You Should Read Paul Krugman On The Emerging-Market Turmoil

BI ^ | 2-2-2-14 | Joe Weisenthal

[blam]

You Should Read Paul Krugman On The Emerging-Market Turmoil

Joe Weisenthal
Febuarary 2, 2014

Paul Krugman weighed in this week on the turmoil in emerging markets.

He connected the turmoil to weak economic performance in developed markets, and the mad rush by investors to seek return anywhere they can get it. What we're seeing now is the downside of that — basically the argument is that Turkey (et al) are like subprime, and that they represented a search for returns in an economic environment that was very poor. Now that's blowing up.

(snip)

[blam]

"If investors are being cautious and prudent, we are collectively, in effect, trying to spend less than our income, and since my spending is your income and your spending is my income, the result is a persistent slump".

Deflationary.

[Dalberg-Acton]

Paul Krugman? No.

[palmer]

Krugman loves to prattle about how money printing is not inflationary. It is true that printing money and giving it to large banks and politicians to give to their campaign contributors will not instantly lead to higher prices. For some price inxreases we have to wait for the "minimum" wage (really a wage index) increase and increasing government handouts.

The inflation psychology has been managed through some price manipulation but mainly the decline in purchasing power aside from the mostly useless gadgetry we pick up at cheaper prices. The monthly data plans and credit payments consume the rest of disposable income.

We export a lot of inflation to countries like China who want to build up their industry (and military). Sooner or later they will draw the line and demand actual payment, not IOUs and that is when inflation will ht here all at once.

[mulligan]

Why would anyone read the ravings of an idiot.

[VRW Conspirator]

Paul who?

[BfloGuy]

Deflationary.

Deflation is a benefit to the consumer if it is a result of markets -- it means the currency's purchasing power is increasing.

Deflation is only dangerous when it results from government-sponsored central banks yanking the rug [or hinting at yanking the rug] out from under the easy-credit they created in the first place.

Krugman, in his Keynesian-drenched delirium, is incapable of understanding the difference.