10 Oct 2017

Murphy and Co-Host Twin Spin

Contra Krugman, Lara-Murphy Show 2 Comments

==> In the latest Lara-Murphy Show, we argue that we’re in a real estate bubble.

==> In the latest Contra Krugman, we kinda sorta endorse Krugman’s critique of Paul Ryan on fiscal matters.

2 Responses to “Murphy and Co-Host Twin Spin”

  1. E. Harding says:

    It makes zero sense to argue real estate is now in a bubble. See Kevin Erdmann on this.

  2. Tel says:

    Hey I liked your LMR episode, here’s my comments:

    All the shirts are dirty… if you keep cash under the bed then you are at risk of price inflation and a potential Fed policy of “stimulus” and money printing. If you have a Whole Life policy that’s functionally similar to keeping cash under the bed since your policy is denominated in dollars… but you get a few benefits like some interest on your investment, and you get a payout if you happen to die (some see that as a benefit, depends on point of view).

    That said, if you are worried about rampant price inflation then owning a solid asset like land, gold, silver, is a great hedge against price inflation in the long term (but in the short term any of those could temporarily crash for all sorts of reasons).

    You could try Bitcoin or some other crypto but that’s highly speculative, anything could happen so good luck!

    But who knows? The economy might go into a deflationary spiral and a bust and if that happens then a lot of asset prices could crash down with it. So unless you acknowledge that there’s uncertainty on every side then I don’t think you are giving a balanced picture there.

    So a few other points… Austrian theory says that low interest rates trigger an unsustainable boom which ultimately leads to bubbles and the whole lot pops and deflates. Then you go into debt deflation. OK, but there really was no boom under Obama. There was barely even an Obama recovery. So either we are out into entirely new territory or else if Austrian theory holds then the deflationary crash will be of limited magnitude. Also, I don’t believe Carlos about all those enthusiastic young people who just never have seen bad times… at least that doesn’t apply this time around, because I know quite a few young people and they thing they ARE living through hard times. They are not splashing out and getting deep into debt. Everyone I know is expecting *something* bad to happen with the economy. We simply disagree on what’s going to go wrong and when.

    The 2008 crash was different to the others in as much as it’s still with us… we never escaped it properly. That’s not to say everything is just fine, but the problems we are living with don’t seem to fit the basic boom/bust cycle.

    Lastly… Yellen is clearly aware of the tightrope she is walking between price inflation and a US dollar devaluation on the one hand; vs interest rate hikes causing a fragile bubble economy to pop and deflate on the other hand. She knows the deal and so far she has walked that rope. I can respect that. OK, if I had my druthers I would not set up a crazy system like this, but under the circumstance Yellen is as good as it gets. She really is trying to balance this right down the line between inflation and deflation. Can it be done? I dunno, I’m gonna find out.

Leave a Reply