So as the debate between coming deflation/recession and boom/inflation goes on in the U.S., one country is experiencing a phenomena not seen since Robert Mugabe managed to destroy his own country's economy. I am of course talking about the massive inflation occurring in Belarus:
Belarus’s supermarkets are running out of meat as Russians take advantage of a currency crisis that a devaluation and the world’s highest borrowing costs have failed to stem.*Sigh* Are they ever going to learn that printing money doesn't create wealth and has negative consequences such as this? It looks like Gresham's Law is taking hold in Belarus as the ruble is getting replaced. Perhaps if the citizens of Belarus had invested in gold or silver....
“All meat has gone to Russia,” Alexander Andreyevich, an 82-year-old former tractor-plant worker, said Aug. 25 in Minsk, the capital. “My relatives near the Russian border called me a few days ago and said the shops are empty.”
Belarus is grappling with a balance-of-payments crisis that forced a 36 percent devaluation of its ruble in May. It may need to raise $12 billion by 2013 through state-asset sales and international bailout loans to stave off economic collapse, Moody’s Investors Service said Aug. 23.
Anyway, when it comes to inflationists, none have a wider media platform than good friend of the Miller's Genuine Draft, Mr. Paul Krugman. Amidst all the talk of alien invasion and earthquake-induced economic boom, the impeccable Bill Frezza donated his whole Forbes column to taking down Krugman's continual idiocy in brilliant prose. Here are some excerpts from the fictional interview:
Polishing off his second bottle of Brocard Les Clos Grand Cru the dean of the dismal science gave full-throated support to the Obama administration’s plan to launch a National Infrastructure Bank through which freshly printed construction dollars could be funneled. “Roads, bridges, tunnels, trolleys, beaches, subways, causeways, riverbanks, culverts, parking lots, who cares!” shouted the cherry cheeked cheerleader of copious consumption. “What matters is that we pull out all the stops and build as much stuff as we can. We can only hope that the next earthquake or hurricane knocks it all down. And for the maximum impact on unemployment we must place a moratorium on all heavy construction equipment so that workers using picks and shovels can spread the available jobs around.” My growing look of incredulity must have unleashed his primal scream. “What? Are you mocking me? Me? What part of modern macroeconomics don’t you understand?!”Yes, what of modern macroeconomics does Frezza not comprehend? The fact that money dilution doesn't actually create sustainable growth? That wealth being destroyed doesn't correlate to a net benefit of economic gain? Clearly Frezza doesn't get it as he is too logical to accept such ludicrous claims. The whole article is highly recommended and this author has a tough time discerning if the interview actually took place in the end.
I backed away as the inflamed intellectual advanced, menacingly swinging his Nobel Prize medal like a nunchuk. “Fools! You are all fools!” he sputtered, drops of spittle clinging to his droopy mustache. “You’re one of them, aren’t you! Did Fox News send you? It’s all the fault of the Bush tax cuts. Enemies! I’m surrounded by enemies!”
While Frezza did a great job taking Krugman to school, also see Gonzalo Lira's wonderful take down of Dick Cheney:
Dick Cheney is taking a lap around all the talk shows, peddling his memoir while giving his reputation one final spit-shine before he dies and goes straight to hell.
Oh—so you actually doubt he’ll go to hell? With the shit he’s pulled? Cabrón, please . . .
It is remarkable that relatively few people seem outraged by Mr. Cheney. Here is the man who, as Vice-President of the United States, violated some of the most important rights, freedoms and liberties that America has defended for over two-hundred years. Not only did he commit what in other times would have been considered war crimes and crimes against humanity—he is proud of having done so!
I couldn't agree more. Seeing the half-human/half-machine corpse of Dick Cheney making his rounds defending the despicable acts he committed in office is enough to garner a bit of vomit
A few days ago, I talked about Obama's new ingenious pick to head the Council on Economic Advisers Alan Kreuger. Supposedly Mr. Kreuger found the magic econometric data proving that minimum wage laws don't create unemployment. This is of course b/s, but logic has never been a strong point of labor economists. Today, Mark Perry has a great post on Carpe Diem showcasing a paper from the National Bureau of Economic Research on just how idiotic Kreuger's theory is:
We re-evaluate the evidence from Card and Krueger's (1994) New Jersey-Pennsylvania minimum wage experiment, using new data based on actual payroll records from 230 Burger King, KFC, Wendy's, and Roy Rogers restaurants in New Jersey and Pennsylvania. We compare results using these payroll data to those using CK's data, which were collected by telephone surveys. We have two findings to report. First, the data collected by CK appear to indicate greater employment variation over the eight-month period between their surveys than do the payroll data. For example, in the full sample the standard deviation of employment change in CK's data is three times as large as that in the payroll data. Second, estimates of the employment effect of the New Jersey minimum wage increase from the payroll data lead to the opposite conclusion from that reached by CK. For comparable sets of restaurants, differences-in-differences estimates using CK's data imply that the New Jersey minimum wage increase (of 18.8 percent) resulted in an employment increase of 17.6 percent relative to the Pennsylvania control group, an elasticity of 0.93. In contrast, estimates based on the payroll data suggest that the New Jersey minimum wage increase led to a 4.6 percent decrease in employment in New Jersey relative to the Pennsylvania control group. This decrease is statistically significant at the five-percent level and implies an elasticity of employment with respect to the minimum wage of -0.24.Perry brilliantly weighs:
It should be noted that even if empirical evidence suggests that raising the minimum wage has no effect on the level of employment, that finding does not necessarily mean that the minimum wage has no adverse effects. There could be many other negative effects making unskilled workers worse off, even if they manage to keep their job following a minimum wage increase. Here are some examples:Cherry picking data to meet expectations is a specialty for Keynesian economics. Not that it doesn't apply for all schools of economic thought, but Keynesians have tended to be more guilty of it. This dates back to Keynes' original "sticky wages" theory in which he recognized that wages dropped slowly but didn't take into account government and union interference to artificially hold wages up. Keynes thought he disproved Say's Law when he only enforced it.
1. Reduction in the number of hours worked;2. Reduction in fringe benefits like reduced cost uniforms, reduction or elimination of reduced cost or free meals at restaurants, elimination or reduction in company-sponsored holiday parties, picnics, events;3. Reduction or elimination in any health care benefits;4. Reduction in on-the-job training, etc.
I will end by mentioning a strange coincidence. So Obama is supposed to speak to a joint session of Congress on September 7th but apparently it occurs at the same time of the GOP presidential debate which has been scheduled for months. How strange! It's almost as if Obama planned the speech at this time intentionally! And here I thought he was above politics, silly me!