# Paul Krugman on initial American reactions to the Euro **URL:** \ **Category:** Factual Questions\ **Created:** [November 12, 2011, 2:56pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689 "2011-11-12T14:56:51Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 12, 2011, 7:49pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/21 "2011-11-12T19:49:16Z")
He won the Nobel Prize\*, but he wasn’t really “in charge” of anything. He may have had some administrative function at UoC, but I think you might be confusing him with Greenspan. \*someone will be along shortly to explain that it wasn’t really a Nobel Prize. 🙂 ---
**Author:** ![Boyo\_Jim](https://avatars.discourse-cdn.com/v4/letter/b/87869e/32.png) [@Boyo\_Jim](https://boards.straightdope.com/u/Boyo_Jim)\ **Post date:** [November 12, 2011, 7:56pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/22 "2011-11-12T19:56:14Z")
> [@John\_Mace](#): > > He won the Nobel Prize\*, but he wasn’t really “in charge” of anything. He may have had some administrative function at UoC, but I think you might be confusing him with Greenspan. > > \*someone will be along shortly to explain that it wasn’t really a Nobel Prize. 🙂 Yes, you are correct – I guess in the process of bowing down to kiss Friedman’s ass so regularly, I began to confuse the two. As a mere theorist, Friedman was free to be as crazy as he wanted to be. Greenspan, at least, came to realize that the markets didn’t regulate themselves as he expected them to. I do recall him being somewhat chastened during his Congressional testimony after the meltdown. ---
**Author:** ![SanDiegoTim](https://avatars.discourse-cdn.com/v4/letter/s/85e7bf/32.png) [@SanDiegoTim](https://boards.straightdope.com/u/SanDiegoTim)\ **Post date:** [November 12, 2011, 8:30pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/23 "2011-11-12T20:30:47Z")
“You must be thinking of someone else. Krugman is a liberal who also happens to be a distinguished economist, but lately he seems to be having trouble separating economics from politics. He’s by no means right-of-center.” I guess I could have made my point better. I don’t read/listen to Krugman as I believe he is a left wing idealogue. And to demonstrate that I am not blinded by my political leanings, I stated that I don’t listen to the right wing nuts, either. Krugman is no doubt a well-educated economist, but his extreme political leanings tend to tarnish his commentary. ---
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [November 12, 2011, 8:37pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/24 "2011-11-12T20:37:24Z")
The “real gold standard” in that Wiki quote is not the gold standard as generally understood. This [quote] ([Quotations From Chairman Milton - Reason.com](http://reason.com/archives/2007/01/24/quotations-from-chairman-milto/singlepage))clarifies Friedman’s beliefs about the gold standard: > [@](#): > > I do believe that every individual should be free to own, buy, and sell gold. If under those circumstances a private gold standard emerged, fine—although I make a scientific prediction that it’s very unlikely. But I think those people who say they believe in a gold standard are fundamentally being very anti-libertarian because what they mean by a gold standard is a governmentally fixed price for gold. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 12, 2011, 8:54pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/25 "2011-11-12T20:54:20Z")
The gold standard in that quote is not “the gold standard as generally understood”. ---
**Author:** ![wevets](https://avatars.discourse-cdn.com/v4/letter/w/e9a140/32.png) [@wevets](https://boards.straightdope.com/u/wevets)\ **Post date:** [November 12, 2011, 8:55pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/26 "2011-11-12T20:55:54Z")
> [@SanDiegoTim](#): > > I guess I could have made my point better. I don’t read/listen to Krugman as I believe he is a left wing idealogue. And to demonstrate that I am not blinded by my political leanings, I stated that I don’t listen to the right wing nuts, either. Krugman is no doubt a well-educated economist, but his extreme political leanings tend to tarnish his commentary. Krugman is definitely liberal, but what marks him as “extreme” in your view? ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [November 12, 2011, 9:10pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/27 "2011-11-12T21:10:34Z")
[quote=“Lantern, post:24, topic:602689”] The “real gold standard” in that Wiki quote is not the gold standard as generally understood. This > [@](#): > > ([Quotations From Chairman Milton - Reason.com](http://reason.com/archives/2007/01/24/quotations-from-chairman-milto/singlepage))clarifies Friedman’s beliefs about the gold standard: Government fixed price for gold… schmold. If an ounce of gold is a dollar, or $35, or $1700 - it means that that is what a dollar is defined as too. Remember that originally, dollar bills could be exchanged for gold (at least, on paper). This meant that originally, a government had to have gold for each dollar it issued. This limits the liberal-inspired tricks a government central bank can do like print more money, change interest rates to expand the money supply, etc. Like a US state, it cannot then issue new dollars unless it uses them to buy more gold. Of course a bank can issue more money that it has deposits too, as long as everyone trusts it. Instead of settling debts, it can run a tab with other bank(s). 90% plus of money is just IOUs from various financial institutions. Nowadays the national banks play this game big-time too; if someone calls them on their outstanding balances, they simply print more money if they have to. With a gold standard or a euro outside its control, a national bank does not have this option. ---
**Author:** ![Boyo\_Jim](https://avatars.discourse-cdn.com/v4/letter/b/87869e/32.png) [@Boyo\_Jim](https://boards.straightdope.com/u/Boyo_Jim)\ **Post date:** [November 12, 2011, 9:15pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/28 "2011-11-12T21:15:13Z")
> [@John\_Mace](#): > > The gold standard in that quote is not “the gold standard as generally understood”. Could it be the “gold standard that is not generally understood to be the gold standards that is not generally understood to be the gold standard”? ---
**Author:** ![What\_the](https://avatars.discourse-cdn.com/v4/letter/w/f4b2a3/32.png) [@What\_the](https://boards.straightdope.com/u/What_the)\ **Post date:** [November 12, 2011, 9:16pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/29 "2011-11-12T21:16:41Z")
> [@wevets](#): > > Krugman is definitely liberal, but what marks him as “extreme” in your view? Perhaps …“The memory of 9/11 has been irrevocably poisoned; it has become an occasion for shame.” ---
**Author:** ![leahcim](https://avatars.discourse-cdn.com/v4/letter/l/b4bc9f/32.png) [@leahcim](https://boards.straightdope.com/u/leahcim)\ **Post date:** [November 12, 2011, 9:46pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/30 "2011-11-12T21:46:00Z")
> [@What\_the](#): > > Perhaps …“The memory of 9/11 has been irrevocably poisoned; it has become an occasion for shame.” I assume you are referring to this [column](http://krugman.blogs.nytimes.com/2011/09/11/the-years-of-shame/)? Doesn’t seem extreme to me. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 12, 2011, 10:18pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/31 "2011-11-12T22:18:19Z")
> [@Boyo\_Jim](#): > > Could it be the “gold standard that is not generally understood to be the gold standards that is not generally understood to be the gold standard”? Absolutely! ---
**Author:** ![Boyo\_Jim](https://avatars.discourse-cdn.com/v4/letter/b/87869e/32.png) [@Boyo\_Jim](https://boards.straightdope.com/u/Boyo_Jim)\ **Post date:** [November 12, 2011, 10:56pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/32 "2011-11-12T22:56:27Z")
I knew it! It’s gold standards all the way down. ---
**Author:** ![Raygun99](https://avatars.discourse-cdn.com/v4/letter/r/6f9a4e/32.png) [@Raygun99](https://boards.straightdope.com/u/Raygun99)\ **Post date:** [November 12, 2011, 11:09pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/33 "2011-11-12T23:09:11Z")
> [@md2000](#): > > Remember that originally, dollar bills could be exchanged for gold (at least, on paper). I love this sentence. ---
**Author:** ![What\_the](https://avatars.discourse-cdn.com/v4/letter/w/f4b2a3/32.png) [@What\_the](https://boards.straightdope.com/u/What_the)\ **Post date:** [November 13, 2011, 9:40am UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/34 "2011-11-13T09:40:04Z")
> [@leahcim](#): > > I assume you are referring to this [column](http://krugman.blogs.nytimes.com/2011/09/11/the-years-of-shame/)? Doesn’t seem extreme to me. Then why did he “not allow comments on this post for obvious reasons” ? ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [November 13, 2011, 11:02am UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/35 "2011-11-13T11:02:04Z")
> [@SanDiegoTim](#): > > I guess I could have made my point better. I don’t read/listen to Krugman as I believe he is a left wing idealogue. And to demonstrate that I am not blinded by my political leanings, I stated that I don’t listen to the right wing nuts, either. Krugman is no doubt a well-educated economist, but his extreme political leanings tend to tarnish his commentary. I don’t know that the one necessarily has to do with the other. If Krugman is a skilled economist who’s economic ideas are supported, then he is, regardless of his political ideology. By analogy, Noam Chomsky IS a left wing idealogue, much further than Krugman, but his work on linquistics is still worth listening to, even if his political views are batshit crazy. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [November 13, 2011, 4:30pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/36 "2011-11-13T16:30:16Z")
I know this is GQ and not GD, but I’m going to go out on a limb here, since I’ve read a lot of Krugman’s stuff over the years, and state that he can’t be accurately described as “extreme left”. It is important, though, to recognize when he is acting as an economist and when he is acting as political commentator. I remember during the last presidential primary race, he was an unabashed HRC supporter, and pretty heavy Obama basher. I can’t see that those two hold divergent economic positions, so that support seemed primarily political in nature. Not that there is anything wrong with that. ---
**Author:** ![Lantern](https://avatars.discourse-cdn.com/v4/letter/l/d26b3c/32.png) [@Lantern](https://boards.straightdope.com/u/Lantern)\ **Post date:** [November 13, 2011, 4:50pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/37 "2011-11-13T16:50:20Z")
> [@John\_Mace](#): > > The gold standard in that quote is not “the gold standard as generally understood”. That quote refers to two things. The “private gold standard” that Friedman says is OK but unlikely is not the gold standard as generally understood. The gold standard mentioned in the last sentence of the quote that he clearly opposes is what is usually referred to as the gold standard. About Krugman, he is pretty much in the middle of the Democratic party as far as politics are concerned. Certainly not extreme left or even close to it. He was quite centrist in the 90’s when he wrote for Slate but he has moved somewhat to the left since then. ---
**Author:** ![leahcim](https://avatars.discourse-cdn.com/v4/letter/l/b4bc9f/32.png) [@leahcim](https://boards.straightdope.com/u/leahcim)\ **Post date:** [November 13, 2011, 5:14pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/38 "2011-11-13T17:14:25Z")
> [@What\_the](#): > > Then why did he “not allow comments on this post for obvious reasons” ? Because he knows his opinions as stated in that article are provocative to a segment of the population likely to spam comments sections of blog posts with meaningless vitriol. So, other than not providing you with an immediately accessible forum upon which voice your displeasure at his opinion, what in the article strikes you as extremist? Seems like fairly mundane opinions to me: Some politicians are whores, pundits are lazy, the Iraq war was not really related to 9/11 at all, and these are all bad things that have tainted what could have been a very unifying experience. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [November 14, 2011, 4:20am UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/39 "2011-11-14T04:20:51Z")
1. Milton Friedman’s advocacy of the gold standard was pretty circumspect. Cite: John Mace’s quote of wikipedia. 2. Milton Friedman was a big fan of flexible exchange rates. Cite: “The Case for Flexible Exchange Rates”, Friedman (1953) 3. Krugman has had kind words for Friedman in the past (_Peddling Prosperity_) as well as some more critical remarks. For that matter he has also had kind words for Martin Feldstein. 4. Friedman believed that “To spend is to tax!!”, and didn’t like Reagan’s or GWBush’s budget deficits for that reason. The point being is that he was a traditional conservative and not a modern conservative cheerleader _pace_ the Wall Street Journal. 5. Most important the OP misrepresents Paul Krugman. I add emphasis: > [@Paul Krugman](#): > > First things first: **The attempt to create a common European currency was one of those ideas that cut across the usual ideological lines.** It was cheered on by American right-wingers, who saw it as the next best thing to a revived gold standard, and by Britain’s left, which saw it as a big step toward a social-democratic Europe. But it was opposed by British conservatives, who also saw it as a step toward a social-democratic Europe. And it was questioned by American liberals, who worried — rightly, I’d say (but then I would, wouldn’t I?) — about what would happen if countries couldn’t use monetary and fiscal policy to fight recessions. Krugman wasn’t claiming that liberals were right and conservatives were wrong. He was saying that the issue _did not_ line up along the usual liberal/conservative axis. 1. Oddly, the guy who had did the most seminal work on common currency areas – Robert Mundell – happened to be a big supporter of the Euro. One economist with a kinder take on the matter than Krugman says that the big financial crisis hit before Europe had a proper chance to set up the proper fiscal institutions: > [@Dani Rodrik](#): > > In short, the euro’s institutional incompleteness has left the Eurozone badly exposed to the crisis. Euro-skeptics say “we told you so.” Others, like me, will argue that it was the EU’s misfortune to have been caught halfway in its institutional integration process by a financial crisis that was not its own doing. [http://rodrik.typepad.com/dani\_rodriks\_weblog/2011/11/why-is-the-bankruptcy-of-the-greek-government-different-from-the-bankruptcy-of-california.html](http://rodrik.typepad.com/dani_rodriks_weblog/2011/11/why-is-the-bankruptcy-of-the-greek-government-different-from-the-bankruptcy-of-california.html) ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [November 14, 2011, 4:24pm UTC](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689/40 "2011-11-14T16:24:36Z")
To get back to the OP, I think I do know what Krugman meant. The Euro was set up in such a way that the central bank has no power to print money, the way the Fed can. This means that there is no way that the central bank could buy vast quantities of Greek, or Italian, or other bonds at the same rate (approximately 2%) that Germany pays. (I think this is what is called “quantitative easing”, odd term). Thus the quantity of Euros is as restricted as the quantity of money is under a gold standard. Now if all currency was backed by gold whose value was allowed to float it might, in the current economic world, float up to a million dollars an ounce. That would be the only way the world economy could continue to function. At that point, they would start mining the oceans for gold. Jewelers would be out of luck. But it makes no sense. Even the current price of gold makes no sense. [Previous page](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689.md?page=1) [Next page](https://boards.straightdope.com/t/paul-krugman-on-initial-american-reactions-to-the-euro/602689.md?page=3)