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Krugman's "Smoot-Hawley Moment"
I'm constantly amazed at the things Paul Krugman has to say. This guy is on the top of the list of global economic thinkers. He has all of the credentials, and a huge platform to spin his views of what's good and bad, and what should be done next. PK's OpEd in the Times today is another example. (Link)
PK does a summary of Cyprus. I believe he has all of the facts straight, and I agree with him when he says:
Global capitalism is, arguably, on track to become substantially less global.
The broader story of Cyprus is about capital controls. It's not just the harsh new controls on the Island, it's all over Europe. There is not a country on the globe that has not established some form of controls the past few years. America has done it in subtle ways, using ZIRP, QE, Dodd-Frank and the Department of Justice to contain the free flow of money. I think a big clampdown in China on money is right around the corner. This trend scares the crap out of me. Krugman is on the other side of the spectrum. He loves capital controls. He wants to see more of them:
The bad old days when it wasn’t that easy to move lots of money across borders are looking pretty good.
"Looking pretty good?" OMG!
Given that big shots like Krugman want to see more controls of money, its a good bet that more controls will come. I think the likes of Krugman are ignoring the realities of 2013. They are doing so very much at the peril of the global economy.
The CIA keeps track of global cross border debt. The numbers are huge, and growing fast:
- Total World External Debt was $69T in 2012. In 2011 it was $63.6T. In one year it grew by $5.4T. World GDP growth was 3% while cross border debt rose by 8.5%.
- In 2004 World External Debt was $43T, or 65% of World GDP. In 2012 total External debt was 85% of GDP.
- The External Debt numbers for the USA are worth noting. Yes, 1995 is a long time ago, and the world is a different place today. I still find these results troubling:
In his typical style, Krugman establishes what is "true" and what is "false".
The truth, hard as it may be for ideologues to accept, is that unrestricted movement of capital is looking more and more like a failed experiment.
Krugman's conclusion is that a cornerstone of global activity is a failed experiment and that the solution is to install more capital controls. Mr. K will get what he wants. More controls are coming - that's certain now. The entire house of cards that is Global GDP is at risk. The failed experiment that PK thinks is the rise in external debt, could easily morph into the failed experiment of the global economy.
I wonder if PK (and all the others who are pushing for more controls) are not having a "Smoot-Hawley Moment". In 1929 tariffs and other restrictions on trade were established. A global depression followed. In 2013 the tariffs and restrictions are on money, not goods. But if the result of those controls is a reduction (or even stability) of the external debt numbers, then the global economies will fall with it.
And this is what the world's "smartest" economist is calling for.
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The official study of "economics" didn't even exist until the Woodrow Wilson era, when big banks and the CFR decided it would be a good idea to donate large sums of money to institutions of higher education in order to encourage this new field of study, in which free market capitalism (real economics) is replaced with the study of central-banking/planning as the true economics.
Get em while they're young and impressionable.
Just exactly how many Smoots does it take to cross the Ha'vard Bridge?
No Cambridge people on this site? 364 plus an ear.
Exactly, central banks are counterfeiters of value and have no place in democratic, capitalistic republics. They have nothing to do with pure economics beyond introducing unnatural distortions and capital misallocations via production of counterfeit value.
Some people benefit greatly during depressions/recessions.......not the 99%, but many in the 1% or .1% will be just fine. Silver lining.............
if we have to suffer qe, instead of free fed money flowing into european or chinese assets, I think it should have to be spent at home. it helps to prevent the fed from bailing out the world.
excess money creation will be alleviated somehow. billions were just destroyed in Cyprus. push on the surface of a bubble and you get pressure somewhere else on the bubble's surface.
if not capitial controls, then resonable transaction costs, a tax
I actually agree with him on this, but disagree on many things.
What ... a transaction tax would crush the HFT folks ... Oh, they would be exempted based upon volume.
Krugman is nothing more than a cheerleader for the money changers. If you are putting wear and tear on your brain tissues trying to make sense of what he says than you are a muppet.
If they decide to say seize everyone's 401Ks to bail out Goldman Sachs. Krugman will write a long winded "Op-Ed" for the NYT about how this is the "right move at the right time to maintain stability in the banking sector, and put us on the pathway to strong economic growth."
And if you want to keep what's rightfully yours then you will be labeled a hoarder who doesn't care about the greater good.
Of which I would say, you aint never gonna see a dime of that 401K buddy, it's not real.
Until the disarmament is complete at least..........
Like it or not, the free trade, corporate globalist way of life will slowly go away, capital controls or not. Energy will see to that.
I've noticed Zhers chafe whenever anybody places energy center stage and implies it deserves higher consideration than PMs. Maybe that's the reason for the minuses. Because what you said is irre-fucking-futable.
The CB's woke up one day and realized they had inflated a lot of crap (as well as legitimate assets) Now how are they going to bring all that money at the frontier (or the periphery as Noland calls it) back into line. You can hear what Krugman is saying, this is what they're thinking, and so Capital Controls, selective user fees, and MORE price controls are inevitable. You ask what's the exit strategy [block the exits, open the list of banks in the Fed charter, and go through their reserves, and lending, one bank at a time, without political consideration, or favoritism] Now we find out Socialist or Fascist? Right now Krugmans saying Fascist.
An economist who believes in capital controls and the theft of depositor savings is not an economist but a socio-fascist apparatchik.
Krugman clearly is both of those things.....
very well said.
krugman is a quack. kind of ironic that the robber barons who built the usa in the late 1800s until the depression set the ball in motion that eventually destroyed the golden goose they created. the 20th-21st century robber barons aided by the likes of krugman will get the blame for the hammering the coffin nails.
what next? the asia century begins any minute now probably with a literal bang. the crazies will do anything to secure the west's economic hegemony. china and russia now know their overseas money is the target therefore they know keeping it overseas is stupid without defending it. all they have to do is insist on payment in rubles for natgas and yuan for walmart crap.
The "[Third World] Century" is not likely to happen. The worst we get is regionalism, where the the First World + EU are on one side, and the Second/Third World are on another.
That said, if Asian countries start trying to push the US, it will be the East that loses more than just its face.
i know u zher's are stupid but jesus the plutocracy sends it's money beyond our borders for cheap labor and to ride the next 3rd world financial bubble it would be a very good thing if money was kept in america (the country u live in zher's)
I support your right to be a moron, but you really should be kicked in the balls for for abusing that privilege so severely. If you are older than 23 or so a steel pipe beating for your parents due to gross incompetence is also in order.
Gee I thought I was Irish.
Go merkuha!
Yes the internets restrict ZH to only Americans. Very smart.
Wait....
So what is the suggestion? We see global depression, cash is king (in each of the individual countries), commodities fall, people go hungry or have to have more food stamps? And all the while the likes of the Warburgs, Carnegies, and Lazards get richer and richer...(I would say Rothschilds, but someone else will surely do it for me)
The MSM is the PR arm of the Democrats/US government.
Krugman is a member of the MSM so he is flashing his PhD (for credibility and perhaps because he is a legend in his own mind) and flapping his gums and getting paid a lot of money to do it.
US government wants more centralized control over as much of our lives as possible. Krugman is just the postman carrying the message.
In short, Krugman is Cliff Clavin with a PhD.
Cliff Clavin was way smarter than Krugman.
He invented the beetabaga fajita on a pita.
A classic.
I'll POUND YOUR FUCKING FACE IN if you EVER again take sides with a political party. They are all FUCKING YOU!
"Who are three people who have never been in my kitchen?"
http://www.youtube.com/watch?v=wOaaahlgt1A
This is also a reflection of Krugman's monetary policy.
Kale was not a good idea.
"The truth, hard as it may be for ideologues to accept, is that unrestricted movement of capital is looking more and more like a failed experiment."
So is your beard.
Stop trying to prove that the world is still flat...aka that it's possible to spend your way to prosperity
Friedman is the earth is flat cocksucker.
So that's where Krugger got that shit!?!?
define "capital".
Those are Krugman's words...you'll have to ask him
Does movement of capital include expropriation or not?
Just askin'
He who could be astoundingly wrong about something, but nothing will ever make him admit it.
You're correct, communicateing PK is like with commuticatig my "pet Rock" You know...the one that came in a gift wraped box back in the late 1980's and early 1990's ? I tried like hell to follow the directions that came with it. But the damn rock. But alas, refused to listen and therefore...like and I had to name my rock "FuckKrugman".
I have only two questions Krugman, when will the European and American death squads start forming, and which group(s) will make up the new "undesirables"?
Spot on...
Maybe it will be a short lived world destruction.
Maybe it won't.
Everybody hopes they will die peacefully in their sleep. Few do. The death process of civilization as Arnold Toynbee pointed out is long and arduous.
The last thing the thieving class wants are folks escaping into the night with their wealth...
"They" always know what's good for us, Bruce,
and they don't mind using infinite amounts of force to make that happen.
Just curious ... why do people pay any attention to what Krugman says ?
Agree. If I see something with his name - or Brooks or Friedman - I burn it. They are all rat bastard cocksuckers
Somebody told me that Freidman and Krugman had sphincter exchanges/transplants.
Although I may have misunderstood...
But makes sense given their uber liberal orientation of sharing alike and close proximity....
He is the soldier, the guardian, the sentry at the gate of Status Quo Nirvana, The Matrix, Planet Keynesian Wet Dream ...A Brave New World indeed.