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Paul "Contrafactual" Krugman: The Laureate Of Keynesian Babble

Tyler Durden's picture




 

Submitted by David Stockman of Contra Corner blog,

If you are not Professor Paul Krugman you probably agree that Washington has left no stone unturned on the Keynesian stimulus front since the crisis of September 2008. The Fed’s balance sheet started that month at $900 billion - a figure it had accumulated mostly in dribs and drabs over the course of its first 94 years. Bubbles Ben then generated the next $900 billion in 7 weeks of mad money printing designed to keep the tottering gambling halls of Wall Street afloat. And by the time the “taper” is over later this year (?) the Fed’s balance sheet will exceed $4.7 trillion.

So $4 trillion in new central bank liabilities in six years. All conjured out of thin air. All monetary vaporware issued in exchange for treasury and GSE paper that had originally financed the consumption of real labor, material and capital resources.

And if $4 trillion of monetary magic was not enough, the action on the fiscal front was no less fulsome. At the time in March 2008 that Goldman’s plenipotentiary in Washington, Secretary Hank Paulson, joined hands with the People’s Tribune from Pacific Heights, Speaker Nancy Pelosi, to revive Jimmy Carter’s infamous $50 per family tax rebate, hoping America’s flagging consumers would be induced to buy a flat-screen TV, dinner at Red Lobster or new pair of shoes, the public debt was $9 trillion. It will be $18 trillion by the time the current “un-ceiling” on the Federal debt completes its election year leave of absence next March.

Yet $9 trillion of added national debt in six years is not the half of it. Even our Washington betters do not claim to have outlawed the business cycle, and we are now in month 57 of this expansion. Given that the average expansion during the ten “recovery” cycles since 1950 has been 53 months, it might be argued that we are already on borrowed time fiscally. That is, we have already used up the forward area on Uncle Sam’s balance sheet that is supposed to be available to absorb the predictable eruption of red ink that will occur during the next recession or financial bubble collapse or China melt-down etc.

In fact, peering at the future through its Keynesian goggles, the CBO assumes that the US economy will accelerate to  nearly 3.5 percent average GDP growth until it reaches “full employment” around 2017, and then will remain in that beneficent state for all remaining time, world without end!  Yet even then it projects a cumulative deficit of nearly $10 trillion under “current policy” (i.e. bipartisan can-kicking of expiring tax and spending giveaways) over the next decade.

Given the self-evident economic headwinds both at home and abroad, however, it  would not be unreasonable to set aside CBO’s Rosy Scenario 2.0—a delusion I have some personal familiarity with, having invented the original version 33-years ago to the day. Indeed, a more prudent 10-year macroeconomic scenario might be simply “copy and paste”. That is to say, take the average growth rate of GDP, jobs, income and investment over the past decade and assume that the inevitable macroeconomic bumps and grinds of the next decade will average out about the same.

To be sure, some pessimists might note that more than 27 million working age citizens have dropped off the employment rolls since 2000; that presently 10,000 more are retiring each and every day; and that the ingredients of future growth have been radically short-changed, given that real investment in business fixed assets has averaged less than 1% annually for the past 14 years. So “copy and paste” might be hard to achieve in the real world ahead, but even then the added cumulative Federal deficit would total $15 trillion over the next decade under current policy.

In other words, until the sleepwalking denizens of the Washington beltway “do something” about a fiscal doomsday machine that has been put on auto-pilot since the 2008 crisis, the nation is likely to end up with upwards of $35 trillion of national debt by the middle of the next decade, while a “copy and paste” growth rate of nominal GDP (2000-2013= 4.0%) would end up at $25 trillion. In short, what is built into our fiscal future right now is a Big Fat Greek debt ratio of 140%.

Now comes Professor Krugman proposing to “do something”:

 …. we should aggressively reverse the fiscal austerity of the last few years, getting government at all levels spending several points of GDP more to boost demand…. let’s say for the sake of argument that the right policy is two years of fiscal expansion amounting to 3 percent of GDP each year, plus a permanent rise in the inflation target to 4 percent. These wouldn’t be radical moves in terms of Econ 101 — they are in fact pretty much what textbook models would suggest make sense given what we have learned about macroeconomic vulnerabilities…

In short, Krugman wants to double-down on the lunacy we have already accomplished. His 4% inflation target is just code for re-accelerating the Fed’s money printing machine, thereby keeping real interest in deeply negative terrain for even more years beyond the seven-year ZIRP target the Fed has already promised. And while the Wall Street gamblers who prosper mightily from the free money carry trades enabled by this insult to honest financial markets might not even appreciate the favor, its possible that millions of Main Street households not “indexed” to Krugman’s beneficent 4% inflation target might well notice its impact.

The math is not promising. Under Krugman’s inflation RX, today’s median household income of $51,000 would compute out to $33,000 in constant dollars a decade hence—taking it back to pre-Korean War levels. But do not be troubled, of course, because right there in Krugman’s Dynamic Stochastic General Equilibrium Model (i.e. DSGE) it shows that every Wal-Mart shift supervisor will get at least a 4% wage increase each year, and that all retirees with a decent bundle of lifetime cash savings will earn at least a 4% annual return by investing in Dan Loeb’s hedge fund.

If you do not understand the DSGE, however, you might say good luck with that. And you might say that wantonly adding another $1 trillion to the national debt over the next two years, as Krugman has also prescribed, amounts to carrying “bathtub economics” to a downright absurd extreme.

At the end of the day, Professor Krugman and his Keynesian acolytes believe in a mysterious economic ether called “aggregate demand”.  And through the wonders of their DSGE models they can measure the precise shortfall between aggregate demand under the nirvana of  ”full employment” and the actual level of aggregate demand ( i.e GDP or spending”) generated by 150 million workers and 300 million consumers struggling to make ends meet in today’s real world.  The whole point of fiscal and monetary ”stimulus”, therefore, is to insure that America’s economic bathtub is filled right up to the brim with aggregate demand, thereby insuring maximum growth of jobs, GDP and societal bliss.

Except that “aggregate demand” is a Keynesian fairy-tale that has now been playing for more than a half-century. In fact, spending or GDP cannot be conjured by the fiscal and monetary tricks of the state. Spending can only come from current income, which is the reward for current production; or it can come from borrowing, which is a claim on future income that will reduce borrowing capacity tomorrow  in order to have more spending today.

In fact, four decades of fiscal and monetary stimulus have essentially layered spending from a one-time credit expansion on top of spending from current income. Unfortunately, we are presently nigh onto “peak debt”; that is, the balance sheets of households, business and the public sector have been used up after the great debt party (i.e. national LBO) since 1980 has taken the US economy’s historic leverage ratio (total credit market debt to GDP) from 1.5 turns to 3.5 turns.

That’s evident even in the specious GDP numbers from Washington’s statistical mills. If you set the aside short-run stocking and destocking of inventories in the quarterly GDP figures, the year-over-year gain in final real sales for Q4 2013 was 1.9%; and that’s also close enough for government work to the 2.5% gain ending in Q4 2012; the 1.8% rate in Q4 2011; and the 2.0% gain in Q4 2010.

In short, there is no “escape velocity” because the Fed’s credit channel is broken and done. Going forward, the American people will once again be required to live within their means, spending no more than they produce.

By contrast, Professor Krugman’s destructive recipes are entirely the product of a countrafactual economic universe that does not actually exist. He wants us to borrow and print even more because our macro-economic bathtub is not yet full. And that part is true. It doesn’t even exist.

 

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Thu, 03/27/2014 - 19:08 | 4600657 SilverIsKing
SilverIsKing's picture

<- Stupid

<- In on the gag

Thu, 03/27/2014 - 19:18 | 4600684 Dagny Taggart
Dagny Taggart's picture

c.) all of the above

Thu, 03/27/2014 - 19:21 | 4600693 fonestar
fonestar's picture

That picture?  Is that Krugman in Debt Wish III?

Thu, 03/27/2014 - 19:24 | 4600705 new game
new game's picture

this may sound harsh-kill the fucking bastards. jmo.

Thu, 03/27/2014 - 19:35 | 4600736 max2205
max2205's picture

He needs to be sentenced to life without parole or those that thought any part of what he said would work out should serve the same time....

 

Paul you are a douche

Thu, 03/27/2014 - 19:47 | 4600793 McMolotov
McMolotov's picture

Krugtard, 2002: "Alan Greenspan needs to create a housing bubble to replace the NASDAQ bubble."

Clearly we're too unevolved to recognize his genius.

Thu, 03/27/2014 - 20:01 | 4600854 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Jeremy Grantham makes it even more obvious. He points out: in 1980 the debt:GDP ratio was 1.3x. Today it's 3.3x. During that time the GDP growth rate has declined significantly.

So

anyone drawing the conclusion that more debt equals faster growth would be 100% wrong.

Thu, 03/27/2014 - 21:26 | 4601122 zaphod
zaphod's picture

I say let them destroy the dollar if they want to.

The dollar is their source of power, if they destroy it and the public reverts back to real money then you've just taken away the bankers and the governments ability to spend money they don't have. Look at Germany, the effects in terms of the publics mindset regarding money from their hyperinflation have lasted into the 21st century. 

Fri, 03/28/2014 - 00:10 | 4601536 Libertarian777
Libertarian777's picture

do you really think the USA will escape genocide or civil war?

In a country with 300 million guns, someone will be the scapegoat when the dollar crashes.

And if the sheeple are so blind to it now, can you imagine who they will elect when the politician promises to save them from the crash of the almighty dollar?

I remember a country a few years back who had a currency that collapsed precipitously. And the saviour was a little guy, with the name Adolf.

Fri, 03/28/2014 - 07:15 | 4601847 Drifter
Drifter's picture

"I remember a country a few years back who had a currency that collapsed precipitously. And the saviour was a little guy, with the name Adolf."

I think that's the plan for America.  Loot the nation's wealth by printing massive amounts of currency and giving it to banks and political cronies, eventually destroying the value of the currency (after banks and political cronies have traded their devaluing currency for hard commodities), declare martial law, bring in dictator, and there you go, America is transformed into communist nation.

This is why "patriots" waiting till the currency collapses to launch their much-threatened "revolution" will have waited too long to accomplish anything, the nation will be under martial law by then.

Fri, 03/28/2014 - 07:37 | 4601879 Jacks Creation
Jacks Creation's picture

The man is an utter Shitclown.

Fri, 03/28/2014 - 11:08 | 4602540 Chuck Walla
Chuck Walla's picture

Paul, Baby! I got this beauty of an estate on Planet Arkadia for ya. In fact, the more of these you and yer pals buy, the better the economy.  You could say its an alien invasion!

 

FORWARD SOVIET SANCTIONS!

Thu, 03/27/2014 - 19:57 | 4600836 kchrisc
kchrisc's picture

We'll get around to it, however some other business first.

 

The Four Rs
Rejection: Quit paying, quit obeying , quit playing
Revolution: It is inevitable, so prepare, as they are.
Retribution: Is there really any place for these sociopaths and criminals in a restored civil and Constitutional society?!
Restoration: Restore the Constitutional republic.

Thu, 03/27/2014 - 21:24 | 4601118 falconflight
falconflight's picture

To your last point, I'm of the opinion that it is past the point of no return.  Consequently, I favor abolishing the Constitution and the various soverign states can go their own ways. 

Fri, 03/28/2014 - 01:12 | 4601616 kchrisc
kchrisc's picture

The problem with that is that then everyone has their own competing agenda which destroys unity against these criminals.

We need to unite under the "law of the land," the Constitution and Bill of Rights, and rid ourselves of these criminals and then modify or change things.

If we "abolish" the Constitution, then we are left with no yard stick to hold over these criminals on the gallows. Article 3, Section 3, the 2nd., the 9th,, the 10th. and the rest still apply.

They are guilty of treason, violations of the Constitution, violations of their oaths to the Constitution and crimes against humanity.

They are guilty, the Constitution is the what their crimes will measured against.

Look at the FedRes. Without a Constitutional measure of their guilt, they can say, "Hey, the DC US said we could," and we would be hard pressed to prosecute their thefts. But with the Constitution in hand, we can say, "Sorry, not permitted, Unconstitutional, off to the gallows with you."

Ditto "executive orders," etc.

Fri, 03/28/2014 - 07:23 | 4601851 Drifter
Drifter's picture

Dream on.

Not even the first "R" will happen.

Are you an employee?  They take taxes from your pay before you get paid?  And you're going to stop it somehow?

Do you buy stuff?  You pay sales tax?  You're going to stop paying sales tax somehow?

Own a home?  You pay property tax?   You're going to stop paying property tax somehow?

Like I said, dream on, not even the first "R" will happen.

Thu, 03/27/2014 - 19:27 | 4600715 TheReplacement
TheReplacement's picture

Useful idiot.  Wait until you see the look on his face when his betters leaving him hanging.  Instead of ;) he'll be :o

Thu, 03/27/2014 - 20:08 | 4600872 WhackoWarner
WhackoWarner's picture

If he was my kid I would send him to bed without his Big Mac.  Then if he failed to get the message I would make him sit in a corner, in a dark room...looking at nothing but FOXK news until he squealed.

 

Tutors would not help. Wood shed rules would not help. Molly coddle with a local touchy-feely shrink would not help. 

hopelessly lost in his ego.

Thu, 03/27/2014 - 19:09 | 4600658 barliman
barliman's picture

 

Paul "I do not think. I require no logic or consistency. This makes me superior to anyone who disagrees with me." Krugman is king of the Low Information Liberals

Thu, 03/27/2014 - 19:26 | 4600712 Accounting101
Accounting101's picture

Keep the tribal shit out of the discussion. You sound stupid. This debt based system has been in place a very long time and through presidential administrations and congresses of both political tribes.

Thu, 03/27/2014 - 19:45 | 4600779 barliman
barliman's picture

 

The only folks on here sensitive to a slam on liberals are the liberals pretending to NOT to be liberals.

Reading Is Fundamental - in your case, besides a failing grade in that respect, you also have no logic behind your comment since I didn't praise one band of fools over the over.

The "tribalism" is all yours, Liberal-In-The-Closet.

Thu, 03/27/2014 - 21:52 | 4601203 Accounting101
Accounting101's picture

Fuck you! Idiots like you are why we are in this economic nightmare. If you were not such an intellectual midget, you would understand that your premise is illogical and defies nearly 50 years of economic history.

You are part of the problem and a major reason why nothing changes.

Fri, 03/28/2014 - 01:03 | 4601607 barliman
barliman's picture

 

Behavioral analysis suggests ...

... we've uncovered the new account name Paul Krugman uses on ZH since we outed his last one.

Gosh, Paul, you haven't changed at ALL since the last time you cussed me out for making fun of you.

I'd go back and look up when that was ... but frankly you're not worth the time.

Hey Tyler!!! I think Paul sneaked back in!!!!

Fri, 03/28/2014 - 06:03 | 4601789 Serenity Now
Serenity Now's picture

LOL.  Right on, friend.

Thu, 03/27/2014 - 20:11 | 4600885 WhackoWarner
WhackoWarner's picture

This is not about Liberals. It is about basic friggin logic.  Krugman is and always has been an idiot.  Could care less if his politics support some wing nut faction. An idiot is an idiot.

Thu, 03/27/2014 - 20:41 | 4600985 Anusocracy
Anusocracy's picture

True, but it is a magical hunter-gatherer economics solution.

Thu, 03/27/2014 - 19:15 | 4600671 maskone909
maskone909's picture

Ufo's and broken window's Krugman. King of Pinocchio economics.

Thu, 03/27/2014 - 19:15 | 4600675 CunnyFunt
CunnyFunt's picture

I'm expecting a series of Krugman selfies to be unleashed soon.

#clueless

Thu, 03/27/2014 - 19:19 | 4600688 SilverIsKing
SilverIsKing's picture

Paging Banzai!

Thu, 03/27/2014 - 19:31 | 4600725 TheReplacement
TheReplacement's picture

Actually, can we get a picture looking down from inside a helicopter to see a .01% boot kicking krugtron out of the FED helicopter as the world below is engulfed in the flames of a central planning/banking induced armagedon?  That should be easy right?  lol

Thu, 03/27/2014 - 19:16 | 4600679 Tenshin Headache
Tenshin Headache's picture

Next time you're looking for an expert opinion, remember this guy.

Thu, 03/27/2014 - 19:18 | 4600685 Peter Pan
Peter Pan's picture

The one good thing about Krugman's ideas is that it will hasten the end of this corrupted, bloated, debt laden system.

Hopefully he gets his way becuse the sooner the whole system collapses, the sooner we can clean up and move on.

Thu, 03/27/2014 - 20:30 | 4600953 Dick Buttkiss
Dick Buttkiss's picture

Seriously, right-wingers have yammered on about "starving the beast," but since that's obviously not going to happen, why not let left-wingers feed it to death.

Let Krugman have his way, in other words, and get it over with.

Thu, 03/27/2014 - 19:19 | 4600687 stant
stant's picture

bring back the trillion dollar coin. i already got mine on ebay

Thu, 03/27/2014 - 19:24 | 4600699 NOTaREALmerican
NOTaREALmerican's picture

Ugh.   It's sad to see immorality covered-up with math.     It tends to cause people to argue with the math instead of the morals.

Thu, 03/27/2014 - 19:26 | 4600710 Bay of Pigs
Bay of Pigs's picture

Makes you wonder how guys like him ever succeed in life. Can lying through your teeth every single day your whole life really work out in the end?

Its beyond Full Retard...

Thu, 03/27/2014 - 19:38 | 4600747 NOTaREALmerican
NOTaREALmerican's picture

Re:  Can lying through your teeth every single day your whole life really work out in the end?

Uhhh,   look up "sociopath".    

The secret of success is duplicity,   and the secret of happiness is self-delusion about your own duplicity.

Being a sociopath is one of the best evolutionary advantages you can have.  

Thu, 03/27/2014 - 20:04 | 4600861 fonzannoon
fonzannoon's picture

"Makes you wonder how guys like him ever succeed in life. Can lying through your teeth every single day your whole life really work out in the end?"

 

https://www.youtube.com/watch?v=vn_PSJsl0LQ

Thu, 03/27/2014 - 19:30 | 4600724 buzzsaw99
buzzsaw99's picture

laugh if you want but that's exactly what they're gonna do

Thu, 03/27/2014 - 19:34 | 4600732 i_call_you_my_base
i_call_you_my_base's picture

Krugman reflects the view of every oligarch. You run up debt, enrich the oligarchy, and then inflate away the losses. As long as the oligarchy makes many multiples more than inflation on assets (which they do), it doesn't really matter to them. The losers are the people who have yet to make money (young people), those on a fixed income (old people), or those trying to acquire assets (because it juices asset prices and forces people into risky investments). In the aggregate the models seem legitimate to fucks like Krugtron, but it's picking winners and losers, and encouraging many already economically weak people to spend as much money as possible, damning their futures. Even assuming it "works", it's a terrible philosophy that harms a lot of people, people who did nothing to cause the "need" in the first place. When you give your life up to models you no longer have a sense of what's right or wrong, or how your decisions impact a single individual, all you care about is one stupid fucking number. Fuck you Krugtron.

Thu, 03/27/2014 - 19:45 | 4600778 Tenshin Headache
Tenshin Headache's picture

+ 1 x 10^6

Thu, 03/27/2014 - 20:49 | 4601016 grekko
grekko's picture

I need a drink, a back-up plan, and a financial bunker to survive the coming financial armeggedon that is coming.

Thu, 03/27/2014 - 19:35 | 4600735 Herdee
Herdee's picture

Sounds like he's taking instructions from the idiots running Japan,but I get it Krugman and you don't.What that means Krugman in case you don't know(and you don't)is that inflation doesn't create jobs.Money printing never has worked and especially in an environment that we've been in since '08.The Fed has an xecellent track record of being wrong because they're using the wrong model in a depresson along with an economy that is still suffering from extreme structural problems.If you want to really create jobs you do this Krugman:You get rid of all capital gains taxes,you lower taxes to individuals and corporations big time and grant all American corporations tax amnesty for years forward in order for them to bring back trillions of dollars.Lastly,you redirect defence spending into infrastructure spending and retraining the workforce.You take a literal axe to defence and to the jail system.

Thu, 03/27/2014 - 19:38 | 4600753 sschu
sschu's picture

Stockman paints a dismal picture, but I do believe reality will be even worse than he predicts.  It is unlikely that we will make it 5 more years without another "Lehman" type event.  Who knows the form it takes and what does it matter.  Economic calamity, war, major social disruption, significant drought, geo-politic crisis, whatever, they all will instigate the collapse of the house of cards.

For my money I am predicting September 2015, but that is not the point.

Something that is not sustainable eventually fails.  We approach that point and nothing you can do will preclude you being affected in a serious manner by this moment.

We can only hope to eventually emerge with our (and our children's) freedoms intact.

Go long faith, family, friends and a few firearms.  

sschu

 

Thu, 03/27/2014 - 20:02 | 4600857 kchrisc
kchrisc's picture

I don't know about the rest of the world, but the DC US will be a snowball in hell.

Fri, 03/28/2014 - 17:13 | 4603647 Radical Marijuana
Radical Marijuana's picture

I regard that as a gross understatement, sschu:

"Stockman paints a dismal picture, but I do believe reality will be even worse than he predicts."

I interpret the reply by kschric to mean that the most protected environments are the last ones to feel the consequences of their actions. Human civilization has become nested groups of protected environments, the deeper within which one goes the more out of touch with reality they become, because their situation is based on the ability of legalized lies to be backed by legalized violence, which engenders attitudes of evil deliberate ignorance.

I agreed with Stockman that: Unfortunately, we are presently nigh onto “peak debt.”  However, in my view he grossly underestimates the degree to which PEAK INSANITIES are going to become the main feature that accompanies Peak Everything Else.

Stockman proposes the nostalgic nonsense that: "Going forward, the American people will once again be required to live within their means, spending no more than they produce." That notion ignores the degree to which we have been operating a fundamentally fraudulent financial accounting system throughout the industrial revolution, which had financed strip-mining the planet, high-grading ourselves to hell. Sure, some protected environments were able to be the "snowballs in that hell," as it appears kschric pointed out, however, the overall double whammy of social polarization and destruction of the natural world has no way to recover without going through psychotic breakdowns. (In that context, it is also nostalgic nonsense to "go long faith, family, friends and a few firearms." Given the tragic trajectory that the industrial revolution has been on, none of those old-fashioned, conventional supports or defenses are remotely close to being in the same order of magnitude as the real problems.)

Krugman, as a whipping boy for Keynesians, is trivial compared to the fundamental system that has enabled private banks making the public "money" supply out of nothing as debts. From that perspective, I never see Stockman as presenting anything more than what I regard as relatively trivial truisms within that context. The bigger picture is that human civilization has been symbolically able to develop the industrial revolution for centuries based on more and bigger steam engines, financed with more and better debt engines. The debt engines that paid for the development of those steam engines were paradoxically based on being able to get away with society deliberately ignoring the basic laws of nature as much as possible, while also tending to interpret those laws of nature in as backwards a way as was possible to do.

The result is that for a few Centuries, the exponential growth of the industrial revolution has been operated through maintaining the maximum possible attitudes of evil deliberate ignorance towards what it was really doing. What actually happened was all based on the increments of the short-term successes of backing up lies with violence, in order to engage in more robbery, so that the benefits of those robberies could pretend to be be privatized, while the socialized losses were not paid attention to. After a few Centuries of that kind of economic growth, the exponential development of the industrial revolution has overshot so far that its coming collapses into chaos are going to become inconceivably crazy in ways which necessarily match how crazy were the driving forces behind the temporary successes of fundamentally fraudulent accounting systems being used to calculate the cost/benefit ratios of every economic decision, which were all collectively driven towards suicidal madness, as seen more objectively in their overall longer term results. Furthermore, it is too late now to fix those problems.

The single simplest symbol of that social situation was the way that the development of the Neolithic style of civilization was able to go through the mutations of the industrial revolutions in ways whereby the single best plant on the planet for people, (hemp, for food, fiber, fun and medicine) had its cultivation completely criminalized, on the basis of the huge lie that "marijuana is almost as bad as murder." Therefore, a civilization which was largely originally based on agriculture became so warped and perverted by the industrialization processes that it outlawed cultivating the single best plant, using nothing but huge lies, backed up by lots of violence, to accomplish that social insanity, through implementing the drug wars.

In that context, most mainstream morons' views about "legalizing marijuana" are now too little, too late, and way too trivial to matter, because criminalizing the cultivation of cannabis was merely the simplest symbol of everything else being directed through the industrial revolution to be done through systems of legalized lies, backed by legalized violence. The magnitude of those social insanities, and the overall destruction of the natural world caused by those runaway social insanities, has no way now to be coherently corrected, because the whole civilization is way too crazy to even begin to comprehend how crazy it actually became.

THE FINANCIAL ACCOUNTING SYSTEM IS FUNDAMENTALLY FRAUDULENT. The society that was built on that basis is deeply demented, to a degree that is way too far gone for the vast majority of people to understand, because they do not want to understand. Guys like Stockman provide some tempest in a tea pot perspectives upon some of the sillier excesses of that fundamentally fraudulent financial accounting system, but nothing remotely close to penetrating deeper into the heart of those problems. Therefore, as the Peak Debt points are reached, that will actually mainly manifest in the form of human beings expressing Peak Insanities.

Even in better Web sites, such as Zero Hedge, I see almost nothing that comes close to comprehending the astronomically amplified magnitudes of the deeper and deeper levels of the political problems which are due to established systems of legalized lies, backed by legalized violence, having been able to direct the industrial revolution to behave in the ways that it has behaved. Guys like Stockman propose the nostalgic nonsense that "Going forward, the American people will once again be required to live within their means, spending no more than they produce." Meanwhile, most of the other comments also return to some other level of conventional wisdoms about how we are supposed to cope with the psychotic breakdowns of globalized systems of electronic fiat frauds, backed by weapons of mass destruction.

Stockman is thereby promoting ridiculously old-fashioned views of how our accounting systems ought to come back to being based on the principles of the conservation of energy and matter, while most of the other comments upon his article similarly promote some other similarly superficial and silly notions of conventional wisdoms regarding coping strategies within the context of the possible collapse into crazy chaos, after we go through the point of Peak Debt. However, after we finally reach the turning or tipping points of Peak Debts, we have already gone deep into the domain of Peak Debt Insanities, which will be manifestations of all the rest of the other Peak Insanities, which are all the other ways that having controlled civilization with lies backed by violence, where that violence could never make those lies become true, but nevertheless continue to drive civilization to behave with evil deliberate ignorance towards what it was really doing, reach various other turning or tipping points, where the exponential growth of social polarization and destruction of the natural world have overshot so fast, so far, that the collapse into crazy chaos thereafter will become a series of psychotic breakdowns which are beyond our current ability to comprehend.

The delightful daydreams that we would somehow be able to have our society come back to facing some of the real facts regarding the basic laws of nature, and return to relying upon old-fashioned conventional wisdoms regarding how to do that, are actually within a nightmare reality, which has already been driven to be created by Centuries of triumphant legalized lies, backed by legalized violence, driving civilization to behave in more and more completely crazy ways, whose full consequences are still being mostly regarded through the same old attitudes of evil deliberate ignorance.

I am NOT saying that human beings might not come back to some better understanding of the laws of nature, and living better within their understanding of those laws of nature. What I am asserting is that, for thousands of years, with an especially obvious exponential growth during the last few Centuries of the industrial revolution, human civilization has managed to simultaneously understand some of the laws of nature far better than ever before, while still operating civilization through triumphant force backed frauds, which deliberately ignored and distorted those laws of nature as much as was possible. We have been running systems of organized lies, operating robberies, at exponentially accelerating rates, while almost everything that was thereby being done was being done through making and maintaining attitudes of evil deliberate ignorance towards the social polarization and destruction of the natural world that was thereby also being driven at similarly exponential rates.

The industrial revolution started with steam engines, paid for through debt engines. That has advanced to become globalized electronic fiat frauds, backed by the force of weapons of mass destruction. That situation now has no ways to return to relatively more sanity, without going through much more severe Peak Insanities and psychotic breakdowns.

All one has to do is real enough Zero Hedge articles and comments upon those articles to realize that even the relatively enlightened still almost totally propose bullshit "solutions" from within the same old-fashioned frames of reference which enabled the runaway problems to develop in the first place. Since scientific breakthroughs have enabled our technologies to become trillions of times more powerful, that power ended up making our problems become trillions of times worse than ever before in human history, because those technologies were primarily paid for by fundamentally fraudulent financial accounting systems, based on having made and maintained attitudes of evil deliberate ignorance towards what those technologies were really doing, in the overall bigger picture.

Paradoxically, the success of society being a social pyramid system, based on state religions which were operated as organized lies, operating robberies, enabled there to develop a fundamentally fraudulent financial accounting system, in which "money" was made out of nothing, as debts, and could return to nothing when those debts disappeared. That enforced fraud was absurdly contradictory of the basic laws of nature, which the industrial revolution harnessed in ways which were deeply inverted and perverted through the ways that those applications were understood and advanced.

Guys like Stockman, and most of the other readers who comment on Zero Hedge, skate fast across the thinning ice of the acceptance and rationalizations of operating fundamentally fraudulent accounting systems. Stockman points out some of the superficial excesses of goofballs like Krugman promoting old-fashioned rationalizations and justifications for creating even more "money" out of nothing as debts, as somehow a "solution" for the problems which were originally created by doing too much of that, for too long. However, so far, I have never read anyone who penetrates more deeply into the problem of how enforced frauds, backing up lies with violence, has so totally dominated human civilization for so long, that we have collectively become more completely crazy than is almost possible to comprehend. Since understanding how insane our Peak Insanities are going to become is too difficult to now fully imagine, those who simply skip that phase are then able to continue to promote their nostalgic nonsense "solutions," in the form of some return to an old-fashioned set of conventional wisdoms about how we are supposed to be able to cope with Peak Debt transitioning into Peak Debt Insanities, along with the manifestation of all the other interrelated Peak Insanities which are going to express themselves because our whole Neolithic style of civilization has been based on being able to back up huge lies, with lots of violence, which never were able to make those lies become true, but only able to drive that civilization to become more completely crazy every time that its financial frauds were followed to decide what next was done during the development of the industrial revolution.

The "corrections" necessary for how completely crazy our civilization has become are currently not known, nor even knowable, from within the context of that civilization as it currently operates itself, through perpetuating attitudes of overall evil deliberate ignorance about itself. Returning to somehow human beings living in ways which more consciously were in accord with the laws of nature is practically on the dark side of moon, invisible to us now, when we pretty well totally are living inside of a social system operating through a fundamentally fraudulent financial accounting system!

Mon, 03/31/2014 - 13:26 | 4611121 sschu
sschu's picture

TLDR.

In that context, it is also nostalgic nonsense to "go long faith, family, friends and a few firearms." Given the tragic trajectory that the industrial revolution has been on, none of those old-fashioned, conventional supports or defenses are remotely close to being in the same order of magnitude as the real problems.

Given that the problems are no solvable by humans or that we are so hopelessly corrupt that a solution is not feasible, what options do we have?

That is why faith needs to be at the top of everyone's list.

sschu 

Thu, 03/27/2014 - 19:43 | 4600769 SharkBit
SharkBit's picture

I'm sorry but Paul Krugan is a FUCKING MORON!  Just preparing MSM for the un-taper.  Let the ponzi continue.  We are dooooomed.

Thu, 03/27/2014 - 19:46 | 4600784 Hohum
Hohum's picture

That's funny: I didn't see the word "oil" once in the article.  Maybe Stockman and Krugman have something in common.

Thu, 03/27/2014 - 19:47 | 4600794 NOZZLE
NOZZLE's picture

That explains the burning bale of pot in the background he has been inhaling.

Thu, 03/27/2014 - 19:47 | 4600796 nmewn
nmewn's picture

K...its time to start hunting these thieves down.

Thu, 03/27/2014 - 19:59 | 4600844 TrustWho
TrustWho's picture

Krugman should have saved the Soviet Union in late 80's. Soviet Union had a command economy that used huge input-output matrices. If Soviet Union leaders had Krugman's insight, Putin's invasion in Crimea would not be an issue today.

Thu, 03/27/2014 - 20:00 | 4600849 TrustWho
TrustWho's picture

....appreciate the thick sarcasm, please

Thu, 03/27/2014 - 20:01 | 4600853 nightshiftsucks
nightshiftsucks's picture

They're going to print and spend,what's the alternative ?

Thu, 03/27/2014 - 20:35 | 4600967 James-Morrison
James-Morrison's picture

Spend and Print is the alternative.

Thu, 03/27/2014 - 20:04 | 4600862 Spungo
Spungo's picture

Krugman works for Putin

Thu, 03/27/2014 - 20:11 | 4600887 Ghostdog
Ghostdog's picture

The beedie-eyed loon is back

Thu, 03/27/2014 - 20:21 | 4600925 bentaxle
bentaxle's picture

Yep, When it all collapses Krug will be there insisting it all fell apart because the (bankrupt!) Government refused to obtain more credit......

Thu, 03/27/2014 - 20:38 | 4600977 smacker
smacker's picture

Krugman is an economic TERRORIST and should be arrested and prosecuted.

Thu, 03/27/2014 - 20:50 | 4601020 frednash
frednash's picture

 

What's the interest rate on the trillions..

 

.025%

 

What's inflation

 

Less than 2%

 

Wake up!

 

 

 

 

 

 

 

 

 

 

 

 

 

Thu, 03/27/2014 - 21:13 | 4601095 Pairadimes
Pairadimes's picture

I would be happy to volunteer to read excerpts from Charles McKay's "Extraordinary Popular Delusions and the Madness of Crowds" at Krugman's funeral service.

Thu, 03/27/2014 - 21:15 | 4601100 Nehweh Gahnin
Nehweh Gahnin's picture

One of my greatest regrets, as this world turns over, is that Krugman is never going to show up in my neighborhood.  Our lamp posts are so droll here.

Thu, 03/27/2014 - 21:41 | 4601177 teslaberry
teslaberry's picture

you think krugman really is the problem? one academic touting his 'theory' that everyone 'listens' to. no. it's not even the new york times to blame, or the msm at large. it's the morons, sheep and fucknards that comprise much of the  the public at large. they don't care about their own slaughter. and thus endanger all those who are near them.. you can blame the some of the wolves too of course for being too greedy and some of the sheep for being too sheepy. but it's a too way street. and the greedy wolves and the proliferation of stupid ass sheep will overwhelm the middle of both, who want to just to preseve a reasonably stable society. it aint going to happen. shit's gonna get real. history is an unforgiving bitch that waits for no one.

Thu, 03/27/2014 - 22:12 | 4601265 sfisher
sfisher's picture

Fuck You PK!  You can not really believe most of the crap that you say.

Thu, 03/27/2014 - 23:25 | 4601474 YHC-FTSE
YHC-FTSE's picture

 There's only one thing that ties in with the CBO's assumption that GDP will accelerate to 3.5% average growth and full employment will be reached by 2017 with Krugman's following quote:

"…. we should aggressively reverse the fiscal austerity of the last few years, getting government at all levels spending several points of GDP more to boost demand"

I think we all know that it is war. Even though I could see it, I constantly questioned my analysis on whether the US really was trying to start a major war because it just seemed completely evil and insane. But here it is in black and white. These idiots are listening to this bigger idiot to get themselves out of an impossible spot. It's not going to work. That amount of reversal will need every city to be nuked and rebuilt, but since that amount of destruction will mean the end of life on earth as we know it, there will be nobody left to rebuild. It is a gamble no sane person would ever take, yet I have heard that he has advocated such inhuman, absurd solutions many times.

There's something seriously wrong with this Krugman bloke. The S in DSGE, stochastic is a term that describes a state that is non-deterministic, ie random. Random systems can be described in terms of probability, but the term "Stochastic" itself basically means that the variables in the system are too complex to make predictions. It's a complicated way of saying, "Guessing". Anyone who has knowledge of probability theories and especially stochastic neural nets will understand that such models can, depending on the system being analysed, yield predictions that are completely off the reservation.

The biggest flaws in the bathtub analogy with the tap of liquidity filling the difference between actual aggregate demand and perfect aggregate demand are these: The bathtub has a giant hole in the bottom leaking away with fixed (and rising) costs, as well as liabilities that are growing with each new government employee, each new retiree. Then there are the giant banks, TBTF corporations each with a hose in the bathtub siphoning off large volumes of liquidity every time it is added to the bath. The bath can never be filled because the level is getting lower to the bottom with each passing second, and the faster you try to fill it, the faster it drains.

As I said, there is something seriously demented about this Krugman bloke. He is either the biggest bullshit artist on the planet or he is mentally damaged. That's not the worst part. The worst part is that people are listening to him and acting on his blatantly stupid theories.

Fri, 03/28/2014 - 00:08 | 4601532 DIgnified
DIgnified's picture

Just read the comments on his NYT blog.  Those mother-fuckers have to be the dumbest sacks of fluid-filled meat that have ever slothed their way around the planet:

       TypicalKrug 

Yotown 2 days ago

Fiscal austerity. What a load of nonsense. How exactly has the US government cut back? Even at ultra low interest rates the US is effectively spending 26 percent of tax revenue on interest payments.

http://www.zerohedge.com/news/2014-03-25/us-now-spending-26-available-ta...

According to you, Mr Krugman, we just need to spend more to solve this little problem.

                   Reply to 

    CA 

    Michigan Yesterday

    What you are saying is literally untrue.

    You are worried about a supposed $415 billion interest payment? That's only about 2.6% of GDP, and it's not even growing. Given current interest rates, it wouldn't grow substantially almost regardless of how much we spent, and would remain a simple thing to inflate away. Who cares?

    Fri, 03/28/2014 - 01:15 | 4601617 AndrewJacksonsGhost
    AndrewJacksonsGhost's picture

    If Krugman had the reins that son of a bitch would be doping the horse with so much adrenaline that the horses heart would have exploded at the first 1/8th mile pole.

     

    I do not understand how it is still running to tell you the truth. As for GDP growth, that is fake GDP growth. When you pump so much liquidity and drive the markets to the level we have now, that GDP growth rate is pure bullshit. I would have to see the raw numbers from the CIA to get any true idea what our GDP growth has been, but since that is impossible my best guess we have had a contraction over the last 5 years no net gain at all. Hell, we are still 3 million jobs short of 2007 and the jobs created? Hell, I would put money that the vast majority of them are government or hole digging ala the Big Deal.

     

    Fuck Krugman.

    Fri, 03/28/2014 - 01:17 | 4601620 the0ther
    the0ther's picture

    One Keynesian tactic they have not tried is to hand out cash to Main Street. I bet that would work a lot better than this crony shit they've done all along.

    Fri, 03/28/2014 - 04:15 | 4601742 Aussiekiwi
    Aussiekiwi's picture

    yeah, aussie did that to stay out of recession after the GFC, it actually worked really well, a shot in the arm for consumers and retailers, trickle down effect to banks...that's how it should be.

    Fri, 03/28/2014 - 06:00 | 4601785 olenumbersix
    olenumbersix's picture

    Just watch Japan. Thats seems to be the closest model the U.S. is following. Shits been going on over there for what, 20 plus years? Personally, I don't think we have that much time, as Japan crashes and the yen dies, a cascade effect will shorten the dollars demise. until then its guns, gold, silver, ammo, land, and dry goods. Stack on.

    Fri, 03/28/2014 - 06:46 | 4601821 adonisdemilo
    adonisdemilo's picture

    Hey Krugman, get a proper job, you could be flipping burgers and adding 30 cents of value to the US economy and that's more than you've added in all the years of you existence to date.

    Fri, 03/28/2014 - 08:25 | 4601968 AdvancingTime
    AdvancingTime's picture

    In Europe the ECB had to step in to halt the economic collapse of Spain, Italy and several other countries that were on the brink. What you pay in interest on debt does matter accept in the manipulated land of MMT. This cure to past woes adds a whole new exciting dimension to economics that eliminates any potential of failure and concern.

    However there is a major flaw in the concept  of MMT that not only wounds the theory but it is its Achilles heel. What do you do when it becomes apparent the economic efficiency of credit is beginning to collapse? This means that as more money is poured into the system and lower rates are no longer effective in driving the economy forward options evaporate. More below.

    http://brucewilds.blogspot.com/2014/01/have-we-been-lulled-into-complace...

    Fri, 03/28/2014 - 09:12 | 4602088 elwind45
    elwind45's picture

    The walmart shift supervisor gets a 4% increase? The corperate structure would collapse! This company came up with the phrase "too many chiefs anever enough coxswains" about 33 years to the day and now everyday is spent drinking at party cove lake of the ozarks? 19 dollar 8 pack of tees buy two before they go up! Don't expect a bonus tee or more 4 less EVER aaaagain! Fool me once ....never get fooled again!

    Fri, 03/28/2014 - 09:37 | 4602202 elwind45
    elwind45's picture

    If you like your supply of money you can keep your supply of money taking the banking out of fractions for a hundred years and STRENGTHENING FOR ANOTHER HUN run.

    Do NOT follow this link or you will be banned from the site!