ECON MYTH: Krugman's "Liquidity Trap" and Academic Integrity Exposed For the Nonsense that it is under OBJECTIVE PROOF
Submitted by Bhynes919 on Sat, 02/04/2012 - 09:53What You Are Missing: Myth surrounding the Financial Market The Objective Fallacy of the Liquidity Trap.
A Pretty fundamental methodology to objectively illustrate a logical deductive proof.
The Liquidity Trap: Academic Envisioning or Imagination?
Krugman, disagree or agree with his underling philosophy, has demonstrated he’s a dangerous person to follow for Market Advice. I call to caution as he is likely on the same level of the academic defrauder Mishkin. However, it is more fair at this point to simply illustrate lack of confrontation of his contradicting suppressed premises. Although that’s a very intellectually dishonest way to write; his fallacies are likely the result of his lack of knowledge between subjectivity and objectivity.
After much study of the prospect of a liquidity trap, objective logic presents a case resulting in a simple conclusion. It is beyond any objective doubt that its existence is nothing short of fiction. The liquidity trap is related to the transformation of definitions throughout the 1980s; Where falling prices; which undoubtedly is irrationally feared is completely inaccurate when a definiendum no longer matches its’ definiens; more simply stated as the mistaken definition of deflation “falling prices” rather than “contraction of the supply of money”. If you can understand that, not everything else is beyond the realm of comprehension in a deductively laid out argument. This objective method will give a very brief synopsis to analyze the validity behind the jargon:
Hi I'm bankrupt....
but if you would just loan me one million dollars I can put off the bankruptcy until later.
Does this make any sense? My son failed his economics class that used a book authored by Krugman. Man was I relieved.
Doesn't
the liquidity trap imply a certain perspective?
Who or what is trapped?
I would think it's the people trying to get bailed out.
The liquidity trap is the scenario where cash injections fail to lower the interest rate. The failure of the interest rate to fall is blamed on 'hoarding' or 'saving'...which, when on deposit, is what actually lowers the interest rate.
If new cash fails to lower the interest rate it must mean it is being soaked up somewhere. I would imagine that to be principally by the losses of failing industries.
If cash injections fail to re-stimulate failing industries it is because the market is already reorganizing the resource distribution structure of the economy.
If 'higher order' producers of a busting industry sector are busy covering their losses they are not bidding on 'lower order' resources, allowing raw materials to fall in price.
Other sectors of the economy may indeed wait for raw materials prices to fall as the bubble sector's influence on those prices continues to unwind before starting their ventures.
It should go without saying that purchasers of the 'higher order' goods produced by the busting industry sector are wise to wait for falling prices.
None of this is a problem except from the perspective of the failed industry sector and those who desire for it to have never busted and now seek to reinstate its artificial apogee onto an unwilling reality. When your fighting reality then 'trap' is clearly the correct term.
But from any other perspective there is no trap.
I always
Find it interesting in these Austrian discussions of deflation and definitions thereof, to never include "credit." If inflation is so rampant, why is the dollar index still above 80 and U.S. Treasuries so strong? We are experiencing a deflationary credit contraction that is dwarfing the intermittent quantitative easing by the Fed, which only has a temporary effect. The end result is the same, but for now, the Fed can't stop the massive contraction.
Note of reference; I sell gold and silver for a living, but this "insurance" I sell is more related to the banking crisis than it is to inflation.
Many may not agree, but you can't ignore credit in your analysis. That's like doing your research on who is going to win the Superbowl, and ignoring an analysis of the Patriots defense. (I am on my way to Vegas, ha...and hope to see the good Dr.) Sorry I won't be able to replyz but if you want to send me your email address, I will send you Chapter 4 of my book which has 100 footnotes on the issue, including Austrians who use credit in their analysis. Go New England! And Ron Paul!
My Christian/Political Blog:
We the Serfs! Blog
The level of ignorance displayed in a Krugman column
is nothing compared to the ignorance of the comments section. I can't believe anyone believes his nonsense. The answer to a debt crisis is not more debt; apparently you have to be incredibly smart or incredibly stupid to believe that.
you have
to spend several years in higher learning institutions...meaning you've been 'institutionalized'. :p
History will judge Krugman in
History will judge Krugman in the same vein as it does the doctors who came out and pitched for Phillip Morris by saying smoking is not bad for you.
I think it should be fairly obvious by now
that Nobel Prizes are only now given to lackeys who will push the New World Order lies, and have nothing at all to do with being good at anything, except maybe lying.