# Inflation Looming? Phillips Curve vs. Quantity Theory

Look at this:

Figure 1: Ratio of M1 to real GDP (blue), of M2 to real GDP (brown), of M3 to real GDP (green), 1959Q1-2020Q3. Quarterly money data average of end of month data. Source: Federal Reserve via FRED, and BEA, 2020Q3 2nd release, and author’s calculations.

Should I be worried about imminent inflation? The Economist thinks we should be on guard, even if not likely. If I believed in the Quantity Theory of Money (MV = PY), maybe I should. Let consider what it implies, given the sharp jump in money stock. At the end of November, M2 was about 22% above levels the previous November — so naively, one might expect over time a 22% increase in price level.

Let’s consider the empirical content of various models of inflation. First, quantity theory — is there an error correction version that has any predictive power over the Great Moderation/pre-Covid period (1986Q1-2019Q4)?

Figure 2: Year-on-year growth rate of consumption deflator versus error correction term implied by Quantity Theory (M2, no trend) lagged 4 quarters, inverted so implied positive coefficient, 1986Q1-2019Q4.

That is, assuming the PCE deflator and the M2/real GDP are cointegrated, we should see the growth rate of the PCE deflator respond with a negative coefficient. In the above graph, I’ve inverted the error correction term, so there should be a positive correlation. For the 1986-2019 period, there is none. In fact, there’s essentially no correlation.

I can more carefully conduct a cointegration analysis. Over the entire 1959-2019 period, or the restricted 1986-2019 period, a multivariate cointegration test incorporating plausible assumptions regarding constants and/or trends in the specifications fails to reject the no cointegration null.

What about a simple Phillips Curve specification involving the output gap (as defined by the CBO)? Here one finds a little more supportive evidence, but not overwhelming.

Figure 3: Year-on-year growth rate of consumption deflator versus output gap lagged 4 quarters, 1986Q1-2019Q4. Source: BEA 2020Q3 2nd release, CBO Economic Outlook Update (July 2020), author’s calculations.

There could be many reasons for this outcome — instability in the slope relationship, failure to account for expectations (anchored vs. accelerationist), or mismeasurement of potential GDP — but at first glance one would be hard pressed to determine the better predictor of inflation. Of course, there is a very large literature resurrecting the Phillips curve (Coibion et al. for measuring expectations correctly, Blanchard et al. for accounting for structural breaks, among others), so one rightly be more persuaded by the Phillips curve approach.

Personally, I find the idea of a nonlinearity in the Phillips curve interesting. If one uses a “plucking” model of potential GDP as a motivation, one can see the correlation between inflation and maximal output pretty clearly.

Figure 4: Year-on-year growth rate of consumption deflator versus slack lagged 4 quarters, 1986Q1-2019Q4. Slack measured using author’s implementation of Delong-Summers trend output, discussed in this post. Source: BEA 2020Q3 2nd release, author’s calculations.

As I discussed previously, the focus on slack is consistent with this plucking model. The Fed’s new monetary strategy is also consistent with this view.

Does this mean we have no need to worry. If one believes that we will be way below potential GDP for a while, then no. Using the WSJ’s December survey mean forecast, and the CBO’s estimate of potential GDP, end-2022 is when one might start worrying about inflation, using this criterion; later still if using my estimate of maximal output (which depends on the actual evolution of output).

Figure 5: GDP as reported (black), WSJ December mean survey by quarter (red), by Q4/Q4 (red square), CBO potential GDP (gray). Source: BEA 2020Q3 2nd release, CBO Economic Outlook Update (July 2020), WSJ December survey, and author’s calculations.

## 91 thoughts on “Inflation Looming? Phillips Curve vs. Quantity Theory”

1. pgl

OK the reporting of M3 has ceased but it does seem FRED reports MZM, which has recently jumped (or as Congdon would say HUMPED). Maybe your graphs should show MZM/Q instead of M3/Q just to capture recent events.

2. pgl

“In 1975 Adam Fergusson, a journalist on the Times, published a book called “When Money Dies”. A history of hyperinflation in Germany in the early 1920s, it was written with an eye to what was going on in the then-present day. Inflation in Britain was not at the prices-soaring-day-by-day levels seen in the Weimar Republic. But in 1975 it reached an unprecedented 24%—grim enough for Fergusson’s warning that the experience of inflation was “totally absorbing, demanding complete attention while it lasts” to hit home.”

Good grief – all long will we have to endure this 45 inflation paranoia? What else was going on in 1975? Oh yea Gerald Ford’s stupid WIN buttons.

At least 1975 was the first season of Saturday Night Live – which still rules!

1. Paul Mathis

Yes, Ford’s WIN buttons were silly, but Ford achieved the steepest inflation reduction from its peak in Nov. 74 at 12.2% to nadir of 5% in Dec. 76 since Truman’s reduction in 1951-52. OTOH, Carter achieved the highest inflation of the post-WWII era in Apr. 1980 at 14.6% which brought on the Reagan landslide that curses our democracy to this day. https://fred.stlouisfed.org/graph/?g=gJ4#0

So while Carter is revered, the fact is that many things he did or did not do as president still haunt us today. Nothing Ford did matters now.

3. Not Trampis

Inflation aint coming until you have a sustained recovery and shortages for labour mean wages start rising to levels which are dangerous for central banks.

monetary theory is deceased. It is a dead parrot

4. oee

I thought I was not clear. the economy in the planet is in a state of depression . there is no demand for anything. there are plenty of supplies.
the Corporate globalization with technology, and the end of the Cold War has produced a situation that has created plenty of goods and services.

1) Tv’s-you can purchase TV’s from any where now. 50 years ago you had to Sears, or your local store which had a monopoly in its town. Small town America had no choices. now you have a Wal mart in every town. Now your have a surfeit of retail space.
2) End of the Cold War -it opened major labor markets for US multinationals so they can produce anywhere and now countries and states compete which each other the next factory , the next headquarters with the race to the bottom.

i do not see where shortages of goods will materialize.

1. Willie

Shortages of buyers will be the limiting factor. When a company moves production to lower and lower cost areas, that puts downward pressure on wages. Which means the goods and services had best be really cheap or they will go unsold. Don’t forget that retail isn’t just WalMart. You can buy online and never set foot in a retail space anywhere.

Unless we start rebuilding the grid and the rest of our infrastructure, we will be inefficient and out of work sooner or later. Then maybe we will see the kind of miserable economic performance that turns into both inflation and recession/depression at the same time.

2. Paul Mathis

Chinese consumers may cause shortages in the future. American consumers will have to compete with them.

5. ltr

December 13, 2020

Coronavirus

US

Cases   ( 16,737,267)
Deaths   ( 306,459)

India

Cases   ( 9,884,716)
Deaths   ( 143,393)

France

Cases   ( 2,376,852)
Deaths   ( 57,911)

UK

Cases   ( 1,849,403)
Deaths   ( 64,170)

Germany

Cases   ( 1,338,483)
Deaths   ( 22,406)

Mexico

Cases   ( 1,241,436)
Deaths   ( 113,704)

Cases   ( 460,743)
Deaths   ( 13,431)

China

Cases   ( 86,725)
Deaths   ( 4,634)

6. ltr

December 13, 2020

Coronavirus   (Deaths per million)

UK   ( 943)
US   ( 923)
France   ( 886)
Mexico   ( 878)

Germany   ( 267)
India   ( 103)
China   ( 3)

Notice the ratios of deaths to coronavirus cases are 9.2%, 3.5% and 2.4% for Mexico, the United Kingdom and France respectively.

7. ltr

https://news.cgtn.com/news/2020-12-14/Chinese-mainland-reports-16-new-COVID-19-cases-WcTdyWCmVG/index.html

December 14, 2020

Chinese mainland reports 16 new COVID-19 cases

The Chinese mainland recorded 16 new COVID-19 cases on Sunday, including 2 locally transmitted cases in Heilongjiang Province, the National Health Commission announced on Monday.

Nine new asymptomatic COVID-19 cases were recorded, while 197 asymptomatic patients remain under medical observation. No COVID-19 deaths were reported on Sunday, while 9 patients were discharged from hospitals.

The total number of confirmed COVID-19 cases reached 86,741, with 4,634 deaths as of Sunday.

Chinese mainland new imported cases

https://news.cgtn.com/news/2020-12-14/Chinese-mainland-reports-16-new-COVID-19-cases-WcTdyWCmVG/img/119496c9ece14fd8bbd3732f0a8b4276/119496c9ece14fd8bbd3732f0a8b4276.jpeg

Chinese mainland new asymptomatic cases

https://news.cgtn.com/news/2020-12-14/Chinese-mainland-reports-16-new-COVID-19-cases-WcTdyWCmVG/img/fdb8c14855b14bb6bfa95e3cb0814404/fdb8c14855b14bb6bfa95e3cb0814404.jpeg

[ There has been no coronavirus death on the Chinese mainland since the beginning of May.  Since the beginning of June there have been 7 limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

There are now 313 active coronavirus cases in all on the Chinese mainland, 7 of which cases are classed as serious or critical. ]

8. baffling

watching the electoral college vote in the next president, joe biden. democracy at its finest, despite the sore losers who tried to subvert the constitution over the past month. goodbye to the chaos of the past four years. biden is bringing a vaccine into office on day 1.

1. Barkley Rosser

Ah, but Congress still has to count the electoral votes and accept them on Jan. 6, both houses, and Trump and crew are going to pressure the Senate GOPs to say no, which would throw the election to the House where they vote by state, which would lead to Trump winning. That is their last chance, and the dead enders are definitely not giving up before then, with probably a bunch of them not even giving up then, assuming the votes are counted and accepted by both houses.

1. baffling

its a hypothetical. too many gop in the senate have already acknowledged biden as the next president. the issue will stick around in the media to try and way the georgia election in january. but biden is the new president, make no mistake about it.

i find it ironic that all of those republicans supporting trump and these falsehoods have more effectively threatened free democracies around the world than communist china or the old soviet union ever did. kind of ironic all those china hating maga hatters were more dangerous to democracy than the supposed “enemy of democracy”. rick stryker must be proud of the damage wrought throughout the world.

1. Barkley Rosser

It does look that there are enough GOP senators admitting Biden-Harris have won the electoral vote so as to prevent this last gasp effort by Trump and his allies to go anywhere. As it is, however and unsurprisingly, Trump is continuing to refuse to admit the outcome and concede.

1. baffling

trump and his minions better be careful. they are starting to cross the line. stephen miller is out promoting violence and the creation of a shadow government. this is bordering on secession and treasonous activity, with the framework of an attempted coup. if i were biden, i would make clear that those involved in this type of behavior will be treated as enemies of the state. you may voice your opinion, but this call to action is crossing a line. the situation in michigan is an example. we will hold no protections for rebels. they better understand trump will not be able to protect them in the future.

2. Macroduck

Given that Trump will fail to subvert democracy, we still have the problem a goid many people were willing to alliw him to subvert democracy. Even help him do it. Joe kreps saying that’s not jow we do things, but the fact it has to be said is a very bad sign.

The State Department can deal with the problem overseas by pointing to the transition of power, but that is a claim regarding the strength of our institutions. The sickness among politicians and voters cannot be so easily explained away, and domestically, that seems a mich bigger problem
Over time, institutions are only as strong as the public’s support for them.

2. JohnH

Now that that kingmaker Vladimir Putin has congratulated Biden, I guess that it’s now officially over…not that any Democrats are complaining…

1. baffling

the russians just led a major cyberattack against multiple us institutions. i guess putin no longer has any use for trump. too bad trump left the us so exposed to cyberattacks. this event is criminal.

1. JohnH

The biggest dividend that Putin got was Hillary’s attempt to delegitimise the 2016 election. It really made ‘the world’s greatest democracy” look like a shining example for others to emulate. [Not!]

And Putin must be really smiling as Republicans try to delegitimise this year’s elections.

Of course, the real beneficiary was Big Money—heads they win, tails, voters lose. I mean, who needs legitimacy when you’ve got Billions for bribes (I mean, campaign contributions.)

2. pgl

“JohnH
December 15, 2020 at 11:59 am
The biggest dividend that Putin got was Hillary’s attempt to delegitimise the 2016 election. It really made ‘the world’s greatest democracy” look like a shining example for others to emulate.”

Of all the stupid statements you have made over time – this one takes the cake. Senator Clinton almost immediately accepted that Trump won. Even though Trump got massive help during the campaign from the Russian government. But hey – reality never got in your way from writing such asinine comments!

3. Barkley Rosser

No, JohnH, Putin did seriously mess with the 2016 election, as has been clearly documented by the Mueller Report, despite claims by the Trumpists that the MR established “no Russia hoax” and “no Russian collusion,” neither of which it showed. It is unclear if the intervention actually swung it or not.

On HRC, she conceded on election night and all these accusations by Trumpists that she never accepted the outcome, despite winning the popular vote by nearly 3 million, are just baloney. Legitimate questions were raised about Russian intervention, which clearly happened.

As for 2020, it looks like there was probably less Russian intervention, more indirectly done. Quite likely the most serious effort was to cook up the Hunter Biden laptop, although some are blaming the Chinese for that. In any case last night Sean Hannity on Fox never mentioned the electoral college once, but he went on and on about Hunter Biden, claiming that his laptop is just full of awful things that will be coming out. But that laptop story did not sway many votes and Biden’s 7 million vote lead was just too much for Trump, leading him to lose in those crucial swing states.

Anyway, Putin certainly got a lot out of the last four years, but it is over now for that game.

4. JohnH

I don’t challenge the assertion that Russia tried to interfere. I do challenge the nation that this interference was any more consequential than any number of billionaires and “allied nations,” who routinely interfere in US elections.

Focusing almost exclusively on Russia (an issue that the national security state cared about but not most voters) was largely a diversion and distraction that allowed Hillary and then Democrats flogged to their detriment. But it did conveniently allow them to avoid concentrating on and promoting kitchen table issues that most Americans really do care about.

In any case, Putin must be pleased to see America so polarised. After all, the best way to deal with an enemy is to have it implode from the incompetence of its feuding elites, as was the case with Soviet Union.

5. JohnH

pgl is too stupid to know that Hillary’s quick concession had nothing, absolutely nothing to do with her subsequent efforts to delegitimise Trump, which, hyped by Democratic elites, continued for years after 2016. Hillary’s own ineptness is what ultimately doomed her…helped along by billionaires like the Kochs, who had more than enough resources to do everything that Russia was accused of. The difference is that American billionaires are exempt from charges of election interference, even though that’s clearly the name of the game in corrupt American politics these days.

6. pgl

“JohnH December 15, 2020 at 7:03 pm
pgl is too stupid to know that Hillary’s quick concession had nothing, absolutely nothing to do with her subsequent efforts to delegitimise Trump, which, hyped by Democratic elites, continued for years after 2016.”

You are so full of BS. Trump delegitimized himself and you know it. But it is good to see you have gone full Kelly Anne Conway to the bitter end. BTW – read what Barkley wrote in response to your incredibly STUPID comment. Spot on but I guess you are too much of a coward to take him on.

2. Barkley Rosser

Oh dear, JohnH, you are coming on as almost as stupid as sammy, if not fully.

Sorry, but I have no memory of Hillary leading any effort to “deligitimize” Trump after he was elected. This is a line I see coming out of Trumpists and I guess their lying media bubble: oh, she was as bad as Trump!!! Not. She did nothing after her defeat, although she did show up with Bill for Trump’s inauguration, as did both the Obamas and the Bidens. Trump got himself deligitimized by constantly doing things for or with Putin that were blatantly questionable, aides lying to the FBI about Russian contacts, him firing James Comey and then bragging about doing so as to “end this Russia thing” to Lavrov and Kislyak in the Oval Office while leaking classified information. And on and on, contacts verified by the Mueller Report, private talks with Putin, a total failure to ever criticize Putin even once for anything in his entire presidency. Quite a performance this.

As for the election, certainly HIllary had probllems as a candidate, althoiguh it was not her failure rto push some of the pet issues you are so into like raising the miminum wage. She should have spent more time in WI and MI, althoiugh she did make a big push in PA while still losing there. But a lot of people just did not like her for a variety of reasons.

All that said, while I said we shall never be able to determine the impact of the Russian intervention, the case has been credibly made by serious people that it did in fact make the crucial difference. The fake information they pushed was very carefully directed to certain groups in crucial swing states, such as African Americans in Milwaukee, Detroit, and Philadelphia, and we know their turnout was sufficiently down to swing it, although it was probably going to be down at least somewhat without Obama on the ticket.

Anyway, JohnH, you are spouting outright phoney gsrbage here. And I would suggest you go bac 2009 when Mitch McConnell detrmined to oppose every single thing Obama proposed in an effort to defeat him, and McConnell did. So, please, let us not hear somw whining about people giving Trump a hard time implying it is remotely like what he is pulling now.

1. JohnH

Rosser: you did well to preface your comment with: “I have no memory of…”

“The Clinton campaign’s stunning and largely unforeseen loss has only hardened its own resolve to win the post-mortem of how it happened. In the six weeks since the election, her aides have cited white supremacy, FBI Director James Comey, the apparent Russian hacking of campaign emails and a delinquent press corps as primary reasons for Clinton’s loss.

While the messaging has evolved, the motive has becoming strikingly apparent: It’s an unrepentant effort to delegitimize President-elect Donald Trump and absolve Clinton of the lion’s share of electoral liability.”
https://www.usnews.com/news/the-run-2016/articles/2016-12-20/the-delegitimization-of-donald-trump?context=amp

The Collins dictionary defines ‘delegitimise’ as follows “ to diminish or undermine the legitimacy or authority of; discredit, devalue, etc.”

As for Trump, I thoroughly agree that he should have been delegitimised, not for winning, but for all sorts of bad and even criminal behaviour. Strangely, however, Democrats couldn’t find one single piece of egregious behaviour to ‘get’ him on, except for RussiaGate, which was a big deal only for Democratic die-hards and for the national security establishment. Dare I say incompetence?

BTW I also believe that Republicans did everything they could to delegitimise Bill Clinton’s presidency (not his election) via Whitewater, TravelGate, etc.

You should know that I dislike both political parties. Both opportunistically use any dirty tricks at their disposal in order to win.

1. Barkley Rosser

A US News and World Report from Dec. 2016? Yes, she and her people made a bunch of noise in the immediate aftermath of the election, but she basically completed disappeared after the inauguration. Trump’s delegitimization was fully his own work, and he was fully at it during the period of that article, with people like Flynn secretly meeting with Amb. Kislyak and lying about it to the FCI, which none of us knew about, certainly not her.

And, of course, the Trumpists now whining about her supposed efforts, which amounted to a big zero despite these efforts in Dec. 16, did not remotely compare to what Trump has been pulling now. She did indeed conceded on the evening of the election, despite winning the popular vote. She brought now lawsuits. She made no demands that states overturn their voting outcomes and send electors favoring her even though Trump won. She did not demand the removal from office of Dem election officials certifying Trump victories in their states. She did not make supportive noises about groups threatening to kill such officials. Do I need to go on?

Sorry, sure, she made some noises, but her efforts were not kept up and went nowhere. She simply disappeared after Jan. 20, and while she said a lot of the same critical (and accurate) things she had been saying during the election about him, she went nowhere with any ofit.

But you got me, JohnH. By gosh there was one article, and I did not read it. Wow, you win.

9. David O'Rear

Demand is the key; without it, there can only be short-term supply disruption inflation. The experience with wildly fast money supply growth a decade ago proved that once and for all: Inflation everywhere and always is a demand issue.

1. Willie

All bets are off until the pandemic is under control. The cloudy plastic ball says we are in for a long, dismal winter of recession and misery until June or so. Maybe August. Then things will start to recover, but I don’t see full recovery for a couple years.

The 1970s had several supply shocks – oil being a big one. Petroleum goes into all kinds of things, not just fuel. When the price of oil went through up, other prices went up. There was not the kind of downward pressure on wages then that there is now. Ruling out 1970s stagflation would be foolish, but I don’t expect it to happen any time soon unless we really screw things up. Then again, never underestimate stupidity.

10. ltr

http://krugman.blogs.nytimes.com/2015/02/25/explaining-recovery-performance-in-europe/

February 25, 2015

Explaining Recovery Performance in Europe
By Paul Krugman

I was very interested by the new paper * by Claeys and Walsh on “plucking” as an explanation of differential performance in Europe; basically, they’re saying that fast growth has come in countries that previously had deep slumps. But how does that result interact with the result many of us have found, which is that differences in austerity seem to explain a lot? Here’s an example of what I find:

I tried to see where their result fits in; but I used a slightly different sample. I included Greece; I’m not sure why they excluded it (they say that they’re dropping countries that didn’t have any recovery, but why?) I also used the same dates for everyone, 2007-9 for the slump and 2009-14 for the recovery. And since I wanted to use structural deficits to measure austerity, I could only include Latvia among the Baltics.

Latvia stands out, but in this sample it’s alone; the estimated coefficient on the size of the slump is large but hugely uncertain.

What happens if you throw both variables in? With standard errors in parentheses, I get Growth in GDP 2009-14 = 7.91 – .26(.28)*Change in GDP 2007-9 – 1.41(.27)*Change in structural balance as % of potential GDP. Plucking might be important, but it’s hard to tell given the lack of data. Austerity, on the other hand, comes in very clear.

Maybe the point is that there aren’t any deep mysteries that need explaining. You can point to individual countries and say that they did better than you might have expected, but any kind of non-cherry-picked analysis of the data really, really wants to tell you not just that austerity hurts growth but that it’s the major factor causing some European countries to do worse than others.

11. ltr

December 14, 2020

Coronavirus

US

Cases   ( 16,942,822)
Deaths   ( 308,089)

India

Cases   ( 9,906,507)
Deaths   ( 143,746)

France

Cases   ( 2,379,915)
Deaths   ( 58,282)

UK

Cases   ( 1,869,666)
Deaths   ( 64,402)

Germany

Cases   ( 1,357,141)
Deaths   ( 22,887)

Mexico

Cases   ( 1,250,044)
Deaths   ( 113,953)

Cases   ( 468,862)
Deaths   ( 13,553)

China

Cases   ( 86,741)
Deaths   ( 4,634)

12. ltr

December 14, 2020

Coronavirus   (Deaths per million)

UK   ( 946)
US   ( 928)
France   ( 892)
Mexico   ( 880)

Germany   ( 273)
India   ( 104)
China   ( 3)

Notice the ratios of deaths to coronavirus cases are 9.1%, 3.4% and 2.4% for Mexico, the United Kingdom and France respectively.

13. ltr

https://news.cgtn.com/news/2020-12-15/Chinese-mainland-reports-17-new-COVID-19-cases-WezdGWWJWM/index.html

December 15, 2020

Chinese mainland reports 17 new COVID-19 cases

The Chinese mainland recorded 17 new COVID-19 cases on Monday, including 3 locally transmitted cases, the National Health Commission announced on Tuesday.

The local transmissions included 2 cases reported in Heilongjiang Province and 1 in Sichuan Province.

Eight new asymptomatic COVID-19 cases were recorded, while 196 asymptomatic patients remain under medical observation. No COVID-19 deaths were reported on Monday, while 18 patients were discharged from hospitals.

The total number of confirmed COVID-19 cases reached 86,758, with 4,634 deaths as of Monday.

Chinese mainland new imported cases

Chinese mainland new asymptomatic cases

https://news.cgtn.com/news/2020-12-15/Chinese-mainland-reports-17-new-COVID-19-cases-WezdGWWJWM/img/f8605b651060492cb50b03240baa4eaf/f8605b651060492cb50b03240baa4eaf.jpeg

[ There has been no coronavirus death on the Chinese mainland since the beginning of May.  Since the beginning of June there have been 7 limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

There are now 312 active coronavirus cases in all on the Chinese mainland, 7 of which cases are classed as serious or critical. ]

14. ltr

https://tribunemag.co.uk/2020/12/indias-popular-revolt

December 14, 2020

India’s Farmer Revolt
India’s government is trying to force through a corporate takeover of its agricultural sector – but their plans have met fierce resistance from the country’s farmers, who are refusing to hand over their livelihoods.
By Subin Dennis

The farmers’ struggle taking place now on the borders of Delhi and its neighbouring states is one of the most important mass agitations that India has seen in its three decades of neoliberal reforms.

Since 26 November, hundreds of thousands of farmers have congregated on the borders of the National Capital Territory of Delhi. At the beginning, most of them were from the state of Punjab, located about 200 km from Delhi, but many more have since joined from the state of Haryana, which abuts Delhi on three sides, and then from Rajasthan, Uttar Pradesh and Madhya Pradesh as well. With their caravans, the farmers have occupied long stretches of several highways that connect Delhi to its neighbouring states. They say they are ready to stay and fight for as long as necessary to see their demands met.

The March to Delhi …

15. ltr

Latin American countries have recorded 4 of the 13 highest and 6 of the 24 highest number of coronavirus cases among all countries.  Brazil, Argentina, Colombia, Mexico, Peru and Chile.  Mexico, with more than 1 million cases recorded, has the 4th highest number of cases among Latin American countries and the 13th highest number of cases among all countries.  Mexico is now the 4th among all countries to have recorded more than 100,000 coronavirus deaths.

December 14, 2020

Coronavirus   (Deaths per million)

US   ( 928) *

Brazil   ( 853)
Argentina   ( 904)
Colombia   ( 767)

Mexico   ( 880)
Peru   ( 1,108)
Chile   ( 830)

Bolivia   ( 768)

* Descending number of cases

16. sammy

The director of National Intelligence, John Ratcliffe, will be issuing his report on December 18. If there really is provable massive fraud or foreign interference, the election cannot stand.

To prepare for these possibilities — either judicial courage or such overwhelming fraud that the election cannot stand — seven states did something unusual and courageous. Pennsylvania, Georgia, Michigan, Wisconsin, Arizona, Nevada, and New Mexico all selected two slates of electors: one slate accepts a Democrat victory, but the other slate anticipates a turnaround, whether judicial or because of such overwhelming proof of fraud or foreign interference that Biden’s “victory” must fail.

1. Barkley Rosser

sammy,

Oh, please don’t tell us. Is Trump now claiming on Twitter that Biden’s victory was due to foreign interference? The most serious foreign interference was clearly in Trump’s favor, coming out of Russia, with quite a few pieces of it well known, such as the fake charges coming out of Ukraine from Russian-connected sources that went to Sen. Ron Johnson (R-WI) who publicized them in a hearing he held (and threatens to hold more hearings, I tell you, more!). But these did not move the voters much more than did the probably-cooked-up-by-the-Russians Hunter Biden laptop. While Trump has made noises that the Chinese backed Biden, that is far from clear, with some even blaming them for the clearly fake HB laptop.

Time for you to get real, sammy. Biden got the highest percentage of the vote of any challenger to an incumbent president, 51.3%, since FDR beat Hoover in 1932. He even did better than Reagan against Carter on that measure. There simply is no way that 7 million vote lead is going to get whittled down enough to swing it in enough states to give it to Trump. Even McConnell accepts, and nothing out of Ratcliffe is going to change a thing.

Heck, in 2016, Clinton won by 3 million in the popular vote, and the Mueller Report documented large amounts of interference in Trump’s favor, with the margins in the swing states much closer than this time around. But there was no move to undo the result. Trump might be hoping for it, but it is not going to happen this time. Really is over, although I can imagine the new conspiracy theories will get weirder and weirder.

2. Baffling

“ the election cannot stand.”
Sammy, the election will stand. And trump will be removed from office, if he has not already retreated to maralago. Trump got his a\$\$ beat in a landslide election. I really dont care if you want to accept or deny that reality, because come january 20 it will be president biden.

3. 2slugbaits

sammy Would you mind checking with Trump HQ just to make sure you’ve got the party line right? I’m asking because I want understand your claim. As best I can tell you’re claiming that millions of people illegally voted for Biden at the top of the ticket but on those same ballots they voted legally for Republicans at the bottom of the ticket. Is that your story? Very clever those Democrats. They tried to cover their tracks by voting for Republicans down ballot. By gosh golly, this is indeed the crime of the century!!! Oh…one more thing. You’re a moron.

1. pgl

I’m surprised that Sammy is not leading the charge for a Special Prosecutor to investigate Hunter Biden. Isn’t the new way Trump can get his MAGA hatters to continue to send him money?

1. baffling

if trump pardons his kids, i would encourage biden to pardon his as well. make it a presidential tradition.

1. pgl

Yea – now why didn’t President Carter pardon Amy? Or Obama and his daughters. Oh wait – neither White House had even a hint of scandal.

2. sammy

2slugbaits,

That is also one of the suspicions. Thousands of ballots with Biden only votes, without down ballot votes, which would explain your discrepancy.

Yes, some people only vote for the top of the ticket, but not in an overwhelming wave of mail in ballots after the polls closed, as if the ballots were filled out in a hurry.

1. pgl

Good grief Sammy. Your spreading blatant lies. Next you will tell us little green Martians cast votes for Biden. Maybe you should go to Netflix and start watching X file episodes.

2. Barkley Rosser

This is just a rank lie, sammy. Most states did not allow mail in baallots arriving after the election to be counted, although a fre did. Most prominantly was PA where there were legal efforts not to allow them to be counted. But in fact there were not enough of these to have been responsible for Biden’s 80,000 margin.

This is the best you have? It is a complete fantasy. You are completley out of it.

3. 2slugbaits

sammy You have to be the most gullible person here. Did you sign up for classes with Trump University? Try doing some simple checks. For example, the wingnut media is claiming that Fulton County, Georgia had lots of ballots for Biden only. Except that’s not true. In fact, if you add up all of the ballots in Fulton County there were actually about 2,500 more votes for the Senate race than for the Biden/Trump race. So it appears that more folks actually voted for the Senate candidate than voted for the Presidential candidate. My guess is that what actually happened is that the mark at the top of the ballot was spoiled in some way (e.g., filled in outside the circle or whatever) and wasn’t counted. And for Georgia overall the difference between the total voting for President was only very slightly higher than those voting for Senate. You’re also assuming without evidence that it was only Democrats who voted for the top of the ticket and skipped the down ballot. So far all of the (very few) cases for which we have absolute proof of voter fraud involved Republicans trying to vote twice for Trump. And where did you get this nonsense about a wave of mail-in ballots arriving after the polls closed? It depends on the state, but just because a ballot physically arrives at the county clerk’s office after the polls close does not mean the ballot is invalid. Usually each state allows a certain number of days after the election date as long as the ballot is postmarked by election day. Seriously, do you even know what you’re talking about? You seem totally clueless.

This whole fraudulent vote cry is pathetic whining from a bunch of sore losers. Trump’s lawyers made all kinds of claims for fraudulent votes when they were on Fox Noise and in front of the cameras, but when they had to testify under oath in a court of law, Rudy was forced to admit that Trump’s legal team was NOT claiming any fraud. Got that? When under oath rather than in front of a camera, Rudy had to admit that there was not fraud. You’ve been played.

I’ll bet you and our old friend HAMBONE are still anxiously waiting for those 98,236 sealed indictments to be unsealed any day now.

4. Dr. Dysmalist

“That is also one of the suspicions.”

That doesn’t even rise to the level of being a suspicion. It’s nothing more than a dirt-stupid idea that some lunatic pulled out of his a** to soothe his hurt fee-fees. And now it’s being circulated around the interwebs by MAGAhatters who also have hurt fee-fees and don’t want to admit they were taken in by perhaps the most ludicrous con, and conman, in US history, people who have neither the ability nor the desire to perform even a rudimentary fact-check, nor to pay attention to anyone who does have the ability to do so.

MAGAhatters like you.

3. Dr. Dysmalist

“You’re a moron.”

Judging by the images I’ve seen online of a Trump supporter, the correct spelling of that in MAGAworld is “moran.”

4. noneconomist

Seven STATES did something courageous? Methinks you meant to say private, unelected citizens in those states decided to call themselves—including the so called”sovereign citizens” in Arizona (i.e., balding, overweight white guys) who told anyone dumb enough to listen—that they too are electors. Which must mean anybody can be an elector, whether they were officially listed on any ballot anywhere or not.
Hey, Ma! Look at me! I’m an elector!
DNI Ratliff will be releasing a report 12/18? Can’t get any more timely than that.
Really, Sammy. Even in the midst of the pandemic , you need to get out of the cave more often. No need to drive and risk the DUI. A good brisk walk will help.

17. Bob

Hi, perhaps it is the wrong interpretation, but isn’t the recent surge in the money supply driven by QE and is occurring in all advanced economies engaging in unconventional monetary policy? That is, normally money is most often created when a bank credits a deposit account as it writes a loan, where the decision to write a loan is influenced by the central bank’s policy rate, bank capital requirements, bank assessments of credit risk, etc. Now, though, the money supply is surging because under QE the Federal Reserve buys a government bond from an investment fund, crediting the reserves of a bank who then credits the deposit account of the investment fund? Is it possible that this type of money creation gives a different signal about inflation risks to the more usual situation of money created by a bank writing a loan? thanks

18. Baffling

Trump promised 300 million doses of vaccine by end of year. He will be lucky if he can deliver 10% of what he promised. Maga at its finest. Lets see what else he can screw up before leaving office.

1. pgl

But remember Trump created the vaccines all by himself. Never mind the fact that the scientists have been working on this since 2003.

19. sammy

” Biden got the highest percentage of the vote of any challenger to an incumbent president, 51.3%, since FDR beat Hoover in 1932. He even did better than Reagan against Carter.”

This is one of the reasons for the scepticism.

We are supposed to believe that this creepy senile dotard, with no meaningful accomplishment in 40+ years in the national legislature, who failed miserably in every other presidential run, with an obviously evident payola scheme through his drug addicted son, who campaigned from his basement and when he did emerge, didn’t draw flies, with record low voter enthusiasm…yeah that guy…..

1. pgl

Look at who Biden was running against. Someone who had to cheat to get his college degree. Someone who sunk one business after another. A man who needs two hands to drink a glass of water and only form of exercise is riding around in a golf cart. Yea his wife is attractive but she has stayed with him only because she is a gold digger. Ask Stormy Daniels about how incredibly inept Trump is in bed. It would seem a mental retard could beat Donald Trump in any contest in any land. But sammy worships this stupid fat and utterly incompetent clown. Go figure!

1. noneconomist

Who can’t hold a Bible right side up but is very close with the “two Corinthians..” Who used to be pro choice but is now solidly pro life. Who supports traditional marriage including his three, Giuliani ‘s three and Gingrich’s three. Who’s never recognized a Ten Commandment he hasn’t happily ignored. Who, according to son Eric, saved Christianity, which has always needed a savior.
That guy.

1. baffling

“Who used to be pro choice but is now solidly pro life. ”
apparently those pro lifers are not discouraged by the recent federal executions of inmates, especially minorities. nothing like protecting all god’s children while you flip the switch on that electric chair. i have always been fascinated with conservative pro lifers embrace of killing their fellow man, in a show of power.

2. pgl

“his drug addicted son”. Hunter is not taking drugs but your boy Fred Jr. certainly is hooked on some opium related products. Hey Sammy – what are you smoking?

3. Barkley Rosser

sammy,

Oh, more hopeless nonsense from you. Yeah, if you listen only to Hannity or worse you say dumb stuff like this. But it really is time to face reality here.

So, presumably your skepticism is not based on claiming that somehow some other challenger to an incumbents since 1932 got more than Biden’s 51.2%. Reagan did next best in 1980 when he beat Carter, but he only got 50.1%. All of this is easily checked and verified, a matter of the historical record. So, obviousliy you doubt that Biden got what he got.

But it should not be all that surprising. Indeed, the polls had him further ahead than he ended up, with indeed supposedly the Dms taking the Senate, which they failed to do. So the outcome was better for the GOP and Trump than forecast, but still with Biden well ahead of Trump.

But a reality you need to face is that Trump has been despised by the majority of Americans through pretty much all of his presidency. He lost the popular vote in 2016, and only about three times, one of them his Inauguration Day, did he manage to get a 50% popular approval rating. I know you guys like to dismiss most polls, but there are some that lean GOP and like him, such as Rasmussen. But even they only rarely had him at or barely over 50%. The overwhelming majority of the time more people disapproved of him than approved of him.

And right now polls show that Biden has a higher approval rating than Trump ever had in his entire presidency. You may not think much of Biden, and he probably will not be a great president. Bu in 2015 Lindsey Graham called him “squeaky clean,” and he is respected for having served well as VP for President Obama, who has always had a higher rating than Trump by a lot. Even if you think little of Biden, a lot of people think his 8 years as a solid VP make him qualified to be president, certainly a better one than the despicable and disastrous Trump, who is being the first candidate in US history to continue to contest his loss after the electoral college voted, putting him the position of committing un-American sedition, something you yourself are now supporting, sammy. Really. Time to get real..

4. noneconomist

And Sammy is convinced there was no way Biden was +29 in California where calculating Democratic cheaters somehow allowed Kevin McCarthy to retain his seat as well as the next door despised dimwit Nunes? Or that they were foolish enough to allow Republicans to regain three House seats by less than one percent in each? (In one—the 25th— Republican, Mike Garcia, won by 333 votes out of about 340,000 cast)
But sure, the gang that couldn’t cheat straight, somehow rigged millions of illegal votes for Biden.
Sammy, for your own good, stay away from anyone wanting to sell you bridges or luxury beach front condos in Barstow.

5. baffling

“This is one of the reasons for the scepticism.”
actually, the skepticism should be why trump got as many of the votes as he did. based on expectations from the polls, trump should not have performed nearly as well as he did. if one wants to argue fraud, one should look at how trump over performed in the election. lots of voter intimidation and voter suppression occurred by trump. this should be investigated. there certainly was fraud, sammy, but it was on the part of trump and his minions.

6. noneconomist

OK, Sammy. Since 1988, how many presidential elections has the Republican candidate won in Michigan, Wisconsin, and Pennsylvania?
One? You are correct!
Who said you don’t have clue?

20. ltr

December 15, 2020

Coronavirus

US

Cases   ( 17,143,779)
Deaths   ( 311,068)

India

Cases   ( 9,932,908)
Deaths   ( 144,130)

France

Cases   ( 2,391,447)
Deaths   ( 59,072)

UK

Cases   ( 1,888,116)
Deaths   ( 64,908)

Germany

Cases   ( 1,378,518)
Deaths   ( 23,692)

Mexico

Cases   ( 1,255,974)
Deaths   ( 114,298)

Cases   ( 475,214)
Deaths   ( 13,659)

China

Cases   ( 86,758)
Deaths   ( 4,634)

21. ltr

December 15, 2020

Coronavirus   (Deaths per million)

UK   ( 954)
US   ( 937)
France   ( 904)
Mexico   ( 882)

Germany   ( 282)
India   ( 104)
China   ( 3)

Notice the ratios of deaths to coronavirus cases are 9.1%, 3.4% and 2.5% for Mexico, the United Kingdom and France respectively.

22. ltr

https://news.cgtn.com/news/2020-12-16/Chinese-mainland-reports-12-new-COVID-19-cases-WgdgDgSUms/index.html

December 16, 2020

Chinese mainland reports 12 new COVID-19 cases

The Chinese mainland recorded 12 new COVID-19 cases on Tuesday, all from overseas, the National Health Commission announced on Wednesday.

Nine new asymptomatic COVID-19 cases were also recorded, and 199 asymptomatic patients remain under medical observation.

No COVID-19 deaths were reported on Tuesday, and 9 patients were discharged from hospitals. The total number of confirmed COVID-19 cases reached 86,770, with 4,634 deaths.

Chinese mainland new imported cases

https://news.cgtn.com/news/2020-12-16/Chinese-mainland-reports-12-new-COVID-19-cases-WgdgDgSUms/img/a0db9c26ffd44efd8ff49108b8c0cf12/a0db9c26ffd44efd8ff49108b8c0cf12.jpeg

Chinese mainland new asymptomatic cases

https://news.cgtn.com/news/2020-12-16/Chinese-mainland-reports-12-new-COVID-19-cases-WgdgDgSUms/img/2536fe55b6df4a2dbd32274035b95e79/2536fe55b6df4a2dbd32274035b95e79.jpeg

[ There has been no coronavirus death on the Chinese mainland since the beginning of May.  Since the beginning of June there have been 7 limited community clusters of infections, each of which was an immediate focus of mass testing, contact tracing and quarantine, with each outbreak having been contained.  Symptomatic and asymptomatic cases are all contact traced and quarantined.

Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Cold-chain imported food products are all checked and tracked through distribution.  The flow of imported cases to China is low, but has been persistent.

There are now 315 active coronavirus cases in all on the Chinese mainland, 8 of which cases are classed as serious or critical. ]

23. ltr

https://www.nytimes.com/2020/12/15/world/asia/india-coronavirus-shramik-specials.html

December 15, 2020

The Virus Trains: How Lockdown Chaos Spread Covid-19 Across India
Prime Minister Narendra Modi’s coronavirus restrictions sent migrant workers fleeing. To get them home, the government offered special trains. But the trains would spread the virus across the country.
By Jeffrey Gettleman, Suhasini Raj, Sameer Yasir and Karan Deep Singh
Photographs by Atul Loke
________________________________

SURAT, India — The crowds surged through the gates, fought their way up the stairs of the 160-year-old station, poured across the platforms and engulfed the trains.

It was May 5, around 10 a.m. Surat was beastly hot, 106 degrees. Thousands of migrant laborers were frantic to leave — loom operators, diamond polishers, mechanics, truck drivers, cooks, cleaners, the backbone of Surat’s economy. Two of them were Rabindra and Prafulla Behera, brothers and textile workers, who had arrived in Surat a decade ago in search of opportunity and were now fleeing disease and death.

Rabindra stepped aboard carrying a bag stuffed with chapatis. His older brother, Prafulla, clattered in behind, dragging a plastic suitcase packed with pencils, toys, lipstick for his wife and 13 dresses for his girls.

“You really think we should be doing this?” Prafulla asked.

“What else are we going to do?” Rabindra said. “We have nothing to eat and our money’s out.”

They were among tens of millions of migrant workers stranded without work or food after Prime Minister Narendra Modi imposed a national coronavirus lockdown in March. By spring and summer, these workers were so desperate that the government provided emergency trains to carry them back to their home villages. The trains were called Shramik Specials, because shramik means “laborer” in Hindi.

But they became the virus trains.

India has now reported more coronavirus cases than any country besides the United States. And it has become clear that the special trains operated by the government to ease suffering — and to counteract a disastrous lack of lockdown planning — instead played a significant role in spreading the coronavirus into almost every corner of the country.

The trains became contagion zones: Every passenger was supposed to be screened for Covid-19 before boarding but few if any were tested. Social distancing, if promised, was nonexistent, as men pressed into passenger cars for journeys that could last days. Then the trains disgorged passengers into distant villages, in regions that before had few if any coronavirus cases.

One of those places was Ganjam, a lush, rural district on the Bay of Bengal, where the Behera brothers disembarked after their crowded trip from Surat. Untouched by the virus, Ganjam soon became one of India’s most heavily infected rural districts after the migrants started returning….

24. ltr

December 15, 2020

Coronavirus   (Deaths per million)

Belgium   ( 1,555)
Italy   ( 1,090)
Spain   ( 1,035)
UK   ( 954)

US   ( 937)
France   ( 904)
Mexico   ( 882)
Sweden   ( 757)

Switzerland   ( 722)
Luxembourg   ( 663)
Netherlands   ( 593)
Portugal   ( 563)

Austria   ( 515)
Ireland   ( 430)
Greece   ( 364)

Germany   ( 282)
Denmark   ( 166)
India   ( 104)
Finland   ( 84)

Norway   ( 73)
Australia   ( 35)
Japan   ( 21)
Korea   ( 12)

China   ( 3)

25. ltr

December 16, 2020

Yes, Young People Are Dying of Covid
New research shows that July may have been the deadliest month for young adults in modern American history.
By Jeremy Samuel Faust, Harlan M. Krumholz and Rochelle P. Walensky

The largest burden of Covid-19 has undoubtedly fallen on people older than 65, accounting for around 80 percent of deaths in the United States. But if we momentarily eclipse that from our mind’s eye, something else becomes visible: The corona of this virus.

Young adults are dying at historic rates. In research published on Wednesday in the Journal of the American Medical Association, we found that among U.S. adults ages 25 to 44, from March through the end of July, there were almost 12,000 more deaths than were expected based on historical norms.

In fact, July appears to have been the deadliest month among this age group in modern American history. Over the past 20 years, an average of 11,000 young American adults died each July. This year that number swelled to over 16,000….

26. pgl

Let’s get one thing straight here. Lots of people struggle with opium dependence which is a serious issue. To abuse these people for partisan purposes is beyond disgusting. And yea I am referring Trump sycophant Sammy went off on Hunter Biden. One should read this thoughtful discussion:

Look this is not my blog and I’m not one for banning people for being stupid like Sammy often is. But beyond disgusting is another thing. Even Facebook and Twitter are reaching out to ban such garbage. Now whether Menzie decides Sammy has gone that far is his call. But yea – Sammy is truly a heartless lying lowlife piece of scum.

27. 2slugbaits

Getting back to the main topic, the question was whether or not inflation was looming. While I don’t think there’s any evidence of looming inflation, I sense that some folks might be interpreting that as good news. As though we’ve dodged a bullet. But wait. Shouldn’t we be hoping for a little inflation? I recall that long before the Great Recession our host Jim Hamilton said something to the effect that the Fed could create inflation whenever it wanted. At the time that was the consensus view and truth be told it was my view as well. Now we know better. So now that we’ve thrown MV = PQ into the dustbin of history, just how do we explain inflation…or rather, how do we explain the lack of inflation just about everywhere outside of Venezuela? Everything that was trotted out to explain inflation in the 1970s (huge deficits, the Fed’s easy money policy, falling worker productivity, supply shocks, etc.) all seem to be happening now as well, but yet we don’t see any incipient inflation.

1. baffling

stagnant wages are a result of labor losing power to management. long term inflation occurs when workers demand 4-5% cost of living wages each year. Over the past decade, yearly wages are in the area of 0-1% for many workers. this does not translate into inflation. when workers have the ability to command yearly cost of living increases, then inflation will return. loss of labor unions, compared to the 1970’s, probably explains a lot.

1. baffling

i would also argue that today, consumers have FAR more choices to spend their money on than in the 60’s and 70’s. i can spend my money on hard objects like bikes, cars, exercise equipment, computers, etc. i can spend my money on soft items like subscriptions, digital media, etc. one very big change from the past, is I am far more responsible for my own retirement funds. so i use more of my take home pay to place in financial products like stocks and bonds, than previous generations. this is a pretty big category for many people, and adds “inflation” pressure to stocks but removes it from cpi. today, it seems to be a bit harder to create true demand that drives up consumer prices, because i have so many more places to put my money compared to a few decades ago. investment bubbles seem to be the result. maybe not a true economic description, but my observation over time.

2. Barkley Rosser

And we have been through how Yellen and Akerlof and some others argued two decades ago why a low positive rate of inflation is a good thing for micro labor market efficiency reasons, given the nominal downward stickiness of wages, with these arguments fitting in with the emergence of the 2% inflation target, which has not been met in any consistent way during this period, with chronic underperformance. I do not have an explanation, although one item not mentioned by anybody so far is that in fact despite this past year’s dollar decline, over the last decade plus it has been up as a newer post by Menzie shows, with that being anti-inflationary.

3. Paul Mathis

• Increasing the federal debt has NOT raised inflation or interest rates. In 2000 when we had the largest ever budget surplus of \$236 Billion, the 10yr Treasury bond rate was 6.03%. But now, with a deficit of \$3 Trillion (FY2020) the 10yr Treasury bond rate is 0.65% (3Q2020). With a record \$3 trillion deficit, the interest rate is approximately one tenth what it was when we had the largest surplus in history. Likewise, in 4Q1997 inflation was less than 2%, but after 3 years of budget surpluses, inflation increased to 3.4% in 4Q2000.

So there seems to be and inverse relationship of the federal debt to interest rates and inflation.

• The worst inflation (14%) and highest interest rates (15% 10 yr Treasury bonds) of the past 70 years occurred in 1973-82 when deficits averaged 2.4% of GDP and the debt-to-GDP ratio was always less than 35%. Since 2009, however, deficits have averaged 6.3% of GDP and the debt-to-GDP has been over 100% for the past 8 years. The deficit to GDP ratio in FY2020 was 17.9%. Inflation, however, averaged 1.4% for FY2020 and has not exceeded 4% annually in over 25 years, while interest rates have been historically low for 10 years and are far below their level in 1973-82.

28. Not Trampis

great question Slugy.

I agree. Central banks can easily cause a fall in inflation but not an increase.

We do need an increase as one late RG Hawtrey and Keynes would agree on.

That requires a large increase in economic activity.