Paul Krugman: The austerity delusion • Hacker News Board

Re: Paul Krugman: The austerity delusion

#71

Post by panglott » Wed, Apr 29, 2015, 7:01 PM UTC

Amezarak wrote: post #65

Mikeb85 wrote: post #47

Earlier quoted context omitted.

> I've noticed there's a bizarre phenomenon surrounding Krugman where people just refuse to read what he says and instead put all kinds of nonsense into his mouth. 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 n…

See, though, I don't think that's at all the case. Krugman isn't a dry writer at all, at least when it comes to his blog posts and political and economic commentary. To be sure, you find most of the more detail analyses on his blog (since the kind of posts he marks as "wonkish" would not be very popular in his column), but there's usually a lot of color to them and they're pretty accessible even to the layman. His bl…

Krugman is far from a dry writer. He just writes about a topic that too many people find dry and inscrutable, sadly.

Re: Paul Krugman: The austerity delusion

#72

Post by mikeash » Wed, Apr 29, 2015, 7:02 PM UTC

anm89 wrote: post #45

mikeash wrote: post #35

Earlier quoted context omitted.

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…

These are after the fact justifications. 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…

I'm curious, why is my version an after the fact justification, but yours isn't?

Re: Paul Krugman: The austerity delusion

#73

Post by mdemare » Wed, Apr 29, 2015, 7:07 PM UTC

adventured wrote: post #66

Amezarak wrote: post #52

Earlier quoted context omitted.

In what sense do you mean Japan has "debased" the yen? Inflation has been virtually nonexistent. A weaker yen promotes exports; obviously not something that is automatically bad for the economy. It's absolutely not true that having a weaker currency means growth is illusory.

If you reduce the value of your currency by 25%, and get 3% GDP growth in the process, you have to adjust the baseline lower and what you've actually got is a drastic reduction in real economic value. The Japanese government has been aggressively devaluing the Yen, because they're bankrupt and can no longer afford to pay even the interest on their debt without either using printing or new debt issuance. They're stuck…

> If you reduce the value of your currency by 25%

It is the dollar that has appreciated, not the yen that has depreciated. The dollar has appreciated against most currencies in the last year – probably because people expect interest rate hikes this year. It has nothing to do with Japan per se.

Re: Paul Krugman: The austerity delusion

#74

Post by jhulla » Wed, Apr 29, 2015, 7:10 PM UTC

Amezarak wrote: post #67

jhulla wrote: post #62

Earlier quoted context omitted.

First, the market is made up of all of us seeing similar data and coming to our own conclusions based on our interpretations and self-interest. Second, the market didn't just crash in 2008, it melted down. There were fears of simultaneous runs on global banks with catastrophic consequences. Bernanke/Geithner/Paulson orchestrated government backstops on money market funds, on Fannie/Freddie debt, on shotgun-marriages…

> Perpetual QE + ZIRP is not in ur economic textbooks and I do not believe our models can tell us what is coming. That very situation is what Krugman did a lot of his academic work on. So far it's played out mostly like what he and other mainstream economists predicted. You can always say "until it doesn't", but that's the nature of life. We have to go with what we know. It's not as if Krugman wants QE + ZIRP; he'd r…

Here is Paul Krugman writing in a book review in 2014:

"Almost nobody predicted the immense economic crisis that overtook the United States and Europe in 2008. If someone claims that he did, ask how many other crises he predicted that didn’t end up happening."

http://www.nybooks.com/articles/archives/2014/oct/23/why-wer...

Then read hedge fund billionaire Druckenmiller's transcript linked in this article below.

http://www.bloomberg.com/news/articles/2015-04-10/druckenmil...

Then read about billionaire Ray Dalio here:

http://www.newyorker.com/magazine/2011/07/25/mastering-the-m...

Krugman didn't 2008-2009 coming. Many people did.

I think QE + ZIRP saved us from a catastrophe in 2008-2009. Instead of thinking what got us to a point where such heavy-handed financial tools were necessary and moving away from the cliff, we've just used the QE tool over and over again. QE1,2,twist,3. QE in Japan. QE in Europe. The Chinese have yet to openly go down this path.

I don't in any way believe that Krugman knows what is coming. (I don't either.)

Re: Paul Krugman: The austerity delusion

#75

Post by mdemare » Wed, Apr 29, 2015, 7:12 PM UTC

seertaak wrote: post #42

The Paul Krugman delusion : thinking a little or a lot more of the policies that have produced little to no improvement will suddenly work if we do it just one more time .

Actually, The Paul Krugman delusion is the illusion that people have that they have much more insight in economics and economic policy than Paul Krugman, despite never having studied economics, or read a textbook or a journal in economics.

Re: Paul Krugman: The austerity delusion

#76

Post by jhulla » Wed, Apr 29, 2015, 7:20 PM UTC

Amezarak wrote: post #67

jhulla wrote: post #62

Earlier quoted context omitted.

First, the market is made up of all of us seeing similar data and coming to our own conclusions based on our interpretations and self-interest. Second, the market didn't just crash in 2008, it melted down. There were fears of simultaneous runs on global banks with catastrophic consequences. Bernanke/Geithner/Paulson orchestrated government backstops on money market funds, on Fannie/Freddie debt, on shotgun-marriages…

> Perpetual QE + ZIRP is not in ur economic textbooks and I do not believe our models can tell us what is coming. That very situation is what Krugman did a lot of his academic work on. So far it's played out mostly like what he and other mainstream economists predicted. You can always say "until it doesn't", but that's the nature of life. We have to go with what we know. It's not as if Krugman wants QE + ZIRP; he'd r…

> So far it's played out mostly like what he and other mainstream economists predicted.

Oh christ on a cracker.

Mainstream economists should have all taken their PhD diplomas off their walls and collectively shredded them in the fall of 2008.

Under the watchful eyes of mainstream economists at the Federal Reserve, the watchful eyes of academics at institutions worldwide, the global financial system melted down.

Now, we are to believe that these same folks who couldn't see the 2008-2009 crisis know exactly how to lead us out.

Re: Paul Krugman: The austerity delusion

#77

Post by quadrangle » Wed, Apr 29, 2015, 8:12 PM UTC

mdemare wrote: post #75

seertaak wrote: post #42

The Paul Krugman delusion : thinking a little or a lot more of the policies that have produced little to no improvement will suddenly work if we do it just one more time .

Actually, The Paul Krugman delusion is the illusion that people have that they have much more insight in economics and economic policy than Paul Krugman, despite never having studied economics, or read a textbook or a journal in economics.

That's really just an instance of the Dunning-Kruger effect, but it's a good example of it.

Re: Paul Krugman: The austerity delusion

#78

Post by thoward » Wed, Apr 29, 2015, 8:25 PM UTC

Krugman presents this as a dilemma between two choices.

1. Institute austerity now. 2. Institute stimulus now, pay down debt responsibly once the good times roll.

This is a sham dilemma. The real options appear to be.

1. Institute austerity now. 2. Institute stimulus now, but half-ass the debt paydown in the future, condemning future generations to a high debt to GDP ratio.

Given this real dilemma, which is worse? I don't pretend to know the answer. I know austerity sucks. I also know that governments lack the self discipline to pay down debt significantly in the future.

Which option is actually worse?

Re: Paul Krugman: The austerity delusion

#79

Post by Nimitz14 » Wed, Apr 29, 2015, 8:35 PM UTC

ancap wrote: post #68

Nimitz14 wrote: post #60

Earlier quoted context omitted.

You're right, but I think you would yourself admit you're being pedantic, the great divide between policies in the US and EU was QE (until recently). It was wrong of the previous poster to paint the US as a country following austerity that was successful.

No, it was not wrong. I am simply using the definition of austerity that Krugman commonly uses (see my above post). UK has used QE since 2009[1], BTW, but only government expenditures goes into Krugman's definition. [1] http://www.bbc.com/news/business-24614016

your sources are bad and you should stop reading them, I've read both of the links you posted before when they were ripped apart by mainstream economists

Re: Paul Krugman: The austerity delusion

#80

Post by mpweiher » Wed, Apr 29, 2015, 8:47 PM UTC

dragonwriter wrote: post #53

pluckytree wrote: post #8

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…

> Most of the world has been following the recommendations of this “economist” for decades. Er, no, most of the world has not been following Krugman's advice for decades. In fact, pretty much none of it has.

And the economies that have followed closer have overall done better than the ones that didn't. Go figure. I mean, we now have the actual evidence.