Paul Krugman's latest rant
I just finished reading Paul Krugman's piece called "The Hijacked Crisis" which was published in the NYT on August 11, 2011. For those of you unfamiliar with him, he's a Noble laureate and an unabashed Keynesian economist. He's a smart guy from an academic standpoint. He's also a deep thinker. He's not dumb or dim. But for now, his assessment of what the solution is to the US economic malaise is, in a word, C-R-A-P. Read for yourself:
I agree with him that President Obama has focused too much on the deficit discussion (with no action to show for all that time spent talking) and too little time and attention on jobs creation. But he states that "austerity policies...will make the economy even weaker" and I couldn't disagree more. Britain was quick to develop and implement an austerity package and while times aren't great in the UK at least they're not falling. Krugman also pleads for a "short-run fix" over that o f long-run solutions to systemic problems. Basically he says we should push a couple hundred billion more into pick & shovel public works jobs ("more government spending" in his words) because borrowing costs are so low. And he advocates for more "aggressive moves to reduce household debt via mortgage forgiveness and refinancing". And what he calls an "all-out effort by the Federal Reserve to get the economy moving" is a convoluted expression roughly translated to "print money until no one will accept it as currency and until it takes a wheel-barrow amount of dollars to buy a loaf of bread". Maybe I am exaggerating that last bit, but he readily admits and even advocates for higher inflation "to help alleviate debt problems".
Wow. A written plan which included all of that might be summed up in two words: toilet paper. As a counter point to Krugman's suggestion I'd advise folks to acquaint themselves with another Nobel-winning economist named Friedrich Hayek. Another great one that would offer an alternative to Krugman's propaganda is Milton Friedman. It is apparent that the works of Hayek and Friedman will never be popular with the current administration.
Friedman once said that "if you put the federal government in charge of the Sahara Desert, in five years there'd be a shortage of sand". He also said that "inflation is taxation without legislation". I agree with him in both cases and find both quotes very relevant under the current circumstances.