a)
loves libraries, Civil War history,
singer/songwriter types, and science fiction with a tinge of econ
b)
is gleeful that a right-wing think tank is
associated with a white supremacist and goes on to explain the think-tank is
not really serious – it just puts out bull$%#
c)
Because the European central bank has promised
to support governments with unlimited money bad times in Europe have not gotten
worse. It was not because of austerity.
d)
Things are getting better in Japan because of basically
his idea that the government has promised to print a lot more money
e)
Defending Ben Bernanke against very mad hedge
fund traders. They are mad at Ben since
bond prices are very strong and they believe they should fall but Krugman says
hey you hedge funders, you should have realized they we are in a one in a
million crisis so things won’t work out as you always expected.
f)
He’s very proud of himself for thinking that the
liquidity trap phenomenon has been relevant for this crisis, matter of fact
when some referred to liquid trap as ‘textbook’ he was like – what textbook is
that --- I (Krug) wrote the only textbook that mentioned it before this whole
crisis.
g)
Pegged a 8k+ word essay/book review at the New
York Review of Book on his whole approach to the crisis with some economic
history thrown in. Hmmm, maybe this is
why he had no column on Monday. Relatively short synopsis:
a. 2
academic papers were written that provided proponents of austerity (austerians)
the intellectual cover to cut government spending
b. These
papers were proved wrong
c. Why
did important people believe these papers?
d. Answer
is in the history of the crisis
e. 2008
was start of the crisis due to bursting of the housing bubble
f.
Bubble burst because sub-prime mortgage market collapsed
g. This
caused a crisis since now people needed to pay down their debts at the same
time – which meant no one was spending
h. Lessons
learned for the ‘30’s meant no depression because of more social welfare
programs which automatically pumped money into the economy
i.
Stimulus in 2008 and 2009 also helped but there
were too small and too short compared to size of the economy
j.
In 2010 governments suddenly pivoted from
stimulus to austerity
k. They
did this since the crisis seemed somewhat over the worst, German government and
Republicans never believed in government spending, and there were the
aforementioned academic papers which warned of high government debt.
l.
Also the Greek crisis happened which seemed to
highlight to the austerians the dangers of high government spending
m. Austerians
claimed that by cutting government spending people would have renewed
confidence and growth would return.
These beliefs held sway over policy makers.
n. Since
2010 there has been emphasis on austerity but no recovery.
o. Why
then did people listen to austerity policies and not classical economics?
p. Classical
economics says that crisis’ are not because bad people (we are spending too
much before so there must be pain now) but because of a technical malfunction in
the economy.
q. Wealthy
people have not been hurt as much from the non-recovery that has kept interest
rates low and no inflation – they are the creditors or people who give out
loans since they are more likely to get paid in full and not have the value of
the loans reduced through inflation.
r.
This has been terrible since many, many people
have needlessly suffered and we had the tools to fight the crisis and have a
quicker recovery. We just choose not to
use them.
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