Dear Lord this is bad for an economist

Short term speculative profits, made by exploiting small price differences within and between markets, are one of the ways in which hedge funds make profit.

Err, no, exploiting pricing differences is arbitrage, which is not speculation. They’re opposites of each other.

In arbitrage the buying and selling is done at the same time. No leg hanging in the air. Prices are this, right now, buy and sell right now. That’s certainty.

Speculation is the opposite. Prices are this now and they might be that in the future. So, buy/sell now to sell/buy in the future.

Arbitrage does not involve price risk – although it does counterparty, obviously. Speculation involves price risk. That’s why they’re opposites.

The underlying point being made is no less awful:

And in an instant I understood exactly why we are having so many reports on inflation expectations at the moment when the real prospects for it arising (most especially now the Indian variant of Covid appears rampant) looks to be very low indeed. The fact is that markets – and most especially hedge funds – survive on market turmoil.

That’s the Jooos again.

And then there’s this:

So, is there inflation risk at present? I still do not think so, a short term possible burst when the real markets of the world actually reopen (if they ever do in the way that they once existed) apart. Thereafter I see no reason for inflation expectation. Money creation will certainly not be a cause.

He’s not even understanding his own MMT, is he? Stimulus will create inflation at some point. You know, as a result of money creation?

12 thoughts on “Dear Lord this is bad for an economist”

  1. Bloke in North Dorset

    I saw an article posted by a German economist I follow on Twitter saying that the cost of a roof on a new build house has doubled in 6 months and its not getting better

  2. BiND is right, and it is happening in the UK too. All building materials are going up fast, seeming to be a supply-side shortfall.

  3. From AEP in the Telegraph this morning, German price increases recently

    Petrol was up 23pc in April, heating oil 21pc, financial services 5.6pc, and coffee 5.1pc.

    And according to Spud, there’s no inflation risk until markets fully reopen. Fuck me, can he not even read a paper?

  4. All the builders have stopped enjoying their enforced leisure breaks and are back at work – around my way there is frenetic activity on alterations, extensions, new roofs, etc.
    I’ve been quoted 4 – 6 months delays getting plumbers and electricians on site – it seems during lockup many people decided to extend or modify their dwellings, creating many shortages now the gangs are active again.

  5. I can personally vouch for the increase in timber prices. Engaged in a project right now.

    As to Ritchie. I simply cannot understand how someone can so completely lack any form of logical thinking. The fact that he is called on as an ‘expert’ on occasion equally baffles. I just….I’m just lost for words….I can’t get my head around it.

  6. @MrVeryAngry

    Spud tells left wing nut jobs and losers what they want to hear.

    They want to believe in a world of evil nasty tax evading capitalist Tories which could easily be set right and that’s what he gives them.

  7. Ducky McDuckface

    Round our way, trades people have been busy since last summer – and got really busy in autumn and over the winter.

    A couple said they’ve never seen anything like it in 30+ plus years of trading.

    At the moment, they seem to be running into delays as they just can’t get hold of the necessary.

    It’s just like trying to get hold of a webcam back in April 2020. RS dicked me around for about twelve weeks, and they aren’t exactly cheap to begin with.

  8. Price of unleaded petrol in NL is EUR1.81 per/litre at local service station. That’s the highest I’ve seen it since moving here in 2015.

  9. Dear Mr Worstall

    “Dear Lord this is bad for an economist”

    I thought the basic precept was that he wasn’t.


  10. DP beat me to it

    He is not an economist by any conventional measure. He walked out of an economics degree course some time during his first term. He is at best a polemicist who comments on economic matters. However, noone in a private sector financial institution would consider his inchaote thoughts as constituting economics as it is conventionally understood. Perversely he takes pride in that disdain, revelling in his self-proclaimed status of ‘speaker of truth to power’. In a more civilized country he would have been locked up both for his good as well as that of wider society….

  11. I wonder if, in his former career, he ever gave advice on tax and investments. The thought of being advised by him is scary. How many more such charlatans are there out there? Remember he has an accreditation from a leading professional organisation!

  12. Shortage of timber at the moment which is causing lot of problems.
    Had an interesting case recently where the First Nations whose land was being logged (for a fee of course) put up roadblocks to stop the protestors harassing the lumber company.

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