Dear Paul Krugman: Enough Already!

Thanks to Paul Krugman, my life is starting to resemble Groundhog Day. Essentially, every morning, when I pull up the New York Times on my BlackBerry, right after opening my eyes, I find myself reading the same article, from the same person, day in and day out -- just like Bill Murray found himself reliving the same terrible day over and over again.

Meet Punxsutawney Paul
The source of this madness, of course, is Paul Krugman, an intensely left-wing economist who seems convinced of his own omniscience. Lately, Krugman has been spouting off about what he thinks are the very specific reasons that fiscal stimulus failed, why Democrats are blowing it, and why Republicans are the largest entity standing between Americans and a decently healthy economy. And he's been doing this quite a lot.

Here are just a few snippets from his recent articles:

Article

Date

Quote

"Falling Into the Chasm" 10/24/10 "America needed a much stronger program than what it actually got... This isn't 20-20 hindsight: the inadequacy of the stimulus was obvious from the beginning….What we do know is that the inadequacy of the stimulus has been a political catastrophe."
"British Fashion Victims" 10/21/10 "[P]remature fiscal austerity will lead to a renewed economic slump."
"Hey, Small Spender" 10/10/10 "[T]hat has been the key problem with economic policy in the Obama years: we never had the kind of fiscal expansion that might have created the millions of jobs we need."
"The End of the Tunnel" 10/07/10 "When people ask why the Obama stimulus didn't accomplish more, one good response is to ask, what stimulus?"
"Things Could Be Worse" 9/09/10 "If the Republicans go beyond obstruction to actually setting policy…we'll be on our way to economic performance that makes Japan look like the promised land."
"This Is Not a Recovery" 8/26/10 "In the case of the Obama administration, officials seem loath to admit that the original stimulus was too small."

There are a few problems here that I'd like to confront. First, I'm getting pretty tired of reading the same article over and over again. Mr. Krugman, please try a fresh angle.

Second (and far more significantly), while I fully believe that everybody is entitled to their own opinion, I, like most rational observers, also believe that no one can possibly know everything there is to know about something as complex as the U.S. economy.

Overconfidence in action
While Krugman is more qualified than most to provide commentary on the subject (at least, he is if you're swayed by a long career spent in classrooms), he seems to lack the basic intellectual humility necessary for effective thinking and writing.

No one -- even economists -- fully understands how a complex, adaptive system like the U.S. economy really works. Yet that's precisely what Krugman is selling here with his excessively definitive stance on the issue.

How many times do we need to be burned by economists (of any political stripe) and their lousy, confidence-laden predictions to learn that economists don't really know what they're talking about? How is it possible that Krugman can analyze the same economic history everyone else is looking at and come to the right conclusion, while everyone else is dead wrong?

Answer: It's not a science
The answer lies in the core of what an economist really studies. A science, by definition, is a body of knowledge that can provide the requisite conditions to replicate certain results repeatedly. If I mix two vials of this green stuff with one vial of the blue stuff, I know I'll get three vials of purple stuff … and so forth. But that isn't how economic theory works. If anything, economics is a pseudo-science that offers results that are only occasionally predictable, but never certain.

A true scientific understanding of the economy would require the ability to read the future. Krugman can't do so. He may know more about what has worked in the past (which might be helpful if the past were always like the future), but his guess is as good as mine when it comes to predicting the next five years, five months, or five days.

This is precisely what makes the existence of someone like Krugman particularly dangerous. He has the name, the brand, and the resume to sound like a credible authority on tea-leaf reading. He has the confidence and the knowledge to write convincingly on the subject, too. And he clearly has a conduit via the New York Times. But he obviously lacks the modesty to understand that even the most cogent of economic analysis is problematic, at best.

End this waking nightmare
I'm not an economist; I'm an investor. I couldn't really care less about whether the Obama administration is following the righteous, economic path to prosperity or not (mostly because I don't know what that path is -- and I know that nobody else does, either). My primary mission is to try to figure out ways to make money based on the probabilistic outcome of certain events.

Krugman undoubtedly doesn't supply that kind of knowledge. Instead, he seems solely concerned with banging his head on a table, trying to convince the world that his particular brand of economic policy is the right kind. My best counsel is to be careful incorporating his advice into your own. His guess is, after all, just as good as yours.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool Nick Kapur is looking for something new to read in the morning. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 26, 2010, at 11:21 AM, TMFHousel wrote:

    Solid, Nick.

  • Report this Comment On October 26, 2010, at 11:45 AM, naandrews wrote:

    Nick, I appreciate your article here, but as someone who has read Paul Krugman, including the articles you list here, I don't think you were fair to him; it felt more like a personal attack on him than anything else.

    A fairer, better article on your part, in my humble opinion, would have been to analyze, and then debunk, his main arguments. So, for instance, Krugman says the stimulus wasn't strong enough. Ok, you may disagree. But why? As another example, Krugman points to many historical examples where being too timid with stimulus led to castastrophe. You may disagree. But why? Why are Krugman's historical parallels unconvincing to you?

    In essence, you criticize Krugman for pounding the table with a certain approach/idea about things, but I feel you did the same thing: you wanted to bash him for being smug or too certain in his conclusions, but you didn't actually address his main arguments, why you think they may be off-base, etc.

    To me, just saying that economics isn't an exact science like chemistry isn't enough to debunk Krugman; you need to tackle his specific arguments, made in all of his columns, more head-on.

    Maybe that will be your next article : )

  • Report this Comment On October 26, 2010, at 11:52 AM, TheDumbMoney wrote:

    While I tend to agree the stimulus was too small, I also tend to agree that Krugman is a little too convinced of his correctness. Of course, that just puts him in good company with every single major pundit and politician, from Beck and Limbaugh and Palin and and on the Right, to Olbermann and Rich and Maddow and Pelosi et al on the Left. Which begs the question, why single Krugman out? He may very well be wrong, I agree, but if you honestly care about probabalistic outcomes, then based on his background he likely has a higher, not equal, probability of being right. Or maybe you are part of the ascendant movement in our fine country that believes guttin' elk an' mowin' lawns and drinkin' coffee down at the diner an' rubbin' shoulders with the folks, makes ya more qualified to talk about the economy than does "a long career spent in classrooms" (though frankly, vastly more time in libraries, than in classrooms, despite your dismissive characterization of the primary locational focus of Krugman's career).

  • Report this Comment On October 26, 2010, at 11:56 AM, ETFsRule wrote:

    My thoughts:

    1. Yes, Krugman has written essentially the same article over and over. And it does get tiresome. I think it is an important point though, and he has tried to explain it in different ways, showing different charts, stats, etc.

    Also, I think what happens is that he reads a lot of articles from other economists who are advocating austerity, and apparently he feels the need to respond to them every time.

    2. Krugman has never claimed to "know everything", so I don't see much point in trying to use this type of argument against him.

    3. I agree that economics is an inexact science. However, that doesn't mean that anyone's guess is just as good as anyone else's. Some people understand the economy better than others, and therefore they can make better guesses.

  • Report this Comment On October 26, 2010, at 11:59 AM, TMFLomax wrote:

    Good one, Nick!

  • Report this Comment On October 26, 2010, at 12:25 PM, mtf00l wrote:

    TMF...

    All for one and one for all...

  • Report this Comment On October 26, 2010, at 12:30 PM, naandrews wrote:

    Nick, I simply have an issue with this sort of analysis where you totally trash someone without actually dealing with the substance of that someone's claims. Saying you are not an economist seems like a copout -- interview one for your article! (I have strong feelings about this because I am a professional journalist -- I write about science and medicine for a living).

    I know this is an opinion column of yours, not a more evenhanded journalism, but to me, the best opinion columns are backed up by some hard analysis.

    By the way, Paul Krugman is a columnist for the NYT -- he is not doing more evenhanded journalism. Consequently, it's not surprising that he presents a very strong point of view -- he writes opinion articles after all!

    But he backs up his opinionated columns with a lot of evidence. You didn't do the same in my opinion.

  • Report this Comment On October 26, 2010, at 12:31 PM, c5700 wrote:

    Nice article Nick.

    Since he's so sure of himself, maybe Mr. Krugman could produce his opinion piece from 2009 (before the stimulus bill was actually passed) where he argues against the confident predictions of President Obama that unemployment would never get above 8%.

    Anyways, it's a very common excurse that liberals always use....things were just not done "enough"...that the policies would have worked if they were just done "bigger"! Never mind that one could look back at policies such as Reagan's tax cuts and the long period of economic growth that ultimately followed. No, Krugman will never try any other angles or ideas, because he's a devout socialist.

    By the way, do you really "....care less about whether the Obama administration is following the righteous, economic path to prosperity or not..... "? I most certainly do care. And Obama is not leading this country to economic prosperity.

    You write "....because I don't know what that path is -- and I know that nobody else does, either..." Come on Nick, you don't really believe that! If you're an investor and your goal is to "figure out ways to make money", then you must believe in free market capitalism. Otherwise, you're probably just waiting for more government "benefits" to come your way.

    Clearly, Obama's policies even if augmented per Krugman's wishes will not unleash the vibrancy of the private sector. The private sector, not the government, is what will grow our economy, create jobs, and create wealth.

    c5700

  • Report this Comment On October 26, 2010, at 12:50 PM, dargus wrote:

    Do you only read his articles, or do you take the time to read his blog? His articles do have an authoritative certainty to the tone, but if you read his blog he often goes more in depth with his analysis, including potential problems, in a way you can't do in a bi-weekly column. Part of his tone almost certainly comes from his view of the echo chamber of the media today, if you allow me to do a bit of psychoanalysis. I like Krugman and his analysis, but I do often find him a bit too ideological. However, I found your critique to be too harsh as well. Again, it does make a difference if you only read his columns verses his blog.

  • Report this Comment On October 26, 2010, at 1:38 PM, skypilot2005 wrote:

    Nick,

    “Meet Punxsutawney Paul

    The source of this madness, of course, is Paul Krugman, an intensely left-wing economist who seems convinced of his own omniscience.”

    I agree.

    I feel Krugman should offer full disclosure in all of his Economic related articles regarding his political positions and prior political support. Because, he has chosen to publicly express them. I don’t feel he adequately does and has lost credibility as an Economist, as a result.

    I don’t read any of his articles because of this.

    If I wanted to read political commentary, I would read his articles. I want objective nonpartisan Economic analysis and Krugam clearly has no credibility in my opinion because of his general lack of disclosure.

    From an investor’s point of view your piece does a great service and is right on target.

    Thanks

  • Report this Comment On October 26, 2010, at 1:39 PM, CoachBen wrote:

    I would like to applaud everyone for having a professional, even tempered discussion. It is refreshing in an age when hostility and hate pervade socio-political discussions. I have truly enjoyed the discussion!

    THANK YOU ALL.

  • Report this Comment On October 26, 2010, at 1:40 PM, dargus wrote:

    Nick,

    I agree with you that he probably should be more evenhanded, but again if you read his blog you get a good idea why he isn't. First, let me say he often laments the lack of space he has in his column. I think the reason he doesn't give a more evenhanded assessment in his column is he feels like he's arguing against points made everywhere else, and given this limited space he wants to give you a dissenting opinion. His blog gives you insight into the frustration he feels about what he's started calling Very Serious People. Again, I'll grant you there is a noticeable ideological tone here, but he does seem to show a degree of humility.

  • Report this Comment On October 26, 2010, at 5:22 PM, DSmod wrote:

    To the handful of you who have dropped the notion that Krugman is peddling an economic theory to support his liberal or socialist agenda, I'd have to respectfully argue that this is an unfair assessment, and there really is no record to support it. I suggest we all open our minds--or at least suspend disbelief--and ask if there is a chance that Krugman, a much wiser economic thinker than me (and admittedly by the author, than he too), has arrived at his economic conclusion based on a lifetime of honest research and that maybe, just maybe, his political leanings are a fallout from this, and not vice versa? It would seem to me that if anyone deserves the benefit of the doubt in this regard, it would be someone with a long record of delivering high quality and well-backed-up analysis without himself having a dog in the fight (he's not a politician, he's not a corporate bigwig, he's not a banker, he's not neck-deep in religious ideology, etc. etc.). As an economist, he only wants to be right. The fist-pounding, well, that's because he knows he's done his homework and based on what he found out, he whole-heartedly believes he's got a viewpoint humanity can benefit from. Isn't that exactly what you'd want in an economist?

  • Report this Comment On October 26, 2010, at 5:56 PM, BlazerMania wrote:

    "You know, I'd love to analyze his economic theories on a more granular level, but that's not really my field of expertise. I'm not an economist, nor do I care to become one. I'm simply looking out for the investor."

    And how exactly did your article "look out" for me? If you don't like Krugman, don't read him. I fail to see why this article should be featured on an investing site such as TMF, however. I see nothing helpful to the individual investor in this piece.

  • Report this Comment On October 26, 2010, at 5:59 PM, NationalMatch wrote:

    Good article - I'm glad I'm not the only one that feels like Krugman is sounding like a broken record. I am curious to see how Britain's debt reduction measures pan out.

  • Report this Comment On October 26, 2010, at 6:11 PM, stan8331 wrote:

    I think the problem is our toxic political environment is bleeding over into economics. Krugman certainly does have an agenda, but so do all the vociferous austerity proponents to whom he's responding. I think it's unfair to criticize Krugman without discussing the larger environment in which he's making these arguments.

    Personally, I don't think Krugman has all the answers by a long shot, but I also know it's EXTREMELY easy to shout about austerity after we appear to have pulled back from the brink of disaster. The problem with economic systems is inertia - if you focus too much on austerity before the economy has sufficiently recovered, you run the risk of moving back toward the cliff and once that momentum gets generated, there's no way of knowing whether we'll be able to stop it again.

    Obviously we have serious long-term fiscal problems and we have to find ways to drastically reduce spending in coming years and decades. Unfortunately, while a lot of folks love ranting about austerity, most only love it when the plan is to slash someone else's benefits.

  • Report this Comment On October 26, 2010, at 6:35 PM, minnjim1 wrote:

    Oh, so you don't like reading Paul Krugman. Well, stop reading his column, Nick. But don't write a TMF column about it. Especially if you admit you don't have the knowledge to rebut what he writes, and all you can do is attack the man, not the ideas. This is not the kind of writing we need here on TMF.

  • Report this Comment On October 26, 2010, at 6:49 PM, TheDumbMoney wrote:

    DSmod. Well spoken.

  • Report this Comment On October 26, 2010, at 7:14 PM, Borbality wrote:

    These kinds of blowhards are absolutely necessary to the editorial sections. People who offer two sides of a story or admit they might not have all the answers don't sell papers!

  • Report this Comment On October 26, 2010, at 7:38 PM, newageinvestor wrote:

    I was pretty shocked at your article. As others have noted, you really didn't say anything of substance, except that you're an economist. Do you even know what Krugman won the Nobel Prize for?

    Here's what the Nobel committee said:

    http://nobelprize.org/nobel_prizes/economics/laureates/2008/...

    Please save these kinds of rants for the dining room table. Usually I love reading The Fool, but this article was a huge waste of my time. You said absolutely nothing.

  • Report this Comment On October 26, 2010, at 7:39 PM, newageinvestor wrote:

    Correction: except that you're NOT an economist.

  • Report this Comment On October 26, 2010, at 7:51 PM, Clawhammer08 wrote:

    Nick,

    Krugman is basically saying this -- unless the Federal Government dumps a whole bunch of money into the economy, and soon, we are all going to be stuck in a decade of stagnate growth that otherwise could have been avoided. And while I definitely consider myself a capitalist, I also realize that my chainsaw will not start unless I prime it first. The same goes for our economy -- Krugman is frightened that those preaching austerity are going to win out in the marketplace of ideas. What he's preaching is that not only did unbridled free market capitalism get us into this mess, but that it is inherently incapable of quickly getting us back out without serious help. The best way that I have heard it explained is that corporate America is in the midst of a classic prisioner's dilimna -- it's in corporate America's collective best interest for all individual companies to simultaneously start hiring and ramping up production, but this will never happen because individual corporations are beholden to their stockholders, not to the overall betterment of the economy. Hence no individual corporation's CEO will ever be willing to be the first to announce that they are going to unilatteraly start hiring and production in the hopes that other companies follow their noble lead. So the end result is nothing -- corporate America is sitting on 2 trillion in cash (within the U.S., with another trillion unrepatriotated overseas) and nothing is really happening. This is what Krugman is warning about. That we can avoid this via a true stimulation and then easily repay its costs from the future growth that we receive that we otherwise would not have.

  • Report this Comment On October 26, 2010, at 7:58 PM, Clawhammer08 wrote:

    But then what do you care, you're just out to make a quick buck.

  • Report this Comment On October 26, 2010, at 7:59 PM, KAITECH wrote:

    America did spend itself out of the great depression during WWII and our debt to GDP ratio was worse than it is today. Have we forgotten all history in our current madness? Have we also forgotten that that top tax rates were around 90% during Ike's administration and today we are arguing over a 2% raise to 39% for the very wealthiest Americans as though a life and death struggle.

  • Report this Comment On October 26, 2010, at 9:10 PM, dave665 wrote:

    I understand what Krugman is saying since he does keep saying it incessantly, but I completely and totally disagree with him. Does ANYBODY really trust our elected officials to spend money that they don't have (and you probably can't afford to pay in taxes) wisely enough to generate positive economic returns that will outweigh the initial costs? Is it even possible for that to be done? There may be some things (infrastructure spending, etc) that could conceivable generate positive returns over the long run, but the government spent less than 8% of the stimulus money on that anyway. So if you would really want to give them any more, please tell me why.

  • Report this Comment On October 27, 2010, at 9:35 AM, number2son wrote:

    "Does ANYBODY really trust our elected officials to spend money that they don't have (and you probably can't afford to pay in taxes) wisely enough to generate positive economic returns that will outweigh the initial costs?"

    How come we heard none of this bleating when Bush and his lapdog Congress were spending trillions on wars in Iraq and Afghanistan? Not to mention continued spending on unnecessary weapons systems?

    Hypocrites.

  • Report this Comment On October 27, 2010, at 12:32 PM, Clawhammer08 wrote:

    I hate politicians as much as the next guy, but really, it wouldn't matter what they spent the money on. It would be nice if we were left with something to show for it, like improved infrastructure, but in the end that's not what matters. In fact, take a look at what everybody agrees was what finally pulled us out of the Great Depression -- WWII. What tangible things do we still have left to show for all of that money we borrowed and spent? I mean, I guess I could drive down to Mobile Bay to see the USS Alabama, and there are residiual facilities, but by and large the vast sums of money that the federal government dumped into WWII would be considered "wasted" taxpayer's money these days. Never forget that we own and run the printing presses for the currency that just so happens to be the world's reserve currency of choice. Now we wouldn't want to pull a Robert Mugabee and just start running the presses 3 shifts 7 days a week, that's just so third world. But we are already "creating" money in a sense when the Federal Reserve buys and holds Treasuries -- we are using the credit that is to be found in the good will and name of the U.S. Federal Reserve to buy our own debt. You must realize that so much in the way of unrealized gains evaporated overnight when the housing market crashed (trillions) that our economy will never be right again until somebody, somehow pumps an aproximate amount back in. So, in short, it's got to be done; that is, injecting huge amounts of money into our economy. And dropping bags of cash from a helicopter over urban areas would be both dangerous and ineffective. For it's part, the Fed is doing its job, albeit in an indirect manner, we just need Congress to do its part and inject funds directly. We can either wait 10 years for this to happen organically, or we can speed up the process immensely.

  • Report this Comment On October 27, 2010, at 1:32 PM, c5700 wrote:

    Here's an interesting article from American Thinker. The author provides some actual numbers that amount to throwing cold water on Krugman's thesis.

    http://www.americanthinker.com/2010/10/paul_krugmans_jihad_1...

    Naturally, I would expect Krugman's rebuttal to be along the lines of .... Obama didn't spend enough.....Obama should have made the stimulus even bigger!

    c5700

  • Report this Comment On October 27, 2010, at 1:52 PM, JProckyfeller wrote:

    Krugman has no credibility, but not because he is sure of himself. It's because he clearly changes his position on fundamental economic issues based on whether a Democrat or Republican is in office such as deficits.

    For example:

    http://www.realclearpolitics.com/articles/2010/02/11/krugman...

    Krugman, in a November 2004 interview, criticized the "enormous" Bush deficit. "We have a world-class budget deficit," he said, "not just as in absolute terms, of course -- it's the biggest budget deficit in the history of the world -- but it's a budget deficit that, as a share of GDP, is right up there."

    The numbers? The deficit in fiscal year 2004 -- $413 billion, 3.5 percent of the gross domestic product.

    Fast-forward to 2010.

    The numbers: projected deficit for fiscal year 2010 -- over $1.5 trillion, more than 10 percent of GDP.

    This sets a post-WWII record in both absolute numbers and as a percentage of GDP. And if the Obama administration's optimistic projections of the economic growth fall short [they since have], things will get much worse. So what does Krugman say now?

    We must guard against "deficit hysteria." In "Fiscal Scare Tactics," his recent column, Krugman writes: "These days it's hard to pick up a newspaper or turn on a news program without encountering stern warnings about the federal budget deficit. The deficit threatens economic recovery, we're told; it puts American economic stability at risk; it will undermine our influence in the world. These claims generally aren't stated as opinions, as views held by some analysts but disputed by others. Instead, they're reported as if they were facts, plain and simple."

    As another poster noted, Krugman never said the "stimulus" would not work at the time that it was passed.

    One person saying it wouldn't work AT THAT TIME was Greg Mankiw, the former chairman of President Bush's Council of Economic Advisors, who Krugman started attacking:

    http://gregmankiw.blogspot.com/2009/03/wanna-bet-some-of-tha...

    Krugman also stated that the Bush 2003 tax cut would plunge the economy back into recession.

    He is, quite simply, a disingenuous ideologue. No one who is aware of the above as well as many other of his prevarications, and is objective, will accord him any credibility.

  • Report this Comment On October 27, 2010, at 2:10 PM, mpendragon wrote:

    JProckyfeller

    Krugman's argument would likely be that:

    - federal stimulus spending barley offset cuts in state spending so there was little if any actual stimulus

    - the federal budget to GDP comparisons were impacted a lot more by a large drop in GDP than increases in the government spending

    - the stimulus was primarily extensions of safety net programs for the unemployed, tax cuts, and keeping teachers, police, and fire fighters on the job

    - Obama's first budget cut the deficit from Bush's last budget by about $200 billion

    - by far the biggest contributors to the deficit are the wars in Iraq and Afghanistan and the Bush tax cuts

    - borrowing at a time when interest rates are near or at historic lows to stimulate the economy and rebuild some of America's crumbling infrastructure makes good long term economic sense

  • Report this Comment On October 27, 2010, at 2:43 PM, dave665 wrote:

    Number2son:

    It does not matter which party is in power, they are both corrupt and self-serving. Deficit spending should not be allowed at all because it is always a slippery slope. That is my point.

  • Report this Comment On October 27, 2010, at 2:47 PM, mjrephlo wrote:

    Amen! 'Nuff said!

  • Report this Comment On October 27, 2010, at 3:22 PM, dargus wrote:

    JProckyfeller, you clearly do not read Krugman's writing. The difference in his opinions of deficits was not the political party in power, but the economic context. We were not in a budget crisis/liquidity trap in 2004. Right or wrong, there is clear logic to the idea that running a deficit now to fix the economy will pay for itself.

    As for Krugman's assessment of the stimulus, he was most certainly skeptical at the time of passage. He wrote extensively that the size and nature of the stimulus was probably not enough to heal the economy in any meaningful way.

    Perhaps you should actually read Krugman instead of clearly slanted commentary of what he supposedly claimed.

  • Report this Comment On October 27, 2010, at 3:22 PM, dargus wrote:

    Oops, "budget crisis" should read "economic crisis".

  • Report this Comment On October 27, 2010, at 3:40 PM, SStambush wrote:

    Hi Nick,

    Saying someone sounds like a broken record is not a good argument against their logic. Can you imagine people responding to Paul Revere's "The British are coming" refrain with, "Mr. Revere, please try a fresh angle?"

  • Report this Comment On October 27, 2010, at 3:53 PM, JProckyfeller wrote:

    mpendragon

    Yes there can always be some BS reasons why there's no inconsistency between his statements.

    If you look at the link in c5700's post, you can see that the "federal stimulus spending barley offset cuts in state spending so there was little if any actual stimulus" argument that Krugman has made is a flat out lie.

    Deficits are now lower than Bush's last budget? What are you talking about? The 2010 fiscal year deficit, if you count that as Obama's first budget, came in at $1.6 billion. The 2009 deficit was $1.4 billion, if you are counting that as Bush's last budget even though that contained some of Obama's stimulus and another massive spending addition on top of the stimulus ($409 billion Ominbus Appropriations Act of 2009). The 2008 fiscal year deficit was $455 billion.

    The increase in spending as a percent of GDP was not impacted more by a drop in GDP than spending increases.

    Arguments about why the spending was supposedly on good things, according to Krugman - or is it according to you are beside the point.

    Krugman said Bush's deficits were excessive and a danger to the economy: "If there isn't a clear path towards fiscal sanity well before (the next decade), then I think the financial markets are going to say, 'Well, gee, where is this going?'". It had nothing to do with specifically what it was being spent on.

    In any case someone could always make the argument that deficit spending was for some good reason. For people like Krugman who say Bush's tax cuts contributed to the deficit and were therefore bad, it could be argued that they stimulated the economy - the alleged purpose of Obama's spending. In fact the stimulative effect from the Bush tax cut was clear and fairly dramatic, unlike Obama's. Yet that didn't change Krugman's mind.

    As for low interest rates, rates can go up, which is exactly what many savvy people are expecting. The extra debt from the deficit spending will still be there when that happens. In fact Krugman said that Bush's much smaller deficits would cause the markets to react.

    In short there is no way to reconcile Krugman's anger at Bush's "huge" deficits with his complaint now that Obama's are too small other than ideology and mendacity.

    Wait are you Krugman?

  • Report this Comment On October 27, 2010, at 4:06 PM, JProckyfeller wrote:

    dargus

    I do see where he said it wasn't large enough from early on.

    The bottom line is he is clearly a liar. If anyone wants to dispute that I can give some examples. I already gave one above - about the supposed cuts in state and local spending.

  • Report this Comment On October 27, 2010, at 4:11 PM, Acesnyper wrote:

    Krugman does what sadly most media outlets do.

    Says what's loud and will sell, no matter how much or how little (in his case) truth is going to get in the way of over hyping an article.

    It's a matter of time till we read planet falling apart in regards to someone moving a stone.

    Being in such a large medium I consider Paul a danger to keep writing bold untruths as he does.

  • Report this Comment On October 27, 2010, at 4:22 PM, ETFsRule wrote:

    dave665 wrote:

    "I understand what Krugman is saying since he does keep saying it incessantly, but I completely and totally disagree with him. Does ANYBODY really trust our elected officials to spend money that they don't have (and you probably can't afford to pay in taxes) wisely enough to generate positive economic returns that will outweigh the initial costs? Is it even possible for that to be done?"

    Our government is borrowing that money at an interest rate of what, 1%? It would be almost impossible not to have a positive return on that money.

  • Report this Comment On October 27, 2010, at 5:04 PM, dargus wrote:

    JProckyfeller, you can read Krugman's argument about government spending here:

    http://krugman.blogs.nytimes.com/2010/10/12/special-bulletin...

    Please explain what he's lying about? He uses BLS numbers too.

  • Report this Comment On October 27, 2010, at 5:10 PM, dargus wrote:

    Nick, once again you show that you don't read Krugman's blog. The "hilarious" inconsistency you point out isn't one at all. Krugman has addressed this point over and over again in his blog. Textbook economics under normal circumstances says unemployment benefits do slightly raise the unemployment rate. However, we are currently not in normal economic times. Do you honestly think textbook economics says when there are 5 applicants for every job opening that unemployment benefits have a significant impact on the unemployment rate?

    You may be trying to stay apolitical, but by repeating these supposed inconsistencies that Paul has addressed many times, I am beginning to see who the real ideologue is.

  • Report this Comment On October 27, 2010, at 5:15 PM, dargus wrote:

    Give me a break, Nick. Going back and reading it, the explanation is right in the column.

    How WSJ quotse Krugman:

    "What Democrats believe," he says "is what textbook economics says"

    What Krugman says:

    "What Democrats believe is what textbook economics says: <b>that when the economy is deeply depressed</b>, extending unemployment benefits not only helps those in need, it also reduces unemployment. "

  • Report this Comment On October 27, 2010, at 10:12 PM, JProckyfeller wrote:

    "Please explain what he's lying about? He uses BLS numbers too."

    As I said, it's at the link already posted. I guess you didn't read it.

    http://www.americanthinker.com/2010/10/paul_krugmans_jihad_1...

    In his October 10 column entitled, "Hey, Small Spender," Krugman declares that there "never was a big expansion of government spending" under Obama, because cities and states underwent "drastic spending cuts, more than offsetting the modest increase at the federal level." His clear message is that total government spending has fallen, a premise also advanced by Ezra Klein in the pages of the Washington Post.

    In his October 24 column ("Falling Into the Chasm"), Krugman deftly modifies his rhetoric, now contending that the increase in federal spending "was barely enough to offset cutbacks at the state and local level." Hence, he paints another picture -- namely, that overall government spending has been flat.

    A glaring void in Krugman's articles (and Klein's) is the absence of any numbers on total government spending, which are exactly what he needs to prove his point. This omission is particularly brazen given that Krugman avows that there is "a widespread perception that government spending has surged" because of "a disinformation campaign from the right, based on the usual combination of fact-free assertions and cooked numbers."

    So let's test these assertions against the only comprehensive and reliable source of data on this topic, which is the federal Bureau of Economic Analysis. Citing the latest figures, total combined federal, state, and local government spending rose from $5,020 billion in 2008 to $5,345 billion in 2009 -- to a seasonally adjusted average of $5,532 billion in the first half of 2010, which is the most recent available data point.

    This constitutes a 10% increase over a 1.5-year period with 3% inflation. In other words, the data flat-out contradict Krugman's and Klein's stories.

    Also, contrary to Krugman's claim that cities and states experienced "drastic spending cuts," the reality is that state and local governments slightly increased their spending from $2,186 billion in 2008 to $2,189 billion in 2009 to a seasonally adjusted average of $2,224 for the first half of 2010. This equates to a 2% rise during a period with 3% inflation.

    Could it be that Krugman has access to another source of data that is more reliable? According to the Bureau of Economic Analysis, the data published by this agency are the "only comprehensive estimates of state and local government activity available on a timely basis."

  • Report this Comment On October 27, 2010, at 10:25 PM, JProckyfeller wrote:

    Here's another of Krugman's many lies.

    http://poorandstupid.com/2004_12_12_chronArchive.asp

    There's actually more than one at this link alone, but this one is pretty brazen:

    Speaking of Britain's social security privatization, Krugman wrote:

    'Its Pensions Commission warns that those who think Mrs. Thatcher's privatization solved the pension problem are living in a "fool's paradise."'

    This is an utter misrepresentation of what the Pension Commission said. In its 2004 report, the "fool's paradise" it is talking about is the 1990's investment environment for corporate defined benefit pension plans. They are not issuing any "warning" or other opinion about "Mrs. Thatcher's privatization." Krugman simply made that all up.

    Here's another link on Krugman's privatization lies:

    http://timworstall.typepad.com/timworstall/2004/12/paul_krug...

  • Report this Comment On October 27, 2010, at 11:37 PM, margiejones wrote:

    Krugman is calmly and with a nice dose of sarcasm pulling apart the flawed logic of various 'expert' commentators. He provides a real time lecture in economic theory during a critical and uncertain period of economic outlook, and let's the readers free to comment and counter his arguments. What's not to like? Enjoy!

  • Report this Comment On October 28, 2010, at 6:29 AM, MAURIZIO400 wrote:

    , JProckyfeller

    that was well done!

    you provided the only facts in this ocean of opposing opinions.

    if your facts are straight then P.G.'s obviously a liar and does indeed have a political agenda.

    and again in his line of business, who does not?

  • Report this Comment On October 28, 2010, at 7:41 AM, MAURIZIO400 wrote:

    ...sorry i meant P.K.

  • Report this Comment On October 28, 2010, at 9:44 AM, MKArch wrote:

    Hallelujah Amen brother Nick! I think George Will years ago put it best. "The idea that an economy driven by billions of individual decisions made every day is being controlled by a handful of people in Washington is hubris". IMHO it's time for both sides of the political spectrum to sit down shut up and let the economy do what it's done after every other recession we've endured and heal itself.

  • Report this Comment On October 28, 2010, at 10:59 AM, dargus wrote:

    JProckyfeller, I doubt anything I say to you will change your mind that Krugman lied. I will grant you that he every so slightly changed his position. I can't tell you exactly why that is, but I can tell you the essence of what he is saying is true. The point he is trying to make, regardless of whether or not he makes it well, is that the notion that the Obama administration is somehow spending vastly more than other administrations is false. Once you accept this fact this you have answered one of Agresti's complaints, "Furthermore, since Krugman's central premise in these articles is that government spending is a salve that heals unhealthy economies, why does he limit this question to spending 'under Obama'?"

    Now, if Obama were spending like crazy we'd expect a big change in the rate of spending, which would change the slope of the line showing government spending over time. As the chart in the blog post I put up earlier shows, this isn't the case.

    http://krugman.blogs.nytimes.com/2010/10/12/special-bulletin...

    Here is another way Krugman looks at it, and it is very similar to the calculation Agresti uses. Krugman calculates what spending would be given expected GDP growth had we not gone into crisis. He uses GDP growth of 2.3% a year (7.3% total), and the GDP deflator of 4.1% from Q2 2007 to Q2 2010. Add them up to get 11.4%, he says 11.7%, but he must be lying. At any rate, Krugman goes on to calculate spending growth at 19.5% ($350 billion), so we do see an increase in the rate of spending. Agresti’s number is 10% over 1.5 years, so Krugman is almost addressing this point directly. Clearly this is a rebuttal, except Krugman wrote this on Oct. 16th, and Agresti’s article is from Oct. 27th. Of course, the next question to ask is what accounted for the spending. He claims $185 billion of that is unemployment benefits and increase to Social Security and Medicare (11% higher than the norm).

    http://krugman.blogs.nytimes.com/2010/10/16/the-non-surge-in...

    Now you can argue that given expected budget shortfalls the budget should have been cut to decrease deficits, but Krugman is not arguing for against deficits here. As I stated, he is attempting to debunk the myth that the Obama administration is increasing spending at an unusual rate. I understand this is a very nuanced argument, and Krugman clearly made a minor misstatement in his first column, but you seem to want to play gotcha instead of taking the time to understand what he is really attempting to say.

    http://krugman.blogs.nytimes.com/2010/10/17/why-have-deficit...

  • Report this Comment On October 28, 2010, at 11:23 AM, dargus wrote:

    Now on to complaint number two. I must admit I’m not an expert here, but I do take issue with the Chilean comment.

    The quote they use from Krugman, “Privatizers who laud the Chilean system never mention that it has yet to deliver on its promise to reduce government spending. More than 20 years after the system was created, the government is still pouring in money. Why? Because, as a Federal Reserve study puts it, the Chilean government must ‘provide subsidies for workers failing to accumulate enough capital to provide a minimum pension.’ In other words, privatization would have condemned many retirees to dire poverty, and the government stepped back in to save them.”

    It sounds like he is saying the government isn’t really saving money on the program. The author of that attack column uses percentage of GDP as the benchmark. In fact he says, “government spending on Social Security has been falling decade by decade, representing an ever smaller percentage of an ever larger GDP.” He is correct, but shouldn’t the number that really sums it up be per capita spending adjusted for inflation? Percentage of GDP is a pretty noisy number if you want to get to the heart of how successful the program is. I can’t find this number, but I’d like to see it before condemning Krugman.

    As for Britain, I don’t really know anything about it, so I must rely on the commenter’s assessment. Nothing jumps out at me as being obviously wrong, so I can only assume it is a fair assessment. It seems as though Krugman made some errors here. However, it seems more like a mistake than an outright lie. Even Noble winning economics make mistakes, and Krugman does let ideology taint his thinking from time to time when he moves away from empirical analysis. However, as I said in the last post, you seem determined to play gotcha instead of looking at broad lines of thought.

  • Report this Comment On October 28, 2010, at 2:08 PM, NWGoDucks wrote:

    Wow, this article comes out swinging so I thought the author would actually have something of substance to say. Then I find out that the central thesis is that Krugman is overconfident. By that logic you sound very confident that Krugman is overconfident. Does that mean Krugman isn't overconfident? I'm confused.

  • Report this Comment On October 28, 2010, at 2:50 PM, JPDemers wrote:

    "His guess is, after all, just as good as yours."

    Really? REALLY? I've heard of shooting the messenger, but being tired of the message is a new (and breathtakingly lame) excuse for it.

  • Report this Comment On October 28, 2010, at 5:49 PM, ryanalexanderson wrote:

    I came a bit late to this conversation, which is probably more or less over. I disagree with most of Paul Krugman's stuff.

    I admire his disingenuousness in saying that nothing but redonculous amounts of QE and stimulus will get things going again. Since these amounts are practically impossible, as bond purchasers will never play along, the government won't pursue them. And Krugman will sit there saying "see, I told you so. You didn't follow my suggestions, and the economy is tanking." He can't lose!

    But what really irritates me is that this guy has the credibility of a "Nobel Memorial Prize". Not a Nobel Prize, which is a tribute to the people who advance humanity through science, art, and peace efforts. The Nobel Memorial Prize in economics was set up by a Swedish bank. Many of it's recipients have criticised its validity. Hayek, a Nobel Memorial recipient whose views are completely antithetical to Krugman, had this to say almost 40 years ago:

    "The Nobel Prize confers on an individual an authority which in economics no man ought to possess ... This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally."

    I couldn't agree more.

  • Report this Comment On October 28, 2010, at 6:17 PM, dave665 wrote:

    ETFsRule does make a good point about the govt only paying a 1% interest rate on its debt. Since that is below even the real inflation rate, a positive return is almost guaranteed at the moment. However, we may suddenly be forced to finance the debt at a much higher interest rate, so that 1% rate may provide a false sense of security.

    Also, I want to point out that I (partially) agree with Krugman about our trade imbalances. However, de-valuing our currency and more "stimulus" is not the answer to this. The reason we would be more competitive, according to those doing the devaluing, is that the real value of wages paid to American workers would be diminished with a weaker currency. So in this case, why not simply abolish the minimum wage and let the "free" (global) market determine wages? This would accomplish the same thing without the risk of hyperinflation.

    Even better, why don't we deal with the root of our trade problems: The free-trade agreements we have tied our own hands with are inherently unfair, and give us the short end of the stick. We have all sorts of environmental regulations here in the U.S. for example, but import products that were produced without all those expensive regulations. We also have laws to protect human rights, such as requiring businesses to have handicapped access and forbidding child labor, yet we import products freely from those who have no such laws. We insist on a relatively high minimum wage (compared to the rest of the world), and then try to kill our currency to counteract it. And on top of all that, some of our trade partners cheat on the rules, but we can't or don't do anything about it.

    The bottom line is, if we are going to play by different rules than elsewhere in the world (and we should in many ways), then our trade policies need to reflect that in order to protect our economy. Sorry this post is so long, but these are some core issues that I don't hear either political party talking about.

  • Report this Comment On October 28, 2010, at 6:30 PM, ETFsRule wrote:

    JProckyfeller:

    Krugman is a Keynesian economist. If you understood Keynesian economics, it would be very obvious why he is ok with running a deficit now, but not ok with it during the Bush years. When times are good (at least, relatively good), you are supposed to have a budget surplus, so that you can save up some of that money for when you really need it. During a recession, you can tap into your surplus, or even run a budget deficit. The most important thing is that you DO NOT cut the budget during a recession, because that just makes things worse.

    In the current recession it was inevitable that we would have a deficit no matter who was in office. It happened because of the huge dropoff in tax revenues - not because of increased spending, which is only responsible for a very small portion of the deficit.

    During the Bush years there was absolutely no excuse for running a deficit. Those deficits were due to the Bush tax cuts and a failure to cut spending. The Bush tax cuts, by the way, were a complete failure by any measure. The housing bubble was inflated on his watch - and the stock market still produced dismal returns, even despite that inflated bubble. Not to mention the tepid GDP growth that we saw during the Bush years.

  • Report this Comment On October 28, 2010, at 6:37 PM, ETFsRule wrote:

    ryanalexanderson wrote:

    ..."I admire his disingenuousness in saying that nothing but redonculous amounts of QE and stimulus will get things going again..."

    Actually, in a couple of his latest columns PK is very skeptical of QE2 having a positive effect - and not because it is too small.

    Krugman would undoubtedly say that more stimulus would help the economy, if it was targetted correctly. But more QE is not necessarily going to have much of an effect on the economy.

  • Report this Comment On October 28, 2010, at 8:23 PM, cbsWTF wrote:

    Nick, save the personal attacks. You sound like Bill Chrystal...always wrong, but always getting a second chance...to be wrong...again. Krugman is correct in that the first stimulous, amongst other tools, saved us from depression. Was it too small? Well, that is a question that you should have analysed. Do we need another...? OK explain why it isn't necessary instead of attacking the man . Krugman was correct during previous administrations and his prescience should be considering in any discussion. Demand will correct this current downturn. I think Ravi Batra has it correct that if you don't pay workers then you will not have the money to create demand in the overall economy. You know, to make stuff that the average American needs, and thus to create jobs in an win/win situation. Of course there is the trade agreements and the China problem. So let's tackle that too. Charge them the same tariffs we are being charged in China. China charges a 22% tariff on US automobiles, we charge 4% on Chinese goods of a similar nature...enough said.

  • Report this Comment On October 28, 2010, at 9:22 PM, haystrust wrote:

    I am also beginning to think that Paul K. Is beginning to sound like someone talking to a person who doesn't speak English, and starts talking louder as if deafness was the problem.

    Talk about a "Fuzzy science" - don't get me started on economics. Peter F. Hamilton,has called it the "deformed offspring of ecology," (in his Mars trilogy) which I found was pretty true when I met a bunch of economists who were working in the fisheries management parts of the Scripps Institute. They thought it true and their employment path seemed to support that idea.

    But it is hard enough to just think about this complex issue, without the difficulty of talking about it. We can't even agree on a common vocabulary. Someone mentioned the Reagan Tax Cut - which was one of the largest increases in taxes in history. They mushed the entitlements into the general budget and then cranked up the FDIC to pay for everything - I was a small business owner and I remember that my employees were devastated that they had been had by those at the top. I even know some businesses that went under from the increase in taxes, so if this big increase is touted as a "tax cut" then what hope do we have of a rational discussion of this complex issue. And what does it all mean for my portfolio as I face retirement. I do know that my wife volunteers a day each week taking care of my great-nephew because the budget cuts in CA are such that his mother can't afford pre-school. and she is working two jobs. I just worry that if we can't even teach out kids, what the heck kind of future am I gonna have when I do retire?

    Sorry, no answers, just questions. Thank goodness for the RYR Fools.

  • Report this Comment On October 29, 2010, at 8:41 AM, ryanalexanderson wrote:

    Hi ETFsRule,

    I haven't gone through all of Krugman's articles, so I believe what you say. However, Krugman defended QE2 on his blog a couple days ago here:

    http://krugman.blogs.nytimes.com/2010/10/27/the-worst-econom...

    ...and demanded a weak dollar here:

    http://krugman.blogs.nytimes.com/2010/10/25/ignoramity-trium...

    To be precise, he's not saying that QE2 will work in these articles, as you say - but he's implying that they can't hurt, and that a weak dollar (the feared result of QE2) is desirable. It is this opinion that is so contested.

  • Report this Comment On October 29, 2010, at 10:40 AM, SocialRespInvest wrote:

    The problem is that Nobel Prize winning economist Paul Krugman has been correct over and over again. He wrote column after column, with no one listening apparently, in 2007 and early 2008 warning of exactly what happened in the fall of 2008.

    Then he wrote column after column, with no one listening apparently, pointing out that the stimulus was too small and that the unemployment rate would not be down by 2010 (and that the Democrats would be blamed).

    Now he is writing many warnings again---I am not tired at all of reading his warnings. He does not need a new "angle" when what he is writing is likely to prove, yet again, true.

    I do not want him to stop telling us the truth. I do want to hear something different -- from everyone who has incorrectly said, proven wrong since the 1980s, that simply lowering the top tax rates will grow the economy, while lowering the deficit. Actually, it has been demonstrated to do the reverse.

  • Report this Comment On October 29, 2010, at 11:23 AM, cswalker21 wrote:

    Don't blame Krugman for repeating himself. Blame policy makers for refusing to listen.

  • Report this Comment On October 29, 2010, at 11:41 AM, Fullstep wrote:

    It is obvious to trained economists (of which Paul Krugman is one) that monetary policy will not solve the current problem of inadequate demand. A fiscal stimulus is needed. A large one. The current federal stimulus was not big enough and must be measured against contraction of state and local spending.

    Krugman has been repeatedly correct. He is not a "left wing economist". He is accomplished and well reasoned.

    What you, as a member of the investing community must do, is figure out the long-term consequences of using monetary policy well past its effectiveness. I anticipate a stock market bubble in dollar terms and a sharp drop in the dollar. This would be an easy call, but the dollar is the international reserve currency; how many dollars are too many dollars?

  • Report this Comment On October 29, 2010, at 2:37 PM, parcheymex wrote:

    I always try to keep my academic thoughts separated from my market place observations but, alas, now I witness the Motley Fool being invaded by the tea-bagger zombies. This article

    is the most spurious attempt at slander I have

    seen lately. And with the upcoming elections we've witnessed new vistas of political high-jacking. Cheap swat I would say!

  • Report this Comment On October 29, 2010, at 3:09 PM, eldetorre wrote:

    "It's the way in which Krugman presents his points that is troubling to me. He's extremely absolutist--extremely certain--that whatever he's saying is definitely going to happen. I think that is what is troubling to me."

    So why are not the absolutist opinions that we are going to hell n a handbasket from conservative economists worthy of your public derision?

    "Does ANYBODY really trust our elected officials to spend money that they don't have (and you probably can't afford to pay in taxes) wisely enough to generate positive economic returns that will outweigh the initial costs?"

    These are two separate but related issues and unfortunately the divisive nature of our political situation assures that they can't be properly un-entwined or resolved. It is one thing to accept that more stimulus is needed, it is another to make sure it is spent well.

    In an ideal world the people who decide it is necessary to spend more would not be the people allocating resources. The fact that there is no bipartisan cooperation in principal on any of these issues assures that doesn't happen. We need more pragmatic and moderate people in office not the battling ideologues we are sending to Washington now. A line item veto wouldn't hurt either.

  • Report this Comment On October 29, 2010, at 3:12 PM, bretco wrote:

    [K]omrade Krugman, the man that likes to order $500.00 bottles of wine when someone else is paying the bill shows his socialist colors in almost every article he writes. Nonwithstanding his Nobel prize the man does not deserve the platform NYT's affords him. I don't know why I keep reading his socialist agenda except it reaffirms my belief we must remain vigilant against those that would turn America into a socialist welfare state where only the ruling political classes drink $500. bottles of wine, I suspect Krugman would still be swilling his share.

  • Report this Comment On October 29, 2010, at 3:37 PM, ThorsteinVeblen wrote:

    Krugman is right. The Obama administration has not done enough to lower unemployment. Back in 1929 the Republicans ran an experiment in the efficacy of keeping goverment out of the business of economic recovery. The result of that experiment is known as "The Great Depression". Herbert Hoover, the Republican president in charge during the crash of 1929, was was a firm believer in balanced budgets and was unwilling to run a budget deficit to fund assistance programs. (remind you of anyone?) He also felt that jobs were being stolen by illegal immegrants and sent a half million Mexican and Mexican Americans back to Mexico. He ended up run out of town on a rail in 1933 for the failure of his small govement policy to do anything to assist the growing masses of destitute and unemployed. In 1933 FDR took over and brought us Social Security, FDIC, WPA, the New Deal and jobs. With the market crash of 2008 we didn't have to wait 3 years for a president who believes in the power of government to right economic ills to take charge. Obamas problem has been that his stimulus program was not up to the task. It ended up being used in most part to keep state services and education at near pre-crash levels and did not provide enough additional funding to make a dent in the unemployed pool resulting from corporate layoffs. The urge to pull back and balance budgets in times of economic hardship makes intuitive sense on the small household scale, but it does not make sense on the large national scale as we have learned from the experiment of the Great Depression eighty years ago. As George Santayana said, "Those who cannot remember the past are condemned to repeat it."

  • Report this Comment On October 29, 2010, at 3:40 PM, pota69 wrote:

    c5700 (and everyone else),

    If you don't like Krugman, don't read him. It is opinion after all. A reply to your earlier comment about being critical of Obama before the stimulus was passed: Krugman wrote a boatload of pieces in early 2009 arguing that the proposed stimulus was way too small, and that the unemployment rate could easily exceed the popular predictions at the time. Unfortunately for the millions still unemployed, apparently he was right. Here are links to a couple of the pieces from then:

    http://www.nytimes.com/2009/01/12/opinion/12krugman.html?ref...

    http://www.nytimes.com/2009/01/09/opinion/09krugman.html?ref...

  • Report this Comment On October 29, 2010, at 3:43 PM, TopAustrianFool wrote:

    Keynes and Krugman are both socialist... If you study economics you have to also study praxeology, which is what the Austrian School of Ecomics does, in order to realize that the price system and free market with minimum regulation is the best policy.

  • Report this Comment On October 29, 2010, at 3:46 PM, anacorider0 wrote:

    To: Naandrews:

    Krugman can spew his arrogant commentary and when someone else, in this case Nick Kapur, writes a strong article lacking the degree of vitriol expressed by Krugman, it is regarded as unfair. Unfairness is the position of certain "intellectuals" that they know better how to run a person’s life than the person himself. We faced this same situation over two hundred years ago and changed the situation. It is no accident the grassroots movement dubbed the "Tea Party" arose slightly more than eighteen months ago. The arrogance of the Democrats led by the Obama Administration has aroused a visceral reaction which they seem to misunderstand or pretend does not exist.

    There will be a drastic change on November 2, 2010, but if the change the people desire, reduced spending and not increasing taxes among others, is not forthcoming in the next two years, the real blood letting (figuratively for any PC readers) will occur. Those who managed to survive the election of 2010 and those who did not meet the expectations aroused in the two years of Obamism will need to find honest work. The country cannot continue the policies of warfare and welfare which are the highlights of Obamaism.

    Thomas Jefferson reportedly stated "A little revolution now and then is a good thing", looks like a revolution is developing.

  • Report this Comment On October 29, 2010, at 3:59 PM, narf1212 wrote:

    Right on, Nick.

    Krugman is a political hack who enjoys the safety of a tenured positon at Princeton. He knows he can never be proven wrong because his theories will never make the light of day in the real world.

    A Nobel Prize !! Doesn't Obama have one of them..... worthless.

  • Report this Comment On October 29, 2010, at 4:03 PM, eldetorre wrote:

    "Unfairness is the position of certain "intellectuals" that they know better how to run a person’s life than the person himself."

    The crucial difference, which you and others don't get, is that it is unfair to attack a PERSON without addressing the IDEAS. Krugman's criticism is always of ideas and policies. He lays out his arguments logically if vociferously. The right just criticizes people, labels them socialist without bothering to debate on the basis of the merits of the argument.

  • Report this Comment On October 29, 2010, at 4:04 PM, eldetorre wrote:

    "Krugman is a political hack who enjoys the safety of a tenured positon at Princeton. He knows he can never be proven wrong because his theories will never make the light of day in the real world."

    And yet he has been proven right in retrospect numerous times.

  • Report this Comment On October 29, 2010, at 4:08 PM, TopAustrianFool wrote:

    "The crucial difference, which you and others don't get, is that it is unfair to attack a PERSON without addressing the IDEAS. Krugman's criticism is always of ideas and policies. He lays out his arguments logically if vociferously."

    Here is an idea... Where was Krugman when the stimulus was about to pass? Find the article where he says it is NOT BIG ENOUGH. He never said that. How do you argue against a cry-baby that says "well, I am not wrong... you just didn't do exactly what I told you... You didn't go far enough, big enough, exact enough, perfect enough..."

  • Report this Comment On October 29, 2010, at 4:09 PM, TopAustrianFool wrote:

    "And yet he has been proven right in retrospect numerous times."

    OK... name one time... an example...

  • Report this Comment On October 29, 2010, at 4:21 PM, TopAustrianFool wrote:

    "The right just criticizes people, labels them socialist without bothering to debate on the basis of the merits of the argument."

    Maybe so... but have you ever read Marx's communist manifesto? Government control of the economy through monetary policy and financial regulation is one of his ten points.

  • Report this Comment On October 29, 2010, at 4:31 PM, TopAustrianFool wrote:

    What happened eldetorre? Can't find any examples of Krugman being right?

  • Report this Comment On October 29, 2010, at 4:34 PM, eldetorre wrote:
  • Report this Comment On October 29, 2010, at 4:38 PM, eldetorre wrote:

    "Maybe so... but have you ever read Marx's communist manifesto? Government control of the economy through monetary policy and financial regulation is one of his ten points."

    Two people choosing the same tools do not necessarily share the same belief system.

    Muslims accept the bible as a sacred book.

    BTW I am not necessarily a pro Krugman person. I am against ad hominem attacks

  • Report this Comment On October 29, 2010, at 4:40 PM, TopAustrianFool wrote:

    "Two people choosing the same tools do not necessarily share the same belief system."

    Ha ha... but they sure as hell end up in the same place. Don't they?

  • Report this Comment On October 29, 2010, at 4:48 PM, TopAustrianFool wrote:

    "I don't spend my hours here

    http://www.nytimes.com/2005/08/08/opinion/08krugman.html?_r=...

    That's it? That's your example of him being right? Krugman predicting in 2005 that the bubble had burst, when it burst in 2008. Yikes... So if you predict the market will drop today, every day, eventually you will get a Nobel prize. By the way there in no Nobel economics or peace prize. These are both political awards by Parliament.

  • Report this Comment On October 29, 2010, at 4:56 PM, anacorider0 wrote:

    To: eldetorre:

    At the most fundamental level any communication communicated verbal or written starts as an idea. What I, who feel Krugman is a hack, find dangerous in his writing the same subject matter, is not that he is explaining his position in different ways so the ordinary reader, the arrogance!! Is able to understand him, but that he is repeating the same thing over and over. His ideas have been read repeatedly and found wanting repeatedly.

    Seventy plus years ago this repetition of an essentially untrue position was labeled the "Big Lie", it is still alive and kicking.

    Since a large portion of the American population is unaware of the historical past, or cares less, the "Big Lie" would seem as truth. What a pity the people are fooled again, only this time the issue is more critical than selling them the Brooklyn Bridge.

  • Report this Comment On October 29, 2010, at 5:02 PM, dargus wrote:

    TopAustrianFool, I think you need to change that it a little f.

    http://krugman.blogs.nytimes.com/2009/02/07/what-the-centris...

    Here's two columns posted just above your comments in this thread.

    http://www.nytimes.com/2009/01/09/opinion/09krugman.html?ref...

    http://www.nytimes.com/2009/01/12/opinion/12krugman.html?ref...

  • Report this Comment On October 29, 2010, at 5:10 PM, SStambush wrote:

    It is wrong to say, "Krugman never said the "stimulus" would not work at the time that it was passed." I saw him complaining that the Stimulus was not big enough and would not work on Olberman around the time of the Stimulus passage. It was the first time I saw PK and I remember thinking "why is that hairy guy trying to torpedo Obama's stimulus. Don't all socialist stick together?"

    Yes I watch Olberman. It is the most palatable way to watch the highlights of Limbaugh, O'rielly, Beck, Hannity, Fox and Friends....

  • Report this Comment On October 29, 2010, at 5:11 PM, XTDNMAN wrote:

    It's consistent with his latest book, which provides example after example of liquidity crises that were exacerbated by misguided attempts to impose fiscal austerity too aggressively.

    "Be very careful!" is the message I hear loud and clear. And in this election time, be careful what you wish for, you might just get it.

  • Report this Comment On October 29, 2010, at 5:12 PM, dargus wrote:

    Nick, your position seems to be that one can't make macro predictions with any accuracy, that modeling and economic analysis are basically pointless.

    I again suggest you read his blog if you believe him to be arrogant. I will grant you he has a lot of faith in macroeconomic models, but he tends to give a fair assessment of their strengths and weaknesses when he has the space. Frankly, I'm not even sure how you would use his writing for investing purposes, unless you are trying to market time.

  • Report this Comment On October 29, 2010, at 5:15 PM, zyx987 wrote:

    Paul Krugman received the Nobel Prize in Economics in 2008.

    I think he is worried that the citizenry is too complacent ... that the Hooverites may be running the next Congress . That things can still go mightily wrong.

    That you don't yell "Fire" once and hope for the best, when the danger is still present.

  • Report this Comment On October 29, 2010, at 5:23 PM, mrwizard555 wrote:

    krugman is both right and wrong, and fails to acknowledge that.

    the stimulus was more than sufficient in terms of volume or mass or any other measure of size. the overarching error that was mad was in assuming that just throwing money at the problem was enough. the $787 billion was enough to directly employ 15,740,000 people for a year, almost 8 million for two years, at a decent wage, with benefits. i personally don't care what they would have been doing. sweeping sidewalks. picking up papers. walking dogs. who cares.

    what we got was a couple miles of paving or sewers over a 6 month period, with the rest going to "administration", AKA waste. Bob's Backhoe Service got some work, but Bob, himself, was doing the digging. he didn't hire anybody. he knew it would not last beyond the last hole filled in.

    if there is ever another stim package, it needs to be very direct. $50K=one $15 per hour job plus bennies.

  • Report this Comment On October 29, 2010, at 5:51 PM, anacorider0 wrote:

    To: eldetorre:

    At the most fundamental level any communication communicated verbal or written starts as an idea. What I, who feel Krugman is a hack, find dangerous in his writing the same subject matter, is not that he is explaining his position in different ways so the ordinary reader, the arrogance!! Is able to understand him, but that he is repeating the same thing over and over. His ideas have been read repeatedly and found wanting repeatedly.

    Seventy plus years ago this repetition of an essentially untrue position was labeled the "Big Lie", it is still alive and kicking.

    Since a large portion of the American population is unaware of the historical past, or cares less, the "Big Lie" would seem as truth. What a pity the people are fooled again, only this time the issue is more critical than selling them the Brooklyn Bridge.

  • Report this Comment On October 29, 2010, at 6:01 PM, jcrubino wrote:

    So long as our authors definition of science includes green and blue making purple, the dismal science has some legitimacy.

  • Report this Comment On October 29, 2010, at 6:14 PM, RLoder wrote:

    Even an armchair economist should know that the spending of WWII brought the country out of the Great Depression. WWII was the largest stimulus package ever as % of GDP, so please don't tell me government spending can't work to bring the country out of a economic problem. The mental midgetry of the article is sad to see on TMF, this sounds more like Glen Beck or someone from the Tea Party ranting but has no logical solutions to propose.

  • Report this Comment On October 29, 2010, at 6:30 PM, Harley117 wrote:

    You big mistake is reading the New York Times.

  • Report this Comment On October 29, 2010, at 6:52 PM, ryanalexanderson wrote:

    > don't tell me government spending can't work to bring the country out of a economic problem.

    Yeah, okay, I won't tell you that. I'll tell you this:

    1) You can't borrow your way out of a solvency crisis.

    2) America had a solid manufacturing base back then, and actually made things. Now our economy is 70% based on consumption.

    3) Our debt-to-GDP was waaay lower before the start of WW2. The debts incurred then couldn't remotely be incurred now.

    4) Demographics were in our favour then. Definitely not now.

    5) US had a sound money policy back then. The currency has since been trashed, and will continue to be trashed.

    Man, I could go on.

    The arguments for the stimulus imply that we're just in the doldrums and a bit of stimulus will bring sunshine and roses. We have severe structural problems in our economy that have culminated in the ever expanding debt bubble of the last 25 years. We've got a big bill to pay today for our collective hedonism of the last couple decades.

    Forget about armchair economists. It's armchair accountants that can figure this one out.

  • Report this Comment On October 29, 2010, at 7:35 PM, TopAustrianFool wrote:

    Yes... I see in the links above provided by dargus that Krugman wanted more. Its is not clear how much more, but he mentions the "multiplier effect" could be 150%. What he fails to see is that money spent by the gov't has to be taken away from someone else. Therefore, gov't spending cannot stimulate since that money would have been spent somewhere else, or saved, which would have provided more liquidity and security to banks.

  • Report this Comment On October 29, 2010, at 7:37 PM, TopAustrianFool wrote:

    Hoover started the New Deal. You can look it up, that a lot of FDR's New Deal programs were extensions of Hoover's programs. You can say that Hoover did not spend enough and that FDR did, but it took until 1954 to recover. You should not say that Hoover did nothing, that is just campaign propaganda from FDR. I think we are passed that now.

  • Report this Comment On October 29, 2010, at 7:50 PM, TopAustrianFool wrote:

    "we must remain vigilant against those that would turn America into a socialist welfare state where only the ruling political classes drink $500. bottles of wine, I suspect Krugman would still be swilling his share."

    Vigilant indeed. Socialism is a cancer and the problem is that human nature makes us feel good about it. When a socialist says he will institute fairness, but he believes in the free market, then he turns around and tells you that you should not have to pay anything to the physician that saves your life, or that teacher who helps your kids. He says it should be free, most people like the sound of that.

  • Report this Comment On October 29, 2010, at 7:55 PM, TopAustrianFool wrote:

    "Even an armchair economist should know that the spending of WWII brought the country out of the Great Depression"

    Not really. What brought us out of the depression was that FDR was dead and his succesor undid most of the New Deal. During the war the US realized that the Soviet system had failed, when the Germans with their crappy economy steamed rolled over the Red Army and we had to supply the USSR with blue prints for everything from machinery to tanks since they were 20 years behind in technology. The Red Army didn't even have rifles or winter clothing for its soldiers.

  • Report this Comment On October 29, 2010, at 8:54 PM, fredgei wrote:

    There is one simple reason I read Krugman's blog more regularly than any other economics blog: The man has been right about the big economic moves, to a degree that's scary.

    I think it was May 2005 that Krugman said we had a real estate bubble, which was going to burst soon. (Off on timing, right on what was happening.)

    It was November 2005 when he started blogging about health care coses, and advocating Medicare-for-all. Whether you agree or disagree, he was certainly airing the arguments that would later be used to justify the health care overhaul.

    In December 2006, based on a back-of-the-envelope calculation, estimated odds of a recession because of the housing crisis as between 68% and 74%. Gotta say he called that one a year in advance, eh?

    I could continue, but the point should be obvious: Either the guy's had a fantastic streak of luck, or reading his blog will give you a year or two's notice of big changes in the economy. And if you can't turn a profit with an edge like that, it's time to turn to investing in baseball cards instead.

  • Report this Comment On October 29, 2010, at 9:17 PM, graybeardNYER wrote:

    talk about tea party ignorance (along with hubris)! Admitted pro-Democrat Krugman espouses the very same opinions as two very conservative investor/economists: Bill Gross "the bond king," and the Canadian broker-economist Dave Rosenberg.

    Gross's postings are once per month, and Rosenberg's are daily. They both fill their articles with government statistics, charts and quotes from the Economic Times, WSJ, etc.

    Gross's last article condemned both political parties and pleaded for a third (would they really be different?).

  • Report this Comment On October 29, 2010, at 9:46 PM, RLoder wrote:

    TopAustrianFool wrote

    "Not really. What brought us out of the depression was that FDR was dead his succesor undid most of the New Deal. During the war the US realized that the Soviet system had failed ..."

    Sorry to tell you this but much of the New Deal still exists in some form and many parts ended before FDR died. Also your statement that the US realizing communism was a bad system helped end the Great Depression is total nonsense. I have to assume at this point you are some random phrase generator that tries to bypass spam filters.

  • Report this Comment On October 29, 2010, at 10:03 PM, thebest12211 wrote:

    It is interesting that Nick Kapur finds Paul Krugman tiresome because of his consistent support of significant government spending during a recession which is right out of Keysian Economics.

    Unfortunately, no one listens to the New York Times anymore and the decline in influence of the Times directly corrolates to the decline of the country.

    For 15 months prior to the invasion of Iraq, Mr. Krugman's colleague, Thomas Friedman wrote endlessly about what needed to be done IF the United States was to invade Iraq.

    1.Secure the borders

    2.Invade with 500,000 soldiers

    3. Must be prepared to provide electricity and water

    4.Provide for the public safety with a police and army

    5 . etc etc etc

    Did any one listen despite Friedman's endless articles on what needed to be done?

    ZERO!!!!

    Only after the fact did the government admit that it misunderstood what needed to be done.

    Mr. Krugman will be proven correct over the next several years. Unfortunately, Republicans , who believe in low taxes and low government spending do not rule according to their beliefs and spend us into oblivion during their rule. This makes necessary spending during a rescession appear to be outrageous and excessive.

    Mr. Kapur will eat his words.

  • Report this Comment On October 29, 2010, at 10:21 PM, dargus wrote:

    TopAustrianFool, wrote, "What he fails to see is that money spent by the gov't has to be taken away from someone else. Therefore, gov't spending cannot stimulate since that money would have been spent somewhere else, or saved, which would have provided more liquidity and security to banks."

    Who are we taking this money from?

  • Report this Comment On October 29, 2010, at 10:27 PM, TopAustrianFool wrote:

    "Who are we taking this money from? "

    The ones who earned it, who will spend it in things the really need or desire thereby creating a sustainable desire. When govt spend the same money it usually spend it in things that are temporary, thereby killing the multiplier effect that Krugman speaks of. Also from investors who will creat jobs by investing with a longer term return.

  • Report this Comment On October 29, 2010, at 10:30 PM, TopAustrianFool wrote:

    "Sorry to tell you this but much of the New Deal still exists in some form and many parts ended before FDR died."

    Ha ha... most of the new deal is gone and the only programs left are broke... Social Sec, etc...

  • Report this Comment On October 29, 2010, at 11:08 PM, dargus wrote:

    TopAustrianFool, who has less money today because of money the government is spending of economic stimulus?

  • Report this Comment On October 29, 2010, at 11:09 PM, AvianFlu wrote:

    I dropped by a bookstore and read a few excerpts from a Krugman book. I had disturbing nightmares all night. Horror movies do not scare me like Krugman. He puts the dismal in "dismal science". Some peoples minds are like cement... all mixed up and permanently set. He is a pimple on the buttocks of the nation. But those are the GOOD things I have to say about him...

  • Report this Comment On October 29, 2010, at 11:14 PM, NOTvuffett wrote:

    Let me see if I got this straight:

    Krugman says it is generally accepted that public spending yields 1.5 times gain in output, the benefits of tax cuts are uncertain, and austerity measures would be apocalyptic.

    What is government spending if you are out of money? It is running up our collective credit card. Why is that good when they blame part of the economic crises on excessive consumer debt? My own back of the envelope calculation has current government debt for every man, woman and child at about $40k currently.

    Tax cuts? Think of how horrible it would be if you were left with more of your own money to spend, save and invest as you saw fit.

    Austerity in government spending? Pure charlatanism. Just because individuals have to live within their means doesn't mean that the government should, after all they have to bring home the bacon, lol.

  • Report this Comment On October 29, 2010, at 11:43 PM, RLoder wrote:

    TopAustrianFool wrote:

    "Ha ha... most of the new deal is gone and the only programs left are broke... Social Sec, etc..."

    I count 10 of the 21 New Deal programs still exist in some form today. It looks like 9 ended BEFORE FDR died in 1945, so your logic that undoing the New Deal created some magic wand that ended the Great Depresion after FDR died and the US discovered communism is bad is profoundly ignorant. At this point I have to assume everything you write is wrong even if I agree with it.

  • Report this Comment On October 30, 2010, at 12:35 AM, SmallWords wrote:

    Does anyone else find it humorous when the most vocal people supporting Krugman, like thebest22111 or whatever, have no picks. In other words, they talk a big game but aren't even trying to prove that they know the first thing about economics by choosing company's with good potential. Go back to the HuffingtonPost.

  • Report this Comment On October 30, 2010, at 12:46 AM, Vineconimcs wrote:

    I see no need to defend Mr. Krugman, but I do not like you calling Economics Psuedo-Science. It is as we all know, a Social Science. As a Social Science, Economics is always subject to “Averaging” some kind of human behavior, which most casual observers would think, “This can’t be averaged”!

    Unfortunately, when the Economy runs well, Economists are not needed or so the story goes. Like Policemen where there is no crime. The system you see, is working and Economics aka “The Dismal Science” constantly throws bad news where it is not welcome, warning of impending dooms, pointing out excesses and Achilles Heels.

    When times turn bad, these same Economist’s want to write and re-write “I told Ya so Articles” as mentioned in the current article of discussion.

    Economists are not generally built with an Agenda pre loaded in them. Rather, they look at numbers, data and apply these to the various Macro or micro economic principles.

    So, if you wanted to actually argue with Mr. Krugman, a better approach would be to comment that Social Security, Unemployment Compensation, Road repairs and construction, Medicare and Medicaid and quite a few others are all “PRE installed” stimulus packages. Unemployment compensation spending, especially is automatically going to go up, when the Economy goes down. So there is no need for a further stimulus package, unless you want to consider these items, which the government should be doing anyway, as some how, something extra?

    Further, Fiscal policy actions in General are no guarantee. Even if you just hand out money for good behavior, $1,000.00 to each citizen, you can’t make people spend it. Economic lingo, you cannot control the velocity of the money put into the system. If your stimulus money goes into some one’s savings vs. consumption that money’s stimulus value ends, until the owner decides to spend it.

    The time it takes from a “stimulus package” being planned, Voted in, and then implemented almost gurantees it will be wrong when actual effects are being felt. By this, I mean it will be time to “pull back” before the next package can have any effect.

    Lastly, The, “there just isn’t enough money in the cookie jar” argument. The new stimulus package, no matter how much you put in, will also not be enough. The root cause of the “Great Recession” currently unfolding is the housing crisis. This crisis changed consumers, some quite dramatically, from “Wealth Effect” upwardly mobile consumers to Hopeless debtors aka “depression mentality” consumers. So, the last statistic I heard about Just Homeowners, was 12 Million Homeowners have a mortgage that exceeds the market value of their home.. I know of No stat, but consider, if each of these was “down” $100,000.00. My tally shows that is $12 trillion worth or reasons to save money or to pay down on what you have already purchased vs. going on a spending spree.

  • Report this Comment On October 30, 2010, at 2:04 AM, hadreedy wrote:

    Krugman is correct in his simple analyses. Tear him down by calling him arogant, lacking humility, or socialist. That has proven to work better than actually countering his arguments.

    I know someone else who could use a little humility.

    Do yourself a favor, and stop reading his articles.

  • Report this Comment On October 30, 2010, at 2:11 AM, 88woody wrote:

    You reveal your own ideological presuppositions, and actually your narrowmindedness, by calling Krugman an 'intensely left-wing economist'. Krugman is a Keynesian, so in other words a social democrat. Only in right-wing Republican circles would someone committing to defending capitalism be called 'intensely left-wing'. If you got out a bit more, then you would find that Krugman is a Nobel-Prize winning economist who is pretty centrist in world terms.

    As many of the commenters have said, try meeting his points instead of name calling.

  • Report this Comment On October 30, 2010, at 2:12 AM, drborst wrote:

    I'd like to point out one detail. Krugman writes two articles. You correctly read "the stimulus wasn't big enough" repeated several times. (and, to give him credit, he started that before the stimulus was passed, when he correctly predicted that we'd never get another if it turned he was right and it wasn't big enough, and stimulus has become a bad work in Washington).

    He's also written about Chinese currency being overvalued. Which has nothing to do with the stimulus...

  • Report this Comment On October 30, 2010, at 6:36 AM, markofzorro wrote:

    Nick,

    I am surprised TMF publishes such a superficial analysis. I'd advise thinking with your head rather than your biases.

    You are of course right that it is impossible to mathematically predict the behavior of a complex system with precision, but there more factors that can be considered in a real-life context -- and they greatly increase chances of successful prediction. For example, weather is the classic chaotic system and it is notoriously difficult to predict. Yet we all know that there will be four seasons in the next year and what order they will come in.

    Financial systems are, of course complex, but a thoughtful analyst can make predictions based on experience, knowledge, and understanding that are far more accurate than chance. This is what we pay TMF for.

    Example: Thomas Au's 2004 book, A Modern Approach to Graham and Dodd Investing, has an entire chapter predicting the real estate and stock market crash based on sound and well-known economic principles of boom and bust.

    In your over reaction to Krugman's politics, you lost your objectivity. Not a good characteristic for any analyst.

  • Report this Comment On October 30, 2010, at 7:23 AM, TopAustrianFool wrote:

    "21 New Deal programs"

    21? There were hundreds of programs. It was an alphabet soup...

  • Report this Comment On October 30, 2010, at 7:27 AM, TopAustrianFool wrote:

    dargus, you ask:

    "TopAustrianFool, who has less money today because of money the government is spending of economic stimulus?"

    Everyone. When the govt inflates the currency it is stealing money from your bank account, and paycheck. Since the purchusing power of your dollars goes decrease. So effectively you are poorer and bankers are richer.

  • Report this Comment On October 30, 2010, at 3:17 PM, thebest12211 wrote:

    I just don't get it!

    Where were the Bushites when Mr. Bush started TWO unfunded wars. And yes, your great, great grandchildren will still be paying for these wars but not a peep out of the Tea Party. Where was the uproar when Mr. Bush decided to pay for drugs for wealthy older folks instead of mean testing the benefit. Where were the outcries when Haliburton was stealing the American people blind with non-compete contracts?

    Not a word on budget deficits until Mr. Obama was elected.

    Most economic discussions are controlled by intellectually dishonest folks who woke up after 8 years of sleep.

    The problems with America began when the middle class became fat, happy, lazy and stupid. The were not content to be middle class but felt an entitlement to live an upper middle class lifestyle. State Universities were not good enough for THEIR children, 2500 sq ft houses were not good enough to live in, BMW's were not something to aspire to but to purchase no matter what their income.

    We got lazy and the rest of the world kept working.

    And if we get away from economics which is a polarizing subject, look at American basketball teams in the Olympics. Never lost a single game until we became complacent and overconfident and the rest of the world became as good as us.

    The problem is not GOVERNMENT but rather it is US and we don't like what we see in the mirror.

  • Report this Comment On October 30, 2010, at 4:31 PM, TopAustrianFool wrote:

    "Where were the Bushites when Mr. Bush started TWO unfunded wars. And yes, your great, great grandchildren will still be paying for these wars but not a peep out of the Tea Party."

    The two wars have a cost, so far or about 17% of the deficit. War is the only thing govt should be doing. Healthcare will cost $1Trill once is fully implemented. The stimulus anothe Trill...

    You just can't compare the cost of both. Its ridiculous. And yes we should have paid, not borrow money for the wars.

  • Report this Comment On October 30, 2010, at 4:34 PM, TopAustrianFool wrote:

    "The problem is not GOVERNMENT but rather it is US and we don't like what we see in the mirror."

    No... the problem is over-reaching by govt, not just govt. It is socialist govt and people are about to let you know they don't want it. Of course, only when they realize that the socialists in power want to make them pay for all of it... but nevertheless they don't want it.

  • Report this Comment On October 30, 2010, at 4:42 PM, thebest12211 wrote:

    Top Austrian...

    I am not commenting on the merits of spending on war or healthcare but rather on the fact that government spending is government spending and that the opposition party sat on their hands while government spending went over the top during an 8 year period. In fact, the Republicans said (in contrast to their philosophical beliefs) that deficits don't count.

    Re: "the over-reaching by gov" Did you not see the recent report on Hitler and the German people. Hitler didn't MAKE them do anything..He let them do exactly what they WANTED TO DO.

    Evil or ignorant people just SEEM to get the government that fits them.

  • Report this Comment On October 30, 2010, at 5:37 PM, TopAustrianFool wrote:

    "opposition party sat on their hands while government spending went over the top during an 8 year period."

    This is true... I agree with you, and I also agree that the Tea Party was nowhere to be seen. I have always suspected the movement as hypocritical...

    Now... I did not see the Hitler report, but I have studied Hitler's economic policies for a time now, and something most people don't know is that Hitler was a socialist. Yes, NAZI is an acronym for a National Socialist German Workers' Party. The difference between German socialism and Soviet socialism was that the German kind is by proxy. For example, the govt doesn't own the banks or provides healthcare directly but it controls it through regulations which creates monopolies. Facism is actually the name socialists gave to Hitler's socialism so as not to have to call him a socialist after he invaded the Soviet Union. Once he invaded the USSR, socialists turn from non-interventionists to war supporters. And embarked into turning the NAZIs into a religious right movement. Talk about rewritting history...

  • Report this Comment On October 30, 2010, at 5:39 PM, TopAustrianFool wrote:

    "In fact, the Republicans said (in contrast to their philosophical beliefs) that deficits don't count."

    This is also true. I remember that during the Bushy years they would say something of the sort that the debt was not so important... And actually Gore ran on paying the debt... remember that? And Bush couldn't care less about the debt.

  • Report this Comment On October 30, 2010, at 5:57 PM, fooldotcom76 wrote:

    ok

  • Report this Comment On October 30, 2010, at 6:01 PM, fooldotcom76 wrote:

    ok

  • Report this Comment On October 30, 2010, at 6:02 PM, fooldotcom76 wrote:

    You did not engage Krugmann's arguments.

    You simply took the stance that you have no stance.

    This is nonsense.

  • Report this Comment On October 30, 2010, at 7:39 PM, lntwo wrote:

    Is his guess really as good as mine? - "His guess is, after all, just as good as yours".

    As someone with a small measure of intellectual honesty, I sincerely doubt it.

    So, NO analysis can be brought to bear on a problem that could improve the prediction from utter randomness?? That is nonsensical and mocks TMF.

    I know you wrote an opinion piece but geez, Krugman is hardly some off-the-cuff hack, and offers extensive background on his blog to support his arguments.

  • Report this Comment On October 30, 2010, at 8:21 PM, TopAustrianFool wrote:

    "Krugman is hardly some off-the-cuff hack"

    Krugman is no hack. He is a believer, and quite subjectively, in the Keynesian School of economic though. Keynes was somewhat of a facist, he believed that govt could manage and control the economy through monetary policy. Keynesians are full of contracdictions. For the "spending drives the economy but not in Las Vegas."

  • Report this Comment On October 30, 2010, at 8:25 PM, TopAustrianFool wrote:

    Here is Krugman contradicting the things he said while a democrat was in power. He is guilty of changing his tune depending on who in in the white house... That makes him dishonest at best.

    Krugman says:

    "What Democrats believe is what textbook economics says...

    ...But that’s not how Republicans see it. Here’s what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning’s position (although not joining his blockade): unemployment relief “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.”

    In Mr. Kyl’s view, then, what we really need to worry about right now — with more than five unemployed workers for every job opening, and long-term unemployment at its highest level since the Great Depression — is whether we’re reducing the incentive of the unemployed to find jobs. To me, that’s a bizarre point of view — but then, I don’t live in Mr. Kyl’s universe."

    Here is what Krugman himself wrote together with Robin Wells (his wife) in his textbook "Macro- economics":

    "Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker's incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of "Eurosclerosis," the persistent high unemployment that affects a number of European countries."

    Case close...

    Krugman's economics as he write in his column are naive and uneducated. But I believe he knows better than that, it just doesn't suit his politics.

  • Report this Comment On October 30, 2010, at 9:03 PM, dargus wrote:

    TopAustrianFool, way to paint economic context as a partisan party issue. Let's see what Krugman really said. "What Democrats believe is what textbook economics says: that when the economy is deeply depressed, extending unemployment benefits not only helps those in need, it also reduces unemployment. "

    I guess you missed it earlier when I already debunked this attack. Case closed, you are an ideological hack.

  • Report this Comment On October 30, 2010, at 10:47 PM, kimbory wrote:

    Nick, Nick, Nick, poor Nick,

    I am sorry you're just a poor investor attempting to make a buck, versus a well respected economist. As one investor to another I might recommend reading a few recent 10K's or earnings conference transcripts to get a feel for what some business leaders are saying. For your enjoyment, I'll pull one out of a hat, one from a non-US company, so we've got no home-court bias. VALE, maybe you've heard of the company. Here's what they had to say in their latest earnings announcement.

    "The main central banks of developed economies did not change the stance of monetary policy easing and in emerging economies monetary policymakers followed a more cautious stance with respect to interest rate hikes. A global accommodative monetary policy continues to support the recovery preventing deterioration in financial conditions."

    Seems to me like these guys have no problem with New Keynesian economic theories, and likely would support more of the same.

    Rational argument would do better than bashing. I would suggest that fool.com have a little heart-to-heart

    before publishing more junk. Or is your contribution simply intended to stoke the fires?

    source - http://www.sec.gov/Archives/edgar/data/917851/00009501231009...

  • Report this Comment On October 30, 2010, at 11:07 PM, ThorsteinVeblen wrote:

    @TopAustrianFool: I did not mean to imply that Hoover was a bad guy, he was a great man hamstrung by a bad idea. Hoover was a brilliant, hardworking, self-made man. He went from being a poor orphan to a captain of industry. He led private, massive, food relief efforts to Europe during WWI. He was in charge of the relief effort for the 1927 Mississippi Flood for which he gained much deserved national admiration. The fact that Hoover did start the Reconstruction Finance Corp in last year of his term proves my point that even he, a dyed in the wool, budget balancing fiscal conservative saw the need for federal investment to prime the economic pump. He just figured it out too late for the country and his presidency.

  • Report this Comment On October 31, 2010, at 7:16 AM, TopAustrianFool wrote:

    ""What Democrats believe is what textbook economics says: that when the economy is deeply depressed, extending unemployment benefits not only helps those in need, it also reduces unemployment. "

    I guess you missed it earlier when I already debunked this attack. Case closed, you are an ideological hack."

    That is the point his... his text book says otherwise and he criticide Kyl's remarks as bizzarred when they are exactly what he wrote in his text. You just made my point. You debunked nothing.

    You can read above where I say Krugman is no hack. Also read above where I criticize the Tea Partiers as being absent during Bushy years. I will say Krugman has been quite the socialist lately and has criticezed the Obama administration as not being left enugh. Nevertheless he has been incosistent in the above remarks.

  • Report this Comment On October 31, 2010, at 7:21 AM, TopAustrianFool wrote:

    ""What Democrats believe is what textbook economics says: that when the economy is deeply depressed, extending unemployment benefits not only helps those in need, it also reduces unemployment. "

    I guess you missed it earlier when I already debunked this attack. Case closed, you are an ideological hack."

    His book contradicts this! That's the point. Next time read my whole post before you insult me.

  • Report this Comment On October 31, 2010, at 12:39 PM, dargus wrote:

    The quote from his book is about normal economic times! When the economy is deeply depress and unemployment is at 9% it is a different world. When there are 5 people applying for every job opening, please explain why unemployment benefits would raise unemployment? In fact, as he states in his column, the extra spending money the unemployed have actually decreases unemployment by stimulating the economy. You know they are going to spend the money because they have no income.

    Your attack would be like criticizing someone for writing a book that suggests wearing a jacket in the winter, but there when there is an unusual heat wave during the winter they write a column telling you to wear shorts. Clearly, they are telling you to wear shorts because a Democrat is in the White House and not because it is 90 degrees outside.

  • Report this Comment On October 31, 2010, at 1:28 PM, doncoyoteok wrote:

    It's simple really. Krugman gets paid to express a certain view. Anything anyone else says will not affect his view because it's the source of his livelihood. Alternative strategy: maybe if we ignore him he'll just go away.

  • Report this Comment On October 31, 2010, at 3:56 PM, TopAustrianFool wrote:

    "The quote from his book is about normal economic times! When the economy is deeply depress and unemployment is at 9% it is a different world. When there are 5 people applying for every job opening, please explain why unemployment benefits would raise unemployment? In fact, as he states in his column, the extra spending money the unemployed have actually decreases unemployment by stimulating the economy. You know they are going to spend the money because they have no income."

    Then why call Kyl's remarks bizarre?

    It sounds logical to say that there just isn't any jobs out there. But the reality is that there is plenty of work, just not at the salaries people want or need. I say need because due to the inflationary policies that Krugman espouses inflation makes it difficult for employers' cost to decrease and thereby hire. If Krugman allowed deflation to occur, which he fears and fights with economic fallacy, then your unemployment rate would drop. I believe is not so dense as to not understand this, so I have to conclude that he is so emotional that he is dominated by partisanship.

  • Report this Comment On October 31, 2010, at 4:31 PM, dargus wrote:

    Once again, he's calls Mr. Kyl's view bizarre in the face of the current economic condition, which you fully quoted. Why are so many Krugman haters unfamiliar with nuance?

  • Report this Comment On October 31, 2010, at 7:12 PM, lntwo wrote:

    Man, WAY better discussion than the opinion piece.

    @Aust: great points - so how would PK distinguish between present condition and his Euro. stance? You really should pose the question on his blog and see if he answers. (He does respond from time to time). Or maybe I will.

    My uneducated thoughts have been swirling around PK's points that we run the risk of deflationary positive feedback loop w/o benefits, and that cost of homelessness and other ancillary services to destitute/unemployable are greater than unemployment bennies.

    (Maybe that's a distiniction PK would make - Europe you lose a job, you have generous safety net, and housing help (I lived in France 3 years and know that housing allowances are generous, and one could reduce unemployment bennies without throwing many into street).

    Maybe drawing direct line from Eur. to US not the best - the level of social safety net not even comparable.

    No doubt, one could parse the unemployment/and job stats to get a handle on impact....

    Most simply, we could do the experiment and cut bennies and watch for a year.

    Cheers All

  • Report this Comment On November 01, 2010, at 12:34 AM, ThorsteinVeblen wrote:

    For those interested in economic opinions, Steve Keen, who recently beat out Nouriel Roubini as the economist who best predicted the crash of 2008, is now predicting a double dip recession and takes issue with NBER claiming the recession is over. Steve uses nonlinear differential equations to model unemployment vs debt relative to GDP. It's an interesting read:

    http://www.debtdeflation.com/blogs/2010/10/19/deleveraging-d...

  • Report this Comment On November 01, 2010, at 3:07 AM, TaigaTaiga wrote:

    Krugman is trying to describe persuasively a well demonstrated model of economic recovery from a particular set of economic circumstances. I would think that investors would understand the history of the corporations they might be investing in and realize, in contradiction to the current GOP mantra that government can't create jobs and other rubbish, that government is responsible for a great deal of economic development.

    I think we can dismiss the Austrians out of hand; the Chicago School of Friedman has past its peak but has been flailing for several years now thanks to the Ayn Rand fetish of Greenspan and the naive market worship of its prominent followers. Significant and substantial market failures in health insurance and other areas cannot continue to be ignored, leading us back to Samuelson and Keynes and Krugman.

    Where does government create jobs? Every major construction firm, e.g. Bechtel, MK, Halliburton. Every environmental consulting firm. Every aircraft manufacturer. Every oil company-the Navy is quite a customer. Every shipbuilder still in the US. Literally thousands of firms depend directly on the government for their business. This is an undeniable fact that is politically unpalatable to the GOP despite their continued dependence upon those firms for donations.

    The fact is that Keynes' model of the economy was correct and that political opposition to Keynesian policy is decoration. Reagan, cited above as a fiscally responsible conservative, did nothing less than a) shift tax burdens from the wealthy elites to the working and middle classes and b) Keynesian stimulus spent on military projects is still stimulus-Reagan's example would be an absurd Naval buildup, Star Wars, and a number of flashy procurement programs and colonialist adventures overseas.

    How to profit from this knowledge? Don't short Halliburton or other crony capitalist firms. If you had purchased crony firms to Bush and Cheney in 2000 you would be money well ahead. If Republicans win this cycle, look for opportunities in crony industries that have contributed to GOP candidates. If the Democrats come out ahead look at green energy stocks, American automakers, and be ready to pounce on health insurance and receiver banks. In either case there are a number of historic opportunities for investment-copper, rare earths, the transition of domestic oil fields from the majors to smaller, more flexible players, engineering firms like CH2M Hill are expanding, the mortgage fraud disaster will no doubt end with a federal entity taking over like the S&L crisis, and developing markets that will be taking over the grunt manufacturing from China as that economy moves up to domestic consumption.

  • Report this Comment On November 01, 2010, at 7:28 AM, TopAustrianFool wrote:

    "predicting a double dip recession and takes issue with NBER claiming the recession is over"

    Technically the recession is over since the ridiculous CPI they use coupled with GDP say the economy is growing. Now, the depression is not over. I think most people confuse depression with recession.

  • Report this Comment On November 01, 2010, at 7:30 AM, TopAustrianFool wrote:

    "Once again, he's calls Mr. Kyl's view bizarre in the face of the current economic condition, which you fully quoted. Why are so many Krugman haters unfamiliar with nuance? "

    He may be using nuance, but he is the one who still wrong about the economy. (Read my post before this one.) This is a special case to him because it is the Dems in control. Once the Reps take over it will cease to be a special case.

  • Report this Comment On November 01, 2010, at 7:34 AM, TopAustrianFool wrote:

    "Where does government create jobs? Every major construction firm, e.g. Bechtel, MK, Halliburton. Every environmental consulting firm. Every aircraft manufacturer. Every oil company-the Navy is quite a customer. Every shipbuilder still in the US. Literally thousands of firms depend directly on the government for their business. This is an undeniable fact that is politically unpalatable to the GOP despite their continued dependence upon those firms for donations."

    What you don't see is the jobs the govt robs from the economy, the jobs that are not created when the govt takes the money, it needs to do the "wonderful" things you list above, from the private sector.

    All of those industries you list above created by the govt cost about $300 - 400k/job/yr. When if the money had stayed in the private sector it would have been more jobs at about $150 - 200k/job/yr.

    Keynes always failed to see what would happen without govt intervention.

  • Report this Comment On November 01, 2010, at 7:39 AM, TopAustrianFool wrote:

    Keynesian economics are so ridiculous they are not even discussed in intellectual economic conferences. The only ones who use them are politicians because they are perfect to justify totalitarian control of the economy and socialism.

  • Report this Comment On November 01, 2010, at 10:15 AM, TopAustrianFool wrote:

    "Most simply, we could do the experiment and cut bennies and watch for a year. "

    Clinton did in the 1990's. And what happend after ward? The lowest unemployment ever... 4% for about a decade afterwards.

  • Report this Comment On November 01, 2010, at 10:45 AM, lntwo wrote:

    With respect, 90's Clinton economy ain't even close to current economy. Way off.

    @taiga: in the words of Greenspan: uh, uh..., uh... oops. His complete speechlessness in front of Congress, for me, was one of the more chilling moments in this mess.

    Also add to list of gov't supported jobs the entire pharma industry that relies on NIH, NCI and NSF trained scientists and public domain basic research to drive its profits. Essentially, all of the modern medicine you, I, we now have has some element of gov't funded research behind it.

    Just do a google patent search under say MIT, U Mich, or any other large university.

  • Report this Comment On November 01, 2010, at 11:54 AM, JamesRobertDobbs wrote:

    "...if you're swayed by a long career spent in classrooms..."

    Yep. You're a Republican.

  • Report this Comment On November 01, 2010, at 1:22 PM, JonPruitt wrote:

    I think you over reached on this one. while I enjoy your snarky, humorous idea that Mr Krugman is writing the same article each day, your examples seemed distinct from each other to me.

    Furthermore, history doesn't have to always be a predictor of the future American economy in order to be a valid basis for drawing conclusions. 80% or so of the time will do just fine, thank you.

    and, by the way, can we just get this over with to satisfy all the fear mongers out there: will all the people with a secret socialist agenda please stand up?

  • Report this Comment On November 01, 2010, at 1:29 PM, randallpouwels wrote:

    I think what's really bothering Kapur and other commenters at this website is Krugman's message (as in "kill the messenger if you don't like the message"). So, Nick, that leaves a few questions I have for you: (1) What investors can afford to ignore the bigger picture, i.e. the economy and economics? (2) Since you're not an economist, on what personal expertise do you judge Krugman's views? (3) Krugman is a Nobel Prize winner in Economics. Where's your Nobel Prize that we should take you seriously? (4) Do you realistically think Krugman writes just for investors? If, as you claim, all economists bore you, what bothers you about this particular economist that gets your gore? If he were a "righty," would you pay more heed to what he has to say?

    I, too, am an investor and I believe in capitalism. However, the views of people who naively think that capitalism is perfect, that market forces solve all problems and are benefit all are naive to the point of their making a religion out of it. ANY system, and theory needs modification to address their shortcomings. A little socialism (note: NOT communism, which is a different animal) is needed in all capitalist economies to smooth their rough edges and to bridge their extremes (recessions and depressions).

  • Report this Comment On November 01, 2010, at 1:30 PM, pantalons wrote:

    Can you offer some specific reasoning as to which of his talking points you disagree with, and why? (I admit, I too noticed the repetition in his articles, but his logic has sounded plausible to me for the most part.) Would love some substantive refudiation rather than bagging on him generally.

  • Report this Comment On November 01, 2010, at 2:48 PM, buyandsellandbuy wrote:

    The more I read by Paul Krugman, the less worried I am about his influence and danger to our country. We all have biases. Though his biases seem extreme to me, at least they are very apparent to anyone who picks up one of his editorials.

  • Report this Comment On November 01, 2010, at 5:21 PM, TopAustrianFool wrote:

    "A little socialism (note: NOT communism, which is a different animal) is needed in all capitalist economies to smooth their rough edges and to bridge their extremes (recessions and depressions)."

    What? You don't have enough now...?

  • Report this Comment On November 01, 2010, at 8:26 PM, deepestvalue wrote:

    Paul Kr. does not talk about the federal program not working at a cost of 3-4 Tril. $. He has the galls to suggest that we spend $ 13-14 Tril. that we have to borrow, so that it will not work and we are that much more in debt.

    I will grant that if the Feds print a 100 Tril. the economy WILL INFLATE. But we will then have a un managable debt that even our grand h=grand children will be paying off. Best to allow the Tea Party to stop the spending and see how much the innovation and hard work of Americans can inflate the economy. Then we will not increase our debt.

  • Report this Comment On November 02, 2010, at 8:56 AM, TopAustrianFool wrote:

    "He has the galls to suggest that we spend $ 13-14 Tril. that we have to borrow, so that it will not work and we are that much more in debt."

    If true, then it means he wants us to be a bannana republic... Then it will be easier to get an "El Presidente."

  • Report this Comment On November 02, 2010, at 1:07 PM, HowthCastle wrote:

    Paul Krugman is a professor of political economy. He writes essays on the subject of political economy. You object that you are an investor and are not interested in political economy, but rather in investment advice and investment-related news and opinion. The solution is obvious: Do not read essays by Paul Krugman. Read essays by investment advisors or investment reporters, and leave Paul Krugman's essays to people who are interested in political economy.

  • Report this Comment On November 02, 2010, at 1:52 PM, KingTag wrote:

    I see that many people object that the author, Nick, is arguing Krugman without directly arguing Krugman's theories. However, any of you whom actually read Krugman must assuredly realize that he NEVER disproves his critics points with facts - Krugman uses emotional appeal to the nth degree and constantly asserts that his opponents "simply don't understand".

    Krugman disgusts me. Write on, Nick.

    The stimulus was too,ooo,ooo,ooo,ooo big.

  • Report this Comment On November 02, 2010, at 1:54 PM, ThorsteinVeblen wrote:

    @TaigaTaiga: Wow, nice post! Thoughtful ideas well presented and actionable intelligence. TMF should pick you up as a correspondent.

  • Report this Comment On November 02, 2010, at 2:02 PM, KingTag wrote:

    And come on! The Hooverites??????????

    Seriously?????

    Go back to grade school!

    Hoover SPENT a stimulus!

    IT DIDN'T WORK PEOPLE! DUH!

    sorry for the rant, but I hate these dummies. Nick, your next article ought to be about these dummies and their fear of "Hooverites". Perhaps you could also throw in the market collapse of 1920. In fact, save yourself the irritation and ignorance of Krugman and read a nice comparison of Japan and the US in 1920, and then perhaps a good article about Japan as a Keynesian failure in the late 1980s.

  • Report this Comment On November 02, 2010, at 4:44 PM, Signify wrote:

    It's positively creepy watching Krugman's defender's close ranks around him here. And it's unbelievable that readers here are rushing to Krugman's defense with claims that Nick (1) attacked Krugman personally, (2) doesn't read enough of Krugman's other writing (e.g., his blog) to understand that the guy really has proof that the stimulus was too small and Republicans are evil dimwits, (3) shouldn't characterize economics as ultimately a lot of guesswork and uncertainty, simply because economists have formulas and use numbers and history and stuff or (4) shouldn't be listening to Krugman for serious macroeconomic analysis because he's a "political economist."

    So here's the rejoinder:

    (1) It's not a personal attack. That would have gotten down to Krugman's level, as he suffers yet another borderline apoplexy in denouncing anyone or any notion that he disagrees with.

    (2) Krugman has no standing on the issues that obsess him. Harvard PhD & Economics Professor, Robert Barrow said this about Krugman: "He just says whatever is convenient for his political argument. He doesn’t behave like an economist. And the guy has never done any work in Keynesian macroeconomics, which I actually did. He has never even done any work on that. His work is in trade stuff. He did excellent work, but it has nothing to do with what he’s writing about." Krugman is talkin through his hat, whether it's in the opinion column we're not supposed to take seriously, or in his more obscure writings, where presumably he has proof for his quasi-religious leanings.

    (3) Economics involves considerable uncertainty. The butterfly effect in complex systems such as the economy and the impossibility of incorporating every factor into complex econometric equations leads to guesswork -- but Krugman pontificates as though his belief is indisputable. Nick was correct.

    (4) Okay, we won't take Krugman seriously. But you can't have it both ways. Either he's a yammering political commentator or he's an impartial observer of an economic system, offering the conclusions that hard research yield -- regardless of whether they gibe with his liberalism. You can't say, it's just an opinion -- but it's correct, because he's a Nobel prize-winning economist.

    On Krugman's stimulus obsession in particular, there's at least an honest debate. If he said the stimulus was too small *and* poorly designed/significantly misdirected, that would be one thing. But he's a hypocrite. Google "krugman on bushs deficits" and you'll find a piece by Larry Elder about Krugman's 2004 criticism of Bush's deficits. But Obama's are okay, because they're for the right constituencies from the right guy. He has no credibility.

    Finally, from Thomas Sowell in the past few days: "Guess who said the following: 'We have tried spending money. We are spending more than we have ever spent before and it does not work.' Was it Sarah Palin? Rush Limbaugh? Karl Rove?

    "Not even close. It was Henry Morgenthau, Secretary of the Treasury under Franklin D. Roosevelt and one of FDR's closest advisers. He added, 'after eight years of this Administration we have just as much unemployment as when we started. . . And an enormous debt to boot!'"

    So much for the certitude about Keynesian priming. It's just not that simple. But Krugman insists it is, which makes him sound like a ranting child.

  • Report this Comment On November 02, 2010, at 4:56 PM, dargus wrote:

    All you need to do is Google "liquidity trap". We weren't in one in 2004.

  • Report this Comment On November 02, 2010, at 5:19 PM, MeirRatsky wrote:

    As one who actually studied economics under Samuelson in the very early '60s at MIT (and was flunked twice by his TAs for the sin of questioning the "multiplier effect" of gov't spending vs. private), I am quite amused by this "dialog" between the True Believers (please read the Eric Hoffer book!) on both sides. For those not closely following certain signs of the economy, real inflation is already here; no surprise since it is the classic response to firing up the currency printing presses, and the favorite tool of statists for resolving the consequences of unmanageable debt. For example, check out the cost of some forms of technology: the "historic trend" of ever-dropping prices for more powerful computers, especially approaching the Xmas shopping season, has actually reversed. This is especially noticeable in the past few days, as the yuan has dramatically strengthened vs. the US $, reversing the gains of the past couple of months as the Chinese responded to global pressures. Same for $ oil price. Expect this to grow rapidly in the near future REGARDLESS of the outcome of today's elections! The inflationary forces are far too strong to reverse in time. P.S. I am actually one of the long-term unemployed who hasn't been too diligent in seeking a job that would pay me even half of what I made before!

  • Report this Comment On November 02, 2010, at 5:39 PM, dargus wrote:

    You may very well be right, MeirRatsky. I read Krugman along with several other economic thinkers. What really gets under my skin are the attacks of political hackery. Krugman certainly has a strong ideological pull to his opinions, but it seems to me so do many of his detractors. There is much room to find fault in his views, but I think he genuinely believes them. I see many people here setting up straw men to knock down and then declare him a fraud. Layout Krugman's actual arguments and the haters melt away.

  • Report this Comment On November 02, 2010, at 5:47 PM, TopAustrianFool wrote:

    "All you need to do is Google "liquidity trap". We weren't in one in 2004."

    Got to love how Keynesians invent all kinds of non-sensical terms like liquidity trap to explain why their simplistic theorie fail every time.

    You have to liquidate the mal-investment caused by artificially low interest rates, inflation. Until you do that nothing will change. The more stimulus and bail-outs the govt pumps out, the longer it will take for private businesses to liquidate and reinvest.

  • Report this Comment On November 02, 2010, at 5:48 PM, TopAustrianFool wrote:

    "I see many people here setting up straw men to knock down and then declare him a fraud. Layout Krugman's actual arguments and the haters melt away."

    Address that, dargus. My last point is no straw man.

  • Report this Comment On November 02, 2010, at 5:49 PM, dargus wrote:

    I tend to agree with your last point.

  • Report this Comment On November 02, 2010, at 6:04 PM, TopAustrianFool wrote:

    "For those not closely following certain signs of the economy, real inflation is already here; no surprise since it is the classic response to firing up the currency printing presses, and the favorite tool of statists for resolving the consequences of unmanageable debt."

    Of course inflation is here. It has been here for at least a year. But they keep using the CPI as long as it tells them that there is no inflation and we can keep printing money. That is one of the main reasons banks are not lending. By the time their short term loans get paid inflation has eaten their profits and they can securitize the debt in order to counter that, so no lending. And Krugmann and Co want more of it. The man is clueless...

  • Report this Comment On November 02, 2010, at 6:05 PM, TopAustrianFool wrote:

    I meant they CANNOT securitize the debt in order to counter that, so no lending by the banks.

  • Report this Comment On November 02, 2010, at 6:05 PM, TopAustrianFool wrote:

    Keynes is full of contradictions.

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