Krugman's Revisionist History
Krugman's recent article "Divided We Fail" uses false claims, fear and outright lies to convince the reader that a Republican take over in Congress is going to be terrible for the U.S. economy.
After I expose the Krugman lies, I will refute his entire economic thesis using just ONE word.
Krugman wrote "We might add that should any Republicans in Congress find themselves considering the possibility of acting in a statesmanlike, bipartisan manner, they’ll surely reconsider after looking over their shoulder at the Tea Party-types, who will jump on them if they show any signs of being reasonable."
The word "reasonable" was very carefully chosen by Krugman. Why not say "conciliatory" or "compromise"? Krugman chose "reasonable" because it forces the reader to assume think "Only a crazy person isn't 'reasonable'! Those Tea Party-types are crazy."
The truth is if a politician COMPROMISES beliefs, COMPROMISES election promises, it is entirely REASONABLE to remove that person from office. Krugman believes its OK to lie to get elected, because the average American is dumber than a box of cereal (and not Kashi cereal, he's talking about Coco Puffs).
Krugman goes on to say "When Republicans took control of Congress in 1994, the U.S. economy had strong fundamentals ... In this favorable environment, economic management was mainly a matter of putting the brakes on the boom, so as to keep the economy from overheating and head off potential inflation. And this was a job the Federal Reserve could do on its own by raising interest rates, without any help from Congress."
What an amazing piece of revisionist history. Yes, Krugman's right that in 1994 the U.S. had stronger fundamentals, but he credits the FED for putting the brakes on a boom! Did we not have the greatest BUST in a century when the the Dot Com bubble burst? If anything the FED screwed up royally during the 1990's by not putting on the brakes hard enough (reality is they were coasting more than braking).
Krugman adds "The economy, weighed down by the debt that households ran up during the Bush-era bubble, is in dire straits; deflation, not inflation, is the clear and present danger."
It's true the households ran up debt during the Bush-era, but it was the very low interest rates by the FED that encouraged this debt. Somehow Krugman gives the FED credit for avoiding the Dot Com bubble (and it wouldn't be a bubble if it was avoided), and he blames Bush for household debt.
Why would someone so obfuscate the truth? You have to when you are advocating what Krugman does in the two sentences following this one. "And it’s not at all clear that the Fed has the tools to head off this danger. Right now we very much need active policies on the part of the federal government to get us out of our economic trap."
Aha! How can you ask to give the FED and the Federal Gov't MORE POWER, without lying about the their past actions in causing the problems.
Krugman DOES NOT believe in austerity. He does not believe that reducing spending and low inflation to get us out of this economic debacle. He needs to save face and he does that by constantly saying that we are not spending enough. As long as we don't spend enough, he can always argue he was right.
So how can I, in one word, prove he's wrong? How can one word prove that austerity creates prosperity? How can one word prove austerity creates jobs? How can one word obliterate the economic teachings of a Nobel prize winning economist?
It's not hard at all. Here you go. GERMANY