5 votes

Paul Krugman Wrong Again

"Krugman's main line of argument has been that more fiscal stimulus is always needed as long as a significant output gap exists. But in Cyprus and Slovenia, very substantial fiscal stimulus generated minimal growth. Neither country would be suffering from its current financial conundrum had it not followed such a policy. Spain would probably be safe as well.

Krugman's disregard for the risk of sovereign default is perplexing. His main line of thinking seems to be that Europe has a growth problem, not a debt problem, and he appears to believe that a fiscal stimulus can always overcome the threat of the increased public debt burden. Even in the case of Greece, which had a gross public debt of 165 percent of GDP at the end of 2011, he failed to notice the danger but financial markets declared that the country's public debt was excessive. Slovenia's public debt of 50 percent of GDP, for instance, is more than the markets accept, as its bond yields have exceeded 7 percent."


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miket23's picture

His latest couple blog posts on

His latest couple blog posts on the NY Times regarding the iPhone are even more bizarre. In one he mistakenly draws an analogy between the "broken window theory" (yes, he refers to bastiat's "fallacy" as "theory") and the iPhone5 release. Then today he tries to defend the need for government spending to stimulate demand because of the impact the iPhone5 will have on GDP growth, which is a supply-side driven argument! Maybe their putting something in his coffee over there.

I suspect he'll die a lonely, destitute, shadow of a man

sometime in the near future. He'll go the way of the dinosaurs but not before he's roasted alive.

They try to pretend that this is so very complicated but a 2 year old would probably know that anything built on a mountain of debt is an economic liability, not something you want to drive towards.

So either he's a kook who is too arrogant to see how stupid his ideas are that has been propped up or he's intentionally misleading people.

Probably a little of both.

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