Rewinding The Tape On Paul Krugman
In my last post, I should have perhaps included this revealing (given his current denial of the effects of budget deficits on interest rates) from one of his 2004 columns:
"For many years, advocates of tax cuts have insisted that the normal laws of supply and demand don't apply to the bond market, and that government borrowing — unlike borrowing by families or businesses — doesn't affect interest rates. But there's no argument among serious, nonideological economists. For example, a textbook by Gregory Mankiw, now the president's chief economist, declares — in italics — that "when the government reduces national saving by running a budget deficit, the interest rate rises."
Krugman was entirely right about that "there's no argument among serious, nonideological economists" part (Though it is incorrect to suggest that all advocates of tax cuts believe in that or that only advocates of tax cuts believe it(he himself is an example of that)). It's too bad that he has however revealed himself to be anything but [a]"serious, nonideological economist".
Via Lew Rockwell, I also see another interesting quote from Krugman, from 2002.
"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."
If you think the quote has been taken out of context, do read the entire article. It is clear there that the only misgiving he expresses about the strategy of creating a housing bubble is that he doubted (incorrectly, as everyone now presumably knows) that it would be possible to create the allegedly desirable housing bubble.
The now experienced effects of Krugman's 2002 policy recommendation should give you a hint of the effects of Krugman's current policy recomendations.
UPDATE: Now Krugman tries to spin his way out from the latter quote, writing:
"Guys, read it again. It wasn’t a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that’s just what happened."
That excuse is simply not plausible. Is Krugman saying that he, a man renowned for advocating Keynesian recession-fighting policies, saying that he opposed a policy he thought was needed to fight a recession? Give me a break.
While he may not have formally written "I advocate it", he didn't in any way suggest that it would be undesirable, and given his known preference of advocating policies that reduces the severity of recession in the short-term, he can't argue that he didn't advocate a policy that would do so by saying it would do so, unless he specifically argued against it.
"For many years, advocates of tax cuts have insisted that the normal laws of supply and demand don't apply to the bond market, and that government borrowing — unlike borrowing by families or businesses — doesn't affect interest rates. But there's no argument among serious, nonideological economists. For example, a textbook by Gregory Mankiw, now the president's chief economist, declares — in italics — that "when the government reduces national saving by running a budget deficit, the interest rate rises."
Krugman was entirely right about that "there's no argument among serious, nonideological economists" part (Though it is incorrect to suggest that all advocates of tax cuts believe in that or that only advocates of tax cuts believe it(he himself is an example of that)). It's too bad that he has however revealed himself to be anything but [a]"serious, nonideological economist".
Via Lew Rockwell, I also see another interesting quote from Krugman, from 2002.
"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."
If you think the quote has been taken out of context, do read the entire article. It is clear there that the only misgiving he expresses about the strategy of creating a housing bubble is that he doubted (incorrectly, as everyone now presumably knows) that it would be possible to create the allegedly desirable housing bubble.
The now experienced effects of Krugman's 2002 policy recommendation should give you a hint of the effects of Krugman's current policy recomendations.
UPDATE: Now Krugman tries to spin his way out from the latter quote, writing:
"Guys, read it again. It wasn’t a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that’s just what happened."
That excuse is simply not plausible. Is Krugman saying that he, a man renowned for advocating Keynesian recession-fighting policies, saying that he opposed a policy he thought was needed to fight a recession? Give me a break.
While he may not have formally written "I advocate it", he didn't in any way suggest that it would be undesirable, and given his known preference of advocating policies that reduces the severity of recession in the short-term, he can't argue that he didn't advocate a policy that would do so by saying it would do so, unless he specifically argued against it.
posted by stefankarlsson at 8:27 AM
1 Comments:
Today Krugman adds to the obvious obliviousness of his position. He links and derides Schumpeter and quotes the section containing this
"For the truouble is fundamentally not with money and credit, and policies of this class are particularly pt to keep up, and add to, maladjustment, and to produce additional trouble in the future."
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