Paul Krugman Blog- One Point Seven Six

[n2doc]

The invisible bond vigilantes continue to lure us into their invisible trap.

Meanwhile Joe Weisenthal has more about the bizarre response of conservative economists to the failure of interest rates to rise the way they claimed they would: part insistence that somehow the Fed is rigging the market, part denunciations of the markets themselves, because they’re not disciplining government the way they’re supposed to.

And as for actually rethinking preconceptions, and considering the possibility that Keynesian economists who told us three years ago that we were in a liquidity trap, and rates would stay low until the economy recovered? Not a chance.

http://krugman.blogs.nytimes.com/2011/10/03/one-point-seven-six/
(He is referring to the yield on the 10 year Treasury bond)

[Warpy]

1. Keynes's model is the only one that ever holds up in practice

and it drives the rest of them stark, staring crazy.

[TacticalPeek]

2. Whom the gods would destroy,

they first make stark, staring crazy.

[girl gone mad]

6. We have an even better model now.

Post-Keynesians have nailed all of their predictions over the last 20 years. I'm glad people like Weisenthal are starting to get it. Krugman should make the leap, too.

[banned from Kos]

3. Dumbasses on the right keep screaming INFLATION!!!

We are on the verge of a deflationary death journey.

[ikri]

4. From what I've read

Raising interest rates to combat inflation only really works when the inflation is being caused by wages and spending. Currently, inflation is being pushed by fuel prices (which is having a knock-on effect on to the price of everything else) so raising interest rates would do fuck all to lower the inflation rate and would only hurt borrowers even more. True, savers are being hurt by low interest rates but frankly, if you have enough savings that a change in the interest rate would actually yield noticeable amounts of money in the short-term then you're pretty damned well off already and can afford to take a hit for a little while longer.

[banned from Kos]

5. But rates are falling - the 10yr is at 1.85% near all time lows.

Crude oil down to $76.

The one commodity stuck too high is gold - which enjoys a weird paranoia bubble for the moment.

[girl gone mad]

7. Fully encouraged by the Federal Reserve..

which was more than happy to stoke the inflation fear fires throughout the QE programs, pumping up bubbles in commodities and contributing to global unrest in a misguided effort to prop up TBTF zombie banks.