20 May 2013


Potpourri 16 Comments

==> Some people complained to me when this came out, but I thought Russ Roberts did a good job keeping Sumner honest in this interview. At the very end, Russ says something like (not exact quote), “You tell interesting an interesting story, Scott, it might even be true.”

==> Joe Salerno on the Fed realizing low interest rates might be a problem.

==> Some funny “memes” about the White House scandals and the press.

==> Tom Woods plays with fire. Although the lady in the video is speaking nonsense.

==> JP Koning uses a very Misesian argument about why stocks aren’t a good hedge against inflation.

16 Responses to “Potpourri”

  1. Yosef says:

    I am bit confused by the furor over the DOJ AP scandal. Isn’t the government supposed to investigate leaks? Were the phone records obtained in violation of the law? If the phone records were obtained legally, the way records are obtained in every investigation, is the scandal just the fact that this happened to a media organization?

  2. Joseph Fetz says:

    Dude, weren’t you on Mike Salvi’s show (which is live) during the posting of these, or are these timed posts? Maybe you really are a ninja.

  3. Daniel Kuehn says:

    That Napoleon Dynamite one was pretty funny

  4. Dustin says:

    Wait. I’m a bit confused on the equities as an inflation hedge article.

    I believe I understand his argument concerning historical cost accounting, but I don’t find it very convincing. Let’s stick to the inventory for now. In his TV example, he is saying that a firm that previously generated a gross margin of $50 before inflation will now generate a margin of $300 due to the inflated selling price and the uninflated historical cost of the inventory. This profit is supposedly an accounting illusion and the company will be taxed on them anyway, resulting in a tax bill of $150 (50% tax rate). However, the company still gets to keep the other $150, the real value of which is now $75. The company was earning real after-tax profits of $25 before the inflation, and will now earn $75 on its inventory purchased prior to the inflation.

    I can definitely see how this is not a lasting prosperity. Any new inventory will have to be purchased at the inflated cost of $400 and sold for the inflated price of $500, netting $100 pre-tax, $50 after-tax which is back to $25 in real terms. However, this means the company got a one-time windfall on the real assets it purchased prior to the inflation, and will return to “normal” profitability post-inflation. This seems to tell me that stocks make rather good inflation hedges. Am I missing something?

  5. Ken B says:

    No Sunday post this week? Ah well, here is a brief refutation of Bob’s worldview anyway. http://www.youtube.com/watch?v=bita3nibuSw

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