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EconoTrolls: An Illustrated Bestiary
September 26, 2012 4:54 PM   Subscribe

EconoTrolls: An Illustrated Bestiary

( Via Krugman and Cowen, so everyone has something to like.)
posted by Jakey (34 comments total) 14 users marked this as a favorite

 
Heh. I see Smith has spent some quality time perusing the big econ blogs out there.
posted by 2N2222 at 5:04 PM on September 26, 2012


That cargo cult airplane used in one of the images deserves a FPP.
posted by fzx101 at 5:41 PM on September 26, 2012 [1 favorite]


That's awesome. Thanks, Jakey.

(Although the usual word of warning applies - Do. Not. Read. The. Comments.)
posted by soundguy99 at 5:49 PM on September 26, 2012


Craziest idea: Take your pick
ok i will
posted by This, of course, alludes to you at 5:53 PM on September 26, 2012


Favorite dead economist: No one. The spot is being reserved for Scott Sumner, along with thousands of life-sized terra cotta grad students.

I'm no econ buff, but I loved this line and may have to steal it.
posted by Countess Elena at 5:55 PM on September 26, 2012 [2 favorites]


Missing an entry on peak oilers.
posted by ocschwar at 5:59 PM on September 26, 2012 [1 favorite]


I wish I knew how to classify the weird inflation hawk commenters in the Wall Street Journal. They don't seem to be committed to Austrian economics per se, they just copypaste the same screed about how the Fed is evil and also how real inflation is running much higher than official statistics indicate because Ben Bernanke is cooking the books.

Oh and seconding the love for the "life-sized terra cotta grad students" line.
posted by dismas at 6:06 PM on September 26, 2012


The inflation rate does not include prices of volatile commodities, like food and energy, and it hasn't for decades. I remember early in the Obama presidency, people started claiming that this was something novel that Obama was doing. They are still at it, or are they claiming that Bernanke is doing something else?
posted by thelonius at 6:21 PM on September 26, 2012


From the second comment:

Krugmanite
How they see themselves

How the world sees them
posted by alms at 6:26 PM on September 26, 2012 [3 favorites]


Metafilter: [truncated]
posted by lalochezia at 6:32 PM on September 26, 2012


I was hoping for original illustrations.
posted by Hicksu at 6:39 PM on September 26, 2012


thelonius: "The inflation rate does not include prices of volatile commodities, like food and energy, and it hasn't for decades. I remember early in the Obama presidency, people started claiming that this was something novel that Obama was doing. They are still at it, or are they claiming that Bernanke is doing something else?"

Nope, same old, same old.

well, a minor correction: Measured headline inflation, such as the Consumer Price Index or the Personal Consumption Expenditure price index (which is generally preferred by policymakers, I think) both do include direct gas & food prices. But, as you say, they tend to be volatile, so policymakers will often look at price indices that exclude those measures in addition to the headline measures, because (a) they're less volatile (b) statistically they are useful in forecasting future headline inflation and (c) If a price spike in energy, for example, is persistent, it will pass through to the 'core' index so even if policymakers were to pretend gas prices didn't exist they would still see those effects.

Macro indicators are interesting!

posted by dismas at 6:59 PM on September 26, 2012 [1 favorite]


I absolutely loved the link to the Marxists' secret weakness. Brrrrrilliant! I KNOW those writers! Now I know how they learned to write like that. [via the FPP]
posted by dmayhood at 6:59 PM on September 26, 2012


White House budgets usually use CPI-U as their measure of inflation, whereas the Federal Reserve usually uses PCE. Both of these include food and fuel prices. Whether you want to use "core" CPI, i.e. exlcuding price-volatile goods from the basket such as food and fuel, really depends on what you're trying to do. If you're looking at consumer behaviour, then you want to include the price of food and fuel, because those are prices that affect consumers.
posted by kithrater at 7:04 PM on September 26, 2012


Right, and the goldbug argument usually goes: Obama began excluding the price of food and fuel from the price index to conceal the real inflation rate of >10% due to quantitative easing! The proof is the price of gold which measures REAL VALUE! Know your trolls, people.

In case anyone takes this comment as an invitation to seriously discuss the virtues of a gold standard, consider yourselves warned that I recently obtained a +3 axe of troll slaying, and also have experience grinding axes.
posted by mek at 7:10 PM on September 26, 2012 [1 favorite]


Economics: all kinds of wrong.
posted by srboisvert at 7:20 PM on September 26, 2012


Wait, are Marxists into David Graeber? I kind of had the impression they were all YOU FUCKING ANARCHISTS SHOULD PAY MORE ATTENTION TO MARX as per usual.
posted by brennen at 7:43 PM on September 26, 2012 [1 favorite]


mek: "Right, and the goldbug argument usually goes: Obama began excluding the price of food and fuel from the price index to conceal the real inflation rate of >10% due to quantitative easing! The proof is the price of gold which measures REAL VALUE! Know your trolls, people.."

And actually now I'm seeing a direct connection between this argument and the talking point circulating among the Republicans lately that polls as published are skewed and if you adjust them using the real composition of voters that their guy is winning. (For example).
posted by dismas at 7:50 PM on September 26, 2012


The inflation rate does not include prices of volatile commodities, like food and energy, and it hasn't for decades.

It doesn't matter how long you've been doing something wrong, you're still doing it wrong.

No kind of inflation hurts more than energy and food inflation, because energy and food are the things you must have, to live. You can't delay consumption in any meaningful way; you must have them in very short order, or you will die. Food prices are particularly critical, and the sharp inflation we're seeing in various foodstuffs, between the genuine shortages and the extreme price distortions caused by the flood of money and money-like instruments in the world, are literally killing people.

Trying to tell you that the lower number is more important is one of the Big Lies of the political class.
posted by Malor at 8:39 PM on September 26, 2012 [1 favorite]


Just because the real cost of energy and food are increasing (and will continue to do so for the forseeable future), doesn't make it inflation. Inflation has a further meaning. Are energy and food costs significantly higher in USD than they are in other currencies? Nope.
posted by mek at 8:43 PM on September 26, 2012 [2 favorites]


And I should add that even if market distortions exist and are skewing the price of food in ways so the price is not an accurate reflection of supply and demand, that still isn't inflation.
posted by mek at 8:45 PM on September 26, 2012


Trying to tell you that the lower number is more important is one of the Big Lies of the political class.

This is just not what is going on with the ex-food and energy CPI. kithrater touched on this, but when GDP is reported, they don't use a measure of inflation that removes food and energy. The only real use of the series removing food and energy is for the Fed to use in setting monetary policy, on the (completely correct) theory that food and energy are highly volatile and could badly mislead them.

Example: In June 2008, unemployment was sitting at a quite reasonable 5.6 percent. The CPI excluding food and energy was running at 2.4 percent year over year, while the CPI which doesn't take out food and energy was at 5.0 percent. A Fed official who wanted policy driven by the headline rate would be arguing for tightening the money supply, which would have been frankly a disaster, and completely unnecessary, as inflation fell rapidly even as monetary policy was loosened throughout the year.

This, by the way, is exactly what Noah Smith was complaining about with Austrians. I am actually a pretty libertarian guy, but it is simply not the case that the government is trying to bury rampant inflation.
posted by dsfan at 8:59 PM on September 26, 2012 [2 favorites]


mek: Right, and the goldbug argument usually goes: Obama began excluding the price of food and fuel from the price index to conceal the real inflation rate of >10% due to quantitative easing! The proof is the price of gold which measures REAL VALUE! Know your trolls, people.

That's not something Obama did. I first became aware of the absolute bullshit games that are being played with the inflation numbers in the freaking Clinton era. As an example, look up 'owner's equivalent rent' if you want to see how they ignored the enormous price increases in housing during that era. This was absolutely inflation, driven directly by monetary policy, which is exactly what inflation measures are for, and they came up with a way to ignore it completely. And then it got used even more in 2004-2006. It's just absolute shit, handwavy makeup adjustments so they can exclude the cost of housing from their inflation figures.

And they'll do crap like exclude gas prices from the index when they go up more than they like, but then include them when they go down. It is a racket.

And the reason we're not seeing that much inflation, despite all the dollars flooding out to the world, is because other countries are buying dollars, printing their own currency to do so. This holds their Those at par with ours, and sops up the excess dollars. In essence, they import our inflation. Inflation figures in China and India are very high. The last numbers I saw were around 15%ish, but I haven't been paying close attention. Not sure what's up with Japan, but sans disaster, I'd have expected them to have some inflation, too. With the disaster, I'm not sure exactly how it will all work out.

If you look at the shadowstats site, which computes inflation the old way, the more accurate figures are a few points higher than the official ones... and remember that Warren Buffett has, in his own words, devoted his life to showing people how much difference a few percentage points makes. By the old standard, it's not 10%, but it's a fair bit higher than the current official figures.

It would be MUCH higher, except that other central banks are being so activist. This is why they want to call China a 'currency manipulator'. The US wants to devalue its own currency, WE want to be currency manipulators, and those "jerks" keep holding their currency at par value with the dollar. So we call THEM manipulators, when we're the primary abusers of currency in the world economy.

Eventually, those countries are going to give up on this idea, and there is a freaking tsunami of latent inflation built up. All those trillions that the Chinese and Japanese in particular have absorbed, storing up dollar assets, will be an extremely strong inflationary forces, should they decide to liquidate those positions, unless they do it exceedingly slowly, giving up on most of the current value of those assets. It's hidden from us at the moment, but it is out there, and we will eventually pay dearly for abusing the dollar and our status as the world's reserve currency.
posted by Malor at 9:03 PM on September 26, 2012


I am actually a pretty libertarian guy, but it is simply not the case that the government is trying to bury rampant inflation.

No, but they ARE trying to make themselves look better, as politicians always do. And these adjustments go back to the Clinton era. Inflation has been steadily underreported for many years now, typically by a couple of percentage points. That doesn't sound like much, but it adds up, over time.
posted by Malor at 9:05 PM on September 26, 2012


"Food prices are particularly critical, and the sharp inflation we're seeing in various foodstuffs, between the genuine shortages and the extreme price distortions caused by the flood of money and money-like instruments in the world, are literally killing people. "

Sorry Mr. Goldbug, but inflation is literally almost zero these days. Food shortages are no joke, but they have nothing to do with monetary policy and everything to do with wars and politics and conflicts.
posted by bardic at 9:09 PM on September 26, 2012 [1 favorite]


Wait, are Marxists into David Graeber? I kind of had the impression they were all YOU FUCKING ANARCHISTS SHOULD PAY MORE ATTENTION TO MARX as per usual.
posted by brennen at 10:43 PM on September 26 [+] [!]


graeber's "towards an anthropolgy of value" is actually a fundamental critique of marx's "labor theory of value." its funny how irrelevant the left is that a cheap joke lumps together ideological enemies because they are both so far away from the discussion that differences are irrelevant
posted by ennui.bz at 9:21 PM on September 26, 2012 [1 favorite]


Inflation has been steadily underreported for many years now, typically by a couple of percentage points. That doesn't sound like much, but it adds up, over time.

Yeah, but the thing is, a few percentage points adds up in ways that are pretty bad for your position. Let's look at Shadowstats, which you cite. OK, as far as I can tell, you have to pay them to get their data, but just eyeballing their chart shows that they believe inflation has run at least 5% over the past decade. So the price level would have increased over 163% over this time.

Now, nominal GDP (which is pretty damn tough to fake) for the US was $10,286B in 2001 and $15,076B in 2011. Taking Census populations for 2001 (285,309,000) and 2011 (313,232,000) means that nominal per-capita GDP was about $36,000 in 2001, and $48,100 in 2011.

OK, here's the problem. If the price level really had jumped 163% in a decade, then the 2001 figure at 2011 prices would be $58,700. In other words, per capita output has somehow dropped over 18%--a Great Depression-like event--and somehow the world's economists haven't noticed. You actually get worse than Great Depression figures if you make this modification back to the mid-90s.

In short, it's just not even remotely plausible what these people are trying to tell you about inflation.
posted by dsfan at 9:33 PM on September 26, 2012 [3 favorites]


Can we get a DM in here to calculate my chance to hit against Malor?
posted by mek at 9:43 PM on September 26, 2012 [2 favorites]


Malor, you are fighting strawmen. CPI-U and PCE, the "inflation rates" usually used by the White House and the Federal Reserve, include fuel and food. Do you have any evidence to back up statements like "they'll do crap like exclude gas prices from the index when they go up more than they like, but then include them when they go down"?
posted by kithrater at 9:53 PM on September 26, 2012 [2 favorites]


Missing an entry on peak oilers.
You do realize that global oil production peaked in 2006, right?

It's interesting. Back in '08 Malor and other "Austrians" were predicting massive inflation. Hyperinflation even. Yet, clearly that inflation hasn't happened. Rather then admit they were wrong, they're now apparently just denying reality and trying to claim that inflation really is happening, even though the numbers (and not just government numbers) show it's not.

Food and fuel, well that might have something to do with the fact that the world actually is running out of oil, and turning to more expensive extraction methods. And beyond that, we have global warming, which is causing droughts and raising prices. Those things are bad but they certainly aren't caused by monetary policy (and in any event, they are included in the standard inflation rate)
posted by delmoi at 2:36 AM on September 27, 2012 [1 favorite]


ocschwar, I contributed one (sort of):

Thermoeconomists
"One mus have a very erroneus view of the economic process as a whole not to see that there are no material factors other than natural resources. To mantain further that 'the world can, in effect, get along without natural resources' is to ignore the difference between the actual world and the Garden of Eden."

How they see themselves
http://themeaningofmadness.files.wordpress.com/2010/09/prometheus.jpg

How the world sees them
Nope, they are pretty invisible

Favorite blog: http://physics.ucsd.edu/do-the-math/

Favorite dead economist: Nicholas Georgescu-Roegen

Will appear in response to posts regarding: Solow, natural resources, thermodynamics, Cobb-Douglas functions, growth, peak oil, EROEI.

Craziest idea: abolish advertisement

Special attack: Second Law of Thermodynamics

Secret weakness: entropy is a bitch, really.
posted by samelborp at 7:00 AM on September 27, 2012 [1 favorite]


delmoi, that should be "global conventional oil production peaked in 2006". In volumetric terms of all liquids production has been increasing, although not a lot.
posted by samelborp at 7:04 AM on September 27, 2012


Missing an entry on peak oilers.
You do realize that global oil production peaked in 2006, right?


Yup. I made that comment because I am one.
posted by ocschwar at 10:54 AM on September 27, 2012


It's interesting. Back in '08 Malor and other "Austrians" were predicting massive inflation. Hyperinflation even. Yet, clearly that inflation hasn't happened. Rather then admit they were wrong, they're now apparently just denying reality and trying to claim that inflation really is happening, even though the numbers (and not just government numbers) show it's not.

It's not that they deny reality, it's that they have never had any connection to it. Their stated non-empirical a priori beliefs mean that they don't need silly things like evidence or confirmation for their ideas; Von Mises and Rothbard and the like logically proved that they were right long ago. If reality doesn't want to match up to their perfect logic, too bad for reality.
posted by Sangermaine at 3:52 PM on September 27, 2012 [1 favorite]


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