Saturday, April 10, 2010

Krugman Spreads the Inflation Gospel

As I pointed out in my previous post, Paul Krugman has become the new Apostle of Inflation, and his "gospel" of printing money on a massive scale is taking in new converts. The latest comes from Peter Gorenstein, who declares:
...inflation is an important tool in getting us out of this mess. It's painful and unfair--those who have been responsible and saved money will pay the price for those who borrowed money, racked up huge debts, and spent more than they could afford. But it's what the Fed is (quietly) aiming for.
The accompanying video further enhances the madness that we are seeing. Listen to what these people are claiming -- that the raising of interest rates by the Federal Reserve in 1937 was a huge error -- and realize that they are giving a truncated and perverse history of what happened in the 1930s.

What is especially chilling is the cavalier way that they dismiss savers and people on fixed incomes. Since Krugman already has declared savers to be partly responsible for our economic mess, my sense is that we are going to see responsible people demonized even more.

No society ever in human history has managed to inflate its way out of an economic crisis. People forget the crises that occurred in the 1970s precisely because the government had resorted to the printing press. It looks as though we are going to head for another repeat of that sorry decades, except what is going to happen is going to be much worse than what was going on nearly 40 years ago.

Thanks, Krugman. You receive a Nobel Prize and use it to promote the worst of "crankdom."

(Hat tip to Mark Hovila)


Bob Roddis said...

So who is Henry Blodget, the guy on the left in the video?

Henry Blodget (born 1966) is an American former equity research analyst, NOW BARRED FROM THE SECURITIES INDUSTRY BECAUSE OF FRAUDULENT ACTIVITY, who was senior Internet analyst for CIBC Oppenheimer during the dot-com bubble and the head of the global Internet research team at Merrill Lynch. Blodget is now the editor and CEO of The Business Insider, a business news and analysis site, and a host of Yahoo TechTicker, a finance show on Yahoo.

Blodget can currently be seen co-hosting the Tech-Ticker broadcast with Aaron Task weekdays at Yahoo! Finance.

As Blodget said, savers and people on fixed incomes ARE GOING TO GET CREAMED. But that’s OK, because EVERYONE KNOWS that it was tight money in 1937 that returned us to depression.

We all know that, right?

Barking Cat said...

It was tried before, check out this video from 1933:

Anonymous said...

"inflation is an important tool in getting us out of this mess" - indeed, if that's so brilliant an idea when in crisis, why is it not ALWAYS a good idea? Why not inflate ourselves to riches, and the Africans with it. They need it most, and Zimbabwe seems to have too little inflation, not too much. Gorenstein, we see the light!

Barking Cat said...

There is also, of course, the logical contradiction. If expansionary credit and money (inflation) was the main cause of this mess, it cannot also be the cure.