In reading Paul Krugman's column today -- his usual political screed about Good Democrats and Bad Republicans (as opposed to Bad Republicans AND Democrats) -- I am struck by the utter ho-hum attitude Krugman has toward the gargantuan U.S. Government debt. To him, the issue is purely political, and there is no danger in stacking on more debt and printing more money.
Instead, Krugman continues to excoriate anyone who might think that the government with its policies of "Quantitative Easing" (called expanding the monetary base even more) and heavy borrowing are not leading our economy into disaster. And, while he praises efforts of the government to drive down the value of the dollar (yes, it temporarily makes U.S. exports cheaper abroad), he claims there is no downside to policies of monetary debasement.
Jim Rogers, the legendary investor, would beg to differ. No, Rogers does not have an economics doctorate from MIT, nor does he have a Nobel Prize in hand or a column in the NY Times. But Jim Rogers knows markets and he knows currencies and he believes that the government is pushing us into an even greater crisis than what we experienced in 2008.
In this recent interview on Russia Today, Rogers states that for all of the rhetoric we hear in Washington, no one seriously is dealing with the crisis. The Democrats have been off the charts, and Republicans are delusional about the state of U.S. military spending. I believe the man has some wise things to say, even if U.S. policy makers and people like Krugman stop up their ears with "Na, na, I can't HEAR you!"
Showing posts with label Jim Rogers. Show all posts
Showing posts with label Jim Rogers. Show all posts
Monday, May 16, 2011
Sunday, November 7, 2010
Krugman's Treasure Trove of Shibboleths
Paul Krugman definitely has been busy since the last election, and so have I -- but not in reading Krugman's material as the day job (and some consulting work on the side) have taken front-and-center. Nonetheless, as I read the Nobel Prize winner's blog this morning, I must admit that I have missed a real treasure trove of Krugman's Shibboleths, including a number that he has written himself.
It is hard to know where to begin, but I think I will begin with Krugman's own Shibboleth: inflation. Some years ago, I read a book by someone lambasting the Keynesians in which he said that their only real "arrow in the quiver" was inflation, and I think that Krugman has continued that long tradition. According to Krugman, the only way that an economy can recover from a depression is via inflation, coming in the form either of central bank monetary expansion or increased government spending.
As Krugman has claimed many times, the U.S. economy -- for that matter, all of the world (except for Zimbabwe) -- is mired in a "liquidity trap" in which individuals and businesses are selfishly holding onto their cash and not spending it. Obviously, THAT is intolerable, so the government either must find a way to confiscate it by force (raise taxes, which Krugman has advocated) or via inflation (which Krugman pursues with religious zeal).
Along the way, he attacks Jim Rogers, a person who actually understands capital, unlike Krugman, who seems to believe that capital magically springs from the ground when people start spending. Yes, Krugman wants us to believe that if the government tries to recreate the government-run financial cartel in which external capital markets were scarce (and the system clearly was running into a wall by the mid-70s), and if government showers the economy with newly-printed dollars, blocks Chinese imports, raises taxes, forces taxpayers to pay for high-cost, subsidized "clean energy," and demonizes any business that actually is profitable (except for those businesses getting government subsidies), that the U.S. economy will roar back into a state of real growth and full-employment.
Yes, Krugman definitely identifies himself with the Inflationists, claiming that if government debases the currency -- and that is what inflation really is -- and, thus, depreciating the cash that people have earned, that we will have prosperity. In a world in which all labor and capital are homogeneous, that would be true. However, in a world in which a government-caused boom creates huge malinvestments -- as we saw with the housing boom -- we have to face reality.
According to Krugman, we can keep the original boom alive via spending and more spending. Assets mean nothing; depreciated currency is everything. In the meantime, blame everything on Goldstein: the Chinese and Republicans. And that is what passes for Great Economic Wisdom with modern Progressives.
To use Krugman's own words: Paul Krugman makes my head hurt.
It is hard to know where to begin, but I think I will begin with Krugman's own Shibboleth: inflation. Some years ago, I read a book by someone lambasting the Keynesians in which he said that their only real "arrow in the quiver" was inflation, and I think that Krugman has continued that long tradition. According to Krugman, the only way that an economy can recover from a depression is via inflation, coming in the form either of central bank monetary expansion or increased government spending.
As Krugman has claimed many times, the U.S. economy -- for that matter, all of the world (except for Zimbabwe) -- is mired in a "liquidity trap" in which individuals and businesses are selfishly holding onto their cash and not spending it. Obviously, THAT is intolerable, so the government either must find a way to confiscate it by force (raise taxes, which Krugman has advocated) or via inflation (which Krugman pursues with religious zeal).
Along the way, he attacks Jim Rogers, a person who actually understands capital, unlike Krugman, who seems to believe that capital magically springs from the ground when people start spending. Yes, Krugman wants us to believe that if the government tries to recreate the government-run financial cartel in which external capital markets were scarce (and the system clearly was running into a wall by the mid-70s), and if government showers the economy with newly-printed dollars, blocks Chinese imports, raises taxes, forces taxpayers to pay for high-cost, subsidized "clean energy," and demonizes any business that actually is profitable (except for those businesses getting government subsidies), that the U.S. economy will roar back into a state of real growth and full-employment.
Yes, Krugman definitely identifies himself with the Inflationists, claiming that if government debases the currency -- and that is what inflation really is -- and, thus, depreciating the cash that people have earned, that we will have prosperity. In a world in which all labor and capital are homogeneous, that would be true. However, in a world in which a government-caused boom creates huge malinvestments -- as we saw with the housing boom -- we have to face reality.
According to Krugman, we can keep the original boom alive via spending and more spending. Assets mean nothing; depreciated currency is everything. In the meantime, blame everything on Goldstein: the Chinese and Republicans. And that is what passes for Great Economic Wisdom with modern Progressives.
To use Krugman's own words: Paul Krugman makes my head hurt.
Subscribe to:
Posts (Atom)
