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Thursday, February 17, 2011

Robert Hall starts at minute #38. He and James Hamilton are the clearest and cleanest economists on the planet.

Listen to what he says at minute 43:45. That is one of the answers as to why we are where we are.


watch cell phone with bluetooth camera said...

I was very encouraged to find this site. I wanted to thank you for this special read. I definitely savored every little bit of it and I have you bookmarked to check out new stuff you post.

Randall Parker said...

Well right you are and thanks for visiting.


Jeffrey said...

Well lets see, the overhang in the housing and durable goods markets and the consumer debt obligations are a result of.... artificially low interest rates! What happens when the price of something valuable is lowered? More people buy it. If the Federal Reserve lowers the price of access to money not yet earned then more people are going to go into debt. A debt bubble was created, the only way out of the debt bubble is to allow it to deflate and allow resources to be reallocated! Lowering interest rates further and pumping money into the economy simply prolongs the problem and prevents reallocation.

Macro economists most certainly SHOULD make forecasts and then explain why they were either right or wrong. Anyone that couldn't see this crisis coming didn't understand the economy - they were, and probably still are, simply misinformed. What is coming next is a dollar crisis and massive inflation, it is incredibly obvious. It is impossible to know when its going to happen, but if there are not MASSIVE changes in the way our government is run, it WILL happen. We have printed tens of trillions of dollars and sent them all around the world in response to this crisis. We will have a 1.5 trillion dollar deficit in 2011 alone. China is no longer using dollars to trade with other countries and they are allowing their currency to appreciate. They will not continue buying our debt. Our entitlement programs represent somewhere between 50 and 150 trillion dollars in unfunded liabilities over the next two decades. Democracies never last and neither do fiat currencies - we are beyond the average life expectancy for both. The end comes when people think they can vote themselves gifts from the treasury - half the country believes that health care is a right. Bigger trends are always more powerful and more accurate, for tens of thousands of years this is how it has been and I personally don't believe we are going to defy the odds. We abandoned most of the things that made our country special a century ago. The painful reality of the situation is that we are a corrupt empire that is over extended and our days are numbered.

The idea that the economy cannot recover because we cannot lower the interest rate below zero is possibly the stupidest thing I have ever heard. Yes, we are constrained by life in the real world. Seriously, this sort of talk makes me want to dig out my eyes and ears with a spoon so that I will never have to hear or see anyone say anything so effing stupid ever again.... seriously. Why don't we just pay people to go get bread and toilet paper from the store?

Randall Parker said...

Jeffrey: Put that spoon down NOW! Take a deep breath. Now go on with the rest of your life. Perhaps you now know what it feels like to hear peeps talk about going back to the gold standard. I managed to disfigured my left ear, but my wife came home and stopped me before I could finish the rest of the job.