Saturday, May 29, 2010

Why do News Corp editorials hate reality?

In an interview in this week's edition of Barron's, Ray Dalio of Bridgewater Associates, a fund with institutional assets of $75 billion, explains in six simple sentences why inflation is not a problem right now. This is from the print edition; the interview is available online to subscribers.

Explain why the printing of money won't cause inflation.

The printing of money will offset the deflation that is coming from the weak demand for goods and services due to weak credit growth. For example, in March of 1933 the U.S. printed a whole lot of money, and that had the effect of converting deflation into modest inflation, but not a high rate of inflation.... My point is, in developed countries there is too much of most things at the moment, ad that's creating a deflationary environment. There is too much manufacturing capacity. There is too much labor. There is too much housing stock.
Six sentences, including actual facts, spoken by someone who is actually responsible for other people's money (and a lot of it). Compare this to last week's inflation hawk editorial by Barron's editor Tom Donlan, in which he seems to desire to make the opposite case -- an argument for contractionary policies -- but instead wanders off on an embarrassing digression about old bonds and barely manages to burp out some you'll-be-sorry warnings about inflation.

This is another case of a financial paper's journalism being sane and the editorial pages being completely unhinged from reality. Where else does this happen? Why, Wall Street Journal, which is owned by News Corp, which owns Fox News and, of course, Barron's.

No comments: