As the U.S. economy continues to crumble and as the USA's debt situation deteriorates, Paul Krugman demands that we play the role of the band in "Animal House" and march forward as though there were no brick wall in front of us. (Who is playing the role of Stork? Is it Obama, Krugman, Stiglitz, "Bad" DeLong?)
Echoing Rahm Emmanuel's infamous "Never let a crisis go to waste" line, Krugman bemoans the fact that the Fed has not created enough of a paper blizzard to put overall inflation past six percent. (That commodity prices, not to mention prices that we are paying for food, fuel, medicine, and other goods, are in double-digit increase land is to be ignored, according to Krugman. Those price increases have nothing to do with Bernanke's policies; it's all "volatility," and anyone who disagrees is an Enemy of the People.)
Apparently, Krugman, like Rahm, must have believed that this crisis would trigger a "New New Deal," in which government would increase its reach over everything, and out of it would come jobs, jobs, and more jobs. That the scheme has failed miserably only heightens Krugman's rage, as he insists that just the very ideas that people have which disagree with his own are the cause of this misery. (Krugman never is wrong. Ask him.)
When Obama took office, accompanied by insurmountable Democratic majorities in the House and Senate, the government went on a spree of spending, new regulations, and massive entitlement increases. The Obama administration not only continued the destructive bailout policies of the Bush administration, but also added to them. By appointing a number of industry "czars," Obama even reached back to the days of the infamous National Industrial Recovery Act, as harebrained FDR scheme to organize the entire U.S. economy into a series of cartels. (Yes, the idea was that if we could produce less and force up prices of goods and commodities, the higher prices would translate into higher incomes and lead to recovery.)
However, Krugman wants us to believe that the administration from 2009 to 2011 actually engaged in "austerity" spending. And why, according to Krugman, did the Obama government reject his advice? The very presence of people who disagreed and said that they disagreed with Obama's claim that we were going to spend our way out of the recession. (I am not agreeing with Krugman, but rather am pointing out that Krugman is making the unreal claim that the tiny Republican numbers in Congress actually controlled nearly all White House and Congressional policymaking. Right.)
So, Krugman's great plan is for the U.S. Government to borrow into oblivion, bail out failed industries, subsidize "alternative energy" schemes, with the result being that jobs arise out of the economy. No country ever has inflated itself to prosperity, and the fact that the U.S. Dollar has served as the world's "reserve" currency for a while only will make the real crisis even worse when the rush to abandon the dollar increases. And it will increase, with the results being very, very ugly.
For the next several days, future posts will be spotty, as my wife Johanna, Sintija, and I are traveling to Latvia, where we will be living for the next 3-4 weeks. The adoption process is slow, but it continues.
Our apartment in Riga has wireless, and the Internet speed in Latvia is faster than it is in the USA, so I anticipate some time for future posts. Krugman and others will make outrageous claims, and I will try to answer them when I can.