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.