The topic of stagflation was discussed tonight on CNBC’s “Kudlow and Company,” and guest John Browne, former member of British Parliament and ultra-stagflationist, argued that we are facing a “far, far worse situation than the 1970s,” and further predicted that we are “facing a massive recession.”
Larry Kudlow disagreed, and said “Stagflation is a total canard.”
The money supply data support Larry Kudlow, not John Browne. The chart above compares the growth of M1 during the peak of the stagflation period of the 1970s (the 85 month period from December 1974 to December of 1981) to the growth of M1 over the last 85 months, from January 2001 to January 2008. (M1 is set to equal an index value of 100 in the beginning month of each sample period.)Notice that there is a significant difference between the two periods: During the 1970s, M1 grew by almost 60%, compared to a 24% growth during the last 7 years. And for the last 3.5 years, M1 has been flat, with almost 0% growth!
Like Larry Kudlow, when it comes to stagflation, “I don’t buy it for a nanosecond.” Not gonna happen.
“The medical establishment is opposed to drop-in clinics in Wal-Marts and other retail stores. But self-interested doctors need to get over their archaic ways of doing business,” says Dr. Rahul K. Parikh, a member of the American Academy of Family Practice, and the American Academy of Pediatrics, writing in Salon.com:
The medical community needs a second opinion. Retail clinics are good for American healthcare. By giving doctors a run for their money, they force us to do something we don’t do well: innovate. At their best, retail clinics can make doctors look like smart entrepreneurs instead of a self-interest group futilely trying to protect archaic ways of doing business.
Three Carpe Diem charts from this post were featured on CNBC’s “Kudlow and Company” tonight as part of the segment “Kudlow 101: An Outlook on Commercial, Consumer, Industrial and Real Estate Loans.” Here is the link.
SAN FRANCISCO — Bill Gates Sr. — father of the co-founder of Microsoft who is the USA’s richest man — is fighting to keep Bush from killing the estate tax that hits the super-rich but also some small-business owners and farmers. His son agrees with him, as do billionaires Warren Buffett, David Rockefeller Sr. and others.
DES MOINES, Iowa (AP) – An Iowa Senate committee has approved a bill to grant tax breaks to Microsoft — if the computer giant decides to put a project in Iowa.
As Taxing Tennessee points out, Bill Gates opposes eliminating the death tax but is quite happy to have local and state taxes eliminated for his company, Microsoft, which is holding more than $22 billion in cash, and made about $17 billion in profits last year.
Harvard professor Martin Feldstein, writing in today’s WSJ:
The principle cause for concern today is the paralysis of the credit markets. Credit is always key to the expansion of the economy. The collapse of confidence in credit markets is now preventing that necessary extension of credit. The decline of credit creation includes not only the banks but also the bond markets, hedge funds, insurance companies and mutual funds.
The dysfunctional character of the credit markets means that a Fed policy of reducing interest rates cannot be as effective in stimulating the economy as it has been in the past. Monetary policy may simply lack traction in the current credit environment.
The collapse of the credit markets began last summer when the subprime mortgage crisis demonstrated that financial risk of all types had been greatly underpriced, that the market prices of complex financial assets overstated their true values, and that the credit scores provided by rating agencies are not to be trusted. Because market participants now lack confidence in asset prices, they are unwilling to buy existing assets, thus preventing current asset owners from providing credit to new borrowers.
Comment: What collapse/paralysis of the credit market? The most up-to-date banking data suggest otherwise.
According to quarterly banking data released yesterday by the Federal Reserve on “end of period levels” through the end of 2007 for all banks, bank credit/loan volume is at an all-time record for all types of credit (business, consumer, real estate)! See charts above, click to enlarge. If there is some paralysis/collapse of the U.S. credit markets, how can bank loan volume be at all-time historical record high levels?
New Reason.tv episode with Drew Carey:
Vikki Reyes has had it with Locke High, the school her daughters attend in the Watts neighborhood of Los Angeles. She walked in on class one day and recalls “the place was just like a zoo!” Students had taken control, while the teacher sat quietly with a book.
Frank Wells has also had it with Locke High. When he became principal he says gangs ruled the campus. He tried to turn things around but ran into a “brick wall” of resistance from the school district and teachers union.
Locke seemed destined to languish in high crime and low test scores until Wells, Reyes, and many reform-minded teachers joined with a maverick named Steve Barr in an attempt to break free from the status quo. Their battle is just one example of the charter school education revolt that’s erupting across the nation.
NEW YORK (Fortune) — Economic conservatives should take heart. John McCain’s chief economic advisor – and perhaps his closest political friend – is the ultimate pure play in free market faith, former Texas Senator Phil Gramm (Ph.D Economics, University of Georgia, 1967).
If McCain follows Gramm’s counsel, and most of his current positions are vintage Gramm indeed, his policies as president would represent not just a sharp departure from the Bush years, but an assault on government growth that Republicans have boasted about, but failed to achieve, for decades.