Paul Krugman: "[Ron] Paul has maintained his consistency by ignoring reality"

http://www.nytimes.com/2011/12/16/opinion/gop-monetary-madness.html?_r=1

Another amazing and hard hitting piece by Paul Krugman. This guy should be president. We sure could use an intelligent economist in the white house right now.

 

Austrian's are nut cases.

 

Yes and Krugman would sit on his hands waiting for this magical alien invasion to bail us out.

[ame="http://www.youtube.com/watch?v=Vbf5RO6TfxA"]Paul Krugman says perceived Alien Invasion would fix Economy - YouTube[/ame]

I mean there was a twilght zone episode about it so it must work.

 

huh? Krugman is very proactive in his ideology.

 

Krugman's argues that Paul's wrong because we haven't seen much price inflation. But in fact, prices for food, gas, medicine, and college tuition are all skyrocketing. According to the old measurement of price inflation, it's over 10%:



Furthermore, price inflation isn't the only negative symptom of inflating the currency. It also creates speculative bubbles that squander resources and lead to busts, which is exactly what we saw with the housing bubble.

Lastly, it acts as a regressive tax. It redistributes wealth from savers and people on fixed incomes to governments and private special interests that get the new money first, making the poor poorer and rich richer. This is a hidden form a theft.

And for all this, it does nothing to strengthen the economy. Even a child can see that printing more money doesn't actually create more wealth. It merely redistributes wealth from one group to another while distorting the price system.

 

You didnt even watch the video.. Yes Krugman is very proactive. SPEND SPEND SPEND eventually it will work.

Sorry we have tried that...

 

He was obviously joking in that video. And we try it all the time because it works everytime. It's a proven good method to get out of recessions. It's the reason our recessions are shorter and not as deep after the great depression as they were before the great depression.

 

Working? Stick to comic books kid.

 

We're both adults here. I don't insult you so don't insult me.

And yes. It works. It's proven to work. it works every single time. It ends recessions quickly and in the end costs much less than doing nothing at all and allowing deep recessions to run it's course. On average Keynesian policies have cut recessions short by about 3 years compared to pre depression recessions and recessions happen less frequently, about once every 10 years as opposed to once every 5 years pre depression.

We've also seen extreme growth and high productivity under these policies.

 

http://www.usdebtclock.org/

Every tax payer is in debt $134,000 and counting. Yes its working alright...

Sure the theory *works* because it keeps pushing more and more debt to the future.

 

During the late 19th century, the United States saw more accelerated growth than perhaps at any other time in history. I've seen no evidence that monetary inflation has mitigated the business cycle. Since the creation of the Fed, we've seen the Great Depression, the stagflation and malaise of the 70s, and the current crisis, amongst various smaller downturns.

Furthermore, most panics before the Fed happened under a central bank or quasi-central banking system, which has predominated throughout the countries history.

 

Krugman is corrupt. Somebody like him is smart enough to know that the velocity of money is one of the most important factors in the inflation rate changing. That is basic macroeconomics. He is playing stupid while pushing his self-righteousness full force through propaganda. He is simply trying to push his political agenda into his economic pieces. Once the velocity of money picks up, you can bet your ass we are going to see inflation like crazy.

 

He's a winner alright.

 

I think Ron Paul definitely ignores certain economic realities, but I think Krugman has as well.

We're not at a point where we need Austrian economics or pure Keynesianism.

We just need a better balance of government and the market.

 

The broken window fallacy does not apply to public work projects that help the economy be more productive. Such as more effective travel.

 

This I agree with. But I think the balance is shifted so heavily towards conservative economics that a few years of pushing for Keynes/Krugman ideas would be really beneficial.

 

Krugman has also suggested that a war would stimulate the economy, which is textbook broken window fallacy. Even with things like roads, it ignores opportunity cost; you can't show the road is more productive than what the money would have been spent on otherwise.

 

I can sympathize with that, but the problem I have with more public works is that we're already in so much debt.

We need to be cutting spending, not raising it.

 

War does stimulate economies. The broken window fallacy is itself a fallacy.

 

Then I don't know what the point of your previous criticism was. How is it fallacy?

 

Debt is such a small problem that it should really only be considered in good economic times. It might sound really weird but there is virtually no repercussions to having a high debt. Of course you don't have to be overly dependent on debt because that's a security issue. But other than that it's not like they can send repo men in.

 

Why would you make an exception for the fallacy and then claim the fallacy is not legitimate? It would not need exceptions if it isn't legitimate.

 

I would have to disagree with that.

About the only way I could see more public spending working on the balance sheet is for us to dramatically increase our agricultural sector.

We have a lot more arable land than most countries, and our agricultural industry is one of the most technologically advanced in the world. One of the few things we actually export more of than import is food.

So, if we truly became the breadbasket of the world, we'd probably make enough money to pay off our debt.

That's about the only way I could see us spend our way out of this recession.

 

It's a fallacy because it's just not true.

A broken window does create work.

People who claim broken window policy say that because you lost value from the window that all you've done is replace the wealth that was already in the economy. But that's all economics is is moving wealth around.

Wealth is a limited resource. At any given time there is only a certain amount of wealth in the economy.

Economics isn't about increasing the amount of wealth in an economy. It's about increasing the speed at which that wealth is moved around.

 

I have to admit: in the field of ignoring reality, Krugman is an unassailable authority.