The Beginning Of The End
The Beginning Of The End By Michael T. Snyder - Kindle Version

The Prepper's Cookbook

Don't Buy Survival Food Until You Read This - If you stockpile the wrong foods, you could be setting your family up to starve. It sounds harsh, but the truth is too many people with good intentions are making critical mistakes with their food stockpiles. Watch this video now >>
The End of Obama? Approaching Obama scandal could change the White House Administration and our country overnight... Click Here
Gold Buying Guide: Golden Eagle Coins
PREPARE FOR A CME, EMP, OR GRID DOWN TERRORIST ATTACK AT: http://www.iplantosurvive.info/

Archives

Why New York Times Economist Paul Krugman Is Partly Right But Mostly Wrong

In recent days, New York Times economist Paul Krugman has been doing a whole bunch of interviews in which he has declared that the solution to our economic problems is very easy.  Krugman says that all we need to do to get the global economy going again is for the governments of the world to start spending a lot more money.  Krugman believes that austerity is only going to cause the economies of the industrialized world to slow down even further and therefore he says that it is the wrong approach.  And you know what?  Krugman is partly right about all of this.  The false prosperity that the United States and Europe have been enjoying has been fueled by unprecedented amounts of debt, and in order to maintain that level of false prosperity we are going to need even larger amounts of debt.  But there are several reasons why Krugman is mostly wrong.  First of all, we have not seen any real "austerity" yet.  Even though there have been some significant spending cuts and tax increases over in Europe, the truth is that nearly every European government is still piling up more debt at a frightening pace.  Here in the United States, the federal government continues to spend more than a trillion dollars a year more than it brings in.  If the United States were to go to a balanced federal budget, that would be austerity.  What we have now is wild spending by the federal government beyond anything that John Maynard Keynes ever dreamed of.  Secondly, Krugman focuses all of his attention on making things more comfortable for all of us in the short-term without even mentioning what we might be doing to future generations.  Yes, more government debt would give us a short-term economic boost, but it would also make the long-term financial problems that we are passing on to our children even worse.

It is important to understand that Paul Krugman is a hardcore Keynesian.  He believes that national governments can solve most economic problems simply by spending more money.  His prescription for the U.S. economy in 2012 was summarized in a recent Rolling Stone article....

The basic issue, says Krugman, is a lack of demand. American consumers and businesses, aren't spending enough, and efforts to get them to open their wallets have gone nowhere. Krugman's solution: The federal government needs to step in and spend. A lot. On debt relief for struggling homeowners; on infrastructure projects; on aid to states and localities; on safety-net programs. Call it "stimulus" if you like. Call it Keynesian economics, after the great economic thinker (and Krugman idol) John Maynard Keynes, who first championed the idea that government has an essential role in saving the free market from its own excesses.

So is Krugman right?

Would the U.S. economy improve if the federal government borrowed and spent an extra half a trillion dollars this year for example?

Yes, it would.

But it would also get us half a trillion dollars closer to bankruptcy as a nation.

Krugman claims that "austerity" has failed, but the truth is that we have not even seen any real "austerity" yet.

When a government spends more than it brings in, that is not real austerity.

People talk about the "austerity" that we have seen in places such as Greece and Spain, but the truth is that both nations are still piling up huge amounts of new debt.

So let's not pretend that the western world is serious about austerity.

The goal for most European nations at this point is to get their debts down to "sustainable" levels.

But for economists such as Krugman, this is a very bad idea.  Krugman insists that cutting government spending during a recession is a very stupid thing to do.  The following is from one of his recent articles in the New York Times....

For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.

Critics warned from the beginning that austerity in the face of depression would only make that depression worse. But the “austerians” insisted that the reverse would happen. Why? Confidence! “Confidence-inspiring policies will foster and not hamper economic recovery,” declared Jean-Claude Trichet, the former president of the European Central Bank — a claim echoed by Republicans in Congress here. Or as I put it way back when, the idea was that the confidence fairy would come in and reward policy makers for their fiscal virtue.

Yes, Krugman is correct that government austerity measures will only make a recession worse.

Just look at what has happened in Greece.  Wave after wave of austerity measures has pushed Greece into an economic depression.  If you want to see what austerity has done to the unemployment rate in Greece, just check out this chart.

As other nations across Europe have taken measures to get debt under control, we have seen similar economic results all across the continent.

The overall unemployment rate in the eurozone has hit 10.9 percent which is a new all-time high, and youth unemployment rates throughout Europe are absolutely skyrocketing.

Right now there are already 12 countries in Europe that are officially in a recession, and in many European nations manufacturing activity is slowing down dramatically.

So, yes, austerity is not helping short-term economic conditions in Europe.

But what are the nations of the western world supposed to do?

According to Krugman, they are supposed to run up gigantic amounts of new debt indefinitely.

And that is what the United States is doing right now.  But at some point the clock strikes midnight and all of a sudden you have become the "next Greece".

U.S. government debt is already rising much, much faster than U.S. GDP is.

Between 2007 and 2010, U.S. GDP grew by only 4.26 percent, but the U.S. national debt soared by 61 percent during that same time period.

Today, the U.S. national debt is equivalent to 101.5 percent of U.S. GDP.

But Paul Krugman does not consider this to be a major problem.

The Obama administration is currently stealing approximately 150 million dollars from our children and our grandchildren every single hour to finance our reckless spending, but for Paul Krugman that is not nearly good enough.

To Krugman, the only thing that is important is what is happening right now.  Apparently the future can be thrown into the toilet as far as he is concerned.

The founder of PIMCO, Bill Gross, told CNBC on Tuesday that the U.S. government is likely to be hit with another credit rating downgrade this year if something is not done about our exploding debt.

The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.

But Krugman insists that the solution to our economic problems is even more debt and even more spending.

In a previous article, I detailed how we are doomed if the U.S. government keeps spending money wildly like this and we are doomed if the U.S. governments stops spending money wildly like this.

If we keep running trillion dollar deficits every year, at some point our financial system will collapse, the U.S. dollar will fail, and we will essentially be facing national bankruptcy.

But if the federal government stops borrowing and spending money like this, our debt-fueled prosperity will rapidly disappear, unemployment will shoot well up into double digits, and we will soon have mass rioting in major U.S. cities.

The truth is that we have already been following Paul Krugman's economic prescription for the nation for decades.  Our 15 trillion dollar party has funded a standard of living unlike anything the world has ever seen, but the party is coming to an end.

The Federal Reserve is trying to keep the party going by buying up huge amounts of government debt.  The Fed actually purchased approximately 61 percent of all government debt issued by the U.S. Treasury Department in 2011.

It is a shell game that cannot go on for too much longer.

The national debt crisis can be delayed for a while, but at some point the house of cards is going to come crashing down on top of us all.

If Paul Krugman wanted to talk about real solutions he could talk about shutting down the Federal Reserve and he could talk about going to an entirely debt-free currency.

But we all know that is not going to happen, don't we?

As I have written about before, the Federal Reserve was designed to be a perpetual government debt machine.  The system was designed to have the amount of money and the amount of government debt constantly expand.

And it has been working quite well in that regard.  At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.

But Paul Krugman is not going to talk about the real issues.  Instead, he is just going to keep running around declaring that more government spending and more government debt will solve all of our problems.

It is a very big lie, but millions of people are going to believe it.

Be Sociable, Share!
  • shane

    yawn

  • Rodster

    “But Paul Krugman is not going to talk about the real issues. Instead, he is just going to keep running around declaring that more government spending and more government debt will solve all of our problems.

    It is a very big lie, but millions of people are going to believe it.”

    You mean like Gary2. :)

  • Cinderella Man

    America is stuck between a rock and a hard place. Maybe Krudman is smart enough to realize that this country is far beyond gone and its fall is inevitable so why not spout off and say the hell with it and spend into oblivion? This man has no love for tomorrow. He figures ” Whoa look at me!! Im smart and im a writer for the NYT and Im a Nobel Peace prize winner bluh!” So that means we’re suposed to take this guys word as gospel? Nope America is doomed. The oil is going to eventually become too expensive, nobody will lend us money and we will become as El Pollo describes an BRA. Im just glad to be sticking this thing out in the sticks with the hicks!! I say hicks with love!

    • Concerned Person

      I love the way you put things – I am too – sticking things out with the hicks;) Better than living a stone’s throw away from a little piece of the 3rd world in America – Detroit and people are really nice and moral too.

  • Buzzy Watts

    Virtually any given Economics textbook, from either side of the globalist coin begins with a detailed anecdote highlighting the flaws of Soviet central planning. The entire rest of the textbook, however, will be an argument in favor of central planning, just a perverse “free market” version that manages to retain all the negatives while systematically filtering out any redeeming qualities.

  • http://worldendsat5newsat11.blogspot.com Roberta Lamb

    One day this house of cards will come crashing down around us and it will destroy many of us. Some will refuse to believe it has happened. Some will get mad and take it out on their neighbors and friends. Some will go on a rampage killing everything and everyone. Some will crash down off their meds and they will run amuck doing unspeakable horrors to people. And a few will prepare but precious few and most of them will not have enough supplies for their own family not to mention extended family, friends, co-workers, neighbors but they will EXPECT those who did prepare to share with them.
    Bad times are coming I feel. See how to prepare at:
    http://surviving12-21-2012.blogspot.com

  • Benjik

    You would think a world-renown economist such as Krugman would have a fundamental understanding of the dangers of hyper-inflation, obviously he doesn’t. I try to be positive and not use condescending terms, but Paul Krugman is such a TOOL…….

  • Kevin

    A politically incorrect question, but a relevant one.

    Is Krugman a homosexual?

    I ask becasue it is typical behavior of homosexuals to live for today and not care about tomorrow, and that’s all because they tend not to have children.

    • Gary2

      Kevin–here I thought you were asking as you were looking for a hook up with him. :)

      • Steve

        It’s a joke about guys with breads, long mustashes.
        Sorry Micheal for embarassing your colum:
        His bread resembles a part of a woman.

    • Nick

      I believe you’re thinking of a nihilist.

      All the useless eaters who’ve had kids they cannot afford; I say burn the place down and start again.

      We need some serious Social Darwinism to purge humanity, and we’re going to get it.

      The Georgia Guidestones give a good recommendation for a sustainable population.

      All the welfare programs, medicare, medicaid, social security, socialized medicine, UN food programs, etc. need to be stopped and will be.

      At least the gays aren’t capable of contributing to over-population.

      Anyway, at this point you might as well just party and enjoy life before we enter the next dark age.

      • http://theeconomiccollapseblog leonard

        … and bail out the banks with quadrillions of dollars this time around…

      • http://theeconomiccollapseblog leonard

        Just add more zeros for them! Zeros is all you need!

    • Gay Veteran

      Kevin, you’re a moron

    • http://www.povertylinejournal.blogspot.com/ the optimist

      Your bigotry is showing. Just how ignorant can a person be???

    • Jerry

      Kevin, such a sweet name, but such a clueless comment! Delusion and sublimated (or lived-out) funseeking afflict people of any sexual orientation or totally asexual. What kind of reductionist world do you live in, adorably dumb but cute kid?

  • http://OgallalaAquifer Lazy Ike

    The only candidate addressing these issues in a meaningful way is Ron Paul. Because he is against aid to Israel and wants to terminate the Israeli inspired wars, he is totally ignored by the *********** media.

    Here in general is what people of his ilk want done.
    Austerity Measures:
    1. Terminate these costly foreign wars.
    2. Stop all foreign aid.
    3. Cut defense spending. (I would add return to the draft, the biggest and most costly entitlement program.)
    Regulatory Measures:
    4. Put the big banks out of business and reorganize them with US backing.
    5. Start sending the banksters to jail.
    6. Revalue the currency and write down the debt.
    Demand Measures
    7. Put a labor cost denominated tariff on imports from low wage countries.
    8. Repeal all the trade agreements.
    9. Confiscate the accumulated wealth through income & estate taxation being held in corporate reserve and foreign bank accounts to reduce the national debt.
    10. Stop policies of the Fed that encourage the investment by the Banks mainly in emerging markets.
    11. Start a WPA and spend the money here on long term value added projects not just welfare.
    12. Institute price controls on health care costs and expansion. Extend Medicare to everyone.

    • CJ

      Yeah, um, not sure about some of those there cupcake. External links so I could verify for myself you’re not just blowing sunshine up my butt, please?

      (On a side note… See Gary2, that’s how it’s done.)

    • Gary2

      you know I kinda like what you propose.

    • Darien

      Investing in foreign countries, shutting down US businesses while opening their replacements in foreign countries and shelterimg earning offshore is treason and should be dealt with accordingly.
      All of this weakens the USA while strengthening our enemies.

    • Shamaka

      I think terminating wars is a great idea.

      Rather than wage war, why not simply send Bernanke and the banksters over there and let them build Iran’s economy in the same way they have helped the US. My suggestion is don’t bomb Iran. A bit of American “know how” should help!!! Netanyahu would not bomb Iran while the US is “helping” the Iranian economy! So you have helped world peace on that front too…

  • Washington

    As always, but government loves him because he will say what they want the most. Bought and paid for by government! He is always wrong.

    This is a must see. This is truly amazing!

    If this Dog, Cat, and Rat can be friends and live in harmony together it makes you wonder why so many humans can’t. A message of peace from Greg Pike and his amazing animals.
    http://www.youtube.com/watch?v=D85yrIgA4Nk&feature=player_embedded

  • nowwthen

    Watched Sunday morning’s discussion on “This Week” moderated by Snuffleupagus (ask Cookie Monster Gary 2). Paul Krugman looked like a lost child in the company of George Will, David Walker, Eric Schmidt, Carly Fiorina and Jennifer Granholm. Krugman says private sector job creation is now “Vastly better”??? bwwaaaahhaaa!!

    Aside from Krugman being de-pantsed two things really stood out from that discussion.

    Jennifer Grandholm accurately suggesting that anyone who signs a pledge to never compromise should be tossed out of Congress.

    Carly Fiorina’s anti-union guided mentality preventing her from seeing the value of saving the U.S. automakers and her inability to recognize that it was only by a stroke of luck that Ford’s CEO Allen Mullaly cashed in on Ford’s line of credit prior to the crisis whereas GM and Chrysler decided (in what would have been considered prudent decisions in less turbulent times) not to prematurely cash in on their lines of credit. Bottom line — Ford weathered the crisis because they had the good fortune of borrowing early enough to do so. GM and Chrysler didn’t borrow in time and when the credit dried up they were S.O.L. The facts are that millions of Americans are still working and paying income tax into the U.S. Treasury because GM and Chrysler are doing well today.

    David Walker – former U.S. Comptroller – impressed by way of being apolitical suggesting that neither political party is offering long term solutions.

    • Gary2

      is that the same carly fiorina who drove HP into the ditch and shipped thousands of jobs over seas?

      Or the one who tried (and failed *************) to buy the senate seat of Boxer? (One of the better ones in the senate)?

      Why is that tool given any air time or creditability?

  • McKinley Morganfield

    PK is looking at the south end of a north bound horse. Government horse caca does not a healthy economy make; the exact opposite is true. Think about this: more than 1/3 of DC spending is borrowed/printed money. Same goes for most of the states and municipalities, likewise the private sector. By PK’s logic DC should borrow/print 100 trillion FY 2013 and suddenly every man, woman, and child will instantly be multi-millionaires.

  • Washington

    Schiff: ‘Junk’ US Treasurys, Dollar Headed for CollapseWednesday, 02 May 2012 09:26 AM
    By Forrest Jones
    http://www.moneynews.com/StreetTalk/Schiff-US-Treasurys-Junk/2012/05/02/id/437757?s=al&promo_code=ECDF-1

  • Rikki

    Exactly Michael:

    I have not seen a dime of that trillion dollars….My credit cards interest rates still haven’t gone down, Why isn’t there some debt relief for for those who are NOT wildly over their heads in debt? I have 1 credit card pay it down by $4000 and i will spend it wisely… like why is my engine light on? I need a new computer XP only goes so far and my mac is aG4 cant upgrade it…I need shoes

    I need to keep my skills updated so why did every last dime of job training funds disappear in NYC?

    You want us to eat healthy foods then increase my food stamp $50-75 mo and it’s for fresh fruits and veggies only, and its use it or lose it each month, no carry overs

    Hey my landlord needs the rent tomorrow, luckily I have it this month yet Deadbeat homeowners live Scott free for over 4 years in FloorRiddaH i’m mad..

    And we need to change how Fico is calculated I had almost 800 before the crapolla hit the fan, well duh maybe I can get it back with a real normal paying job, ya think OhBooozo??

    Yet neither party will ever address my financial future.

    ———
    American consumers and businesses, aren’t spending enough, and efforts to get them to open their wallets have gone nowhere.

  • joe

    Absolutely stunning that people take this troll seriously.

  • Barn cat

    Raising tax rates leads to lower collection rates. Reagan lowered the top tax rate from about 70% to 23% and revenues doubled between 1981 and 1989.

    • Gary2

      and so did the deficiets!

      • Syrin

        Hey self proclaimed genius. It’s deficits.

        Hey *** for brains. Why would that be? Oh yeah, EXCESS SPENDING. ************* man, do you wake up daily and take a stupid pill?

  • Antonio Gonzalez

    Krugman is wrong because he can’t see why is the crisis. He is money man
    and not a human been.

  • markthetruth

    MIKE i stopped at this line no need to go any further!!!

    The goal for most European nations at this point is to get their debts down to “sustainable” levels.

    Debt is a creation equivalent to drugs and alcohol, we are addicted to debt and told it is a good thing, and must have to get any any kind of credit rating. The society is prayed on by the government , and corporations (no money down, buy now pay later, easy to use plastic cards) all enablers to the addiction. We need to be in “REHAB” PERIOD……. or else we overdose.

  • DMyers

    Good article. Isn’t there a basic logical fallacy to the argument that the way to solve a problem is by adding more of the problem to the problem (i.e. debt)?

    Only if you assume that nothing on Earth is infinite.

    I do! I assume that. It’s true!

  • Orca

    Michael, when would you say was the peak of US civilization? As much turmoil as there was I would say the mid to late 70s, since wages were still growing faster than inflation until 1980. Manufacturing employment (middle income jobs) were still on the upswing. Public debt to gdp did not bottom until about 1979. Finance occupied 4% of GDP (same as the 60s) versus the current 8%. There was turmoil, and especially inflation, but the economy did produce actual wealth until about 1981/2. Then it was all debt fueled “growth”. Thoughts from the group?

    • Michael

      That is an interesting question.

      I liked the music of the 1970s, but the clothing was abysmal. :)

      Michael

      • mondobeyondo

        I’d have to agree. Don’t know if those awful polyester shirts were the inspiration for the Simpsons’ “Itchy and Scratchy Show”, but I wouldn’t doubt it if it was.

      • John W.

        Polyester leisure suits. Can’t believe they were ever popular.

      • Alasha

        i luved the clothes of the seventies!!!! platform shoes, bellbottom pants, afros and floral print tops!! boy was in my element – lol And i did a boogie on the soul train line….. yay!!

        http://www.facebook.com/alasha.williams

        • Alasha

          a pic of me in the seventies….

          • uncurable wound

            LOL,,Alasha,I think I had that shirt.Nice!

        • Michael

          Very nice! :)

          Michael

      • Justanoguy

        So were the hair styles.. ;)

      • Beano

        If you are short a Safari Suit or two I’ve still got some brand new ones here somewhere.

      • Macnasty

        Michael platfom shoes,big afros,leisure suits,monster bell bottom jeans,hip hugger jeans,the list goes on absymal yea I agree

      • Gary2

        I bet you wore one of those neru jackets! Show us a picture Michael!

  • Another Richard

    Krugman is part of the same group that has been engineering the US economy at the Fed and the Treasury Department for the last 40 years. Together, you see where they have brought this Nation and the World as the Fed is the Lender to the World, since they control the lever of the money printing machine of the endless supply of US dollars. The United States and the World now stand at the brink of a Debt Chasm so deep that none can see the bottom. This was engineered by Plan and Design to bring us All down into Financial Chaos of such Draconian proportions, that the Nations of the World will have to eventually submit to their Control and One World Monetary System. The Financial Collapse will begin in earnest by the End of 2012 as the US Dollar is devalued and loses its reserve currency status and petro dollar status and inflation runs rampent and the western world economies descend into Choas. Krugman is a brilliant man as are his cohorts in Crime that have done this to the USA and the World. They know better than any that the Creation of Humongous Debt the USA and the World has is completely Unsustainable, Because that is their Diabolical Plan. Check out the Pedigree on this man and most of his cohorts at the Treasury and the Fed for the past 40 years and you will discover the group that they belong to.

  • Phillip Sherwood

    Printing money without reforms would make things worse in the long run but for most people the short run is more important. It reminds me from something I came across in a true crime paperback. “The only thing a con artist ever needs is another day.” For people who are struggling another day is enough. In the absence of serious reform I prefer Krugman’s prescription over those proposals that would certainly make things worse. Anyway, economic systems are man made. Every now and then the old system is scrapped and we start over. The debt will not be passed on to our children because they cannot possibly pay it. Eventually this will get sorted out but there will be a lot that happens between now and then and a serious collapse may not be avoidable.

  • Otown Right Guy

    We have already past the point of no return. Defense is the only thing that might get serious budget cuts. But that will decimate our war-based economy. Social spending will get no cuts. The Democrats will not allow any cuts to Medicare, Medicaid, Social Security, food stamps, farm subsidies, etc. The unfunded liabilities are who knows what. $20 trillion? $100 trillion?

    • uncurable wound

      Otown Right Guy,according to the national debt clock,its about 118 trillion,give or take…
      The payroll tax only brings in about 800 billion a year so yes

      WERE SCREWED!!!

      http://www.usdebtclock.org/

    • Syrin

      I have read when you use actual accounting practives and don’t keep things like entitlemenmt programs off the books as the gov’t does, include state, local and individual debt, we are actually $211 TRILLION in debt. Read that just last week. You are correct. mathematically, there is no way to return from that. Liberals, including liberal GOP members, have spent the wealth of the next three generations of Americans.

      • Gay Veteran

        and Bush the Idiot wasted $trillions for his war of aggression against Iraq

  • mondobeyondo

    Krugman’s obviously a Keynesian. He thinks we can spend our way out of debt.

    Oh, hold on.. news flash! Money IS debt. I repeat, MONEY IS DEBT!!!

    Okay, back to our regularly scheduled program.
    Um. I’m more of the Ludwig von Mises approach to finance. But that’s just me.
    The Keynesian approach has been a failure. It only leads to more and more debt.

  • CAngel

    Does Mr Krugman say anything about how we are supposed to pay this back? I am shocked that this man won the Nobel Prize for economics, nothing he says makes any sense. The jobs are gone, the middle class is disappearing, and the taxes are so high already, where is the money going to come from?

  • Colin

    I was watching Rachel Maddow’s show on MSNBC. On her show, she showed a chart that linked the rise of economic inequality with the polarization of the House of Representatives. She mentioned that while people on the left have stayed pretty much the same, the people on the right are pulling even further right.

    Here is an article on this chart:

    http://www.decisionsonevidence.com/2012/02/ideological-polarization-and-income-inequality-track-each-other/

    http://voteview.com/polarizedamerica.asp

    According to this article, the Republican Party is the most conservative that it has been in 100 years.

    http://www.npr.org/blogs/itsallpolitics/2012/04/10/150349438/gops-rightward-shift-higher-polarization-fills-political-scientist-with-dread

    In my opinion, if this trend continues, I think it may become improbable for our nation to arrive at a consensus on how we will heal our economy. The right will have their plan, and the left will have their plan, and there will be no compromise between the two sides. I believe that economists, like Paul Krugman, will be seen by the public as affiliating with one side or the other, and, depending on a person’s affiliation, the economist will either be listened to or dismissed at best or attacked at the worst. I think this is already happening. I have read comments by people who are affiliated with the right who either dismiss or attack Krugman’s opinion. Sometimes these comments I have read have attacked the person of Krugman. How can this nation heal our economy if people are unwilling to consider new ideas or reevaluate their preconceived ideas, and are content to stay true to what they know?

  • Evie

    Reagan raised my taxes to help ww2 on ss. 1 out of 88 kids are autistic. Moving in with your kids will not work here. The populace would prefer collapse to debt serfdom. Who will spend under austerity to help the corporations. Letting banks go out of business is a better idea.

  • mark

    First if you believe in Keynes ideas, you are supposed to run a surplus in good times. They never do that, the debt grows larger every year. The right way to get out of a deperesion as we did in 1921 is to have major cuts in government spending along with major cuts in taxes. Bush cut the taxes but did not cut spending and Obama increased spending. Krugman said yesterday that we could increase the debt by a third and it is no big deal.He is a nut case. None of the parties will do what it will take to work towards a fix as the riots will be ugly. You better get ready for a long hard ride where these folks are taking us.

  • Joe

    Krugman is either a dullard or just another brick in the wall, i.e., political tool who has memorized some talking points. Or as someone else suggested, just an ordinary tool.

  • http://goldenladyfun.blogspot.com Pat

    This guy is an idiot. Localism not globalism. In order to be economically sound money must circulate within a finite economy at least 8 times before leaving. These thieves want to steal the money before it is even created. He has a nice hairdo though.

    Goldenladyfun

  • Eric

    So is Krugman right?
    No, he is brain damaged. An 8-ball gives better answers.

    Would the U.S. economy improve if the federal government borrowed and spent an extra half a trillion dollars this year for example?

    No! The US hit debt saturation about 3 years ago, which means that any added deficit spending has a net negative impact on GDP.

    http://economicedge.blogspot.com/2010/03/most-important-chart-of-century.html

  • Paul

    Investors need to invest more money into the real economy and less into the financial bubble. If necessary, the state needs to increase the tax on financial transactions and reduce income tax for the lowest wage earners.

    Entrepreneurs need to start inventing and employing inventors and innovators.

    Companies need to increase the lowest wages most and the highest salaries, bonuses and dividends least.

    That’s the only sustainable way to bring more money into the economy.

    Printing more money CANNOT be the answer.

  • Robin

    Says a lot about the goons who dish out the nobel prizes

  • chiller

    What klugman refers to is called a ponzi bubble, not supported by basic or fundamental growth, only an artificial bubble inflated by money coming in that does not exist but has been brought into existence by a decimal point on a computer.

  • Big Don

    Stop feeding the parasites…

  • Stan522

    Krugman is a moron…..

    He is simply saying we need to party like it’s the end of the world. Spend, spend, spend like there is no tomorrow. And the problem with that is when you wake up in the morning the maitre d will be handing you a bill.

    His fix is temporary at best and we don’t need temporary. To use the new liberal favorite word, it’s void of “sustainability”.

  • Richard

    This is a brilliant article. Michael shows he can write powerful stuff without resorting to the awful tear-jerking that permeates so much of his work. This one was for the history books. (I guess it is really really hard to tear-jerk an appraisal of that odious Krugman’s views). I wish I could say, “keep it up, Michael”. Unfortunately, I know that by the next article we’ll be back to the sappy codswallop we’ve all come to know and love. More’s the pity. You can do better than that, Michael. You just did.

  • pete

    We should allow the Keynesians to have all of the rope they like and to ******* themselves and destroy the system.

    Then, fix the system AGAIN and vow to NEVER again allow fiat money to destroy us.

    As for future generations……we are not going to pay back the Fed the money we owe them. That’s not going to happen.

  • Syrin

    Krugman is actually 100% wrong. Keynes himself wouldn’t be a modern day Keynesian. Go back and read the original papers. Plus, Krugman had to shut down his own comments sections because other economists, including people like me, kept owning him to the point of out right embarassment. He’s an idiot. He’s obssessed with the Great Depression but ignores the depression of 1920-1921 which was JUST AS BAD, but the appraoch taken to get the nation through it was DRASTICALLY different and actually worked. Again, liberalism – decimating nations for centuries.

    http://www.americanthinker.com/2010/08/paul_krugman_gives_up_1.html

  • Jodi

    People actually still listen to this guy? Unfortunately, I believe it’s over, we are bankrupt.

  • darien

    The solution to our debt problems begins with ending the countless, endless, bogus wars and military occupations throughout the universe. That will save almost a $1 trillion alone. Why do we need 800 bases worldwide, 20,000 troops in England, 50,000 in Germany and 20,000 in South Korea?
    Second, we must balance the budget in other areas like cutting foreign aid, ending pork programs, drastically reducing salaries and pensions of high government officials, eliminating unnecessary government agencies etc.
    Third, drastically reduce imports that hurt American industries and business and encourage and reward American based production and consumption. The WTO, NAFTA, and aother trade agreements have been a huge negative for the US worker and we need to nurture and protect the jobs of the US TAXPAYERS.
    BUY AMERICAN!

  • patriot alice

    It is excessive spending of borrowed money that is causing these financial problems in Europe and the USA..He recommends doing more of the wrong thing at a faster pace….It’s like a doctor recommending more alcohol to a drunk, or a speeder to go faster, or a criminal to commit more crime, or an idiot be even dumber to solve their problems. Live for today and leave the bill for the kids, or just depend on a default/haircut whatever…Only someone with dishonest motivations/intentions would promote for wrong to correct a wrong….He is so morally corrupt that he doesn’t know the difference between right and wrong. He must be a product of inherited wealth…Sorry Krugman, you would never made out of poverty if it wasn’t for your parent’s good graces….

  • Mark

    I’ll bet this guy, can laugh at the communistic joke.,
    Where one economist asks the other economist, what’s really going on in our economy? Replies the other; well let me explain.. No No No says the first, explaining is not the problem.

  • Chris

    Potential conspiracy theory – Krugman is actually proposing Western government to take on more debt because he wants to hasten the collapse of the financial system and the demise of the West? He doesn’t like any austerity or return to balanced budgets because it will prolong the lifespan of the present system? Does he want the financial system to collapse in order to allow the ‘elites’ to offer their new ‘solution’? Who and what is he really working for?

    • Another Richard

      Yeah Chris, No theory – just Conspiracy. This Grand scheme could Never be pulled off by one person. Krugman is part of the Dark Side which has Conspired for decades to bring the World into unfathomable Debt. They have succeded. The old proverb “The Borrower is Servant (Slave) to the Lender” is eternally True, therefore their Plan has succeded for they own the Debt thet the Slaves must pay, So they own US. Their goal is and always has been about Control. Unless one has a twisted and depraved Mind that lusts for Power over other people, then one Cannot grasp the Motives of these demoniacs.

  • http://TheEconomicCollapse Dave in OK

    Say, speaking of telling the truth and real solutions, what is happening to Ron Paul? It seems the press have made him a non-news item.

    • mondobeyondo

      Ron who?

      Yes, I know. I feel your pain. (Oh wait, Clinton said that first. Oops.

  • Evie

    It does not require a degree to understand more people are earning billions for doing zip and are being rewarded to help collapse. So what dumb moron believes people will work hard for less so they do not have the money for basics? Anyone who goes into debt to help the elite is a fool. I find it amusing the ones who expect everyone else to sacrifice are living on the welfare themselves _yet what they have they earned. Well all of you good boys and girls feel free to shop and take out subprime loans. If they are good enough for the masses. No growth with debt merchants.

  • Paranoid

    It’s all B.S. How in the world did we ever get to the point where spending 100% of what you make is austerity? This whole argument s asinine. Spending 60-70% of what you make and saving the rest is austerity. I know, that’s what I did for years; Now I’m retired and can pretty much do and spend as I like. People are going to find out the difference between wild spending and bankruptcy. They have no concept of living within their means

  • Old Man

    Whether Krugman is right or wrong on anything is irrelevant. He is not, and will not be in position of power. And his talk, like the talks of all economists, have been discredited.

  • Washington

    Report: Students don’t know much about US history ‘We are failing to provide children with a high-quality, well-rounded education’
    http://www.msnbc.msn.com/id/43397386/ns/us_news-life/t/report-students-dont-know-much-about-us-history/#.TwzLFflXk3w

  • Gay Veteran

    “…The Obama administration is currently stealing approximately 150 million dollars from our children and our grandchildren every single hour to finance our reckless spending….”

    with the consent of both houses of Congress, so that makes it bipartisan

  • Klean

    what a *************** clown! most 5th graders could do better than this.

  • Klean

    Other countries will attack because other countries actually live within their means and know how scarce things can actually get… austerity?? Don’t use words you don’t know the proper definitions of.

  • NEWTON

    Most of you are way over thinking this entire issue.

    You buy a vehicle – at least 35% of the parts are not made here & in some cases; 75% plus.

    You build a house – same story; try to buy nails, screws, drywall, 2X4s
    carpet, windows, fixtures, lamps, siding, roofing that are made in the USA

    Your clothes, your shoes, your precious computer, your glasses, your socks, makeup,

    I could go on for a couple paragraphs right down to the $4 gas in said car.

    FACT is – we dont make anything anymore and until THAT changes nothing else can or will.

    Simple as that

  • JLOA

    These editorials are right on, but never any commentary on a solution!

    • http://goldenladyfun.blogspot.com Pat

      It is obvious what needs to be done. The question is do we have the will to do it? The Fed gave 17 Tillion Dollars to European Manufacturers at no interest. They did it in secret. That money has to be repaid by the people it was given to. If they can not pay, then we will have to deny them the right to sell in the United States and we will have to foreclose on their assets.

      1. Kick the bastards out.
      2. Send those countries, banks and manufacturers a bill for the money given plus interest. Foreclose on those who do not pay it back. Revoke their license to sell in America.
      3. Ger rid of debt based monetary policy.
      4. Make it illegal for unelected and therefore unaccountable parties to ever commit, lend or give our assets to companies.
      5. Get rid of personal income tax for all American citizens. Non Americans would have to pay for their U.S. income.
      6. Close all loopholes to corporations
      7. Encourage private enterprise by eliminating financing of NGO.s, Associations such as the U.N., trade organizations, etc.
      8. Get rid of foreign aid.
      9. Distribute ownership of the assets of the country to each citizen on an annual basis.
      10. Eliminate inheritance tax.
      11. Eliminate Land tax.
      12. Reduce Military spending
      13. Reduce spending on so called security
      14. Eliminate toll roads, bridges and tunnels
      15. Open internal markets to competition
      16. Make corporations liable for all government hand outs
      17. Abandon forced medical coverage such as Obamacare.

      Goldenladyfun

    • Another Richard

      JLOA, the solution is Simple yet Radical. Elect Ron Paul as President. Unseat Every incumbent. Have the Justice Department under Ron Paul charge his Attorney General to indict All the Wall Street Banks with Fraud and Conspiracy for the Derivatives and consequent housing collapse of 2008 and perp walk All of them off to Prison for the rest of their lives. Shut down All the Too Big to fail Banks on Wall Street and Confiscate All their Assetts and return them to the United States Treasury of the people of this land. President Paul would then return the U S Dollar to a bimetallic backing of Gold and Silver as the Constitution calls for and then bring home All U S military forces from around the World and cut their size in half and provide an offering for two years of technical college or 3 years of college with all tuition, books paid. President Paul would then review all regulations on small business and slash 80% of them and lower their tax rates by 50% so we AMERICANS can be competive again. Then President Paul would do away with the IRS and establish a Flat Tax that All Americans would pay. Then president Paul would totally wean-off All those on Welfare over a Ten year period to where the most they could receive would be maxed out at 20% of what they Now receive. This would Restore American business and manufacturing and entrepeneurship and a Sound, healthy and vibrant economy within 5 years.

      • Another Richard

        JLOA, I forgot to mention that President Paul would Neuter the Federal Reserve before then eliminating them with All their destructive power and then audit the gold (Our National Treasure) in Fort Knox and of course, try and execute for Treason those responsible for any missing Gold.

  • 1% fan

    Define “austerity” in terms of actual dollars/drachma/euros spent in Places like Greece, Italy or Spain. How much were governmentd spending before
    Comparedtonow in actual dollars? Because my experience is that when people say “services cut 10%” it means instead of getting a planned 10% increase, it was “only a 9%” increase.

    There is no such thing as a Nobel Prize for economics. Alfred Nobel did not include economics as a subject to be honored when he set up the prizes. It is a later invention by a separate organization designed to cash in on thefame of Nobel’s awards. And the real Nobel prizes are heavily steeped in politics and giving them is often a political statement of the voters.

  • George

    The scope of the “long-term financial problems that we are passing onto our children” has been quantified by Professor Laurence Kotlikoff of Boston University. The present value of the debt being foisted (without their vote or consent) onto our children and grandchildren was $211 Trillion in 2010. See,http://www.bloomberg.com/news/2010-10-22/u-s-debt-is-child-abuse-laurence-j-kotlikoff-richard-munroe.html. That is equivalent to about 14 years of the US GDP. Whether characterized as “child abuse” (Kotlikoff) or decried because “taxation without representation is tyranny” (Revolutionary War hero James Otis), our politically unrepresented children and granchildren will certainly have cause to question whether they should be bound to become indentured servants in order to satisfy debt incurred by older generations.

  • bobbobbob

    u amerikakas will die inthe7street9wwithout medicalanddental urloosersand offerthe world kakaka. uurrtruelydieasedhumans

  • Tom T.

    Krugman is right, we need more govt. spending but not deficit spending. If the economy is at such a state that interest rates are so low and those low interest rates are not spurring the economy, we could, at this point, just print money and spend it on real projects we would spend money on anyway like education, health, or infrastructure.

    Our trade deficit last year was 67 billion from oil but a total of 657 billion, mainly to countries who are manipulating their currency. A good old fashioned devaluing of the currency is in order, not deficit spending.

    http://economyincrisis.org/content/china-responsible-for-bulk-of-the-u-s-trade-deficit-in-non-oil-manufactured-goods

    Our trade deficit was 737 billion, of which only 67 billion was oil. Yes, if we devalue our currency, oil (and gas at the pump) will go up. Perhaps a little stimulus spending on that would be in order. If we did this kind of spending, not by attaining more debt, but by devaluing our currency, we would not be so gamed by the likes of China (and their U.S. globalist partners in trade crime). This deficit means the U.S. is stimulating China’s economy, not ours with their stimulus. Turning that deficit around would mean a real stimulus to the U.S. economy– not just one controlled by U.S. politician’s spending problem.

    Krugman is right, but only partly right.

    Our political system is selling the future of our children through debt and pushing the solvency of the country to the brink. It is time to see how the globalists and their country allies are gaming the current system and quietly turn the game around on them. Will it mean that globalist assets in China and their gaming partners are devalued— you betcha. That is the point.

    Structurally we have real issues that have to be addressed that the game players have awarded themselves. The concentration of wealth into the hands of a few who have mastered the game needs to end. Our anti trust laws need to stop being sold out by the courts and their many excuses to not act on existing laws. The wealthy need to stop using economics (and illegal economics at that) to harvest the nation’s wealth. They need to be held accountable.

    What we need is real leadership. I only see excuses.

    Tom T.

  • Tom T.

    Krugman is right, we need more govt. spending but not deficit spending. If the economy is at such a state that interest rates are so low and those low interest rates are not spurring the economy, we could, at this point, just print money and spend it on real projects we would spend money on anyway like education, health, or infrastructure.

    Our trade deficit last year was 67 billion FROM OIL but a total of 737 billion, mainly to countries who are manipulating their currency. A good old fashioned devaluing of the currency is in order, not deficit spending.

    http://economyincrisis.org/content/china-responsible-for-bulk-of-the-u-s-trade-deficit-in-non-oil-manufactured-goods

    Our trade deficit was 737 billion, of which only 67 billion was oil. Yes, if we devalue our currency, oil (and gas at the pump) will go up. Perhaps a little stimulus spending on that would be in order. If we did this kind of spending, not by attaining more debt, but by devaluing our currency, we would not be so gamed by the likes of China (and their U.S. globalist partners in trade crime). This deficit means the U.S. is stimulating China’s economy, not ours with their stimulus. Turning that deficit around would mean a real stimulus to the U.S. economy– not just one controlled by U.S. politician’s spending problem.

    Krugman is right, but only partly right.

    Our political system is selling the future of our children through debt and pushing the solvency of the country to the brink. It is time to see how the globalists and their country allies are gaming the current system and quietly turn the game around on them. Will it mean that globalist assets in China and their gaming partners are devalued— you betcha. That is the point.

    Structurally we have real issues that have to be addressed that the game players have awarded themselves. The concentration of wealth into the hands of a few who have mastered the game needs to end. Our anti trust laws need to stop being sold out by the courts and their many excuses to not act on existing laws. The wealthy need to stop using economics (and illegal economics at that) to harvest the nation’s wealth. They need to be held accountable.

    What we need is real leadership. I only see excuses.

    Tom T.

  • Jerry

    It seems, not surprisingly, that the only way to cope with the Western world`s economic tailspin is not to have gotten so rottenly indebted in the first place. That is why the Dominion of Canada and some other Commonwealth nations (though not the U.K. itself) have been able to keep afloat in the midst of so much disaster, and even to prosper modestly. The trouble with the solution of not having sunk into drastic debt is that it is not one from which the severely indebted nations (like Spain, Portugal, the UniTIGHTASStates of AmeriKKKakapeepee, and other such loser nations) possible can profit. They have blown away all the chances that once they had and hacked down their bridges back to normalcy. Such a sad sight. It is all “tank, crash and burn”, turning them into blighted nonentities till they can have an hope of emerging, deeply marginalised in terms of power, from all of this.

  • WASP

    Krugman is full of you know what.

  • Paddy

    Why not recognise modern monetary theory, take the majority of money creation power away from the banks and let the government create the money!

    Inflation isn’t problem, if a central bank can regulate inflation caused by private banks then so can a government. This way at least the money can go somewhere good, i.e. public infrastructure or some *******

  • hitfan

    The left squawks against austerity because any cuts in government services will make government workers become unemployed.

    But the truth is, we can no longer afford to provide these services. Running TRILLION DOLLAR deficits every year might provide a false sense of prosperity to those who are fortunate enough at the moment to be employed by the government (or indirectly through contractors who build and maintain infrastructure) but eventually, interest payments on the debt will mean even greater pain in the future.

  • Washington

    For Your Consideration in the next election cycle:

    Here is the list of Senators who voted FOR (Aye) the use of 30,000 drones over the land of Liberty: Votes by Senator The Pro-Drone Senators Posted on May 10, 2012 

    http://fellowshipofminds.wordpress.com/2012/05/10/the-pro-drone-senators/

  • Jim Demmy

    If we need more government spending, what does that say about our economy?
    We need the markets to decide where money should be spent, not politicans and it seems, especially economists. All their education drove away their common sense. Ever since the 80′s prosperity has been built on debt as globalization moved the low skill, high paying jobs to cheap wage countries. Now the high school graduate competes for jobs with the Chinese, Vietnamese,etc. who work for $2 a day and without benefits. Demand will appear when more sectors of the economy are functioning, not only finance and governmental jobs. We cannot continue to have prosperity built on debt. That simply delays the bad times and eventually the payback is worse. The path to prosperity cannot be built on debt. If it was, why work.

  • http://none jhamrick

    Wow! Your essay is nothing more than a political position in search of a justification.

    You really don’t understand how the world works, the world of economics at least.

    But you are not alone. Many people seem to accept your poor thinking. If only people who write blogs like would just think objectively. But that is too much to hope for. Political passion is the bane, and possibly the destruction, of our world.

    • Jason

      i was waiting for an actual argument or some fact to support your position at some point….silly me.

  • http://thegreatrecession.info David Haggith

    I’ve had the same thoughts about Krugman. A lot of what he says makes sense, but you are exactly right. The problem with Krugman’s thoughts are this: In a properly run economy, the U.S. would have paid down its debts during good times, rather than create debts in order create good times at someone else’s expense. THEN, when bad times came, the U.S. (or any other country on the same program) would have ample ability to do some spending and stimulate the economy. If you pay off debt in the good times, then you have the capacity to use debt to get by in the rough times. That kind of economic program evens out the highs and lows and makes life a lot more liveable in a responsible way.

    Where Krugman is wrong is in failing to realize that the U.S. has been so profligate with debt during the good times that it has no capacity to take on more debt now. It already has more debt than it will ever find the political will to pay off. More dangerous by far than that, as a result of these bailout spending policies that began in the Bush II years, the U.S. NOW has more debt than it could ever pay off, for paying off the debt at any time in the future will be such a burden that it would pull even the strongest of economies right back down.

    We have passed the point of no return, and that is why Krugman and others want to keep up deficit spending. Without it, there would be / will be NO economy because the old economy is existing solely on life support now. When an economy is moribund, it would be better to declare a “year of Jubilee” and forgive all debts everywhere and do a complete reboot. Tough as that is, it would put the entire world in better shape for the future.

    –Knave Dave

  • Loop Garoo

    I say Barry and the Boys should increase spending so we can kill the country ASAP. It is history in the making. I have nothing left, so yes, I want everyone to be screwed like me. Do it now and get it over with. Hell on Earth can’t be that bad, we will still have football and porno, right? Voters are children and politicians are con artists for the children.

  • Brian

    I live in a city where the minuses = the pluses. They accomplished this by setting up red lights. The red lights, in turn, provides the city revenue, enough to fix a lot of roads and bridges, as well as rebuilding a golf course.

    Spending more money than we have for the country makes no sense at all. Where is the fiscal responsibility? It sure isn’t at the White House! Nor will it be found at the Federal Reserve, where the heads are empty of any ideas about fixing anything.

    We need new people with fresh ideas, and we start by getting rid of President Obama and liberal senators.

  • http://neo-ekonomi.com ekonomist

    well this nobel prized economist krugman is one of bests. he says always truths..

Emergency Essentials/BePrepared
Agora Financial
Thrive Life
FEMA Hates This

Austin Coins
Family Survival Plan - Check This Out!

PRI Advanced Fuel Treatments

High Blood Pressure?
Liberty Metals
The End Of America?
Panama Tours
ecb125e
End Game Economics
Facebook Twitter More...