31 May 2014


Inequality, Piketty, Potpourri 4 Comments

==> BusinessWeek explains why the 1% (annualized) drop in GDP in the first quarter is good news for the economy. Hint: it involves inventories. Oh boy.

==> Be careful, this article says the government is reporting that “food price inflation” is running at a 22% annual rate, YTD. But no, if you click the link to the source, you find that the government was reporting beef and veal prices are up a 22% annualized rate, YTD. Obviously, I think the government is downplaying actual price inflation, but the Breitbart piece was claiming the government’s own figures showed food was up 22%. Nope.

==> Randy Holcombe has some good points about capital & interest theory in his review of Piketty.

==> Howard Reed does a good job laying out the different data sets on which Piketty and Giles drew for their respective (and vastly different) trend constructions. Reed says it boils down to Piketty adjusting for discontinuities between the original sources. I have no real problem with Reed’s arguments. What made me flip out is when people initially said that Giles’ results were basically the same thing as Piketty’s.

==> David Beckworth goes over the historical evidence to judge the odd claim put out by Williamson and a few others (?) that the Fed’s low interest rates must yield low price inflation (to maintain equilibrium).

4 Responses to “Potpourri”

  1. Enopoletus Harding says:

    The 1% annualized drop in GDP in the 1st quarter also occurred in the first quarter of 2011.

  2. Philippe says:
  3. Rick Hull says:

    The Holcombe article scratched a very real itch.

    • guest says:

      That really was good.

      From the article:

      A larger problem is that Piketty assumes capital earns some rate of return, r, so the share of income going to capital, α, is determined by the value of capital times the return it earns. This is exactly backwards.

      Capital does not have some value, which then earns a return to provide income to the owners of capital. Rather, capital consists of productive assets that generate a return, and the value of the stock of capital is determined by the return it generates, rather than, as Piketty depicts it, the return being determined by its value.

      Here’s what scratched that same itch, for me:

      The Birth of the Austrian School | Joseph T. Salerno

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