How Keynesian Archduke Krugman Recommended A Housing Bubble As A Solution To All Of America's Post Tech Bubble Problems

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Wed, 09/08/2010 - 01:24 | 568886 ACjourneyman
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I think if Krugman and Burnett hooked up, we would have no worse spawn than that of Bernanke and Geitner.

Wed, 09/08/2010 - 01:28 | 568890 A Broken Bear
A Broken Bear's picture

The realm of modern Academia is no longer designed to produce free thinkers who will challenge the currently accepted norms, rather it is designed to produce a slave class that will fight tenaciously to ensure they always prove "true" their currently held dogmatic "beliefs"

Krugman et al are a clear example of this. Keynsianism is the new DDT, people think it helps produce lovely disease free crops, but in truth it only acts to slowly poison us

Wed, 09/08/2010 - 07:08 | 569046 JLee2027
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A natural outgrowth of the evils of fiat currency, where the lazy can be over-payed for doing nothing but ranting diatribes of hatred.

Wed, 09/08/2010 - 09:48 | 569238 Joe Davola
Joe Davola's picture

Nothing is so firmly believed as what we least know.



Wed, 09/08/2010 - 20:54 | 570808 malek
malek's picture

You clearly have become part of some other slave class, opinionwise.

Since DDT was banned worldwide around 1980, about 1 million have died of malaria per year, which would still live with moderate use of DDT in their areas.
And they are still dying every year as no vaccination or other approach has been found against Plasmodium or the spreading through Anopheles mosquitos, after decades of huge research programs! To put it more clearly we still have no other option against malaria than DDT, killing the mosquitos!

BTW parts of the US were malaria infested too, before the National Malaria Eradication Program by use of DDT ended that

And "DDT slowly poisons us" reminds me of the fluoridation of all elements scare of General Jack D. Ripper and others... there is no f***ing proof for that claim!!!

DDT ban supporters have the blood of 1 million people per year on their hands, mostly children, and countless illnesses. It's as simple as that.


Wed, 09/08/2010 - 01:33 | 568892 three chord sloth
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He doesn't think he's wrong. I guarantee you he and his defenders think his idea was brilliant, Bush just did it wrong. Obama is doing it wrong. The masses just don't listen and obey enough. The implementers are deceitful and treacherous. Dark and mysterious foreign forces undermined his plans. All of the above... and more.

Wed, 09/08/2010 - 03:34 | 568964 1984
1984's picture

Yep.  The housing bubble didn't work because it wasn't big enough. 

Wed, 09/08/2010 - 06:05 | 569022 hugolp
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Wed, 09/08/2010 - 06:24 | 569028 nmewn
nmewn's picture

"Yep.  The housing bubble didn't work because it wasn't big enough."


Wed, 09/08/2010 - 07:08 | 569047 JLee2027
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+++++, to trillions

Wed, 09/08/2010 - 08:10 | 569084 imapopulistnow
imapopulistnow's picture

Most clever!

Wed, 09/08/2010 - 09:47 | 569111 P Rankmug
P Rankmug's picture

It wasn't a bubble if someone was still buying a house.

Wed, 09/08/2010 - 12:40 | 569704 capitalist bison
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Wed, 09/08/2010 - 01:34 | 568894 suteibu
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Hmmmm...Pimpco advice, too, huh?  I remember watching Bill Gross on CNBS nearly in tears begging for the Fed to cut rates in August 08.  Jack-ass.

Wed, 09/08/2010 - 01:41 | 568900 nhsadika
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This is totally crazy.   Since he seems like a mouthpiece for someone else's master plans, who were the architects of the housing bubble back then?



Wed, 09/08/2010 - 01:51 | 568909 Millennial
Millennial's picture

I'd put a bullet in his head if I could. That would be a good investment down the drain. Better yet I will use a baseball bat, break his fingers, and legs, and maybe his jaw. 

Make him out like Steven Hawkins. 

I'd already spray painted my baseball "The Fed". When it hits you you feel it. Shock and awe motherfuckers.

Wed, 09/08/2010 - 07:25 | 569053 DarkMath
DarkMath's picture

I read this and then saw your avatar and started cracking up. That is too funny.


Wed, 09/08/2010 - 02:21 | 568930 Caviar Emptor
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The key thing is that Krugman is only reflecting the general thinking at the highest level of academia, the Fed and the Government. That's why he can allow himself to be so bold. 

Yes leading economists, self-styled Washington money experts, and self-serving interests like Wall Street and the banks all believe that we can "Spend our way out of debt" because it worked during the Great Depression.

As we discussed yesterday, the situation today is radically different then in the 1930s in 2 key ways that make more spending toxic: 

-In the 1930s the world was not yet awash in an ocean of dollars and dollar debt. There was a gold standard in the US and elsewhere. 

-Within a few short years of massive Federal spending for the Depression, the US became the creditor to most of the developed world as they first fought then reconstructed from the total devastation of world war 2. Today the US ain't no creditor. 

More dollar printing and debt will has only served to make each increment less effective, and the risk of massive inflation is big.

Wed, 09/08/2010 - 02:33 | 568936 Bonesetter Brown
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(sung to the tune of the Meow Mix song)

Tool, tool, tool, tool

Tool, tool, tool, tool

Tool, tool, tool, tool, tool, tool, tool, tool...

Wed, 09/08/2010 - 05:22 | 569006 Coldfire
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Wed, 09/08/2010 - 09:23 | 569201 FEDbuster
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Paul's Blackberry ringtone:

Wed, 09/08/2010 - 02:36 | 568938 yabs
yabs's picture

Krugman should be shot for being a Financila terrorist along with bernanke. How can someone this thick get a Nobel?


Wed, 09/08/2010 - 09:29 | 569211 toeser
toeser's picture

"How can someone this thick get a Nobel?"


Well, it seems another extreme liberal not doing too well as our President won a Nobel Prize recently.  Seems like the scandi's don't have very high standards for the people they choose.

Wed, 09/08/2010 - 19:51 | 570729 TexasAggie
TexasAggie's picture

Remember, the larger the fraud, the faster you get the Nobel prize - Krugman, Gore (a large fraud), and BHO - the largest fraud in History. Madoff should get Krugman's Nobel prize for economics, his was a more honest theft.

Wed, 09/08/2010 - 02:36 | 568940 Professor Moriarty
Professor Moriarty's picture

Best. Post. Evah! Faaark Krugman and the horse he rode in on.

Wed, 09/08/2010 - 02:44 | 568947 yabs
yabs's picture

question to Paul krugman if you read this

do you actually belive the bullshit that comes out your mouth


if the answer to the above question is yes

Did you fall on your head as a baby and suffer irrepairable brain damage

or were you born thick


if answer is no you do not believe in it

how much dick and cash are you rewarded with for being a shill?

I can see just from looking at you that you do for sure bat for the other side. I guess you and your fag friend Bernanke both have beard so we cannot see the stubble rashes on your face.



Wed, 09/08/2010 - 02:54 | 568952 A Nanny Moose
A Nanny Moose's picture

Old wisdom, new twist:

Better to keep your mouth shut and be thought a Krugman, than to open one's mouth and remove all doubt.

Wed, 09/08/2010 - 02:54 | 568953 24KGOLD FOIL HAT
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I often wonder how the US got to this point.  Television keeps coming up.  I read that something like 40% of our brains attention is used up by the eyes [video].  Hearing might be another 10 or 20%.  Does someone learn or think better in a quiet room versus watching news on TV?  Did Hitlers speeches or books convince more people.  Without radio and cinema he might not have took over.

When I watch a debate for President its confusing.  If I jot down a few notes on the point they try to make, it becomes obvious its nonsense.

I was on a jury in a murder trial.  I was surprised how much the lawyers used emphatic language, gestures, emotion, etc to try to sway the jury.  The facts took a back seat.  To read the facts would be much less subject to manipulation.

Peoples minds are way overloaded and distracted and spun by bad video.  The ads use a recent technique of targeting the so-called "reptilian mind."  It was pioneered by a French psychiatrist who left academe to cash in on Fortune 500 consulting.  He bought a castle in New York state and all the CEO's come and worship at his feet.  He will tailor your ads to any of Earths 200 countries.  He is paid millions cuz he shows results; very powerful ads.  I remember a few of his discoveries.  Don't tell Americans what to do.  Tell Germans and French what to do.  Create strong emotions: fear, envy, lust.  Attack the non-cognitive parts of the brain.

Video can be great; like youtube series on "The Money Masters."  It has been overall hijacked for harmful manipulation.

So how do I tie this in to Archduke Krugman?  Maybe we need a youtube gameshow about foolish economists.  Or a videogame that has bounties on swindlers.  My friend Millenial would enjoy that.  Maybe he could produce it?  Much better than getting violent.  The system wants us to get violent so as to spin us as evil to the public.  A Mark Twain, Will Rogers, George Carlin type presenter.

Americans have the brains; they just are up against craftier modern Rasputins.  For those of us who still want to try and improve things, I think we can make a difference.  Plan B with gold, guns, smokes and nylons wil probably be needed to some extent.

Wed, 09/08/2010 - 08:50 | 569144 Colonel Boyle
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Anytime you read something, and get an immediate emotional reaction (agreement, hate, pity...) you can be sure conditioning has taken place.

Salesman, pop commentators, and politicians look to pace the inner world of their average demographic. One of the most common conditioning is the "virtue" of fairness. n this article Krugman invokes the "hard working American." What American doesn't think they work hard? Maybe 20%? So 80% read his first paragraph and agree emotionally with him. Their brains now have a interest in agreeing with whatever economic bullshit he slings in the rest of the article, because it validates the feeling they had reading the first paragraph.

Wed, 09/08/2010 - 09:26 | 569208 Implicit simplicit
Implicit simplicit's picture

I agree. Our minds are bombarded with bullshit everyday. It makes everyone want to complicate things. Then it will be easier for the neurosis in society to infect everyone by complicating every issue.

Be calm. It is not difficult. Simply said Debt bad, not good.

Wed, 09/08/2010 - 16:29 | 570350 PeterSchump
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Atlas needs to shrug.

Wed, 09/08/2010 - 21:16 | 570835 FEDbuster
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Atlas has dropped the ball this time.  Party at Gault's Gulch for the next couple of decades.

Wed, 09/08/2010 - 03:19 | 568960 agrotera
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thank you Tyler!


Wed, 09/08/2010 - 03:33 | 568965 Jus7tme
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Get real, Paul Krugman was not advocating a housing bubble. He was simply quoting the PIMCO guy and illustrating how bad the NASDAQ bubble had been.

This is old news, and wrong news. Sorry to say.

Wed, 09/08/2010 - 03:52 | 568978 Catullus
Catullus's picture

Yes.  Old news.  And you are wrong. 

Read the whole quotation:

A few months ago the vast majority of business economists mocked concerns about a ''double dip,'' a second leg to the downturn. But there were a few dogged iconoclasts out there, most notably Stephen Roach at Morgan Stanley. As I've repeatedly said in this column, the arguments of the double-dippers made a lot of sense. And their story now looks more plausible than ever.

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Yes, he's quoting Paul McCulley, because he's using the McCulley line as a support for his argument.

Wed, 09/08/2010 - 06:13 | 569024 chrisina
chrisina's picture

I think it can be interpreted both ways. One that he is supporting the housing bubble, the other that he is doubtful if Greenspan can pull it through.

But one thing is clear, he never asked himself what would be the consequences of a housing bubble collapse. Exactly as now he doesn't seem to ask himself what will happen when there is a Govt bond bubble collapse.

That's the big problem with Krugman and many other economists, they never think about the unintended consequences, they only look at the short term positive effect of leverage and never seem to believe that deleveraging can eventually happen.

Wed, 09/08/2010 - 09:09 | 569182 kridkrid
kridkrid's picture

That's teh big problem with everyone, not just economists.  If I'm free to leave out unintended consequences and opportunity costs, I can make a rational sounding case for just about any activity... War, Spending, Taxes, Tax Cuts, Welfare, Expansion, Staff Increases, Staff Decreases, Marriage... literally anything.

Wed, 09/08/2010 - 10:46 | 569400 Arseclown
Arseclown's picture

+1 billion and saddle for that jackass Krugman

Wed, 09/08/2010 - 12:16 | 569629 TheMonetaryRed
TheMonetaryRed's picture prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt.

And as that temptation becomes obvious, interest rates will soar. It won't happen right away. With the economy stalling and the stock market plunging, short-term rates are probably headed down, not up, in the next few months, and mortgage rates may not have hit bottom yet. But unless we slide into Japanese-style deflation, there are much higher interest rates in our future.

I think that the main thing keeping long-term interest rates low right now is cognitive dissonance. Even though the business community is starting to get scared -- the ultra-establishment Committee for Economic Development now warns that ''a fiscal crisis threatens our future standard of living'' -- investors still can't believe that the leaders of the United States are acting like the rulers of a banana republic. But I've done the math, and reached my own conclusions...


That's also Paul Krugman's own words - not his quoting someone from PIMCO - some months later. 

The unheralded part of the 2002 recession was that it was a default crisis as well. In response to the need for short-term fiscal stimulus, Bush put in long-term tax cuts for the rich. To overcome this fiscal mistake, Greenspan did, indeed need a real estate bubble to replace the NASDAQ bubble - and he got one. 


And, of course, the result will be exactly what Krugman predicted: Japan-style delfation or worse (which he would argue we're entering now) or higher interest rates and a punishing inflation. In other words, Krugman was right.

Wed, 09/08/2010 - 16:33 | 570370 PeterSchump
PeterSchump's picture

I like your logic better than Krugman's, perfectly counterintuitive.

Wed, 09/08/2010 - 03:47 | 568976 Catullus
Catullus's picture

The Mises Institute has actually called him out on this before. Krugman responded in his normal "and I was on the grassy knoll too" to discredit anyone who questions him as a quack.

A total classic by all standards, "Krugman's Intellectual Waterloo".

To which there are Krugman apologists on this issue:

Even The Onion has made fun of the situation and he AGREED with The Onion. The man is beyond shame at this point.

Keep it up on the attacks on the failed Keynesian religion.  There needs to be a purging of the economics departments all across the country on this issue.

Wed, 09/08/2010 - 04:20 | 568989 yabs
yabs's picture

of all ther shootings that go in the US why oh why can't people shoot clowns like these

Wed, 09/08/2010 - 04:22 | 568990 TooBearish
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I find it telling that he was talking about a double dip back then, and all the while these MS economists tell you how fukking rare double dips are, hmm 1981, 1937...Krugman is a sniffling fool who so obviously desparate for a seat at the Obama table in the NWO.

Wed, 09/08/2010 - 05:27 | 569012 Coldfire
Coldfire's picture

For his tax fetish: Thugman.

Wed, 09/08/2010 - 06:11 | 569023 tom
tom's picture

 "It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness." - Karl Marx

Maybe not true of everybody, but surely true of Krugman. He's promoting an economic ideology that suits himself. And it suits a lot of other people who promote his views in print, online and on television.

Wed, 09/08/2010 - 06:49 | 569029 chrisina
chrisina's picture

"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. ....I am sure the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. ... Soon or late it is ideas, not vested interests, which are dangerous for good or evil."  J.M.Keynes, closing paragraph of The General Theory

Yes, Mr Krugman, I'm sure you wouldn't have forgotten this paragraph from Keynes? Well, you see, it is the gradual encroachment of your ideas and of all mainstream economists (who have bastardized Keynes into a completely junk "new synthesis") which have been dangerous for good and evil

Very dangerous indeed, and now it is going to be very painful for most, if not all, of us.

Wed, 09/08/2010 - 07:05 | 569043 SWRichmond
SWRichmond's picture

i) how does Krugman still have a forum in which to peddle his destructive ways, and

ii) why does ANYONE still listen to this Nobel prize winner, a/k/a charlatan?

The answers to both questions are obvious: because he tells the status quo power structure exactly what they want to hear, and exactly what they want the masses to be told: that government has the right to, and is capable of running the economy, that the masses are too stupid to make their own decisions, and that without intervention and regulation, the rent-seekers would have to actually compete in the marketplace and liberty would break out all over the place.

Wed, 09/08/2010 - 11:35 | 569095 chrisina
chrisina's picture

but if the masses believe that they are too stupid to make their own decisions, doesn't that make them stupid?


"without intervention and regulation, the rent-seekers would have to actually compete in the marketplace and liberty would break out all over the place"

Just another "axiom". Just as dangerous as all the other ones. Any system that's based upon property and money, which can easily be accumulated, whether it's collectivist or capitalist or a mixture thereof, will always lead to ever growing concentrations of power and loss of liberty for most. This leaves us with only true anarchism, not capitalist anarchism or socialist anarchism, as a system of ideas that might work to maximize freedom for all. But all system of ideas are dangerous especially when one ignores the uninted consequences of those ideas before they have been implemented.

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