Fear and Ignorance

No, fear and arrogance, you hayseed! Bonus points if you know what movie that's from.

I was more appalled than usual at NPR this morning. They reported, with a straight face as far as I can tell, that the inflation numbers have economists worried about deflation. This because inflation for the past month posted roughly at zero.

They do mention the drop in energy prices relating to this, but seriously: House prices have declined sharply of late, and gasoline dropped from an artificial high of $4 a gallon back to a more plausible $1.60 when a speculative bubble in that sector burst.

That's a 60% drop in gasoline prices, kids. If inflation is zero percent overall with a move like that, that means everything else just got massively more expensive.

Actually, this report only claims an 8.6% drop in energy prices, so obviously the window they were looking at (October) didn't include all the the return to sanity in the petroleum market.

Fundamental economics education is so lacking in America. That $700,000 billion bailout? That is money the Federal Government is borrowing (mainly from panicked investors fleeing the stock market, causing the market to further implode). Because the Federal Government is essentially taking out a credit card to pay off its other credit cards in an eternal spiral of increasing debt, this amounts to printing money.

U.S. GDP is something like $14.5 trillion these days. So that so-called bailout amounts to about 5% inflation on top of whatever other inflation there is in the economy. And with interest rates as low as they are, I guarantee you there's more inflation in the economy than just the bailout money.

People keep talking about the Great Depression, and I hope that's hype. What the Bush Administration has been doing, and what the Obama Administration seems intent on as well, is the same sorts of stupid interventions by the government that took what would have been a severe recession and made it the Great Depression.

Still, with a little luck, we're only in for another Stagflation, 1970s style. That's when the economy contracts but prices go up, and all those Keynesian economists are shown to be a pack of idiots.