The creator of the fake Krugman statement confesses!!

So, the perpetrator of the Hoax has come clean! One wonders if the Obama administration's Department of (In)Justice will come after him in the way they have gone after S&P for downgrading U.S. paper. (Yeah, the DO(In)J has another explanation, but politics is politics.

I do find it interesting that Krugman DID classify the earthquake and tsunami in Japan as possibly being "expansionary" events, so while he did not make the statements on the U.S. earthquake, nonetheless he has said similar things elsewhere. Say what you want, but Paul Krugman IS a practitioner of the Broken Window Fallacy.

No, I don't support forgeries, although I do remember that a lot of Democrats and assorted lefties did not condemn the use of forged documents against President Bush by CBS News and Dan "The Frequency" Rather in 2004. In other words, for some people, if a forgery is politically useful, then it is OK.

It was only 5.9. Blame the Bond Vigilantes!! Too Small!

[Update]: Krugman claims that this comment is a forgery. Maybe it is, but it is no more ridiculous than his "space aliens" comment.

Hey, forget the space aliens! We now have a new economic stimulus package: the earthquake!

Actually, no. It was too small, just like the "stimulus," darn it! Paul Krugman has given us the Ultimate Broken Window Fallacy post on Google about yesterday's earthquake (which I admit we did NOT feel here in Riga):

"People on Twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage."

Now, if we only could get the space aliens to induce and earthquake, we all could get rich!!

Krugman's Freudian Slip?

For years, Paul Krugman has been touting the wonder of Sweden's economy, as its high taxes and high welfare programs apparently provide "aggregate demand" that keeps the entire circle turning. So, in a recent blog post he makes from Sweden, Krugman declares:

Of course the point is not that Sweden is perfect, it’s the fact that it works and thrives despite high taxes and a strong welfare state — which isn’t supposed to be possible according to conservative dogma.

So, does Sweden thrive BECAUSE OF high taxes and welfare, or IN SPITE of it? Both cannot be true. Is it a Freudian slip, or is he just creating a conservative straw man?

I have never been to Sweden, and right now I am the closest I ever have been to there, being in Riga, Latvia. Each day, two ferries run from Rita to Stockholm, and from what I can tell, Scandinavians seem to make up the largest contingent of tourists here in Old Riga, where we are staying. The reason that the Swedes like to come here is because Riga, while somewhat expensive by American standards, is much less expensive than Sweden. In my conversations with Swedes and Norwegians, I get the sense that they are not personally as wealthy as Progressive Americans want us to believe.

In other words, what Krugman (who is a multi-millionaire and really doesn't have to worry about what things cost) does not tell people is that Swedes pay much more for goods than do Americans, yet Swedish incomes are not as high, and their real incomes are substantially lower than ours. Now, this is not a slam on Sweden, which is a lovely country, but nonetheless is not quite the paradise Krugman wants to claim that it is.

Now, Sweden is not a hellhole, either, although I don't know of any practitioners of "conservative dogma" who make the claim that such a society cannot function. Furthermore, income tax and welfare policies are not the only thing affecting investment. Something tells me that the Swedish government is not nearly as hostile to new capital investment as is the current Regime in Washington. (While it will bug the Krugmanites who read this page, this editorial that appeared in the Wall Street Journal is spot on when it comes to dealing with the economic policies of the Obama administration.)

Krugman has one more statement that does strike me as interesting:

An anecdote here: Robin and I were talking yesterday with an eminent American financial economist, and said something about tax levels here. He said, “Well, that’s why all the young people are leaving.” Except, you know, they aren’t. But never mind — that’s what’s supposed to be happening, and it must be happening.

Does that mentality apply to the stimulus? According to Krugman, a "stimulus" by definition always must have a positive economic effect, provided it is "large enough," so is the fact that the economy is in the tank -- despite trillions of dollars being spent to keep that from happening -- proof on its face that the government is following an "austerity" plan? Or, if "that’s what’s supposed to be happening, and it must be happening" only applies to other things, but not the "stimulus"?

Say what? Issue more debt to relieve a debt crisis? Only in Wonderland!

The name of this blog came from a commentary I wrote for Forbes nearly three years ago, but I would add that the writers and editors of the New York Times seem to be living in their own Wonderland. This is a newspaper that took the confabulated "evidence" in the Duke Lacrosse Case and insisted that it all made sense when people living in the Reality World saw it and wondered how in the heck a D.A. managed to find a rape case wrapped up on that nonsense.

Unfortunately, the delusion that is the NYT is not limited to imaginary crimes being committed by "young men of privilege." No, the NYT still is insisting that we can and should "spend our way" out of this financial crisis. In today's editorial, we see yet another plea for central banks and governments to unleash another round of debt in order to enable sinking governments to...repay debt.

(Remember that the NYT was all over Karl Rove for his "reality-based world" comments when he was the de facto political officer for the Bush administration. While I agreed with the editors' assessment of Rove's comments then, I only can conclude that Rove Disease has overtaken the NYT editorial offices.)

The editorial is insisting that governments don't cut back on borrowing and spending (and increasing taxes) because if they stop borrowing, then won't be able to repay their debts:

Excessive indebtedness is a real, long-term problem. But Europe’s broad downward trajectory can only be turned around if governments — both those of lenders and debtors — spend more in the near term to put people back to work and get consumers back to spending.

The proper interpretation of those words is as follows: "We need to stop drinking, but in the interim, another round for the house! Let us make a toast to ending toasts...in the future!"

This is not, of course, what the editors actually seem to believe. Like Hitler's generals in the Berlin bunker who were insisting to the bitter end that they could win World War II, the editors are insisting that another round of borrowing and spending (and more taxation) THIS time will take hold and that economic growth will be just around the corner:

As the crisis quickens, more enlightened voices struggle to be heard. Christine Lagarde, the new managing director of the International Monetary Fund, is calling for balancing long-term debt reduction with “short-term support for growth and jobs.” The financier George Soros this week renewed his pleas for more growth-friendly policies, as has Gordon Brown, the former British prime minister.

What do the editors mean by "growth-friendly policies"? They mean more borrowing, more government spending, more subsidies, higher marginal tax rates, higher fuel taxes, more regulation, destruction of industries such as energy industries that still are profitable, more criminal penalties for normal business transactions, and broader welfare policies.

Yes, I am sure that all of these things will enable the economies of the USA and Europe to grow. Increase burdens upon individuals and businesses, make it easier to throw people into prison, print money, increase government borrowing, increase anti-business rhetoric, and expand the police powers of the state, and out of this is going to come that unicorn known as "economic growth." Create a little boom now and we will figure later how to deal with the inevitable bust.

Only in Wonderland.

Random commentary on Krugmania

Why the Progressives liked John Kenneth Galbraith

I remember when Staples put this Dilbert cartoon into an ad, and Krugman claims that this is how some American pundits decide who is "presidential."

Obviously, Krugman never would think a person's looks would determined whether or not he was "distinguished," but it was not that long ago that Progressives were united in their praises of the "distinguished economist" John Kenneth Galbraith, whom I dubbed the "Dilbert Economist." Yes, Galbraith was tall and had academic-style hair which...turned silver. That he was an economist as opposed to being a socialist political operative who made a number of nonsensical claims on economics is another subject for debate.

(For that matter, Bill Clinton was tall and his hair has turned silver, too. That must make him a "distinguished ex-president.")

Salvation by Printing Money

In the end, Krugman tends to be a Silvio Gesell-style crank. Print money (which everyone knows is free wealth), and governments easily can solve their economic problems. In a recent post, Krugman claims:

...countries without a printing press are subject to self-fulfilling crises in a way that nations that still have a currency of their own are not. The point is that fears of default, by driving up interest costs, can themselves trigger default — and that because there’s a crossing-the-Rubicon aspect to default, once a country crosses that line it will probably impose fairly severe losses on creditors. A country with its own currency isn’t in the same position: even if it is pushed into some inflation, there’s no red line that need be crossed.

Yeah, there are no consequences for debasing the currency; it's all "free money"! Wealth for all!

Save us from space alien economics!

While waiting at JFK International Airport last Sunday to catch a plane to Riga, Latvia, I saw Paul Krugman on the tube (along with Harvard's Ken Rogoff). While the words were provided, nonetheless I could not get myself to watch it, as I just was not in the mood for ridiculous. Apparently, I missed a doozy. For that matter, I didn't even know that space aliens were upon us, although I would say that in economic terms, space aliens will attack us before Keynesian "solutions" set the economy on a correct and sustainable path.

According to Krugman, war (be it with Germans and Japanese or space aliens) is a great thing (even though he admits it gives us "negative product social spending") because it both gives us more employment AND inflation! I mean, what's not to like? You can have prices rise and have empty store shelves -- but you have a job, even if you can't buy anything, as was the case in WWII.

As for Krugman's "alien threat" comments, Bob Higgs has it right. On a recent Facebook post, Robert Higgs has written:

Professor Krugman, I can be even more Keynesian than thou. My plan: invite aliens to bring to earth the blueprints for a global debt-financed public-works program in which every nation would construct thousands of pyramids (constrained only by the condition that public debt not exceed infinity and policy makers' IQ not exceed 63.)

Higgs makes more sense. Really. Mary Theroux of the Independent Institute agrees, and has this to say:

As Dr. Robert Higgs has more than ably shown, the Great Depression continued, and deepened, throughout the New Deal and throughout World War II. The World War II years were a time of shared privation, with virtually every item that we take for granted today either rationed: e.g., meat, gasoline, sugar, clothing; or not available at any cost: e.g., new cars, appliances, etc. The American standard of living throughout World War II remained at an excruciatingly low level that no 21st century American would accept. Meanwhile, unemployment disappeared simply because 16 million able-bodied people were sent to war, paid below-market rates and subject to danger, death, and maiming they may not have preferred to unemployment.

To be honest, I think that we will be better with space aliens running things than the Keynesians.

A delusion agenda, anyone?

[Update]: Graham Dugas sent me a link of Richard Nixon's infamous August 15, 1971, speech after closing the gold window because of constant runs on the dollar. Staying true to his name of "Tricky Dicky," Nixon proceeded to blame the "international speculators" for actually buying gold and essentially shorting the dollar, which Nixon dishonestly calls the "cause" of the trouble.

Of course, the cause of the trouble was the fact that the government was rapidly expanding the supply of dollars -- with a predictable result. Flash forward to 40 years later and we see Washington still trying to claim that the government wants to protect our money and our lives.[End Update]

The editors at the NY Times believe that they have discovered something that apparently no one else notices: a lot of people are out of work. Of course, the Grey Lady's perception that in the past year "Congress and the Obama administration have spent the year focused on budget cuts" is a pretty sick joke, considering that the government continues to spend and borrow into oblivion.

Now, the editorial is worth reading if only for its huge leaps in logic. First, the "serious" stuff: "Without more jobs, both the economy and the budget will deteriorate further."

Notice the causality here; the NYT is claiming that "jobs" help create an economy. So, we are supposed to believe that the economy is bad because people are out of work instead of dealing with the logical point that unemployment is high because the economy is bad. This is simple economic logic, something that always seems to escape the people in the august NYT offices.

But, it gets even better, as all of these grandiose jobs projects ("Let's rebuild this and that....") need to be funded, of course. How to do that?

Washington, in thrall to austerity, has abandoned one of the most immediate and powerful tools for supporting growth and jobs, namely, borrowing at today’s low rates to provide direct fiscal aid to states. But Mr. Obama can and should make the case for targeted new jobs today, to be paid for over time by closing tax loopholes.

This is hilarious (unfortunately). First, Washington is not "in thrall to austerity" by any stretch, given the explosion not only in government spending, but also in government obligations over the past four years. Washington might be delusional, but "in thrall to austerity" is a product of a fertile imagination.

Second, while the suggestions are couched in the language of capital spending, it is clear that what the editors mean is that the government needs to continue its record borrowing simply to funnel it to certain favored political groups. This basically is the government using the bond markets as a giant credit card to continue a spending spree.

The last one -- "closing tax loopholes" -- also demonstrates utter delusion at the Grey Lady. What constitutes a "loophole"? While the NYT and Paul Krugman seem to believe that the government can balance the budget and end the recession by raising the top rates to, perhaps, 70 percent (a rate Krugman tool me seven years ago was "insane," but I guess Krugman now is re-defining "inanity").

For the past four years, the NYT has shown utter hostility to those industries that are profitable and can lead us out of a recession. Instead, we get the incomprehensible nonsense that if the government borrows at even higher rates, jacks up taxes, and props up favored "green industries" with huge subsidies, that this mishmash will result in a recovering economy.

It seems to me that the editors of the NYT need to spend some time in "recovery" from the delusion of Keynesian thinking. These are people who are laying out the very path to depression and are calling it prosperity. I don't think so.