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Krugman's Keynesian Crackpottery: Wasteful Spending Is Better Than Nothing!

Tyler Durden's picture


Submitted by Jeffrey Snider of Alhambra Partners, via David Stockman of Contra Corner blog,

Janet Yellen has essentially confirmed QE’s demise; good riddance. Unfortunately, I don’t think that is the final end of QE in America, just as it hasn’t been the end time after time in Japan (and perhaps now Europe treading down the same ill-received road). What’s interesting is really watching these central bankers talk themselves in circles about why that is. At the start of each program, there is no ambiguity, largely because of both inordinate faith in regressions and rational expectations theory that posits central bankers’ greatest work is in self-fulfilling prophecy – QE only works if you get people to believe in it.

But believing and acting are two separate and distinct functions that follow very different lines even for some of the same reasons. The premise of QE is rather dastardly, going all the way back to IS-LM and Samuelson (who admitted later how ill-suited such an academic framework was for anything outside of a classroom). What matters is the rate of interest next to the natural rate of interest. But in a real world where 0% represents a very real boundary, all that is left if interest rates at zero remain above the “natural” rate is to shift expectations toward “inflation.”

To gain a foothold below the natural interest rate, in IS-LM, is to shift focus to the real interest rate, and thus make the primary variable inflation. But that isn’t what really happens, either, as it is not inflation that moves but inflation expectations – again rational expectations theory. QE debasement seems to conform to what economists model of lay interpretations of inflationary sourcing, so the idea passes cursory logic, though, as Samuelson noted, only in a basic, low-variable and static environment.

The “markets” (or at least mainstream commentary seeking to provide post facto causation) seem preoccupied with “hawkishness” vs. “dovishness” when in fact QE was already on its way out as early as February 2013. When Fed Governor Jeremy Stein openly stated the “reach for yield” conundrum it was an implicit reference to the idea, long denied, that QE has very real costs.

Nevertheless, I want to urge caution here and, again, stress how hard it is to capture everything we’d like. As I said, ideally we would total all of the ways in which a given asset class is financed with short-term claims. Repos constitute one example, but there are others. And, crucially, these short-term claims need not be debt claims. If relatively illiquid junk bonds or leveraged loans are held by open-end investment vehicles such as mutual funds or by exchange-traded funds (ETFs), and if investors in these vehicles seek to withdraw at the first sign of trouble, then this demandable equity will have the same fire-sale-generating properties as short-term debt.18 One is naturally inclined to look at data on short-term debt like repo, given its prominence in the recent crisis. But precisely because it is being more closely monitored, there is the risk that next time around, the short-term claims may take another form.

In other words, less than two months after expanding QE3 to QE4 (UST “buying”) Jeremey Stein was essentially describing the downside of the crowded trade in a system with very narrow, potentially, exits. And while he was right to look for other possible exit bottlenecks, the repo market, despite all its new “monitoring” has not been very encouraging of late.

A few months later, Ben Bernanke began talking taper, referencing repeatedly that the FOMC was seeing recovery in the economy and stressing the improvement in labor. The global dollar disruption caught the Fed unaware, staggered their commitment to the straight-line ending of QE, but did not, ultimately end it. In fact, when in September 2013 the FOMC “shocked” expectations by not tapering the FOMC simply noted it was awaiting “confirmation” that the economy was still on track, as they were undoubtedly intimidated, but ultimately unphased, by the dollar episode and credit market selloff.

That came sometime in October and November, apparently, as the FOMC tapered last December.

That, I think more than anything, clarifies this entrenched trend. Supposedly the economy provided confirmation at the very moment of the worst Christmas shopping season since 2009, a very noticeable inflection in capital goods investing (with companies for “some reason” shifting cash to financialism instead) and what would turn out as a very severe contraction in GDP by Q1 (even though initial expectations and estimates were for a positive number, it was still near-zero and looked pretty bad in its own right initially).

A Federal Reserve policy that is committed to a data-driven approach, as proclaimed repeatedly in the past two years, would have further paused under such observations. Even the vaunted Establishment Survey stumbled in the winter, which had to be very unnerving to anyone actually committed to the data instead of pre-programmed monetary deceleration.

And that is what I think has been ongoing again since at least February 2013. QE is on autopilot to its end, not because of “incoming data” but because of secular stagnation. This is an idea that has infected nearly every facet of central banks since Mario Draghi’s euro promise (and perhaps even before then in a more quiet and reserved fashion). This is certainly been a topic for some time given Japan’s persistent failure, and the longer the US and Europe, indeed the world, goes without recovery the more it looks as if the theory holds consistency with observation.

It should go without saying that I pretty much disagree with nearly everything that Paul Krugman says, writes and thinks, but there is surprisingly enough room to see and observe where we do agree and the implications of that. Writing in the New York Times back in November 2013, Krugman noticed:

We now know that the economic expansion of 2003-2007 was driven by a bubble. You can say the same about the latter part of the 90s expansion; and you can in fact say the same about the later years of the Reagan expansion, which was driven at that point by runaway thrift institutions and a large bubble in commercial real estate.

So far, so good.

But as Larry [Summers] emphasizes, there’s a big problem with the claim that monetary policy has been too loose; where’s the inflation? Where has the overheated economy been visible?

The closed economy theory strikes again, whereby Paul Krugman efficiently describes the symptoms of the problem and then immediately denies the most logical, intuitive and consistent explanation for it because asset bubbles do not conform to the economist’s definition and consideration of inflation?

That is not some trivial distinction, as everything that comes thereafter is corrupted by that blindness. Where this all becomes most relevant (and there is a lot here that is really important, but consumes far too much space, even more than this already long exposition) to “dovishness” vs. “hawkishness” in the current circumstance is the implications for “secular stagnation” in terms of policy. The inability to see the economy as it is causes the Krugmans and Larry Summers of the world to theorize that economic growth “needs” asset bubbles to take place. And part of the reason for that is a downshift in the natural rate of interest, even to the point of being negative on a persistent basis.

Therefore, in the IS-LM worldview, the Fed has no choice but to push interest rates down with the natural rate, causing serial and perpetual bubbles along the way. Instead of seeing financialism as the primary reason for the “declining natural interest rate”, such that it actually exists in any form, they put the cart before the horse, instead remaining unquenchably curious as to why economic potential is mysteriously eroding and thus “needing” asset bubbles. That is where the most comedy is observed, as they try to come up with various reasons for that and even more wild desires for getting out of it.

Krugman again:

This is the kind of environment in which Keynes’s hypothetical policy of burying currency in coalmines and letting the private sector dig it up – or my version, which involves faking a threat from nonexistent space aliens – becomes a good thing; spending is good, and while productive spending is best, unproductive spending is still better than nothing.

Others have posited equally ridiculous ideas, including a distinct “lack of war” in the past few decades as “explaining” why the natural rate of interest may be falling so consistently. That is all pure nonsense as it contours far too closely to short-term thinking at the expense of the long-term, a Keynesian impulse at the heart of far too much folly. What bends lower the productive trajectory of the economy is unproductive spending taken in the name of such short-term consideration. Wasting resources is a net negative, not neutral as Krugman and the monetarists simply assume. They see these resources as otherwise idle, and thus opportunity cost is greater than profitable considerations.

Where monetary policy comes in is that it has the unique ability to allow unproductive spending and investment to remain undiscovered far longer than it should – through exponential debt. You can fund “bad” ideas for a long time when the “reach for yield” reaches itself for extreme levels. You get exactly what the Keynesians want, “several years of much higher employment” and investment, but the net cost is not zero as they imply, it is at the expense of future growth as so much unprofitable waste demands reversion to the mean or a return to productive balance.

This is what Stanley Fischer so conspicuously missed in his speech last week, as the flow of wasted resources is not simply raw materials and labor, but financialism as well.

Currently, even policymakers who are willing to concede that the liquidity trap makes nonsense of conventional notions of policy prudence are busy preparing for the time when normality returns. This means that they are preoccupied with the idea that they must act now to head off future crises.

And so QE is on autopilot to its end, regardless of incoming data. The secular stagnation theory, that I think has been fully absorbed in certainly Yellen’s FOMC, sees little gain from it because, as they assume, the lackluster economy is due to this mysterious decline in the “natural rate of interest.” Therefore QE in the fourth iteration accomplishes far less toward that goal, especially with diminishing impacts on expectations in the real economy, other than create bubbles of activity (“reach for yield”) that always end badly. What Krugman and Summers call for is a massive bubble of biblical proportions that “shocks” the economy out of this mysterious rut, to “push inflation substantially higher, and keep it there.” In other words, Abenomics in America.

While Yellen’s FOMC and Paul Krugman and his acolytes may differ on specific prescriptions, they are very much just different sides of the same coin. To them, an economy is generic activity that must be obtained because the opportunity cost of doing nothing is positive and their view of wasting resources in that paradigm is of zero consequence. That is nonsense, because an economy is the creation of wealth that is axiomatically tied to profitable enterprise, which indisputably is ruined by so much waste.

In the end, secular stagnation might unite orthodoxists and those opposed to them as an observation, but certainly not how and why that may have come about. Japanification is becoming universal, and the more these appeals to generic activity and waste continue, the tighter its “mysterious” grip. For now, though, QE is done (for now) in the US no matter how bad the economy gets.


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Sun, 08/24/2014 - 11:08 | 5136947 kowalli
kowalli's picture

ahahah? lol what?

Sun, 08/24/2014 - 11:10 | 5136958 y3maxx
y3maxx's picture

...To help jumpstart the Economy, the USSA Govt and Banksters should provide free coffins and burial plots for America's Middle Class.

Sun, 08/24/2014 - 11:13 | 5136962 X.inf.capt
X.inf.capt's picture




Sun, 08/24/2014 - 11:17 | 5136970 GetZeeGold
GetZeeGold's picture


<--Nobel Prize winner

Sun, 08/24/2014 - 11:47 | 5137041 Manthong
Manthong's picture

“Wasteful Spending Is Better Than Nothing!”

..and that wrinkled, stinking, hunch back, ugly old bar fly that took me home last night was better than nothing, too.

Sun, 08/24/2014 - 12:03 | 5137086 Da Yooper
Da Yooper's picture

“Wasteful Spending Is Better Than Nothing!”


I have to wonder


if these assholes would be saying this


IF they were not BENEFITING


from the "wasteful" spending

Sun, 08/24/2014 - 12:19 | 5137139 TahoeBilly2012
TahoeBilly2012's picture

Moral equivlent of pond scum. It's fucking amazing how many people sign off that immoral reasoning is somehow preferable and they really really work hard to square that circle. Just the right amount of lieing, when balanced just right, is a beautiful thing for all. It's zen even! 

Sun, 08/24/2014 - 16:08 | 5137774 Truthseeker2
Sun, 08/24/2014 - 12:55 | 5137235 TheFourthStooge-ing
TheFourthStooge-ing's picture

Krugman IS wasteful spending.

So no, Paul, it's not better than nothing.

Sun, 08/24/2014 - 14:10 | 5137402 slightlyskeptical
slightlyskeptical's picture

What's fucked is that there is a lot of non wasteful spending that could be done. Which is also why I have been against what the Fed is doing from dsy one. There still isn't enough money in the real economy and probably never will be because they refuse to spend the money where it will do the most good.

Sun, 08/24/2014 - 14:48 | 5137510 ebworthen
ebworthen's picture

If you hammer a screw long enough it will go partway into the wood.

We are the screw getting hammered, instead of getting $3 Million tax free each.

Sun, 08/24/2014 - 16:01 | 5137748 jarana
jarana's picture

“Wasteful Spending Is Better Than Nothing!”

The alternative to expending is saving or investing. (period)

It's impossible to do NOTHING (time passes and you are doing one of the 3 things above with or without your conscience).

So the real question is if one should expend, save or invest.

Wasteful spending is the result of spending when one should save or invest.

This should be understood even by a 7 year old child.

Mr. Nobel Prize, thanks for your contributions to humanity.

Sun, 08/24/2014 - 11:50 | 5137042 sunaJ
sunaJ's picture

When you are the cheerleader of an incompatible, dead or dying ideology that has no hope of functioning now or in the future, then yes, the gross misallocation of resources (malinvestment) is better than no investment in that system.  In fact, it is the only thing that keeps the current and corrupt system from crashing (right now, as opposed to later and greater).  If Krugman admitted that his models faileth, then he would spend the last of his days as the discredited, unemployed soothsayer that he is, rather than the expert economic analyst that so many people believe him to be.


Sun, 08/24/2014 - 11:56 | 5137064 Stuck on Zero
Stuck on Zero's picture

People stick by incorrect, disproven, dead, and dying ideologies when they make them filthy rich.

Sun, 08/24/2014 - 12:01 | 5137081 sunaJ
sunaJ's picture

Exactly, and why not?  They are disincentivized to admit anything different.  The marriage of centralized, institutional power and money.

Sun, 08/24/2014 - 11:48 | 5137043 kaiserhoff
kaiserhoff's picture

Idiots.  What would these damn Soviet Central Planners know about the "natural" rate of interest?

How many times do their ridiculous models have to fail?

Sun, 08/24/2014 - 11:22 | 5136990 Bossman1967
Bossman1967's picture

they already have them so now what? That's the most rediculous article I've read today. talk in circles much?

Sun, 08/24/2014 - 13:03 | 5137258 williambanzai7
williambanzai7's picture

Sun, 08/24/2014 - 15:32 | 5137625 Lordflin
Lordflin's picture

This is most definitely the viewpoint my children have...

Sun, 08/24/2014 - 11:11 | 5136961 Ignatius
Ignatius's picture

Not too bright, Krugman, when we live inside a debt money regime (which you conveniently and oddly never mention) where these debts will have to be serviced.

Sun, 08/24/2014 - 11:15 | 5136966 shouldvekilledthem
shouldvekilledthem's picture

Consume MOAR!

Sun, 08/24/2014 - 11:20 | 5136979 Fluxite
Fluxite's picture

this is micro analyzing when the problems are macro:


There are larger, less indebted, more agressive countries than the USA that are taking over the world trade>


Its as simples as that.

Sun, 08/24/2014 - 11:21 | 5136983 spanish inquisition
spanish inquisition's picture

Misallocation of capital is more beneficial than not spending. So, letting the banks continue to loot, is the American economies best chance at recovery.


Sun, 08/24/2014 - 11:21 | 5136985 AdvancingTime
AdvancingTime's picture

Austerity is a term that recently has been given all kinds of negative connotations because it is often painful. Economic growth tends to mask a multitude of problems, in economics austerity refers to cutting spending often by lowering and reducing the amount of benefits and public services.  Austerity policies are often used by governments to try to reduce their deficit spending.

Spending cutbacks are sometimes coupled with increases in taxes in an effort to demonstrate long-term fiscal solvency to creditors.  It is easy to point your finger at measures taken to reduce runaway or wasted spending and blame them for creating a reduced spending spiral but that is unfair. More on how Austerity has been given a bum rap in the article below.




Sun, 08/24/2014 - 11:48 | 5137039 chubbar
chubbar's picture

To follow a related train of thought, who is buying the trillion dollars in debt being issued each year by the U.S. gov't deficit spending? It can't be the primary dealers and I think we can all agree that most foreign gov'ts of any size are either in worse shape debt wise and/or are moving away from the dollar.

Is Belgium going to be able to buy a trillion a year in debt securities? If not, and "if" QE stops, what is the mechanism by which the U.S. gov't unloads it's perpetual debt instruments? Or am I missing something here?

Sun, 08/24/2014 - 15:14 | 5137565 daveO
daveO's picture

MYRA's or Luxembourg.

Sun, 08/24/2014 - 11:22 | 5136988 wisefool
wisefool's picture

Lots of broken windows in Napa right now. Can Krugman get a second Nobel Prize?

Sun, 08/24/2014 - 11:23 | 5136991 Bioscale
Bioscale's picture

A bit off topic. Resistance in Donetsk showing the Ukies soldiers in the streets:

Sun, 08/24/2014 - 12:17 | 5137135 Bioscale
Bioscale's picture

LiveLeak put it into a better context: parade of POWs of the Germans in Moscow in 1944

Sun, 08/24/2014 - 11:23 | 5136994 suteibu
suteibu's picture

Japan is still fighting deflation.

BOJ may ease policy for some time to beat deflation: Kuroda

I suppose one excuse is as good as another.

Sun, 08/24/2014 - 11:59 | 5137074 Temporalist
Temporalist's picture
Business is bad

A sign of Japan’s economic malaise? A shopping street in Shimizu Ward, Shizuoka City, is practically deserted on Sunday morning.



Sun, 08/24/2014 - 11:24 | 5136996 kchrisc
kchrisc's picture

By now Krugman should be treated like the troll he is, and just ignored.

He is just an apologist for the elites who pay his salary. Let him howl at the moon and call it cheese for all we care.

An American, not US subject.

Sun, 08/24/2014 - 11:30 | 5137006 wisefool
wisefool's picture

You answered your own question. Elites need appologists to continue the status quo. You can ignore him, but when his masters set policy based on his statements, you will not ignore that. They have both the guns and the judges.

Sun, 08/24/2014 - 12:01 | 5137075 kchrisc
kchrisc's picture

"They have both the guns and the judges."

One day the people, the American people, on whose production the elites live off of, and bearing guns, will come as judges of they, the treasonous elites.

An American, not US subject.

Sun, 08/24/2014 - 11:24 | 5136997 RacerX
RacerX's picture

Isn't krugman's 15 minutes up already?!

Sun, 08/24/2014 - 11:59 | 5137069 Stuck on Zero
Stuck on Zero's picture

For Krugman 15 minutes = $150K, the going rate for statist-economist whores.


Sun, 08/24/2014 - 11:30 | 5137008 disabledvet
disabledvet's picture

I feel like Captain Picard on the Star Trek Enterprise and the Universal Translator has just crapped out when I read this shit?

Who cares if Krugman is wrong dicktard! We alread have Krugman you stupid phuck!


Sun, 08/24/2014 - 12:07 | 5137095 whatthecurtains
whatthecurtains's picture

You are more like a fucking Pakled.    

"You're smart... we look for things to make economy grow.  Will you make us grow?"

Sun, 08/24/2014 - 15:23 | 5137602 pakled
pakled's picture

Actually, it's "You're smaaart... "


There. Fixed it for ya.


Sun, 08/24/2014 - 11:40 | 5137016 Notsobadwlad
Notsobadwlad's picture

Let me explain it to the morons.

1. QE only works if the money goes to the people first before the banks.

2. QE only works if the people do not have to pay the money back.

... even so, my guess is that people will pay down debt first ... then spend. That is what is natural to people. People only take on debt if they have to.

That is the ONLY way that people will spend the money into the economy. People will NEVER spend the money if all it does is give them a higher debt load. Money that gives the people a higher debt load ONLY benefits the banks and NO ONE else... especially the economy.

Maybe they are not morons. It is just as likely that they are doing it on purpose to kill the country and make it defenseless against the aggression of the banks. That is what banks do. They enslave people and countries. Is is any wonder people resist against the chains? duh! (grumble, grumble ... f'n morons.)

Sun, 08/24/2014 - 11:51 | 5137050 Inthemix96
Inthemix96's picture





Sun, 08/24/2014 - 12:02 | 5137084 techstrategy
techstrategy's picture

QE for the people: everyone stops paying their mortgage...  Would probably be the most efficient QE boost.  Fed will soon own all the MBS anyway...

Sun, 08/24/2014 - 12:13 | 5137115 techstrategy
techstrategy's picture

After all, the reduction of estimated loan losses is driving bank earnings and bonuses.  Why can't we get some of that CB free money as well?

To be clear, I really just want the financial sector to have to add value to capture value.  I'd rather see the financial ponzi unwind than QE for the people, but if that is what it will take for the required currency / financial asset versus real asset revaluation, let's get it on and get it over.

Sun, 08/24/2014 - 12:06 | 5137091 whatthecurtains
whatthecurtains's picture

The purpose isn't to help the poor or turn the economy around.  It is to tear down the middle class.   You've been fucked by the hopeless changemaker

Sun, 08/24/2014 - 12:07 | 5137093 Hungrypirana
Hungrypirana's picture

The federal government ran a budget deficit of $462 billion for the first 10 months of fiscal year 2014. Add in the off budget accounts; the US Post Office is spending $8 billion in FY 2015 it doesn’t have. State governments are spending approximately $100 billion of G.O. debt proceeds this year.

This amounts to almost $700 billion of fiscal stimulus by year’s end. Moar, moar moar.

Sun, 08/24/2014 - 12:38 | 5137166 nakki
nakki's picture

How hard is it to figure out. All QE has done is creat more $$ going into less hands.Then again in 1913 when the idea that a private entity would control the US dollar, the people of this nations fate was sealed. After all, its their money.

Sun, 08/24/2014 - 12:32 | 5137173 LetsGetPhysical
LetsGetPhysical's picture

The way you get rid of a troll is to IGNORE it. ZH please stop feeding the troll. I swear Tylers favorite word is Krugman. By constantly calling out his name you are promoting him. He's a jackass.... we get it already. Or is it just a slow news day and you looking for some click-bait. If so, well done sir. 

Sun, 08/24/2014 - 15:04 | 5137545 daveO
daveO's picture

Orwell called it a Hate Session. Those who don't participate should be reported immediately.  

Sun, 08/24/2014 - 12:43 | 5137202 q99x2
q99x2's picture

Yanet Yellen was caught last week stuffing a Bernanke up her Krugman.

Sun, 08/24/2014 - 12:46 | 5137214 Last of the Mid...
Last of the Middle Class's picture

Let me repeat. Inflation is not a problem.

Sun, 08/24/2014 - 12:54 | 5137231 Comte d'herblay
Comte d&#039;herblay's picture

The strongest signal we ever received and continuing is to be found in any major newspaper all over the country except the NYX which doesn't have any. 

The miniaturization and declining number of cartoons. 

This is the primary signal of End Tiimes.

When there is less and less to laugh about, one eventually pulls a Mork exit.  

And while it's not always possible to agree with Krugman, he is right.  ANY spending gets velocity moving. It's economics 101.

So the purchasing agent for tools needed for maintenance in the Pentagon who is bribed to buy $700 Vise grips by the gross, without consequence, isn't really all that much of a crook.  

She gets to flow $700 per into the economy, which $700 goes to a number of different human beans, corrupt to the core, I'll admit, but nevertheless, unless they all take their cut and hoard it somewhere, stopping the flow and choking off the good it could do if kept in circulation, is a good thing.

One hopes of course that the goods and services purchased are done so with thrift and common sense in mind, e.g. a good pair of Channelock vise grips shouldn't cost the Pentagon any more than $12.00.

I consider my Verizon Fios bill for satellite, DVR, and a variety of add on services to the tune of 275.00 a month, to be 'wasteful spending'.  But I can't argue with myself that my 'wasting' that money isn't somehow benefitting a whole lotta people.  Wasteful spending is the two half gallons of Banana Split and Chunky Monkey ice cream I bought with a refund I got from an overpaid medical bill.  Wasteful spending was the condoms I bought when Katie Upton replied to my request for a hook up, with a thumbs up. 

So he's right.  It would just be great though if it was more strategically spent on any number of wanting projects, like a national alternate energy program that seeks to eventually make our incursions into the Middle East obsolete and the savings from that defense budget used to further the interests of gay marriage proponents. 


Sun, 08/24/2014 - 14:02 | 5137377 Chief Wonder Bread
Chief Wonder Bread's picture

You may have notice that Krugman uses a 'fakery' conceit of Alien Invasion. Is this just HARD-WIRED into certain demographic segments of dual-citizenry?

I think so.

WASp Keynes uses a 'burying' conceit, i.e., underground, concealed, inverted. but at-least KNOWN: 'x marks the spot>dig here'Interesting. We know now he was a homo.

Damn, 'folks' sure are ornery. They refuse to go along with the delusion that everything is 'just fine' on the economy front. Why won't they cooperate with the Keynesian/Monetarist wet-dreams?

Sun, 08/24/2014 - 15:02 | 5137540 daveO
daveO's picture

Krugman's plan is like the 'apple on a string' bait. People are slowly waking up to the fact that the apple is rotten and they were never going to be allowed to eat it , anyway! Student loans are a perfect example. 

Sun, 08/24/2014 - 16:53 | 5137905 shovelhead
shovelhead's picture

And while it's not always possible to agree with Krugman, he is right.  ANY spending gets velocity moving. It's economics 101.

Fuck sakes... Are people really that dumb?

If the bank doubled your mortgage payments, would that help the economy? would your neighbor suddenly run out and buy a new Ferrari ? Maytag would hire new workers to increase output?

NO. Because you would be servicing more debt than you are capable of handling and you would fail and the "stimulus" would stop.

Malinvestment does not produce wealth or surplus income. any spending does not increase velocity, certainly not anything sustainable. If this were true then QE would be an unmitigated success and we all would be rich from a booming economy.

Please explain how someone who buys a $200,000 house for 1.5 million makes the corner butcher wealthier.

Krugman is ALWAYS and idiot and so is anyone who listens to him.


Sun, 08/24/2014 - 20:14 | 5138563 Comte d'herblay
Comte d&#039;herblay's picture

You sure make some assinine statements and still fail to make a point.

How is a bank going to double my mortgages payments??? How in christ's name are they going to do that??   AND how is that increasing spending that I and Krugman are talking about????

Start there.....we'll wait.....

The rest of it is so off the wall I can't respond without sputtering.

QE was never going into the economy, other than by stealth, to prop up all the pensions and other fiduciary obligations of banks that new money can buy.  To some extent that has completely restored, and now exceeds the stock market averages of 2007.  Money very well spent. ask anyone with a 401K that got killed in 2008 and now has at least recovered all of it and more. 

Now go play with your anger in the street.


Sun, 08/24/2014 - 12:57 | 5137237 yogibear
yogibear's picture

Deflation is the natural market force after inflation was pushed for the last 30 years. Fighting it will just transfer wealth to the 1%.

The DHS has over a billion bullets to reduce the propulation of those who protest and resist.

Sun, 08/24/2014 - 13:39 | 5137328 damicol
damicol's picture

Is it just me, or can anyone else see something that I see so clearly, so starkly, sticking out like a fucking 12 inch dick on a fucking midget hooker, Something that shouldn't be there, is there, and every fucker pretends not to notice it.

Bubble in this, bubble in that, bubble in everything, one inflates a bit more in housing, then pops a bit, stocks grow more bubbly, bonds go bubbleicious,  credit goes goes on a mad boiling frenzy.  but the one thing no one looks at is the currency.


That fucking useless piece of unbacked ponzi Delhi back street shithole arse wipe confetti, the fucking euro coupon or a fucking voucher is a bubble, a bubble of stupendous  proportions, It is fucking worthless, a roll of freshly minted Andrex is worth more, its softer and absorbs more shit, but everyone pretends that fucking useless piece of soiled asswipe has value.

The fucking $ is worth about 2 cents a tonne more, and that's being generous, and the fucking Yen is worth much the same and the UK pound might just be worth 3 cents a tonne.

The last 3 have the backing of a sovereign, corrupt as may be, but the  fucking stinking euro shit is a fucking scam plain and simple.

The fucking bubbles are the currencies.  and slowly and surely as day follows night people will eventually wake up and realize they are being peddled these fucking useless bits of tat and that they are utterly fucking worthless.

And at that point the real effects of all this printing crap will strike home and you will see what they see in Argentina and Zimbabwe and Wiemar.

So called currencies are the ultimate and final bubble , and when every $ today becomes worth 0.0000000001 cents tomorrow then every billionaire is a fucking pauper again.

Sell the  ass wipe they pretend is worth something and exchange it for something real and valuable.

Like a stock of Andrex




Sun, 08/24/2014 - 13:50 | 5137355 CHX
CHX's picture

WOW, you unloaded pretty good here, must feel better now, aye?

Sun, 08/24/2014 - 14:03 | 5137384 damicol
damicol's picture

I'm so sorry, but it has this very powerful effect of wanting to defecate in the throat of a decapitated socialist every time an article appears with the word Krugshit in it

Sun, 08/24/2014 - 13:48 | 5137343 CHX
CHX's picture

Krugi is - I have to give him that - trying hard to put the very best lipstick onto the dying/decaying pig.

Sun, 08/24/2014 - 14:24 | 5137436 Ban KKiller
Ban KKiller's picture

Simple...add Non-GAAP to the mix and problem solved. 

To be an accountant in D.C or NYC is to be a criminal. Or you lose your job for still thinking 2+2 = anything other than what I tell you it adds up to. 

Banks are not transparent for a reason but the shitty odor still leaks out.

Noise in the Hamptons? That's me flying in a helicopter dropping ebola infected whores for your weekend pleasure. 

Sun, 08/24/2014 - 14:32 | 5137462 moneybots
moneybots's picture

"What Krugman and Summers call for is a massive bubble of biblical proportions that “shocks” the economy out of this mysterious rut, to “push inflation substantially higher, and keep it there.”


Haven't we already had that bubble?


Just what is mysterious about this rut?


Inflation causes deflation.  A massive bubble of Biblical proportion will cause a massive deflation of Biblical proportion, when it bursts.



Sun, 08/24/2014 - 14:48 | 5137482 daveO
daveO's picture

The 'natural rate of interest' has been declining because the debt loads have been going higher for 30+ yrs. The demand for more credit shrinks in relation as the ability to service said debts starts declining, too.  'Natural' credit cycles were effectively banned in 2008, that's when the 'natural rate of interest' was also abolished. Since then, they have been stealing from depositors, and word wide dollar holders, to service the debt. In a free market this wouldn't happen. Debtors would eat the losses. Death to counterfeiters, End the FED.

Sun, 08/24/2014 - 14:38 | 5137480 limacon
limacon's picture

Lacklustre economy caused to a large degree by Learned Helplessness induced by Fed policies , specifically the removal of risk.

Without risk , the ability to make decisions is impaired and a strange ennui ensues . This at a neurotransmitter level.


Sun, 08/24/2014 - 15:04 | 5137496 Joebloinvestor
Joebloinvestor's picture

So run up the deficit with spending that does nothing for the economy, but makes a few cronies and banksters wealthier.

Both parties are guilty.

Sun, 08/24/2014 - 14:45 | 5137503 kenny500c
kenny500c's picture

What he really means is that a command and control economy directed by his ilk and the crony socialists is better than a market driven free enterprise economy.

But of course history has time and time again proven him wrong. But these control freaks will never give up to the detriment of human civilization.

Sun, 08/24/2014 - 15:22 | 5137590 pakled
pakled's picture

"What Krugman and Summers call for is a massive bubble of biblical proportions that “shocks” the economy out of this mysterious rut..."



Why does this smack of the old fashion practice of bleeding the patient to cure them?


Or, I guess, more modern, electro-shock therapy?


What's next, a frontal lobotomy?




Sun, 08/24/2014 - 15:58 | 5137725 unitwar
unitwar's picture

Great observation!  Funny!  Also, what is so mysterious about this rut?  Of course the economy can't run optimally when there is a huge fianancial parasite sucking the life out of it!  The parasite is killing the host.  It is like wondering why an athlete can't perform well when he has a 15 food tapeworm in him!  Everyone knows the guy has a huge tapeworm in him but for some reason, doesn't think it should effect his performance.

Sun, 08/24/2014 - 15:25 | 5137604 dizzyfingers
dizzyfingers's picture

Avoiding Krugman news is better than doing nothing.

Sun, 08/24/2014 - 15:46 | 5137672 unitwar
unitwar's picture

Anyone that believes there is a "natural" rate of interest is a fucking moron.  The only thing natural about interest rates is that it is natural for an elite segment of society to run criminal scams on the rest of society.  There is a natural rate in which, if i am an elite, i can charge you for money that i don't even have?!  For anyone that hasn't been brainwashed, the concept of a "natural" interest rate is ludicrous.  Even the Christians of the middle ages, speaking of scams run by an elite, made interest illegal.  The "christian" kings had to subcontract it out to the jews.  The dumbassed serfs blamed the jews and hated them when it was really their "christian" lords doing it to them.  The serfs still haven't figured it out!  Their feudal overlords aren't fucking them, it is the "natural" rate of interest! If I wasn't born a serf it would be hilarious.  Ok serfs, now you can let me have it.  Kill yourself defending your feudal overlords.  Tell me how there is a natural interest rate in a free market!  Tell me how everything would be fine if we were on the gold standard.  Tell me how socialy security is going to ruin us but giving 23.7 trillion to the banks is fine.  There was no alternative!  Sometimes I find myself siding with the elites and think you fucking morons actually deserve worse than what you are getting.

Sun, 08/24/2014 - 16:03 | 5137750 GreatUncle
GreatUncle's picture

Bullshit, wasteful spending better than nothingh.

If you increase the level of bad debt through unprodictive spending you make matters a whole lot worse with no tangible secured asset and then having to find the income to service this debt using central bank forward guidance of course.


Go on, show me the tangible assets please because like finding rocking horse shit the economic situation would not exist. That they run a continual defecit and no way to pay off the debt is the sticking point.


Sun, 08/24/2014 - 17:10 | 5137973 shovelhead
shovelhead's picture

Want a 'natural' rate of interest?

See how much someone would charge to loan you 10 gold oz. for a year.

Real money from savings has a cost that is disassociated from fabricated digits.

Sun, 08/24/2014 - 17:25 | 5137985 Radical Marijuana
Radical Marijuana's picture

AFTER the biggest gangsters, the banksters, SUCCEEDED in corrupting the political processes, so that private banks were allowed to make the public "money" supply out of nothing as debts, THEN along comes Keynesian economic theory to explain how that can be a good thing, and therefore, how any possible excuses for banksters to make more "money" out of nothing are good things. Meanwhile, almost all of the controlled opposition groups to the financial systems of enforced frauds, which were made and maintained by the international banksters, continue to propose ideal "solutions" based on WHAT MONEY SHOULD BE, but all of their idealized "solutions," based on WHAT MONEY SHOULD BE, tend to deliberately ignore what MONEY IS!


That definition places the political economy inside of the human ecology, recognizing that the debt controls are backed up by the death controls. The established monetary systems are based on ENFORCED FRAUDS, where the public is forced to accept the fraud of "money" made out of nothing as debts, because they must pay their taxes, and respect legal tender laws, which give that fiat money its value. Of course, those various sorts of private banking entities, all the way up to and including entities like the Federal Reserve Board, find every possible excuse to make more "money" out of nothing!

AFTER one accepts the basic idea that it is O.K. for private banks to be allowed to make the public "money" supply out of nothing as debts, and therefore, that "money" can also disappear if the debts disappear, then those established systems MUST find every possible excuse to keep on making more "money" out of nothing! That is the context inside of which one gets "Krugman's Keynesian Crackpottery: Wasteful Spending Is Better Than Nothing!"

However, by and large, I am not aware of any significant opposition to that which is not based on the impossible ideals regarding WHAT MONEY SHOULD BE, which do not deliberately ignore WHAT MONEY IS (& how and why that is what money actually IS!) I regard it as having become more and more blatantly obvious that governments are the biggest form of organized crime, controlled by the best organized gang of criminals, the biggest gangsters, the banksters. That is how and why MONEY IS WHAT IT IS!

Meanwhile, those who propose idealized alternatives, by listing the properties of WHAT MONEY SHOULD BE, tend to deliberately ignore the ecological factors which surround the economy, which is the same bullshit world view that those who legally counterfeit the public "money" supply also do, although for slightly different reasons. In order to NOT ignore the ecological factors that surround the economic system, with the monetary system at its core, then one must regard human beings as manifestations of general energy systems. AFTER one looks at human beings, and groups of human beings, as entropic pumps of energy flows, THEN it makes sense how and why MONEY IS MEASUREMENT BACKED BY MURDER.

Since our society has been dominated through every aspect, from the philosophy of science to political economy, by the biggest bullies' bullshit world view, our society is controlled by the maximum possible deceits and frauds, while the controlled opposition groups to the established systems continue to operate from within that same frame of reference. The banksters control our civilization because of their actual ability to operate the death controls, through the maximum leverage, via the assassination of politicians who could not otherwise be bribed or intimidated, on out through all other social institutions which could be controlled by dominating their funding.

In that context, I find that the article above follows the typical pattern of good analysis of the problems, but which then continues to imply superficial bullshit "solutions." That is totally typical in Zero Hedge, which I read for the relatively good analysis, but which tends to never lead to anything but bullshit idealized "solutions" based on what should be, which tend to deliberately ignore how and why what IS IS!

One could think that human beings ought to be understanding human systems as manifestations of general energy systems, in which politics was primarily applied human ecology, within which context was operated the political economy. HOWEVER, human history has selected for success in warfare to be based on backing up deceits with destruction, and that became the foundation for the economic systems to be based on enforced frauds. All of the mainstream theories of economics are ways of rationalizing & justifying the economy being based on enforced frauds, mostly by deliberately ignoring those social facts as much as possible. Similarly the controlled opposition groups have also adapted to operate within the same basic frame of reference.

Indeed, the ways that human beings understand general energy systems are themselves BACKWARDS, because an arbitrary minus sign was inserted into the entropy equations of thermodynamics and information theory, in order to keep the biggest bullies happy, by making that philosophy of science consistent with their bullshit view of the world. That has been so triumphant for so long that almost all the controlled opposition groups continue to presume to take that basic MISTAKE for granted.

While one would think that human beings could be able to understand themselves as manifestations of general energy systems, in fact, human history has created a civilization based on the maximum possible deceits and frauds about itself. Nowhere is that paradox more apparent than with respect to understand the monetary system, which is the most abstract symbolic expression of that basic problem.

The EXISTING monetary system is based on ENFORCED FRAUDS, because MONEY IS MEASUREMENT BACKED BY MURDER, because it must necessarily be, since human systems of artificial selection must exist because they are surrounded and interpenetrated by natural selection systems. However, at the present time, we are trapped within the profound paradoxes amplified by human history that intelligence was the internalization of natural selection, but that ended up being applied through social pyramid systems where the success of some was based on their ability to engage in the maximum possible deceits and frauds against others.

Given that history, almost all of the controlled opposition to the established economic systems continue to operate within the same frame of reference. Therefore, a stream of Zero Hedge articles, like this one above, provide relatively good analysis of the problems, but never continue through to provide genuine solutions which are consistent with that analysis, instead of collapsing back to the basic bullshit regarding WHAT MONEY SHOULD BE, as the way to resolve the chronic political problems which are inherent in the nature of human life.

OF COURSE, Keynesian Crackpottery is developing bigger cracks all the time, since it was always based on enforced frauds, which it always provided a bullshit discourse about! However, so far, any genuinely better resolutions to that problem continues to be the fringe of the fringe of the fringe, or Fringe Cubed, position ...

Sun, 08/24/2014 - 17:49 | 5138113 Bumbu Sauce
Bumbu Sauce's picture

At least Bonnie and Clyde had to actually shoot their way out of a few heists.  These modern day theifs retire into a lifestyle no one else can earn.

Sun, 08/24/2014 - 17:55 | 5138142 Hellone
Hellone's picture


Mon, 08/25/2014 - 13:54 | 5138765 Radical Marijuana
Radical Marijuana's picture

No! Hellone, you grossly underestimate and misunderstand what a greater use of information and higher consciousness with respect to human death controls would entail. Metaphorically, I am suggesting that everyone needs to become better wolves, not better sheep. I am NOT saying that killing the top predators (who have tended to degenerate into parasites that are killing their host) is any kind of genuine solution to the systemic problems. IT IS A SYSTEM. Even IF one could somehow miraculously kill off some of the top predators, that would definitely NOT make things better, since that would be no systematic solution!

I REPEAT, what I recently posted here:

The G-20's Solution To Systemically Unstable, "Too Big To Fail" Banks: More Debt

Silent Weapons for Quiet Wars

"Energy is recognized as the key to all activity on earth. Natural science is the study of the sources and control of natural energy, and social science, theoretically expressed as economics, is the study of the sources and control of social energy. Both are bookkeeping systems: mathematics. Therefore, mathematics is the primary energy science. And the bookkeeper can be king if the public can be kept ignorant of the methodology of the bookkeeping. ... In this structure, credit, presented as a pure element called "currency," has the appearance of capital, but is in effect negative capital. Hence, it has the appearance of service, but is in fact, indebtedness or debt. ... if balanced in no other way, will be balanced by the negation of population (war, genocide)... They must eventually resort to war to balance the account, because war ultimately is merely the act of destroying the creditor ... War is therefore the balancing of the system by killing the true creditors (the public ...)"



There is nothing theoretically wrong with the ideals of a democratic republic, operating its death controls, to back up its debt controls, through its rule of law. The PROBLEM is that the vast majority of "We the People" have been reduced to Zombie Sheeple. Furthermore, most of the controlled opposition continue to recommend "solutions" based on the view that everyone should become better sheeple, instead of everyone becoming better wolves. I recommend that "We the People" should take back the political power that has been given away to the banksters, due to them covertly applying the methods of organized crime to dominate the political processes in the past.

Going around murdering a bunch of banksters in ways that operated outside of the rule of law would make things worse, not better! However, any democratization of the death controls MUST be based on understanding that governments are necessarily the biggest form of organized crime, which have ended up being controlled by the best organized gang of criminals, because the vast majority of citizens do NOT understand that their country is basically a form of organized crime, that they are a member of. Governments are basically military organizations. Therefore, politics should respect militarism as the supreme ideology, and operate all decisions through military ethics. What "we" should do is do what the banksters did better than they do it now. However, that is not some facile notion of killing them, in ways which would even more destroy the rule of law, and drive society even further from being a democratic republic.

"Who we murder" should be systematically understood, in ways which require radical intellectual scientific revolutions. For instance, everything that we currently call "birth control" is actually a form of death control. Similarly every other kind of way that we say "no" and enforce that, is some kind or degree of death control. True birth controls are to select for something to say "yes" to, and enable that to happen. Any form of death control is saying "no" to something, and enforcing that, to try to stop whatever that is from happening.

Although I am expressing myself through more abstract general energy system terminology, including a radical critique of the concept of entropy, I am saying similar things which some of the most famous politicians in North America have previously stated:

"Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile …  Once a nation parts with control of its currency and credit, it matters not who makes that nation’s laws … Usury once in control will wreck any nation.” --- Canadian Prime Minister William Lyon Mackenzie King

"The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of the government but it is the government's greatest creative opportunity. By adoption of the these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity." --- American President Lincoln.

Creating the money supply, as a public utility, should be government's supreme prerogative, and greatest creative opportunity, and its most conspicuous and sacred responsibility.

Instead, giving away the power to make money out of nothing to private banks was the most insane domestic policy that a government could ever adopt! However, it is easy to explain the history of how that actually happened. It was simply the history of the application of the methods of organized crime to take control over governments, in a runaway spiral of the success of fraud enabling those who did that to constantly be able to get away with even more frauds. That started more slowly and secretly. However, it was on an exponential growth curve, so that it now is becoming blatantly obvious to even mainstream morons that the banksters have become the new royalty, who are above the law, because they effectively control the political processes.

THE PROBLEM is that after one faces the social facts that the banksters ARE the biggest gangsters, who were able to take control over governments through applying the methods of organized crime, all THEORIES about what monetary reforms should be are still born in that situation. THEORIES of what "money" should be are actually irrelevant when what money IS has already become runaway frauds, backed by force, while those who are able to do that have collectively become a group of trillionaire mass murderers.

The REAL SOLUTIONS depend on facing the facts regarding the REAL PROBLEMS, which are that money is backed by murder, and therefore, the best organized gangs of criminals have taken control over the money system, and one of the primary ways that they were able to do that was through assassination of politicians who refused to be bribed or intimidated to become the puppets of the banksters. Thereby, the governmental powers to rob, and to kill to back up the power to rob, have been effectively privatized, by the real control over the power to rob transferred to the banksters.


Since the sovereign powers of "We the People" have already been 99% PRIVATIZED, and that is now a runaway situation, which is driving the government to become the worst enemy of the People, because the government is actually being controlled by the banksters. Any REAL SOLUTIONS, therefore, can NOT actually be through some sort of sane monetary reforms. Rather, what MIGHT happen is the eventual psychotic breakdown of the current runaway frauds, which MAY provoke some kind of monetary revolution. ??? ???

However, given that overwhelming vast majority of the People do not understand, and do not want to understand, any of the basic social facts about their monetary system, it is almost impossible to imagine how BAD that psychotic breakdown could eventually become, and therefore, just as difficult to speculate about what could be rebuilt after that.

Anyway, Hellone, your reply was a typical example of a political idiot deliberately not understanding anything. Personally, I do NOT define myself by my membership, nor lack of membership, in any tribe. However, I would agree that, practically speaking, we are very unlikely to see any series of political miracles whereby enough of "We the People" sufficiently stop being Zombie Sheeple, in order to go through a superior, real radical revolution, whereby "We the People" take back control over the monetary system, as well as understand how to better operate the murder system to back that up.

My long posts may practically be a "waste of valuable time" because our civilization is already in a situation of runaway debt slavery, which has generated numbers which have become debt insanities. Inside that situation, there may be an eventual collapse into crazy chaos, where the ruling classes are mass murdering people through imposing democidal martial law, and that might spin so out of control that some of those ruling class members may end up being murdered too. However, biologically murdering some selected individuals (be they banksters, or whomever else) is a ridiculous over-simplification of the problems caused by civilization developing systems of globalized electronic frauds, backed by the force of atomic bombs!

The death insanities caused by various kinds of severe social storms blowing through would not change the basic problems, regarding how to operate a better monetary system, backed up by a better military system. My main point is that those must exist, but currently are operated through the maximum possible deceits and frauds. None of our problems would be as overwhelming without the progress in science and technology pumping them up by many orders of magnitude. No genuine solutions would work other than changing political science just as much, or more, as other sciences such as physics and biology have already changed!

What you proposed, Hellone, are the typical, stupid recommendations that the bogus "solutions" are to go backwards, to old-fashioned notions of different tribes attempting to kill each other! You are utterly WRONG to assert that my "LOGIC WOULD DICTATE WE NEED TO MURDER TPTB IN ORDER TO GET THE MONEY SYSTEM IN CONTROL OF OUR HANDS." Such behavior would not represent better death controls! Rather, that would be the same old stupid stories being retold yet again!

My political philosophy is based on a creative synthesis of post-modernizing science with ancient mysticism, which develops ideas about human artificial selection within the context of natural selection. All of the sophisticated notions regarding evolutionary ecologies should be understood and applied to human systems. Natural selection should be the source of our ethical understanding. While it is clearly the case that human beings murdering each other has been crucial to human history, that was always only one, relatively small, although crucial, component of the overall artificial selection, within natural selection systems.

Sun, 08/24/2014 - 18:19 | 5138213 Dre4dwolf
Dre4dwolf's picture

Print all the money till you cant print anymore, then when you can't print anymore, change the money and start over again.

If the rest of the world doesn't like it, go to war with them.


History shows this is the model for success! ^.^


Sun, 08/24/2014 - 18:47 | 5138308 Raoul_Luke
Raoul_Luke's picture

When you design your economic policies to suggest to the entrepreneurial class "you didn't build that" then you might as well rely on "elite" educators to design programs where bureaucrats bury "free" money and then pay people with borrowed money to dig it up, because it is sure as shit you are going to get fewer businesses opening than closing and no real productive jobs created.  Duh!

Mon, 08/25/2014 - 07:15 | 5139694 Not Goldman Sachs
Not Goldman Sachs's picture

I don't drive. Build your own roads to get your goods to market. Subsidize your own airports, runways, bridges, tunnels, snow phucking plows, etc (schools, phucking kids either.).......just saying.

Mon, 08/25/2014 - 07:16 | 5139695 Not Goldman Sachs
Not Goldman Sachs's picture

I don't drive. Build your own roads to get your goods to market. Subsidize your own airports, runways, bridges, tunnels, snow phucking plows, etc (schools, phucking kids either.).......just saying.

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