at HSU, I learned a lot about MF. When I first heard of him, I just thought of the guy as yet another vulture capitalist like most of today's RW. But after reading part of his book "Capitalism and Freedom", he sort of gave me a clearer definition of what it means to have a free-market. It sounded like his view of a free-market wasn't necessarily where a few big businesses have monopolies on everything, but instead was a field where all businesses could compete, and that there would be a wide variety for consumers to choose from. To me, that vision of a free-market makes the most sense and is the most fair. Unfortunately, most of today's political Right would scoff at that idea of a free-market. They just want a wild-west system. I also thought it was interesting how he considered himself a liberal in his book, rather than a conservative (despite his fiscal stances). He defined the word "liberal" essentially as what a neo-liberal is--someone who favors lower taxes, free trade, etc., and went on to decry those on the political Left who call themselves liberals for having more socialistic fiscal policies.

works when GOVERNMENT FORCES private interests to compete.

1. We had the Gilded Age in the 19th Century when government took a non-interventionist position in the marketplace; and giant trusts brought in monopolies. We then had nearly a century of unprecedented economic growth when Teddy Roosevelt and some others brought in the anti-trust, anti-monopoly laws at the turn of the century.

2. The consumer-driven Free Market is only able to function properly when consumers have accurate and complete information on the products they're buying, so they can make a RATIONAL decision on which to buy. A lot of the bad capitalism that's been going on for the last half century has been done by companies that obfuscate and obscure the actual value of their products, so that consumers CAN'T make a rational decision. ie-bribing ratings agencies to give JUNK BOND-LEVEL Mortgage Based Securities triple A ratings, when in fact they're worthless. Selling healthcare insurance policies that are riddled with fine print that obscures the fact that they don't actually COVER anything...etc.

So, ironically, Obamacare gives the ultimate boost to the consumer driven health insurance market, by making it impossible to obscure the actual value of policies. The law mandates that all plans cover the same things, so now you can compare them on a price basis, rather than a hidden cost/value basis.

What we have now is neither a free market economy, nor a socialist economy. We have a lemon socialist economy, with privatized profits covered by public liability.

The inflation is where it would have to be, when all the gains have gone to the top. Wall Street.

To a certain extent Krugman was right, while the pathetic pedantic gloom and doom naysayers of failure were all wailing as they predicted the huge imminent collapse of the entire economy, and they were all busy putting in overtime blowing smoke out of their asses whining in overdrive about the very idea of increasing the monetary base, the economy picked right back up and is still chugging along nicely, thank you very much.

Just as Krugman predicted it would.

Excellent thread, but coming this late at night, I'm afraid that most of the DU'ers will miss it.

With the oil hikes staring us in the face, we gave a minute or two or more to these greed guy. Keynes and his beneficiaries knew - )they knew) Chicago was lying. Fresh faced bushy tailed numbskulls like me took longer to work out their murderous lies. OK I am not one of the Woodstock generation, but we failed. Failed to call these MF Rat Bastards on their lies. In 1978, I turned up to class to hear Chicago School Voodoo: Natural rate of Unemployment, Rational Expectations. I needed someone academic. One Guy (or Gal), just One Guy, to lead us and we would have been ripping out RW throats. I still hate those BS Bastards.

We kept on talking about Inflation, and no one mentioned the 10x increase in the price of crude. We should have done better. EOM. I know it.

The Gold bubble is bursting........get out now while you still can get your money back

and a vibrant, growing economy.

here is the thing - the 10% test.
10% unemployment was 'manageable'; 10% inflation was (and is) a national emergency worthy of 22% interest rates.

Inflation = the big money hit;
Unemployment = as long as its not going up (too much), who cares?

Difficult decisions at the Fed.

compound interest blah blah blah. greenspud suuuuuuuucked.

If all this money was inflating the money supply, wouldn't there be a lot of inflation?

Not if the velocity of money dropped.

This is what happened. MF assumed that the velocity would hold about study. Lots of "cet. par." in the assumptions.

The downside to this is twofold.

It means that all the QE and stimulus would have muted effects. Most of the claims have that same "cet. par." assumption. "All other things being equal."

It means if the velocity of money picks up it could get ugly.

And contra the "inflation is a boon to savers" quip in a previous post, typically interest lags inflation and COLAs. In the late '70s those who were hurt the most were those on fixed incomes, low income, and those living off of pensions and savings.

People with loans were the winners, if they managed to keep their heads above water. Then again, loans are just another word for other people's savings and investments, personal or through pensions.

or relatively constant as linked to real GDP. When finance flipped all over the shop in the 1980's, driven by countless new instruments, the sky fell in, and on Chicago school theorists.

Inflation has one central consequence - Real Debt is forgiven. In the case of hyperinflation, debt is vaporised. The thing is, who are the winners (debtors), who are the losers - creditors - the wealthy. No wonder, unemployment is more acceptable than inflation, hey? : Follow the money.

Nevertheless, even today, no central bank has a 0% inflation target, Without the easing of gross debt, through inflation, creditors may reap a bitter harvest. Ask Portugal.