That ’30s Show. The Dunces never learn. Paul Krugman one of them.

In his recent op-ed in New York Times the Nobel Prize winning economist Paul Krugamn argues that the Obama administration ecomic advisers learned the lessons of the Great Depression. (Oh dear, Alfred Nobel must be turning in his grave knowing what kind of dimwits get his prize money) .

I argue that these keynsian clowns, these dunces did not learn a thing and they are in charge of American, and by proxy, world Economy. That should scare all of us and push us to wake up already.

Here is what Krugman proposes in his op-ed That ’30s Show, that makes you wonder how much he really undestands:

So have we failed to learn from history, and are we, therefore, doomed to repeat it? Not necessarily — but it’s up to the president and his economic team to ensure that things are different this time. President Obama and his officials need to ramp up their efforts, starting with a plan to make the stimulus bigger.

It has been a rude shock to see so many economists with good reputations recycling old fallacies — like the claim that any rise in government spending automatically displaces an equal amount of private spending, even when there is mass unemployment — and lending their names to grossly exaggerated claims about the evils of short-run budget deficits. (Right now the risks associated with additional debt are much less than the risks associated with failing to give the economy adequate support.)

Also, as in the 1930s, the opponents of action are peddling scare stories about inflation even as deflation looms.

So getting another round of stimulus will be difficult. But it’s essential.

Obama administration economists understand the stakes. Indeed, just a few weeks ago, Christina Romer, the chairwoman of the Council of Economic Advisers, published an article on the “lessons of 1937” — the year that F.D.R. gave in to the deficit and inflation hawks, with disastrous consequences both for the economy and for his political agenda.

What I don’t know is whether the administration has faced up to the inadequacy of what it has done so far.

So here’s my message to the president: You need to get both your economic team and your political people working on additional stimulus, now. Because if you don’t, you’ll soon be facing your own personal 1937.

Ben Bernanke and his buddies don’t understand or don’t care to understand and admit that monetary manipulations will not bring back demand. We are now experiencing a DEMAND DEFLATION in everything. The sub-prime real estate buyers are not coming back to market, and the credit worthy borrowers are not going to get into debt any time soon to support the speculative bubble blowing any longer. We don’t need to “unfreeze lending” if nobody wants to borrow (while assets are depreciating). Mr. Bernanke somehow believes that he can magically circumvent creating economic product, which is always based on labor and goods it produces, by just hitting a button on his computer to add a few zeros to FED’s account in a coup of counterfeiting. This illegal act does not provide employment to anyone except Mr. Bernanke and not resulting in any economic product on the other end of this labor intensive operation. His academic theories, being tested on live human beings, will be proven wrong and disastrous soon enough. The prices will go where they naturally want to go. All FED can do is slow the process of decline, not arrest it – and that will only prolong this recession that has all the underpinnings of becoming another Great Depression.



  1. Posted July 4, 2009 at 11:06 am | Permalink

    don’t worry about nobel, NP for economists wasn’t his adea (and its real name is Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel

    about krugman – i do understand why so many politicians and some low grade economists love the idea “throw there money, everything will be ok”; but i don’t understand how somebody like krugman, who can be considered and intelligent and top educated person, can be in favour of such pointless actions. i am not against controversies, i dont want economics to become the shrine of friedman or mises, but some conceptions or clearly out of the pool

    • Posted July 6, 2009 at 2:32 am | Permalink

      perhaps krugman is on the payroll of the financial industry that is using him and his reputation to promote their ideas that benefit their schemes, or perhaps krugman is simply a keynsian fool of which there are many. Any way it is not up to them now as it seems the law of physics are finally taking over this mess.

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