patrick.net

Republican, but he is extremely independent and more libertarian in his views. Why would party matter? Repatriation of assets? I don't think that will be an issue against Dodd with his ties to firms like Countrywide. Much of Schiff's asset recommendations are commodities anyway.

Hopefully he runs as an independent. It's sad when intelligent people are forced into claiming political party affiliation when they clearly don't agree with the party's objectives at all (see Ron Paul).

I don't see why the interview would be any longer. Schiff and Stewart are actually probably pretty far apart as far as economic policy goes, but Stewart knows that Schiff is a rational and intelligent person whom he wouldn't really be able to have an entertaining debate with (remember, this is a comedy program). In Cramer's case, it's plainly obvious that Cramer is just a self absorbed jackass who doesn't know the first thing about what he's talking about, so Stewart skewered him.

A real interesting debate on economics might be Krugman vs. Schiff. For as much as those guys actually agree on things, you'd probably not get either of them to admit it.

Ask Schiff how his commodities investment have been doing lately. He did extremely well a few years ago but he's lost his ass since last summer. The dollar has not crashed like he promised, commodity prices have tanked, etc. If you bought his books and followed his advice starting last summer, you would be WAY down rt now. Schiff was right about some things but for the wrong reasons. Everywhere I look I still see deflationary pressures and Schiff's investment strategies are setup for a crashing dollar and high inflation. Although I think that will happen I don't see it for a number of years. Invest w/ caution.

I think Schiff's problem is that he doesn't anticipate change very well. He's really good at predicting what will happen if nothing changes, but that's a bit short sighted in times like these.

A good example was his predictions in 2002 that the dow was going to hit 4000 and the nasdaq 500. He failed to predict the credit bubble and the recovery of tech companies following the dot com bubble. If neither of those things had happened, his prediction would have been correct.

So, while Schiff has a lot of value as an economist, I don't think he's necessarily the best person to listen to for investment advice. I'd argue that there's really only one person who has consistently great investment advice, and that's Warren Buffet -- and even he's wrong occasionally.

So, while Schiff has a lot of value as an economist, I don’t think he’s necessarily the best person to listen to for investment advice. I’d argue that there’s really only one person who has consistently great investment advice, and that’s Warren Buffet — and even he’s wrong occasionally.

Kevin, well said. Though even Mr. Buffet has been losing big time recently. It's a tough time out there for everyone.

grywlfbg,

why don't you ask him? Commodities just had the biggest 1 month run in the past 4 decades. Anyone who's stuck to Schiff's strategy had done well. In fact, I dipped into some mining stocks when Schiff called the bottom. They are up 250%. I bought heavily into Silver since October. We know where that is. I bought into Canadian Energy Trusts on his recommendation in February. We all know where oil is. Schiff was begging people to buy into "Skyworth Digital" in his newsletter and in some interviews back in December. The thing is up 250% and pays out 25% on your original investment if you listened to him.

You are still spewing the Mike Shedlock hit piece he published back in January. Fact of the matter is, the second everyone turned on Schiff, it was the best time to invest with him. Meanwhile, Mike Shedlock officially proclaimed it's time to buy treasury bonds again 4 weeks ago....oops. I had an account with Schiff that went down 60% last October. I stuck it out and followed his advice and already erased every loss with my new investments. Oh yeah...and my other stocks that appeared to tank appear to be on their way to recovery.

You don't see high inflation at all? Have you looked at the market in the past 2 months? Astute investors were out of the dollar 8 years ago and it will continue to be the place to be out. Deflationary pressures are meaningless against a printing press.

You don’t see high inflation at all? Have you looked at the market in the past 2 months? Astute investors were out of the dollar 8 years ago and it will continue to be the place to be out. Deflationary pressures are meaningless against a printing press.

At the moment all I see is a bear market rally. Look at charts from the 30's. There were plenty of rallies on the way down - some of them lasting many months.

I bristle against anyone who says they have a "system" for the current times whether it's Schiff, Mish, Krugman, whomever. No one knows what's going to happen or how to "fix" it. The Fed's printing like crazy. The rest of the world is printing like crazy. Credit is being destroyed at a rate never seen before. People have been preaching the death of the dollar forever and so far the rumors of its death have been greatly exaggerated.

More unregulated hedge funds gigging the commodities market, just like always. Nothing has changed.

As far as markets go, if you need something in order to survive, (shelter, fuel, food,) then it should be hugely regulated and safeguarded from over speculation.

Krugman is a nutjob. If you want, I can show some articles written by him early in the decade about how he thought low interest rates were need to "stimulate housing" to lead us into recovery. The guy is clueless and talks out of both sides of his ass.

Mish is your classic snake oil salesman. In fact, the guy is running a commodities fund along side his other fund. He's playing both sides of the coin so he can claim he's right no matter what happens.

Deflation never wins. In fact, the printing presses turned deflation into inflation instantaneously in 1933. I suggest you follow some more credible sources on whether the dollar is going to collapse or not. If you want libertarian minded economists, listen to Peter Schiff, Jim Rogers, or Marc Faber. If you want progressives, listen to Dean Baker and Nouriel Roubini. Fact of the matter is, they all say the dollar is going to get crushed. When other countries print like crazy, it doesn't prevent us from having inflation (just look at the 1970s.) Stocks can be a crappy investment and go up nominally in an inflationary environment. We'll have a pullback in the near future, and they'll print away some more. Inflation always wins if you want it to.

"More unregulated hedge funds gigging the commodities market, just like always. Nothing has changed."

Yes, something has changed. Those hedge funds would have no money had it not been for the printing press recapitalizing them. That's the inflation. The rising prices are a symptom of inflation. It's going to keep happening.

Deflation never wins. In fact, the printing presses turned deflation into inflation instantaneously in 1933. I suggest you follow some more credible sources on whether the dollar is going to collapse or not. If you want libertarian minded economists, listen to Peter Schiff, Jim Rogers, or Marc Faber. If you want progressives, listen to Dean Baker and Nouriel Roubini. Fact of the matter is, they all say the dollar is going to get crushed. When other countries print like crazy, it doesn’t prevent us from having inflation (just look at the 1970s.) Stocks can be a crappy investment and go up nominally in an inflationary environment. We’ll have a pullback in the near future, and they’ll print away some more. Inflation always wins if you want it to.

The key question about the dollar collapsing is what will it crash in relation to? Other fiat currencies? They’re all printing like mad so they’re as weak as the dollar. Commodities? All speculation aside, someone has to eventually consume the commodities and I don’t see demand increasing any time soon so I don’t see how prices will rise. Gold? Well, gold is special because it’s not consumed like a normal commodity. It’s an emotional purchase which could do really well or really poorly depending on people’s fear.


When I look at things I buy I don’t see inflation. Sure, oil has gone up but that’s because 1) it’s summer and 2) speculators are storing tons of oil in tankers to try to drive the price up. Eventually they’re going to have to deliver that oil.


We’re talking fundamentals here. Supply and Demand. We’re in global oversupply for pretty much everything. With no signs that demand is going to pick up I just don’t see a driver for increased prices.

Once you realize you can sell any market as easily as you can buy any market, you then realize you substantially raise your odds for winning.

That’s the inflation. The rising prices are a symptom of inflation. It’s going to keep happening.

Perhaps. I think George Soros got it right in saying that fear of inflation is the greater threat than actual inflation.

we aren't in a global oversupply of everything. Check the world's food inventories. Oil fields around the world have declining reserves. The time frames you are thinking in are way too short. If you extend anything beyond a year or two, the supply/demand fundamentals for commodities only get better, especially for oil. Demand for commodities has already shown signs of picking up in Asia. Producer nations have a giant vault of cash that they have been saving for a rainy day for 20 years. They will consume more.

regardless of what you may think, it's complete nonsense to question Schiff's investment strategy at this point in time. His company delivered near double digit returns for nearly a decade and 2008 was the only year in which they lost. When all his biggest recommendations since October have yielded gains of 200-300% in a 6 month period, I fail to see where criticism is deserved. Hell, even his worst picks have gained 50%. A big mistake people made was selling out after the decline. An even bigger mistake was not buying in. There is no deflationary spiral. There is no paradox of thrift. In fact, there is no depression yet. We do have a crappy economy...but the real bust will be inflationary.

Although I think theoakman is cherry picking numbers for Schiff, I don't think you can ignore the obvious inflationary pressures here. All of the stimulus money hasn't hit the economic bloodstream yet. The Fed dumped dollars to push down Treasury yields, but they've already hit a reflex point where the gain (amplification, not profit) is less than 1. So all they've succeeded in doing was unleashing artificial greenbacks into Congressional spending, and have now lost the ability to control the interest rate on that debt.

Once the banks finally realize their losses with government cash, we're going to flip from deflationary to inflationary in a very short timeframe. I doubt we'll see true hyperinflation, but I think 1970's style stagflation is in the cards... unless we stupidly opt for an American Lost Decade.

Of course I cherry picked numbers from Schiff. The whole argument that Schiff lost money was based upon cherry picking numbers on a 6 month time frame. Now that I already erased whatever losses I had with Schiff by listening to him for the past 9 months, that argument is complete nonsense. Fact is, Schiff posted good returns for the past 10 years and only had one bad year (2008). 2009 appears to be his best year so far, according to him. What's hilarious is that the time when all the Schiff bashing articles came flying out in January was when his portfolios were set for their biggest run in history. What's sad is that a dishonest blogger like Mish scared a bunch of Schiff's clients into liquidating their portfolios which made those losses real. I don't know if we'll see hyperinflation. What I do know is, we won't see the cost of living go down any time in the near future.

You are never supposed to listen to anyone's advice without filtering through your own analytical lens. Mish and Schiff both have good points to make and I listen to them both, but never accepting at full value whatever they preach.

I really feel sorry for all of those who bought US treasury in the last few months, and I will feel even more sorry for them 2 years down the road. These are simpletons who actually have savings (a rarity in the US!) and they don't deserve a government that is working against their interest.

I am not a believer of a replay of Zimbabwe or Weimar in the US. But we are heading in that direction, with a much, much better outcome. One thing I would like to point out is, at the initial stage of decline of Weimar, and the complete trashing of Weimar's Deutsch Mark, the currency actually gained significant ground against USD (the gold standard back then) for about 2 years before a total collapse.

You are never supposed to listen to anyone’s advice without filtering through your own analytical lens. Mish and Schiff both have good points to make and I listen to them both, but never accepting at full value whatever they preach.

Bingo!

You win a gold star.

I read a lot of this in many internet arguments, when I talk about individual issues, then I talk about the people who have helped me form opinions.

Just because they were nut-jobs at an earlier time and were wrong, doesn't discount the argument now. I agree, and can really wrap my head around the arguments Krugman makes now, so I read him regularly.

Anyway, whether or not he is right or wrong (Shiff), why the fuck would people put a money person in power? It's like shooting yourself in the foot! Christ, you think people would learn . . .

Don't put bankers into power. Smart or not, a banker in power is a walking conflict of interest.

In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer.

-Paul Krugman October 7, 2001

Beware listening anything to Paul Krugman says...You can search through his entire archive of writings and find that he's been consistently awful since about 1982.

<blockquote>
</blockquote><blockquote>
In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer.
-Paul Krugman October 7, 2001

Beware listening anything to Paul Krugman says…You can search through his entire archive of writings and find that he’s been consistently awful since about 1982.

</blockquote>
Yeah, anyways, like I was saying. . . I am not going to read all this. As I am sure it is a matter of opiniion. The man won the Nobel prize in Economics, there has to be something behind that. Of course I am not going to fall into the appeal to authority trap . . . You have to filter things based on logis and precedent.

Darn editor. . . I'm not going to fix it.

Hi OO,

"I really feel sorry for all of those who bought US treasury in the last few months, and I will feel even more sorry for them 2 years down the road. These are simpletons who actually have savings (a rarity in the US!) and they don’t deserve a government that is working against their interest.

I am not a believer of a replay of Zimbabwe or Weimar in the US. But we are heading in that direction, with a much, much better outcome. "

I follow your statements closely as you seem to have a good knowledge of global economy. I hold some Inflation protected treasuries and your above statement started to ring some alram bells to me, can you please elaborate what you mean?

thanks,
Pshawn

pshawn,

how is the return of the inflation-protected Treasuries computed? Who protects you against inflation? If I believe in the integrity and the protective power of the entity that issues that Treasury, I would have held nothing but plain vanilla US Treasury.

On a more technical note, the CPI on which the inflation protected Treasury is based will not reflect the reality in an unevenly distributed inflationary environment EVEN IF there is no data massaging at all. Let me illustrate why.

Say, current food is cheap, its assigned weight is only 10%. If we encounter serious inflation in fuel and then food, the weight we assign to them in monthly expenditure will become higher than 20%. In more extreme cases, people cut back on clothing, entertainment and other things to service food, which could push up the weight even further. So in reality, if you start to assign 30% of your monthly expense to food, then 10% growth in food price should contribute to 3% to CPI instead of 1% as weighted in the original formula. So weighting is really a moving target, and in an inflationary situation where necessities go up faster (which is what I believe will happen), the CPI will always lag the reality by quite a bit.

Hi OO,

thanks for the reply. I know that the inflation rate that I bonds is manipulated to pay the least interest.
But my question is regarding printing dollars and why do you think the outcome here will be better than, say Zimbabwe?

thanks,
Pshawn

Zimbabwe has no agricultural excess, no guns, and no technology. And their illiteracy rate is way higher than ours.

A country's worst case scenario is defined by two aspects: resources (coupled with means to defend that resource), and people. I know we bitch about America a lot, but when you look at these two fundamentals, we are not that shabby at all.

We do print, but thanks to the Wall Street, we also created a lot of USD pit that cannot be easily filled. The Fed will not be stupid enough to print all at once and drown us under the tsunami of USD. They print as it goes, depending on the de-leveraging needs. Eventually the holes will be filled, and they will need to face lots of USD coming home to roost. But we are not there yet.

got it, thanks. I was also thinking that becuase of asset deflation(especially house prices), lot of dollars are getting destroyed also, so the liquidity that Treasury causing probably will not create hyper-inflation once economy is back on track and fed stops printing more of it.

got it, thanks. I was also thinking that becuase of asset deflation(especially house prices), lot of dollars are getting destroyed also, so the liquidity that Treasury causing probably will not create hyper-inflation once economy is back on track and fed stops printing more of it.

Well, that's THE question isn't it? Will the destruction of money/credit (which I contend is the same thing as money) happen faster than the Fed can print new money? No one knows. You can try and hedge one way or the other but it's tough.

I'm thinking the next 3-5 years are deflation as this stuff continues to unwind/de-leverage. After that I think we're in for inflation as the money that's being printed now makes its way into circulation. I'm currently 70% USD, 20% stocks, and 10% commodities (oil, gold, silver). But will rebalance as things change. Best you can do is to be flexible and debt-free.

First off, it's not a Nobel. Second, Economics is probably one of the least respectful fields in existence. They all develop these complex mathematical models for simple problems which all fail horribly. Previous winners include the two morons who gave us the Long Term Capital Managment Debacle and the AIG derivitaves nightmare. In short, the prize is meaningless, and the men who win are horrible economists who develop bad models. The only thing I'll give them is that they are good at Math. Krugman has proven he's a pretty mediocre economist. In fact, he admitted that he had his money entirely in a money market account that he thought was safe. Just goes to show you that he really had no clue what was coming.

I am more intrigued with an impending issue, what will happen when CA goes bankrupt?

Did anyone live through the time when Orange County filed for bankruptcy? I would love to see all the CALPERs receiving $200K pension going belly up, but what kind of impact it will have on residents?

First off, it’s not a Nobel. Second, Economics is probably one of the least respectful fields in existence.

I thought it was a Nobel, what is it then?

As far as respect, well that's a different matter altogether. More to the point, because it is such a disputed field, you have to listen closly to various viewpoints. . .

It's not a Nobel. It is The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. It's an award issued by the Central Bank of Sweden. The real Nobel committee doesn't like the fact that it even exists. Ironically convenient that they would issue it to Krugman at a time when the Central Bank is looking to print tons of money. It's akin to the Federal Reserve issuing someone an award. And they awarded it to him for his work on international trade, which he hasn't published a paper on in about a decade. The award is a farce. The big guys in "macroeconomics" are the ones that construct really complicated models that have pretty much nothing to do with anything of particular importance to economics. In fact, you will notice that any Nobel prize winner pretty much has zero credibility when it comes to understanding markets and macro forecasting. That's why they stay in academia and are not working for banks or Wall St. making billions of dollars. A guy like Warren Buffett or Jim Rogers understands the way economies work 100 times more than a clown like Paul Krugman ever could. The two that recently tried, Robert C. Merton and Myron Scholes, gave us the Long Term Capital Management blow up and more recently, the insane derivatives market. These guys don't understand economics. They are kooky mathematicians playing around with models. They develop models that say you can insure 100 trillion dollars worth of obligations without any danger. They develop models that tell you that you can loan out 400k to someone making 25k a year to buy a house and still make money. They develop models that tell you that 0% interest rates and trillion dollar deficits lead the path to economic recovery. Paul Krugman is a nutjob who worships economic thoughts has been discredited over 40 years ago. He's an awful historian. He's a schill for his buddy, Ben Bernanke, who hired him at Princeton. He's also a left wing ideologue, which is apparently what makes him extremely popular with a number of people. He clearly advocated in 2001 to lower interest rates close to zero to "stimulate housing". Not too smart if you ask me... He also automatically wrote off anyone who preached protectionism in the 80s saying that the trade deficit would naturally balance itself. He claimed in the 90s that fears of outsourcing labor were greatly exaggerated. He was sounding the alarm in 1983 that inflation was coming back. The guy has been wrong on virtually everything he preaches. The only time Krugman is ever right is when he starts biting off his buddy Dean Baker. But in reality, that just makes Dean Baker right, and Paul Krugman too dumb to think for himself. Paul Krugman is good at math, that's it.

As much as I agree with theoakman's assesment of Krugman, it isn't like there are any economists who actually do seem to 'get it right' more often than any random person.

Economics, as a science, is bullshit. You can't base a science on something that is influenced more by black swan events than by any natural phenomenon. The difference between good managers of the economy and bad (and between good investors and bad) is the ability to react quickly to situations as they arise, not in the ability to formulate strategies for influencing what will happen in the future.

Economists are great at telling us why something happened. They suck at figuring out how to prevent it from happening again, and they suck even worse at giving investment advice.

I'm not saying all economists are bad. But as far as the mainstream goes, the so called "rock stars" in academia, and the material taught in nearly every college curriculum, it's a farce. Most people who have degrees in economics don't have a clue. It gets even worse when you get up to the PhD levels. They spend so much time working on their problems that they never manage to understand basic economics. The real dangerous ones are the ones who come up with models to apply throughout the economy. They try to micromanage aspects of the economy and generally create a big mess. The reality is, economists suck at telling you why something happened. They will all tell you the banking system nearly collapsed because we didn't bailout Lehman Brothers. The reality is, the banking system nearly collapsed because it was insolvent.

Your greatest economic forecasters are largely the ones who never had any exposure to mainstream economics or did and dismissed it entirely. This latest financial crisis should be grounds to completely dismiss 90% of the garbage that is taught in Universities today. Economists, by and large are clueless. And those that actually get it right and are ahead of the curve are usually ignored because some "Nobel Laureate" disagrees and writes a column in the New York Times. In 20 years, I'm hoping history doesn't treat guys like Krugman and Bernanke nicely. I'm amazed that they are held in such high regard in the first place. It's amazing to me that no one calls them out on how wrong they've been despite the fact that everything they've written or said is easily accessible.

It’s not a Nobel. It is The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

That is just so fucked up. You convinced me, I will forever more think Krugman is a schill.

What a crock. The Nobel name being abused in such a manner. Of course, we have all seen it before.

And there you are, money people suck. Why the hell would you want one in power?

Many people don't realize how much damage economists do to an economy. Alan Greenspan, Ben Bernanke, the LTCM guys, Lawrence Summers, Tim Geithner, Hank Paulson...etc..These guys are extremely dangerous to not only freedom but prosperity. The TARP is probably the biggest example that comes to my mind. 30 years ago, many people who were well schooled in monetary history and monetary theory were sounding the alarm that the system of the entire world using floating fiat currencies is a giant experiment that we do not know the consequences of. Since the 70s, we've witness several currency collapses and we are now entering the 2nd bout of historical inflation on a global scale since then. For thousands of years, the cycle was inflation/deflation because most currencies were tied to gold/silver and inflation/deflation was primarily driven by leverage through the fractional reserve system. The US Federal Reserve basically managed to transform that cycle into one of constant inflation since the 1930s. In sciences, we have everything figured out on the basic level and we manage to run laboratories properly and efficiently throughout the world in every university. In economics, despite centuries of historical data, we manage to screw up economies royally. Krugman is just the most vocal of a long list of jerks who think what they do is going to benefit society. I'm not sure if he actually believes a lot of the things he writes. If you want a progressive economist to follow, I suggest you follow Dean Baker. I don't agree with all of his positions (both political and economical), but he is very good at understanding markets, and is very honest. He knows who the people are to blame and he does demand transparency. Krugman has really just turned into a propaganda machine IMO.

Just goes to show you that he really had no clue what was coming.

Well he kinda did know some of this was coming actually.
http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

Just goes to show you that he really had no clue what was coming.

Well he kinda did know some of this was coming actually.

http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

No he didn't. The guy from PIMCO who he quoted did. In fact, he wrote in that article "Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off". From that statement alone, he didn't realize the bubble was already underway. I posted a article in this thread the year before the article you just posted in which he advocated lowering interest rates to stimulate housing and consumer spending. You can search his entire NYT archive and you'll find that he only vaguely mentions the housing bubble in passing and whenever he did, it wasn't him recognizing it. It was his buddies Dean Baker and Robert Schiller, whom he refers to. On top of it, Krugman had no idea that the financial system would collapse, by his own admission. So, even if I gave him the benefit of the doubt about recognizing the bubble, that doesn't change the fact that he actively advocated policies to purposely create the bubble or make it worse. Like I said, whenever Paul Krugman appears to predict something, it's because he's just rehashing stuff his buddy Dean Baker said way before. That doesn't make Paul Krugman smart, it just makes him too dumb to think for himself.

No he didn't...

German Interview, undated

http://www.pkarchive.org/global/welt.html

“During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn't you lower interest rates?”

July 18, 2001

http://www.pkarchive.org/economy/ML071801.html

“KRUGMAN: I think frankly it's got to be -- business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).
DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she -- or I should say he and she, can they bring back this economy?
KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don't know.
“

August 8th 2001

http://www.pkarchive.org/economy/ML082201.html

“KRUGMAN: I'm a little depressed. You know, inventories, probably that's over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates haven't fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. It's not a happy picture.”

August 14, 2001

http://www.pkarchive.org/column/81401.html

“Consumers, who already have low savings and high debt, probably can't contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery…. But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates — and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1…. Sooner or later, of course, investors will realize that 2001 isn't 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.

October 7, 2001

http://www.pkarchive.org/economy/ML071801.html
“Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.
In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package.
“

Dec 28, 2001

http://www.pkarchive.org/column/122801.html

“The good news about the U.S. economy is that it fell into recession, but it didn't fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed's dramatic interest rate cuts helped keep housing strong even as business investment plunged.”