Dezaad
DP Veteran
- Joined
- Feb 7, 2005
- Messages
- 5,057
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- Political Leaning
- Very Liberal
Crying Fire! Fire! In Noah’s Flood - Paul Krugman Blog - NYTimes.com
My favorite part of this commentary is where he quotes Keynes blasting classical economic theory, which could not account for the Great Depression.
But, the real point is that the hawks, many armchair ones on this board, keep saying that the sky is falling the sky is falling. But, they are never right. Here's why:
Krugman lays out the opposing claims:
It is insane that we are listening at all to inflation hawks when we actually are experiencing disinflation. Any inflationary cycle would be child's play compared to a deflationary one. Japan was lucky enough over the last decade or so to have a deflationary cycle that ran while the rest of the world was prosperous. Their pain was not so acute that way. But us? If we experience a deflationary spiral in this environment? Well, lets just say that Republicans would be out of office for the next 6 decades.
My favorite part of this commentary is where he quotes Keynes blasting classical economic theory, which could not account for the Great Depression.
But, the real point is that the hawks, many armchair ones on this board, keep saying that the sky is falling the sky is falling. But, they are never right. Here's why:
Krugman lays out the opposing claims:
- "Deficit spending will raise bond rates" as opposed to that it won't in this environement.
- "Low interest rates and 'printing money' will lead to hyperinflation" as opposed to they won't (again, in this environment).
In effect, we’ve had a test of those two views. And guess what? Interest rates have fluctuated, but as of 20 minutes ago the 10-year bond rate was 3.17, yes, 3.17 percent. Bond vigilantes, where have you gone. Meanwhile, core inflation — and yes, that is the right measure — just keeps falling.
It is insane that we are listening at all to inflation hawks when we actually are experiencing disinflation. Any inflationary cycle would be child's play compared to a deflationary one. Japan was lucky enough over the last decade or so to have a deflationary cycle that ran while the rest of the world was prosperous. Their pain was not so acute that way. But us? If we experience a deflationary spiral in this environment? Well, lets just say that Republicans would be out of office for the next 6 decades.