FYI: That "Travis" is not me. LOL On Mon, Jun 22, 2009 at 9:56 AM, bruce majors <[email protected]>wrote:
> > > > > > *Krugman's Intellectual Waterloo > *by Lilburne > Posted on 6/22/2009 > > Last Monday evening, Lew Rockwell, from a tip by someone named "Travis," > posted <http://www.lewrockwell.com/blog/lewrw/archives/027541.html> this > damning quote of Paul Krugman's from a 2002 *New York Times* > editorial<http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html?scp=4&sq=krugman%20mcculley%20bubble&st=cse> > : > > To fight this recession the Fed needs…soaring household spending to > offset moribund business investment. [So] Alan Greenspan needs to create a > housing bubble to replace the Nasdaq bubble. > > Krugman. 2002. Calling for a housing bubble. > > What's more, by explicitly calling for a new bubble to replace the recently > burst one, he anticipated by 6 years the *Onion*'s hilarious " > report<http://www.theonion.com/content/news/recession_plagued_nation_demands>" > that "demand for a new investment bubble began months ago, when the subprime > mortgage bubble burst and left the business world without a suitable source > of pretend income." Except Krugman was being *serious*. > > The quote caught on in the blogosphere, to such an extent that Krugman > actually > responded<http://krugman.blogs.nytimes.com/2009/06/17/and-i-was-on-the-grassy-knoll-too/>in > his New York Times blog Wednesday morning: > > Guys, read it again. It wasn't a piece of policy advocacy, it was just > economic analysis. What I said was that the only way the Fed could get > traction would be if it could inflate a housing bubble. And that's just what > happened. > > So with a deft little two-step, Krugman paints himself as a doctor who gave > an excellent diagnostic, and not a disastrous prescription. One of his > ditto-heads posted on his blog that saying Krugman advocated or caused the > housing bubble was "Like saying Nostradamus caused the rise of European > fascism." > > At the same time, with his headline of "And I was on the grassy knoll, too" > he paints his critics (especially the Austrians) as conspiracy theorists, > akin to the Lone Gunmen (the Kennedy-assassination theorists from the > X-Files TV show). Just like with the matter of Jekyll Island and the events > leading up to the creation of the Fed, an obvious conclusion from a matter > of public record is portrayed by establishment sophistry as unmoored > crankiness. And once again, it works: another ditto-head dismissively > remarked "no need to reason with those folks." > > Even economist Arnold Kling bent over > backwards<http://econlog.econlib.org/archives/2009/06/defending_what.html>to > interpret the column in a benign light: > > He was not cheerfully advocating a housing bubble, but instead he was > glumly saying that the only way he could see to get out of the recession > would be for such a bubble to occur. > > Krugman thanked Kling for his "gracious, sensible explication". I can just > imagine Kling running around his office in glee at having been nodded at by > a celebrity Nobel Laureate, exclaiming, "He likes me! He likes me!" > > Mark Thornton on the Mises blog followed up with a devastating > collection<http://blog.mises.org/archives/010153.asp>of 2001 Krugman quotes > clearly documenting his support for inducing a > housing bubble. The most damning of this batch is the following from a 2001 > interview <http://www.pkarchive.org/economy/ML071801.html> with Lou Dobbs: > > Meanwhile, economic policy should encourage other spending to offset the > temporary slump in business investment. Low interest rates, which promote > spending on housing and other durable goods, are the main answer. [emphasis > added] > > How the hell can anyone spin that as a purely academic musing, and not a > policy recommendation for artificially inducing housing spending? > > Ignoring the other quotes for a moment, and just judging from the 2002 > column, did Krugman support pumping up a housing bubble or not? Given that, > even in his recent blog defending himself, he explicitly stated his belief > that "the only way the Fed could get traction would be if it could inflate a > housing bubble," there are only two possibilities: > > > 1. He did not support inducing a housing bubble, and wanted the Fed to > not fight the recession. > 2. He did support inducing a housing bubble. > > > Anyone even somewhat familiar with Krugman's attitude toward Fed activism > should know that proposition #1, that Krugman supported a do-nothing policy, > is preposterous. So, especially after bringing back in the quotes gathered > by Mark Thornton, the case for proposition #2 is overwhelming. > > And what about his strawman <http://en.wikipedia.org/wiki/Strawman>protests > that he didn't cause the housing bubble, much less the Enron > scandal or Kennedy's assassination? The man is willfully missing the point. > What is damning about these quotes is not that he necessarily caused > anything. What is devastating about them is that they expose the > intellectual bankruptcy of his economic principles. Those who look up to him > like the second coming of Adam Smith should realize that the neo-Keynesian > principles that lead him to advocate aggressive interest-rate cuts and > mammoth public spending now, are the very same principles that led him to > advocate inducing a housing bubble then. He would himself affirm that his > economic principles haven't fundamentally changed since then. So the > conclusions and policy prescriptions he infers from them are just as wildly > wrong now as they were then. > > [VIEW THIS ARTICE ONLINE] <http://mises.org/story/3530> > > ________________________ > > Lilburne is a teacher and writer based in San Francisco. 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