41–50 of 100 posts
I'm sure the Greeks would be delighted to hear that more debt spending is the shot in the arm they've been looking for.
He specifically calls out Greece as a special case. His comments are directed towards economies which are not like Greece.
What Krugman and his ilk fail to address is capital misallocation. Placing capital into its most productive use is the definition of a well functioning market. We tolerate market distortion for greater social good: safety regulations, environmental regulation, labor laws, etc. Unfortunately, with QE1,2,twist,3 and ZIRP, we are now well past properly functioning capital markets. At a gross scale, every single investme…
So while Krugman offers data and concrete, falsifiable predictions that generally prove correct - for example, that hyperinflation will not be a problem, that QE won't move the economic needle much (but is better than nothing), that interest rates will remain low for the foreseeable future despite claims to the contrary, you offer vague handwaving about capital misallocation and "distortions" and then tell us you can't answer how and when Krugman will actually be wrong.
Can you understand why people have difficulty coming to terms with your beliefs? To me it just seems rooted in some cognitive bias about suffering and sacrifice; it sounds like you just can't believe things are this easy, that we have to suffer and be punished for our vile profligacy.
What about Japan? They tried to buy economic growth (dubbed Abenomics) and failed horribly. The economy is worse and government debt is higher than ever. Models that can't explain some weird edge cases are ok. But what happened in Japan is the exact opposite of what Mr. Krugman tries to convince people.
Krugman has written a lot about Japan, and Abenomics. According to Krugman's own analysis, Abenomics would not be very effectual and warned that particular Abenomics policies (like the tax increases) would indeed worsen the economy. It's a little disingenuous to say the economy is worse: growth did improve (until the VAT increase Krugman warned would be disastrous) and unemployment did fall, and Krugman wasn't worrie…
If you have to significantly harm your currency to get growth, what you're getting is not actual growth, merely an illusion.
Paul Krugman in 2002: "To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." Somehow every op-ed this guy writes gets treated as the word of god. It is important to remember that while he does have a Nobel prize, he has also said a lot of profoundly dumb stuff. I am not saying that Au…
I read the editorial that the "housing bubble" quote is from and it doesn't sound at all like he actually recommends it: http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip... The theme of that article seems to be, "we're screwed, and here's why." In that context, the quote in question seems to be saying, "the only way out would be to create a housing bubble, that's how screwed we are." I think it's ironic t…
He does indeed say that lowering rates to inflate asset prices would be our easiest way out of the situation.
He goes back only to say that it is unlikely that we will cut rates enough so it porbably won't work (ie this will fail because our attempt to create bubbles will be too half assed to work.)
He's pretty clearly serious that lowering rates to encourage investment is our ticket out of the problem.
What Krugman and his ilk fail to address is capital misallocation. Placing capital into its most productive use is the definition of a well functioning market. We tolerate market distortion for greater social good: safety regulations, environmental regulation, labor laws, etc. Unfortunately, with QE1,2,twist,3 and ZIRP, we are now well past properly functioning capital markets. At a gross scale, every single investme…
If all you care about is the short-term, then forget about austerity. Juice things up a bit. Throw some borrowed money at it. Alleviate some economic misery. But long-term, living within your means leads to greater stability, a market where prices reflect reality, and people that save are rewarded. This is a far greater payoff in exchange for some potential short-term pain. The worst part is that many governments cla…
> We’ll never know who is right, though. Most of the world has been following the recommendations of this “economist” for decades. No, they haven't. No country has passed the kind of budget-busting stimulus packages Krugman has said was necessary. The closest any country came was the US, which passed a stimulus package less than half the size of his recommendations and that consisted largely of tax breaks instead of…
It's because he writes like a Nobel award winning economist. Meaning a dry writing style, and advanced concepts.
Most people hated economics in school (either because they don't understand it, or found it boring - it's basically math that most people see no practical outcomes for) or just strait up don't get it.
Earlier quoted context omitted.
How about in the U.S. in the past couple years[1]? [1] http://www.forbes.com/sites/johngoodman/2015/01/13/voodoo-ec...
QE is the opposite of austerity. That's what the US is still doing since god knows when.
QE means that the central bank buy up bonds. The hope is that this lowers interest rates on bonds, making it less attractive for banks to hoard bonds instead of lending money to companies wanting to invest.
Interest rates are 0% and our economy isn't growing (Q1 '15). I find that scary. I'm seeing the results of Krugman's philosophy on the ground: Asset prices are way up. Housing in my city is almost as expensive as it was before the '08 crash. For those of us that are lucky enough to own stocks and a house -- three cheers for Krugman, 0% interest rates, and QE! But the asset economy is outpacing the real economy. Wages…
All it has done, is give governments an excuse to drastically spend beyond their means to fake growth and well being that isn't real. Then they act so shocked when their economies sink into recession the moment the stimulus programs stop. The US, Europe, China, Japan are all drowning in this fraud, with $60-$80 trillion in new debt over the Keynesian reign, and absolutely nothing to show for it but economic strangulation and upset voters.
Earlier quoted context omitted.
The proper time for austerity is when things are good. When things are bad, juice it up, especially if you can borrow at rates that are negative when inflation adjusted. The problem with austerity now to make the long term better is that it's not a zero sum game. Austerity lowers GDP growth, which can offset any move toward solvency. You spend less and surprise, you also take in less. Eventually you recover, but poor…
Austerity in good times? Good luck with that!