Tuesday, August 2, 2022

Top economists say Democrats' health care and climate package will put 'downward pressure on inflation'

 https://edition.cnn.com/2022/08/02/politics/economists-democrats-package-downward-pressure-inflation/index.html

Congressional Democrats' climate and health care package is getting a boost from a group of top economists, who wrote in a new letter that the so-called Inflation Reduction Act will lower prices for American consumers amid high inflation.
"This historic legislation makes crucial investments in energy, health care, and in shoring up the nation's tax system. These investments will fight inflation and lower costs for American families while setting the stage for strong, stable, and broadly-shared long-term economic growth," 126 economists said in a letter sent to congressional leadership Tuesday, which was first obtained by CNN.

19 comments :

  1. These 126 economists are idiots.
    The more government spends, the more inflation goes up. It's not an opinion. It's a rule.
    So putting more money into the system and setting up shortages of things like energy by encouraging inefficient green replacements just pushes prices up faster.
    Oh I know. Greedy corporations will be blamed.
    These economists and Democrats are like folks who see a fire, pour some gas on it and when it gets worse say "Must've not poured enough gas on!"

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  2. Did they say inflation will go down?

    No, they did not say inflation will go down.

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  3. "This proposal addresses some of the country's biggest challenges at a significant scale. And because it is deficit-reducing, it does so while putting downward pressure on inflation," the economists said.

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  4. Wow so you disagree with the economists?

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  5. The inflationary pressures are due to a different set of factors than what their economic theory holds by. Since Covid, and 2 years of lockdown, there is a shortage of labor [US spelling], as people are staying at home, travel is problematic, and movement of people is restricted- same as in UK and /europe. Add to this War in Ukraine - leading to an acute fuel and energy crisis, and a grain crisis, from one of the most important exporters of the grain. All these factors combine to cause inflationary pressure - workers demand higher wages; prices are rising in stores, and at gasoline stations, water is scarce in in Euroep , due to drought; transport is more costly, and productivity - both agricultural and industrial is falling. In fact, even before the war started, there was a shortage of chips , which led to a shortage of new cars, [automobiles], and and raising the price of used cars!




    The measures recommended by these anshei hacalcala hagedolah, will take years to implement and to bring a new supply of energy, at enormous cost. So if governement needs to borrow, it also needs to pay interest on its debt.


    Fossil fuel prices may drop at some point, eg if the war in Ukr ends, or supplies are brougt in from fracking, from Africa, S. America etc. If the labor market improves, whcih depends on factors such as covid - then inflation may be curbed. So even if after 3-5 years, inflation does fall, attrivuting it to the green measures may not be accurate. It may well be supply factors normalising, which lead to falling inflation.


    However, this is a rosy outlook. the situation could get worse - a Chinese invasion of Taiwan - after Pelosi-provocation, will send the global economy into uncharted disaster. Boycott of china exports, will lead to further supply shortages, especially for rare earth metals, and lithium for batteries .










    Prof Nouriel Roubini is expert at predicting the economic "tochecha" and he has some interesting things to say , already beofre this year even began:








    https://www.project-syndicate.org/commentary/economic-market-outlook-2022-by-nouriel-roubini-2021-12

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  6. Right. "Downward pressuere." In other wors, a statement was made that can never be disproved.

    Case I. Inflation goes down in one month.

    "We were right! The 'downward pressure' reduced inflation quickly!"

    Case II. Inflation goes down in six months.

    "We were right! The 'downward pressure' eventually led to a reduction in inflation!"

    Case III. Inflation stays at the same rate.

    "We were right! The 'downward pressure' led to a stabilization of inflation!"

    Case IV. Inflation goes up

    "We were right! The 'downward pressure' prevented a spike in inflation. The 2% increase demonstrates how sound fiscal policy can lead to a manageable inflation rate growth!"

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  7. Stiglitz being the most famous of economists, but they are usually Democrats , as Stiglitz certainly is.

    he is too smart to believe that these measures will solve inflation - he is already writing and saying (in agreement with me) that inflation is supply side, and hence the supply chain needs to be fixed.

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  8. Yup. Just because you call yourself an economist doesn't mean you know what you're talking about. How many economists announced that governments printing trillions of dollars in CoVID support wouldn't trigger inflation? Remember those assurances? Or how many assured us that inflation would peak briefly at 2% and then drop back to lower levels?

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  9. Just because you call yourself a doctor doesn't mean you know economics

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  10. Wow! and your pronouncements likewise

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  11. Gerald is an economist.
    See his opinion.

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  12. Can you provide a rationale for your viewpoint? I'm interested to hear.
    Thank you

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  13. My "pronouncement" is disprovable.

    I stated, "...they did not say inflation will go down."

    Now, if there is a quote from the article or from the letter the 126 economists signed that was like, "inflation will go down", "inflation will be at 3% in 3 months", etc. then I would be wrong.

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  14. Yeah, just because I've studied economics and remember my professors talking about how, really, it's all theoretical because the economy is too big with too many variables to truly understand doesn't mean I know economics.

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  15. Does he have greater accuracy than the others?

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  16. I've asked him to give his sevara, not just pasken yes or no.

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  17. More on parsha דברים. Thanks KA. I worked in the research dept of Hirsch & Co on Wall Street. I did the stock of the month June 1969. Now I do theoretical mathematical models.

    See my “The Economics of Business Cycles Numerical Model Role of Fixed Costs” Modern Economy Vol.11 No.2, February 2020:

    “1.2.1. Expansion Phase of the Business Cycle
    This is the prosperous business cycle phase. There are widespread feelings of optimism among consumers and producers. The economy is growing. Firms are hiring workers. Firms are building new plants and equipment. Expansion is the seven fat years of Pharaoh’s dream in the Bible “Immediately ahead are seven years of great abundance in all the land of Egypt” (Genesis 41:29).
    1.2.2. Peak Phase of the Business Cycle
    The expansion phase is ending. Checks are operating blocking further expansion. Plants are operating at high rates of capacity utilization.
    1.2.3. Contraction Phase of the Business Cycle
    This is the declining business cycle phase. There are widespread feelings of pessimism among consumers and producers. Economic growth, if at all, is weak. Firms are hiring less. Firms are building fewer new plants and equipment. Contraction is the seven lean years of Pharaoh’s dream: “After them will come seven years of famine, and all the abundance in the land of Egypt will be forgotten. As the land is ravaged by famine” (Ibid. 30).
    1.2.4. Trough Phase of the Business Cycle
    The contraction phase is ending. Consumers and producers are looking forward to a coming expansion phase of the business cycle. Plants are operating at low rates of capacity utilization.”

    Looks to me the USA is in the Contraction Phase of the Business Cycle.

    I nominate Joseph the son of Jacob the best economist of all time. Can I go on about my theory of דברים?

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  18. More on parsha דברים.So similar Nehemia 9 and דברים א.
    “You gave them bread from heaven when they were hungry, and produced water from a rock when they were thirsty. You told them to go and possess the land that You swore to give them.” (Nechemia 9:15) so similar to “We set out from Horeb and travelled the great and terrible wilderness that you saw, along the road to the hill country of the Amorites, as the Lord our God had commanded us. When we reached Kadesh-barnea, I said to you, You have come to the hill country of the Amorites which the Lord our God is giving us. See, the Lord your God has placed the land at your disposal. Go up, take possession, as the Lord, the God of your fathers, promised you. Fear not and be not dismayed.’” (Deuteronomy 1:19-21)

    נחמיה פרק ט פסוק טו
    וְלֶחֶם מִשָּׁמַיִם נָתַתָּה לָהֶם לִרְעָבָם וּמַיִם מִסֶּלַע הוֹצֵאתָ לָהֶם לִצְמָאָם וַתֹּאמֶר לָהֶם לָבוֹא לָרֶשֶׁת אֶת הָאָרֶץ אֲשֶׁר נָשָׂאתָ אֶת יָדְךָ לָתֵת לָהֶם:
    רש"י נחמיה פרק ט פסוק טו
    לרעבם - מן רעב יאמר לרעבם כמו מן צמא לצמאם:
    אשר נשאת את ידך - בשבועה כמו אשר נשאתי את ידי לתת אותה (שמות ו'):
    מלבי"ם נחמיה פרק ט פסוק טו
    ולחם, וגם השגיח עליהם להפיק להם כל צרכיהם במדבר, ותאמר להם לבא לרשת את הארץ, שאז א"ל שילכו לרשת את הארץ, כמ"ש ואומר אליכם באתם עד הר האמורי וכו' עלה רש (דברים א' כ'):

    The Malbim comments on Nechemia 9 to go and possess the land with a reference to דברים א that Moses said to go and possess the land. I know many in USA wait for the mashiach, In Moses’ time many also waited for the mashiach.

    שמות פרשת וארא פרק ו פסוק ח
    וְהֵבֵאתִי אֶתְכֶם אֶל הָאָרֶץ אֲשֶׁר נָשָׂאתִי אֶת יָדִי לָתֵת אֹתָהּ לְאַבְרָהָם לְיִצְחָק וּלְיַעֲקֹב וְנָתַתִּי אֹתָהּ לָכֶם מוֹרָשָׁה אֲנִי יְקֹוָק:
    מלבי"ם שמות פרשת וארא פרק ו פסוק ח
    והבאתי. וכן הדבר השלישי שהוא כבוש הארץ יהיה ע"י שם הויה כמו שסיים אני ה', כי הכבוש יהיה ע"י אותות ומופתים המתיחסים לשם הויה שבשם זה אביא אתכם אל הארץ ותקחוהו בתורת ירושה מאבותיכם, ובזה באר שכל הג' דברים הנ"ל יהיו ע"י שם הויה ונסים גלוים ומפורסמים:
    תורה תמימה שמות פרשת וארא פרק ו פסוק ח
    לכם מורשה - יובא אי"ה לפנינו בס' במדבר בפ' פינחס בפסוק לשמות מטות אבותם וגו':

    The Malbim says occupation of Israel will be with open miracles. The Torah Timimah says first with Elijah coming. Beautiful.

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  19. I may have mentioned this before, but Kondratiev, the Russian economist had a long wave economic theory, which seems very similar to the 49-50 year shemitta/yovel cycle.
    Yosef works on the 7 year cycles, whereas Moshe reveals the full 49 year cycle.

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