KRUGMAN: Fed "using evidence the way a drunk uses a lamppost: for support, not illumination"

[kpete]

KRUGMAN
August 13, 2011, 9:02 AM
Pain and Prejudice

...............

It’s not just that Kocherlakota seems to have been very selective in his choice of starting point: the key point about employment, familiar to anyone who looks at the data, is that any fall in the unemployment rate is basically a statistical artifact, not reflecting actual job gains. The employment-population ratio has gone nowhere:


And even on the inflation rate, there is good reason to believe that the modest rise in core inflation was a blip driven by commodity prices, and is already fading out:


So this isn’t fact-based policy. The Fed dissenters are obviously looking for excuses to pursue tight policies; they’re looking at the facts only in search of support for their prejudices. As the old line goes, they’re using evidence the way a drunk uses a lamppost: for support, not illumination.

http://krugman.blogs.nytimes.com/2011/08/13/pain-and-prejudice/?smid=tw-NytimesKrugman&seid=auto

[Rabblevox]

1. +1 that is a GREAT quote!

[Chimichurri]

2. Love the analogy.

[n2doc]

3. Except there is inflation

In energy, in food, in medical, essentially in most things people really need. I see it in my electricity bills, in my Grocery bills, in my insurance bills. Not that raising interest rates does squat in stopping those kinds of inflation. I think the academics miss this stuff in focussing so much on so called 'core' inflation, which is rigged to show the least possible inflation rate possible. Gasoline prices aren't everything, either, even though they seem to dominate the 'PCE' index, it seems.

[roamer65]

6. We have nasty inflation in all of the wrong areas right now, I agree.

Who cares about house price deflation when most either can't get the credit for one or simply don't want to buy one.

People who point to declining home values and yell "deflation" are about as useful as someone who would point to lower prices on Chinese cat toys and yell "deflation" as well.

The gov't core numbers are fudged beyond belief and are undependable.

This a result of the uncontrollable "hot money" that the Fed has thrown into the system.

[pnwmom]

4. Not the FED, according to Krugman. The DISSENTERS from the Fed's recent action. n/t

[Kolesar]

5. Yes--that is confusing ... eom