Monday, November 10, 2014

Krugman, hyperinflation in the Hamptons, Veblen goods and secular stagnation

The Krugginator - on the use of ridicule. Wherein, among other things, he ridicules the poor rich fellow Paul Singer who says yes indeed there is hyperinflation - in the Hamptons:

Washington Post - poor billionaires suffer hyperinflation in the Hamptons.

Here's Krugman's take on the story:
Meanwhile, a quick hit. Matt O’Brien has a lot of fun with Paul Singer, a billionaire inflation truther who is sure that the books are cooked because of what he can see with his own eyes:

… check out London, Manhattan, Aspen and East Hampton real estate prices, as well as high-end art prices, to see what the leading edge of hyperinflation could look like
Hyperinflation in the Hamptons; hard to beat that for comedy, although Matt adds value with the Billionaires Price Index.

This is interesting, because Krugman loves talking about secular stagnation, particularly the endemic collapse in growth-environment interest rates and inability of advanced economies to generate inflation.

And I've been asserting that the answer is in Piketty, that there has been decreasing demand for the money that rentiers wish to rent out for income simply because the rentiers have been stealing an ever-larger share of capital for themselves.

So can you see why it's interesting?

It's interesting because, if the rentier/plutocrat class gets wealthier and wealthier, then you'd expect inflation to shift to the rentiers' section of the economy, and thus Veblen goods should see high inflation while the peasant/serf part of the economy sees none.

And a corollary of this is that Paul Singer has proven for us that the rentier/plutocrat class actually is stealing an ever-larger share of the economy at the expense of the peasantry. Which is even more interesting.

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