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Re. the following:
The other
qualification concerns your suggestion that my analysis of the
cause of the
inflation after 1969 is "the classic explanation for the
stagflation of the
1970s [and] appears in all textbooks (Samuelson's for
instance)." Samuelson
would be surprised to note that...
James,
You are right on this one - in my 1976 copy of
Samuelson' Economics, he wrote that the "stagflation" problem remained
to be explained.
If some young economic scholar could figure it
out, he added, he or she would be on track for a Nobel Prize in Economic
Science.
Gunnar
----- Original Message -----
Sent: Thursday, January 15, 2004 4:14
AM
Subject: [gang8] Re: The US Dollar,
Inflation and the Outlook for 2004
Sam,
Your responses are always acute and
refreshing.
(I like them too because you so often agree with me - and
indulge my
egocentricity!!)
However, just a couple of
qualifications.
I am not anti-American.
I am strongly anti the Bush
Administration. I think this administration has
done the United States a
great deal of harm and has split many people
overseas asunder from a
country, a civilisation, a "culture" if you like to
which they have been
deeply attached for decades and even generations.
I fought alongside the
Americans after Pearl Harbour. Their performance then
and for many years
afterwards deserved and continues to merit recognition. I
like to think
that the Bush episode is a bleak and, in some ways, even
terrifying
regression from which they will soon recover
The other qualification
concerns your suggestion that my analysis of the
cause of the inflation
after 1969 is "the classic explanation for the
stagflation of the 1970s
[and] appears in all textbooks (Samuelson's for
instance)." Samuelson would
be surprised to note that and so would Greenspan
who too embraces quite a
different theory and, in particular, the idea that
a hike in interest rates
is the way to deal with actual or potential
inflation. The mainstreamers
around the world, including the central
bankers, have been for decades and
still are afflicted with this notion.
A man called Gibson - the "Gibson
paradox" - thought otherwise way back in
the 1920s and Keynes had a brief
flash of understanding in the thirties but,
for the rest, it was left to me
to tell the world, in 1970-71, that you'd
get stagflation if you hiked
interest rates. (The sad thing was that not
much of the world listened.)
There are now a few, in Gang 8 and ICE, who
think as I do but we're a
pretty select - though we try not to be
exclusive - bunch.
Thanks again,
Sam, for your comments which are always appreciated.
James
Cumes
http://www.authorsden.com/visit/author.asp?AuthorID=3473
http://members.chello.at/jamescumes/default.htm
http://www.kokodatrail.com.au/forums/?showtopic=54
http://members.chello.at/jamescumes/VOW/default.htm
-----
Original Message -----
From: "Sam Vaknin"
<vaknin@xxxxxxxxxxx>
To: "James Cumes"
<cresscourt@xxxxxxxxx>
Cc: <vow@xxxxxxxxxx>;
<gang8@xxxxxxxxxxxxxxx>;
<pkt@xxxxxxxxxxxxxxxx>;
<jozefimrich@xxxxxxxxxxxxxx>; "William
Engdahl" <engdahl@xxxxxxxxxxx>
Sent: Wednesday, January 14, 2004 2:06
PM
Subject: Re: The US Dollar, Inflation and the Outlook for
2004
> Dear James,
>
> Thank you for your kind
words.
>
> You wrote:
>
> "My analysis differs from
yours - and from that of everyone else of whom I
> am
> aware - in
that I relate the deficit, directly, to the inflationary
> pressures
that arose in the late sixties and early seventies and to the
> unwise
policies that, then and after, were used in the attempt to curb
>
inflation.
> Those unwise policies simply intensified inflation - giving
us initially,
> you will recall, stagflation."
>
>
Sam:
>
> Actually, the connection between the twin deficits,
inflation, and
retarded
> economic growth as the classic explanation
for the stagflation of the
1970s,
> appears in all textbooks
(Samuelson's for instance).
>
> What I find new and intriguing in
your article is the novel linkage you
> propose between capital
investment and inflation:
>
> "Some countries avoided stagflation
through policies of intense, real,
> fixed-capital investment. The
outstanding economies in this respect were,
in
> the 1970s, (West)
Germany and Japan."
>
> That - to the best of my knowledge - is a
new and enlightening twist on
> economic orthodoxy!
>
>
James:
>
> "they thought that the "recovery" after 2001 was a real
recovery.
> It wasn't and isn't, of course, and the pressures built up
constantly
during
> those boom and bust years, plus the "recovery"
years, to leave us in the
> position we have today in which the Mother
of all Boilers could now burst,
> unless we're lucky, with an explosive
intensity and a global reach that
> we've never imagined
before."
>
> Sam:
>
> Couldn't agree
more.
>
> James:
>
> So we must not make the mistake
of ascribing the American "free lunch" to
> characteristic American
villainy or, for example, to imperialist designs.
>
>
Sam:
>
> This paradise of fools inhabited by both the USA and
exporting countries
> reminds me of another "coevolution"
---
>
> Reminds me of the collusion between greedy American
investors and
avaricious
> rapacious American
managers.
>
> When the bubble burst the former feigned innocence
and blamed it on the
> villainy and imperialist designs of the latter
...
>
> I happen to be a rabid anti-American and am following its
inevitable
decline
> with ever-rising hopes and delight - but I think
your brilliant analysis
> hits quite a few nails on their proverbial
heads.
>
> Take care.
>
>
Sam
>
>
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