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Saturday, January 5th, 2013

Americans Still Waiting for Predicted Hyperinflation

Author:     PAUL KRUGMAN
Source:     Truthout.org
Publication Date:     Thursday, 03 January 2013 10:34
Link: Americans Still Waiting for Predicted Hyperinflation
Stephan:   I went to my gym the other night -- I usually go about 7:30 -- and, while I was there I got into a conversation with the owner, Jim, who I like. He is very conservative, and it was the first time I had seen him since before the holidays. We talked and very quickly he began worrying over what he was sure was the coming hyperinflation. The conversation stimulated me to write something about this and, when I was doing the research for the piece I came across this. Paul Krugman explains it better than I could, and addresses the larger issue about the importance of operating on facts. So many of the country's policies are built on ideology or theology, and not facts. Most of what's wrong with us, as a nation, arises from our unwillingness to hear the truth, and act on it rationally.

Some readers may recall the Peter-Schiff-was-right campaign of 2009, a sort of public-relations blitz claiming that Mr. Schiff, an Austrian-oriented commentator, had foreseen the financial crisis. It wasn’t really true even then; still, Mr. Schiff became a fixture of right-wing television shows, constantly warning that expansionary monetary and fiscal policies were about to produce hyperinflation.

Well, Cullen Roche, who writes the Pragmatic Capitalism blog, recently caught a TV host actually putting Mr. Schiff on the spot, pointing out that he’s been predicting that hyperinflation since 2008. So where is it?

Good question.

And I’d like to pursue the question a bit more, not just or even mainly about Mr. Schiff’s assertions, but more broadly about the role of predictions – including wrong predictions – in economics.

What’s crucial to understand, I think, is that there are two kinds of erroneous predictions. One kind of error, which everyone makes all the time, involves what you might call extraneous forces.

If the economist making the prediction didn’t know that there was going to be a war in the Middle East, or a confrontation over the debt ceiling, or whatever, his forecast may well be very badly wrong; too bad, but that doesn’t really speak to his underlying […]

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