflation don't get spread equally. It hurts poor people more than rich people because most of their spending isn't discretionary. They have to buy milk to survive and if that milk puts them over budget, it's more crippling than it is to someone who isn't poor.

    BT, You just made the point I was trying to make earlier about the Philips Curve not holding particularly well at times like this. When inflation touched at 13.5 it wasn't a price being paid for full employment. Unemployment was somewhere north of 7 percent at that time and it was headed toward 9 percent. Unemployment and inflation both rose at the same time. And the fiscal and monetary policy prescriptions at the time, which actually made things worse, were small potatoes compared to the extreme measures the Fed and our lawmakers have been recklessly playing with.

    Instead of just visualizing it as jobs versus rising costs, imagine a repeat (and conditions are more ripe for it because of our actions) of "lots of joblessness AND prices are rising." To put it in the terms you just did, if you lose your job and everything you need to survive is getting more expensive at the same time, you are doubly screwed.

    I am not predicting stagflation, but when I look at our monetary and fiscal policy, I see them flirting with measures that have dubious benefit (and haven't worked the way they expected), and which predict stagflation. Our monetary policy is keeping rates artificially low, while our fiscal policy and debt is putting pressure on those rates. Monetary policy (Friedman) and fiscal policy (Keynes) tried alone each create their own set of problems. When you try to do contradictory measures at the same time, they create even bigger, and even more predictable problems. This is what we have been doing.
     
  3. cranberry

    cranberry Well-Known Member

    While inflation is spread equally, like a flat tax, it affects the poor and middle class disproportionately. However, my point is that inflation is spread across 100 percent of the populace vs. unemployment being spread across 10-15 percent.

    I can't think of anyone who would take being unemployed over dealing over making the necessary adjustments to deal with rising costs.

    I have little doubt there could be another recession before there's a broader recovery and I fully acknowledge that inflation would be an aggravating factor -- if and when it happens.
     
  4. Boom_70

    Boom_70 Well-Known Member

    I think it's time stop listening to Larry Summers.
     
  5. cranberry

    cranberry Well-Known Member

    http://www.rollingstone.com/nationalaffairs/index.php/2009/11/12/a-decade-without-guardrails-live-without-glass-steagall/

    Who knew it was the 10th anniversary of the repeal of Glass-Steagall?

    Take it away, President Clinton:

    I think you should all be exceedingly proud of yourselves… today what we are doing is modernizing the financial services industry, tearing down these antiquated laws and granting banks significant new authority. This will save consumers billions of dollars a year through enhanced competition.

    Hit it Phil Gramm:

    In the 1930s, at the trough of the Depression, when Glass-Steagall became law, it was believed that government was the answer. It was believed that stability and growth came from government overriding the functioning of free markets. We are here today to repeal Glass-Steagall because we have learned that government is not the answer. We have learned that freedom and competition are the answers. We have learned that we promote economic growth, and we promote stability, by having competition and freedom. I am proud to be here because this is an important bill. It is a deregulatory bill. I believe that that is the wave of the future. And I am awfully proud to have been part of making it a reality. (Applause.)
     
  6. Boom_70

    Boom_70 Well-Known Member

    There ya go. Repeal of Glass Steagall along with The Commodities Modernization act are 2 of the key reasons we are in the mess we are in now.

    Its disconcerting that one of the key proponents of both - Larry Summers is now one of those responsible for setting policy to bail us out.

    Ragu - you certainly can better explain / understand but I just do not get the arrogance of macro economists. History shows that time and time again many of their polices designed to help the economy have done just the opposite.
     
  7. The Big Ragu

    The Big Ragu Moderator Staff Member

    I believe that trying to steer the economy is like trying to dribble a football. It's an impossible task that is going to fail. Unfortunately economists who think that way don't get hired to work at the White House (they want people who believe in fiscal tinkering, to give justification to spend) or the Fed (they want Monetarists to monetize the debt they create). But some of the finest economists thought (and think) that way. FA Hayek said, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
     
  8. Boom_70

    Boom_70 Well-Known Member

    That is spot on and dangerous to our well being as country. So many economic decisions are made as political ones.
     
  9. cranberry

    cranberry Well-Known Member

    And, likewise, so many political agendas are disguised as economic. The deregulation and free-market policies that served our country's plutocrats so well the past three decades are chief among them. They had the perfect ideologue in Alan Greenspan to help push that agenda, too. Rules! Who needs rules!
     
  10. The Big Ragu

    The Big Ragu Moderator Staff Member

    I disagree with this. I see what you are talking about as politicized regulation disguised in the language deregulation--for political-rhetoric reasons. But it's just different regulation. Maybe not the type you, or others like, but regulation.

    There was a time in his life when Alan Greenspan supposedly believed in free-market policies and laissez-faire capitalism, but that was well before he became politicized and was given the powers of a king--and got drunk on them. As Fed chairman he was criticized by the true free-market advocates--the Harry Binswangers of the world--for his abandonment of free market principles.

    You simply can't be Fed chairman, and an advocate of monetary tinkering, and at the same time tell anyone you believe in free markets--not when your job is to manipulate our money in ways you think will influence the economy and not when you are creating endogenous inflation. Greenspan was a monetarist, and in his own way no different from a Keynesian. They each believe they are smarter than the masses, who can't be trusted without a paternalistic hand guiding them. They don't believe in free markets. The differences between the two are political. It isn't that one believes in regulation and the other doesn't. It's that the type of regulation they want to employ is different--one wants to do it fiscally. The other yells at him and says he is all wrong and says we have to do it monetarily. They are BOTH trying to regulate us, though.

    You say, "Rules! Who needs rules!" as if Greenspan was some kind of anarchist. This is mind-boggling to me. The guy was given dictatorial powers over our money. He was the rule maker. There are people who just didn't like the rules the way he and others make them. But those people are still making rules and what we get isn't deregulation. Fiscal regulation as opposed to monetary regulation, or worse (in my opinion) both. It's never DEregulation.

    A free market advocate understands the central banks control our money. Central banks, or any centralized planning, are antithetical to free markets. The Fed Chairman, who can single-handedly inflate or deflate our currency with the wave of a hand, by definition isn't allowing our markets freedom.
     
  11. cranberry

    cranberry Well-Known Member

    Sure, I understand there are plenty of even greater ideologues than Greenspan who will (as it turns out justifiably) criticize his monetary policy. Hey, who knew there was a limit to how much you can drop interest rates? But those people represent a tiny (but interestingly very wealthy!) minority at this point, and there is no question Greenspan was a free marketeer at heart and held a great disdain for regulation. That he eventually fell into the thinking -- and he certainly wasn't alone among economists -- that he could sustain economic growth by tinkering with interest rates wasn't, to him, the ego-driven power trip some have portrayed; rather, I think he viewed his monetarist tinkering as among the least invasive ways to do his job. And you know what? It worked for a long time. He was pretty widely considered a genius until he got so very stupid last fall.

    http://www.reuters.com/article/newsOne/idUSTRE49M58W20081023?pageNumber=2&virtualBrandChannel=0&sp=true

    "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity -- myself especially -- are in a state of shocked disbelief," said Greenspan, who stepped down from the Fed in 2006.

    Anyway, my point is simple: The systematic removal of appropriate checks and balances and consumer advocacy within the financial markets over a period of about three decades was at the root of our economic crisis.

    But the game goes on and our institutional investors -- the people whose self-interest we should all be trusting! -- will surely find the next market to exploit. Back to commodities, I guess
     
  12. The Big Ragu

    The Big Ragu Moderator Staff Member

    I disagree with this assertion. The fiscal and monetary policy we have employed causes huge economic swings. The economic crisis was caused by too much regulation -- bad fiscal policy and even worse monetary policy. What is wild is that people who want more regulation, or a different flavor of regulation, capitalize on the problems they created in the first place by stating flatly that we need them in control, "regulating things better" to fix everything. When it is any and all interference that we should be avoiding. It should be so clear to people by now.

    The solution isn't to try to regulate or control the economy more. There are no such things as "checks and balances and consumer advocacy" within the financial markets or any other marketplace. That is newspeak for taking decisions away from us as individuals and putting whoever you want in charge with obscene powers to create inefficiencies and inevitably use corruptly.

    Either it's a free market or it is a market being manipulated. You favor manipulation, with the stated motive of protecting people. Time and time again that has given us politicians--who are the only ones who can enact that sort of "regulation"--screwing around with things, nearly always with short-sighted motives that benefit themselves and the handpicked beneficiaries they choose to profit from their favors (who presumably keep them in office in order to get the favors--and then make convenient punching bags if there is a meltdown later on). Those politicians are worried about the next 2 years or 4 years or 8 years required to stay in office, so they act with the nearsightedness not to anticipate the longer-term problems they create by their actions. They'll try to buy a quarter point of economic growth today, even if it means leaving a predictable dump of a mess for someone else 10 years from now. Or worse, they'll take a huge campaign war chest as a trade-off for "regulatory" favors.

    I actually understand how people who think like you actually get people to go along over and over again, even if your particular motives are pure (and most of the people with the power to regulate, or manipulate us into problems, are not creating problems naively. There are few people who can get themselves into positions of power with that kind of naivete and pureness).

    In essence, what you advocate creates problems. Then there are always people--who you support--ready to capitalize, by convincing a population angered by the problems that we need more of what caused the problems to fix the problems (they have the solution!). It works over and over again because people vote for the guy--both political parties--who makes the best promises given the current climate. It's a shame. Not the end of the world. We still are among the most unregulated economies in the world, and it has given us an amazing standard of living. But we hold ourselves back.
     
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