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Title: Krugman's Rightful Victory Lap - Mone Too...
Source:
The NY Times
URL Source: http://www.nytimes.com/2011/06/03/opinion/03krugman.html?_r=1
Published: Jun 3, 2011
Author: Paul Krugman
Post Date: 2011-06-03 12:10:35 by war
Keywords: None
Views: 140924
Comments: 159
Earlier this week, the Federal Reserve Bank of New York published a blog post about the “mistake of 1937,” the premature fiscal and monetary pullback that aborted an ongoing economic recovery and prolonged the Great Depression. As Gauti Eggertsson, the post’s author (with whom I have done research) points out, economic conditions today — with output growing, some prices rising, but unemployment still very high — bear a strong resemblance to those in 1936-37. So are modern policy makers going to make the same mistake? Mr. Eggertsson says no, that economists now know better. But I disagree. In fact, in important ways we have already repeated the mistake of 1937. Call it the mistake of 2010: a “pivot” away from jobs to other concerns, whose wrongheadedness has been highlighted by recent economic data. To be sure, things could be worse — and there’s a strong chance that they will, indeed, get worse. Back when the original 2009 Obama stimulus was enacted, some of us warned that it was both too small and too short-lived. In particular, the effects of the stimulus would start fading out in 2010 — and given the fact that financial crises are usually followed by prolonged slumps, it was unlikely that the economy would have a vigorous self-sustaining recovery under way by then. By the beginning of 2010, it was already obvious that these concerns had been justified. Yet somehow an overwhelming consensus emerged among policy makers and pundits that nothing more should be done to create jobs, that, on the contrary, there should be a turn toward fiscal austerity. This consensus was fed by scare stories about an imminent loss of market confidence in U.S. debt. Every uptick in interest rates was interpreted as a sign that the “bond vigilantes” were on the attack, and this interpretation was often reported as a fact, not as a dubious hypothesis. For example, in March 2010, The Wall Street Journal published an article titled “Debt Fears Send Rates Up,” reporting that long-term U.S. interest rates had risen and asserting — without offering any evidence — that this rise, to about 3.9 percent, reflected concerns about the budget deficit. In reality, it probably reflected several months of decent jobs numbers, which temporarily raised optimism about recovery. But never mind. Somehow it became conventional wisdom that the deficit, not unemployment, was Public Enemy No. 1 — a conventional wisdom both reflected in and reinforced by a dramatic shift in news coverage away from unemployment and toward deficit concerns. Job creation effectively dropped off the agenda. So, here we are, in the middle of 2011. How are things going? Well, the bond vigilantes continue to exist only in the deficit hawks’ imagination. Long-term interest rates have fluctuated with optimism or pessimism about the economy; a recent spate of bad news has sent them down to about 3 percent, not far from historic lows. And the news has, indeed, been bad. As the stimulus has faded out, so have hopes of strong economic recovery. Yes, there has been some job creation — but at a pace barely keeping up with population growth. The percentage of American adults with jobs, which plunged between 2007 and 2009, has barely budged since then. And the latest numbers suggest that even this modest, inadequate job growth is sputtering out. So, as I said, we have already repeated a version of the mistake of 1937, withdrawing fiscal support much too early and perpetuating high unemployment. Yet worse things may soon happen. On the fiscal side, Republicans are demanding immediate spending cuts as the price of raising the debt limit and avoiding a U.S. default. If this blackmail succeeds, it will put a further drag on an already weak economy. Meanwhile, a loud chorus is demanding that the Fed and its counterparts abroad raise interest rates to head off an alleged inflationary threat. As the New York Fed article points out, the rise in consumer price inflation over the past few months — which is already showing signs of tailing off — reflected temporary factors, and underlying inflation remains low. And smart economists like Mr. Eggerstsson understand this. But the European Central Bank is already raising rates, and the Fed is under pressure to do the same. Further attempts to help the economy expand seem out of the question. So the mistake of 2010 may yet be followed by an even bigger mistake. Even if that doesn’t happen, however, the fact is that the policy response to the crisis was and remains vastly inadequate. Those who refuse to learn from history are condemned to repeat it; we did, and we are. What we’re experiencing may not be a full replay of the Great Depression, but that’s little consolation for the millions of American families suffering from a slump that just goes on and on.
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#9. To: Capitalist Eric (#7)
(Edited)
Knock off the BS noise and stick to the article, Erica. I don't need your asshole comments about banksters and other crap. Why do you believe that Krugman was incorrect when he said that the stim was not big enough? The crap above is crap I can read in any of your posts. Stick to the issue. When you feel like offering up an actual argument rather than the same frothy mouth end of the world BS that you've been spurting on the internet for 15 years, PING me. Until then, don't bother.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Krugman is an editorial page contributor to the Times. He's syndicated and published elsewhere. In other words, take your Sean Hannity talking point and stick it.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." And is that supposed to impress me into believing what he says..... not....
"I love the 45 caliber M1911, I respect the 9MM M9 Beretta but I only carry a CZ for my own personal protection". Quote courtesy of Lt Col John Dean Cooper, recognized as the Father of Modern Handgunning
America was a closed economy in the 1930s and the government didn't owe trillions of dollars in debt to foreign countries. The Keynesian idiots whose heads are stuck in the 1930s just don't understand that the world has changed.
Of course, you can't cite a cogent reason WHY you don't believe him - even though what he predicted 2 years ago has come true.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Do you believe that monetary flows are more efficient or less efficient now? If you say "less" you're more stupid than I have previously pointed out. Do you believe that it MATTERS who holds the debt?
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Actually, America has been the world's largest trading partner going back to the late 19th century. They tried to close it and semi-did but it was for a very brief period.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." International trade was tiny in the 19th century compared to today. Smoot Hawley shut most trade down in the early 1930s.
Yep, money can very easily flee a country today when a government acts irresponsibly. That's part of my point bozo.
Keynesian economics 101: Wages are "sticky" downwards. In a recession, people won't voluntarily take wage cuts to clear the market price for labor so that businesses will start hiring again. So, people have to be fooled into taking a pay cut through inflation. Prices go up, wages stay the same -- a pay cut has occurred. The market price clears and businesses start hiring again. That's Keynesian economics in a nutshell. Two problems: 1.) This model stopped working in the 1970s because people started expecting inflation and demanded automatic cost of living increases in their union contracts, etc. 2.) The government owes a tremendous debt to foreign countries. Creating inflation to lower real wages in the U.S. also lowers the value of the debt held by foreigners, which makes it harder for the government to borrow more money. There are many more problems with Keynesian economics today than these, but this basically why it doesn't work anymore. There's an old adage that is very instructive here: You can fool some of the people some of the time, but you can't fool all of the people all of the time. The people stopped being fooled by the Keynesian inflation scam in the 1970s.
More Communism! was the battle cry of the USSR right up to the end. If they'd only had enough, everything would've been peachy. /s
Obama's watch stopped on 24 May 2008, but he's been too busy smoking crack to notice.
The US was to Europe in the late 1800s what China is to us today.
It is our responsibility to protect that child once that child’s born too. When we start debating a budget, let’s make sure we don’t cut 100,000 vaccines. Let’s make sure we’ve got health insurance. We seem to worship what we cannot see, but as soon as that baby’s born, oh no, we don’t want to be intrusive. Texas is going to shrink government until it fits inside a women’s uterus. Senator Leticia Van de Putte
Economists know better, but the GOP is listening to the teahadist minority. Just today Boehner said that the jobs report was evidence that further spending cuts are needed, ignoring the fact that he claimed to have passed "historic" spending cuts not long ago - and the result is falling job growth. And then of course we had the extension of the Bush tax cuts plus additional tax cuts in December. Never let facts get in the way of ideology though.
"Thats because your basically and idiot." Romney says he will balance the budget in his first term, I can't to hear how. Even Ryan wouldn't balance it until 2019.
"Thats because your basically and idiot." Almost everyone I know took a pay cut in 2008. Keynesian approaches have never really been applied to this recession. The stimulus only spent about $300 billion on infrastructure, the rest went to tax cuts and aid to states. Now that state aid is done we're seeing big cuts in state spending and big cuts in state employment (the latest report showed another decline of 30,000 government workers. So what we've got now is that we just had "historic" federal spending cuts, earlier this year we passed another round of tax cuts. Governments across the U.S. are shrinking. And guess what, job growth is anemic. So the GOP answer is "more" spending cuts and tax cuts, right?
"Thats because your basically and idiot." You're blaming falling job growth on spending cuts?
Tag lines are gay.
Obama said he'd cut the deficit in half in his first term. That's not a defense of Romney, who is an idiot.
Tag lines are gay.
Cutting spending will slow the economy. Economics 101 - See U.S. 1937, UK 2011
"Thats because your basically and idiot." Take a look in the mirror, if you want to see what stupid REALLY looks like. It has been empirically proven- MANY TIMES- that more government interference in the market-place results in greater inefficiencies. Just look at Soviet Union, for a real-world example of a fully government-managed economy, and its results. Don't throw China into that mix, though- their economy is capitalistic, with a Communist government. Intermediate macroeconomics would have explained this to you, but it is abundantly clear that you don't understand basic econ, much less the intermediate or advanced levels. Oh, BTW, you never addressed my point- NO country or empire has ever propelled itself to lasting prosperity, by devaluing its own currency. (What we now call "quantitative easing.") Check-mate. :)
List of those unable to think: Bumper sticker on DwarF's car: Lol. DwarF is quite the moron...
List of those unable to think: Bumper sticker on DwarF's car: You ignorant libTURD cow, there is no possible similarity between the two. Except in the fetid and fevered bird like "brain" pan of the typical libTURD mouth breather. Did you even finish third grade?
Spoiled, stupid and ignorant, brain dead phuckwads, libTURD fools, tools, and idiots, are the real sickness; the messiah "king" obammy and his regime are only the symptoms.
Regardless... Smoot Hawley shut most trade down in the early 1930s. Both imports and exports were about 5% of GDP. Even after Smoot-Hawley, the US had the lowest or near lowest tariffs in the world. As a monetarist, per se, and knowing that recessions and depressions are monetary in nature, I discount Smoot Hawley as having any substantial impact.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Government spending and tax credits do not equate to communism. They don't equate to Socialism either. PING me in a few years when you've had a HS level course in "isms".
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Money is not fleeing the US. IN fact, the US bends over backwards via the tax code to accommodate these inflows. So, if that was your point it was...pointless.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." That the stimulus would be a failure because of where it was targeted? (A way to keep his union pals working for awhile longer so he could reap the benefits of their campaign contributions for 2012)... So did he say that???? We didn't need the stimulus, plain, pure and simple.... It didn't accomplish anything other than to put us more in debt, and help bribe his "Gangsta" buddies for their support....
"I love the 45 caliber M1911, I respect the 9MM M9 Beretta but I only carry a CZ for my own personal protection". Quote courtesy of Lt Col John Dean Cooper, recognized as the Father of Modern Handgunning
Inflation is not an indicator or a characteristic of a recession. Want to try again? What does occur during a recession is that people LOSE their jobs. Companies have a productivity baseline that, minimally, would have to be that the result of every dollar invested in production should equal a dollar of output. labor, being a cost of production, is the "easiest" to adjust. What Keynes would tell you, and which he states in his general theory, is that WAGES and PRICES should be subject to legislative controls rather than controlled through monetary policy. Had you made that argument as being a flaw in his General Theory you'd have agreement with me. Keynes saw inflation as a temporary dislocation that could be easily manipulated. He was wrong, of course. And while you do cite history correctly - Nixonomics - you take away the wrong lesson. The reason why the Keynesian model does not work is because the fiscal policy of the US government has been anti-Keynesian for the last 30 years. IN 1985/86, Keynes would have been demanding of Reagan that he stop spending and pay down debt. He would have been doing the same in the middle part of the last decade. Keynes was not an advocate of spend, spend, spend.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." It targeted consumers and public works projects. We didn't need the stimulus, plain, pure and simple.... We were in the depths of a recession that was on its way to being a Depression. It did a great job of stopping that almost in its tracks. The problem is that it did little else. Tax cuts, btw, are both stimulative AND put us into debt. I've never seen you argue against one.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Putting aide the aphoristic qualities of that statement, the goal of quantitative easing is not to devalue the currency but to fund an available capital pool. And if you want to see a currency devalue, watch what happens when the EU meltsdown.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." That the stimulus would be a failure because of where it was targeted? It targeted consumers and public works projects. Yea I remember all of those stupid road signs that said "This Road will be repaired using Stimulus money"..... Well the signs are now gone and the road is still the way it was before, no repairs, no repaving, no nothing.... "EXCEPT" the signs are gone, guess that's what the money was for to put up and take down signs..... phucking brilliant!!!!
"I love the 45 caliber M1911, I respect the 9MM M9 Beretta but I only carry a CZ for my own personal protection". Quote courtesy of Lt Col John Dean Cooper, recognized as the Father of Modern Handgunning
Ask the Japanese about stimulus plans, they did 8-10 of them and are still suffering to this day from that useless shit....
"I love the 45 caliber M1911, I respect the 9MM M9 Beretta but I only carry a CZ for my own personal protection". Quote courtesy of Lt Col John Dean Cooper, recognized as the Father of Modern Handgunning
I've never seen you argue against one. You won't because the debt is temporary..... if in conjuction with that you get rid of a lot of government rules and regulations that inhibit economic growth... Which is pretty much all the bureacracy the Dumbassocrats have dreamt up over the years, because they think we are all just too stupid to run our own lives..... (And they can't even run their own....... LOL.....)
"I love the 45 caliber M1911, I respect the 9MM M9 Beretta but I only carry a CZ for my own personal protection". Quote courtesy of Lt Col John Dean Cooper, recognized as the Father of Modern Handgunning
"EXCEPT" the signs are gone, guess that's what the money was for to put up and take down signs..... phucking brilliant!!!! Challenge.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Are you Obamas lover? You sound like a bitch protecting her man.
Have you been asleep since KempRoth? You cannot cut taxes that fall predominantly into the hands of 2% of taxpayers and expect to see any kind of significant return in revenues. As for your other GOP talking point, the US is very pro-business. I challenge you here and now to cite "rules and regulations" that put a significant damper on economic growth. I issued that challenge to Erica last year, btw, and his response was to throw a snit fit and pout me on bozo - so he claimed. I've also challenged pegler when he's mouthed that talking point. I'm still waiting for his answer.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." You can enjoy bozo for a while again while you unstick your needle.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." I worked for a Japanese company for 9 years. You can't stimulate an economy without giving incentive to spend money. All of their "stimulus" was to give incentive for foreign investments [capital outflow] and exports.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." I think I'm going to see if you are telling the truth. If so you get a timeout.
A timeout for what? You seem to have a napoleon complex. Are you shorter than six feet tall?
Why would you give a timeout for telling the truth?
It is our responsibility to protect that child once that child’s born too. When we start debating a budget, let’s make sure we don’t cut 100,000 vaccines. Let’s make sure we’ve got health insurance. We seem to worship what we cannot see, but as soon as that baby’s born, oh no, we don’t want to be intrusive. Texas is going to shrink government until it fits inside a women’s uterus. Senator Leticia Van de Putte
war received a 15 min timeout for bozoing the host.
See 48.
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Top • Page Up • Full Thread • Page Down • Bottom/LatestHis agenda is to start selling QE-3, 4, 5....N, i.e., money-printing, to further rob the middle-class, and line the pockets of his bankster backers.
--GW Bush
#10. To: CZ82 (#8)
--GW Bush
#11. To: war (#10)
Krugman is an editorial page contributor to the Times. He's syndicated and published elsewhere
#12. To: war (#0)
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#13. To: CZ82 (#11)
--GW Bush
#14. To: jwpegler (#12)
(Edited)
The Keynesian idiots whose heads are stuck in the 1930s just don't understand that the world has changed.
--GW Bush
#15. To: jwpegler (#12)
America was a closed economy in the 1930s
--GW Bush
#16. To: war (#15)
(Edited)
America has been the world's largest trading partner going back to the late 19th century.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#17. To: war (#14)
Do you believe that monetary flows are more efficient or less efficient now?
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#18. To: war (#13)
(Edited)
Of course, you can't cite a cogent reason WHY you don't believe him
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#19. To: Capitalist Eric (#7)
Obama stimulus was enacted, some of us warned that it was both too small and too short-lived
"We (government) need to do a lot less, a lot sooner" ~Ron Paul
#20. To: war (#15)
Actually, America has been the world's largest trading partner going back to the late 19th century.
#21. To: war (#0)
Mr. Eggertsson says no, that economists now know better
Badeye posted on 2011-04-29 10:30:22 ET
#22. To: war (#3)
So far the GOP plan for 2013 is to take away health care, unemployment benefits, medicare, more tax cuts for the wealthy and a default on debt.
Badeye posted on 2011-04-29 10:30:22 ET
#23. To: jwpegler (#18)
There are many more problems with Keynesian economics today than these, but this basically why it doesn't work anymore.
Badeye posted on 2011-04-29 10:30:22 ET
#24. To: go65 (#21)
Just today Boehner said that the jobs report was evidence that further spending cuts are needed, ignoring the fact that he claimed to have passed "historic" spending cuts not long ago - and the result is falling job growth.
#25. To: go65 (#22)
Romney says he will balance the budget in his first term, I can't to hear how.
#26. To: We The People (#24)
You're blaming falling job growth on spending cuts?
Badeye posted on 2011-04-29 10:30:22 ET
#27. To: war (#14)
Do you believe that monetary flows are more efficient or less efficient now? If you say "less" you're more stupid than I have previously pointed out.
mcgowanjm, ferret mike, skippy, fartboy/yukko, white sands, bucky, lucys idiot mom, e_type_jackoff, go56, badlie, wreck, calCON, mininggold, war, Banjo Boris, Biff, Godwinson and meguro. If you're on the above list, you're too fucking stupid to hold a real conversation.
#28. To: hondo68 (#19)
mcgowanjm, ferret mike, skippy, fartboy/yukko, white sands, bucky, lucys idiot mom, e_type_jackoff, go56, badlie, wreck, calCON, mininggold, war, Banjo Boris, Biff, Godwinson and meguro. If you're on the above list, you're too fucking stupid to hold a real conversation.
#29. To: lucysmom (#20)
The US was to Europe in the late 1800s what China is to us today.
#30. To: jwpegler (#16)
International trade was tiny in the 19th century compared to today.
--GW Bush
#31. To: hondo68 (#19)
(Edited)
More Communism! was the battle cry of the USSR right up to the end.
--GW Bush
#32. To: jwpegler (#17)
(Edited)
Yep, money can very easily flee a country today when a government acts irresponsibly.
--GW Bush
#33. To: war (#13)
Of course, you can't cite a cogent reason WHY you don't believe him - even though what he predicted 2 years ago has come true.
#34. To: jwpegler (#18)
Wages are "sticky" downwards. In a recession, people won't voluntarily take wage cuts to clear the market price for labor so that businesses will start hiring again. So, people have to be fooled into taking a pay cut through inflation. Prices go up, wages stay the same -- a pay cut has occurred. The market price clears and businesses start hiring again.
--GW Bush
#35. To: CZ82 (#33)
That the stimulus would be a failure because of where it was targeted?
--GW Bush
#36. To: Capitalist Eric (#27)
Oh, BTW, you never addressed my point- NO country or empire has ever propelled itself to lasting prosperity, by devaluing its own currency. (What we now call "quantitative easing.")
--GW Bush
#37. To: war (#35)
#38. To: war (#35)
We were in the depths of a recession that was on its way to being a Depression. It did a great job of stopping that almost in its tracks. The problem is that it did little else.
#39. To: war (#35)
Tax cuts, btw, are both stimulative AND put us into debt.
#40. To: CZ82 (#37)
Yea I remember all of those stupid road signs that said "This Road will be repaired using Stimulus money"..... Well the signs are now gone and the road is still the way it was before, no repairs, no repaving, no nothing....
--GW Bush
#41. To: war (#35)
#42. To: CZ82 (#39)
You won't because the debt is temporary.....
--GW Bush
#43. To: A K A Stone (#41)
--GW Bush
#44. To: CZ82 (#38)
Ask the Japanese about stimulus plans
--GW Bush
#45. To: war (#43)
#46. To: A K A Stone (#45)
#47. To: A K A Stone (#45)
I think I'm going to see if you are telling the truth. If so you get a timeout.
#48. To: Fred Mertz (#46)
#49. To: lucysmom (#47)
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