원문 보기
this video is going to be a look back to one of the earliest videos on this channel published on May 18th 2021 where a prominent Economist nuo rubini is putting forth a pessimistic prediction saying that the FED is cornered will either lose control of inflation or crash markets and now more than 3 years later neither has happened and I'm going to take the entire footage of this video as part of this new video that you're watching right now to see about how I was correct and these formal economists were wrong so it's part of my inflation Victory lap Series so on to the footage greetings the difficulty level of this video is easy and today we're going to look at another example of an expert talking head who comes on various financial news programs and likes to pontificate about how the Federal Reserve has caused a situation that is going to cause inflation any day now any day now they've been wrong for years and years and years at a time and they still think inflation is just around the corner it's actually become almost sort of a weird little cult here of people who insist inflation is about to happen tomorrow even though they've predicted about 100 of the last zero bouts of high inflation the expert in question over here nuo robini is someone who is always a Perma bear his nickname is Dr Doom he tends to say that things are about to go bad and therefore three years before the financial crisis he said they will eventually be a recession eventually be a recession he was kind of right about that the real estate bubble could not sustain a rise in interest rates was a pretty easy prediction I to predicted that on the futurist even before he did but on account of being someone who's a Perma bear eventually he's right Whenever there is a recession and that kind of made him famous and therefore he is out again talking about interest rates will rise and there will soon be inflation but if you watch this channel you know how quantitative easing from the Federal Reserve does not cause inflation and a number of outdated assumptions from what he says are what we are going to examine and deconstruct in this channel he despite being an immigrant still seems to act as though the United States is the only country in the world in terms of the Federal Reserve printing money is going to cause the US inflation when we know that the entire world is orderless in terms of these metrics commodity prices inflation and so forth so this video is going to be yet another lesson about how assumptions that economists have are completely outdated they are intellectually unequipped to frankly just understand the economics of technology and more specifically software where you don't run out of supply and there's no such thing as a supply bottleneck so we will proceed with this video here well who better to ask then the man who warned us about the financial crisis of 2008 3 years before half happened internationally acclaimed Economist Nel R Nel it is great to have you when us here on Kito today being re today okay so we have this unprecedented stimulus helicopter Money Record L rates and the FED is saying that inflation will transitory and claims that it can be controlled so how does this play out well make consum is that what in the short time B rashers are sped the rising inflation going to see this year is not going to be just transitory and driven by a basa effect but it could be more persistent time why after this Co PR with a massive amount of Monet is stimulus and credit easy you know3 trillion of Ste was last year 900 last December 1.9 trillion just pass and now four three class all various types of infrastructure spended it may be pass by progress this is a time where the economy is already starting to grow faster and improving than really expected so it looks like the stimulus one is excitic uh two it's the supply bottom next we're seeing semiconductor Arma products Commodities and so on so we are now surging the because there was a build up of CES buil also by the transfers of the government there pent of demand and there is now for STS on Supply and that implies that inflation over time may go much higher than the FED expects the other concern I have is that not in the short but over time we can go back to not only inflation but also to statation what is stock flation is it's the situation of low economic growth not negative and Rising inflation now last time we had seen it was in the 1970s this time around most likely unless there was a war between us and Iran the ne Supply shock is not going to be treatened by oil but there are other factors that suggest that there could be reduction in potential growth and a rise in cost of production with a negative spash off and if you monetize calices in that context you may end up with inflation and statation now what are they we have now de globalization fragmentation of the global economy varization of global supply chain restoring of foreign direct investment from China to high cost region like us in Europe uh we have import protection we have restriction to trade in goods and services in labor in capital restriction to migration where be DEC between us and China on trade technology data information we now also a declining in the supply of labor because uh us Europe Japan Advan economies are Agy but not only at but now China Russia uh Korea and other Asian and is are also aging and you add to is also now policies that are be Progressive to try to redistribute income from C to labor because labor has been disadvantage for the last few decades and that can lead to a build up of wage and price pressures and now reducing potential growth increasing the cost of production that you monetize large fiscal deficits and down the line not speaking about this year but two years down the line we could also end up into station recession and inflation like in the S is that's a rising R well may are sharing that Outlook particularly when you look at the Biden administrations of janen it seems to go very very big on SP okay we'll stop right there he's all over the place on the factors he's throwing out and remember when someone earns a living about being a pessimist and then they get accolades whenever something bad happens and they happen to be right somewhat by chance rather than through a Precision of their predictions then they have a certain set of tools in their toolbox he spoke about shrinking Workforce because of Aging population and therefore wages rise which is a bad thing I mean remember only these PhD economists will say wages Rising is a bad thing and they often say things like too many people have jobs but isn't such a belief Mutual exclusive with the fear that automation is taking away jobs how can you simultaneously have a narrative saying that wage pressure is rising because of a shrinking Workforce and an aging Workforce but automation is taking away jobs so that's bad these are where these contradictory sound bites tend to be very problematic and not very well thought through now of course he didn't mention automation to be fair but he's also throwing all kinds of things out there about Supply bottle and so forth and how we had stagflation in the 1970s no recognition whatsoever on his part of how different the economy is from the 1970s now we have a lot of software in the economy a lot of hard goods are also produced by software this is the big cushioning effect that not only moderates things that could cause inflation but also contributes to deflation there's no Supply bottlenecks in soft and as you know if you watched other videos on this channel the high-tech fracture of the economy is now 3% of world total GDP and it was only half a percent in 2000 and certainly negligible in the 1970s and 80s and therefore he's really just repeating some boilerplate textbook material from 1970s and 1980s era textbooks now he's right that bad policies can cause inflation but at the same time he's taking a very domestic view on that and the United States is the largest economy in the world but bad policies cannot cause as much inflation at the global level and we're still not at a point where this is a meaningful risk so we continue but think that's exactly the reality we're facing right now a situation in which eventually the stimulus might be excessive eventually inflation May raise too much at the time where the fat is telling us I'm not even thinking about star papering and maybe T will start only next year and the F forecast are that the First Rate I away from zero is going to ur only sometime in 2024 that is three years from now so we're going to be what with zero rate for another three years at the time where the col by the end of the year may be at full employment it's clear that the p is now lock itself in a corner because they're saying that the inre inflation is temp okay we'll stop there here's the problem with a lot of economists they are so theoretical that they actually say things that are very very unsympathetic to The Human Condition saying things like full employment and other economists not nin right here but it's a very common thing among other economists to say too many people have jobs why because if too many people have jobs there might someday be some inflation somewhere no mention of why that is worse than fewer people having jobs no recognition even from what neuro robinia said here that deflation is in fact a bad thing and could happen and what's telling is that even the Federal Reserve is slightly more Forward Thinking than NE robini because they recognized that interest rates will have to be low for a while now I very openly said that the FED funds rate has to be zero permanently it was Zero since 2009 and they never should have temporarily raised it I'm going to show you this chart from chapter four of my atom publication you can see how when the FED funds rate was Zero it should have stayed zero forever because quantitative easing was already being done this was the age of money printing the age of technological deflation this weird need to increase it and they have a belief that the normal interest rate should be 3% and un employment rate should be X cuz otherwise too many people have jobs and cause inflation backfired on them there was a huge stock market correction and they were forced to lower it down lower and eventually to zero and they went all the way from 1.75% to zero on March 15 2020 which I very prominently called out as the Netscape moment of Economics that was a day from which permanent QE became more normalized as well as need for the FED funds rate to be zero became more normalized now the Federal Reserve doesn't recognize that the FED funds rate has to be zero forever Nal robini is even more resistant to that because his Fame was from predicting a real estate crash back before the age of quantitative using so he doesn't understand how the economy has changed but March 15 2020 was the Netscape moment of economics and the FED funds rate will stay at zero forever which is a very good thing these PhD economists are still years from figuring out but Nur orini is even further away from the Federal Reserve which is really saying something now back to the video I want the inflation to be above Target for a while to wake out for exhibition being below Target I want the economy to become in the Li Market a little bit hard because now I care about inclusive employment meaning about inequality all of these means to remain doish for a long time when maybe the factors that going to lead to rise infation are not going to be only temporary transitory Bas effects but because of the stimulus because of the IM balance between demand and Supply there may be more persistent over time so that's the isace okay so Nel then the FED has backed itself into a corner as you say it's tra what happens how does this play happen well if if in the next few months the increase in inflation were to be truly temporary then the FED would be right that would happen if most of the stimulus is saved there rather the spending used to run down areas and that but if instead there is this huge amount of savings and pent of demand so at Le he recognized that the FED seems to think that inflation is temporary because it will only be a recovery back to preco levels but now he's talking about sustained demand from too much stimulus and too many people having jobs and how that can cause inflation it aat that the increase in inflation is going to become more persistent and then the risk is really that the fight is behind the Cur cuz even the fact that that point keeps on saying things are temporary inflation starts to rise inflation expectations start to rise they control the short of the gear curve but then long R can rise in all in real turns that's one race then inflation gets out of control either you are behind the curve you're going to cause inflation or you don't want to be anyone behind the curve and then you sign an item then could have a bond market and a credit market crash that could really weak the economy start so there you have it when all somebody knows is that inflation can happen if there's full employment or if too many people have jobs then there are Supply bottlenecks because there's no such thing as software that can never have a supply shortage and inflation occurs and you've been trained that inflation is always bad and never once even utter the word deflation and you're effectively just a broken record who got famous once because it was right about 2008 but now is pretty much just a one trick pony that's all he can keep doing and nothing personal about nuro robini all PhD economists say the same thing they all have memorized the same textbook they all have the same cognitive blocks they're intellectually and even holistically unequipped to understand how much the economy has Chang through the diffusion of high technology and they don't see the irony in predicting inflation even though quantitative easing has been going on for 11 years already there's a very distinct gradient of how much quantitative easing can arise in proportion to the extent to which the economy becomes high-tech and I've presented all those numbers over here and the matchup is very solid and profound but they just don't have the Curiosity or framework to understand that because they could never believe why the economy of the 1970s is in any way different than the economy of today or even how the economy of today is different than the economy of 2011 10 years ago we have continuously Rising diffusion of software into the economy again this is another PhD Economist who does not have to make any rapid financial decisions in terms of managing money or anything like that and was pretty much set for life based on getting lucky about having gone on record predicting that 2008 crisis which was easy to predict I predicted that too and I have links in the description Box about that as well but all these people are still in very 1970s era thinking so there you have it you saw all of the statements that he made my counter statements and who turned out to be right in the end well you can see this table of the CPI inflation rate and you can take a threeyear or 5year period to see those are slightly above the trend but the last two years has been low and certainly the last one year so they had one speed bump and then it defaulted back down to low inflation and is arguably drifting lower into deflation at this point if you like this type of content I encourage you to subscribe to this Channel and thank you very much for watching
Comments 0