One of things that struck me very early on in my following of Krugman is his counter-intuitive embrace of inflation. Like most of the world I think, I had always assumed that inflation was always evil and the lower the better. Krugman however believes some inflation is good and necessary especially when an economy is in recession. One of his reasons is that it allows debts to reduced automatically since a future dollar (or euro) would worth less than one that is borrowed today. For people who are hugely indebted, unfairly in his opinion (think US sub-prime homeowners or Europeans economies which grew to fast due to German's pushing exports), this allows them to get back to normal spending quicker in order to get economies growing again.
Krugman also has a post where he explains (or should I say shouts!) that he has been right for five years now that stimulus spending and expansion of the money supply would not lead to inflation. He points out two Fed presidents who have admitted they have been on the wrong side of the argument and then ponders why this has not led to more pronouncements from other individuals who have been very wrong about inflation.
Nov 7, 2013
Oct 18, 2013
Niall shoots one over the bow towards Krugman
Niall Ferguson has a couple long posts where he takes apart Krugman. Basically he calls out Krugman for saying he has only been wrong two times. Niall proceeds to explain in great detail how Krugman said the break-up of the Euro was imminent but yet it has still not happened. Niall wonders why Krugman fails to acknowledge this since this is arguably the biggest issue in international economics in the past 5 years.
Niall then moves on to call out Krugman for not predicting the 2008 financial crisis while Niall gives proof that he/himself did. He then gives a couple examples of Krugman's smugness and impoliteness. He can't believe Krugman has the gall to claim to be right about the importance of stimulus spending when his other predictions did not pan out so why should people believe him?
Niall finishes up his piece by saying that Krugman's lack of civility hurts the economic discourse because people are afraid to oppose him. He published his piece to show how wrong Krugman has been so others can feel safe bring arguments that counter Krugman.
Krugman's response to all this is that he would never respond. I assume that is because he doesn't have any respect for Niall but he really doesn't explain. This is especially surprising since Krugman has gone out of his way previously to call out Niall. Very strange, maybe Niall is onto something?
Niall then moves on to call out Krugman for not predicting the 2008 financial crisis while Niall gives proof that he/himself did. He then gives a couple examples of Krugman's smugness and impoliteness. He can't believe Krugman has the gall to claim to be right about the importance of stimulus spending when his other predictions did not pan out so why should people believe him?
Niall finishes up his piece by saying that Krugman's lack of civility hurts the economic discourse because people are afraid to oppose him. He published his piece to show how wrong Krugman has been so others can feel safe bring arguments that counter Krugman.
Krugman's response to all this is that he would never respond. I assume that is because he doesn't have any respect for Niall but he really doesn't explain. This is especially surprising since Krugman has gone out of his way previously to call out Niall. Very strange, maybe Niall is onto something?
Oct 16, 2013
Contratry to what they think - Republicans don't have new ideas, Obamacare will not give the Republicans victory, you don't need a fancy degree to have influence, and five years of low interest rates and no change in policy
Krugman was on This Week with George Stephanopoulos and couldn't believe that Peggy Noonan said that the Republicans are the party of ideas. Krugman wonders what examples there are of new ideas since if it is Medicare and slashing tax rates for the rich - then those come from Newt!
Krugman also finds someone who is happy with the health-care exchanges. He is surprised the Obama administration messed up the web-site programming but says this will get fixed and most importantly there is no way the Republicans will be able to run against it next year since it will be popular.
Krugman makes it clear he doesn't much care for academic prestige if the person is an idiot or fool. If you don't have fancy degrees but your ideas and work are sound then you will get respect. The degree and reputation will still give you a larger audience but you had better still have good quality work.
Krugman is pointing out that we are coming up the 5 year anniversary of interest rates bottoming out. This, he explains, has enormous implications that policy makers have not grasped. Namely that since you can't force interest rates lower than zero than other fiscal solutions must be tried to try and get the economy growing again. But these other solutions (higher stimulus spending) are not being tried.
Krugman also finds someone who is happy with the health-care exchanges. He is surprised the Obama administration messed up the web-site programming but says this will get fixed and most importantly there is no way the Republicans will be able to run against it next year since it will be popular.
Krugman makes it clear he doesn't much care for academic prestige if the person is an idiot or fool. If you don't have fancy degrees but your ideas and work are sound then you will get respect. The degree and reputation will still give you a larger audience but you had better still have good quality work.
Krugman is pointing out that we are coming up the 5 year anniversary of interest rates bottoming out. This, he explains, has enormous implications that policy makers have not grasped. Namely that since you can't force interest rates lower than zero than other fiscal solutions must be tried to try and get the economy growing again. But these other solutions (higher stimulus spending) are not being tried.
Oct 4, 2013
Krugman came right out and says it - Republican leadership is 'stupid'
Krugman flat out calls Boehner and Cantor stupid for backing themselves into a corner on the shut down/debt ceiling. He says Obama won't back down, his cave-in over the debt ceiling in 2011 was his worst decision, and he won't repeat that again according to Krugman. Boehner and Cantor are stupid because they know Obama won't give ground and Obama is winning this politically so there is no way Boehner and Cantor can come out of this positively. Krugman's 'stupid' remark is quite noteworthy since he says he never believed George W Bush nor his advisers were stupid just 'incurious' and 'dishonest'.
Krugman ends the post very concerned since he thinks the country / world may pay the price for this stupidity since it could lead to a default.
Krugman ends the post very concerned since he thinks the country / world may pay the price for this stupidity since it could lead to a default.
Shutdown, Debt Ceiling, Obamacare, and a new look???
Krugman explains that the biggest worry is not the shutdown but hitting the debt ceiling. He uses the phrase "God help us all". He mentions that he would not be surprised if we get right to the edge and perhaps there is a free pass that the lawyers know about but if not - it will not be pretty.
Krugman talks about how Obamacare will be popular because of the glitches since since so many people were trying to sign up. This has got the Republicans panicking because now they know they won't be able to repeal it.
Also for fun - seems Krugman has lost some weight -- maybe he thinking of running for office???
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Aug 31, 2013
This is funny and why Asia recovered relatively quickly in '98 and Europe has not
Krugman highlights that the NYT blog Economix is the 2nd most influential econ blog in the world - then when you click on the link you discover who is the most.... shocker, huh?!?
Krugman also explains how Asia recovered quicker from the Asian crisis in the late '90's because they had their own currencies while Europe is taking a lot longer to recover. This is because Europe is tied to one common currency so the poorer countries have less flexibility to make their economies more competitive. This is also a good segue way to Krug's other recent post on how he was a Euro-skeptic from the inception in the early '90's.
Krugman also explains how Asia recovered quicker from the Asian crisis in the late '90's because they had their own currencies while Europe is taking a lot longer to recover. This is because Europe is tied to one common currency so the poorer countries have less flexibility to make their economies more competitive. This is also a good segue way to Krug's other recent post on how he was a Euro-skeptic from the inception in the early '90's.
Aug 21, 2013
Healthcare and Yellen
Krugman is having a field day bashing the Republicans over healthcare. He firmly believes it will be a raging success and hurt Republicans for years since they did not support it and are actively fighting its implementation. He is especially angry that they have the nerve to try and prevent its implementation through not funding parts of it - he wonders how this can happen since it passed Congress and was signed into law. His other main point is that of course some people's cost will go up since you have to cover and get premiums from healthy, young people - that is the only way to make full coverage of population work. He feels it is disingenuous of Republicans to criticize this if they really believe people have a right to some form of health insurance.
In the drama over the new Federal Reserve chair - Krugman is a big supporter of Janet Yellen over Lawrence Summers. Krugman explains that Yellen has been right numerous times over the past decade in terms of economic insight and forecasting. Summers on the other side has been too cautious and was a key architect in the Obama administration's stimulus package in 2009 that was too small and weak. He faults Obama for pushing Summers saying in essence he just wants a buddy in the position. Of course this is a big problem since the Fed chair should be independent.
In the drama over the new Federal Reserve chair - Krugman is a big supporter of Janet Yellen over Lawrence Summers. Krugman explains that Yellen has been right numerous times over the past decade in terms of economic insight and forecasting. Summers on the other side has been too cautious and was a key architect in the Obama administration's stimulus package in 2009 that was too small and weak. He faults Obama for pushing Summers saying in essence he just wants a buddy in the position. Of course this is a big problem since the Fed chair should be independent.
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