At 22:12 11/07/2010 -0700, Sanwichman wrote:
I agree that deficit spending, as it has evolved, is like a Ponzi
scheme. What does denninger mean though, by "real GDP". Usually that
term is reserved for nominal GDP deflated by something like the
consumer price index. Since there hasn't been much in inflation over
the past three years where does the graph get its "-10%" shrinkage
rate for real GDP? Is he making up his own private deflater? Doing so
would be acceptable, if and only if he presents a rationale for his
alternative calculation. Otherwise he is presenting a misleading
graph.
I agree. I'd like to know where his figure comes from. However, "-10%"
seems to me to be much nearer reality than the official figures. There are
so many negative items in GDP that, as a measure of "progress", it is pure
fiction.
I suspect that Denninger may be using something like the gold price as
a deflater.
However, I doubt this. The price of gold has gone up so much in the last
few years that such an attempt would produce nonsense. Besides, what would
be the 'market value' baseline? It hasn't had a market value for about a
century now because Western governments ever since have tried every trick
in the book to de-monetize gold and reduce it to jewellery uses only. (That
is, until the last year or so -- see below.)
While that argument may have merit, smuggling it in under
the pretense of "real GDP" is disingenuous. On the other hand, if he
were to make such a deflater explicit, he might be dismissed as a
"gold bug". Well, too bad. The onus is on the hard money folks to deal
with the prejudices of the great unwashed masses. Marxists don't get a
free pass with their labor theory of value so why should hard money
advocates be given an exemption from the prejudice of popular
delusion?
Try buying gold coins to see whether the masses are still prejudiced!
You'll have to wait weeks for delivery. Mints in several countries
(including the US) are doing overtime to supply demand. And, besides that,
even Western central banks are now rumoured to be buying gold instead of
trashing its reputation and trying to hold its price down. Even their
officials are now as smart as the masses in questioning the future value of
paper currencies, particularly the EMU euro and the US dollar.
Keith
On 7/9/10, Steve Kurtz <[email protected]> wrote:
> Mike G will be tempted to call this a Conservative rant. Ad hominem
> doesn't refute his argument.
>
> Steve
>
>
http://market-ticker.denninger.net/archives/2489-Krugmans-Insanity,-And-The-Hard-Mathematical-Truth.html
>
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>
--
Sandwichman
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Keith Hudson, Saltford, England
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