Paul Krugman's War on Austerity [Spend Baby Spend]

TIME ^ | 11 June 11 2010 | Stephen Gandel

[Lorianne]

At a time when most people are saying the path out of the financial crisis and European debt problem is for individuals and governments around the world to cut back, Paul Krugman wants us to spend, spend, spend.

So how much we spend on supporting the economy in 2010 and 2011 is almost irrelevant to the fundamental budget picture. Why, then, are Very Serious People demanding immediate fiscal austerity?

The answer is, to reassure the markets — because the markets supposedly won't believe in the willingness of governments to engage in long-run fiscal reform unless they inflict pointless pain right now. To repeat: the whole argument rests on the presumption that markets will turn on us unless we demonstrate a willingness to suffer, even though that suffering serves no purpose.

Krugman has of course been calling for additional stimulus spending for a while. So it may be easy to dismiss Krugman as a liberal who, despite his Nobel, is no longer in touch with economics. But he's not the only one calling for more spending.

[oyez]

That would probably make good sense to Krugman, as he makes enough money for being worthless.

[Parley Baer]

“Krugman as a liberal who, despite his Nobel, is no longer in touch with economics. But he’s not the only one calling for more spending.”

No, Krugman is not alone. Obama and most of the dimoKKKRAT party want to and are increasing spending.

[Wpin]

This doesn’t even make sense...explain how increasing the deficit and debt/taxes can improve the economy at this point? I say the debt will be crowding out other investment and causing interest rates to climb, exasperating the problem as well as pulling money out of the private sector to pay the ever increasing interest payments which will really slow the economy down. Raising taxes will also take money out of the private sector which will also slow the economy down. We have lived through these same mistakes before, this is not new to economic science. Milton Friedman was awarded his Nobel for exactly this subject. Krugman, who is now a political hack...not an economist, won his for import/export studies.

[Oceander]

Krugmann is an a$$ who ought to be charged with committing, or with soliciting, treason.

The simple fact of the matter is, he put all of his intellectual capital behind the "stimulus" spending binge we just went through - and that failed - thus, he has nothing left to argue with - he's a failure, because he preferred to waste his intellectual capital trying to push erroneous ideological policies, and should therefore not be heard from on the subject any more.

[Tolsti2]

Check out the comments on there. There’s basically people saying that federal spending costs nothing, ever. They’re saying that it’s only a positive so no matter what is spent it can’t be bad, unless it’s not enough.

[DaxtonBrown]

If I told you at the point of a gun to take a money advance on your credit card, hock your car and mortgage your house to buy a tractor trailor of worthless rubber widgets because your family’s economic velocity index would be higher, you’d say I was certifiably nuts.

In contrast, if Paul Krugman tells us to waste another trillion because we will be better off, he is called a genius. Buying worthless crap can not magically improve an economy.

The paradox of savings only works on the margin, not when everyone knows you are running a hundred trillion dollar ponzi scheme with only helium to support it.

[tumblindice]

You can never be too rich, too thin or have too much ammo taking up space in your gunsafe and closet.
BLOAT

[ChiMark]

Krugman is a left wing syncophant. Logic, truth is not
what drives the left.

[sickoflibs]

Save this one for the future!

[sickoflibs]

RE :”Yes, the bond market should tell us everything. You have to believe it tells us something. National economies are very large. And they can turn around very quickly. It's not like our own personal economics. Getting out of credit card debt is very tough. Our incomes down change very much, and our spending patterns are ingrained in who we are. The US economy does surprising things. Who knew that Clinton was going to be able to get us into a surplus situation. Who would have guess that Bush would have been able to screw that up so quickly. And what about the financial crisis. Economies are very hard to predict. Interest rates even more so. So policy makers should go with what they know. We don't know what our current deficits will mean for our children or even interest rates a year from now. We do know that people are unemployed and suffering financially. I say go with that.”

Blow our children's and grandchildren's future now ping! Mark Time magazine down as recommending national suicide!

[Travis McGee]

Krugman, like his master Keynes, votes for "later."

But Keynes's "long run" has arrived. Later is now.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

-~~Ludwig Von Mises

[Minn]

Who knew that Clinton was going to be able to get us into a surplus situation. Who would have guess that Bush would have been able to screw that up so quickly.

Good thing the author is so even handed takes all relevant facts into consideration before making inflammatory pronouncements.

[Minn]

A good laugh from some moron in the comments section:

The sad truth is even worse than balancing the budget on the backs of seniors. Taxes do not pay for federal spending. FICA does not pay for Social Security. The government pays its bills simply by crediting the bank accounts of creditors, then debiting its own balance sheet. It can do this endlessly, whether or not taxes are collected. FICA can and should be eliminated and still there would not be one good reason to reduce Social Security benefits. See: Ten Reasons To Eliminate FICA There is no relationship between federal taxes and federal spending. None. That balance sheet debit, erroneously called "federal debt," merely is a record of the net money created by the government. Taxes reduce it; spending increases it. But federal spending is not in any way constrained by that number. Anthropomorphic economics -- the belief that the federal government is like you an me -- has caused more human misery than all the wars in history. Rodger Malcolm Mitchell ------------------------------

What trouble? Will the federal government be unable to create the money to service its bonds? No, the money-creation power of a monetarily sovereign nation is unlimited.

Will other nations refuse to lend to us? Who cares? As a monetarily sovereign nation, we don't even need to borrow. T-bills are a relic of gold standard days.

Will interest rates go sky high? No, the Fed has absolute control over interest rates.

So what is the problem, here? There are two problems. One, lack of recognition that as a monetarily sovereign nation, the U.S. is different from, for instance, Greece and the other EU nations.

And two, anthropomorphic economics -- the lack of recognition the U.S. is different from you and me. For people, borrowing can lead to bankruptcy. Not so for a monetarily sovereign nation. We folk have to acquire money before we spend money. No so the U.S., which creates money by spending money.

The notion that our children and grandchildren will pay for today's debts is utter nonsense (See: CHILDREN ). Taxes do not pay for federal spending, past or future.

Clinton's beloved surplus actually caused the recession of 2001. No surprise. Almost all recessions and depressions follow surpluses or reductions in federal debt growth, and all recoveries come with increases in federal debt growth. Coincidence?

Today's economists are like the doctors who prescribed leeches for anemia. The "cure" actually exacerbates the illness. And though these prophets' predictions never come true, they just keep on making exactly the same predictions, learning nothing from history. And the people just keep on believing.

And that is why we have a recession on average, once every five years.

Rodger Malcolm Mitchell

[rbosque]

“Animal spirits” are nothing but phantoms; and this Keynesian resurgence is nothing but the recycling of ideas that don’t work.

[DontTreadOnMe2009]

I hate Paul Krugman, hypocrite and liar

and I hate Time magazine, taken over by hypocrites and liars.

[Lorianne]

I know.
It’s insanity, but that seems to be the prevailing ‘wisdom’.

God help us (but I wouldn’t blame him if he doesn’t).

[webstersII]

The only reason this loon gets any press time or respect at all is because he is the mouthpiece for most of the politicians in this country.

Spend, baby, spend. They are like addicts. And then they use the resulting economic crisis as an excuse to pass laws which give them more and more power.