On Tuesday, Joe Kernan, host of the the CNBC show “Squawk Box” called Nobel laureate and New York Times columnist Paul Krugman and co-director of the Center for Economic and Policy Research (CEPR) Dean Baker “co-communists.”
Attacking a Huffington Post piece debunking claims Burnett made about Federal Reserve policy, Kernan said, “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.”
On Friday, Burnett said on her CNN show “Out Front” that the Federal Reserve has made items like food and gasoline more expensive through quantitative easing (QE), a controversial financial policy maneuver in which a large central bank (the Federal Reserve in the U.S.) makes strategic purchases of assets from other banks in order to inject capital into the economy.
The Federal Reserve (and it is the only institution in the country that is allowed to do this) creates new money to make these purchases. This is the problem critics of QE see with it, saying the money is created out of thin air. It exists because they say it exists.
“Easy money has also sent commodity prices higher. This is the rub,” Burnett said, “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.”
The Huffington Post piece, however, stated that Burnett has mistaken correlation for causation. Whatever problems may exist with QE, it isn’t to blame for higher commodity prices.
Krugman and Baker have both published informed defenses of the practice and explained that commodity prices are much more beholden to the inviolable, intractable economic push and pull of supply and demand.
“This is nonsense,” Dean Baker wrote in an e-mail to Huffington Post. “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.”
Krugman wrote in 2010, “What the commodity markets are telling us is that we’re living in a finite world. 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.”
CNBC’s Kernan, however, didn’t find these arguments to be persuasive.
“You know, fact-checkers need fact-checking now,” he said. “They’re so full of crap. These fact-checkers lie more than the people that they’re fact-checking. In the blogosphere, you can write what is libelous, you can lie and it’s taken as fact by the readers.”
Watch the video, embedded via YouTube, below: