CNBC's Joe Kernen Calls Paul Krugman a Communist
CNBC's Joe Kernen on Monday called New York Times columnist Paul Krugman a communist.
Kernen expressed the same sentiments for economist and Huffington Post contributor Dean Baker (video follows with transcript and commentary):
JOE KERNEN: To categorically say that all this QE has not at different points inflated commodity prices. They have said absolutely that they think there’s a linkage. I saw something last week, Erin Burnett happened to mention that on CNN. The Huffington Post will put, you know, fact-checkers need fact-checking now. They’re so full of crap. These fact-checkers lie more than the people that they’re fact-checking.
The lead story was that she makes fraudulent false statements. And I read it, and I go, “Wow, what did she do? She must have really screwed up.” All she did was tie some of the commodity inflation to some of the QE3, and then they quoted Paul Krugman and this other idiot, Dean Baker, who’s some guy, I don’t even know who he is, he always writes for The Huffington Post. Basically co-communists in a lot of different economic circles.”
For some background, the Huffington Post published "Erin Burnett Makes False Claims About Federal Reserve" Saturday:
The Federal Reserve has made food and gas more expensive, one television news show host said Friday, but evidence shows that's not really the case.
"Easy money has also sent commodity prices higher. This is the rub," Erin Burnett said Friday on her CNN show "OutFront." "Gas prices, as you can see, about double. Regular unleaded was $1.89 in November of 2008. It's now $3.82 a gallon. And food prices are up 54 percent over that same time frame. So easy money isn't so easy."
As Kernen said, the Post quoted Baker and Krugman:
"This is nonsense," Dean Baker, co-director of the Center for Economic and Policy Research, wrote in an e-mail. "These prices have been moving largely in response to real conditions of supply and demand (e.g. the Libyan civil war raised oil prices by taking supply off line, the summer drought in the U.S. has raised corn prices) often amplified by speculation." [...]
"What the commodity markets are telling us is that we're living in a finite world," Krugman wrote in the New York Times in December 2010. "As more and more people in formerly poor nations are entering the global middle class, they're beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies. And those supplies aren't keeping pace."
That might all be true, but there is no question that all the quantitative easing the Fed has done since the financial crisis of 2008 has indeed caused commodity prices to rise by not only keeping interest rates lows and flooding the markets with dollars, but also keeping the value of the dollar down.
As traders have been shorting the dollar for years to buy things like commodities, the more quantitative easing the Fed does, the higher commodity prices go.
Taking this further, there are many economists who believe there's an inverse relationship between the dollar and oil given that oil is traded internationally in dollars. As such, some think as the dollar goes down, oil must go up and vice versa.
In just the past two weeks, commodity prices have dramatically risen as traders speculate that the Fed is about to do another such easing.
As such, Burnett's comments were quite right last week and didn't warrant the attack from the Huffington Post.
As for Krugman and Baker being communists, I'll let readers decide on that.
(HT Huffington Post)