The Official Roster of the Pain Caucus

Any list that includes Niall Feguson, Amity Shlaes and William Kristol is obviously composed of very serious people.




Cliff Asness
AQR Capital

Michael J. Boskin
Stanford University
Former Chairman, President’s Council of Economic Advisors (George H.W. Bush Administration)

Richard X. Bove
Rochdale Securities

Charles W. Calomiris
Columbia University Graduate School of Business

Jim Chanos
Kynikos Associates

John F. Cogan
Stanford University
Former Associate Director, U.S. Office of Management and Budget (Reagan Administration)

Niall Ferguson
Harvard University
Author, The Ascent of Money: A Financial History of the World

Nicole Gelinas
Manhattan Institute & e21
Author, After the Fall: Saving Capitalism from Wall Street—and Washington

James Grant
Grant’s Interest Rate Observer

Kevin A. Hassett
American Enterprise Institute
Former Senior Economist, Board of Governors of the Federal Reserve

Roger Hertog
The Hertog Foundation

Gregory Hess
Claremont McKenna College

Douglas Holtz-Eakin
Former Director, Congressional Budget Office

Seth Klarman
Baupost Group

William Kristol
Editor, The Weekly Standard

David Malpass
GroPac
Former Deputy Assistant Treasury Secretary (Reagan Administration)

Ronald I. McKinnon
Stanford University

Dan Senor
Council on Foreign Relations
Co-Author, Start-Up Nation: The Story of Israel’s Economic Miracle

Amity Shlaes
Council on Foreign Relations
Author, The Forgotten Man: A New History of the Great Depression

Paul E. Singer
Elliott Associates

John B. Taylor
Stanford University
Former Undersecretary of Treasury for International Affairs (George W. Bush Administration)

Peter J. Wallison
American Enterprise Institute
Former Treasury and White House Counsel (Reagan Administration)

Geoffrey Wood
Cass Business School at City University London

This is what makes them so very serious.

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued.  We do not believe such a plan is necessary or advisable under current circumstances.  The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

While the last point is yet to be determined, and I, too have my doubts about the effectiveness of QE II, the idea of a risk of currency debasement and inflation is absurd in the extreme.  My counter predictions:-

1) Coming off last month's lows, look for several months of strengthening in the dollar vs other currencies, especially the Euro.
2) Inflation will remain below 2% for the next several years.  If we manage to avoid actual deflation, I will be quite surprised.
3) Commodity prices have peaked and will decline for years.  The peak prices of 2007 won't be approached again for decades.
4) We will see gasoline near $2.00 per gallon - possibly even less.

Krugman weighs in.

If you don't get the reference in his title, it is to this quote from Andrew Mellon in 1930.

Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people

I tracked down the Mellon quote at a site called, with no apparent sense of irony, REALITY LENSES.

The blogger there continues:

Obviously, his advice wasn't followed by Hoover, who preferred to intervene massively following Keynesian theories and push the economy into the Great Depression.

It's become a cliche to say that you are entitles to your own opinion, but not to your own facts. It has also become a right wing meme that Hoover engaged in massive intervention following Keynesian theories.   This is pretty rich when you consider that Hoover's presidency ended in 1933, and Keynes didn't publish THE GENERAL THEORY until 1936.  Further, even that rabid socialist, FDR, didn't practice Keynesian ideas with any great fervor, as the recession of 1938 proved.

This is what you always get from the right - some version of a lie or distortion.  Here it is revisionist history, delivered with the typical tone-deafness to irony.

Update: I love it when Delong agrees with me.   He is, in fact, quite pointed in his criticisms.

Meanwhile, we're screwed.
.