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January 16, 2013 10:20 AM The Dog That’s Still Not Barking

By Ed Kilgore

Here’s an important reminder at WaPo’s Wonklog from Jim Tankersley:

There’s still a lot wrong with the U.S. economy. Unemployment remains stubbornly high, just under 8 percent. Growth remains too weak to bring that rate down very quickly, which adds up to fairly dim hopes for the 12 million-plus Americans who are currently looking for work but can’t find a job.
Working-class wages are stuck in neutral. A yawning gap between the richest of the rich and everyone else - one that threatens the strength and stability of the economy - isn’t going anywhere anytime soon. The ratio of federal debt to the size of the economy is trudging upward toward levels where many economists warn it will begin to drag on growth. America’s trade deficit widened in December, continuing a general trend since the end of the Great Recession.
Know what’s not a problem? Inflation.

Nope: hasn’t been a problem for a very good long while now. But as Tankersly notes, it is the implicit motive for an awful lot of respectable economic policy proposals, particularly from conservatives who claimed throughout the Great Depression that we were on the edge of Weimar-style hyper-inflation due to federal borrowing.

At some point is the continued non-appearance of inflation maybe grounds for questioning the credibility of those who favor austerity policies in good times and bad? One would think so.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • dweb on January 16, 2013 10:40 AM:

    But the smart people NEVER stop hyperventilating about the POSSIBILITY of inflation. Heard it again the other day on my favorite rich guys defense center...CNBC. I think it was Fix the Debt or maybe No Labels or very likely Mr. Simpson and/or Mr. Bowles. They all have ulcers worrying about inflation.

    You know what I can't wait to see? What happens as a result of Japan's recent decision to spend a ton of cheap money on infrastructure modernization as a means to stimulate their economy.

    It may well be the perfect illustration of why Paul Krugman is right and Pete Peterson is a selfish toad.....and an idiot.

  • Domage on January 16, 2013 10:44 AM:

    At some point is the continued non-appearance of inflation maybe grounds for questioning the credibility of those who favor austerity policies in good times and bad? One would think so.

    One would be wrong. Just as one would be wrong in thinking that the bond vigilantes will eventually show up and demand higher interest rates due to federal borrowing crowding out private investment--something else we've been warned about by Very Serious People for the last 25 years.

    Let's face it: Global economic discussion has been hijacked by people who believe only two things: Financial institutions must never be held to account for their actions, and the only real solution to a contracting economy is imposing more contractionary policies. There are no other acceptable points of view today.

  • MuddyLee on January 16, 2013 10:47 AM:

    If being wrong about most things most of the time would discredit a person, then we wouldn't be hearing anything from Bill Kristol would we? Here's a list of a few things I know of, and I haven't really studied him: worked for VP Dan Quayle, worked to wreck Hillary Clinton's health care reform initiatives, had his Weekly Standard magazine advocating invasion of Iraq during Bill Clinton's second term, gave 100 percent support to the Bush-Cheney invasion of Iraq, supported the Bush-Cheney re-election after the stupidity of the Iraq invasion was obvious, and brought Sarah Palin out of Alaska and got her the VP nomination in 2008. He still gets a lot of attention, and the country is still suffering from what he has advocated - isn't it time to put Bill Kristol out to pasture?

  • James M on January 16, 2013 10:48 AM:

    'High on the hog'.

    You have to be an Okie to really understand that phrase! (Haha). But really, when reading the comments of all the Very Serious People (VSP)who talked about the need for greater austerity during the previous year, I got the feeling that the country's economic, media and political elites thought that the average American (whose relative standard of living and financial standing has been consistently declining) was living 'too high on the hog'. And after that, some GOP pol( a House rep I think) actually said that in a speech.

    The VSP really believe that the average American is living above his/her station,and has to be taken down more than a couple pegs in terms of wages, pensions, health care, and all 'entitlements'. This is despite the fact that the relative share of national wealth is being consistently redistributed to the upper 10%.

  • c u n d gulag on January 16, 2013 10:58 AM:

    Being a Conservative politician or pundit, or an economic 'austerian,' means never admitting to being wrong, or having to say you're sorry.

    How, and why, would you be sorry, if you were never wrong in the first place? At least, never wrong in your own mind's eye, that is.

    Turn on a network or cable news show, and there's a line out the door of the idiots I listed above, just drooling for some TV face-time.

    Once every few weeks, Paul Krugman is allowed to appear on ABC's Sunday yak-fest, and ruins George Will's and Peggy Noonan's Sabbath Day bloviations.

    I love the merry little twinkle in his eye, as he takes aim at their idiotic talking points, and shoots them down without mercy.

    Network and Cable TV New Rule:
    Keep a "Right v. Wrong" tally beneath each person talking head.
    You'd have something like this:
    Krugman: Right - 5,234 Wrong - 3.
    Will: Right - 1 (Baseball) Wrong - 10,998
    Kristol: Right - Never Wrong - Always.

  • Anonymous on January 16, 2013 11:08 AM:

    @dweb on January 16, 2013 10:40 AM:

    "You know what I can't wait to see? What happens as a result of Japan's recent decision to spend a ton of cheap money on infrastructure modernization as a means to stimulate their economy.

    It may well be the perfect illustration of why Paul Krugman is right and Pete Peterson is a selfish toad.....and an idiot."

    dweb, I am something of an expert on the Japanese economy and your comment is spot on. Japan had been locked in hellish deflation for almost 10 years. The average price of a 'salaryman's lunch box in lunch carts (private stands in business districts) went from an average of over 600 Yen (around 7 dollars) to around 300 yen (around 4 dollars).

    '100 Yen Shops' (Dollar stores abounded) and afternoon news programs ran features on super cheap restaurants and stores. 'Tabehodai' (all you can eat) and Nomihodai (all you can drink) courses became standard in many low-medium priced restaurants.Of course, average wages steadily declined. Though I have no particular love for Mr. Abe (you don't want to get anywhere near his foreign policy...) the risk of Japan entering a period of rampant inflation is near zero and his economic policy prescriptions (at least in the short term) are long overdue in my opinion.

  • Michael Robinson on January 16, 2013 5:48 PM:

    As Duncan Clark/Atrios periodically reminds us, no one cares about the deficit.

    The inflation boogieman is a story they tell the children to scare them into supporting policies which the reduce the amount of money which is recycled out of the pockets of the wealthy, through the government, and back out into the general economy.

    That's why they never ever ever want to cut defence spending: because "strong defence" policies recycle money from the general economy, though the government, and into the pockets of the wealthy (both directly, in the form of procurement contracts, and indirectly in the resulting favorable global trade environment for U.S. corporations).

  • Michael Robinson on January 16, 2013 5:50 PM:

    Duncan Black, obviously.

  • Vicente Fox on January 17, 2013 11:15 AM:

    Economics is a disgraced profession.