| I’d say quoting Krugman is doing exactly what the ancestor comment said > and yet we will continue to believe the people making the incorrect predictions, especially when they reinforce our worldview. I take Krugman’s advice with a grain of salt. In 2002 his suggestion was “To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.” I wouldn’t care but he was the type of thinker who caused people to say Ron Paul was a kook, who warned that the housing bubble was going to burst a couple years before it happened. Asset inflation is most definitely occurring due to the increase in monetary supply. If I’m sitting in 100k in capital that I’ve saved by being frugal over the last 5 years, it is effectively becoming less and less valuable so I’m forced to spend it on some kind of asset not in hopes that the asset becomes more valuable but because my 100k is becoming less valuable. To be fair there is much increase in home prices not due to inflation and more due to increased demand with the changes covid brought on. And here is the legal crime that it brings about, I bought my current house with only 5% down for 350k and it would probably sell now for 390k, meaning my 20k of my frugally saved capital will have a 100% return in one year.
You could argue if it lost 10% I would lose 100% of my invested capital but I bought right after I saw Trump turn on the printing presses so I was 99% sure this wouldn’t be like me buying a condo at the end of 2007.... shudder |
> [...] And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
> Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.
* https://www.nytimes.com/2002/08/02/opinion/dubya-s-double-di...
* https://archive.is/Vqw6x
People kept bringing up that 2002 statement over and over:
> So did I call for a bubble? The quote comes from this 2002 piece, in which I was pessimistic about the Fed’s ability to generate a sustained economy. If you read it in context, you’ll see that I wasn’t calling for a bubble — I was talking about the limits to the Fed’s powers, saying that the only way Greenspan could achieve recovery would be if he were able to create a new bubble, which is NOT the same thing as saying that this was a good idea. Of course, I know that this explanation won’t keep the haters from pulling up the same quote out of context, over and over.
* https://krugman.blogs.nytimes.com/2010/04/05/me-and-the-bubb...
If you've got a suggestion for person(s) who has been more right / less wrong that Krugman, I'm all ears. The Keynesians, as a general school of economists, seem to me to have best track record over the last ten years. Everyone else (Monetarists/Friedmans, Austrians, Chicago) seems more wrong than them.