Thursday, December 29, 2011

Dear Paul Krugman: Research Suggests Deflation Does Not Lead to a Depression

I don't mean to go all empirical on the Herr Professor Doktor, Doktor (or is it Doktor, Doktor Professor?)* so I'll pass along an observation. Under a gold standard prices were generally deflationary without getting all depressionary. 1873 and '93 were doozies though.

From History Squared:


Abstract: Are deflation and depression empirically linked? No, concludes a broad historical study of inflation and real output growth rates. Deflation and depression do seem to have been linked during the 1930s. But in the rest of the data for 17 countries and more than 100 years, there is virtually no evidence of such a link.

Here we see only 8 episodes with both deflation and depression. There are 65 episodes of deflation without depression and 21 of depression without deflation. Thus, 65 of 73 deflation episodes had no depression, and 8 of 29 depression episodes had no deflation.What is striking is that nearly 90% of the episodes with deflation did not have depression.

Bernanke’s entire modus operandi: trillion dollar give-a-ways to foreign and domestic banks, the inflation tax, financial repression, picking the pockets of savers while rewarding debtors, stem from an intense study of an…outlier, all in an effort to avoid the phantom menace that is deflation. All the problems from this nefarious happenstance can be solved by money printing. It’s flabbergasting...MORE
*Ah ha!
I knew the ever modest Krugster would have given us the low-down (or is it down low?):
Well, So Much For Lufthansa
In the Times:
Ms. Merkel, a former academic married to a professor, was being accused of belittling intellectual property theft and, by implication, the value of an advanced degree, which is not a purely academic matter in this country. Many jobs require such degrees in Germany, where, as is not the case in America, calling oneself doctor for having completed a thesis in, say, political science or art history, is not embarrassing but normal, even when filling out Lufthansa’s online booking forms. (The airline generously provides three levels of academic achievement for its overachieving countrymen: doctor, professor and professor doctor, skipping the extremely rare but not unheard-of German mouthful Herr Professor Doctor Doctor).
As someone who actually is Herr Professor Doktor Doktor (honorary degree from the Free University in Berlin), I’m feeling slighted.

As for Mr. Guttenberg, he should take the whole plagiarism thing in stride. In resigning, it was a far far better thing than he had ever done before; tomorrow is another day; and he has nothing to fear but fear itself.
Great-aunt Bernice, M.D. would only call a PhD or even a Sc.D. "Doctor" if they could set a kid's broken arm.
Or if she liked them.