Paul Krugman On The Federal Reserve: 'Not Enough Inflation'

The New York Times:

A few days ago, Alan Greenspan, the former chairman of the Federal Reserve, spoke out in defense of his successor. Attacks on Ben Bernanke by Republicans, he told The Financial Times, are “wholly inappropriate and destructive.” He’s right about that — which makes this one of the very few things the ex-maestro has gotten right in the past few years.

Read the whole story at The New York Times

Comments

[RomeoMD25]

04:01 AM on 04/09/2012

Krugman and the other Keynsians are following an illusion and thing that an economy can be rebuilt by borrowing and spending. Like a normal person you can not get richer by consuming, only through saving and building a capitalstock. This is a econmic principle.

But dont worry, the current poltics by Obama/Bernanke or Romney/Bernanke will be continued and the KEYNSIAN ENDPOINT will be riched soon.

[novictim]

02:18 PM on 04/07/2012

Imagine if one quarter of the 7Trillion dollar bank bailout had gone to underwater homeowners...erasing their negative balances?

Now let's see who is REALLY against inflation...ha ha ha. Oh, a change in heart, I see...

What a bunch of self serving monkeys.

[novictim]

02:12 PM on 04/07/2012

Inflation is directly proportional to employment.

If you want lower unemployment, if you want customers to buy your goods, eat at your restaurants, pay taxes to fund your schools...then you WANT higher inflation than we have now.

If those things are of no concern, if you slurp gruel like Ebeneezer Scrooge...care nothing for your fellow citizens...then yes, low inflation is for you. Of course, eventually, your life evil mistreatment of your fellow citizen will come back to haunt you...perhaps as a mean spirited, sadistic orderly/nurse at your rest home...a guy who ekes out a hopeless existence on the miserable crumbs society has spilled off it's plate.

[victorianism]

11:27 AM on 04/07/2012

Thank god, thank god, thought the retired once working poor, Obama didn't chose Paul Krugman to run his Fed, or what could I live upon now? Foodstamps?

[DismayedRepub]

03:49 PM on 04/07/2012

You may still get your chance.

[spyker1]

11:03 PM on 04/06/2012

Elect Ron Paul and END THE FED

[hoedown]

07:52 PM on 04/06/2012

Paul K. never had a bad word to say about inflation, and he never seems to have any concern that inflation eats away at savers savings, or those wages of workers on essentially fixed incomes.

I would say a healthy, just economy is one where simple investments (eg what old folks can do, like CDs) should at least keep up with inflation. Not in this over-leveraged, over-indebted, onver-innovated, over-derivatized US Frankenstein economy, though.

Old folks shouldn't have to get into the stock market or corporate bond etfs just to keep pace with inflation, but that is what the FED, with its 0% interest rates, wants them to do. Shame on the FED.

Interestingly, I just checked out the highest CD rates in the US and they are a paltry 1.4%/year for 3 years, quite a bit below REAL US inflation. But the equivalent in the UK for 3 years are about 4.00%/year which is getting close to where UK inflation really is. Why are rates so much lower in the US?

[DismayedRepub]

04:05 PM on 04/07/2012

Because the FED buys Treasury bonds and lowballs the yield in the bid. This forces out other bidders that demand the highest yields. If the FED quits buying these bonds you'd see a 2% or more pop in the yields. This would be really bad for the Treasury as they would have to service the debt at these higher yields and they would have to cut spending on other things to do so. They could end up having to borrow money to pay the interest on the money they already have borrowed. The Treasury is pretty much bankrupt.

[dodgersbfan]

07:16 PM on 04/06/2012

Lets see 25% inflation,,,,, Hurry up, we need it before Nov.

[RomeoMD25]

05:10 PM on 04/06/2012

The media, which is owned by corporations is controlling what info, we get. The Fed is the biggest ponzi scam-and JFK tired to take away their powers in 1963 with his order of EO11110, by giving our monetary system back to the people, with Silver Backed Notes-Not Federal Reserve Notes.

[RomeoMD25]

05:04 PM on 04/06/2012

Liberals are not liberals, they are statists. Libertarians are liberals (classic liberalism). The word liberal has been corrupted over the years for a modern day liberal having nothing to do with true liberalism. It is the same concept as capitalism. America doesn't have true capitsalism but people still call it capitalism wrongfully. Be careful with the labels.

[joeisright]

04:52 PM on 04/06/2012

If I were to judge Krugman purely based on what he writes in the NYT, I would have to conclude that he is the one guilty of not being a serious thinker, and that his views are dogmatic in the face of all evidence to the contrary.

[LivingDebtFree]

04:34 PM on 04/06/2012

Krugman is absolutely crazy. An ideological "economist" that usually forgets to include economics in his hit pieces and is always void of ethics.

According to him we should:
1. Punish savers who were responsible.
2. Punish elderly on fixed incomes
3. Borrow money because what we pay back isn't going to be worth as much
4. Hurts the poor (poor are hardest hit with inflation because they don't own inflation safe investments like homes and stock portfolios)

[DismayedRepub]

03:51 PM on 04/06/2012

More inflation would be a good thing, not a bad thing? So $4.50 per gallon gas and $10 per pound for steak aren’t expensive enough for you? Oh that’s right, necessities like energy and food aren’t counted in the inflation estimates. Runaway inflation is already cooked into the economic system. If the recovery does finally happen we’ll have to compete in the global market for food and energy with debased dollars. Things will get very expensive very fast.

The President recently said that he can’t do much about the current high fuel prices and blamed the global markets. After a $2 Trillion inflation of the money supply under his watch we’re lucky that gas isn’t over $6 a gallon. More and more people will have trouble affording food. Those that get food stamps or SNAP, will compete with those that pay cash forcing food prices ever higher.

The economy is still messed up and the government hasn’t done anything to address the underlying problem which is too much debt. Their answer is to pile on even more debt. It’s not a lack of inflation it’s demand destruction.

[Wanderland]

03:56 PM on 04/06/2012

The economy didn't fall off a cliff because of too much debt. We were all there. It's not like it's ancient history.

[DismayedRepub]

04:06 PM on 04/06/2012

This whole thing started because the Chinese Central Bank held over a Trillion in FHA, Fannie and Freddie bonds that were going into default. They demanded that we make good on this debt. Where do you think all that T.A.R.P. money went?

[LivingDebtFree]

04:35 PM on 04/06/2012

Um... Yes it did. Borrows borrowed too much and couldn't pay it back.

[LunaPark]

02:53 PM on 04/06/2012

Yea! More inflation, just in time for the baby boomers to retire on a fixed income.

[swift goat pet for truth]

03:43 PM on 04/06/2012

Rather have that than have the Right Wing give it to corporations.

[LivingDebtFree]

04:36 PM on 04/06/2012

Give inflation to corporations?

[Serio420]

02:39 PM on 04/06/2012

Right on Krugman. Lets just bail out the people with debt and forget about 1) the people who save their money the old fashioned way, u know, the fiscally responsible, and 2) get the corporate and financial institutions to unleash all their cash holdings, which is what hyperinflationists are really worried about. Trying to force institutions to spend their holdings through inflation is just going to cause more inflation.

[DismayedRepub]

04:01 PM on 04/06/2012

Krugman wants to inflate away the debt burden. Isn’t this a bit dishonest, certainly unethical? I don’t think I would want to loan him any dollars. He’d probably want to pay me back in Wampum.

[LivingDebtFree]

04:29 PM on 04/06/2012

He is absolutely wacko.

[ny hot mic]

02:35 PM on 04/06/2012

Yes, get inflation well beyond its current levels, and all those companies with 'cash' (or, in many cases, debt in the form of fiat piled high as a result of corporate bond sales given record low yields on said bonds) will hire many new workers to produce more of the things that aren't in demand by consumers who can't afford the prices of that which is already being produced.

Also, that ramp in inflation won't at all kill the economy further, because it's irrelevant that Americans are awash in debt as it is, that seniors and savers are engaged in massive deleveraging not out of choice, but necessity (given current rates of inflation and ZIRP), and that such a process won't end up also dramatically ramping bank failures as interest rates ultimately get away from Bernanke slowly at first, and then hasten the pace.

Yes, that Paul Krugman is some kind of genius.