Storm economic impact seen modest - White House (Pollyanna Alert!)

Yahoo! ^ | 8/31/2005 | Reuters

[Mr. Jeeves]

WASHINGTON (Reuters) - Hurricane Katrina is likely to have only a modest impact on the U.S. economy as long as the hit to the energy sector proves transitory, White House economic adviser Ben Bernanke said on Wednesday.

"Clearly, it's going to affect the Gulf Coast economy quite a bit," Bernanke told CNBC television. "That's going to be enough to have at least a noticeable or at least some impact on the aggregate (national) data.

"Looking forward ... reconstruction is going to add jobs and growth to the economy," he added. "As long as we find that the energy impact is only temporary and there's not permanent damage to the infrastructure, my guess is that the effects on the overall economy will be fairly modest."

He added that most indications suggested the effect on the energy sector would indeed be temporary.

Bernanke, chairman of President George W. Bush's Council of Economic Advisers, said the administration's decision to release oil from emergency stockpiles should be helpful.

"There are some petroleum refineries that don't have crude and by allowing them to draw from the Strategic Petroleum Reserve they will be able to produce more gasoline," he said.

Bernanke said the bond market's reaction to the hurricane, pushing market-set interest rates lower, showed more concern about the potential hit to growth than to the risk of a broad inflation surge due to soaring energy prices.

"I think that is a vote of confidence in the Federal Reserve," the former Fed governor said. "People are confident that inflation will be low despite these shocks to gasoline and oil prices."

[Mr. Jeeves]

Appalling hubris by Bernanke, but I guess that's in keeping with his past comments on "helicopter money". If this announcement wasn't authorized, Bush needs to keep this guy on a tight leash until the damage assessment is complete. All of those people in the South and Midwest who stand to get laid off from their Mississippi river traffic-dependent jobs if the river proves unnavigable aren't going to appreciate Pollyanna-ism by the Republicans at this time.

Even with as little as we already know, the storm's economic impact is going to be immense.

[AdamSelene235]

Ben "Helicopter Commander" Bernanke is a dangerous lunatic.

[atomicpossum]

He might be a good economist, but he ain't much of a spokesman.

[AdamSelene235]

U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

-Ben S. Bernanke,Bush's Chief Economic Advisor, Deflation: Making Sure "It" Doesn't Happen Here

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. - John Maynard Keynes, Grave Digger of the British Empire

[AdamSelene235]

He might be a good economist, but he ain't much of a spokesman.

He is economically illiterate.

[McGavin999]

No, it's not. You see, the rest of the country will increase production of the construction materials that will be required to re-build. There will be thousands and thousands of construction jobs available, and as a result, thousands of support jobs available.

As for the actual cost of rebuilding, there will be a lot of tax dollars required, but that will just mean a diversion of funds previously set aside for foreign aid.

[Always Right]

LOL, the oldest trick in the book. Anything that has CONSTANT growth goes exponentially, and when plotted on a linear scale exhibit that scary looking increase.

[Mr. Jeeves]

No, it's not. You see, the rest of the country will increase production of the construction materials that will be required to re-build.

That's the old "broken window" fallacy from basic economics: If you break a window it's good for the economy because the workman and the glassmaker get paid to replace it...so let's go break all the windows and really create a boom!

When I hear senior Fed officials (who certainly know better) making very similar assertions, I worry.

[AdamSelene235]

Anything that has CONSTANT growth goes exponentially,

No, things that grow exponentially grow at a rate proportional to its size.

Furthermore, that's not an exponential curve, genius.

At least not yet.

[loreldan]

Did you want him to tell everybody to start panicking? The market is watching everything everyone of importance has to say. Now is the time for calming voices. I don't think we're headed for doomsday anyway.

[Clemenza]

"Stay Calm. Do not panic. All is well."

[Always Right]

1. Yes it is an exponential curve.

2. And it has a constant growth rate.

An exponential growth is characterized by the following equation:

k - is the constant rate of growth.

So in the graphs in the post above, say the money supply is growing at a constant rate of 4%, it will look exactly like those curves. And BTW, what means it is growing at a rate proportional to it size, and that rate is constant.

[AdamSelene235]

Please write an equation to curve fit M3.

1. Yes it is an exponential curve. 2. And it has a constant growth rate.

Here's the data set

It very obviously does not have a constant growth rate.

[McGavin999]

Well, we didn't break this window, Katrina did but to think the economic consequences are going to be bad is just silly. Is it going to lead to economic growth? No, of course not, but it's not going to be a net loss either.

[Always Right]

It very obviously does not have a constant growth rate.

Yes it does. You would just take the average rate of growth of the money supply, plug that into the equation above and you would have a curve that closely approximates the curve above. Obviously the money supply growth probably varies from about 4-6% per year, but there is a best fit exponential curve that would map the data very well.

[AdamSelene235]

Obviously the money supply growth probably varies from about 4-6% per year

Hardly

Jan 2000 - Jan 2001 9.557% Growth

Jan 2001 - Jan 2002 11.404% Growth

Jan 2002 - Jan 2003 6.529% Growth

Jan 2003 Jan 2004 4.130% Growth

For the last 10 years the average m3 growth rate is 7.9% with a peak growth rate of 13 % from 11/00 - 11/01 and a min growth rate of 3.6% from 12/02 - 12/03.

A simple exponential function does not match the data.

[Always Right]

A simple exponential function does not match the data.

No curve matches data, you average out the growth rate it and get a best fit. The fact that growth is measured as a pecentage is a dead giveaway that you have exponential growth, hense as your definition says "grow at a rate proportional to its size".

[AdamSelene235]

Methinks you will need a Fourier series of both real and imaginary exponential functions to match a curve like m3.

[Always Right]

Methinks you will need a Fourier series of both real and imaginary exponential functions to match a curve like m3.

Have you ever made a best fit curve in your life? We are dealing with a very simple exponential curve. Just because the actual growth rates fluctuate from month to month does not change they fact that M3 grows exponentially and there is a constant rate factor that plugs into the equation that nicely tracks the above graph. When you make a best fit curve, the object is not to hit every point. The best fit curve will have some portions that are above the actual data and some portions below the actual data. This really is not that complex.

[Always Right]

I am really tiring of your condescending comments when it is quite obvious you are clueless as to what exponential growth means.