To call Paul Krugman a nitwit, dumbass, lying, pompous asshole would be an insult to all nitwit, dumbass, lying, pompous assholes. Jesse obliterates his 3rd grade level analysis sentence by sentence. Krugman belongs at the NYT, where truth and journalism hit the road decades ago.
It’s Official. Krugman Does Not Understand the Value of Money
I am not quite sure I have the words. Chris Hedges was right.
Like other progressives and independents, I have been discouraged that many old school liberal economists have had so little to say about financial reform, and the frauds in the banking system, even as they blindly pressed their case for more stimulus to be distributed without repairing a broken financial system that taxes the real economy with fraud. It is ‘whatever works’ as they define and measure it. Justice and equity have no part in their calculations. They learned part of the lesson from FDR, but not the part that really matters, and that made him memorable.
They make themselves and their models willfully blind to the crony capitalism that exists between the Fed and Wall Street, and the manipulation in the markets, and the lack of any credible prosecutions for some of the most egregious financial crimes since the 1920′s. How many more scandals will have to be revealed before they end their denial?
But in grabbing this whacko platinum gimmick of overt monetization which typifies almost everything that is wrong about modern economics, and in stubbornly claiming that it can do no harm, while dismissing anyone who expresses concern as some economic Luddite, Krugman and too many others have shown the purblind ignorance of the ideologue who does not understand what is wrong, and why the people are becoming restless.
And they answer them with sophistry and derisive baby talk. No wonder that economics is a disgraced profession.
The greatest irony is when we become what we hate.
This is another example of the credibility trap, and a failure in leadership. The Emperor is naked, and the people do not quite know what to do about it except to mill about in restless and embarrassed silence.
…For many people on the right, value is something handed down from on high It should be measured in terms of eternal standards, mainly gold; [Because something is not purely arbitrary does not require that it be divine - Jesse] I have, for example, often seen people claiming that stocks are actually down, not up, over the past couple of generations because the Dow hasn’t kept up with the gold price, never mind what it buys in terms of the goods and services people actually consume.
And given that the laws of value are basically divine, not human, any human meddling in the process is not just foolish but immoral. Printing money that isn’t tied to gold is a kind of theft, not to mention blasphemy. [Again, the intolerance of the ideologue, who is so far over on the continuum that they can only look across and see their other extreme, entirely overlooking the middle - Jesse]
For people like me, on the other hand, the economy is a social system, created by and for people. Money is a social contrivance and convenience that makes this social system work better — and should be adjusted, both in quantity and in characteristics, whenever there is compelling evidence that this would lead to better outcomes. [Money is just another tool, a cool toy, to the financial engineers who govern the economy like a benevolent elite. They do not understand value and consequences as they tinker and experiment, hoping for better luck next time. And amongst financial engineers, Greenspan was Dr. Frankenstein. - Jesse]
It often makes sense to put constraints on our actions, e.g. by pegging to another currency or granting the central bank a high degree of independence, but these are things done for operational convenience or to improve policy credibility, not moral commitments — and they are always up for reconsideration when circumstances change. [The ruling übermenschen are above conventional morality in their arcane knowledge. And how does one measure 'better outcomes?' For at the end of the day, economics is no pure science, but a social science of a certain class of policies, and policy has its roots in 'justice.' This is why the financiers must operate in secret, like the great Wizard of Oz. Because they have no science, but do not wish to be encumbered by anything, and especially something as inconvenient as justice, as they conduct their experiments. - Jesse]
Now, the money morality types try to have it both ways; they want us to believe that monetary blasphemy will produce disastrous results in practical terms too. But events have proved them wrong. [Yes that's right. The credit bubble, tech bubble, and housing bubbles have been benign and not based on policy errors. All of them were facilitated by economic quackery from both sides. But the would be elite can admit no error. - Jesse]
And I do find myself thinking a lot about Keynes’s description of the gold standard as a “barbarous relic”; it applies perfectly to this discussion. The money morality people are basically adopting a pre-Enlightenment attitude toward monetary and fiscal policy — and why not? After all, they hate the Enlightenment on all fronts. [As he cries for more leeches to bleed the patient... - Jesse]
The bottom line is that we aren’t really having a rational argument here. Nor can we: rationality has a well-known liberal bias. [The hubris of an ideology or a professional class in failure knows no bounds. - Jesse]Paul Krugman, Barbarous Relics
AWD says:
Krugman fully supports the $1 trillion coin. (And hyperinflation, loss of the dollar as reserve currency, unicorns and fairies and deficits). Krugman is head of socialism central.
Dear Comrades,
The Chairman of the People’s Collective Treasury is considering the issuing of a $1 Trillion coin to balance the USSA budget and bring prosperity to all. The coin will also function as a commemorative for Comrade President Barack Barackovich Obama’s swearing-in as Party Chairman and Supreme Head of State.
Given the commemorative theme of the coin, it is expected that the People’s Treasury may offer more of these coins, since demand is expected to be very high.
While some unpatriotic and counter-revolutionary elements have dared to suggest that the issuing of such a coin would create inflation, the People’s Treasury Department’s Directorate for Currency Stability has already issued a statement, saying that it will decree that all inflation is Bourgeois and Capitalistic, and so it cannot happen under our Socialist System.
The notion of ‘Supply and Demand’ is clearly a Capitalistic ploy to undermine the workers and peasants. It makes an excuse for their general strategy of impoverishing the Masses by making desirable products more expensive, all the while while depriving the Proletariat of their fair share by declaring their items for sale as having less value.
The Party eliminates the delusion of Supply and Demand by regulating both: the Party establishes what the People must have according to the Five-Year Plan and various governmental regulations, then tells State enterprises how much they may charge. We see how well this works in insurance and crop subsidies. Now, the Party will use the same technique on the People’s Dollars, thereby issuing more People’s Dollars yet not effecting their value.
Rest assured that Comrade Barack Barackovich will punish any Capitalists who attempt to raise their prices with such a counter-revolutionary excuse as ‘inflation.’ Comrades, be confident that your money will be worth the same no matter how much the State prints, because the State always controls the value of things.
Print more money for the People! Long live the Socialist Revolution!
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10th January 2013 at 2:33 pm
AWD says:
Basic economic analysis of the $1 trillion plus deficit indicates that the plan to socialize the US economy will likely fail unless the Obama Administration backs it up by replacing the existing legal tender called “the dollar” with a new kind of motivational currency called the “Thank You Sucker” (TYS) notes, which would flood the markets and stimulate the economy without causing inflation.
Above is our original design proposal of the new motivational money that features the portrait of Barack Obama, who once complained that he “didn’t look like those guys on the dollar bills.” The bill also features one of Obama’s most relevant money quotes, “Focusing your life solely on making a buck shows poverty of ambition,” as well as a couple of axioms that serve as cornerstones of the progressive fiscal philosophy: “Money is the root of all evil” and “I win, you lose.” In place of denomination at the top corners, the bill features the big letters “O,” which some may misread as big zeroes, and at the bottom corners, the anagram “TYS” in the shape of the hammer and sickle.
Obama won the election with a rhetoric that skillfully replaced the words “socialist revolution” with the word “change.” Now he is skillfully replacing the word “recession” with “catastrophe.” The next logical step is to keep the economy running by replacing “dollar” with “thank you.”
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10th January 2013 at 2:37 pm
AWD says:
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10th January 2013 at 2:38 pm
A. R. Wasem says:
Krugman’s literal idiocy is boundless. The last paragraph of his article is absolutely correct; it is impossible, not for him to have a rational discussion with us, but rather for us to have a rational discussion with him. It’s really funny, because his historical stupidity is demonstrated by his final sentence – the “liberal bias” of rationality to which he refers is classical 18th and 19th century liberalism – essentially modern political libertarianism and Austrian economic theory. Krugman is essentially a “religious” fanatic with regards to economics – a stellar example of Hoffer’s “true believer” – in this case a true believer in the power of limitless state fiat debt financing. Best Constitutional-Libertarian Regards to all.
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10th January 2013 at 2:40 pm
Eddie says:
I’m not sure he’s that dumb. Bought and paid for is more like it.
Once an academic whores out his credentials once or twice, it becomes easy for him to say almost anything his masters desire him to say.
So…not necessarily stupid, but rather willfully disingenuous and evil at the core.
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10th January 2013 at 2:54 pm
AWD says:
Why bother with denominations when it will be “worth” what He says it is “worth”? Perhaps they should just go with a graphic representation of actual value ….
fuck Krugman
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10th January 2013 at 3:08 pm
Administrator says:
Martian Central Bank Interested in Buying 100 $1 Trillion Coins
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The $1 trillion coin saga takes an unexpected twist….
The $1 trillion platinum coin saga took a surprising turn as the Central Bank of Mars has expressed interest in buying 100 of the proposed coins. Interpreters are puzzling over the meaning and subtexts of the Martian communique; since Martian is described as an often-ambiguous combination of Fortran and Hungarian, this is no easy task.
Opinion on the Martian offer is divided. Some suspect the Martian Central Bank intends to buy the $100 trillion in platinum coins with electronically created quatloos, i.e. worthless currency.
These observers believe the Martians intend to claim the $100 trillion in platinum coins constitutes a claim on the entire U.S.A., the purchase of which would effectively give the Martian Central Bank a massive beachhead on Earth.
Others believe the Martian Central Bank is simply playing an interplanetary practical joke, showing that any central bank that issues its own currency can magically create phantom money and assets. What better way to illustrate this than to buy $100 trillion in phantom assets with equally phantom quatloos?
A smaller cadre of analysts suspect the Martian Central Bank naively believes the fantasy that the arbitrary creation of assets, either via platinum coins or electronic entries in the Federal Reserve’s balance sheet, creates actual value. Though this credulity borders on the fantastic, these analysts point to the many commentators in the U.S. who have bought into the platinum coin fantasy.
If Paul Krugman et al. have swallowed the fantasy that something of real value can be created from nothing, then why not the Martian Central Bank?
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10th January 2013 at 3:31 pm
AWD says:
The martian equivalent of Ben Bernake
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10th January 2013 at 3:38 pm
Celtic Tiger says:
Ack ack! Ack ack!
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10th January 2013 at 4:11 pm
ASIG says:
Any kid on the streets of Zimbabwe can explain to you how well this will work out.
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10th January 2013 at 5:31 pm
Administrator says:
10 January 2013
Gold Daily and Silver Weekly Charts – Economic Goofiness and Competing Crime Families
Yet another intraday commentary here on the nature of money and the Platinum Coin solution to our debt problems. After all, modern money is just an accounting fiction, easily created and destroyed, taken from these and given to our powerful friends.
The more I thought about what Mr. Krugman wrote, the more troubled about it I became.
He seems to elevate what the central bankers do to the realm of pure science, as a purely mathematical function without resort to or consideration of morality or moral choices. As if.
That sounds like something one of the Austerians might say. We have to do these terrible things, require people to make awful sacrifices, because the economic equations compel us. It is not our fault. And making these difficult choices is such hard work that we deserve magnificent recompense for it, as in British MP’s have asked for a 32% pay increase.
Economics deals with a set of higher level public policy choices, and a series of specific economic decisions and tradeoffs designed to implement them. And not the other way around.
Our current system is upside down, where those with the money and the insider connections make the decisions, and those who serve them in various ways receive power and outsized rewards from those monied interests and their institutions. It is not all that far from what Hedges’ calls inverted totalitarianism.
Consider how badly policy and monetary choices have damaged the people of the United States in the past twenty years, and a good part of the rest of the world for that matter. Who can be confident that wisdom will prevail and justice will be done when there is no serious reform, and the perpetrators continue to write the rules for themselves. It is as though we are witnessing the struggles of competing crime families, and not a democratic process.
I think it is a terrible canard to say that people who wish to have a stable money supply and some confidence in its value, especially with regard to their savings, wish to have a money supply that comes from God as some sort of divine money.
Rather, I think the man is willfully misunderstanding and denigrating people who are referencing the principles of equal justice and ‘inalienable rights’ to freedom and property, without arbitrary confiscation by a central authority. Money is a powerful tool as any economist should know, and it is very dangerous when wielded badly, or by the wrong hands. The process of money needs to be transparent, and above reproach.
And especially when the monetary authority has proven itself repeatedly to be as ineffective, prevaricating, secretive, given to conflicts of interest and cronyism, and self-serving as the current crop of leadership that we have today in the Fed, Wall Street, and the government.
It is not as though these fellows do not understand what is at stake. Today Mr. Krugman said why he prefers the Platinum Coin gimmick to hitting the debt ceiling.
“My own view is that I was willing to go over the brink on the fiscal cliff, but not here, for three reasons.
First, this is seriously risky business. The fiscal cliff would have been a known quantity: basically, a negative Keynesian shock to the economy, which is something we understand quite well, and furthermore something that would have built only gradually over time. The risks, in short, were somewhat contained.
By contrast, nobody really knows what happens if America defaults, even briefly. The whole structure of world financial markets is built around the use of Treasury bills as the ultimate safe asset; what happens if they lose that status? It would certainly be an interesting experiment, but one best carried out if you have plenty of bottled water and spare ammunition in your basement.”
Paul Krugman, Thinking About the Brink
So allowing the debt ceiling to come, which is NOT a default on debt since interest can still be paid, which Clinton had done quite successfully as I recall, is to be feared to the point of doomsday. But using a dodgy method of overtly monetizing the debt, which has existed as an idea on the fringes until a month ago and has never been done before, is much less risky and will bother nobody. Are you kidding me?!
JESSE
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10th January 2013 at 7:42 pm
Davos says:
Wooden nickels are platinum nickles, monetization is monetization and Paul Krugman is a fucking cluless moronic dickhead.
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10th January 2013 at 8:04 pm
Jimi d says:
Use ‘Tally Sticks’ instead ! Just a wooden stick with some notches on it.
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10th January 2013 at 7:32 am