Recent comments by ROBERT BAESEMANN

• The Promise of Abenomics

  US average annual inflation rate since 3/3/2008 is 1.75%. Since 3/1/2008 the CPI has risen by 9.1%. Hubbard thinks that "Nowadays, to save and invest ... entails a running battle ... with the government to prevent devaluation of one's funds through inflation.” A bold proclimation on behalf of no one living in the US where the inflation rate is 1.75%. (“Nowadays” seems to indicate that Hubbard is speaking here on behalf of the common folks.)
  
  Even worse, Hubbard steps up for the common folks and says, “Even 2% inflation over the time it takes to amass money needed for life's major expenses is a major difficulty to surmount.” Fisherian interest rate theory and years of empirical observation tell us that the common folks can put their savings in CDs, which pay interest at rates that cover the expected rate of inflation. Hence the common folks are doomed or saved by a system that returns on their savings the natural or real rate of interest. The current yield on 10 yeat Treasuries of about 3% seems to be that rate, which is all the common folks realize in real terms regardless of the inflation rate.
  
  So Hubbard’s thoughts are really concerned with bankers who steadfastly maintain that they cannot cope with any inflation at all. There really isn’t a soul out there who couldn’t easily cope with inflation rates of 4% to 7%. Everyone who has been an adult since 1975 has done this, and we all know we could do it again. Bankers do not know that that they prospered through inflationary times in the past, but who cares about bankers who don’t even understand their own business.
  

• America’s Global Election

  Please consider this shopping list or wish list for the future:
  
  1) Restore the Chairmanship of the Council of Economic Advisors to a Cabinet level position with the intent of building the economic literacy of voters and making policy that makes sense;
  
  2) Make a clear unflinching assessment of the financial health of the US financial sector including an unflinching assessment of its ability to withstand a run on the banks (Keeping in mind that we are still in a liquidity trap which seems to be inexplicable);
  
  3) In the style of the new economic history, create a reliable assessment of the consequences of a second financial crisis and global bank failures meaning estimates of where the Second Great Depression would leave us (Assuming the world can deal with knowing the stakes of the game we have been playing):
  
  4) Ask that President Obama award the Medal of Freedom to Henry Paulson, Timothy Geithner, and Ben Bernanke for their courage and decisiveness during our blackest hours in the fall of 2008;
  
  5) Demand that the Justice Department to initiate grand jury investigations of all of the major banks who participated in the financial collapse of 2008, the rating agencies who were paid to rate toxic assets AAA, and the Government regulators who failed to do anything to stop the destruction;
  
  6) Make economic policy and put it before Congress, and then hold the Republicans in Congress accountable for making a different policy on their own;
  
  a) Work with the newly elected Senator from Massachusetts to propose and pass new regulation to strengthen Dodd-Frank;
  
  b) Develop and propose a new stimulus package and send it to Congress and force the House Republicans to accept it or take responsibility for not passing it;
  
  c) Demand that the Congress pass a new debt ceiling or take full responsibility for the consequences; and
  
  7) Propose and insist on legislation to return our Country to a non-regressive tax structure while remembering that a regressive tax structure is impossible in a democracy where voters are adequately represented and that taxation without representation is tyranny.
  

• Is Inflation Returning?

  In 1967, I heard Robert Solow give a public lecture in which he stated that the optimal inflation rate would be something on the ordedr of 4%. I have not heard a reponsible fully qualified economist say anything different since then. The apparent exceptions have been and now are economists who court the favore of the banking establishment. The bankers never tire of bleating about their fears of the big bad wolf. Their reasons are clear. They fear that they will need to take risks in order to operate profitably. Taking such risks is the reason we have banks and bankers. Apparently, bankers and those who speak for them hope to use government intervention to create a very comfortable welfare state for bankers and their shareholders. I am surprised to find bankers onthe list of people Mr. Romney calls dependant.