Roman Catholics believe that the pope is infallible on matters of faith and morals.
Paul Krugman believes that Paul Krugman is infallible on all matters except faith and morals.
The Princeton professor, Nobel prize winner, New York Times columnist, and favorite of Barack Obama, is about to publish a new book explaining how the Federal Reserve can erase our economic misery by promoting more and better inflation.
To spare us the pain of having to read it the Times has published an excerpt.
In it Krugman concludes:
Consider, if you will, the current state of our nation. Despite hints of economic progress, we’re still in the midst of an immense disaster, in which unemployment and underemployment are devastating millions of American lives. And none of this need be happening! There has been no plague of locusts; we have not lost our technological know-how. Americans should be richer, not poorer, than they were five years ago. Yet economic policy across the board has become almost passive, has essentially accepted this disaster instead of trying to end it.
If you sense that these words are hiding something, you would be correct.
In this passage and in the excerpts published in the Times, Krugman is obfuscating how much the Obama administration and the Democratic Congress of 2009-2010 are responsible for producing these conditions.
While granting absolute power to the Federal Reserve Krugman slips and uses the term “economic policy,” the province of the president and Congress instead of “fiscal policy,” the province of Krugman’s former Princeton colleague.
But Krugman has another reason for wanting us all to believe that the current crisis is unnecessary. It happens that Krugman himself was one of the leading architects of the financial crisis.
In 2002, after the tech bubble popped, Krugman went on the record to plead with then-Fed Chairman Greenspan to solve the nation’s economic problems by engineering a “housing bubble.”
In Krugman’s words:
The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
Did the Fed create a housing bubble because Krugman told it to do so?
We cannot say for certain, but Krugman does exercise outsized influence in such matters.
Now that the Krugman-encouraged housing bubble has nearly destroyed the world financial system the shameless and bubbleheaded Krugman is back telling the new Chairman of the Federal Reserve to solve the problem by creating yet another bubble—a monetary bubble.
By definition, inflating the currency must produce a bubble, don’t you think?.
Would you buy a used fiscal policy from this man?
Being Paul Krugman means never having to say you’re sorry.