Just when you thought there weren't any more ill-informed people left to spew out their nonsense, CNBC anchor Becky Quick chimes in and writes this mind-numbingly dumb piece in Fortune Mag attacking Paul Krugman.
|
The New York Times columnist and Nobel Prize-winning economist recently wrote a column attacking a bipartisan proposal to reduce the nation's debt problems, arguing, "We're not facing any kind of a fiscal crisis." He maintains that President Barack Obama, if reelected, should reject calls to resurrect the debt-reduction blueprint.
The only problem with Krugman's critique? It is hard to find anyone who actually agrees with him. He's certainly not getting assent from Alan Simpson and Erskine Bowles, who headed the panel that crafted the ideas Krugman is now attacking. Nor will the economist find much support from the 44 CEOs of Fortune 500 companies who are now advocating the plan. And most notably, perhaps, he's not charming former President Bill Clinton, for whom Bowles served as chief of staff. Clinton's office provided me with the following statement when I called for comment. It's a damning retort to Krugman -- and a bold statement about a plan the Obama administration has failed to embrace, even though the President commissioned it: "While everyone can find things to disagree with in the recommendations of the Simpson-Bowles commission, I believe it got some big things right: The debt will become a much bigger problem when normal economic growth returns and causes interest rates to rise; passing a credible 10-year plan now will keep the government's borrowing costs much lower than they will be without one; it's important not to impose austerity now before a growth trend is clearly established, because as the austerity policies in the eurozone and the U.S. show, that will slow the economy, cut jobs, and increase deficits; and any credible deficit-reduction plan requires three things -- spending reductions, revenue increases, and economic growth." |
Quick hauls out the old, "if no one says what you're saying, you must be wrong," attack.
They said that to Christopher Columbus and Copernicus and the Wright Brothers, Becky.
And the staple, "If we don't get out debt in order interest rates will rise and how will we be able to pay it," garbage.
These people are paid millions of dollars to sit there and say this shit, folks.
I know. It pains me every time he says, "We have to deal with the debt, just not now." It gives the other side an opening you can drive a truck through.
ReplyDelete"if he could he would be able to refute this garbage effectively...."
ReplyDeleteOnly because some people listen to him because he's "serious".
Looks like the oligarchs are going after his cred now, then he won't be serious any longer.
Funny part is Krugman used to say EXACTLY what Becky is saying now. During the Bush years. The interest rates were supposed to "go thru the roof". Yaaaawn. He has as little clue as Becky. Even NOW he claims the US has a long term deficit problem. Right. Our only long term deficit problem is people like Krugman who will work hard after the recession to reopen the output gap. Whatever he learned recently was from MMT which had said all of this stuff all along.
ReplyDeletehttp://www.nytimes.com/2003/03/11/opinion/a-fiscal-train-wreck.html
I say he got what he deserves. It is the clueless arguing with the clueless.
How would William Vickrey respond???
ReplyDeleteWilliam Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian professor of economics and Nobel Laureate. Vickrey was awarded the Nobel Memorial Prize in Economics with James Mirrlees for their research into the economic theory of incentives under asymmetric information.
Fifteen Fatal Fallacies of Financial Fundamentalism
http://www.columbia.edu/dlc/wp/econ/vickrey.html
Fallacy 1, Fallacy 8, Fallacy 13
My take:
ReplyDeleteA government who is the net creator of financial assets to the private sector, does NOT need to directly interfere in the real economy. A government does not need to start infrastructure projects or assemble public school systems. However, the government MUST provide the private sector with the financial means to do so. Instead of hiring people directly, in this system, in this age of the internet, all the government would need to do is increase the financial assets on the private sectors balance sheet which is done through the banking system (Marking up accounts). This will allow the private sector to make their own spending decisions which will lead to production, employment. If the government runs a surplus, thereby removing assets from the private sector (income), the private sector can become overly dependent on REAL government programs such as welfare, public schools etc. Running a deficit when the private sector seeks to save in a financial sense, allows the private sector to be free of this government dependence. Again, the issue I have is that the issues of government control and financial balances are being conflated. They need to be treated separately to gain a better understanding of how our monetary system impacts the real economy.
So in her article Becky Quick writes, "The only problem with Krugman's critique? It is hard to find anyone who actually agrees with him."
William Vickrey, the IMF (recently), Modern Money Theorists, Greenspan, and many others would most likely agree with him. The problem is if someone comes across her article who does not study monetary theory extensively might think she is making a compelling point, when they have been refuted using ACTUAL empirical evidence and theory.
Rafael, Not Greenspan he is out there as we speak cautioning against our long term debt... rsp,
ReplyDeleteHere's Quick on the CNBC with Warren:
ReplyDeletehttp://moslereconomics.com/2010/02/16/warren-on-cnbc/
The only thing she says after Warren explains things to her: "Well I wish I could just do that with my checking account!?"
What a keen economic intellect there....
Bill Clinton should google Frank Newman. The name might ring a bell, he appointed him Deputy Secretary of the Treasury.
ReplyDeletehttp://mikenormaneconomics.blogspot.com/2012/04/new-book-as-close-to-mmt-as-it-gets.html
The only thing she says after Warren explains things to her: "Well I wish I could just do that with my checking account!?"
ReplyDeleteYes, its really amazing that people cannot fathom anything without relating to themselves. That's how the government-as-big-household illusion works. For business people it is government-as-big-firm, and it's why people "successful" in business presume that they run a government better than others and do their best to convince voters of this non-sequitur.
I suppose the easiest response to "run government as a household" or business is to say it's an apple-and-oranges argument.
ReplyDeleteFirst and foremost, I wonder if she has any economic credentials at all? I'm guessing no.
ReplyDeleteShe can't find anyone who agrees? She must be less well-read than Sarah Palin
Please go on her show. And be nicer than you were to Lauren (even though they are perhaps intellectual equals)
I must ask again: serious, what are her economics credentials?
This comment has been removed by the author.
ReplyDeleteAs Vickrey, Godley and Ruml all suggested, take capital spending off-budget (after all, very few households pay cash for their house). OMB helpfully adds it all up in Table 9.1 "Total Investment Outlays for Physical Capital, Research and Development, and Training and Education".
ReplyDeleteThere, you just cut the deficit by $592 billion.
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist09z1.xls
$592 billion a year, I should say.
ReplyDeleteI seriously mean this: I want Paul Krugman as a strategic acquisition. I still think it's possible to win him over because he's not a right-wing nutjob - he still has recourse to reason and evidence.
ReplyDeleteAnd we want him because he has a huge following and killer connections.
beo,
ReplyDeleteI was looking at some stuff in that area recently:
Take a look at the z.1 here, table F.6 page 13
http://federalreserve.gov/releases/z1/Current/z1.pdf
Government Gross Investment, Federal: approx $155B per year: PISS POOR!
This is in a $15T economy for crying out loud (1% ?!?!?!?). This is a STAGGERINGLY small number... This could be the whole problem right here if this is all of the public investment the Federal govt is doing these days...
rsp,
Alan,
ReplyDeleteWarren has had face to face meetings with Krugman on this and K remains a moron.... lost cause, he can't get it.
rsp,
Warren has had face to face meetings with Krugman on this and K remains a moron.... lost cause, he can't get it.
ReplyDeleteNot sure PK doesn't get it. Warren has explained soft currency economics to lots of people who give assent privately but not publicly because they realize it is a career-killer. Remember Randy reporting sending Understanding Modern Money to Robert Heilbroner and Heilbroner calling it dangerous. I think that PK is just not ready to be the big name who leads the charge. He probably thinks that it would risk even his own considerable cred., especially when his own field is not monetary econ.
" Heilbroner calling it dangerous."
ReplyDeletethis sounds like our Bob Roddis here... ie when Bob says here "I understand your funny money" I believe him at a certain level...
But I dont think PK ever called it "dangerous".. or exhibited any true understanding to my knowledge...
Tom haven't you ever been in one of those positions where someone is trying to explain something to you that you dont get and rather than get into it with them you sort of nod your head and make agreeable responses and so forth... then you get out of there and think "what the heck was he talking about???"
thats PK to Warren here... no evidence that he understands it... still some evidence of QTM / IGBC with PK....
http://www.kellogg.northwestern.edu/faculty/rebelo/htm/fsbook_ch8.pdf
"The classic example of a fixed exchange rate regime that is not sustainable is analyzed
in the seminal papers of Krugman (1979) and Flood and Garber (1984). These authors
consider a situation in which a government is running persistent primary deficits. A key implicit assumption of their analyses is that future primary surpluses will not be large enough
to balance the governmentís intertemporal budget constraint."
He's in deep...
rsp,
@ Matt
ReplyDeleteTouch the monetary system and you’re academically dead
Bernard Lietaer relates the story of PK telling him "not to touch the money system" when they were both at MIT, since it is a career-killer to do so.
This is a great vid if you haven't seen it.
Lietaer says MMT is correct but he personally don't favor it since it is too centralized and he thinks we need more diversity for resilience in a complex adaptive system.
But what is he protecting now Tom? he's got the Nobel... Is the NYT going to fire him? I still say he doesnt get it... rsp,
ReplyDeleteI suspect he is envisioning the possibility of a position in a future administration, or at least to be a listened to by one. As a result, he is still trying to be seen as a Very Serious Person, and doesn't want to blow that by being associated with some "crackpots."
ReplyDelete