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From Reinhart-Rogoff Witch Hunts To Krugman’s Contradictions

Tyler Durden's picture


Submitted by F.F.Wiley via Cyniconomics blog,

You may have seen the new skirmishes this weekend in the very public debate about Carmen Reinhart’s and Kenneth Rogoff’s government debt research. Reinhart and Rogoff (I’ll call them RR) posted a letter to Paul Krugman on Reinhart’s website, in response to a piece that Krugman wrote for The New York Review of Books.


Krugman, of course, is one of the pundits who last month published “incomplete, exaggerated, erroneous and misleading” reports about RR’s research, as I explained at the time. Unlike some of the others involved, he kept the smear campaign alive and all but guaranteed RR’s latest response. I’ll recap the weekend’s exchange in a moment, but not before offering my take on Krugman’s MO.

Observations on Krugman’s campaign for more deficit spending

I’ll start with an excerpt from my April 27 article, “More Reasons to Call Off the Reinhart-Rogoff Witch Hunt”:

[The] question of how much debt is too much is an extremely important question. And RR’s many critics make no attempt whatsoever to answer it (if I’m wrong about this, please send me the research), even as they bash two researchers who’ve been leading the way to possible answers since well before their 2010 paper.


It seems to me that you can say two things about the many pundits on this issue:

  1. Commentators in the U.S. who’ve both looked under the surface of our fiscal challenges (see the problems with official numbers in articles such as this and this) and seriously considered the question “How much is too much?” have come away alarmed.
  2. Of the commentators on the other side – those now crowing over the misinformation that’s spread all the way from Rortybomb to the Colbert Report – I don’t know of any who’ve attempted to do the same due diligence and answer the all-important question.

Well, I still haven’t found an RR critic who’s made a genuine effort to estimate how much debt is too much. But I did force myself to search a little further, and my search coincidentally focused on Krugman. I read End This Depression Now, his 2012 book, from cover to cover.

This wasn’t my idea of a good read, but I try to make my reading list as balanced as I can stand. In this case, I was looking for counter-evidence to my assertions above. I wanted to see if there was anything more to Krugman’s positions than über-Keynesianism and boasts that his adversaries were proven wrong. He writes incessantly about inaccurate inflation and interest rate forecasts made by so-called “austerians” – those who’ve dared to express concerns about America’s soaring government debt – while arguing that these erroneous forecasts somehow prove his policy advice correct.

But his logic is full of holes. Near-term inflation and interest rate predictions have little to do with one’s beliefs about the mostly long-term risks of excessive debt. I don’t doubt that some forecasters have made faulty predictions. I know for a fact, though, that there are many who’ve opposed Krugman’s deficit spending recommendations while at the same time either accurately forecasting inflation and interest rates or not making any predictions at all. By my estimates, the second group is large and the first not so much.

How Reinhart and Rogoff Spoiled My Holiday

So, what does all of this have to do with RR’s letter to Krugman?

Well, just when I’d gotten through End This Depression Now and thought I could go back to reading stuff that makes sense to me, I learned of the RR post and felt compelled to read through Krugman’s latest attacks. And then I felt compelled to write – not just to offer my two cents on this weekend’s scuffle, but also to draw some parallels between the current debate and Krugman’s book. So much for my planned holiday reading of either The Bankers’ New Clothes or more of The Great Deformation. (I know, I’ll get over it.)

In any case, here’s my list of takeaways from RR versus PK, Memorial Day weekend edition:

  • Using Internet archives (the “WayBackMachine”), RR demonstrated that their data was publicly available as far back as 2010, contrary to PK’s accusations that this data was withheld. (As I said in earlier posts, I’ve downloaded their spreadsheets in the past and knew they were available.)
  • RR showed that they’ve recommended policies intended to reduce austerity, contrary to their portrayal by PK as tireless austerity advocates.
  • RR counterpunched on the question of debt-to-growth causality. (And yes, everyone recognizes this isn’t determined wholly by correlation.) They responded to the accusation that they put too much weight on the causal effects of high debt on growth with an argument that PK puts too much weight on the causal effects of low growth on debt.
  • Krugman eventually retreated to a core position that RR should have prevented impressionable policymakers from over-interpreting their 90% debt-to-GDP threshold. (I offered my opinion on these accusations here.)

For longer summaries, I recommend reading Econbrowser (James Hamilton) and economicprinciples (David Warsh).

Here’s the discussion we should be having

Now I’ll jump from RR versus PK to F.F. Wiley versus PK. (And no, I don’t expect a response, but I’ll say my piece anyway.)

Not surprisingly, End This Depression Now reads like a longer version of Krugman’s blog. If you’re one of his followers, you’ll be even more convinced that poor inflation and interest rate forecasts by the “austerian” crowd provide the evidence needed to justify massive deficit spending. Never mind those of us who’ve forecast inflation and interest rates correctly, or not at all, and yet still believe his fiscal policy views are too extreme.

As I said above, I couldn’t find a genuine effort to estimate how much debt is too much. But Krugman’s book does include a section titled “What about the Burden of Debt?” This is two pages long, running from the top of page 141 to the top of page 143. Here’s an excerpt:

The key thing to bear in mind is that the $5 trillion or so in debt America has run up since the crisis began, and the trillions more we’ll surely run up before this economic siege is over, won’t have to be paid off quickly, or indeed at all. In fact, it won’t be a tragedy if the debt actually continues to grow, as long as it grows more slowly than the sum of inflation and economic growth.

To illustrate this point, consider what happened to the $241 billion in debt the U.S. government owed at the end of World War II … this amounted to about 120 percent of GDP (compared with a combined federal, state, and local debt of 93.5 percent of GDP at the end of 2010). How was that debt paid off? The answer is that it wasn’t.

Krugman goes on to discuss post-World War II debt developments, while providing some incredibly misleading debt service calculations, but I’ll leave those for another day. I’ve shared the excerpt because it seems to tie into the RR debate. Consider the following:

  • By using the post-World War II experience to dismiss our current debt problems, Krugman essentially suggests a debt threshold of 120% of GDP. He says nothing about debt above 120%, but he’s suggesting that we shouldn’t worry as long as we’re below 120%. It’s a threshold, all the same.
  • For all the bellyaching about RR’s data choices, they’ve built the world’s most extensive government debt database (to my knowledge). Their most recent paper on debt and growth, published in 2012 and largely ignored by their critics, examined 26 high debt episodes in 22 countries. Krugman’s threshold, on the other hand, is based on one high debt episode in one country.
  • There are many reasons to believe that our World War II debt was far less troubling than today’s challenges. One of these is that we were running gigantic non-defense budget surpluses, which meant that we balanced the budget after the war by merely bringing our soldiers home and returning factories to civilian use. As I discussed here and here, balanced budgets and financial repression were the critical ingredients in our success at whittling away war debt, and were more important than the “mild inflation and substantial economic growth” cited by Krugman.
  • Outside of the natural slippage that occurs in recessions, our post-war leaders truly detested budget deficits. Presidents Harry Truman and Dwight Eisenhower restored surpluses within two years of every 1940s and 1950s recession, while mostly dismissing Keynesian theories that were being shaped in academia at that time. Truman even raised taxes to help pay for the Korean War (what a novel idea!), while Eisenhower went so far as to claim that “continued deficit spending is immoral.”

In other words, there are several layers of contradictions in Krugman’s reliance on the post-World War II period to support calls for more stimulus. Perhaps most glaringly, the reduction to a 60% debt-to-GDP ratio by 1957 (about half of the 1946 figure) was achieved partly by avoiding the types of Keynesian stimulus measures that have since helped push debt back above 100% of GDP. If Krugman’s ideas about deficits existed at all in the 1950s, they certainly had no influence in policymaking circles, where old-fashioned principles of fiscal discipline still held sway. And without Truman’s and Eisenhower’s un-Krugman-like beliefs, the success story that he cites as a reason to be unconcerned wouldn’t have unfolded the way that it did.

Krugman’s use of this decidedly non-Keynesian episode of debt reduction to justify his Keynesian beliefs reminds me of the many times (too many) that I’ve encountered “circular reference” errors in Excel. His logic is no less flawed or “circular.” But since there’s no spreadsheet involved, I’ll call it an error of induction.

Getting back to RR versus PK, Krugman refuses to walk away from a smear campaign that’s based on overblown accusations of questionable thresholds, selective data use and a spreadsheet error.

I think it’s time to change focus and consider the questionable thresholds, selective data use and induction error in Krugman’s work.


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Sat, 06/01/2013 - 15:52 | 3616881 francis_sawyer
francis_sawyer's picture

"I think it’s time to change focus and consider the questionable thresholds, selective data use and induction error in Krugman’s work"


I think it's time to put an oxbow on his neck & make the SOB do a days work in the field...

Sat, 06/01/2013 - 15:56 | 3616885 Charley
Charley's picture

Really? Who cares about that buffoon Krugman. But does this mean obvious flaws in RR's argument go unchallenged?

Sat, 06/01/2013 - 16:10 | 3616896 MillionDollarBonus_
MillionDollarBonus_'s picture

The problem with the zerohedge mantra about saving and investing simply isn't supported by modern economics. There is too much information out there for me to gain a complete understanding of economics,, so I need to listen to the professionals. And unfortunately for libertarians, the professionals universally support more government intervention in the economy.

Sat, 06/01/2013 - 16:11 | 3616897 Manthong
Manthong's picture

Paul Krugman is to real (classical) economics what Pee-Wee Herman is to Shakespearean Drama.

Sat, 06/01/2013 - 16:14 | 3616902 NidStyles
NidStyles's picture

That is only valid if you consider Shakespeare to be anything more than trash novel drama of that era. I do not. Shakespeare is trash, and I don't understand the obsession with trashy novels either.

Sat, 06/01/2013 - 17:26 | 3616993 jbvtme
jbvtme's picture

you talking pee wee acting shakespeare on stage or in the audience jerking off?

Sat, 06/01/2013 - 19:25 | 3617204 NidStyles
NidStyles's picture

If you go through Shakespeare's work is all the same tripe. They are all romatic tragidies and even when he was writing them they were considered trash. Every single one is about a women whom he fell in love with and she ditched him. THe guy should have committed suicide far sooner than catching food poison. It was obvious on the first reading of anything he has written that he wanted to.

Sat, 06/01/2013 - 20:08 | 3617283 philipat
philipat's picture

Japan will prove Krugman to be wrong. Happy day.

Sun, 06/02/2013 - 01:20 | 3617725 Manthong
Manthong's picture


You are entitled to your opinion, but I believe Shakespeare endures for very good reasons.

But OK, for something a little more contemporaneous, Krugman is to economics what Chaz Bono is to Dancing with the Stars. .. and oh, I think some good parallels can be drawn between modern economics and DTWS.

Sun, 06/02/2013 - 11:56 | 3618195 spine001
spine001's picture

Tyler for any work on the limit of debt to gdp ratio to be valid it MUST include some type of financial stability analysis. Without that, at most it is a cualitative piece of wishfull thinking. Sadly, there is no simple inductive reasoning way to explain this. Worst of all, they didn't  teach the analysis techniques in economics schools when todsy's top economists were in College. Sadly they are the reviewers today in the important journals in the scientific literature. So imagine what happens when somebody sends a paper they don't understands. As I said before I am a student in one right now and am triggering quite some motion among the brightest and most advanced graduate students just pointing them to look into stability and control using chaos theory. You should see the eye popping faces when I am able to instill comprehension in their minds. On the flip side most of the professors dont know enough about whatI am talking about. Curiously other engineer professionals in control theory classmates of mine are as flabbergasted as I am by their level of ignorance of basic system control analysis.

So don't expect comprehension on their part the works that are being started will not reach the literature for at least 5 more years if the system aisbaround that long. I did manage to impress a sense of urhency in a few of them.

Until next time,


Sun, 06/02/2013 - 12:26 | 3618242 AldousHuxley
AldousHuxley's picture


Paul Krugman's advice to recent college graduates: "screw established academia, get your learning for free on the internet. They both do not guarantee employment though"

Sun, 06/02/2013 - 12:43 | 3618266 AldousHuxley
AldousHuxley's picture

Shakespeare endure for the same reason pyramids endure. They are cultural relics of an old empire.

English is spoken widely, so top English author gets overexposure world spot light and schools force kids to read it. In 100 years, American schools will be teaching ancient Chinese folktales instead of the "Good Earth". 


But the funny thing is, rich Chinese kids will be reading celeb tabloids and watching Chinese Snooki instead of Shakespeare or their own literature.

Sun, 06/02/2013 - 15:34 | 3618590 falak pema
falak pema's picture


Plato and Shakespeare are immortal, not because of language but because of content; its essence of civilization, relevant to all ages.

Its NOT ethnocentric.

And Pyramids are also icons in the same vein. Try climbing one.

Sun, 06/02/2013 - 17:28 | 3618776 AldousHuxley
AldousHuxley's picture

Your ethnocentricism led you to claim universal nature of immortal work yet give credit only to a few...and surprise they are of past empires.

That's like saying only Americans are athletic because they are best in NFL football, whereas Europeans claim they are most athletic because they are best in their football (aa. soccer). Who gets to claim which sport is the standard for athleticism? Rich and powerful write the rules of culture and pick which one of the copy cats can represent humanity.

Romeo and Juliet is borrowed from another English author Arthur Brooke, who in turn borrowed from Italian writer Metteo Bandello.

You should have gotten a clue when his stories are based in ITALY.


no civilization nor culture is original. They build on one another. But the powerful gets to deliver the final message and gets the credit.

British empire through control of media shaped the culture's origins to themselves to give them the legitemacy or ruling the world.


Next time watch the olympics broadcast from another country instead of NBC and you will the Americans do the same. They only show you sports they are good at.




Sun, 06/02/2013 - 03:45 | 3617800 libertard
libertard's picture

I'm not a fan of his work, but zerohedgers can get behind his career as a grain hoarder. He would buy up grain and keep it until the price rose/there was a famine and sell it at a profit. I guess a silo is the old timey  version of a futures market, lol. 

Sun, 06/02/2013 - 18:48 | 3618920 Promethus
Promethus's picture

Nidiot - you don't have a clue who Shakespeare is do you?

Sat, 06/01/2013 - 17:22 | 3617000 falak pema
falak pema's picture

now your knowledge of literature is at par with your knowledge of the social costs of neo-fascist economic dogma that you consider as the road to avoid serfdom.


Sat, 06/01/2013 - 19:20 | 3617195 NidStyles
NidStyles's picture

Except I don't advocate statism in the least and stand strongly against Corporations. So now what? We've done this dance before and you bowed out after I handed your ass to you. Would you like to try again, so you can disapppear for a few weeks and think I had forgotten?


I don't drink, I don't do drugs, and I am very fit, so I don't have the memory isues you do.

Sun, 06/02/2013 - 05:59 | 3617852 falak pema
falak pema's picture

nobody advocates pure statism, its a question of balance; a balance which has been lost during the Reaganomics era that you hanker for.


My memory tells me I know how this PAx Americana mess occurred and it wasn't statism it was private sector hubris. And don't say that Big Business is not US reality. It's at the root of what America is, except for delusional fools. 

Cause and effect; if you think you can kick ass then you should re-read Shakespeare. He kicked ass as universal poet and yours is just right for his caustic poetry :  "Tomorrow, and tomorrow, and tomorrow
Creeps in this petty pace from day to day,
To the last syllable of recorded time;
And all our yesterdays have lighted fools
The way to dusty death.  Out, out, brief candle!
Life's but a walking shadow, a poor player
That struts and frets his hour upon the stage
And then is heard no more.  It is a tale
Told by an idiot, full of sound and fury,
Signifying nothing." Happy strutting ...



Sun, 06/02/2013 - 08:16 | 3617943 DOT
DOT's picture

"First to thine own self be true..."

Sat, 06/01/2013 - 16:15 | 3616904 Rainman
Rainman's picture

....eggsacly...savings is for suckers and investments don't pay shit.

Sat, 06/01/2013 - 16:17 | 3616906 Atomizer
Atomizer's picture

There is too much information out there for me to gain a complete understanding of economics


Basic Subtraction Math Lesson - Learn to Subtract

Sat, 06/01/2013 - 16:23 | 3616924 exartizo
exartizo's picture


Is that you...disguised as MDB?

Sat, 06/01/2013 - 16:42 | 3616942 Atomizer
Atomizer's picture

No, he/she is soon to be a unemployed IRS ZH virtual character handed a EBT card.




Sat, 06/01/2013 - 16:48 | 3616948 Freewheelin Franklin
Freewheelin Franklin's picture

You were soooooooooo close, MDB.


There is too much information out there for me to gain a complete understanding of economics,


Actually, there is too much information out there that is constatntly changing with respect to economic conditions, that it is nearly impossible to implement any informed remedy for current economic woes in real time. Which is why most, if not all, modern macro is bullshit. The markets are perfectly capable of sorting through the crap without any help from the "planners".

Sat, 06/01/2013 - 17:30 | 3617015 PiltdownMan
PiltdownMan's picture

But the Krugman/Bernanke Princeton/Berkeley solutions are out the window since we are in unchartered and unDOCUMENTED. So WHO do you listen to? Bernanke? Delong? Krugman? Goolsebee? Or are Rogoff and Reinhart actually right?

SOMETHING has been happening since May 2nd. Treasury yields up 50bps despite Fed buying. Durations rising, etc. NOT in the models. See here:

Sat, 06/01/2013 - 17:39 | 3617039 nmewn
nmewn's picture

But wait, weren't those models invented by some really fart smellers? ;-)

Sat, 06/01/2013 - 17:46 | 3617058 jon dough
jon dough's picture

I wuz thinkin' fart smuckers, m'self...

Sat, 06/01/2013 - 18:28 | 3617126 nmewn
nmewn's picture

lol...some of the smartest fellers in the world sometimes spend millions in R&D, marketing and what-not and are completely blind sided by even the simplest things, of an imaginative mind.

Like Jello & Silly Putty ;-)

"I'd put my putty in the fridge, and I pressed my thumb into it just before pouring the jelly in. Silly Putty always creeps towards a puddle-like state unless you've actually frozen it, so I wanted the minimum possible time between the impression and the moulding.

I poured on the gelatine solution, and into the freezer it went for a few minutes to set."

Sat, 06/01/2013 - 19:31 | 3617216 NidStyles
NidStyles's picture

Apparently some of the newer contestants to the club are thinking that sharing information is a bad idea and junking you. I have seen a great influx of Commies lately. It seems they are getting desperate that they are losing the debate and want to get violent now.

Sat, 06/01/2013 - 19:44 | 3617238 nmewn
nmewn's picture

Its a guarantee that any thread dealing with the quacks who preach socio-economics (like Krugman) will fill up with them...beatiing on drums...shitting on cars...raping women in the next tent.

Standard stuff.


Sat, 06/01/2013 - 19:56 | 3617258 NidStyles
NidStyles's picture

I will try to avoid anything with Krugman. Why anyone listens to the idiot is beyond me. Some of the stuff that he's said is just insane.

Sun, 06/02/2013 - 11:02 | 3618102 Vooter
Vooter's picture

"It seems they are getting desperate that they are losing the debate and want to get violent now."

Well, that's your problem, now, isn't it?

Sat, 06/01/2013 - 19:54 | 3617257 jon dough
jon dough's picture

Awesome link nmewn, thx.

Sat, 06/01/2013 - 20:17 | 3617300 nmewn
nmewn's picture

Welcome, something I stumbled across today...HuffPo of all

Another, which makes sense, seeing as how they simply must put an RFID chip in everything these days...including credit cards...

Capitalism ;-)

Sat, 06/01/2013 - 22:28 | 3617525 jon dough
jon dough's picture

Ad sez "More comfortable than aluminum foil in your pants."

Should I be worried that they know my comfort level for aluminum in my pants?



Sat, 06/01/2013 - 18:12 | 3617103 ebworthen
ebworthen's picture

Yes MDB, in a Ponziconomy debt is king. 

Destroying an economy and creating trillions of unpayable debt to crush future generations must be left to the "professionals", if that is your goal.

Sat, 06/01/2013 - 20:28 | 3617132 SILVERGEDDON

You gotta be a crack or meth baby that got dropped on you head, Trillion Dollar Fiat Bonus - head. 

I  adjusted your persona name for inflation since you joined Zero Hedge for free - my consultation fee waived out of pity for the retarded.

" It only costs five dollars to dig it out of the ground "

 You are a funny guy. 

Sun, 06/02/2013 - 10:59 | 3618099 Vooter
Vooter's picture

I bet the professionals universally support keeping men in ski masks from hiding in the bushes outside their homes at 6:30 in the morning, too. That doesn't mean they're going to succeed....

Sat, 06/01/2013 - 16:20 | 3616909 macholatte
macholatte's picture



Where's Bonzai?

a picture of Krugman (Carmen Ghia from The Producers 1968) (must watch)


Sat, 06/01/2013 - 16:34 | 3616935 TheFourthStooge-ing
TheFourthStooge-ing's picture


But does this mean obvious flaws in RR's argument go unchallenged?

Such as?

Seriously, let's hear them.

Sat, 06/01/2013 - 17:02 | 3616970 Fish Gone Bad
Fish Gone Bad's picture

Keynes was a smart man who realized his mistakes and often changed his mind.  Krugman doesn't channel Keynes anymore-so than the clergy channel God.

Sat, 06/01/2013 - 15:51 | 3616882 Charley
Charley's picture

A witch hunt? To point of obvious flaws of empirical data and reasoning is a witch hunt?

Sat, 06/01/2013 - 16:36 | 3616940 TheFourthStooge-ing
TheFourthStooge-ing's picture


To point of obvious flaws of empirical data and reasoning is a witch hunt?

How about a which hunt instead?

You've alluded to obvious flaws of data and reasoning. Please enumerate them for those of us to whom these flaws are not obvious.

Sat, 06/01/2013 - 16:12 | 3616894 Atomizer
Atomizer's picture


Krugman was hoping that 1998 QE2 alien invasion asteroid might lend a hand in reducing heated inflationary measures. Offering destruction to rebuild new globalization cities as a hub to reconstitute slavery hotspots, so we all can enjoy buying shit we don’t need.

Krugman calls for space aliens to fix U.S. economy


Sat, 06/01/2013 - 16:49 | 3616950 francis_sawyer
francis_sawyer's picture

Ramuses II would have had doughboy Krugman dancing in the mudpits to make bricks...


I'm not sure if any of the pyramids would have ever been built if that were the case...

Sat, 06/01/2013 - 17:17 | 3616991 Cognitive Dissonance
Cognitive Dissonance's picture

Krugman is an EXTREMELY useful idiot (savant) to those who wish to kick the can until the rape and looting can be substantially completed. The more we debate his mantra the more credibility he maintains. His arguments do not support his stature, we do. Just as withdrawing as much as we can will starve the Ponzi beast, withdrawing from the Krugmanites of the world will eventually rendor them mute and moot.

Sat, 06/01/2013 - 16:10 | 3616895 bank guy in Brussels
bank guy in Brussels's picture

In Europe now we are being practical ...

Instead of academic controversy, we have moved up to thousands of demonstrators attacking European Central Bank headquarters

Photos and video from today :

Protesters versus riot police in Frankfurt this afternoon, after blocking access to European Central Bank and Deutsche Bank headquarters yesterday

1 minute English news video on protests in Frankfurt

ZH readers will especially love the big banner that says,

'Let's Choose Communism' !

Sat, 06/01/2013 - 16:25 | 3616907 NidStyles
NidStyles's picture

Yeah that's right, when you can't make your demands happen through actual petition just act violent and destroy everything. That is a great message you're sending future generations. It say's, "If you don't like something, rather than educating people on how to improve it, just destroy and steal everything from others we don't like."


Typical Euro-Trash. That is you...


You have Communism now, and you still don't like it, what makes you think you will like it when it's the more in your face variety? It just doesn't work, and you keep trying it over and over again like a bunch of retarded chimps shoving your cock into a bee's nest for the honey.

Sat, 06/01/2013 - 16:35 | 3616937 kliguy38
kliguy38's picture

Do you mean like America did in 1776 with the British King.......they didn't exactly exercise Ghandi style activism now did they??? Perhaps you would like us to behave like chumps when they roll out gun confiscation and FEMA camps......WHAT is your limit???? Or are you one of those chicken hawks that let "change" come from those with the balls to go out and demand it???  When was the last time you sacrificed for another person besides yourself?

Sat, 06/01/2013 - 16:45 | 3616946 slimething
slimething's picture

Grievance against King George III written in the Declaration of Independence


He has refused his Assent to Laws, the most wholesome and necessary for the public good.


U.S. Constitution—Article. I:  Legislative Branch


Section. 1.


All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives




Grievance against King George III written in the Declaration of Independence


He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.


U.S. Constitution—Article. I:  Legislative Branch


Section. 1.


All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.





Grievance against King George III written in the Declaration of Independence


He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.


U.S. Constitution—Article III:   Judicial Branch


Section. 1.


The judicial Power of the United States shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.













Grievance against King George III written in the Declaration of Independence


He has made Judges dependent on his Will alone, for the tenure [length] of their offices, and the amount and payment of their salaries.


U.S. Constitution—Article III:   Judicial Branch


Section. 1.


The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behavior, and shall, at stated Times, receive for their Services a Compensation [salary], which shall not be diminished [made less] during their Continuance in Office.




Grievance against King George III written in the Declaration of Independence


He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.


U.S. Constitution—Article. I:  Legislative Branch


To raise and support Armies,


To provide and maintain a Navy;


To make Rules for the Government and Regulation of the land and naval Forces;





Grievance against King George III written in the Declaration of Independence


He has affected to render the Military independent of and superior to the Civil power.


U.S. Constitution—Article 2:  Executive Branch


Section. 2.


The President shall be Commander in Chief of the Army and Navy of the United States.


U.S. Constitution—Article. I:  Legislative Branch


To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States;






Grievance against King George III written in the Declaration of Independence


For Quartering large bodies of armed troops among us:


Bill of Rights:  Amendment III to the U.S. Constitution


No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.



Grievance against King George III written in the Declaration of Independence


For imposing Taxes on us without our Consent:


U.S. Constitution—Article. I:  Legislative Branch


Section. 7.


All Bills for raising Revenue [taxes] shall originate [start] in the House of Representatives.




Grievance against King George III written in the Declaration of Independence


For depriving us in many cases, of the benefits of Trial by Jury:


Bill of Rights:  Amendment VI to the U.S. Constitution


In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury … and to have the Assistance of Counsel for his defense.

Sat, 06/01/2013 - 17:00 | 3616963 NidStyles
NidStyles's picture

That is exactly what I mean. Not a single one of these people that has cried for rioting and violence has done at the least that. None of them have gathered together and filed grievances. None of them have tried the peacful way yet, they just want to act violent and impose their vision of statism on the rest of us.

I've been working for two years to get people to start working the peaceful way, but so many are too stuck in this Left VS Right statist mentallity that they can not possibly be reasoned with. They would rather just riot and kill people than actually make an effort to work out the issues peacefully.

Sat, 06/01/2013 - 18:12 | 3617092 besnook
besnook's picture

peaceful demonstrations are for pussies afraid for their life. nothing useful has ever come of peaceful demonstration on either side of the pendulum. that is the one most predictable bit of human nature. peaceful demonstrations make for good history stories and now video histories but rioting always gets results. the last time rioting made a worldwide difference was the 60s and early 70s. those were some great world wide rioting years and the rioting did everything from ending the vietnam war to liberation in algiers and other africa towns to massive anti usa demonstrations in tokyo by the people who run japan .gov today.

if you want useful change you must riot. if you don't want to riot or take another effective path(like what?time?) then quit bitching. speculating on how it is going to end is the real fun here. history really tells the story as clearly as it can be told.

as to the rogoff/krugman match the only words necessary are to point out that fiat printing solutions(krugonomics) have a 100% failure rate caused by the human tendency to self destruct given the opportunity to demonstrate that well honed human trait.

Sat, 06/01/2013 - 19:05 | 3617166 NidStyles
NidStyles's picture

You see, you don't understand what I am saying, and that I have to put the word here to make the point. AGORISM.


Peaceful ways of ending the system exist. You just have to give up those irrational fears you seem to be projecting to everyone that does not collectivize and support your statist desires of taking control of the power structure that exists.If you were more intelligent you would be able to take a step back from the situation and let your primal emotional state pass and then realize that you yourself are part of the problem.

Sun, 06/02/2013 - 10:52 | 3618084 Vooter
Vooter's picture

"You just have to..."

If that isn't the motto of lazy armchair quarterbacks everywhere, I don't know what is...

Sat, 06/01/2013 - 16:58 | 3616957 NidStyles
NidStyles's picture

America? You mean those old guys that were a small percentage of land owners in region at the time? Those guys? How does that apply to Europeaners rioting and destroying the shops of their neighbors while screaming pillage the rich?


They are not even in the same league. Your comparison is based on emotional drivel and nothing more. When was the last time you actually tried being civil to your neighbor and actually discussed active solutions to the issues that effect it? I'm willing to bet never, because you're just like the rest of the statists, quick to jump up and break everything and rob from people you think have wronged you, rather than sitting back and realizing that you're doing all of this to yourself by giving CONSENT.

Sat, 06/01/2013 - 17:13 | 3616980 negative rates
negative rates's picture

Perhaps you havn't heard, there is a war goin on out there, see it get w/ it.

Sat, 06/01/2013 - 17:16 | 3616987 NidStyles
NidStyles's picture

That's not a war. I have seen war. I spent 6 years of the last decade in a war zone. That is just angry children rioting because there are no more free-lunches to be had, because the people that were paying for them are out of resources...

Sat, 06/01/2013 - 18:24 | 3617117 kliguy38
kliguy38's picture

Of course you don't see it... you're a parasite attached to MIC. I know who you've fed at the trough and still do. You think the system is YOUR lunch and that it allows you to hollow out "undesirables" that are to be dispatched at will. One day when you're alone and the room is dark YOUR demons will come.......You think you'll escape them but you won't. ALL of us will have to face them. You don't believe in them now but they will come for you. You don't fear them because you think your side is protectected. All tranny thinks that

Sat, 06/01/2013 - 19:03 | 3617160 NidStyles
NidStyles's picture

I haven't received a paycheck from the government since 2010. I also went into service fully knowing that I was going for the training. Keep on being angry though. It doesn't bother me.

Sat, 06/01/2013 - 19:13 | 3617181 nmewn
nmewn's picture

"Parasite attached to the MIC."

Now theres an interesting comparison between "undesirables" and payment for services rendered. What do you call the real parasites that use EBT at titty bars...essentially stealing food from their own babies mouths?

Sat, 06/01/2013 - 19:25 | 3617205 NidStyles
NidStyles's picture

Those are outstanding patrons of the "fine arts" and deserve our self sacrifice for, or they will threaten us with violence, graft, theft, and rioting.


Sat, 06/01/2013 - 19:34 | 3617222 nmewn
nmewn's picture

Yes, they are very selective (or is it discrminating?) in their tastes, wants, needs and threats.

But on rare occassions, the pen can be mightier than the sword ;-)

Sat, 06/01/2013 - 19:43 | 3617235 NidStyles
NidStyles's picture

If the pen is mighty; the keyboard and mouse are better than atomic weapons ;-)

Sat, 06/01/2013 - 19:58 | 3617264 jon dough
jon dough's picture

Nice exchanges and posts, Nid Styles, I like your civility.

Not much of that left these days, sorry to say...

Sat, 06/01/2013 - 19:58 | 3617266 nmewn
nmewn's picture

Thats the way I look at it.

A war can be won with mighty weapons but it never changes the antagonists minds about why they went to war in the first place.

Leading to...moar war, eventually.

From my perspective, the "other side" could use some thinning out. One way or the other. They really don't know what the fuck they want outside of permanent "class struggle".

Here's a good example...yes, I sometimes pull up my pant legs & wade through their bullshit:

"We can also take comfort in the memory that small groups of organized militants have made a difference before, paving the way for mass action and sweeping structural change. In the short-term, a new organization would focus on anti-austerity and work hand-in-hand with liberal allies who want to see the welfare state rebuilt. But socialists will not merely be anonymous members of a future liberal-left coalition; they’ll seek to push those struggles beyond liberalism’s limits. This means identifying capitalism as a social system that benefits a minority, and openly organizing in civil society to challenge it. It means building its own institutions and organs of class power and presenting real alternatives.

Before long, the subway masturbators among us will be drowned out by a generation free of decades of ill-will — organized and confident enough to make a difference. Until then, try not to stare."

The man is a raving

Sat, 06/01/2013 - 22:46 | 3617552 jon dough
jon dough's picture

From the link...

"But the Left is not mentally ill. It’s insular and inconsequential."

Mmmpphhh...ummm...(snigger/chortle)...ok...but, it IS mentally ill, too...

Ship my pants, that's just sad, who would put their name to that...junk?


Edit: really like your posts, too, mnewn...

Sun, 06/02/2013 - 10:45 | 3618072 Vooter
Vooter's picture

"That is just angry children rioting because there are no more free-lunches to be had, because the people that were paying for them are out of resources..."

Seriously--how stupid do you have to be to think that human beings are simply going to fall in line according to YOUR proclamations of what should and shouldn't be??? LOL...I guarantee you that those "angry children rioting" feel completely justified in what they're doing, and that what YOU think of it doesn't amount to a hill of beans. When people start taking to the streets--for whatever reason--all bets are off. Ignore and dismiss it at your own peril...

Sat, 06/01/2013 - 17:36 | 3617036 Totentänzerlied
Totentänzerlied's picture

I'm more concerned with the frankly childishly disingenuous use of the 3rd person plural pronoun, we, which implies the author, himself, as well as everyone else in Europe, was personally involved in the Frankfurt action. Simple slips like this reveal the covert populists and statists among US, that is, humankind.

Sun, 06/02/2013 - 10:37 | 3618058 Vooter
Vooter's picture

"Yeah that's right, when you can't make your demands happen through actual petition just act violent and destroy everything."

LOL...welcome to the world...

Sat, 06/01/2013 - 16:13 | 3616898 11811
11811's picture

PK also has a penchant for advocating French-style governmental largesse for the US:

Sat, 06/01/2013 - 16:17 | 3616905 Carpathia
Carpathia's picture

The other obvious difference between our 120%/GDP at the end of WW II is that we had just won a war.  All of our major economic competitors were in shambles.  For the next 25 years, we were the 800 lb gorilla that always got our way.  That is certainly not the situation that prevails today.  It's going to take a lot more than budgetary discipline and 2% savings passport accounts to lower our debt/GDP this time around.  This time it is different;-)

Sat, 06/01/2013 - 16:47 | 3616949 dtwn
dtwn's picture

Nice succint explanation, upvote for you!

Sat, 06/01/2013 - 17:30 | 3617011 AbbeBrel
AbbeBrel's picture

If you want to get a glimpse of the KrinskyKollapse(TM) then check out the Panic of 1819!   Wowza!


Sat, 06/01/2013 - 17:40 | 3617040 Totentänzerlied
Totentänzerlied's picture

You failed to mention the most important factor: cheap as shit oil.

Sat, 06/01/2013 - 19:12 | 3617180 Hindsight_Bias
Hindsight_Bias's picture

We did more than just win a war.  We nuked Japan after firebomboing all cities.  Germany -- A lot of people would have preferred to be in Japan than Berlin after Stalin's troops ran amok.  

A rather harsh industrial policy, but it worked. 

Where was Krugman when we really needed him?  We should have grown MUCH faster after WWII.  Running larger deficits would have eliminated the recession of 1947 and the rather lackluster growth given the enormous competitive advantages of literally blowing up your competitors.  

Absent a bona fide war that destroys the competiton, military spending is actually the absolute worst kind of government waste. 

Sun, 06/02/2013 - 10:35 | 3618054 Vooter
Vooter's picture

"military spending is actually the absolute worst kind of government waste."

Although it does provide a bumper crop of maimed "heroes"!

Sat, 06/01/2013 - 16:20 | 3616912 yogibear
yogibear's picture

Krugman is the perfect economist to led the US into communism. A central money printer who believes in the cure all of financialization.

Sat, 06/01/2013 - 17:07 | 3616974 Professor Fate
Professor Fate's picture

Krugman's reference to the debt threshhold after World War II shows how out of touch this idiot is.  The economies of the world have changed dramatically since 1945, a period of time where America flexed its industrial muscle and helped to rebuild the world after we'd blown the shit our of every factory in Europe.  At that time, China didn't even make its own chopsticks.  If you truly believe we can grow our way out of never ending debt expansion, find a Carnival Cruise ship that's still running or not on fire and take an excursion to Greece, Italy and Spain.  Maybe you can even catch a shuttle to Sweden and burn a few cars while your there to cement your point. 

"Push the Button, Max"

Fate the Magnificent

Sat, 06/01/2013 - 17:15 | 3616989 falak pema
falak pema's picture

OT/  a doctor doom now sings a new song about gold going soft and melting :

He now says there will be no inflation, interest rates will go up and the world economy is doing fine...

Wow; Dr are now blooming rose.

Sat, 06/01/2013 - 17:38 | 3617035 debtor of last ...
debtor of last resort's picture

Project Syndicate. Right...

Sat, 06/01/2013 - 17:55 | 3617074 Stuck on Zero
Stuck on Zero's picture

Nice find.  I like to read pure, unadulterated government propaganda.  Roubini reminds me of Baghdad Bob.


Sat, 06/01/2013 - 17:30 | 3617014 sbenard
sbenard's picture

Krugman's biggest "flaw" is the intellectual blindness of his glaring hubris. When the house of government debt cards ineluctably comes down, only the economic devastation that occurs will prevent me from having a very hearty and deserved "last laugh"! History will not be kind to Crazy Krugman!

Sun, 06/02/2013 - 08:03 | 3617931 shovelhead
shovelhead's picture

Extra credit for the use of 'ineluctably'.

I haven't seen that one in a long time. Might have been used by Al Sweringen in one of his more loquacious moments.

Sat, 06/01/2013 - 17:33 | 3617019 q99x2
q99x2's picture

PK Financial Terrorist paid for acts of treason to take down the United States of America.

Sat, 06/01/2013 - 17:34 | 3617020 debtor of last ...
debtor of last resort's picture

Put them in the Large Hadron Collider and let them meet Bernanke, Arafat, Ghandi and Stalin at 430.000 mph.

Maybe Mr. Higgs will 'save' us. If not, they're all dead.

Sat, 06/01/2013 - 17:35 | 3617030 Darth Raider
Darth Raider's picture

MDB good to see your back 

Sat, 06/01/2013 - 17:44 | 3617046 all-priced-in
all-priced-in's picture

PK is one guy (there are many others) that after listening to him talk I always wonder.

Does he really believe the shit he is saying? - or - Does he know better but is just advocating for a position / ideology?


I say let's water board him and find out.



Sat, 06/01/2013 - 21:00 | 3617392 Squiddly Diddly
Squiddly Diddly's picture

No. No waterboard and no he doesn't believe what he said.  He wants dopes to believe it. There is an agenda behind his false words.

Sat, 06/01/2013 - 18:04 | 3617085 ebworthen
ebworthen's picture

What individual or household is going to improve their finances by spending 120% of what they make?

This is simple; spend what you make, or less.

End of discussion.

Sat, 06/01/2013 - 18:17 | 3617106 SILVERGEDDON

Krugman is a like a Klingon from Uranus.

Pluck him off your ass of life, drop him in the toilet, and flush.

Wash your hands thoroughly to avoid the risk of infection.

Sat, 06/01/2013 - 18:19 | 3617111 bill40
bill40's picture

All this article says is that Krugman was right, RR were wrong and you're pissed off about it because it isn't what you believe. Why let facts get in the way of dogma?

Split the banks, use fiscal intervention to get ordinary people working and then you can let the banking elites drown in their own "net to zero" deriative cesspit.

Sun, 06/02/2013 - 01:26 | 3617728 Pareto
Pareto's picture

Your second assertion, a resolution that you offer (to precisely what no one knows) has absolutely fuck all to do with your first assertion about what people believe.  So lets try to string a logical sequence of arguments with some substantiation in it.  Somewheres.  Otherwise, you end up looking like this guy:

Sun, 06/02/2013 - 08:09 | 3617936 shovelhead
shovelhead's picture

You wound an American icon by the comparison of cognitive skills.


Sun, 06/02/2013 - 10:30 | 3618045 Vooter
Vooter's picture

"use fiscal intervention to get ordinary people working"

Making what?

Sat, 06/01/2013 - 19:07 | 3617174 razorthin
razorthin's picture

The fucker even looks like Bernank with hair.  Must be from the same Khazar stock.

Sat, 06/01/2013 - 21:51 | 3617480 criticalreason
criticalreason's picture

when people dont trust the gdp statistics they look at energy consumption

How much debt is too much?

IMO the question is meaningless unless u take into account the price of energy/oil/commodities.

A big factor is cost to service debt.

The IMF debt sustainability target for greece is about 120%.

Sat, 06/01/2013 - 23:05 | 3617583 disabledvet
disabledvet's picture

we'll find out with Japan. i'll announce the winner...

Sun, 06/02/2013 - 02:54 | 3617764 Walt D.
Walt D.'s picture

I don't see why we should give any more crediblity to Paul Krugman's economic predictions than to Harold Camping's predictions of the end of the world in 2012. Both were wrong. However, at least Harold Camping admitted he was wrong. 

Paul Krugman's criticizing Reinhart and Rogoff for being wrong on economics is like Chris Christie criticizing someone for being overweight.

Sun, 06/02/2013 - 03:53 | 3617774 Setarcos
Setarcos's picture

I get sick of Keynes-bashing and those who endlessly equate Krugman with Keynes ... who NEVER advocated unbridled deficit spending and running up massive debts.

Perhaps his simplest concept is:  tax/save during good times, so that there's a surplus to help moderate bad times, i.e. fiscal policies, NOT monetarist policies which took hold during the 1980s and ended what had been some 35 years of prosperity after WW2 ... not least because Keynes was instrumental in bringing about the Marshall Plan of post-war reconstruction.  (Try reading J K Galbraith for more details.)

Actually Keynes' ideas were never fully implemented and the skids were finally put under them by the Chicago Monetarist School, such as cutting taxes under Reaganomics and Thatcherism; plus the lunacy of privatizing everything possible for purely ideological reasons (not economic) premissed on the actually mythical "Free Market", which has never existed in the real world, i.e. because there have always monopolies, cartels, corruption, collusion and greed of course.  Nevertheless the ideologues of Chicago, such as Freidman especially, imagined a neo-Classicism from the 18th Century, when Adam Smith wrote, "The Wealth of Nations" (mind you he had a social conscience, which is lacking in his latter-day disciples and none more so than Ayn Rand's disciples like Greenspan and large numbers of Libertarians).

In any case the Austrian School - which also vaunts the "free market" - has a HUGE advantage over both Keynes and Freidman - because the theories can never be disproved.  Thus "Austrians" can always be 'right'.

It is axiomatic in science that a theory must be disprovable, but since there has never been, nor can ever be a "free market" (nor individuals totally independent of other people - we are a social species and helpless for at least the first 16 years of life and again at the end of it).  Overall Austrian and/or Libertarian theories can never be tested, whereas both Keynes' and Freidman's theories were.

My bias is to favour Keynes' social conscience view of things and to excuse the failings - due to the rise and rise of monetarism since the 1980s - but I cannot avoid the fact that Keynes failed in the 'long run' of some 35 years; then the trial-run of monetarism/deregulation/privatization which has manifestly failed after about the same period of time, i.e. economics has never been a 'science' ... much less completely untested Austrian theories, except indirectly via the Chicago School of deregulation ... which led to repeal of Glass-Steagal and casino banksterism, for instance.

Rant over: except to still say that Keynes has had nothing to do with the financial world since the 1980s and I am sick of contributors to ZH - not least including WB - blaming present stuff on a man who has been dead for nearly 70 years and who would NEVER have endorsed Krugman, let alone Bernanke.

Addition, so as to try to be clear:

Lest you have forgotten - or never knew - the rise of monetarism and neo-Free Market ideology gave rise to the assassination of Allende in Chile and the installation of the Fascist dictator Pinochet + other S American wars, including the Iran-Contra affair which presaged ongoing wars in the ME ... resulting now in the US having become a fascist state and a FAR cry from the "the land of the free" in any way.

Banks and corporations rule OK!




Sun, 06/02/2013 - 04:51 | 3617827 not a twin
not a twin's picture

The fact that you jumped straight from Keynesianism to a spirited defense of Keynes suggests you need to read more JKG and probably some more up-to-date history of economic thought while you're at it.   

Sun, 06/02/2013 - 10:15 | 3618028 Setarcos
Setarcos's picture

I made NO "spirited defense" of Keynes.  He was obviously wrong, but not for the reasons commonly cited these days, e.g. there is no way in the world that he would have endorsed the likes of Krugman.

What do you mean by "some more up to date history of economic thought"?

What is really new?

It's all SO 19th Century essentially and/or based in an assumption of endless growth.

There is NO 'economic science', especially now that central banks buy toxic 'assets' to inflate a mythical 'market' with HFT of derivatives and rehypothecations piled on top of each other WAY beyond real global real global production and consumption.

Please tell me where I am lacking some knowledge of where economics is today.

I hazard a guess that you want to teach me the Austrian School.

Don't bother.  All economic theories are flawed, including the theory that, if only a currency is backed with gold, it would be "real money".

That is a joke: from the dawn of history gold has always been associated with corruption, fraud, piracy, theft and adulteration ... today including the likely fraud about gold supposedly stored in Fort Knox, or somewhere in New York.

How can so many people be wet behind the ears?

Modern banking started at least 400 years ago, i.e. when such as goldsmiths realized that they could issue far more paper receipts for gold than the actual gold they had in their vaults.

I can hardly believe that folks in ZH do not know what I have known for nearly fifty years.

Sun, 06/02/2013 - 11:11 | 3618120 shovelhead
shovelhead's picture

I could trust a public mint that was open and monitored as to purity and content far more than I could trust a closed private bank issuing currency at will and backed by...more printed currency created out of nothing.

It's a lot easier to see if a thumb is on the scale if the scale is in the open and visible.

I have no doubt most people here at ZH understand the problems with fiat currency and fractional reserve banking. That's why they're here.

Sun, 06/02/2013 - 11:13 | 3618124 not a twin
not a twin's picture

Outside of a few concepts like investment multipliers and liquidity traps and a belief in active fiscal policy, Keynesianism was wholly different than Keynes' General Theory, right from the start.  And it's evolved since then, especially the new Keynesian ideas that rescued it from near academic oblivian in the late 70s/early 80s, not to mention the post Keynesians who built out new ways of thinking about financial markets.  JKG has documented the emergence of the early Keynesians in the late 1940s and 1950s (after Keynes left the scene), but doesn't seem the best choice to track Keynesian thought and the different schools within "Keynesianism" since then.  It just seems odd when references to Keynesianism are immediately interpreted as Keynes-bashing - Keynes would have never signed onto many of the theories that took his name - Keynes and Keynesianism are two different things.

Mon, 06/03/2013 - 02:14 | 3619653 Setarcos
Setarcos's picture

Agreed and similar to Marx and Marxism, or any other 'ism' going off at various tangents from whatever an originator said or wrote.

Religions, i.e. any and all belief systems, always result in factions a founder would want no part of.

In any case I agree with you and your nuanced approach ... I only object to ill-informed portrayals.

Sun, 06/02/2013 - 03:33 | 3617792 thestarl
thestarl's picture

When it all goes pear shaped In the Land of the Rising (Setting] Sun i wonder if Abe and Kuroda will do the honourable Japanese thing? 

As for that Krugman the asylum for the insane. 

Sun, 06/02/2013 - 04:28 | 3617818 Truthsayer
Truthsayer's picture

An error doesn't throw out the entire premise of the report which does document  high debt slows growth...seems obvious but it is not in Krugman speak.

The above blog highlights some hypocritical stances and the political agendas.

Sun, 06/02/2013 - 06:08 | 3617848 Escapeclaws
Escapeclaws's picture

People who advocate austerity in the name of fiscal prudence are essentially justifying the larceny of Wall Street. At some point, it becomes more of a question of justice rather than number crunching. These debts should be repudiated since they are what is called "ODIOUS DEBT". The people who are being forced to pay are taxpayers as well as bank account holders (bail-ins as in Cyprus) and investment account holders (eg, MF Global). These parties had nothing to do with the creation of these debts, nor the control fraud (see William Black), and the bad faith through which these debts were created.

Even if austerity worked, it should be repudiated on the grounds of justice. Those whose hands are dirty with this fraud should have all of their assets confiscated and reimbursed to those who over the years were the victims of the malfactors' usury, at the very least.

Perhaps with a new Catholic pope who is more enliightened concerning the issue of justice and less interested in so-called "dialogue" with its one-sided benefits will have the courage to raise this issue. He has already said that money should serve rather than be the master.

Sun, 06/02/2013 - 10:26 | 3618040 Vooter
Vooter's picture

Yeah, let's get someone from the Vatican to discuss austerity...LOL!

Sun, 06/02/2013 - 10:35 | 3618046 shovelhead
shovelhead's picture

Usury isn't like a rainstorm, something that just happens. It requires an active, usually eager participant. Have you ever noticed that a loan is never 'usury' until the financed asset loses value or the borrower can't pay?

That's not to say that lenders don't prey on the ignorant with teaser rate ARMS, margin accts. and the like but being an adult requires due diligence on any transaction, particularly with financials. This is why children aren't allowed to make legal binding contracts.

The elected politicians are the people who sign the bills that run up the debt and allow the Treasury to run amok to save gamblers at taxpayer expense. Wanting this to stop is not austerity but common sense. Funding unsustainable social programs with debt that bleed a future generations income is a criminal Ponzi scheme and must be stopped. This also is not austerity, but again, common sense.

Politicians are the drug addicts that central banks drug dealers cater to. This is where the problems lie.

Until people own and control the minting of money and not private bankers who can create devaluing credit on whim and force elected officials to fund programs without debt before implementing them can anything change for the better.

Perhaps the new Pope will create a charity for the poor with the profits made from illegal money laundering. That might be a little token display of the Churches much vaunted calls for 'justice'.



Sun, 06/02/2013 - 10:51 | 3618066 Setarcos
Setarcos's picture

Agreed ... except that I have no faith in a pope to do anything in favour of "ordinary people" ... in any case the new pope has a blighted past in S America.

Why do you still have faith in Catholicism, after nearly 2000 years of wars, corruption, murder, torture and paedophilia?

The Catholic Church never supported 'enlightenment', from Galileo to the present day ... when something as simple as condoms would save lives.

BTW I voted you down, because I despair about your faith in a pope ... similar to how I would vote down any believer in the Obomber, or any other politician ... which the pope is, as head of the Vatican mini-state.

Interestingly Washington DC and the City of London are also mini-states with also grossly exagerated influence globally.

Sun, 06/02/2013 - 12:44 | 3618232 Escapeclaws
Escapeclaws's picture

The point I tried to make is that justice demands that this odious debt be repudiated and that those who are responsible for it, and other depredations such as what we see with the student loan debt slavery for life, be brought to justice. I'm trying to move away from a purely economic conception of justice. Regardless of the visceral anti-catholicism on this site, i feel there is hope that the current pope would be sympathetiic to this approach.

Sun, 06/02/2013 - 08:41 | 3617951 Plumplechook
Plumplechook's picture

Ever notice how those behind the push for austerity have nothing to loose from it?  It's the 0.1 percenters who advocate most loudly for it.  Thats because they DONT GIVE A SHIT about those who bear the costs - the unemployed and other little people.  In fact its great for the 0.1 percenters - a chance to roll back whats left of the social safety net and entrench their wealth and power.

I can guarantee this asshole Wiley won't be feeling any pain from the sociopathic policies he so loudly advocates.

Sun, 06/02/2013 - 09:14 | 3617970 Jim B
Jim B's picture

The non-austerity is not helping the little people, on the contrary, assist prices are being inflated to benefit the 1%. 

When this mess blows up the poor will be hurt the most!

Krugman is just a hack troll for big government, I hope he lives long enough to see the policies that he advocates blow up!

The only austerity you will see in any of the modern democracies will caused when bond markets blow up like Greece!


Sun, 06/02/2013 - 09:24 | 3617982 Jim B
Jim B's picture

This is austerity?

"Star Trek" parody video produced by IRS in-house studio and served as the opening of a training and leadership conference in 2010.  Good use of 50K... LOL!

Sun, 06/02/2013 - 10:51 | 3618080 shovelhead
shovelhead's picture

"Captain! The Cypriots are theatening the ECB with default...The bankers are helpless..."

"Right...Mr.Sulu...Fire the Tractor Beam at those Cypriot depositors...immobilize and extract."

"Aye Captain."

Sun, 06/02/2013 - 15:32 | 3618207 Jim B
Jim B's picture

They should pull and Iceland an tell the banks to F--- off!

Sun, 06/02/2013 - 11:03 | 3618106 Setarcos
Setarcos's picture

Agreed Plumplechook, but you will not find many supporters in ZH, because most here implicitly support banksters and/or the top 1% who they aspire to be, though it stands to reason that anyone with the time on their hands to comment here is a loser.

At least I am honest about being amongst the 99% of losers in this crazy world, whereas it seems that most ZHers believe that they can still "make it rich" with stocks, bonds, gold and whatever.

These folks are why you have so far got -4.

Sun, 06/02/2013 - 12:09 | 3618216 Jim B
Jim B's picture


30 very inportant government projects!!!


#1 The U.S. government is spending $750,000 on a new soccer field for detainees held at Guantanamo Bay.

#2 The Obama administration plans to spend between 16 and 20 million dollars helping students from Indonesia get master’s degrees.

#3 If you can believe it, the U.S. government has spent $175,587 “to determine if cocaine makes Japanese quail engage in sexually risky behavior”.

#4 The U.S. government spent $200,000 on “a tattoo removal program” in Mission Hills, California.

#5 The federal government has shelled out $3 million to researchers at the University of California at Irvine to fund their research on video games such as World of Warcraft.  Wouldn’t we all love to have a “research job” like that?

#6 The Department of Health and Human Services plans to spend $500 million on a program that will, among other things, seek to solve the problem of 5-year-old children that “can’t sit still” in a kindergarten classroom.

#7 Fannie Mae is about to ask the federal government for another $4.6 billion bailout, and it will almost certainly get it.

#8 The federal government once spent 30 million dollars on a program that was designed to help Pakistani farmers produce more mangos.

#9 The U.S. Department of Agriculture once gave researchers at the University of New Hampshire $700,000 to study methane gas emissions from dairy cows.

#10 According to USA Today, 13 different government agencies “fund 209 different science, technology, engineering and math (STEM) education programs — and 173 of those programs overlap with at least one other program.”

#11 A total of $615,000 was given to the University of California at Santa Cruz to digitize photos, T-shirts and concert tickets belonging to the Grateful Dead.

#12 China lends us more money than any other foreign nation, but that didn’t stop our government from spending 17.8 million dollars on social and environmental programs for China.

#13 The U.S. government once spent 2.6 million dollars to train Chinese prostitutes to drink responsibly.

#14 One professor at Stanford University was given $239,100 to study how Americans use the Internet to find love.

#15 The U.S. Postal Service spent $13,500 on a single dinner at Ruth’s Chris Steakhouse.

#16 The National Science Foundation once spent $216,000 to study whether or not politicians “gain or lose support by taking ambiguous positions”.

#17 A total of $1.8 million was spent on a “museum of neon signs” in Las Vegas, Nevada.

#18 The federal government spends 25 billion dollars a year maintaining federal buildings that are either unused or totally vacant.

#19 U.S. farmers are given a total of $2 billion each year for not farming their land.

#20 The U.S. government handed one Tennessee library $5,000 for the purpose of hosting a series of video game parties.

#21 A few years ago the government spent $123,050 on a Mother’s Day Shrine in Grafton, West Virginia.  It turns out that Grafton only has a population of a little more than 5,000 people.

#22 One professor at Dartmouth University was given $137,530 to create a “recession-themed” video game entitled “Layoff”.

#23 According to the Heritage Foundation, the U.S. military spent “$998,798 shipping two 19-cent washers from South Carolina to Texas and $293,451 sending an 89-cent washer from South Carolina to Florida”.

#24 The U.S. Department of Agriculture once shelled out $30,000 to a group of farmers to develop a tourist-friendly database of farms that host guests for overnight “haycations”.

#25 The National Institutes of Health paid researchers $400,000 to find out why gay men in Argentina engage in risky sexual behavior when they are drunk.

#26 The National Institutes of Health also once spent $442,340 to study the behavior of male prostitutes in Vietnam.

#27 The National Institutes of Health loves to spend our tax money on really bizarre things.  The NIH once spent $800,000 in “stimulus funds” to study the impact of a “genital-washing program” on men in South Africa.

#28 According to the Washington Post, 1,271 different government organizations work on government programs related to counterterrorism and homeland security.

#29 The U.S. government spent $100,000 on a “Celebrity Chef Fruit Promotion Road Show in Indonesia”.

#30 The feds once gave Alaska Airlines $500,000 “to paint a Chinook salmon” on the side of a Boeing 737.


Sun, 06/02/2013 - 12:39 | 3618261 Escapeclaws
Escapeclaws's picture

I don't remember having been in favor of any of these items, but iguess you feel that the little people need to tighten their belts to pay the bankers' bonuses.

Sun, 06/02/2013 - 15:03 | 3618544 Jim B
Jim B's picture

If being against unlimited government spending puts me against the little people, then so be it.

I am against my tax dollars going to the whole range of looters at the taxpayer through... Wall Street, the Obama phone lady, phony green energy companies without viable products, wasteful defense projects....

The point is the government is soo large that I would venture that 15-20% of the 3.5 Trillion dollar budget is wasted, but Paully says we just don't spend enough!



Sun, 06/02/2013 - 11:23 | 3618140 Walt D.
Walt D.'s picture

I think Krugman is right on one aspect about debt. Take France, for instance. Between now and the end of the century, the Moslem population will become the majority and unless democracy is supended, an Islamic Fundamnetalist government will be democratically elected and will impose Sharia Law. Under Sharia Law, all debt will be repudiated.

There is no way for the US to pay down the debt that has been accumulated and continues to accumulate at an ever increasing pace. At some point in the future, the debt will either have to be repudiated, either directly, or, more likely, by inflation. The only thing that is keeping the US afloat is the fact that the dollar is still the world's reserve currency. Once this changes, the whole house of cards collapses. We will be like Argentina.


Sun, 06/02/2013 - 12:33 | 3618253 Escapeclaws
Escapeclaws's picture

Good observation, IMO.

Sun, 06/02/2013 - 12:53 | 3618289 Urban Redneck
Urban Redneck's picture

As long as we are having fun at the expense of Sharia-compliant finance...

What is underlying asset that is indentured in student loan?

And since institutional investors "hedge" both their pricing and repayment exposure to interest rate based debt by using interest rate derivatives- what the outstanding notional volume of derivative contracts that would be Sharia-compliant?

What is Sharia other than a derivative of interest-rate based finance?

Sun, 06/02/2013 - 11:26 | 3618146 Walt D.
Walt D.'s picture

"Paul Krugman is to real (classical) economics what Pee-Wee Herman is to Shakespearean Drama."

Paul Krugman is to real world economics what the Miami Marlins are to baseball.

Sun, 06/02/2013 - 15:01 | 3618539 The Invisible Foot
The Invisible Foot's picture

If we paid of the the debt today, there would be no money in the money supply. Money=Debt. Look at a chart of the total money supply and total debt, they correlate wonderfully. What does all this mean? Bankruptcy is inevitable because of the most sinister idea ever created by man interest. Physical slavery requires slaves to be housed and fed, economic slavery requires people to feed and house themselves.

Sun, 06/02/2013 - 15:57 | 3618628 malek
malek's picture

 In fact, it won’t be a tragedy if the debt actually continues to grow, as long as it grows more slowly than the sum of inflation and economic growth.

Just think about this sentence a little longer, from a book first published in 2013, by a guy who at the same time ridicules inaccurate inflation and interest rate forecasts by anti-Keynesians.

What has our debt growth rate been in the last years? What our economic growth, by official numbers?
So now, either right now we are in a tragedy, or actually not because inflation is much higher than the official numbers. What's your pick, Paul?

Sun, 06/02/2013 - 18:55 | 3618935 Promethus
Promethus's picture

A shoot the messenger policy doesn’t make the message any better.

Sun, 06/02/2013 - 19:15 | 3618968 Promethus
Promethus's picture

After Krugman and Obama, does anyone still respect a Nobel Prize?

Mon, 06/03/2013 - 07:43 | 3619789 orangegeek
orangegeek's picture

Krugman Schmugman

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