Donald Luskin has long held the position of ‘stupidest man alive‘ – but Larry Kudlow has surely now taken the crown.
A couple of days’ ago, I posted a run-down of Kudlow’s mindless optimism about the economy, sustained over years of shamelessly abasing himself before George Bush. But now the man has surpassed himself, declaring that rampant deflation is just the boost the American consumer needs. It’s even better than a tax cut. Yes – seriously.
The plunge in consumer prices is a great thought. It is a tax cut of massive proportions. The drop in retail gas prices alone has been variously estimated at $350 billion in new consumer purchasing power. In fact, real average weekly earnings have now risen four straight months on the back of the CPI drop. Over the past year, this key measure is up nearly 3 percent.
And while consumer prices are deflating, producer prices — which represent wholesale costs to business — have been deflating even faster with the plunge in energy and other commodities. Consequently, corporate profit margins are improving as costs drop faster than prices. This important development is also overlooked.
Inflation is the cruelest tax of all. It is a prosperity killer. But the inflationary decline is the most pleasant tax cut of all, and is a key part of the recovery process.
Now British readers probably just think that Kudlow is some fringe crank, but in fact he’s an esteemed mind on the American right. Esteemed enough that he was part of a select group that Obama chatted up over dinner the other night. (Kudlow couldn’t help gossiping about what went down, despite the meeting beingg strictly off the record.)
Of course, it’s not up to me to declare Kudlow the stupidest man alive – only Brad de Long has that right. But i trust he’ll make a prouncement as soon as he takes a break from the various other feuds he’s engaged in..
