View Full Version : Paul Krugman: Clueless Washington Doesn't Know The Deficit Is 'Mostly Solved'

Gayle in MD
01-11-2013, 02:13 PM
Paul Krugman: Clueless Washington Doesn't Know The Deficit Is 'Mostly Solved'
It has become conventional wisdom that the United States has a deficit crisis. But according to Paul Krugman, most politicians and journalists don't realize that the deficit has been "mostly solved."
"Reasonable projections do not, repeat do not, show anything resembling the runaway deficit crisis that is a staple of almost everything you hear, including supposedly objective news reporting," the Nobel Prize-winning economist wrote in a blog post (http://krugman.blogs.nytimes.com/2013/01/10/the-mostly-solved-deficit-problem/) on Thursday. He cited (http://krugman.blogs.nytimes.com/2013/01/10/the-mostly-solved-deficit-problem/) a new graph from the Center on Budget and Policy Priorities (http://www.cbpp.org/cms/index.cfm?fa=view&id=3885) showing that since early 2011, the government has largely stabilized the U.S. debt outlook.
The New York Times columnist (http://krugman.blogs.nytimes.com/2013/01/11/california-in-surplus/?smid=tw-NytimesKrugman&seid=auto) returned to the subject on Friday in a blog post on California's disappearing budget deficit (http://www.huffingtonpost.com/2013/01/10/california-budget-surplus-2013_n_2450349.html). Krugman wrote (http://krugman.blogs.nytimes.com/2013/01/11/california-in-surplus/?smid=tw-NytimesKrugman&seid=auto) that now that the economy is recovering, "deficits are receding as an issue before our eyes," which he predicted will anger "deficit scolds" that are "set on exploiting the alleged fiscal crisis to dismantle social insurance programs."
The deficit has loomed large in political debates over the past few years. Major newspapers published far more articles about the deficit than about unemployment (http://www.nationaljournal.com/economy/in-media-coverage-deficit-eclipses-unemployment-20110516) starting in late 2010, according to a 2011 analysis by National Journal. The debt ceiling fight (http://thinkprogress.org/special/2011/10/18/346892/chart-media-jobs-wall-street-ignoring-deficit-hysteria/) amplified coverage of the national debt on major TV networks, according to a 2011 analysis by ThinkProgress. And CNBC (http://www.cjr.org/the_audit/rise_above_cnbcs_move_into_adv.php?page=all) recently launched a campaign called "Rise Above" to call for deficit reduction.
Politicians have shaped government policies in kind. The government has shed 651,000 employees (http://research.stlouisfed.org/fred2/series/USGOVT/) since President Barack Obama took office, according to Bureau of Labor Statistics data. This austerity has made the unemployment rate higher (http://www.huffingtonpost.com/2012/08/03/government-employment-recovery-_n_1737915.html) than it would have been otherwise, according to some economists.
Obama seems to be gearing up for future budget battles. On Thursday, he nominated his Chief of Staff Jacob Lew (http://www.huffingtonpost.com/2013/01/10/jack-lew-treasury-secretary_n_2447166.html), a budget expert (http://www.huffingtonpost.com/2013/01/09/jack-lew-deregulation_n_2441249.html), for Treasury secretary. Congressional Republicans have threatened to force the U.S. government to default (http://www.huffingtonpost.com/2013/01/10/the-debt-ceiling-_n_2449798.html) by March (http://bipartisanpolicy.org/news/press-releases/2013/01/new-bipartisan-policy-center-analysis-shows-debt-ceiling-limit-fast-appr) if Obama does not agree to spending cuts.


01-11-2013, 03:20 PM
Gayle -- Krugman iz praps the best. I read hiz stuff.
But he aint never got a Nobel Prize. Something which he hizself duznt seem to understand.

01-11-2013, 04:03 PM
Is Japan the Country of the Future Again?

In the broad sense, surely not, if only because of demography: the Japanese combine a low birth rate with a deep cultural aversion to immigration, so the future role of Japan will be severely constrained by a shortage of Japanese.

But something very odd is happening on the short- to medium-term macroeconomic front. For the past three years macro policy all across the advanced world has been dominated by Austerian orthodoxy; even where there haven’t been explicit austerity policies, as in the United States, fear of deficits has led to de facto fiscal tightening, while monetary policy has fallen far short of the kind of dramatic expectation-changing moves theoretical analysis suggests are crucial to getting traction in a liquidity trap.

Now, one country seems to be breaking with the orthodoxy — and it is, surprisingly, Japan:

The Japanese government approved emergency stimulus spending of 10.3 trillion Friday, part of an aggressive push by Prime Minister Shinzo Abe to kick-start growth in a long-moribund economy.

Mr. Abe also reiterated his desire for the Japanese central bank to make a firmer commitment to stopping deflation by pumping more money into the economy, which the prime minister has said is crucial to getting businesses to invest and consumers to spend.

“We will put an end to this shrinking and aim to build a stronger economy where earnings and incomes can grow,” Mr. Abe said. “For that, the government must first take the initiative to create demand and boost the entire economy.”

This is especially remarkable because Japan has been held up so often as a cautionary tale: look at how big their debt is! Disaster looms! Indeed, back in 2009 there were many stories to the effect that the long-awaited Japanese debt catastrophe was finally coming.

But, actually, not. Japanese long-term interest rates rose in the spring of 2009 because of hopes of recovery, not fear of bond vigilantes; and when those hopes faded, rates went back down, and are currently well under 1 percent.

Now comes Shinzo Abe. As Noah Smith informs us, he is not anybody’s idea of an economic hero; he’s a nationalist, a denier of World War II atrocities, a man with little obvious interest in economic policy. If he’s defying the orthodoxy, it probably reflects his general contempt for learned opinion rather than a considered embrace of heterodox theory.

But that may not matter. Abe may be ignoring the conventional wisdom on spending, and bullying the Bank of Japan, for all the wrong reasons — but the fact is that he is actually providing fiscal and monetary stimulus at a time when every other advanced-country government is too much in the thrall of the Very Serious People to do something different. And so far the results have been entirely positive: no spike in interest rates, but a sharp fall in the yen, which is a very good thing for Japan.

It will be a bitter irony if a pretty bad guy, with all the wrong motives, ends up doing the right thing economically, while all the good guys fail because they’re too determined to be, well, good guys. But that’s what happened in the 1930s, too …

01-11-2013, 04:09 PM
Of course the best ever economist woz adolf hitler. And now praps shinzo abe will bekum a big hero in japan.
Western krappynomix got japan into trouble -- and hitlernomix will get japan out of trouble.
Good to see. I will be watching.

Gayle in MD
02-08-2013, 03:06 AM
As far as I know, you're the only person who thinks Krugman didn't win a Nobel Prize in Economics, and that includes the Nobel folks themselves, lol.

02-09-2013, 02:38 AM
Gayle -- Krugman won the swedish bank nobel memorial prize -- definitely not a nobel prize -- u kan check on the nobel website.
But Krugman iz the best around at prezent.

Gayle in MD
02-09-2013, 10:05 AM
Yep, too bad the Republican Taliban won't listen to him. These idiot jerks have been asleep for four decades, they didn't notice REagan's supply side AND Bush's failed miserably.

You'd think they would have enough sense to notice what happened to those austerity efforts in other countries, but nooooooooo, the Republicans don't deal in reality, never have, never will.

02-09-2013, 10:07 AM
"The Prize in Economics is not one of the original Nobel Prizes created by the will of Alfred Nobel.[3][15][16] However, the nomination process, selection criteria, and awards presentation of the Prize in Economic Sciences are performed in a manner similar to that of the Nobel Prizes.[7][12][17] The Prize is awarded by the Royal Swedish Academy of Sciences "in accordance with the rules governing the award of the Nobel Prizes instituted through his [Alfred Nobel's] will",[7] which stipulates that the prize be awarded annually to "those who ... shall have conferred the greatest benefit on mankind".[18] The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is the only non-Nobel prize that has ever been associated officially with the Nobel Foundation." - reference: http://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economics

02-09-2013, 03:19 PM
Yes, but that iz in effekt puttin spin on it -- fakt iz that the chairman of the nobel foundation woz a krappynomicyst and he koodnt stand not having any respekt for ekonomix so he got the swedish bank to bankroll an annual prize. The fakt that the peeple sitting in the same chairs vote for the swedish bank prize in the same way az for a Nobel duznt make it a Nobel.
And krappynomix now haz respekt, dont it.