Will the real Paul Krugman please stand up?

• "Basically we have a world-class budget deficit not just as in absolute terms of course--it's the biggest budget deficit in the history of the world--but it's a budget deficit that as a share of GDP is right up there. It's comparable to the worst we've ever seen in this country. It's biggest than Argentina in 2001. Which is not cyclical, there's only a little bit that's because the economy is depressed. Mostly it's because, fundamentally, the government isn't taking in enough money to pay for the programs and we have no strategy of dealing with it. So, if you take a look, the only thing that sustains the U.S. right now is the fact that people say, 'Well America's a mature, advanced country and mature, advanced countries always, you know, get their financial house in order,' but there's not a hint that that's on the political horizon, so I think we're looking for a collapse of confidence some time in the not-too-distant future."--Paul Krugman, interview with "Lateline," ABC (Australia), Nov. 3, 2004

http://www.abc.net.au/lateline/content/2004/s1064193.htm



• "So new budget projections show a cumulative deficit of $9 trillion over the next decade. According to many commentators, that's a terrifying number, requiring drastic action--in particular, of course, canceling efforts to boost the economy and calling off health care reform. The truth is more complicated and less frightening. Right now deficits are actually helping the economy. In fact, deficits here and in other major economies saved the world from a much deeper slump. The longer-term outlook is worrying, but it's not catastrophic."--Paul Krugman, New York Times, Aug. 28, 2009

http://www.nytimes.com/2009/08/28/opinion/28krugman.html?_r=1



At the time of the first statement, the budget deficit was about $400b and the national debt was under $9 trillion.

At the time of the second statement, the budget deficit is closer to $1 trillion and the national debt is pushing $11 trillion.

Ah, the neutral, rational economist...

I don't suppose the identities of the parties in power had anything to do with the disparities between these statements... Nah! Krugman isn't.... biased???? Is he?

In the first statement he explicitly says the cycle at the time didn't justify the depths of the deficit and in the second he says the current cycle justifies a large deficit.

Unless you want to argue that the economy isn't more depressed now than in 2004, then you don't have a case.

Originally posted by Palynka
In the first statement he explicitly says the cycle at the time didn't justify the depths of the deficit and in the second he says the current cycle justifies a large deficit.

Unless you want to argue that the economy isn't more depressed now than in 2004, then you don't have a case.

What?

In the former, he decries and laments a smaller deficit.

In the latter, he basically says that a much larger deficit is no big deal.

It's not like he's saying in the latter statement "Well, the deficit is terrible, but we have no choice right now." He's basically saying it's not such a bad thing.

I don't see how you can reconcile those statements other than by stating the obvious: Bush and the Republicans were in power in 2004 and Obama and the Dems are now.

Originally posted by sh76
I don't suppose the identities of the parties in power had anything to do with the disparities between these statements... Nah! Krugman isn't.... biased???? Is he?

Krugman just made a leap of logic and arrived at a fundamental truth, that debt is good, and that the overwhelming indebtedness shared between everyone in the global system actually insures the longevity of the system. No-one can afford for the system to fail and in a perverse way, the accrual of debt actually stimulates the growth of interest rates and guarantees the return of speculative risk as the differentials between the cash rate and money on call give enough room to manoeuvre.

Massive debt levels and the real economy is a lot like the ability to swim. Does it matter if you paddle in 5 or 500 feet of water? You can drown just as easily at either depth, so why worry if you can swim?

Originally posted by kmax87
Krugman just made a leap of logic and arrived at a fundamental truth, that debt is good, and that the overwhelming indebtedness shared between everyone in the global system actually insures the longevity of the system. No-one can afford for the system to fail and in a perverse way, the accrual of debt actually stimulates the growth of interest rates and guara ...[text shortened]... r 500 feet of water? You can drown just as easily at either depth, so why worry if you can swim?

Okay; but that's not what he thought in 2004.

Originally posted by sh76
What?

In the former, he decries and laments a smaller deficit.

In the latter, he basically says that a much larger deficit is no big deal.

It's not like he's saying in the latter statement "Well, the deficit is terrible, but we have no choice right now." He's basically saying it's not such a bad thing.

I don't see how you can reconcile those stateme ...[text shortened]... e obvious: Bush and the Republicans were in power in 2004 and Obama and the Dems are now.

Take a breath and then read it again.

Let me highlight a few parts for you:
First statement: Which is not cyclical

Second statement: Right now deficits are actually helping the economy.

UK's economy 'the best in Europe'

The UK is in the best shape out of all the economies in Europe, according to a leading economist.

Paul Krugman, who won the 2008 Nobel prize for economics, said that the UK's economic policies had been "pretty good" and called them "intelligent".

http://news.bbc.co.uk/2/hi/business/8099408.stm
---

Does anyone take this guy seriously? The UK economy in better shape than, say, Norway? Laughable.

There is no one on planet earth who blindly supports to the Democratic Party more than Krugman. Krugman's believes that everything Bush and the Republicans wanted to do was a waste of money and should not be funded (thus the debt/ deficit ideals) but the things that Obama wants to do should be encouraged (those principles no longer apply). Despite his nobel prize, instead of discussing economic concepts like efficiency he discovers philosophical concepts like what ought to be. I am not sure why his views are taken seriously as he has no philosophical expertese.

The Nobel Prize for Economics is going to be tainted by Milton Friedman for at least another few more decades. The field of economics sadly hasn't matured yet, though it is on the way of becoming a real science.

Originally posted by sh76
[i]
• "Basically we have a world-class budget deficit not just as in absolute terms of course--it's the biggest budget deficit in the history of the world--but it's a budget deficit that as a share of GDP is right up there. It's comparable to the worst we've ever seen in this country. It's biggest than Argentina in 2001. Which is not cyclical, there's only a l ...[text shortened]... es between these statements... Nah! Krugman isn't.... biased???? Is he?

Spinning for politics? Funny how political influence requires political statements, gee I wonder if Obama's economic adviser would dare make a political statement... nah... who plays politics more often anyway? Gee, let's see, politic...s

Originally posted by sh76
Okay; but that's not what he thought in 2004.

As has been pointed out already, 2004 was a growth year and 2009 is a credit crisis year, but I suppose we could always go to the politicians for opinions on what would be the best option on what to do with the economy rather than to economists.

After all, at the highest levels of political office, it's really the nice honest guy that's competing at those levels, right?

Maybe we ignore all the scientists and just start asking the politicians to gather data and make their thesis on the data, hmm, how would things be any different... hmm let's see...

Originally posted by sh76
Okay; but that's not what he thought in 2004.

We are not allowed to grow and mature in our beliefs anymore? Should all the prognostications any of us ever make, be writ large in stone so that we may be forever held accountable to even the slightest deviation or contradiction we may utter in any subsequent statement?

Deities find it hard to meet that standard and you would have mere mortals exemplify that?

Originally posted by KazetNagorra
The Nobel Prize for Economics is going to be tainted by Milton Friedman for at least another few more decades.

What do you mean by 'tainted by Milton Friedman'? 😕

Originally posted by Palynka
What do you mean by 'tainted by Milton Friedman'? 😕

He's an idiot.

Originally posted by KazetNagorra
He's an idiot.

I see.