Introduction
Johns Hopkins University applied economics professor Steven Hanke has recently criticized fellow economist and Nobel laureate Paul Krugman for claiming that inflation is a "global phenomenon." Hanke argues that inflation is primarily a local issue and not a global one. This article explores the differing perspectives of Hanke and Krugman on inflation and their views on the performance of the U.S. economy under the Biden administration.
Krugman Accused of Spreading Disinformation
In a post on X (formerly Twitter), Professor Hanke described Krugman's latest op-ed article in the New York Times as another example of the Nobel laureate spreading disinformation. Hanke believes that Krugman's claim of inflation being a global phenomenon is misleading and inaccurate.
Krugman's Case for Bidenomics
In his article published on December 7, Krugman presents the case for Bidenomics, referring to the economic policies implemented by U.S. President Joe Biden. While acknowledging that convincing conservatives about the success of the Biden administration may be challenging, Krugman suggests that progressive U.S. citizens can still be convinced of the positive impact on the economy.
Krugman's Justification of Economic Success
To support his argument, Krugman points to the rise in the labor productivity rate during the third quarter. He also highlights the significant decrease in the gap of unfilled job openings, indicating progress in the labor market.
Furthermore, Krugman dismisses claims of the U.S. monetary authorities' failure to control inflation. He emphasizes the growth rate of workers' earnings, which is said to have outpaced the inflation rate.
Hanke's Rejection of Krugman's Claims
Professor Hanke disagrees with Krugman's assertion that inflation is a global phenomenon. In a post on X dated December 9, Hanke argues that inflation is primarily a local issue rather than a global one. He provides examples of countries like Switzerland and China, where inflation rates are low and stable due to effective control of the money supply by their respective central banks.
Hanke challenges Krugman's claim that the U.S. has successfully contained inflation by pointing out that inflation remains a concern. He highlights that inflation rates in well-managed countries like Switzerland and China are significantly lower than those in the U.S.
Krugman Versus Hanke
This is not the first time Professor Hanke has disagreed with Paul Krugman's views on inflation. In October, when Krugman declared victory in the United States' war on inflation, Hanke expressed skepticism and dismissed Krugman's remarks.
Interestingly, when Hanke stated in July that the issue of inflation was resolved, Krugman and economist Mohamed El-Erian were reportedly unsure about the situation.
Conclusion
The differing perspectives of Professor Hanke and Paul Krugman highlight the ongoing debate on the nature and control of inflation. While Krugman argues that inflation is a global phenomenon and the Biden administration has effectively managed the economy, Hanke contends that inflation is a local issue and raises concerns about the U.S. economy's inflationary pressures. As economists continue to analyze and interpret economic data, it is crucial to consider multiple viewpoints to gain a comprehensive understanding of complex economic issues.
Frequently Asked Questions
How is gold taxed within an IRA?
The tax on the sale of gold is based on its fair market value when sold. When you purchase gold, you don't have to pay any taxes. It is not considered income. If you sell it after the purchase, you will get a tax-deductible gain if you increase the price.
For loans, gold can be used to collateral. Lenders look for the highest return when you borrow against assets. For gold, this means selling it. There's no guarantee that the lender will do this. They may keep it. They might decide that they want to resell it. The bottom line is that you could lose potential profit in any case.
If you plan on using your gold as collateral, then you shouldn't lend against it. It is better to leave it alone.
How much gold do you need in your portfolio?
The amount that you want to invest will dictate how much money it takes. If you want to start small, then $5k-$10k would be great. You could then rent out desks and office space as your business grows. So you don't have all the hassle of paying rent. Only one month's rent is required.
It is also important to decide what kind of business you want to run. In my case, I run a website-creation company. Our clients pay us between $1000-2000/month and depending on their order. Consider how much you expect to make from each client, if you decide to do this kinda thing.
As freelance work requires you to be paid freelancers, your monthly salary won't be as high as mine. So you might only get paid once every 6 months or so.
Before you can determine how much gold you'll need, you must decide what type of income you want.
I suggest starting with $1k-2k gold and building from there.
What are the pros & con's of a golden IRA?
An Individual Retirement Plan (IRA) has a major advantage over regular savings accounts. It doesn't tax any interest earned. This makes an IRA a great choice for people who are looking to save money but don’t want to pay any tax on the interest earned. However, there are disadvantages to this type investment.
To give an example, if your IRA is withdrawn too often, you can lose all your accumulated funds. The IRS may prevent you from taking out your IRA funds until you reach 59 1/2. If you do withdraw funds, you'll need to pay a penalty.
The downside is that managing your IRA requires fees. Many banks charge between 0.5%-2.0% per year. Other providers charge monthly management charges ranging anywhere from $10 to $50.
Insurance will be required if you would like to keep your cash out of banks. A majority of insurance companies require that you possess a minimum amount gold to be eligible for a claim. You might be required to buy insurance that covers losses up to $500,000.
If you choose to have a gold IRA you will need to establish how much gold to use. Some providers limit the amount of gold that you are allowed to own. Others allow you to pick your weight.
It's also important to decide whether or not to buy gold futures contracts. Physical gold is more expensive than gold futures contracts. Futures contracts offer flexibility for buying gold. Futures contracts allow you to create a contract with a specified expiration date.
It is also important to choose the type of insurance coverage that you need. The standard policy doesn’t provide theft protection or loss due fire, flood, or earthquake. It does include coverage for damage due to natural disasters. Additional coverage may be necessary if you reside in high-risk areas.
Additional to your insurance, you will need to consider how much it costs to store your gold. Insurance doesn't cover storage costs. Banks charge between $25 and $40 per month for safekeeping.
You must first contact a qualified custodian before you open a gold IRA. A custodian helps you keep track of your investments, and ensures compliance with federal regulations. Custodians can't sell assets. Instead, they must keep your assets for as long you request.
After you've determined which type of IRA is best for you, fill out the paperwork indicating your goals. Information about your investments such as stocks and bonds, mutual fund, or real property should be included in your plan. You should also specify how much you want to invest each month.
Once you have completed the forms, you will need to mail them to your provider with a check and a small deposit. Once the company has received your application, they will review it and send you a confirmation email.
A financial planner is a good idea when opening a gold IRA. Financial planners have extensive knowledge in investing and can help determine the best type of IRA to suit your needs. They can help you find cheaper insurance options to lower your costs.
What are the advantages of a IRA with a gold component?
Many benefits come with a gold IRA. It's an investment vehicle that allows you to diversify your portfolio. You decide how much money is put in each account and when it is withdrawn.
You also have the option to roll over funds from other retirement accounts into a gold IRA. This allows you to easily transition if your retirement is early.
The best thing is that investing in gold IRAs doesn't require any special skills. They're readily available at almost all banks and brokerage firms. Withdrawals can be made instantly without the need to pay fees or penalties.
However, there are still some drawbacks. The volatility of gold has been a hallmark of its history. So it's essential to understand why you're investing in gold. Are you seeking safety or growth? Are you looking for growth or insurance? Only by knowing the answer, you will be able to make an informed choice.
If you plan to keep your gold IRA indefinitely, you'll probably want to consider buying more than one ounce of gold. A single ounce isn't enough to cover all of your needs. You could need several ounces depending on what you plan to do with your gold.
If you're planning to sell off your gold, you don't necessarily need a large amount. You can even manage with one ounce. These funds won't allow you to purchase anything else.
What is a Precious Metal IRA and How Can You Benefit From It?
A precious metal IRA allows for you to diversify your retirement savings in gold, silver, palladium and iridium. These are called “precious” metals because they're very hard to find and very valuable. These metals are great investments and can help protect your financial future from economic instability and inflation.
Bullion is often used to refer to precious metals. Bullion refers actually to the metal.
Bullion can be purchased through many channels including online retailers and large coin dealers as well as some grocery stores.
With a precious metal IRA, you invest in bullion directly rather than purchasing shares of stock. This will ensure that you receive annual dividends.
Precious metal IRAs are not like regular IRAs. They don't need paperwork and don't have to be renewed annually. Instead, you pay only a small percentage tax on your gains. Plus, you get free access to your funds whenever you want.
Statistics
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
External Links
finance.yahoo.com
law.cornell.edu
- 7 U.S. Code SS7 – Designation board of trade as contract marketplaces
- 26 U.S. Code SS 408 – Individual retirement funds
cftc.gov
irs.gov
How To
How to keep physical gold in an IRA
An easy way to invest gold is to buy shares from gold-producing companies. However, this method comes with many risks because there's no guarantee that these companies will continue to survive. There is always the chance of them losing their money due to fluctuations of the gold price.
An alternative option would be to buy physical gold itself. You'll need to open a bank account, buy gold online from a trusted seller, or open an online bullion trading account. This option is convenient because you can access your gold when it's low and doesn't require you to deal with stock brokers. It is also easier to check how much gold you have stored. You'll get a receipt showing exactly what you paid, so you'll know if any taxes were missed. You have less risk of theft when investing in stocks.
There are also some drawbacks. You won't get the bank's interest rates or investment money. It won't allow you to diversify any of your holdings. Instead, you'll be stuck with what's been bought. Finally, the tax man might ask questions about where you've put your gold!
BullionVault.com has more information about how to buy gold in an IRA.
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By: Terence Zimwara
Title: Johns Hopkins Professor Discredits Paul Krugman's Claim on Global Inflation
Sourced From: news.bitcoin.com/economist-steve-hanke-blasts-nobel-laureate-paul-krugmans-global-phenomenon-inflation-remark/
Published Date: Mon, 11 Dec 2023 21:00:55 +0000
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