Glenn Beck might not know what the word "deflation" means

Blog ››› ››› DAVID SHERE

There's a lot of bad economic analysis on Fox News. Tonight's Glenn Beck though was truly a tour de force. One of the main issues I have with a lot of the analysis you hear is that it isn't based on anything resembling reality, it's based on what Beck and his ilk think reality is. He said so much, in his show tonight. From tonight's Glenn Beck:

BECK: Here's what's coming: Inflation. Now, you listen to the people on television, and look, I'm not an economist. I'm a high school educated guy. And maybe that's why I can see things that other people can't. Because I don't have that big old head where I've been, it's been filled by the so-called experts. I pursue these things myself. I try to figure it out myself. And I look at what's happening in our country. And I listen to the experts saying 'Oh no, that's fear mongering, there's no inflation happening. Did you see last month, we had the lowest increase since WWII?" Well that was last month.


As I told you at the beginning I'm not an expert. I am not a guy to listen to for financial advice. I'm an American with an opinion. Period. I don't know that the Weimar republic isn't going to happen here. I don't know if it is going to happen here. But I will tell you this: Those same damn experts told me two years ago that the Fed wouldn't do what they did yesterday. those same damn experts told me four years ago the housing market was fine. When will these experts lose a little bit of credibility? When will we start listening to our own guts, and to common sense?

So what happens when you listen to your guts? Well, you get the twenty minute barrage of crazy to which viewers tonight were treated. There are two particular examples of shoddy analysis I'd like to point out. The first example defies rationalization. Beck spent the entire first twenty minutes of the show scaring viewers about hyperinflation, which is supposedly right around the corner thanks to a new round of quantitative easing from the Fed. What does he cite as evidence of his doomsday scenario? The following tweet from the Twitter account of NYU economist Nouriel Roubini:

QE2 will be followed by QE3 and QE4 as QE2 will fail to revive the real economy and to prevent deflationary pressures...about 3 hours ago via Twitter for BlackBerry®

That's right. QE2 will fail to prevent deflationary pressures, Roubini says. Memo to Glenn Beck: Inflation and deflation are actually exact opposites! But wait, you say. There's no way Beck spent the entire segment scaring viewers about inflation only to cite an economist - isn't he one of those "experts" we should be wary of? - who is saying that the Fed's actions won't create inflation. Here's the transcript. From tonight's Glenn Beck:

BECK: As a result, QE2 Americans will have to endure a lower standard of living. It is a tax on all Americans. Prices are going through the roof. Basic cost of living, food, clothing, energy, is all going up. And there will be a QE3 and QE4. That's Peter Schiff. How about doctor doom? The guy who is one of the only people who got it. Leading economist Nouriel Roubini, he tweeted this. I love my global economists tweeting: "QE2 will be followed by QE3 and QE4 as QE2 will fail to revive the real economy and to prevent deflationary pressures." There you go. So when does it stop? When does it stop? The price of your house? Deflation. The price of food? Inflation.

Oh! It all makes sense now? Let's look at what's happening to consumer prices:

That's right. Not only are prices today lower than they were at the peak of the boom, they've settled into a lower growth rate than before.

Then there's another pet doomsday scenario from Beck. Apparently, countries all over the world are "spooked" because of all this debt and money creation. Here's more from tonight:

BECK: The rest of the world can't figure us out. And they are spooked. Because we are now printing more money because nobody wants to buy our bonds. Well what happens? What happens?

I'll tell you what happens. If the demand for something decreases, the price goes down. When bond prices go down, interest rates go up. So if global leaders are "spooked" and "nobody wants to buy our bonds," you would see interest rates going up. So what do interest rates look like?

3 Month Treasury:

10 Year Treasury:

The Fed's new quantitative easing program is focusing on bonds with a maturity of less than ten years, so its bond purchases won't affect 10-year interest rates.

So what's the score?

Evidence: 2; Beck: 0

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Glenn Beck
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