Thursday, October 4, 2012

Krugman Tell a Lie? Oh, Surely Not!

In a blog post following the first presidential debate, Paul Krugman insisted that while Obama did rather poorly, he spoke only the truth while Mitt Romney spoke only lies. Given that I cannot imagine the president or his main challenger telling the truth, I would say that Krugman was guilty of speaking only half a lie, but nonetheless, by insisting that Obama tells only the truth, that half was a whopper.

Krugman, being the political operative that he is, insisted in his latest column that the economy is not in any kind of crisis. In a recent speech in Europe, however, Krugman told a different story, warning of impending collapses if Europe continues its present course of what Krugman calls "austerity." What I find most interesting about his speech, however, is his insistence that the European Central Bank engage in what would be nothing more than a pure print-the-euro scheme, as though the "Zimbabwe Solution" would be sustainable. He declared that Europe must
...contain immediately the financial threat to troubled countries and stabilize yields on their borrowing, which in the end requires the ECB to be ready to be the lender of last resort and buy sovereign bonds.
Understand what he is saying. In effect, he is recommending that the European authorities create what would be an inflation crisis -- and that is what pure money printing schemes like this always create -- in order to solve the fiscal crisis. So, I guess that if Europeans are drowning in euros, they will forget that their economies are grinding to a halt. The Krugman "solution," or what we call the "Inflation Fairy."


Anonymous said...

Shame on you for compromising your arguments with fallacies about Krugman's columns. You set up misleading and unrepresentative straw men, so that you have an easy target.

Dennis said...

The only snippet of truth regarding the austerity boogeyman is that tax increases are detrimental to economic recovery. Most "austerity" programs incorporate significant tax increases, which has a lot to do with why these economies are not bouncing back as quickly as hoped. Massive spending cuts and rollbacks of regulation, especially labor market regulation, is what is needed to revive Europe's growth. But because current political culture can't abandon the "balanced" approach which views entrepreneurs as evil entities which need to be punished, any economic recovery will be continue to be tepid.

Pulverized Concepts said...

Nobody that's actually looked into it has been able to find any evidence of "austerity" anywhere.

Mike said...

Ok somebody fess up. Who is hiding the austerity?

Tel said...

Nobody that's actually looked into it has been able to find any evidence of "austerity" anywhere.

I've yet to find a self-consistent definition of what exactly this "austerity" even is. Once upon a time people used the word to mean consuming less, but these days apparently the word means something about government budgets... weird huh?