Furthermore, I have watched him constantly rewrite the history of financial deregulation in which he has claimed that all of the deregulation occurred under Ronald Reagan when, in fact, most of the original work was done before Reagan took office, and under the direction of Democrats. I also have noted that deregulatory efforts of Congressional Democrats took place because the system at the time, dominated by internal markets, was too stratified and too inefficient to deal with the kind of investment that would be needed as high technology was rapidly advancing.
So, in reading Krugman's column today, I admit I am not surprised when he claims that the only reason that Republicans, China, and Germany are raising serious issues about the so-called QE2 is that they want to see other people suffer. (Yes, he does have a qualifying phrase, but I never have read anything by Krugman that has claimed that anyone who disagreed with him came by it honestly. At best, anyone who carries a contrary view does so out of absolute stupidity at best and venality at worst.)
So what’s really motivating the G.O.P. attack on the Fed? Mr. Bernanke and his colleagues were clearly caught by surprise, but the budget expert Stan Collender predicted it all. Back in August, he warned Mr. Bernanke that “with Republican policy makers seeing economic hardship as the path to election glory,” they would be “opposed to any actions taken by the Federal Reserve that would make the economy better.” In short, their real fear is not that Fed actions will be harmful, it is that they might succeed.Now, I would say there is a good bit of hypocrisy, and I certainly am not going to shill for Republicans, given that they helped produce the Housing Bubble, although the Democrats that ran Congress from 2007 on certainly played their irresponsible role, too. A plague on both their houses! Moreover, when I read Sarah Palin's letter to the Wall Street Journal, I find it interesting that the same person who shilled for the TARP now has suddenly discovered "sound money." So, she was for monetary irresponsibility before she was against it. And I have no doubt that had John McCain been elected (and, thus, driving me to drink), he would be following pretty much the same course as Obama, except he would have diverted "stimulus" money to his supporters instead of Obama's -- and Palin would have been parroting the policy as McCain's VP.
Hence the axis of depression. No doubt some of Mr. Bernanke’s critics are motivated by sincere intellectual conviction, but the core reason for the attack on the Fed is self-interest, pure and simple. China and Germany want America to stay uncompetitive; Republicans want the economy to stay weak as long as there’s a Democrat in the White House.
However, when Krugman (and now Bernanke) and others claim that the current economic depression in this country is due to China's own monetary policies, then someone needs to go back to school. Henry Hazlitt wrote that inflation, which gives the "good effects" first (a temporary surge in buying and employment) and the "bad effects" later (higher prices, malinvestments, and unemployment) is like the "Dead Sea Fruit" which turns to ashes in one's mouth. He also wrote the following about the use of inflation, with the great inflation during the French Revolution (and the circulation of the infamous Assignats):
(The) world has failed to learn the lesson of the Assignats. Perhaps the study of the other great inflations - of John Law’s experiments with credit in France …; of the history of our own Continental currency …; of the Greenbacks of our Civil War; of the great German inflation that culminated in 1923 - would help to underscore and impress that lesson. Must we, from this appalling and repeated record, draw once more the despairing conclusion that the only thing man learns from history is that man learns nothing from history?Of course, I am sure that Krugman would claim that Mr. Hazlitt simply wanted French people to be out of work. After all, it was Henry Hazlitt who carefully refuted Keynes' General Theory page by page and line by line. If Hazlitt, who knew the General Theory as well as any person alive wasn't convinced of its brilliance, then he could have come to his conclusion only because he didn't want people to have jobs.