Krugman compares Bernanke's call for more inflation and expansion of government spending with the earlier opposition some people had to the war in Iraq. (The idea here is that having the courage to speak out against a war in its early stages when the war was popular is the same as having the "courage" to call for the Fed to print more money.)
That's right. Krugman wants us to believe that it takes real courage for someone to demand that the government pretend as though the economy is doing well by borrowing, taxing, printing, and, of course, spending. (Of course, wars entail government spending, lots of government spending, so how could a Keynesian be against that?) Yes, yes, Ben Bernanke also believes in the Inflation Fairy.
In reading Krugman and now Bernanke, I have come to understand that these men see no downside at all in runaway government spending. There is no transfer of wealth from individuals to the state and then to politically-connected people; no. government spending in and of itself creates wealth. Thus, when governments spend money, they actually are producing consumption (or something like that).
Krugman gives all of the usual accolades to government spending (We don't have near enough of it), but my favorite portion of his column is what follows:
The point is not that Mr. Bernanke is an unimpeachable source of wisdom; one hopes that the collapse of Alan Greenspan’s reputation has put an end to the practice of deifying Fed chairmen. Mr. Bernanke is a fine economist, but no more so than, say, Columbia’s Joseph Stiglitz, a Nobel laureate and legendary economic theorist whose vocal criticism of our deficit obsession has nonetheless been ignored. No, the point is that Mr. Bernanke’s apostasy may help undermine the argument from authority — nobody who matters disagrees! — that has made the elite obsession with deficits so hard to dislodge.So,there you have it. The CAUSE of the current economic malaise is the lack of government spending. Now, since government spending comes the wealth government confiscates from private individuals who actually produce it might lead us to think that the reason government spending is not as high as Krugman wants it to be is that the economy is depressed. If the economy were doing better, government would be able to take more in taxes and, thus, increase its spending.
And an end to deficit obsession can’t come a moment too soon. Right now Washington is focused on the idiocy of the sequester, but this is only the latest episode in an unprecedented run of declines in public employment and government purchases that have crippled our economy’s recovery. A misguided elite consensus has led us into an economic quagmire, and it’s time for us to get out.
In Wonderland, however, things are backward. Government spending creates the wealth that comes from private firms. The more government spends, borrows, prints, and takes in taxes, the wealthier all of us become. Why? Because Krugman, Joe Stiglitz, and now Ben Bernanke tell us that is so.