But many share the assessment that inflation, in particular, has been too low in recent years, and that somewhat higher inflation would be a welcome development... Typically, the wealth effect of rising stock prices provides some lift to consumption and should provide some pep for the economy.
You probably know that Mr. Rubio is proposing big tax cuts, and may know that among other things he proposes completely eliminating taxes oninvestment income — which would mean, for example, that Mitt Romney would end up owing precisely zero in federal taxes.
.. What you may not know is that Mr. Rubio’s tax cuts would be almost twice as big as George W. Bush’s as a percentage of gross domestic product
.. So when Mr. Rubio genuflects at the altars of supply-side economics and hard money, he isn’t telling ordinary Republicans what they want to hear — by and large the party’s base couldn’t care less. He is, instead, pandering to the party’s elite, consisting mainly of big donors and the network of apparatchiks at think tanks, media organizations, and so on.
In the G.O.P., crank doctrines in economics and elsewhere aren’t bubbling up from below, they’re being imposed from the top down.
The Fed’s Phillips curve model isn’t working anyway. The unemployment rate has come down to 5 percent and the inflation rate is near zero. According the Fed, inflation ought to be 4 or 5 percent. It’s not. The dollar is up. Oil and commodities are down. There is no global rise of inflation. And there’s a strong worldwide demand for greenbacks. This is good, not bad, according to veteran free-market economist Alan Reynolds. He’s right. What causes inflation? Bad money. Excess money. Too much money chasing too few goods. How do we measure this? We use market-price indicators, such as commodities, the dollar exchange rate, and Treasury inflation expectations.
.. Supply-side policies to reduce burdensome taxes and regulations will grow the economy and reward workers. That’s what’s missing from the picture. The Fed should wise up and stick to price stability rather than slamming workers. And China should let markets determine currency and stock prices instead of the central planners.
Then we can get bullish again.
His latest investor letter recycles all these ideas, inveighing against the Fed’s “fake prices,” “fake money,” and “fake jobs,” before zeroing in on where inflation is really showing up — his wallet:
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.
That’s right: Paul Singer thinks Weimar-style inflation might be coming because he has to pay more for his posh vacation homes and art pieces.
Now, it’s true, if you’re a billionaire who’s interested in decorating your high-end real estate with high-end art, then, yes, your personal inflation rate is higher than others. But tough luck. (I’m pretty sure you’ll manage). The Fed, you see, isn’t worried about the Billionaire Price Index. It’s worried about inflation on goods and services we all face. And that, despite zero interest rates, is still below the Fed’s 2 percent target. That’s not going to change anytime soon, either. Indeed, just because the super-rich are bidding up the prices of houses in the Hamptons doesn’t mean that middle-class people, whose wages are flat, are going to bid up the price of, well, anything.