NIA Article Comment Reax

I did not anticipate my National Inflation Association article garnering as  much attention as it did.  I’ve had a busy winter.  Apologies for the delay.  There are a lot of comments, mostly poorly thought out and incendiary, so let me try to highlight some of the more interesting ones and clarify my own commentary.

Prof Dave writes:

“In all my years studying economics I have yet to meet a female that understands the basic fundamentals of economics.”

That’s terribly depressing.  Especially for a professor.  He then goes onto to call me a Keynesian, because obviously all I talked about in my post was my desire for the Fed to recklessly print mad cheddar and then take a dump on Milton Friedman’s head.

“Inflation is an increase in money supply leading to a direct devaluation of the currency which in turn leads to an increase in prices and costs. Simply stated the more of a currency that is in circulation the more that is available to speculate in stocks/commodities thus driving prices up, not down as ignorance would have us believe nor is it a supply/demand issue.”

So what is inflation?  Is it the increase in money supply, as Prof Dave suggests?  Is it the devaluation of currency?  Or is it the increase in prices and costs?

In a comment, directed at another member. I cited two macroeconomics textbooks that inflation is the increase in prices and costs.  I’m going to stand by the academic standard and not use the fringe definitions of the Austrian school so popular among my commenters.  Rewriting the definition conflates definition with causation.   (Increase in money supply is the main cause of inflation, most economists believe, but it is not the only cause.)

Printing bills, increasing the money supply, drives long-term inflation.  I get that.  That’s not the point of the post.  I didn’t write a criticism of the NIA as comprehensive defense of the US government’s fiscal and monetary policies.  I wrote it to point out the youtube video’s conclusion of apocalyptic economic disaster was not supported by any thorough data in the video and that the NIA’s interest in the hype was rooted not in a humanitarian effort of spreading knowledge and presenting alternative economic policy but rather in their motive of pimping precious metal stock.

I said that I didn’t know whether gold is a good long term investment or not.  I presented an alternative opinion that existed.  There, of course, was no shortage on the ad hominem bandwagon.  “Using the biased Huffington post as a source? The authors motives are as suspect as the NIA.”  Ew, Huffpo.  Icky liberals are incapable of ever having a meaningful thought.

But you don’t need to the investment expertise of <insert media mogul here> to know that precious metals are not immune to speculation and the entailing consequences.  Silver stocks recently took a fall, something that the National Inflation Association had to admit:

“We never expected silver to rise to almost $50 per ounce so quickly.  Silver simply rose too far too fast and was due for a correction.”

On an interesting sidenote for the all Schiff-heads, as brought to my attention from  rtorre02, Peter Schiff recently called the NIA a “Penny Stock Pump and Dump.


Economics is a difficult science in which a litany of variables exist in constantly evolving system that make it hard for empirical testing to produce consistent models.  Any talk of it can elicit a plethora of everlastings debates about the relationship and extent of government.   These are issues where a single blog post about a youtube video makes a poor discussion forum.

I never stated directly but it’s fairly obviously that I’m of the opinion that the United States is not going to have a Zimbabwe-level hyperinflation crisis.  Not within the next 10 years and certainly not for the sole reason of expansionary monetary policy.  It’s possible, but it would take some severe policy mismanagement that I don’t think is currently occurring or is likely to occur.  (There’s obviously dissent here, but no one thus far has commented on it in the form of a well-researched, cited argument.)

There’s also the logical thinking involved with parsing the argument insinuated by so many that, “Well, Peter Schiff was right about the 2008 financial crisis and the mainstream ‘experts’ were wrong, so Peter Schiff has to be right here.”   There is so much wrong with that line of thinking, for sanity’s sake I’ll leave it at that.

There will always be doom-sayers.  In economics, religion, whatever.  Some will sincerely believe what they preach.  Some will ride the wave of psychosis for monetary gain.  And there will always be those who will fail to question, who give into their own precognitive biases, who dismiss the conventional in lieu of the sensational even when the conventional makes sense.  It may sound hypocritical from a blogger with the intent on stirring the kettle, but really, have some humility sometimes.


6 thoughts on “NIA Article Comment Reax

  1. You seem like a really good guy and if debt was 10% of GDP I would agree with you on the point that this policy is sustainable for the forseeable future. But dude, EVERY FIAT currency in the past has crashed after exceeding 100% of debt vs GDP. My friend, you seem wanting to be convinced you’re wrong, yet you can’t even prove yourself right by procducing one country that hasn’t crashed after exceeding 100% thus your critics. You can’t stand in a pile of poop and say is smells like roses without someone calling you nuts. Take care.

  2. There’s a different types of debt, so I’m going to be talking about the public debt to GDP ratio in the next comment. Source:

    By your logic, not only is the US on the road to being fucked, but France, Germany, the UK, and Israel are going to fucked, and Japan is uber-fucked (225.8% of GDP). A few of those countries aren’t doing great, but they have separate economic circumstances that need to looked at on a case by case basis apart from the US.

    For external debt, Luxemborg’s is 3,443% of GDP. External debt is sometimes considered more dangerous than internal debt.

    But again, we can’t compare our country to Luxemborg with any great degree of accuracy because of our size, non-Euro currency, public v external debt, and a bunch of other factors.

    So what fiat currencies that crashed are you referring to? The Yuan Dynasty? Because 15th century China is certainly comparable to 21st century America.

  3. There’s no science in economics. It’s a political means to manage resources. If economics was in a distributed system where resource management weren’t subject to the whims of speculation, but to the calculation and adjustment of a self correcting system, then it would be able to be studied and improved, like say geology. Until then the politicians along with the media will continue to pray upon the “Consumer Confidence” as a means to increase the rich to poor wealth distribution ratio. There is an interesting book by Charles Mackay called “Popular Delusions and the Madness of Crowds”, it was written in 1852 but gives a history of some of the earlier Ponzi Schemes that mirror the USA’s current financial crisis. Ain’t nothing new under the sun!

    • So the empirical models using numerical data used to make predictions and models about the quantitative variables of production and consumption of goods and services are not science?

      Try telling that one to an economist.

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