Here are numerous explicit quotes from Krugman specifically calling for the Fed to keep interest rates low in order to create a housing bubble. E.g.
“Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.
In time this overhang will be worked off. 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. But it seems inevitable that there will also be a fiscal stimulus package” (emphasis added)
And...
"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing." (emphasis added)
One thing he should be given credit for is that he actually does recognise that artificially low interest rates were largely responsible for the housing bubble and American's consumption binge. Recent crashes are a symptom of the US and its ineluctable drive for more and more consumption and spending and less and less saving.
More idiocy from Krugman. This time from the economist, John Lott jnr.
"Krugman’s predictions were no more accurate for other
countries. He criticized the reduction in German government spending in June
2010 as a 'huge mistake,' and said: 'budget cuts will hurt your economy and
reduce revenues [by reducing economic growth].' Yet, more than a year later,
Germany’s unemployment rate continued falling, dropping by 0.7 percentage
points between June 2010 and August 2011. And as of June 2011, German GDP
during 2011 grew at 3 percent, almost twice as fast as our own GDP growth.
Germany accomplished the lower unemployment and higher growth rates without
burdening its children with the massively higher debt that Obama and Krugman
advocated.
But you get some idea why Krugman predictions have so been
consistently wrong by understanding that he just thinks government spending is
free. He also thought that the 9/11 attacks 'could even do some economic good'
by stimulating the economy because “all of a sudden, we need some new office
buildings' and 'rebuilding will generate at least some increase in business
spending.' undefined Let’s the buildings
and spend the money on something else.
Digging ditches and filling them in again leaves people no
better off. Krugman has a different view: 'If we discovered that space aliens
were planning to attack and we needed a massive buildup to counter the space
alien threat and really inflation and budget deficits took secondary place to
that, this slump would be over in 18 months. And then if we discovered, oops,
we made a mistake, there aren’t any aliens, we’d be better off.'"
Its
not just the future debt passed on to our children that should worry
us. Government spending diverts precious, wealth producing capital
(land, factories, machines, etc) away from the far more efficient
private sector and greatly retards growth. Known in economics as "crowding out".
But Keynesians are loath to admit this with their fanatical emphasis on
spending and increasing the money supply - as if these chimeras for
wealth are any substitute for the real thing.
UPDATE: Incidentally Krugman has just written a piece attacking the Austrian economist, Peter Schiff, here Now if he is going to attack Schiff in his opinion piece why does he repeatedly refuse to debate him and other Austrians like Robert Murphy (even when a substantial amount of money is offered to charity)?
Krugman's taking the Austrians to task for their supposed failed hyperinflation predictions. I'd like to see Schiff's response but here is my initial thoughts. The reason inflation is yet to appear in any great quantity is time. When the federal reserve prints money it is not as if it is dropped like manna from heaven into everyone's lap all at once so that prices go up immediately. Rather, what happens is that money enters the economy through various portals usually the banks) and it is only later that it shows up as increased prices. The second point is that it may already be happening. The US Consumer Price Index (CPI) doesn't count all goods in its inflation tally. Food and oil, for example, are not counted. In addition, goods that show technological advancement such as the iPhone 5 are (erroneously) seen as deflation because there is more computer power for the same price. Hence the CPI may be masking the real level of inflation.
UPDATE: Incidentally Krugman has just written a piece attacking the Austrian economist, Peter Schiff, here Now if he is going to attack Schiff in his opinion piece why does he repeatedly refuse to debate him and other Austrians like Robert Murphy (even when a substantial amount of money is offered to charity)?
Krugman's taking the Austrians to task for their supposed failed hyperinflation predictions. I'd like to see Schiff's response but here is my initial thoughts. The reason inflation is yet to appear in any great quantity is time. When the federal reserve prints money it is not as if it is dropped like manna from heaven into everyone's lap all at once so that prices go up immediately. Rather, what happens is that money enters the economy through various portals usually the banks) and it is only later that it shows up as increased prices. The second point is that it may already be happening. The US Consumer Price Index (CPI) doesn't count all goods in its inflation tally. Food and oil, for example, are not counted. In addition, goods that show technological advancement such as the iPhone 5 are (erroneously) seen as deflation because there is more computer power for the same price. Hence the CPI may be masking the real level of inflation.
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