So, when people disagree with his view that another $400 billion would have done the trick with the "stimulus," they did so out of evil intent because they enjoy watching people lose their jobs and the economy falling into depression. When people voice concern about massive expansion of the monetary base and the real problems of inflation, they do so out of evil intent because they enjoy watching people lose their jobs and the economy falling into depression. When people object to the massive borrowing that creates an unpayable debt mountain, they do so out of evil intent because they enjoy watching people lose their jobs and the economy falling into depression. And so on.
Today, Krugman introduces a new villain: Rick Perry. Yes, it is Rick Perry, the Texas governor who now is running for the Republican nomination for president. Why is Perry now responsible for the economic misery? He criticizes Ben Bernanke and publicly worries about the various QE's and Fed-financed bailouts, and has used over-the-top language (i.e. "almost treasonous" and “we would treat him pretty ugly down in Texas” if he has the Fed purchase even more long-term government debt).
However, given the rhetoric I hear from the Democrats (and their media allies like Rachel Mad-dog and Keith Olbermann), accusing Ron Paul of "treason" and "the Tea Party is the enemy" and the like, it seems that what Paul Krugman is saying is that he and his allies are permitted to make whatever accusations they want (free speech, you know), but no one else is permitted to speak. After all, he argues, unless Ben Bernanke is able to do what Krugman has recommended, all hope of economic recovery will be lost, according to Krugman.
Am I exaggerating? Krugman writes:
...I’m using Mr. Perry — who has famously threatened Mr. Bernanke with dire personal consequences if he pursues expansionary monetary policy before the 2012 election — as a symbol of the political intimidation that is killing our last remaining hope for economic recovery. (Emphasis mine)
Just what is this "last remaining hope" policy? Something Krugman believes the Fed should be doing:
Well, in 2000 an economist named Ben Bernanke offered a number of proposals for policy at the “zero lower bound.” True, the paper was focused on policy in Japan, not the United States. But America is now very much in a Japan-type economic trap, only more acute. So we learn a lot by asking why Ben Bernanke 2011 isn’t taking the advice of Ben Bernanke 2000.Given Krugman's rhetoric, one would think that Bernanke has been cowed into doing next-to-nothing, yet we read that Bernanke's Fed has made literally trillions of dollars in secret loans to banks and financial houses around the world, not to mention massive purchases of near-worthless assets in hopes that somewhere there is another short-term bubble the Fed can create to give us the illusion of recovery.
Back then, Mr. Bernanke suggested that the Bank of Japan could get Japan’s economy moving with a variety of unconventional policies. These could include: purchases of long-term government debt (to push interest rates, and hence private borrowing costs, down); an announcement that short-term interest rates would stay near zero for an extended period, to further reduce long-term rates; an announcement that the bank was seeking moderate inflation, “setting a target in the 3-4% range for inflation, to be maintained for a number of years,” which would encourage borrowing and discourage people from hoarding cash; and “an attempt to achieve substantial depreciation of the yen,” that is, to reduce the yen’s value in terms of other currencies.
Was Mr. Bernanke on the right track? I think so — as well I should, since his paper was partly based on my own earlier work. (Emphasis mine)
Now, I will say that Krugman is right -- we are losing hope for a real economic recovery -- but for the wrong reasons. Krugman is claiming that all that is needed is for the U.S. Government (and governments around the world), along with central banks, to try to pump up massive spending, or, as Keynesians call it, "aggregate demand" in hopes of re-employing "idle" factors of production.
Krugman can make this claim all he wants, but all he is doing is calling for the re-employing of malinvested assets that have gone bust, and that is not going to happen no matter how much nasty rhetoric he and his allies spew out. Krugman can blame Perry, Ron Paul, Michelle Bachman, Sarah Palin, and a whole list of other "villains," but perhaps he needs to look in the mirror and admit that he and the King's Men cannot inflate our economy back to prosperity.
29 comments:
Given Krugman's rhetoric, one would think that Bernanke has been cowed into doing next-to-nothing, yet we read that Bernanke's Fed has made literally trillions of dollars in secret loans to banks and financial houses around the world, not to mention massive purchases of near-worthless assets in hopes that somewhere there is another short-term bubble the Fed can create to give us the illusion of recovery.
Silly Anderson. Even if the Fed created $1 dodecajillion, then the presence of widespread unemployment is interpreted by the Keynesian as meaning the Fed should have printed $10 flippityfloppitybajillion, because obviously the $1 dodecajillion was not enough.
Keynesian works, and even when it doesn't work, it still works.
Unemployed home builders in Nevada? Print and spend money on roads and bridges in Florida. Idle fake dog poop making machine? Print and spend money to put that thing back into operation, because clearly the state has determined that it is valuable and so it is valuable. Never mind buyers and sellers. They really do want fake dog poop, they just don't have the money for it, which silly Austrians know means they are spending their money on other things instead.
Printing and spending money can put EVERYTHING into operation!
I remember this man who used to be the printer and spender of money. A candlestick maker complained he was going out of business due to the discovery of electricity. I know right? Electrical monopolists. So the man printed and spent money on this candlestick maker, to keep him employed as a candlestick maker and prevent his candlestick making machine from going "idle."
Anyway, the candlestick maker passed on, but his business has been kept alive through printing and spending this whole time. The shop is still standing! Not once did any candlestick maker have to go unemployed. Not once did the machine go idle! There was full employment and full utilization of resources at this shop.
Isn't printing and spending the best thing since candlesticks?
I wish I had a "like" button to click for this post!! Thanks, Maj!!
@Major_Freedom
"Keynesian works, and even when it doesn't work, it still works."
As I have come to realize, these policies are working exactly as they have been intended to.
Keynesian economics is a subterfuge.
"I must say that Paul Krugman always is on the lookout for villains. Christians, Creationists, Austrian Economists,..."
Care to share proof of his disdain for these people? Links and/or proof would be nice.
"However, given the rhetoric I hear from the Democrats (and their media allies like Rachel Mad-dog and Keith Olbermann), "
I'm not sure who Rachel Mad-dog is, but I am pretty sure Rachel Mad-dog and Keith Olbermann are not running for president. Are you saying we should not hold our Presidents to a higher standard.
(and if by Rachel Mad-dog you mean Rachel Maddow, can you really claim moral superiority to Krugman when you stoop to the level of name calling of people you just happen to disagree with? This seems pretty unprofessional, and borderline childish to me.)
"Bernanke's Fed has made literally trillions of dollars in secret loans to banks and financial houses around the world"
Now this is something to get truly upset about, and worthy of a blog post. But instead you focus on name calling and contribute to the rhetoric you claim disgusts you when Krugman uses it.
AP Lerner:
In other words, you have nothing interesting to say.
Now this is something to get truly upset about, and worthy of a blog post. But instead you focus on name calling and contribute to the rhetoric you claim disgusts you when Krugman uses it.
I guess that Anderson believes that such "secret loans" are an obvious result of too much power and too much money given to a bunch of bureaucrats and politicians. They will give lots of free money to people with powerful connections.
But hey, why would a Keynesian complain about it? Who cares if the loans are secret? They are driving the economy forward, that's what really matters.
They are driving the economy forward
For some, namely those who receive the loans and those who the borrowers spend money on. Everyone else pays higher prices for the goods they buy in competition with the initial receivers of the secret loans.
In addition to being a shoddy thinker, you are also a very bad writer. I am still trying to figure out your point here.
First, you talk about villains. Where exactly in today's NYTimes Op-Ed did Krugman use the word villain? It seems to me that you just don't like the fact that Krugman fundamentally disagrees with you. And if you read the piece, you would know that Krugman thinks that Perry is indicative of a broader political movement that intimidates the FED out of action, that he sees as crucial for the economy. That is not a hyperbolic statement or based on sentiment. It is one shared by nearly every political analysis of Washington politics and the influence of the right-wing of the Republican party.
Then you talk about Rachel Maddow and Keith Olbermann, and you clearly are talking out of your a$$! You have no idea what they say on their show and do not provide me with evidence of any of them ever threatening violence or claiming that Ron Paul is guilty of treason. AND none of them are running for president.
Regardless, moral equivalency arguments are garbage - so because someone on the left talks out of line it somehow becomes OK for Rick Perry to say that Bernanke is borderline treasonous?
Then you turn this awful piece to Krugman's analysis that FED action is the last remaining hope for recovery. How on earth is this similar to Rick Perry's hyperbolic rhetoric? It is analysis backed by facts and years of publications. You just happen to disagree with it and he disagrees with you. What is so hard to get about that, and why does it have to be about "broader" issues like villains and freedom of speech? Are you just angry that your position is not accepted by most mainstream economists? Are you jealous of Krugman's cushy job?
Focus your posts on your economic arguments about FED action and why you disagree with it (basically the last paragraph of this post). Instead, it seems to me that most of what you post is just garbage and poor analysis devoid of any real economic discussion, unlike the actual Krugman blog. Just so poorly written.
@alaskaman
I don't even know where to start with your ridiculous tirades.
"In addition to being a shoddy thinker, you are also a very bad writer."
So why do you keep coming to this blog?
"Where exactly in today's NYTimes Op-Ed did Krugman use the word villain?"
Who cares?
"That is not a hyperbolic statement or based on sentiment. It is one shared by nearly every political analysis of Washington politics and the influence of the right-wing of the Republican party."
If all of these people say it is so then it must be the truth? That's why the economy is so strong right now right?
"Instead, it seems to me that most of what you post is just garbage and poor analysis devoid of any real economic discussion, unlike the actual Krugman blog."
Lol what?
Seriously, if this blog is so inconsequential, why do you bother to visit it?
Nice Mike - your usual drivel response that does not address any of the points made by people who disagree with you and instead resorts to child like "no it can't be" "so what?" and "I know you are but what am I" style responses.
The point about villains is that for some reason Anderson chose to preface his entry with this whole tirade about how Krugman needs villains. That is a hyperbolic statement. The fact that Krugman disagrees with people does not mean he thinks they are villains. He thinks they are misguided.
Why I read the blog is irrelevant to what I think about the blog and its author.
There is also a difference between hundreds of economists agreeing that we are in a liquidity trap ala Japan in the 1990s and mob groupthink. But subtlety is usually lost on this forum. That is why when Krugman says that he believes FED action is the last option for near-term recovery he is not being hyperbolic but using analysis.
If you actually read Krugman's blog (which I'm guessing you don't) it devotes much more to actual economic analysis rather than cable-news style demagoguery. I think Anderson is very bad at both so I would encourage him to stick to his bad economic analysis.
@alaskman
"Nice Mike - your usual drivel response that does not address any of the points made by people who disagree with you and instead resorts to child like "no it can't be" "so what?" and "I know you are but what am I" style responses."
What are you talking about? You said where did he say the word villain. Who cares if he said that actual word. It has been a recurring theme in this blog that Krugman has definitely said things about the people that Anderson is calling a villain in that context.
"Why I read the blog is irrelevant to what I think about the blog and its author. "
Nice dodge.
"There is also a difference between hundreds of economists agreeing that we are in a liquidity trap ala Japan in the 1990s and mob groupthink."
Are these are the same economists who foresaw what Austrians have been warning about for years. Just because there is a majority doesn't make it true. A majority of people thought that world was flat. Doesn't make it true. Yet you keep bringing up this great mass of expert economists that parrot your beliefs. I don't know if you know but things are getting worse.
"If you actually read Krugman's blog (which I'm guessing you don't) it devotes much more to actual economic analysis rather than cable-news style demagoguery."
And if you actually took a walk outside and looked around you (I'm guessing YOU don't or perhaps you are by yourself up there with the polar bears and snow) would realize that things are getting way worse, not way better, regardless of all your attempts at rhetoric.
Take a moment Mike and re-read what you write - its a good exercise. It takes guts and a much smaller ego to acknowledge one's shortcomings. Try it.
On villains - that was the point of this post, and he dedicated 4 paragraphs to it. And yes, it is a theme of Anderson's blog, and one that is unbased and obfuscates the economic basis of this blog. If Anderson wants to be a cable news shock jock he is not doing a very good job. I would stick to the shoddy economic analysis. My guess is he has very little to say on the matter so he has to write about villains, space aliens, earthquakes, and ONLY Paul Krugman (its not like Krugman's blog is called Anderson is la la land).
Dodge? Should I never read things I disagree with or are poorly written? Ridiculous and insulating - pretty much sums up your intellectual world.
A majority of people believing in something that is not true does happen (like Creationists!). There are a number of responses to that. First, that is not the same thing as a panicked statement. When Krugman argues that he believes FED action to be the lat resort we have to spurring growth in the near term he is not saying it because he feels it deep inside. He has thought about the liquidity trap and came up with an analysis.
Second, you have not shown that what the majority of economists believe is completely wrong (aka shown me the earth is actually round). You have merely asserted that because you happen to think that Austrian economics is a more accurate description and perhaps prescription of the economy other approaches are necessarily completely false.
I would venture that this is more difficult than showing that the earth is round for a few primary reasons. Social science knowledge is based on scientific methods - not guessing, belief, and assumptions. Krugman doesn't "feel" we are in a liquidity trap. We are also talking about human behavior where there will always be disagreement about motivation, micro vs. macro behavior etc etc. Which is why, again, when Krugman claims that FED action is our last resort he is NOT being hyperbolic like Rick Perry.
"and if you actually took a walk outside and looked around you (I'm guessing YOU don't or perhaps you are by yourself up there with the polar bears and snow) would realize that things are getting way worse, not way better, regardless of all your attempts at rhetoric."
Again, just a drivel response. What does this have to do with my claim that you really don't read Krugman's blog? Do I not agree that economic conditions are not great, and while I would not say deteriorating, I would say not improving? That, my friend, is a dodge.
"On villains - that was the point of this post, and he dedicated 4 paragraphs to it. And yes, it is a theme of Anderson's blog, and one that is unbased and obfuscates the economic basis of this blog. If Anderson wants to be a cable news shock jock he is not doing a very good job. I would stick to the shoddy economic analysis. My guess is he has very little to say on the matter so he has to write about villains, space aliens, earthquakes, and ONLY Paul Krugman (its not like Krugman's blog is called Anderson is la la land)."
Krugman was the guy who wrote about the space aliens. Anderson merely commented on Krugman's insanely stupid assertion. The rest of your paragraph has no point to it whatsoever.
"A majority of people believing in something that is not true does happen (like Creationists!)."
Creationism has absolutely nothing to do with economics. Please stop bringing up things that are completely unrelated to the subject at hand. It only makes you look like a pretentious dick.
"There are a number of responses to that. First, that is not the same thing as a panicked statement. When Krugman argues that he believes FED action to be the lat resort we have to spurring growth in the near term he is not saying it because he feels it deep inside. He has thought about the liquidity trap and came up with an analysis."
Yeah, and his analysis is shit. He's already been proven wrong countless times. What's your point?
"
Second, you have not shown that what the majority of economists believe is completely wrong (aka shown me the earth is actually round). You have merely asserted that because you happen to think that Austrian economics is a more accurate description and perhaps prescription of the economy other approaches are necessarily completely false."
How many trillions in failed stimulus need to be spent before people like you admit that it is a horrible policy?
"Social science knowledge is based on scientific methods - not guessing, belief, and assumptions. Krugman doesn't "feel" we are in a liquidity trap. We are also talking about human behavior where there will always be disagreement about motivation, micro vs. macro behavior etc etc. Which is why, again, when Krugman claims that FED action is our last resort he is NOT being hyperbolic like Rick Perry."
You use lots of cute, flowery language to dissuade from the fact that you have no real point. Sure, there's lots of people with different opinions due to human behavior. But when someone's been as consistently wrong as Krugman (along with his cronies in academia and the media) about the economy, their opinions should not be defended or validated.
"Do I not agree that economic conditions are not great, and while I would not say deteriorating, I would say not improving? That, my friend, is a dodge."
You wouldn't say deteriorating because you're in denial. Maybe you should go listen to the president read some propaganda off the teleprompter to get your economic knowledge and stay off this blog. Seems like it would be more up your alley.
It's nice to know that Krugman has noticed the "real — and really bad — influence that the Austrians have lately acquired".
http://krugman.blogs.nytimes.com/2011/08/15/mmt-again/
Therefore, Krugman, Rachel Maddog, O'Reilly, Alaskaman, AP "Hut Tax" Lerner and His Lordship Lord Keynes no longer have an excuse for having no familiarity with basic Austrian School concepts.
Anon you are truly and idiot. Do you actually read Krugman or Anderson's blog? Did you read my conversation here with Mike.
"Krugman was the guy who wrote about the space aliens." I was writing about how Anderson thinks that Krugman unnecessarily demonizes his detractors, but does not really back it up or distinguish that from analytical disagreement. Anderson wants to be a shock jock ala talk radio, but really does a bad job at it, which takes away from the economic argument he is making. My guess is he has very little to say about economics, which is why he devotes his blog to one man and everything he writes and says as opposed to say...Austrian economics. Krugman's blog is not the opposite of Andersons.
"Creationism has absolutely nothing to do with economics. "
Since creationists were mentioned by Anderson as a group that Krugman despises, I thought I would use it as an example to counter Mike's point about millions of people being wrong about something. If you had read the conversation you would have understood the reference. Instead you saw the word "creationist," assumed I was a liberal who hates religion and cannot argue about economics.
"Yeah, and his analysis is shit. He's already been proven wrong countless times. What's your point?"
Really? By who? You? Because you feel he is wrong?
"How many trillions in failed stimulus need to be spent before people like you admit that it is a horrible policy?"
Another hyperbolic response that sidesteps the actual argument. For starters, stimulus is only a part of what distinguishes a Kenyesian approach to the economy from Austrians. Second, there is large consensus that the limited stimulus has achieved quite a bit. Your BELIEF that it failed is not EVIDENCE that it failed.
"You use lots of cute, flowery language to dissuade from the fact that you have no real point."
You really have no idea what you are talking about. That is a sentence straight from the mouth of someone who is anti-intellectual to cover their own intelligence short-comings. Its only flowery because you didn't understand it.
"But when someone's been as consistently wrong as Krugman "
Again, says who? You? Prove it? Krugman himself has admitted that he has been wrong in the past. He recently wrote about how he re-visited the idea of the liquidity trap after Japan in the 1990s. On his predictions regarding the current depression he has been quite accurate and consistent.
"You wouldn't say deteriorating because you're in denial. Maybe you should go listen to the president read some propaganda off the teleprompter to get your economic knowledge and stay off this blog. Seems like it would be more up your alley."
All hyperbole there and no real analysis. If you think the economy is deteriorating make an argument. I saw it has stalled because unemployment is still 9%, GDP is growing anemically, and the stock market is flat for the year. No denial. I just took a deep breath and processed my emotions before spewing out nonsense. You should try it.
Curious. Krugman hasn't done any economic analysis in years. The growth and collapse of the derivatives market, the housing bubble, the education bubble. Correct me if I am wrong, but I don't remember him discussing these issues.
I'll spend some time researching this, but I have long had the impression that he has been yelling AD, AD, AD for sometime. His notion that Keynesian expansions broke the Depression during WWII would be comical if it wasn't so extreme and extremely wrong.
As far as the greater number of economists that support further fiscal stimulus: who be they? And, if we are going to argue on the basis of greater numbers - I'd go with the goldbugs. They are legion.
The only good analogy for macroeconomics is the weather. Neither system can predict beyond a week or more; each has incredibly complex mathematical models; neither can be properly scientific - as neither can be tested in a controlled experiment; each is way too complex; and for both everyone has an opinion.
Macro is largely crap. Micro rules.
I knew, back in my school days, that I was going to be anxious when I first heard the term 'aggregate.'
Weather and controlled experiments: this just in: https://nbsubscribe.missouri.edu/news-releases/2011/0818-university-of-missouri-completes-first-drought-simulator/
What the hell is wrong with you people?
The stimulus had an obvious correlation with rising stock markets, the slowing of job hemorrhaging, and arguably, corporate profits and GDP. The question is why, and at what cost, and the quality of such. What’s the evidence that the stimulus was an “unequivocal failure”?
To what degree did the stimulus pump up “aggregate confidence”? Was it an artificial confidence? Was the impact of the stimulus on aggregate confidence severely compromised by all the constant attacks on the stimulus, the debt, Obama, Krugman, tea partiers, congress.... viewed as justified by the common job creator and consumer?
If a loser government agency like NASA can put a spacecraft into a non-destructive orbit around Mercury (an extremely difficult task), then why can’t you free thinking “economists” come up with anything you all can agree on? It’s too hard? Bunch of wusses.
Maybe Krugman's defenders are right. Maybe instead of his attacks on certain villains we should instead be focusing on all of his wrong predictions, and asking his defenders why he is so clueless about the economy.
He said QE2 would not raise commodity prices unless demand was stimulated.
He also said very recently that we needed to worry about deflation, and not inflation.
He also is of the keynesian belief that gold is not money, yet reports are coming in that Mugabe has welcomed Ghaddafi along with gold. He also paid his mercenaries with gold. For some strange reason, gold seems to be money everywhere but in the minds of failed keynesian economists....
I’d add unrestricted free trade. Apparently Krugman forgot the bits about other nations cheating, destroyed jobs not being replaced by new/better ones, national security issues...
Krugman has been consistently right, long term, on economics for two decades. He also cares considerably about those less fortunate, and has made an effort to go to bat for them.
You may disagree with his politics, but to spew nonsense about his predictions and his intents is to degrade yourself and your own positions.
He has truly fought for this country, for his vision of how to make it a better place. Far more a patriot than most who attack him in such superficial manners.
I ended up on this blog to try to get an alternative economic viewpoint (to Krugman) on whether present day government spending can actually pay for itself in increased tax revenues.
I quickly realized that I won't find an answer here. This place seems to be inhabited by folks who are obsessed with the idea that Krugman is the antichrist. There doesn't seem to be much more than that and name calling going on.
At least Krugman has graphs and music videos and doesn't take himself so seriously.
@Anon 11:52PM
ROFL, you sheepish tool. You can't play possum with us you little twit.
You happened to find yourself on a blog called "Krugman In Wonderland" and you are shocked to find out that the people there do not like Paul Krugman. Oh, heavens!
Get a life, loser.
@David B.
I'm not sure I understand what you are talking about.
The only thing I am shocked at is that there is this club that thinks that Krugman is so important that they waste so much of their life this way.
Talk about "get a life".
Krugman has been consistently right, long term, on economics for two decades. He also cares considerably about those less fortunate, and has made an effort to go to bat for them.
Consistently right? This is the guy that told us, in 2009, that the economy was recovering.
And about the "cares about those less fortunate", if I had a penny for every person who "cares about the less fortunate"... I'm done with such "caring" people. Guess what? Less fortunate people can't eat "caring", can't drink "caring".
This isn't the best place to spend time and energy 'correcting' the sociopathy of dependency, but the above comment: "Krugman has been consistently right, long term, on economics for two decades. He also cares considerably about those less fortunate, and has made an effort to go to bat for them..." would seem time-wasteable.
The idea that Krugman and his ilk CARE about the little guy is akin to saying that the local mafia hood cares about the neighborhood.
Nevermind. I just cannot sustain arguments for idiots.
As to comments via 'nimrod': it is macroeconomincs that Krugman and his 'haters' discuss here: macroeconomics is like the weather ('climate change'); -- everyone bitches about it; weatherman study it; the results: crap.
If one thinks that the 'rational actor' model of individual behavior is goofy, try extrapolating that to 'crowd behavior' (AKA 'aggregate demand'.)
If the majority of weather scientists say that something is happening to our weather, I’ll lean that way. If a crowd leans the other way, I question their rationality. I’d think any "average crowd" would accept the opinion of the majority of experts, but then, question the true value and overall impact of any mandated solutions. If they were being rational, that is.
And if thinking about 'crowd behavior' is pointless, then why do cops show up at large gatherings?
I realty couldnot believe the writer of this blog William Anderson is an academic economist. The exaggerated claims about what Krugman believes and what he means are amazing. I happen to be an academic in aerospace, with a tenured university position, and always thought academia and it's disciplines would stop anyone writing so loosely as I find here. My illusions are shattered! Yes I know I just tried an argument from authority, but really I think it is obvious if you examine the statements in this blog that start "this shows that Krugman thinks ... " they are usually wrong. For example, Krugman,s says apple created few jobs in the US. "this shows that Krugman thinks that only companies that create jobs are beneficial ..." No it doesn,t. It shows that contrary to someone,s claim that apple created lots of US jobs, Krugman thinks most of apples jobs are outside the US. Really, that,s what it actually shows, that is what Krugman thinks, not what prof Andersen imagines he thinks.
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