tag:blogger.com,1999:blog-3574536238757003081.post8868207647388246805..comments2022-11-05T02:51:26.210-05:00Comments on Christian Economics: Fiscally InsaneAlex Binderhttp://www.blogger.com/profile/07081761484559249129noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-3574536238757003081.post-23903847458195687962012-11-28T10:37:44.901-06:002012-11-28T10:37:44.901-06:00Ahh! I see it now. missed it the first time. Ver...Ahh! I see it now. missed it the first time. Very good.Fr. Damien Merrinhttps://www.blogger.com/profile/17821062504905546925noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-49100359268667671762012-11-27T23:00:28.927-06:002012-11-27T23:00:28.927-06:00Thank you both for reading!Thank you both for reading!Alex Binderhttps://www.blogger.com/profile/07081761484559249129noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-88844319823880274842012-11-27T23:00:03.745-06:002012-11-27T23:00:03.745-06:00Fr. Damien,
Good question, and yes, sort of. I ga...Fr. Damien,<br /><br />Good question, and yes, sort of. I gave two inflation measures above, and the one that is used most often is the one less energy and food. The reasoning is that these are rather volatile prices that can under- or over-state inflation in any one period. So they are taken out to take out the volatility of the measure of inflation. If you look above you can see the two are close and follow each other, but the one including food and energy is more volatile than the one without.<br /><br />I think it is valid to question this methodology, but if the two separate badly for an extended period, then statisticians would make mention of it. It wouldn't be written off as nothing to be concerned about. So, in general, there isn't really a big difference, one is just more stable than the other, but it is good to look at both to be sure.<br /><br />A spike in the food and energy inflation rate for one period would NOT signal the onset of hyperinflation however. These spikes up and down happen often and can't be relied on as a trend without reoccurring period to period.<br /><br />Hope that made sense!Alex Binderhttps://www.blogger.com/profile/07081761484559249129noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-91178584490835295332012-11-27T22:52:48.833-06:002012-11-27T22:52:48.833-06:00Pedro, sorry I haven't responded sooner, Blogg...Pedro, sorry I haven't responded sooner, Blogger did not alert me of your comment.<br /><br />I do not know the case of Argentina very well, but my understanding is that they are issuers and are having somewhat high inflation. It seems to have gotten built in and would take contractionary policy to squeeze it out, but that is my very uninformed understanding of Argentina. If you mean the debt they were in to other countries, like other Latin American countries, then the reason they were in trouble was because they owed debt in foreign currency.<br /><br />Germany may have higher debt/GDP ratio, but they have a large current account surplus, while Spain has a current account deficit. The explanation for why this matters involves Wynne Godley's sectoral balances and is more than I can explain in a short comment here. But I encourage you to seek it out through internet search.<br /><br />Inflation is the only constraint to high deficit spending. Crowding out occurs if interest rates increase, which lowers investment spending. But interest rates really can't go any lower and we are running high deficits. Deficits can cause "real" crowding out of actual resources, but if this happens, we will see its effect in inflation.<br /><br />I don't trust ratings agencies too much, they have some pretty maligned incentives. I don't know what you mean by your last sentence. If you want more on this subject I recommend Stephanie Kelton, Scott Fulwiler, or Randy Wray.Alex Binderhttps://www.blogger.com/profile/07081761484559249129noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-52430877367632167982012-11-27T10:19:41.478-06:002012-11-27T10:19:41.478-06:00 Hey Alex, good to hear from you again. Been a wh... Hey Alex, good to hear from you again. Been a while. got a question for ya. Is it true that fuel and food are not taken into account to measure inflation? If so how can that be justified when that is the primary bill for most families?Fr. Damien Merrinhttps://www.blogger.com/profile/17821062504905546925noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-60458749294158663222012-11-18T19:45:27.595-06:002012-11-18T19:45:27.595-06:00Hey, I have to tell the news to Latin America and ...Hey, I have to tell the news to Latin America and African countries, they are all ISSUERS. <br /><br />Why Argentina got in trouble? And Spain, since it has lower Debt/GDP than Germany? Should be because the private sector is not buying anymore? Brazil is complaining that private sector is buying too much of its debt. Why? The problem is only inflation? What about the so called crowding out? <br />Just on suggestion, I do not trust them too much, but I think you can read financial reports of rating Agencies. They can give you some clues. And, also look for another professors of economics. Pedro Erik Carneirohttps://www.blogger.com/profile/07981824216067193977noreply@blogger.com