One year ago today, Barry Ritholtz takes fully justifiable pleasure in informing us this morning, Donald Luskin, (dubbed by Brad DeLong “the stupidest man alive”), wrote “the single dumbest column ever published in The Washington Post”: “Quit Doling Out That Bad Economy Line.”
The column was, as Ritholtz documents, embarrassingly wrong on every single point of economic analysis and forecasting.
If you had a time machine, knew the future, and purposefully tried to write something where every word was literally wrong, you could not have done a better job.
Donald Luskin is an investment advisor who tends to pick fights with liberal economists, so there’s been no shortage of schadenfreude in the liberal blogosphere over his stunning achievement one year ago. But I wondered: If he was so wrong back then, what’s he being wrong about right now?
Luskin’s most recent column for SmartMoney.com looks at the price of gold rising over $1000 an ounce and tells us that this is a sign that investors fear inflation. Amusingly, just this morning I learned from investment advisor John Mauldin’s latest missive, “Elements of Deflation, Part 2″ that “the correlation between gold and inflation for the last 25-plus years has been zero.” In other words, for the past quarter century we have been able to learn nothing about future inflationary trends from the present price of gold.
I therefore invoke the Luskin-is-always-wrong rule of economic forecasting. If Luskin says $1000-an-ounce gold means inflation is coming, then prepare for deflation!
Luskin’s most recent blog post wades into the Krugman “How Did Economists Get It So Wrong?” freefire zone that the entire econoblogosphere has been wallowing in for the past week and a half. Luskin excitedly quotes a “devestating” (sic) reply” to Krugman from University of Chicago economist John Cochrane, (one of Krugman’s primary targets in his New York Times opus.)
Later today, I intend to address Cochrane’s assertion that Keynesian fiscal stimulus is just like Bernie Madoff’s Ponzi scheme. But it seems hardly necessary, when instead I can just invoke the Luskin-is-always-wrong rule of economic analysis. If Luskin comes in on Cochrane’s side, then Krugman must be right!