On Mar 21, 10:22 am, Jerry Kraus <jkraus_1...@[EMAIL PROTECTED]
> wrote:
> It seems reasonably clear to virtually everyone now that,
Argumentum ad populum.
Regardless, the statement is false. Arguably the single most im****tant
opinion in the world is of the contrary:
"The economy is not close to a 1970s-style mix of stagnant growth and
high inflation, Federal Reserve Chairman Ben S. Bernanke said
yesterday, but he painted a generally dour outlook and cautioned that
the downturn is likely to cause some small banks to go under.
"I don't anticipate stagflation," Bernanke told the Senate Banking
Committee, during his semi-annual re****t to Congress on monetary
policy. Some analysts have become increasingly worried about that
possibility after recent high readings on inflation and weak readings
on growth. "I don't think we're anywhere near the situation that
prevailed in the 1970s," he said."
http://www.huffingtonpost.com/2008/02/29/bernanke-i-dont-antici_n_89113.html
and . . .
""Unemployment and economic growth are pretty much related," said
Professor Richard Sylla, an economic historian at the New York
University Stern School of Business. "You cannot have stagnant growth,
so you cannot have stagflation, without unemployment being much
higher."
Also, the data points economists use to characterize stagflation are
not nearly as bad as they were in the 1970s. Core inflation is in the
2-3% annual range compared to a 14% inflation rate in the late 1970s.
Unemployment is not an issue.
"The adverse environment we faced in the 1970s [was] so much worse
than what we're facing today," said Dennis Hoffman, an economics
professor at the W.P. Carey School of Business at Arizona State
University."
http://www.foxbusiness.com/markets/article/stagflation-possible_410361_2.html
and . . .
"Higher US Inflation, Not Stagflation"
http://www.morganstanley.com/views/gef/archive/2008/20080225-Mon.html
> at the very
> best, the American economy has lapsed into a period of "Stagflation",
> minimal or negative growth combined with the constant threat of
> serious inflation.
Your entire argument is founded on an incomplete definition. It's not
just the combination of low/negative growth and inflation that
comprises stagflation, it's also the *duration* of these conditions.
In addition, you haven't included high unemployment in your
definition, which is clearly not the case now:
""Stagflation" is back in the headlines--but the term is being misused,
and that's an im****tant story. We're told by eminent newspapers and
commentators that stagflation is the messy mixture of both high
inflation and high unemployment. It isn't. Stagflation, at least as
the concept was initially understood in the 1970s, meant something
different. Yes, it signified the simultaneous occurrence of high
inflation, high unemployment and slow economic growth; but its
defining feature was the persistence of this poisonous combination
over long periods of time. Although we're drifting in that direction,
we're not there yet."
http://www.newsweek.com/id/114803
That's not to say the dangers aren't very real -- I think it's safe to
say there is unanimous consensus on that point -- but your argument is
based on a faulty premise.
> As in the 1970's, this has followed a period of
> growth during an extended and unsuccesful military conflict. While
> the government and the Fed are frantically patting themselves on the
> back for having "handled" the situation with a combination of cash
> bailouts, rebates and tax cuts, it seems reasonably clear that these
> represent only a drop in the bucket faced with the magnitude of the
> current economic problems: simlultaneously collapsing real estate,
> financial, service and manufacturing sectors, combined with an aging
> population and a deteriorating social infrastructure.
"But in my view, the similarities with the 1970s are more superficial
than real. Here's why."
http://www.morganstanley.com/views/gef/archive/2008/20080225-Mon.html
> The government points to the recession of 1991-1993, saying that it
> "managed" it by cutting interest rates by 1% at once. In fact, the
> downturn lasted until 1993 or 1994, and really ended only with the
> coming of a fundamentally new technology: the Internet. Economists
> regularly exaggerate their understanding and control of the economy,
> arguing for inevitable business cycles as natural, physical laws of
> nature, when in fact they result from a conjunction of environmental
> and psychological factors: in particular, the existence of new
> technologies and markets, and the willingness of people to exploit and
> develop them.
>
> The two main problems we face currently in the United States are:
>
> 1. An extreme disparity of wealth between therichand the poor, the
> concentration of wealth in a small number of hands making training and
> advancement difficult or impossible for the majority of the
> population, undermining both business and consumer activity.
>
> 2. The lack of development of new technologies and markets due to the
> waste of resources on the failed Iraq War.
>
> The government, bought and paid for by the wealthy in the American
> plutocratic system, does not wish to resolve the first problem. In
> all probablility, it does not know exactly how to resolve the problem
> of developing new technologies and markets. It remains to be seen,
> how the situation will resolve itself.
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