Quote of the day—Paul Krugman

Fortunately, physicians no longer believe that bleeding the sick will make them healthy. Unfortunately, many of the makers of economic policy still do.

Paul Krugman
September 19, 2011
Decline in manufacturing capacity is probably only the beginning of the bad new: Paul Krugman
[He is apparently oblivious to the irony as he goes on to say, even though the U.S. Government is broke, “For the time being we need more, not less, government spending, supported by aggressively expansionary policies from the Federal Reserve and its counterparts abroad.”

Krugman believes that budget austerity is the equivalent of “bleeding the patient” when sane people would recognize it as reducing the hemorrhaging. One has to wonder if Krugman is practicing doublethink, doublespeak, or both. In any case he has crap for brains if he thinks the majority of the people will believe him.—Joe]

14 thoughts on “Quote of the day—Paul Krugman

  1. But, but, but… HE’S got a NOBEL Prize! He Must be right, RIGHT?!

    It must be double-think, or just plain old insanity / senility, because he has been contradicting much of his older previous writing recently, sometimes from a few years ago, sometimes from way back in the previous paragraph, depending on who was doing what when, so he can always say it was the Republican’s fault.

  2. Considering that money is an artificial construct, the idea that the “government is broke” is even dumber than what he is saying.

  3. Sometimes it seems like rationality will burst into the cult of Keynes like a ray of sunlight. Other times the drumbeat of “more stimulus” whacks that hope in the side of the checkbook like a two by four. All in all, I wish I had more “artificial construct” to spend on gold 😉

  4. I would think that if we are positing that the economy is the sick patient then the equivalent to bleeding would be to increase taxes and burn/throw the money away.

  5. @ubu52, If the government cannot be broke then why doesn’t it just pay everyone a million dollars a year so we could all live happily ever after? Money does have value. It represents the work product of the people who earned it. If those printing the money try to spend more than the work put into the system they are spending money they don’t have and are “broke”.

    @PT, Yes. I know. And it may have been effective for even more diseases (many infections thrive in iron rich environments and are stressed or die in iron poor environments). But it’s a useful analogy even if it does have it’s flaws.

  6. Krugman is a genius, he’s predicted seven of the last three recessions.

    My favorite Krugman story is where Krugman wrote an editorial expressing surprise that anyone would dare criticize extensions of unemployment benefits by claiming that unemployment compensation disincentivizes people from seeking employment. What a ridiculous notion that no sane person would express! James Taranto then found an economics textbook that stated that very idea … authored by Paul Krugman.

  7. Ubu, ask yourself this:

    if King Midas could find a way to control his ‘turn things to gold’ touch, so that he could eat non-gold stuff, and make love to a non-gold wife, would he have ended up any richer than he was before he got the Midas Touch?

    He would have the ability to turn gold into a common thing, and inflate its value into something approximately equal to lead.

    The monetary value of gold is an abstraction, but not in quite the same sense as the monetary value of Federal Reserve Notes (or numbers on a bank-account statement, representative of values stored in the bank’s database).

    Gold has some use in electronics. However, most people through most of history have valued gold in a way that made it usable as money, long before its electrical properties were discovered. One of the properties important in the use of gold as money is the fact that it is rare.

    If Midas had been able to create gold out of anything, he would have been able to remove the ‘rare’ part of gold’s value.

    The Government has the ability to increase the number of dollars in circulation, is analogous to Midas being able to turn lead (or other common things) into gold. That doesn’t mean that this will increase the wealth that is represented by the abstraction. It does mean that the value of the abstraction can decrease.

    Money is an abstraction controlled by governments. That doesn’t mean that the government cannot go bankrupt.

  8. It is also worthy of note that gold is difficult, expensive and time-consuming to mine. Thus the money supply increase due to mining is largely offset by the economic costs that go into the mining operations (as opposed to spending that money to do something else). Printed money costs almost nothing to produce, so there is essentially no opportunity cost to doing it–the value of the currency simply goes down commensurately with the amount printed.

  9. You can’t eat an artificial construct (for nutritional value) but if you have wheelbarrows of it you can buy some bread or potatos…and burn it for heat in the winter.

  10. We’ve tried spending our way out before and it failed then, too. Henry Morganthau, Jr. was Roosevelt’s Secretary of Treasury, “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot.”

    And, while he advocated higher taxes on the wealthy, meaning himself, he also was convinced that the federal government needed to end deficit spending, as he put it, “return to fiscal sanity”.

  11. The only reason our monetary system is “artificially constructed” is that it’s controlled by Government entities who think that they can get things “right”. As the Federal Reserve has proven, it can do *nothing* to prevent business cycles. If anything, the Federal Reserve has made them worse. So long as we believe the stupid myth that artificially low interest rates will stimulate the economy (they do, but only until the bubble bursts), we will always have problems with business cycles.

    I would much prefer that government just get out of the money business altogether, and let us, as individuals, figure out what works best for money. It will most likely be gold and silver, with possibly copper thrown in for good measure.

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