Krugmans take on the deficit is fairly standard but not entirely accepted. There is still an economic debate to be had about deficits, or, rather deficits over the entire economic cycle.
Im not sure what I am suggesting about Krugmans take on the deficit. Previously he seemed to be warning against them, now he is fairly relaxed about them. The reason for this discrepancy is known only to Paul Krugman.
The Bush years were a boom, but an unsustainable one. Too many asset bubbles and too much borrowing. The Bush/Greenspan record is nothing to be proud of. A similar “boom” may be occuring right now. Only time will tell.
I dont see why I should be pulled up on comparing Krugmans views in 2005 and 2011. It is relevant to compare them. If I were to defend Krugman’s point of view I’d say his change of heart depends on what part of the economic cycle he believes the US is in. Defending a budget deficit during a downturn or during the early stages of a recovery is entirely different to him defending similar deficits at the height of an economic boom. IF this is the height of the boom then deficit defenders such as Krugman will be shown to be misguided. If we still have years to go before the downturn then he may be vindicated.
I thought it worthwhile to point out Krugmans Nobel Prize was not on deficits or Government finance but Trade Theory. Other economists have far more expertise in those areas. I could easily copy & paste their opinions on the subject, all of whom I can claim as greater experts in these particular areas.
Evolution isn’t entirely accepted. The EU vs US austerity vs. stimulus experiment should pretty much end this debate - but as Krugman says, it is politics, not economics.
Seems pretty clear to me. Krugman, as far as I remember, didn’t argue against deficits in 2001 - 2002, just about them when the economy recovered. The structure of the tax cuts he did argue against, but not the fact that deficits were called for.
The later deficits came about because of the increase in spending due to the war and the unwillingness to raise taxes to cover the spending. That was dumb.
Sorry, but the EU is an absolute disaster of an economic area. There is a lot which is pulling the European economy down, one of which is austerity. The argument is not nearly as clear cut as you suggest.
It is the “recovered” economy of 2014 we are talking about. Krugman seems to be fairly relaxed about the deficit at this stage of the economic cycle. Roughly 5 years or so into an economic recovery and the deficit is still substantial. Considering economic upswings last roughly around 7 years or so then this deficit level is worryingly large. Another downturn in a year or two and Krugman and his ilk will be suggesting the same massive deficits to pull the US out of the downturn. Rinse and repeat. At some point the government needs to be running at nearly balanced budget levels, at least at the height of an economic boom. Running a deficit of 3% as the economic shit hits the fan has been shown to be irresponsible in the past imo.
Okay it good to new it just this guy and no one else supports his view.
I still will like to know how does he know it will happen on that date and last 25 years.
The article is from moneymorning.
I did not think moneymorning web sites was infested with malware.
If you type in google search you will get lots of web sites talking about it.
I gnu it would help.
Obviously it is not the only factor, but it seems even Merkel is now reconsidering it.
Already covered. The deficit has shrunk significantly already. But the recovery is a 10% recovery, not a full recovery yet, which is why the Fed is still keeping interest rates low, While the economy is still generating jobs, a lot of the drop in the unemployment rate is from people leaving the workforce. When wages start to recover, and even those out of work for a year or two can find work, then we should cut the deficit even more. Though it will cut itself through more tax revenue and less social spending.
I haven’t read The Black Swan by Nassim Taleb, but I think I’ve got the gist: it involves long tails. My response is that when you have a financial emergency (eg Third World debt crisis, the S&L crisis, Long Term Capital Management, the Asian Crisis, the dotcom bubble, the housing bubble followed by the Banking Crisis) occur every 5 or 12 years, you are no longer in the realm of black swans. The swans are white.
A trickier problem, as I see it, is that these crises can take years to emerge and calling them too early makes the forecaster look like a buffoon. The esteemed Henry Kaufman, whom Wall Street nicknamed Dr. Doom, because of his constant hand-wringing, had some of this problem.
Fuzzy Wuzzy: A few corrections.
Many countries have gone for years without balanced budgets or surpluses, so saying, “At some point the government needs to be running at nearly balanced budget levels, at least at the height of an economic boom,” isn’t backed by evidence. I’d agree though that when a peacetime economy is running at or around full capacity that the country should be reducing its debt as a share of GDP. That was standard practice before Reagan convinced the GOP that tax cuts were free lunch. And budget surpluses have the advantage of freeing up capital for private investment when the economy is doing well.
Technically the US entered its economic expansion in 2009. But if you look at the output gap in figure 4.6 of this .pdf you can get a sense of the difference between this lesser depression and other recessions of the post war era. So I’m uneasy with applying a 7 year stop watch under these circumstances.
Eek! That’s the 150th anniversary of the Lincoln assassination! That MUST be the reason!
The application of this I was referring to is that someone predicting a low probability event once is no guarantee they can do it again. Taleb predicted the recession also, for the right reasons. But he would not call himself a prophet. When you have lots of people predicting lots of low probability events, someone will hit it by chance. That won’t repeat. That’s the reason most successful business starters flop their second attempt.
Sometimes it’s pretty easy. This is one of those times.
There are a lot of emails talking about it as well. Thank you for your continued support of The American Spectator. Occasionally, we send emails like this one to introduce our readers to advertisers and other organizations. Below is a special message from Money Morning.
[INDENT][INDENT]What is our “Day After Plan?” You won’t like the answer
Dear Concerned American,
[Image blocked by spam filter.] Mount Weather is a national security stronghold located near the Blue Ridge Mountains.
Its maze of underground bunkers is known as “Area B.”
My colleagues have given Mount Weather the code name “High Point Special Facility.”
You can view footage of it below.
[Image blocked by spam filter.]
This is where Congressional leadership was transported after 9/11.
…I’m sharing this with you now, because my colleagues and I in the U.S. Intelligence Community have uncovered a series of alarming signals that point to a fast-approaching, 70% stock market crash.
And we have begun to prepare for an unstoppable $100 trillion American meltdown that will be unleashed in its aftermath.
Unfortunately, our government has already put emergency measures in play for this coming catastrophe as well. They call it “The Day After Plan.”
And these two locations, at Mount Weather and Raven Rock, have major roles to play ahead.
I’m not asking you to believe me now. I realize what I’m talking about is very serious.
Which is why I strongly suggest you take a few moments to view this evidence.
And then ask yourself, “what if I’m right?”
Click here to continue…
Stay Safe,
[Image blocked by spam filter.]
Jim Rickards
Financial Threat and Asymmetric Warfare Advisor
CIA & The Director of National Intelligence
[/INDENT][/INDENT]
These are sensationalist and largely paranoid claims designed to lure in easy marks. “Secret bunkers”: bah.
Boy, you can really convince yourself of some stupid shit if you just ask yourself, “what if [he’s] right?”
So no one believes him or agrees with him and you want us to tell you why he thinks that? 'Cause he’s either a loon or a cynic trying to exploit the easily scared. My guess is the latter.
He is not as unsupported as some on this thread would have you believe. Earlier I said this guy was not a scaremonger. I should have qualified that statement by saying he has scaremongering tendencies, but has expertise and theory behind his opinions. How this breaks down between his desire to tell it as he sees it, and his desire to sell books I cannot say(though its usually better to be on the skeptical/cynical side). I am fairly right wing when it comes to economics. However, when viewing such right wing libertarian clips on youtube you can see the progression from reasonable opinion towards complete “nutjobism”. The same goes for most such issues. One day you are watching a video on the US mistakes in Iraq , suddenly videos advertising “false flag events” and “the secrets THEY dont want you to know” start showing up on your sidebar . Exactly where reasonable opinion ends and lunacy begins is often hard to accurately pinpoint.
Many people think we didn’t go to the moon or that 9-11 was an inside job, that doesn’t make those theories right either.
In my lifetime, the CIA has missed the boat as often as not. They had no idea that fundamentalist Islamists posed a threat to the Shah in Iran. They had no idea the Soviet Union was on the verge of collapse. They had no idea that the 9/11 attacks were coming…
Just why is being “a CIA insider” supposed to give this particular prophet of doom increased credibility?
Because conspiracy theorists think the CIA knows everything, and if they get something wrong, that’s just what they want you to think.
Look it’s ok to report what you’ve read or encountered. So no worries.
But I think my email upthread demonstrates convincingly that Jim Rickards is currently in the scaremongering business. At one time he may have been semi-serious. But the email I quoted upthread was pure crackpottery. Unless you think “the government” (whoever they are) knows that a crisis is coming and has created exclusive bunkers for a select few to withstand an upcoming financial meltdown. Not nuclear: financial. Also, to be polite, you may want to personally consider recalibrating your beliefs if you think this guy should be taken seriously today.
Permit me to continue. Quite a few right wingers don’t care about getting their argument right. What remains are emotional appeals. The email upthread was an extreme example of that. It had no economic content, scary but empty rhetoric (“What if I’m right?”), and a misleading half-truth (the government surely has plans to keep their generals safe in the event of nuclear war - but economic catastrophe? Sorry: the National Guard can protect the elite, if not the economy itself.)