OK, so all of a sudden the ink cartridge on my new HP 640 Fax machine died. What the heck?! I had used it for like 5 faxes?!
So I pulled out the cartridge and it is called “Introductory HP Black Printer Cartridge.” On the side it says, “Intended for single use only.”
So do you mean to tell me that they intentionally have you buy a brand new fax machine, get into your office and set it all up, and then you run out of ink after you send 5 faxes?
Does anyone know if there is some reason that it’s bad to package these things with a big cartridge?
Finally, why doesn’t the box make clear–”Hey if you actually want to use this thing, you might need to buy some ink while you’re here at the store!”?
Oh…my…gosh. I like to consider myself above average intelligence, and I even fancy that I know a bit about dollars and cents. I just spent a good fifteen minutes on the phone with a representative from my health insurance company, trying to reconcile the EOBs they had sent with the bills I was getting from the doctor.
At least three separate times during the call, I said, “Look I’m sorry, but are you looking at the same piece of paper I am? Does your screen show the EOB you mailed out on June 17? Do you see what I’m talking about, with that second line?”
The lady had gone into defensive mode, chanting the mantra that they don’t pay duplicate claims. I explained that yes I KNOW they don’t pay duplicate claims, but it looked like–from their own EOB–that they never paid the first claim either, which is what the doctor was saying!!
Anyway I now understand what happened. I had made a wrong inference in what their EOB statements meant from the first and second examples I had. In retrospect I understand why she thought I was an idiot. But, she made no attempt to solve the logjam. She was content to sit there until quitting time, constantly repeating to me that they do not pay duplicate claims.
In this post Krugman is rolling his eyes over the press making up the fact that people are worried about the US government’s fiscal situation. (The very idea!) He says:
And right now, deficit-phobia has quickly congealed into the latest [Conventional Wisdom]. You can see it in editorials (not from the Times, I’m happy to say, but almost everywhere else), in what the talking heads say, even in supposedly objective news reporting. Not a day goes by without my reading some assertion that “markets are anxious/jittery/worried about the deficit” — an assertion based on no evidence whatsoever. (Long-term interest rates on US debt are near historic lows; CDS spreads show no concern about default.)
So I’m interested in the part I’ve put in bold. If you follow the link, you’ll see that it’s just to the latest quotes of various spreads on credit default swaps, which are basically insurance contracts making you whole in case some institution (like a company or government) defaults on it loan payments.
So the price for 5-year US Treasurys is 21 basis points. I could be mistaken, but I’m pretty sure that means you pay them $21 a year for them to insure you for $10,000 worth of 5-year US Treasurys. (I can’t remember if they just send you $10,000, or if they wait and see what the nature of the “credit event” is and just make you whole.)
So Krugman’s right, the markets “aren’t worried” about a default on US Treasurys in the grand scheme–the spread on 5-year debt issued by Ford is 784 basis points.
But to understand whether the US government’s shenanigans in the last year have made investors jittery, we should look at what the price for insuring against Federal default was before the financial crash.
Check out this Bloomberg article from September 2008:
Sept. 9 (Bloomberg) — The cost of hedging against losses on Treasuries rose to a record on concern the U.S. government faces higher liabilities because of its rescue of mortgage companies Fannie Mae and Freddie Mac, credit-default swaps show.
Contracts on U.S. government debt increased 3.5 basis points to a record 18, up from 6 basis points in April, according to CMA Datavision prices for five-year credit-default swaps at 5 p.m. in London.
So you’re right, Prof. Krugman. The market is only 250% more jittery now than in April 2008. Man I can’t stand these idiotic financial reporters who are inventing worry over the fiscal situation!
[Disclaimer: I never dealt with CDS when I worked in the financial sector; I have only studied them as an aloof academic. So it's possible I am comparing apples to oranges in the above. But if I had to guess, I'd say Krugman was full of it.]
Krugman is mad about Phelps’ caricature of Keynesians. Phelps wrote:
Keynesian economics, which had been nearly forgotten inside the macro field, has found new voices from outside. They take the position that fiscal “stimulus” of all kinds is effective against slumps of all causes.
Krugman then explained:
Nobody, and I mean nobody, holds that alleged position. The position held by Keynesians — by the way, if Keynesian economics has been “nearly forgotten inside the macro field”, someone should tell Greg Mankiw that he’s an unperson — is that fiscal stimulus is necessary only under certain special conditions. Namely, when you’re up against the zero lower bound, and conventional monetary policy is useless, fiscal stimulus may be your best option.
And we are at the zero lower bound right now, for the first time in 70 years. That’s why fiscal stimulus is on the agenda — not because Keynesians believe that deficit spending is always and everywhere the best policy.
OK so once the Fed raises rates even a quarter point, then we will no longer be at the zero bound and Krugman will advocate an immediate deficit of $0. He will also excoriate the reckless Obama administration if deficits are positive from that point on.
For what it’s worth, I posted this question–without the sarcasm–at DeLong’s blog when he linked to Krugman’s post. I wanted to get the official Keynesian position down, so that when the Fed raises rates and Krugman doesn’t raise the same ruckus about deficits as he did when they were Bush’s, that I would at least have an official endorsement beforehand from a real live Keynesian.
Alas, my comment went through initially, but now it is gone. I’m not saying for sure DeLong deleted it–I’ve had people here on Free Advice have posting glitches and accuse me of skullduggery–but I’m just saying I made an honest attempt to confirm that this is indeed the implication of Krugman’s statement above.
Not sure who I’m rooting for. I’m listening to the live feed of the Senate’s Environment and Public Works committee’s hearings on climate change right now, so I can’t concentrate. But I thought I’d bring your attention to this Brad DeLong post accusing Mises of cozying up to fascists.
UPDATE: Jim in the comments alerts us to this Ralph Raico JLS article [.pdf] where he discusses Mises’ statements about fascism. I haven’t read it yet but I’m guessing Raico’s treatment is a bit more nuanced than DeLong’s.
I just got back from lunch with Carlos Lara, the guy with whom I’m writing a book on Austrian economics and Nelson Nash’s “Infinite Banking Concept.” Carlos said he gave a talk in Oregon and a guy came up afterward and asked him where he learned all that stuff about fractional reserve banking.
“Murray Rothbard,” Carlos replied.
“Oh I thought maybe you had read Modern Money Mechanics. It’s all laid out there too.”
“Oh yeah? Never heard of it. Who wrote it?”
“The Federal Reserve.”
And yes, here it is [.pdf]. I just thumbed through it at Carlos’ house, but he said it’s really good. In very understandable prose, it explains the mechanics of money creation through fractional reserve banking.
So enjoy. These are the schematics to the Death Star. But no one had to give their lives to smuggle it into rebel hands. The Fed was giving this thing away for free until 1994 I believe.
I mean this with sincerity, I am not linking to this because I want any Free Advice regulars to jump in. But I know that I derive entertainment when I see other people throwing down over ridiculous things, so I thought you might too.
Steve Horwitz offers a pretty good summary of the fight so far, and I got sucked into the hostilities in the comments. Personally I would like to see this argument distract all of us libertarians until the passage of both socialized medicine and cap & trade, but I’m not sure it has the legs.