Don’t rely on economic opinion, particularly if given by Joe Stiglitz

I’m pretty sure that Donald Trump doesn’t give a toss what Joe Stiglitz or any of his left-leaning economic buddies, some Nobel laureates, think about his proposed economic policies. (Stiglitz is up there with Krugman for partisan stupidity.)

Let’s face it, professional economists have a terrible record when it comes to forecasting.  A study of forecasts by professional private sector economists  for 77 countries made in April 2008 for the following year noted that not one forecast predicted a recession in 2009.

49 of these economies were in recession in 2009.  Even by extending the forecast timeframe to September 2008, not a single forecast predicted recession.  The IMF and OECD have similarly appalling records.

But this doesn’t stop most of these tossers ploughing on and giving us the benefit of their opinions. wisdom and foresight.  A panel at the recent American Economic Association meeting in Chicago let it rip.

I’m presuming that Krugman is too grand these days to attend these sorts of events (gosh, he has his regular New York Times columns to complete and keep up the twitter feed).  But he is in a bit of bind as he has repeatedly called for more infrastructure spending – massively more – but when Trump proposed this, he is opposed to Trump’s policy.  Tres embarrassing.

(On the Trump economic agenda, the one major misgiving I have is the emphasis on the current account deficit, which is being misinterpreted both as a problem and something that should be targetted.  Mind you, given the size of the US economy, we should not overlook optimal tariff theory when it comes to the proposed imposition of tariffs – the suppliers bear the burden, not the domestic consumers. His deregulation and tax cuts are by contrast masterful.)

Here is a the Bloomberg piece:

A pack of Nobel Prize-winning economists gave Donald Trump and his policy plans the thumbs-down on Friday, with one saying the president-elect’s programs could lead to a deep recession.

Speaking on a panel during the first day of the annual American Economic Association meeting in Chicago, the Nobel laureates voiced a variety of concerns about the billionaire developer’s stance, from his haranguing of US companies about their outsourcing plans to the risk his tax and spending proposals could lead to run-away budget deficits.

“There is a broad consensus that the kind of policies that our president-elect has proposed are among the polices that will not work,” said Joseph Stiglitz, summing up the views of the panel including his fellow Columbia University professor Edmund Phelps and Yale University’s Robert Shiller.

Such disapproval though is likely to fall on deaf ears. Trump rode to victory on the back of an unconventional campaign short on advice from Ph.D. economists – relying more on a team of wealthy businessmen – and there’s no indication that’s about to change. He pledges to accelerate growth and create millions of well-paid jobs through spending hikes and tax cuts as well as reduced regulations and renegotiated trade deals.

Discouraging Newcomers

Phelps was particularly critical of Trump’s singling out of individual companies for abuse and praise, saying such interference could end up discouraging newcomers from entering markets and bringing with them much-needed innovation.

“The Trump government is threatening to drive a silver spike into the heart of the innovation process,” he said.

Phelps also voiced concern about Trump’s plans for big tax cuts and spending increases. “Such a policy runs the risk it could lead to an explosion of public debt and ultimately cause a serious loss of confidence and a deep recession,” he said.

That also has the University of Chicago’s Roger Myerson worried. While other presidents have run big budget deficits in the past, they depended on foreign purchases of US debt to do so.

‘Confidence and Trust’

With Trump threatening to renegotiate US trade agreements and shift to an “America First” policy, the willingness of foreigners to keep buying US government securities can’t be taken for granted, Myerson said.

America’s interaction with other countries “has to be based on confidence and trust,” Stiglitz said. “That’s being eroded.”

Angus Deaton of Princeton University said he was less worried about the US economy under Trump than he was about international relations, particularly when it comes to China.

The Asian nation was facing difficult economic problems and sounding more bellicose in the region even before Trump won the presidency on a vow to take it on, Deaton said.

Yale’s Shiller was the only Nobel Prize winner on the panel discussion who didn’t take a shot at Trump. “I’m a natural optimist and I would not like to speculate on how bad it could get,” he said. “Maybe one of the other panelists wants to do that.”

They certainly did.

 

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67 Responses to Don’t rely on economic opinion, particularly if given by Joe Stiglitz

  1. Perth Trader

    The definition of a economist is ‘ a man who knows 10 different ways to make love to a woman , but has never had a girlfriend’.

  2. Bruce of Newcastle

    A pack of Nobel Prize-winning economists gave Donald Trump and his policy plans the thumbs-down on Friday, with one saying the president-elect’s programs could lead to a deep recession.

    Quite true.

    After he cuts government expenditure with his gold plated tungsten toothed chainsaw nominal US GDP will go down. But government spending of borrowed money should never have been included in GDP calcs.

    Free markets, companies and consumers will do well because they’ll have more money when energy costs, corporation taxes and Obamacare respectively are wasted.

    All you need to know about Nobel Prizes is that Obama got one 10 days into his first term.

  3. .

    Perth Trader
    #2254321, posted on January 7, 2017 at 11:26 am
    The definition of a economist is ‘ a man who knows 10 different ways to make love to a woman , but has never had a girlfriend’.

    The othering on this website is verging on Economist Derangement Syndrome, where good people are confused with the likes of Joe Stiglitz.

  4. .

    I’m presuming that Krugman is too grand these days to attend these sorts of events (gosh, he has his regular New York Times columns to complete and keep up the twitter feed).

    No his wife writes that for him. A less kind person would call him a cuck.

    (On the Trump economic agenda, the one major misgiving I have is the emphasis on the current account deficit, which is being misinterpreted both as a problem and something that should be targetted. Mind you, given the size of the US economy, we should not overlook optimal tariff theory when it comes to the proposed imposition of tariffs – the suppliers bear the burden, not the domestic consumers. His deregulation and tax cuts are by contrast masterful.)

    Optimal tariffs are garbage in a dynamic world. If every country can get a free lunch, there’ll be nothing left. You can almost call this idea “anti-industry” policy. If everyone has them, everyone suffers. Once one country has them, there is no reason why everyone else will not adopt them.

    Furthermore I’d question if any country has monopsony buying power in any commodity. Maybe the US were like that around 1900, but not now. You may as well argue that the EU and FSU put export tariffs on grain – but alas they cannot.

  5. .

    Trump’s economic policies besides tariffs and browbeating companies are great.

    A 15% corporate tax could supercharge economic growth as retained earnings increase, it also would bring back US capital to the US, or at least see more stay in the US, along with foreigners investing in the US.

    Hopefully it will force Mal to rethink our socialist and brutal tax regime.

  6. miltonf

    Tired, discredited old has beens and it’s not like the sh*t they’ve been advocating and had implemented has been a roaring success. Unless you call impoverishing the working and middle classes along with destruction of industry a success.

  7. stackja

    “If all the economists in this country were laid end to end, they would never reach a conclusion.”

    Anonymous

  8. .

    Say you had a monopolistic supplier and a monopsonistic buyer.

    Arguably, they both should impose tariffs on each other.

    This is not the kind of argument we should be entertaining. The only beneficiaries are government. It reduces real incomes in the consumer nation and increases costs to the exporter.

  9. .

    stackja – that is the cost of being infested with left wing ideologues who believe in the magic pudding economics of Keynes.

    Real economics is a worthwhile study and noble profession. A partial solution is to make university entry more difficult.

  10. Roger

    Spot on dot at 11:51am.

    Theresa May has promised to match or even go lower than Trump’s rate with UK corporate tax (presently 20%, heading for 17% by 2020 but a quicker reduction is now being flagged).

    Two biggest foreign investors in Australia?

    US & UK.

    We are going to be decimated thanks to Mal.

  11. RobK

    ” Phelps was particularly critical of Trump’s singling out of individual companies for abuse and praise, saying such interference could end up discouraging newcomers from entering markets and bringing with them much-needed innovation.

    “The Trump government is threatening to drive a silver spike into the heart of the innovation process,” he said.”
    I disagree with Phelps on this point. Done carefully, the Office of President can remind all the players that the people are in charge, not just as customers but as the foundation to which democracy is answerable. If done in good measure, and Trump manages to align all the players in the right direction, the force will be greater than the central banker’s cryptic monthly signaling. As far as innnovation; again, a little pep talk from the top can do wonders. Phelps is struggling to make sense.

  12. RobK

    It is apparent to me that Trump has more hands-on management competency than his critics.

  13. RobK

    Who knows, if he can align all the players in the right direction, he might even make America great again….so far so good.

  14. Fisky

    The entire field of economics should be abandoned. Share traders and business tycoons can help you with rough projections but academic economists will always be wrong.

  15. ella answer-key

    Professional econonomists …………free speech censors, gun rights objectors, blasphemy law promoters are guaranteed a terrible and bloody record when forecasting. The terrible record will contiinue until everyone understands WE CANNOT FORECAST THE UNFORSEEN.

  16. RobK

    Share traders and tycoons are economists with skin in the game.

  17. .

    The problem FIsk is they have no skin the game Fisk; moreso those from “heterodox” and outright Marxist “economics” schools.

    David Ricardo speculated on government bonds in the Napoleonic Wars and became quite wealthy as a consequence.

  18. CraigS

    I’m always reminded of all the economic experts that said Thatcher’s policies would destroy the British economy…..

  19. Neil

    Swan prepared his first 2008 budget to fight high inflation which he said Costello had unleashed on the country

    http://www.budget.gov.au/2008-09/content/speech/html/speech-01.htm

    It is the responsible Budget our nation needs at this time of international turbulence, and high inflation at home.

    A Budget carefully designed to fight inflation, and ensure we meet the uncertainties of the future from a position of strength………….We are budgeting for a surplus of $21.7 billion in 2008‑09, 1.8 per cent of GDP, the largest budget surplus as a share of GDP in nearly a decade.

    The GFC hit only a few months latter and the predicted $21.7B surplus ended up being a $27B deficit. A $48B turnaround.

    Treasury had no clue about the GFC coming

  20. classical_hero

    The proposed tariffs are against China which is not playing by the rules. If China plays by the rules then the tariffs aren’t necessarily.

  21. .

    The GFC hit only a few months latter and the predicted $21.7B surplus ended up being a $27B deficit. A $48B turnaround.

    Treasury had no clue about the GFC coming

    Yes but we were largely unaffected by it in part because we don’t have the bizzare, socialist banking system the US has, along with WorkChoices. Also note Australia didn’t have a recession, not because of the stimulus: the ROI of the stimulus at best would have broken even. However we had something resembling a recession in mid to late 2011 when the spending stopped and the FWA was implemented.

  22. Procrustes

    They call him Crazy Joe Stiglitz, because (a) his name is Joe and (b) he’s crazy

  23. Muddy

    A pack of Nobel Prize-winning economists

    Slightly off topic, I know, but is that the correct collective noun for a group of economists? I always thought it was either a ‘pose’ or an ‘entrail’ of economists? Or for our leftards, a ‘rancid pus’ of economists. I’m happy to be corrected of course.

  24. Muddy

    An ‘intellectual void’ of economists?

  25. egg_

    A study of forecasts by professional private sector economists for 77 countries made in April 2008 for the following year noted that not one forecast predicted a recession in 2009.

    Ironic that it matches Leak’s recent ‘experts’ ‘toon.
    Tea-leaf reading masquerading as a ‘Science’?
    Small wonder this Industry hooks onto the CO2 concentration snake oil.

  26. .

    Muddy
    #2254480, posted on January 7, 2017 at 1:56 pm
    A pack of Nobel Prize-winning economists

    Slightly off topic, I know, but is that the correct collective noun for a group of economists? I always thought it was either a ‘pose’ or an ‘entrail’ of economists? Or for our leftards, a ‘rancid pus’ of economists. I’m happy to be corrected of course.

    The othering is ramping up.

    Muddy
    #2254482, posted on January 7, 2017 at 1:59 pm
    An ‘intellectual void’ of economists?

    Stop it, you’re triggering me.

    I would say a travail of economists.

  27. egg_

    impoverishing the working and middle classes

    Sounds like the net result of Socialism.

  28. John Carpenter

    Stiglitz and Krugman are alumni of the Robert Mugabe School of Central Banking.Despite all the beautiful minds,the PHDs and the huge ,elegant econometric models American economic orthodoxy has collapsed to these tenets;

    1.There is no limit to how much the Government can and should spend.Just like motherhood all spending is good.

    2.Deficits don’t matter and can be financed indefinitely by central bank purchases of bonds.Friedman got everything wrong and who cares about inflation anyway.

    3.Debt probably never has to be repaid.If it ever has to be reduced the best way is via an increase in death/gift tax to 100%.

  29. Muddy

    Dot, you’ll confuse me by using fancy words like ‘travail’. Stop it.
    By the way, it’s a ‘travesty’ of economists.

  30. hzhousewife

    Theresa May has promised to match or even go lower than Trump’s rate with UK corporate tax (presently 20%, heading for 17% by 2020 but a quicker reduction is now being flagged).

    Two biggest foreign investors in Australia?

    US & UK.

    We are going to be decimated thanks to Mal.

    And would Bill Shotten do any better?

  31. Muddy

    OK, I’ve had fun with Dot, now it’s time to head off and start drawing on the wall with my crayons. Oooh! I’ve got another one: A ‘wax crayon’ of economists.
    Zynx I’m funny.

  32. Elizabeth (Lizzie) B.

    Interesting thread. Learned a new word. Monsopsony. You can pick the sense up from context, but here is the definition. Apparently the Wiki piece is short on references thus contentious. Some interesting graphs in it.

    Monopsony

    In economics, a monopsony is a market structure in which only one buyer interacts with many would-be sellers of a particular product. In microeconomic theory of monopsony, a single entity is assumed to have market power over terms of offer to its sellers, as the only purchaser of a good or service, much in the same manner that a monopolist can influence the price for its buyers in a monopoly, in which only one seller faces many buyers.
    Monopsony – Wikipedia
    https://en.wikipedia.org/wiki/Monopsony
    See more about Monopsony
    Monopsony – Wikipedia
    https://en.wikipedia.org/wiki/Monopsony

    In economics, a monopsony (from Ancient Greek μόνος … alternative terms are oligopsony or monopsonistic competition. Static monopsony in a labor market …

    This was more helpful, from Investopedia:

    What is ‘Monopsony’
    A monopsony, sometimes referred to as a buyer’s monopoly, is a market condition similar to a monopoly except that a large buyer, not a seller, controls a large proportion of the market and drives prices down.
    A monopsony occurs when a single firm has market power in employing its factors of production. It acts as a sole purchaser for multiple sellers, driving down the price of seller inputs through the amount of quantity that it demands.
    BREAKING DOWN ‘Monopsony’
    In situations where monopsonies occur, sellers often engage in price wars to entice the single buyer’s business, effectively driving down the price and increasing the quantity. Sellers that get caught in a monopsony are known to race to the bottom, losing any power they previously had over supply and demand.

    For example, some economists have accused Ernest and Julio Gallo – a conglomerate of wineries and wine producers – of being a monopsony. The company is so large and has so much power in buying grapes from growers that sellers have no choice but to agree to its terms.
    Examples of a Monopsony
    Monopsonies take many different shapes and sizes, but most commonly occur when a single employer controls an entire labor market. When this happens, the sellers, in this case the potential employees, compete on wages for the few jobs available, driving down employee costs for the business.
    The technology industry is a great example of this type of monopsony. With only a few large tech companies in the market for engineers, major players like Cisco and Oracle have been accused of colluding and choosing not to compete with each other on the wages they offer technical positions. This, in turn, suppresses wages so that the major tech companies realize lower operating costs and higher profits. This example also highlights the fact that a group of companies can act as a monopsony.
    Another example of a monopsony involves the input suppliers of a large company. If, using a hypothetical situation, auto manufacturers consolidated into a single conglomerate, the resulting business entity would have a large amount of power over its suppliers. All the tire companies and rubber companies would compete with each other to win the auto manufacturers business. Producers of plastics, steel and other metals would also compete with each other to provide the best price to the large conglomerate. It’s easy to see through this example that a monopsony, similar to a monopoly, can have adverse effects on an economy. However, consumers can benefit if the monopsony passes along its savings rather than keeping it as additional profit.

    Read more: Monopsony Definition | Investopedia http://www.investopedia.com/terms/m/monopsony.asp#ixzz4V2kC8DEw
    Follow us: Investopedia on Facebook

  33. Elizabeth (Lizzie) B.

    3.Debt probably never has to be repaid.If it ever has to be reduced the best way is via an increase in death/gift tax to 100%.

    Hmmm. Yes. The extreme socialism in the tail.

  34. Elizabeth (Lizzie) B.

    Let’s be fair now. As with many other disciplines, it is simply a ‘confusion’ of economists. 🙂

  35. alexnoaholdmate

    They also – quite publicly – stated that Margaret Thatcher’s policies would destroy the UK economy. I don’t recall any of them apologising when by 1990 Britain was the powerhouse of Europe once more.

    They also claimed Brevity would result in a drastic recession. Now the Bank of England is being investigated for partisan bias, for getting it so wrong.

    And don’t forget Nobel Prize winner Paul Krugman. When the markets dipped after Trump’s election, he was asked when they would recover. “Possibly never”, was his reply.

    Within mere hours the dip had recovered, and within days the Dow had reached a record high. We now have the head of HSBC predicting a boom for the next four years at least. Hmm. What event takes place every four years, apart from the Olympics…?

    Yet we’re supposed to regard everything these numpties say as gospel.

  36. alexnoaholdmate

    ‘Brevity’? Yikes. Autocorrect.

    You all know I meant Brexit.

  37. Joe

    Liz:

    Let’s be fair now. As with many other disciplinesnon-engineering experts, it is simply a ‘confusion’ of economists.

    FIFY

  38. Joe

    Engineering: Where theory is corrected via painful impact with reality.

  39. Roger

    And would Bill Shotten do any better?

    No, but it is a reasonable expectation that a Liberal PM will understand the need to cut taxes…or at least it used to be. In its last budget the government was fiddling at the edges blissfully ignorant of the seismic shifts about to happen in the political landscape in the US & UK. After the fact they are so dim as to still think it’s business as usual.

    Nothing has changed since Donald Horne wrote this in 1964:

    “Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people’s ideas, and, although its ordinary people are adaptable, most of its leaders so lack curiosity about the events that surround them that they are often taken by surprise.”

    …except that our luck is about to run out.

  40. Defender of the faith

    Economists should never be taken seriously. Usually they are arguing about politics, like everyone else.

  41. chrisl

    Another numptie
    ““The market is definitely slowing, with growth slowing people can (now) make better decisions,” he says. A more consistent market means both buyers and sellers “can see what’s really going on.”

    HIA senior economist Shane Garrett agrees, saying the price growth of 2015 won’t last.

    “Activity is at such a high level … it can’t be kept at such a high level.”

    AND it stays on the internet for all to see!

  42. Entropy

    Slightly off topic, I know, but is that the correct collective noun for a group of economists? I always thought it was either a ‘pose’ or an ‘entrail’ of economists? Or for our leftards, a ‘rancid pus’ of economists. I’m happy to be corrected of course.

    While I quite like a confusion of economists (thanks, Lizzie), I believe for this mob, a collective of economists is loaded with meaning.

  43. Ross B

    Anyone in thrall to Keynes should take a stroll down what’s left of George Street. They’ll be instantly cured.

  44. Leo G

    Don’t rely on economic opinion, particularly if given by Joe Stiglitz

    Would that be the Joe Stiglitz of the nuclear winter shelter economic test kit fame? The test kit he tried out on Freddie and Fannie before they had their nuclear winter event?

  45. Dr Fred Lenin

    Bruce of newcastle ,you speak of obama getting the Nobble prize ,its well known that Nobbling a racehorse meansv it cant win so the half black president has earned the prize by Nobbling the USA . Now Donald will let the horse run without hinderance get your money on it before the odds shorten .( I dont mean wee willie shorten the one malcolm ruddbull is grooming for the PM job) .

  46. .

    chrisl
    #2254596, posted on January 7, 2017 at 4:06 pm
    Another numptie
    ““The market is definitely slowing, with growth slowing people can (now) make better decisions,” he says. A more consistent market means both buyers and sellers “can see what’s really going on.”

    HIA senior economist Shane Garrett agrees, saying the price growth of 2015 won’t last.

    “Activity is at such a high level … it can’t be kept at such a high level.”

    AND it stays on the internet for all to see!

    I think you have been too harsh.

    This is:6416.0 Residential Property Price Indexes: Eight Capital Cities
    Table 1. Residential Property Price Index, Index Numbers and Percentage Changes
    Residential Property Price Index percentage change from corresponding quarter of previous year ; Sydney

    Price changes per quarter, past four years to Sep 16

    Dec 2012 5.4
    Mar 2013 4.4
    Jun 2013 7.2
    Sep 2013 11.8
    Dec 2013 14.8
    Mar 2014 16.2
    Jun 2014 15.9
    Sep 2014 14.2
    Dec 2014 12.1
    Mar 2015 13.1
    Jun 2015 18.9
    Sep 2015 19.9
    Dec 2015 13.9
    Mar 2016 9.7
    Jun 2016 3.6
    Sep 2016 3.2

    I think Shane Garret was correct, don’t you?

  47. chrisl

    OK Dot
    Price growth is likely to slow down and prices are set to become more consistent in 2016 after a period of strong growth, according to LJ Hooker’s Head of Real Estate Christopher Mourd.

    “The market is definitely slowing, with growth slowing people can (now) make better decisions,” he says. A more consistent market means both buyers and sellers “can see what’s really going on.”

    HIA senior economist Shane Garrett agrees, saying the price growth of 2015 won’t last.

    I am going to retire eight years earlier than planned because prices have slowed that much!

  48. .

    Their predictions were correct.

    You’re going to retire 8 years earlier because of the observed and predicted slower growth in 2016?

    Personally I’d chalk it up to 2013-2015.

  49. chrisl

    Growth for 2016 was 13%
    Not slowing
    At all

  50. rickw

    The problem FIsk is they have no skin the game Fisk; moreso those from “heterodox” and outright Marxist “economics” schools.

    When was the last time a noted economist also owned a successful business?

  51. .

    Peter Abelson, rick

    Jac Nasser who was head of Ford is an economist.

    The fact of the matter is a lot of economists are publis servants and academics.

  52. .

    err, public.

    chrisl
    #2254670, posted on January 7, 2017 at 5:21 pm
    Growth for 2016 was 13%
    Not slowing
    At all

    Growth in 2015 was higher than in 2016. So it is slowing. I just posted what the figures for Sydney in 2016 and 2015.

    Well done on your investments, anyway.

  53. .

    rickw – Peter Schiff

    You could just google it, you know.

  54. .

    Judith Sloan didn’t run her own business, but is a Ph D in economics and a director of Santos.

  55. chrisl

    An interesting exercise Dot
    I went to a website that estimates prices of properties, just type in the address and up pops the estimate.
    I typed in two properties that actually had sold and compared them to their respective estimates.
    On both occasions the actual price was 13% higher than the estimate
    Amazing!

  56. .

    So you’re using a sample size of two?

  57. chrisl

    No I heard of the growth figure first from Corelogic or some such and THEN I did the excercise.
    In reality the only value you can put on a house is when it sells

  58. John Carpenter

    On the subject of cap city house prices Australia’s quarterly CPI excludes the cost of existing housing (i.e.land value plus improvements).These price increases have been conveniently summarised for us above by what ever his name is.Given the huge chunk of the consumers income spent on acquiring and maintaining a home these increases should really be given a high weight in the basket of goods.If this was done Australia’s benign inflation numbers would have to be revved upward by several notches.I don’t believe any number put out by any government anywhere.

  59. Stiglitz, Krugman and, I would add, Skidelsky (I suppose I should add the prefix ‘Lord’, for a Lord he is, as Gerard might say) are just embarrassing.

  60. Nerblnob

    Wasn’t Stiglitz the guy who praised Venezuela as a new economic model to follow, a few years back?

  61. Andrew

    To be fair to Shiller he did have the decency to have stood aside from a lucrative potential career of Kenyan boosting.

  62. Denise

    Yes. Their arrogance not one whit dented by their failed prognostications.

    Peter Schiff was warning of the inevitability of the GFC for ages before it happened
    and all the prideful pundits guffawed loud and long on prime time TV.

    After the GFC they should have slunk away to avoid the tar and feathers but just doubled down
    on their lies. There were no consequences for them.

    Come the revolution … Problem is after the revolution the peasantry are no better off than they were before
    because a new set of tyrants – for tyrants they are – come to power. Their plan is to have no middle class so they can rule unopposed. Absolutely wicked.

  63. Stimpson J. Cat

    Wow.
    I’m impressed.
    He really has done well for himself since Top Gear.
    Now he’s driving our economies.

  64. .

    John Carpenter
    #2254761, posted on January 7, 2017 at 7:00 pm
    On the subject of cap city house prices Australia’s quarterly CPI excludes the cost of existing housing (i.e.land value plus improvements).These price increases have been conveniently summarised for us above by what ever his name is.Given the huge chunk of the consumers income spent on acquiring and maintaining a home these increases should really be given a high weight in the basket of goods.If this was done Australia’s benign inflation numbers would have to be revved upward by several notches.I don’t believe any number put out by any government anywhere.

    Correct. Inflation is much higher than reported. The CPI data was also rebased using figures during the GFC. Surprise surprise, all of the inflation data was adjusted down.

  65. Denise

    At least the lumpenproletariat aren’t bawling for their chains anymore. Brexit and Trump proved that even worms can turn. I just hope they won’t do what failed movements have done in the past; smash a few shopfronts and riot and then think that sent a message. Better not to react but act, be clinically determined for the sake of our children and their children down to the last generation to be free of the dead hand of overarching government. And their goons.

    I really recommend ‘Mobs, Messiahs and Markets’, the PDF can be downloaded. Basically the wisdom of crowds is a chimera; when everyone’s zigging one should zag. Crowds are fickle too. I hope the tide is turning and that the winds are contrary for all the rent seekers but they are rat cunning and far superior strategists.

    I used to think that the Almighty was really mean and nasty when He told Joshua not to spare any of the Canaanites but having seen the relentless malice, spite and hatred of all things that make for human happiness that animates these grubs I now understand that He was being protective of His people from
    the untiring malignity of their foes.

  66. John Carpenter

    So we see that the Sydney property bubble has been caused not by the evil foreigners but by the negative real interest rate policy of the RBA.This has penalised savers and rewarded leverage and speculation.It is also a boon for all levels of Australian government who reap windfalls from higher valuations.Always remember that the RBA is only “independent” on paper.In reality it is an agency of the Commonwealth staffed by APS bureaucrats.

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