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Dismantling Krugman's "Debt Doesn't Matter" Mantra

Tyler Durden's picture




 

Submitted by Jeffrey Snider via Alhambra Investment Partners,

Debt As Wealth; The Caution of Unfit Past Experience

With the G-20 recoiling itself back into the same kinds of mistakes made in the 1960’s, leading directly to the Great Inflation, we will have to take into account the other end of that, namely other forms of “stimulus.” With the global economy sinking, and worries about it beginning to resound beyond just inconvenient bears, there is growing official consensus on central banks taking a clearer approach but also that governments need to face up to “austerity.”

Paul Krugman has been leading the critique against what he sees is a disastrous and ignorant deformation against debt. In times like these, which he “predicted” based on too little government spending, Krugman derides fiscal sense as “cold-hearted.”

This misplaced focus said a lot about our political culture, in particular about how disconnected Congress is from the suffering of ordinary Americans. But it also revealed something else: when people in D.C. talk about deficits and debt, by and large they have no idea what they’re talking about — and the people who talk the most understand the least...

 

People who get their economic analysis from the likes of the Heritage Foundation have been waiting ever since President Obama took office for budget deficits to send interest rates soaring. Any day now!

The above quoted passage was taken from a column he wrote back on New Year’s Day 2012. While it has aged three years, given the global slowdown that was about to take place and the ineffectiveness of monetarism alone to dispel it, his words are being taken increasingly as both prescient and prescriptive. However, the logic behind his anti-austerity agenda is more of a sleight of hand than actual argument.

The primary misdirection lies in that second last sentence of the second paragraph quoted above, “budget deficits to send interest rates soaring.” While that could be a concern under some conditions, that is by no means proof that so much “fee money” isn’t a negative factor. The problem with this government-centric view is that it is government-centric not just to begin with but in every part of the formulation. Governments occupy a unique place in society, by design, but that doesn’t necessarily translate into superpowers:

First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

 

Second — and this is the point almost nobody seems to get — an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

Debt isn’t money in the truest sense of the word, but Krugman is right that national debt functions in many ways like currency. But that is taken a step further. This argument isn’t new, in fact it was used many times in the nineteenth century to end fiscal restraint (how well did that work?). Even in the US, in 1865, Jay Cooke wrote a famous pamphlet extolling the virtues of the national debt incurred to fight and complete the Civil War. He made the same argument that Bank of England officials had been making throughout the first half of that century about English colonialism, explicitly that national debt was not debt but actual wealth.

Since taxes are needed to pay off national debt, and taxes represent a government extraction of accumulated wealth, paying off national debt amounts to reducing national wealth – or so it was said. Cooke made the argument as a bond dealer hoping to continue selling government bonds, but the point stuck; so well that Paul Krugman is representing it more than a century and a half later.

But there is still something slightly dishonest about the entire idea, especially in this 21st century expansion. Krugman again:

This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history. [emphasis added]

Here he is making the same argument as above, in that incurring a massive national debt hasn’t been an impediment to prosperity. Thus he makes the further supposition that it won’t be because it hasn’t both in the current era and in the past where government borrowing was equally as intensive. But that is the disingenuous part, as it does not represent the primary problem at all.

Maybe government debt did not pose an existential problem to our post-war prosperity, but it didn’t create it either! That seems to be the proper framing of the apparently eternal question about the current economic malaise. Maybe government spending through deficits won’t send interest rates skyrocketing, or fiscal imbalances that will destroy the “dollar” (a laughable assertion where the “dollar” is concerned), but that isn’t the point. Government debt of whatever size fails to create the wealth by which taxes are extracted to repay it, or not – that function is independent and prior.

Krugman is trying to argue that because government debt did not hinder private wealth creation we should use government debt to create private wealth. The cart is not even before the horse using this “logic”, as the cart and horse aren’t even on the same road.

Private wealth creation comes first, and government attention to “aggregate demand”, spending of the sake of spending, has been woefully inadequate because actual wealth is not based on simple transactions. The transactional nature of the economy is incidental to wealth, not its primary focus. Generic spending doesn’t do anything but waste resources, which is anathema to private wealth creation axiomatically in opposition to such short-termism. Waste is unprofitable; wealth is profit.

Unfortunately, these Keynesian mythologies are coming back again as nobody (besides the Chinese, ironically) seems to remember the “stimulus” non-impact of the ARRA (or the serial “stimulus” programs in Japan). Like the G-20 appeal to currency devaluations all over the world (which is impossible because somebody has to appreciate if others depreciate, and the only one that can do that is the “dollar” which everyone hates when it “rises”; circular logic is the only logic here), there can only be statist solutions to these intractable economic problems, especially because those statist solutions make them intractable. The only real alternative and solution is to destroy the status quo entirely, which markets attempted to do in 2008 but were interrupted and then co-opted once more.

Paper wealth isn’t wealth, and government debt isn’t “free money.” There are consequences to both which their proponents never include in the “prospectus.” Orthodox economics has no sense of a balance sheet, only the idea that activity matters; and that any activity in the short run will lead to prosperity in the long run. So we have had a few decades of “any activity” and yet economists are left wondering why the global economy won’t recover and is at the same time so easily susceptible to the slightest negative pressures. Though they hate free markets, they will come to eventually appreciate their absence just as the current economy appreciates and suffers the absence of actual wealth drowned out by religious devotion to the “aggregate demand” falsity.

 

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Sat, 02/14/2015 - 17:52 | 5785056 James_Cole
James_Cole's picture

Waste is unprofitable; wealth is profit.

Have you been to the US&A??

Paper wealth isn’t wealth

Damn good substitute if it isn’t!

Sat, 02/14/2015 - 18:01 | 5785073 no more banksters
no more banksters's picture

I've been to the ENEE = European Neoliberal Economic Empire

Sat, 02/14/2015 - 18:18 | 5785130 Publicus
Publicus's picture

Debt only matters to the little people. The big boys can print to erase debt.

Sat, 02/14/2015 - 18:30 | 5785163 no more banksters
no more banksters's picture

Then why the US debt continues to grow enormously?

Sat, 02/14/2015 - 18:54 | 5785245 El Vaquero
El Vaquero's picture

Because just writing it off would be like running through the streets with a bullhorn screaming "THE KING HAS NO CLOTHES!"  Then the whole thing would come tumbling down and bankers couldn't skim the profits, EBT would go away and it would be just plain bad. 

Sat, 02/14/2015 - 19:03 | 5785267 knukles
knukles's picture

Either way, matters or not, Krugman's an asshole.

Sat, 02/14/2015 - 23:15 | 5785953 wee-weed up
wee-weed up's picture

FU Fugman!

Sat, 02/14/2015 - 20:26 | 5785534 August
August's picture

Asset purchases, baby.   Asset.  Purchases.

What sensible man could be against a central bank purchasing assets?

Sat, 02/14/2015 - 21:46 | 5785778 ATM
ATM's picture

I could be when they use phantom money to purchase real assets and hand them to the bureaucrats.

That's the sort of shit that gets people building guillotines again.

Sat, 02/14/2015 - 18:20 | 5785135 NidStyles
NidStyles's picture

Why people still listen to Krugman when it's obvious that he's part of the Jewish Mafia is beyond me. It's like everyone is in denial that the Jewish Mafia exists when it's so in your face prevalent.

Sat, 02/14/2015 - 18:32 | 5785171 nailgunnin4you
nailgunnin4you's picture

Exactly what I would expect a racist white cunt to say.

Sat, 02/14/2015 - 18:34 | 5785176 Terminus C
Terminus C's picture

Hello pot, you talkin to the kettle again?

Sat, 02/14/2015 - 18:38 | 5785196 nmewn
nmewn's picture

Well, he did manage to introduce skin color & gender into a subject that was never implied.

So theres that! ;-)

Sat, 02/14/2015 - 23:44 | 5786006 TheReplacement
TheReplacement's picture

He didn't say all mafia.  He didn't say all Jews.  What are you talking about?

Sat, 02/14/2015 - 18:54 | 5785242 realmoney2015
realmoney2015's picture

 “Paper wealth isn’t wealth, and government debt isn’t “free money.”

And paper money isn’t money, and nothing is ever free. Someone somewhere has to pay for it.  It’s just like government handouts. People think that it’s free money. First, it’s really not even money, since its worthless digits on a screen or some numbers on a piece of paper. Second, it’s not free. We either pay for it with our tax dollars, or more likely it goes to our national debt that our children, grandchildren, great grandchildren, great-great grandchildren, etc. will be forced to pay.

If you notice, it’s always the ‘intellectuals’ that buy into this Krugman-like thought. I think that it just an extra few years of programming and schooling to get that brainwashed. It will all come crashing down soon enough. Don’t be stuck with worthless dollars! Buy silver now! These candles with silver coins are good ways to get your friends started with silver (unless they have an advanced degree, they are too smart too listen). https://www.etsy.com/shop/ScentSavers?ref=hdr_shop_menu

Sat, 02/14/2015 - 19:21 | 5785332 James_Cole
James_Cole's picture

First, it’s really not even money, since its worthless digits on a screen or some numbers on a piece of paper. 

Worthless? Hmm, well if you feel that way please send me your 'worthless' bank account (positive) holdings my way! 

If you get enough digits (pos or neg) on your screen you may discover an important truth - interest rates are pretty important in this world, perhaps of key importance.  

it goes to our national debt that our children, grandchildren, great grandchildren, great-great grandchildren, etc. will be forced to pay.

Yeah no, that's not going to happen. By the time your great-grandchildren get into their prime jobs will no longer exist, so there's that. Second, no country ever 'pays its debts,' the relative value of those debts simply changes over time. 

http://upload.wikimedia.org/wikipedia/commons/thumb/8/8b/UK_GDP.png/350p...

These candles with silver coins are good ways to get your friends started with silver (unless they have an advanced degree, they are too smart too listen).

Silver mining is expensive, wonder how they secure such funding? And just curious, when you buy silver do you use silver to buy silver? And since I am ignorant on these things and my advanced degree friends are useless, is silver always set at a fixed value? Thanks for the help!

Sat, 02/14/2015 - 19:34 | 5785367 nmewn
nmewn's picture

Where to begin, well this is good:

"Yeah no, that's not going to happen. By the time your great-grandchildren get into their prime jobs will no longer exist, so there's that."

Pretty sure thats been said for as long as the debt ponzi has been going, yet, it is still very much there and growing. Why is that?

"Second, no country ever 'pays its debts,' the relative value of those debts simply changes over time."

I didn't know "public debt" had "a value" to the indebted but leaving that aside, what you're talking about is currency destruction, inflation.

And again I say...if "government debt doesn't matter" why are we subjected to taxes?

Just print it up, no work, all play...sounds wonderful but who cooks my hamburger and builds my car? ;-)

Sat, 02/14/2015 - 19:58 | 5785449 flacon
flacon's picture

There is definitely something there regarding why pay taxes when central banks can just print the money. That's a very KEY point. I know one American Citizen who hasn't paid any taxes to USA since 2009. Of course that's illegal but that also means it's illegal to earn one's keep. Living is now illegal. But they still have the child tax credit which means they want more slaves. 

Sat, 02/14/2015 - 20:01 | 5785465 lincolnsteffens
lincolnsteffens's picture

"Just print it up, no work, all play...sounds wonderful but who cooks my hamburger and builds my car?"

I'm sure Krugman would just love to see a bigger debt so the gov. can spend it to create wealth!!! More bail outs are good. Free money is good. Debt doesn't matter. Fageddaboudit!

When the whole thing implodes Krapman will be saying "See, I told you they didn't print enough money and bail out business enough to restart the economy. It should have been 5 times as much!"


Sat, 02/14/2015 - 20:10 | 5785495 flacon
flacon's picture

Yeah, it's never enough. 

Sat, 02/14/2015 - 20:03 | 5785473 James_Cole
James_Cole's picture

And again I say...if "government debt doesn't matter" why are we subjected to taxes?

Your comments here can be summed up pretty simply in response - it's called interest. Like how the bank doesn't want you to pay off the principal on your ~20% credit card.

http://treasurydirect.gov/govt/reports/ir/ir_expense.htm

Sat, 02/14/2015 - 20:23 | 5785527 nmewn
nmewn's picture

Why are we paying interest to someone else (who is that by the way?) for things we obviously do not own (because government restricts access to them)...and we did not ask for by the way (the much ballyhooed "public debt" Keynesian sophistic argument).

In other words James, they can just print the interest payment as well in this economic model.

So really at the end of the day, taxes are used for behavior control and modification, aren't they? 

 

Sat, 02/14/2015 - 20:37 | 5785574 James_Cole
James_Cole's picture

Why are we paying interest to someone else (who is that by the way?)

Old people, banks, rich people etc.

In other words James, they can just print the interest payment as well in this economic model.

Pretty sure that is already being done. 

So really at the end of the day, taxes are used for behavior control and modification, aren't they? 

Sure, I'd think it's a power system. All economic systems ultimately are so far as I can tell. If you removed the interest payments entirely the thing would collapse though. 

Sat, 02/14/2015 - 20:45 | 5785601 nmewn
nmewn's picture

In other words James, they can just print the interest payment as well in this economic model.

Pretty sure that is already being done. 

So its a failed economic model then, no sense in arguing for its perpetuation.

https://www.youtube.com/watch?v=3tOq25vBkso

Sat, 02/14/2015 - 21:21 | 5785718 James_Cole
James_Cole's picture

If history is to be a guide human beings will always fuck up if given half a chance, particularly when there's money & power involved (regardless how small).

I think that mel gibson patriot movie has a good line which can be applied to all aspects of life - aim small miss small. In other words work on smaller targets to try and limit the potential fallout from big human stupidity, whether governments, banks, corps, militaries etc. There are ups and downs but over time things tend to improve. Go for overhauling the whole thing real quick fullstop - and again history as a guide - massive stupidty will be unleahsed. 

In terms of the current situation, is what it is. Not the best not the worst. In historical context it's damned near great. 

Sat, 02/14/2015 - 21:34 | 5785748 nmewn
nmewn's picture

The way I see it, we have massive stupidity going on right now and I took that same advice long LONG ago from someone very different from you, now having extricated myself from most of it.

Which is damned near great ;-)

Sat, 02/14/2015 - 23:09 | 5785939 20834A
20834A's picture

Is there any material difference between the 'wealth effect' and 'trickle down'? Asking because I'm endlessly confused...

Sat, 02/14/2015 - 23:20 | 5785966 nmewn
nmewn's picture

If you have to ask you're already a slave/servant to the proposition that someone or "something" else can make you prosperous or happy, besides your own intellect, skill & action ;-)

Sun, 02/15/2015 - 00:17 | 5786069 Creepy A. Cracker
Creepy A. Cracker's picture

"if 'government debt doesn't matter' why are we subjected to taxes?"

Amen.  Of course that's exactly what printing money is - a stealth tax.  And a very heavy one at that.

Sat, 02/14/2015 - 19:43 | 5785417 realmoney2015
realmoney2015's picture

Yes, the dollar is worthless! It is backed by nothing. The Fed can create the biggest number known to man in a nano-second. The only thing that gives the dollar it's percieved value is the confidence. Once that goes, it' a very, very fast decline. I still use the dollar, becuase I am paid in it. I take what I have left and protect myself from its inevitable collapse. Plus it has lost 95% of its value over the years, so its pretty much garunteed that it will continue to lose it value. I do realize interest rates are important. I will not argue that. For exampe, if mortgage rates ever rise, the housing bubble will burst.

There will always be jobs. Even if they only exist in black (I mean free) markets. If a country never pays its debts, why not just go into googolplex debt? The future generations will pay through the hidden tax, the devauling of their currency. My grandpa was not college educated. He raised 3 kids and put them college and was able to retire. And his wife never worked. This is not possible today, obviously. I's because our dollar isn't worth a dang thing.

You're right silver mining is expensive. About $20-$22 per ounce to get it mined. It's obvious that silver is being manipulated downward. I would gladly accept one silver eagle for a candle. Of course silver is not set at a fixed value. But it buys pretty much the same things throughout history. For example, a gallon of gas in 1964 was about two dimes. Well it still cost about two dimes, just not the zinc ones they mint now.

 

 

Sat, 02/14/2015 - 20:30 | 5785546 James_Cole
James_Cole's picture

I still use the dollar, becuase I am paid in it. I take what I have left and protect myself from its inevitable collapse. Plus it has lost 95% of its value over the years, so its pretty much garunteed that it will continue to lose it value. 

So you take one asset and trade it in for a different asset which you believe will be a better bet over time, both assets obviously having value.

All value is realative, your personal value is a probably 99% a function of time and aptitude. Starts negative as a kid, becomes positive as an adult, reaches a peak and then goes back to negative.

US dollar will change over time, other currencies will, gold will, silver will etc. The point is looking objectively at why something should be valued a certain way at certain time over a short period rather than using a crystal ball style long time scale & hedging based on a particular belief of predictable outcomes in system collapse.

If the system were to 'collapse' relative value would probably based on how it collapsed rather than that it collapsed. 

About $20-$22 per ounce to get it mined. It's obvious that silver is being manipulated downward. 

You've got to remember that silver production is largely by-product driven (70+%), your cash costs are primary miners (aka grossly exaggerated).

https://www.silverinstitute.org/site/wp-content/uploads/2011/06/WSS2014S...

And yes, jobs will go away - people have been working for a long time to make this happen and we're nearly there. 

Sat, 02/14/2015 - 21:11 | 5785682 realmoney2015
realmoney2015's picture

I guess you caqn consider dollars as assets. But do you really want an asset that is 100% garunteed to depreciate over time. At least with other assets that depreciate, like equipment or automobiles you get use out of while they are losing value. Not so with the dollar.

The dollar may go up some days, but over time it has and will lose its value. Just look at the average salary in 1912 (one year before the Fed and IRS) was about $750. How did people survive on $750 a year 100 years? I can't live one month on $750! It is absoluetely obvious the dollar has devalued that much over the years. Why hold something if you are certain it will lose its value??

You don't need a collapse for silver to make sense. I'm just saying that after the dollar collapses, no one will accept it as payment anymore. But again, even if you believe the dollar isn't like every other fiat currency in the history of the world, and will be used as money for centuries to come, it still makes sense to not store your wealth in dollars because they lose value!

Silver has been used as money for thousands of years. There are reasons why it makes a great money. The current dollar (Federal Reserve Notes unbacked by gold) have been around since 1971. It should have crashed out in 2008, but the bailouts kicked the can down the road a bit further. Eventually they will run out of road!

Shoot, the Fed even aims for 2% CPI. That means you lose 2% on every dollar if they hit their target!

There will be jobs. People need to eat, they need homes, they need water. Someone has to produce and ship those items. If you are certain that there will be no jobs, surely you are preparing to survive withot a job. I recommend you get some silver.

Sat, 02/14/2015 - 21:33 | 5785744 James_Cole
James_Cole's picture

How did people survive on $750 a year 100 years? I can't live one month on $750! It is absoluetely obvious the dollar has devalued that much over the years. Why hold something if you are certain it will lose its value??

Yeah but what was rent back then? A bag of groceries? They've all changed fairly consistently wrt the dollar, even with massive global population changes and the competing demand that has entailed.

If you don't trust the dollar to maintin its value vs. something else, sure invest those dollars in that something else. It's not a controversial argument.  

I'm just saying that after the dollar collapses, no one will accept it as payment anymore. 

Currencies are always replaced by other currencies. Silver is not a global currency in that sense and is unlikely to become one. 

The current dollar (Federal Reserve Notes unbacked by gold) have been around since 1971. It should have crashed out in 2008, but the bailouts kicked the can down the road a bit further.

Yeah but that argument is counterintuitive to your argument. By your own statement, by making more dollars the fed maintained the value of the currency (actually increased it). 

People need to eat, they need homes, they need water. Someone has to produce and ship those items. 

The first part is right. It's going to be interesting to see this period of adjusment as the job market contracts precipitously and permanently. 

Sat, 02/14/2015 - 22:09 | 5785811 realmoney2015
realmoney2015's picture

OK, you are right. The dollar will be used as money forever. Our dollar buys the same amount of goods as it always has. It will buy the same amount of goods in the future. There will be 0 jobs. We will all just kind of exist, with all of our needs magically met without anyone lifting a finger or producing anyting. 

This is exactly the point I was trying to make in my first post. I don't like wasting time trying to convinve people who don't listen. For the people that listen to what I am trying to tell them, I like to go a step further and give them a candle to help the value of silver to sink in. 

I mean this seriously, I wish you well and hope that you are able to survive and maintain some wealth when everyone loses faith in the dollar. 

Sat, 02/14/2015 - 23:09 | 5785940 wendigo
wendigo's picture

The average income in the US has gained 71% in real terms over the past century. That's all. You'd expect that after 100 years of the most rapid technological development in history real incomes would have gone up more. Alas. 

Sat, 02/14/2015 - 23:23 | 5785972 James_Cole
James_Cole's picture

I don't like wasting time trying to convinve people who don't listen.

I responded point by point to your arguments. Simply, your argument for USD collapse is weak and your argument for silver triumph has been non-existent. 

There are good arguments for USD vulnerability, you just didn't present any - infact you contradicted your primary thesis by pointing out that the USD has risen steadily since the fed went on a money printing binge. 

Sat, 02/14/2015 - 23:47 | 5786013 realmoney2015
realmoney2015's picture

I guess you misunderstood my thesis. I am not calling for a silver triumph. I'm just stating the fact that silver has been used as miney for thousdands of years and stating my opinion that it will be used after the dollar is extinct. 

It would almost be laughable, if it weren't tragic that some people may actaully buy what you are saying. The dollar has not risen steadily! It has lost over 95% of its purchasing. That is another fact. Not an argument. Another opinion of mine is that it will continue to be devalued. They haven't stopped printing. If there are 100,000 dollars in the world, then the fed prints 1,000,000 more, each of those dollars is now worth less than they were before the new 'money' was created. They will continue to print to keep those bubbles inflated!

I'm sorry I wasted more of my time...

Sun, 02/15/2015 - 01:32 | 5786170 James_Cole
James_Cole's picture

I'm just stating the fact that silver has been used as miney for thousdands of years and stating my opinion that it will be used after the dollar is extinct. 

Silver has been used off and on, as has gold, shells, copper, leather etc.The longest running currency is probably livestock. Does this mean there's a serious argument to be made that people will go back to trading shells as currency? 

The dollar has not risen steadily! It has lost over 95% of its purchasing. 

I mean recently, many (esp on zh) predicted it's demise. King dollar remains. The claim that it has lost 95% of its purchsing power is also highly problematic. 

They will continue to print to keep those bubbles inflated!

Gold is not a magic cure all, neither is silver. 

http://en.wikipedia.org/wiki/Cross_of_Gold_speech

In 1890, the Sherman Silver Purchase Act greatly increased government purchases of silver. The government pledged to stand behind the silver dollars and treasury notes issued under the act by redeeming them in gold. Pursuant to this promise, government gold reserves dwindled over the following three years.[12] Although the economic Panic of 1893 had a number of causes, President Grover Cleveland believed the inflation caused by Sherman's act to be a major factor, and called a special session of Congress to repeal it. Congress did so, but the debates showed bitter divides in both major parties between silver and gold factions. Cleveland tried to replenish the Treasury through issuance of bonds which could only be purchased with gold, with little effect but to increase the public debt, as the gold continued to be withdrawn in redemption for paper and silver currency. Many in the public saw the bonds as benefiting bankers, not the nation. The bankers' feeling was that they did not want loans repaid in an inflated currency—the gold standard was deflationary, and as creditors, they preferred to be paid in such a currency, whereas debtors preferred to repay in inflated currency.[13]

 

The effects of the recession which began in 1893, and which continued through 1896, ruined many Americans. Contemporary estimates were an unemployment rate as high as 25%. The task of relieving the jobless fell to churches and other charities, as well as to labor unions.[14] Farmers went bankrupt; their farms were sold to pay their debts. Some of the impoverished died of disease or starvation; others killed themselves.

http://en.wikipedia.org/wiki/Panic_of_1893

http://en.wikipedia.org/wiki/Gold_Standard_Act

 

The best argument for buying silver is resurgence of industrial application, but so far that has been muted. 

You haven't been here long, but there were plenty of people using your EXACT SAME 'ARGUMENT' while saying that silver @ 34$ was the deal of a lifetime and claiming they were 'loading up the truck.' Some even talked about how they were buying on credit & laughing about how stupid JPM was. Well, who's laughing now?

Rates of change, particularly in interest are what get people. 

Sun, 02/15/2015 - 08:33 | 5786467 nmewn
nmewn's picture

"The point is looking objectively at why something should be valued a certain way at certain time over a short period rather than using a crystal ball style long time scale & hedging based on a particular belief of predictable outcomes in system collapse."

Only if considering the value of fiat money as a medium of exchange in the short term, not when one is saving it for the long term.

Value is easily shown by reversing what you seem to be focusing on, putting a $ symbol on value which is the wrong way to look at it. The current $ symbol for a gallon of gas is two dollars & change. A twenty five cent piece (a quarter) used to be 90% silver and is still money today and has a known melt value of three $ symbols and change, all purely fiat terms vs value, yes?

So the question of the day is, has the value of gas gone up or down relative to the value of silver or dollar symbols? It appears to me dollar symbols are worth less now than silver, when valued on the equal footing of today, silver is valued more.

That is to say, gas is really less than twenty five cents a gallon in terms of silver value. In terms of dollar symbol value gas has indeed skyrocketed. This is a function of currency destruction and is actively engaged in by those who print and promote dollar symbols (or any debt-credit based fiat symbols) as "the unit of measure" for all trade & the payment of ones labor. It (dollar, euro, yuan, yen etc. symbols) are steadily declining units of measure based on systemic faith & trust, not anything of real value.

I've just shown you the fiat symbols declared in order to value something are nothing but lies & scams, you're welcome ;-)

Sun, 02/15/2015 - 09:12 | 5786512 FredFlintstone
FredFlintstone's picture

Great insight: "All value is relative, your personal value is a probably 99% a function of time and aptitude. Starts negative as a kid, becomes positive as an adult, reaches a peak and then goes back to negative."

The problem we have now is that we have more and more people who's "value" never becomes positive throughout their entire life. And with "improvements" in the health sciences it is almost guaranteed that most people's lives will have a negative present worth by the time they kick the bucket.

Sun, 02/15/2015 - 12:51 | 5786933 striped-pad
striped-pad's picture

"First, it’s really not even money, since its worthless digits on a screen or some numbers on a piece of paper.

Worthless? Hmm, well if you feel that way please send me your 'worthless' bank account (positive) holdings my way! "

Debt-based money's value comes from the fact that the borrower has to sell something of the same value that they wouldn't otherwise have sold - in order to repay the loan. In the case of the government, the money's value comes from the fact that someone else has to sell something of the same value that they wouldn't otherwise have sold - in order to pay tax to the government which it needs to repay the loan.

"[...]no country ever 'pays its debts,' the relative value of those debts simply changes over time."

While a country generally doesn't repay its debts in full, its government needs to be able to convince either its existing creditors or new ones that it could do so if necessary.

Once a government drops the idea of debt-based money in favour of fiat money (i.e. money that the government claims is valuable purely because it says so), it's very similar to a company trading when it has a negative net worth (more liabilities than assets). One way or another, someone will end up providing goods or services in exchange for a promise to repay which cannot be honoured.

Sun, 02/15/2015 - 00:49 | 5786116 roadlust
roadlust's picture

If "paper money is worthless," can I have yours? 

You can Paypal.

Thanks!

Sat, 02/14/2015 - 18:29 | 5785160 slaughterer
slaughterer's picture

Ever notice how Krugman look like a flatulant, lazy, pedantic Satan?

Sat, 02/14/2015 - 18:56 | 5785251 El Vaquero
El Vaquero's picture

I always thought he looked like a dumpy, unshaved twat.

Sat, 02/14/2015 - 19:15 | 5785316 Yen Cross
Yen Cross's picture

Understatement.  Krugman looks like the lost 4th head on Cerberus...

Sat, 02/14/2015 - 18:33 | 5785173 Terminus C
Terminus C's picture

Kruggers tried to defend his shit on the Hedge a while back (year and a half ago(ish)) and got cock slapped across the face so many times he fucked off for good.  He can only spout his bullshit logic to his own choir (MSM) because his theories don't hold up to logic.

Fuck you Krugman, we know that you are an "intellectual" front man for those raping the peoples of the world.  May you rot in hell for enternity.

Sun, 02/15/2015 - 01:45 | 5786186 doctorZH
doctorZH's picture

The problem with Austerity is that it only works (and it is ALWAYS painful) if it comes with default on debt.  The idea that austerity cures is silly.  Default cures; and austerity comes with default.  I support the Greeks default and coming (even more) austerity  because it is the only way to dethrone the banks from running and ruining the world.

 

The bank regime and the bank regimen is a plan based on unending consumption.  This is a low heaven.  We are trapped in a world created by those with no imagination except what money can buy.  They need to be overthrown.  Default will overthrow them.  Banks need to be the next public utility.

 

The strong dollar will help bring about the overthrown of government by the banks....through global deflation.

Sun, 02/15/2015 - 09:00 | 5786494 Accounting101
Accounting101's picture

You are not making the argument for contractionary expansion, are you?

Sun, 02/15/2015 - 05:22 | 5786362 supercelld
supercelld's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com

Sat, 02/14/2015 - 17:38 | 5785019 dobermangang
dobermangang's picture

"Most of the smartest people I know have college degrees. All of the stupidest people I know have college degrees." - Iowahawk

https://twitter.com/iowahawkblog

His tweet made me think of Obama, Biden, Krugman and many other "credentialed elites".

Sat, 02/14/2015 - 17:50 | 5785050 HyperinflatmyNutts
HyperinflatmyNutts's picture


 Good old KrugFace..  

"Sonny: No-no-no. Coffeecake, no good. I don't want that face lookin' at his face when he's rollin' my dice. Jimmy! Grab a towel from the bar!"
A Bronx Tale 


 

 

If growth is defined in monetary terms and money is debt (interest bearing), please explain how exponential growth of debt is sustainable into eternity.

If money (debt) exponential growth is not sustainable into eternity, then WHAT HAPPENS WHEN THE EXPONENTIAL MONEY (DEBT) GROWTH FAILS?

TIA...

Sat, 02/14/2015 - 18:36 | 5785185 Usurious
Usurious's picture

 

 

collapse

Sun, 02/15/2015 - 01:46 | 5786188 doctorZH
doctorZH's picture

Default; collapse; austerity.  Everntual rebirth.

Sat, 02/14/2015 - 18:59 | 5785257 El Vaquero
El Vaquero's picture

I've known some really smart people who just didn't give a shit about school beyond being able to read and knowing how to balance a checkbook.  I've also known some really smart people with college degrees that are really dumb once you get them outside their field of expertise.  I think it matters why a person goes to college.  Are you going because "that's what you're supposed to do" and to get a high paying job, or are you actually going to learn, say, physics? 

Sat, 02/14/2015 - 19:22 | 5785335 hendrik1730
hendrik1730's picture

Good point. I went for the latter : chemistry. And got a job afterwards that enabled me to pay back all costs I generated doing the studies hundredfold - for society, not for myself, I was taxed to death.

Sun, 02/15/2015 - 01:57 | 5786194 doctorZH
doctorZH's picture

Higher education is for higher education in all disciplines.  The key word is higher.

The world expands for 18 years; then it stops expanding.  We have to learn to deal with this law.  Almost all of our problems stem from the fact that we want to pretend that only the expanding is real.  But the rest, the collapse, is also real, a recurring event for which we must plan and prepare.  We seem to think that wishing the expansion could go on forever will make it go on for ever.  This is clearly not the case.  This is denial, one of the five stages of death.

18 years of life, expansion, growth, inflation.

18 years of death, contraction, rest, deflation.

I think we're afaaid that if we admit this to ourselves we are somehow giving up our 'fereedom' to correct the law, to make perpetual growth suddenly a possibility.  We have to understand how death fits in to the picture, the plan.  It is like waking and sleeping.  Is the sleeping stage useless?  Well, we don't make any money when we sleep.  Maybe that's why some people consider it useless.  But sleep does several things for us, regenerating our energy level, alowing us to escape the mundane world and dream and revitalize out imagery; it allows us to rest our bodies -- and, in the more macro view, it also allows the earth tor est her body, when we talk about 18 years of non-productive economy and exploitation of resources.  During the night, in dreams, we visualize the next stage of evolution that we will build when we awaken and reincarnate during the next stage of 'building' the dream.  The dream is first; the building of the dream is secondary, or an effect of the dreaming.  We want to throw out the primary, the generative, part of the process.

 

...building 1911-1929

dreaming 1929-1947

building 1947-1965

dreaming 1965-1983

building 1983-2001

dreaming 2001-2019

building 2019-2037....

Sat, 02/14/2015 - 20:16 | 5785508 A Nanny Moose
A Nanny Moose's picture

+1 for Iowahawk

Sat, 02/14/2015 - 17:38 | 5785021 CunnyFunt
CunnyFunt's picture

The author is far too kind to Krugman.

Sat, 02/14/2015 - 17:38 | 5785022 meatworm
meatworm's picture

Now as “government management” means interfering with the decisions of individuals, the result will be impoverishment, because people always try to maximize their own benefit by their decisions, and if they are not free to take their own decisions, they are fighting a losing battle to achieve their own benefit and progress: they have to take second-best or third-best or fourth-best decisions, all to their detriment.
So this condition leads to less prosperity. As prosperity fades, governments claim they need more power, stricter management, more management to make things go better. And that process of more and more “management” finally ends up in: Socialism. Quite logical.

Sat, 02/14/2015 - 17:38 | 5785023 Fun Facts
Fun Facts's picture

If the debt doesn't matter, tell Krudman to get his rump ranger pals at the FED to cut us all a check for a million dollars....no make it a bizillion.

Then we can all live happily ever after.

Sat, 02/14/2015 - 17:38 | 5785024 prefan4200
prefan4200's picture

Am I as stupid as Krugman because I click and read articles about Krugman, knowing full well the idiocy I will find there?

... Yes, I probably am..... and I need to stop it.

Sat, 02/14/2015 - 17:42 | 5785029 Winston Churchill
Winston Churchill's picture

Take that first step.

Sat, 02/14/2015 - 17:42 | 5785027 Yen Cross
Yen Cross's picture

 I'm beginning to think Kuroda invited Krugman to Japan so he could steal a copy of his "8G" USB flash drive on "Broken Window Theory".

 It's obvious the Japanese .Gov is putting the breaks on JPY devaluation. The usd/jpy is completely divergent with UST and equity markets.

 It's been that way for almost (3) weeks. The usd/jpy trade is either going to continue to diverge from risk next week, or it's going to break down into the 115 level. Even after the Ponzi JOBS spike it's retaced over 50% of the move.

 The $usd has continued to weaken. ;-)

Sat, 02/14/2015 - 23:59 | 5786032 Augustus
Augustus's picture

Yen Cross,

My theory is that the Japanese govt has been selling the US bonds / buying Yen to fund the purchase of the BOJ bond sales.  That is their alternative to printing more.  It also somewhat explains US bond yields rising over the last few weeks as all others seem to be going lower.

Sat, 02/14/2015 - 17:59 | 5785032 perelmanfan
perelmanfan's picture

My brother Julius has a Harvard degree in Economics. He's never held a job, and holds me in contempt because I'm a dullard who works on a farm.

But he's my brother, so when he asked me to lend him my life savings of 100K last year, I complied.

Me: So, Julius, when are you going to pay me back?

Julius: Pay what back?

Me: The money you owe me!

Julius: You mean the asset that was transferred within the family? I see no reason to ever pay it back! It's not a problem, because we, the family, owe it to ourselves.

Me: But I can't pay my mortgage, and you are living it up spending my money on hookers and blow.

Julius. There you go again. I am always surprised at how few people understand debt. Again, we owe it to ourselves, so it doesn't matter. What's so complicated about that? You should have gone to Harvard. The only problem with the transfer was that it was too small to solve all of the family's problems, such as my need for a Maserati. Are you sure you don't have any more money that we can lend to ourselves?

 

 

Sun, 02/15/2015 - 10:26 | 5786611 CaptOveur
CaptOveur's picture

I might just print this out and frame it.

Sun, 02/15/2015 - 17:51 | 5787934 doctorZH
doctorZH's picture

Yes, we owe debt to ourselves.  No problem.  More like we owe it to them.  Yes, one big happy family, right?  Well, no.  Not so happy any more.

Sat, 02/14/2015 - 17:45 | 5785034 VWAndy
VWAndy's picture

Hey Paul STFU. Any time you want to talk economics come on over. Punk. A real honest debate. Oh and bring that Phd with ya so I can wipe my --- with it.

Sat, 02/14/2015 - 18:37 | 5785192 Terminus C
Terminus C's picture

Welcome to the Hedge, you can say ass.

Really, say it with me... "ass"

 

Sat, 02/14/2015 - 17:47 | 5785039 Bumbu Sauce
Bumbu Sauce's picture

Who has the greater stature, Krugman or Reicccccchhh?

Sat, 02/14/2015 - 17:58 | 5785066 CunnyFunt
CunnyFunt's picture

<snigger>

Sat, 02/14/2015 - 17:48 | 5785045 DOGGONE
Sat, 02/14/2015 - 17:50 | 5785049 q99x2
q99x2's picture

Debt is financial terrorism and FRAUD. It only works against your enemies if they do not use it too. Arrest Krugman for being a financial terrorist. Long live the revolution as long as it doesn't interfere with my FAFSA

Sat, 02/14/2015 - 17:51 | 5785054 nmewn
nmewn's picture

If government debt is so damned unique in the annals of Debtdom with zero deleterious effects on society they should immediately halt all federal taxation and just print what they need, just charge it. The resulting "Keynesian growth boom" would rocket the ObamaFone lady into the ranks of the rich, right Paulie?

So the question then becomes, why do "progressives" hate the ObamaFone lady? ;-)

Sat, 02/14/2015 - 18:08 | 5785077 Yen Cross
Yen Cross's picture

 Great comment nmewn.  In the anals of history, when has a CB ever divulged the location of it's "material wealth"?

  It's always hidden from view "for the few".

 Perception & Deception, when you run the printing company. I hope Rand Paul is successful in auditing the " Federal Reserve".

 I certainly have a few friends that would like to compare "fact" WITH "fiction".

Sat, 02/14/2015 - 18:23 | 5785143 nmewn
nmewn's picture

I've never understood their logic, ethics or morality. It can only be that they desire subservience and love offering up platitudes and "assistance" as they loot the national treasury daily, its the only thing that makes any sense. 

But its the law!

Give me a fucking break...lol.

Sat, 02/14/2015 - 18:32 | 5785170 Yen Cross
Yen Cross's picture

   There's no logic, ethics, or morality involved nmewn. These people are living like pathological kindergartners.

 They're just swinging from one noose to the next on the " Jungle Jim". They'll eat eachother at will.

  Why is it that society has become more violent with additional law enforcement?

 It's time for some asset reallocation<>

Sat, 02/14/2015 - 19:07 | 5785285 nmewn
nmewn's picture

I was just reading about this guy Jefferson "Soapy" Smith from the 1800's.

A scoundrel of the highest order (to be sure) but he had it figured out along with Capn Bellamy years before him, governments are nothing more than large criminal gangs when you get right down to it.

Sat, 02/14/2015 - 19:19 | 5785322 Yen Cross
Yen Cross's picture

 It's all about "lunch money" nmewn. ;-)

Sat, 02/14/2015 - 18:53 | 5785239 Accounting101
Accounting101's picture

You all should all be very skeptical of anyone claiming with certainty that the chicken came before the egg.

Oh, and the failed Obamaphone joke may draw laughs from the useful idiots, but it is really some low IQ stuff.

Sat, 02/14/2015 - 18:57 | 5785255 Bumbu Sauce
Bumbu Sauce's picture

He gonna do more!  Keep Obama in preznit!

That bug you Jenteal?  That old skoo?

Sat, 02/14/2015 - 19:03 | 5785264 nmewn
nmewn's picture

And yet oddly enough your IQ is high enough to have gotten the real punchline, ZH is paying you dividends...lol.

So, on this chicken & egg theory of yours, which came first so called "public debt" or private wealth? ;-) 

Sat, 02/14/2015 - 20:23 | 5785524 Accounting101
Accounting101's picture

Perhaps more accurately, private assets or public debt? I wouldn't venture an answer.

Sat, 02/14/2015 - 20:37 | 5785571 nmewn
nmewn's picture

Private assets have always come first, government produces nothing. Zero. As an accountant you know that.

It could just be a criminal enterprise though, shrouded in "loving goodness" telling you you're obliged to pay toward a "public debt" that will never be paid off in your lifetime or anyones lifetime, couldn't it?

Like some moribund milk cow which once it stops producing milk, is ground up into hamburger meat.

Or indefinite servitude, whichever you prefer ;-)

Sun, 02/15/2015 - 08:46 | 5786475 Accounting101
Accounting101's picture

Then you are an absolutist and are certain the chicken came first. It's all circular bullshit and a colossal waste of time. Not to mention ignorant of basic accounting principles. Somehow that private asset materialized out of thin air. A cosmic miracle"

And if that public debt, or is that socialized private debt I never can tell, isn't paid off in my lifetime I don't care. I will not lose one second of sleep over it, and neither should you.

Sat, 02/14/2015 - 18:09 | 5785090 Clowns on Acid
Clowns on Acid's picture

When is somone going to punch Krugman in the face?

Sat, 02/14/2015 - 20:00 | 5785462 Captain Willard
Captain Willard's picture

It should be stimulative after all.

Cosmetic dentistry, plastic surgery, etc.

Sat, 02/14/2015 - 18:15 | 5785113 kchrisc
kchrisc's picture

"Dismantling Krugman's "Debt Doesn't Matter" Mantra"

Why?

The banksters need to repay us.

 

More value in "dismantling" a pile of shit, than his lies and apologies for Zion.

Sat, 02/14/2015 - 19:38 | 5785389 unicorn
unicorn's picture

ah, i was looking for you, i have a song for you;)

treme brass band - give me my money back:

https://www.youtube.com/watch?v=2KyvXtpY45I

Sat, 02/14/2015 - 22:32 | 5785865 kchrisc
kchrisc's picture

I don't know if you were being sarcastic or not, but that was some kick ass music.

I have some of their other songs queued up.

Thanks.

The banksters need to repay us.

Sun, 02/15/2015 - 17:48 | 5787927 doctorZH
doctorZH's picture

Zion?  I'm not sure that all the banksters are Jewish.  I think not.  Some are.  Hank Paulson was not.  He's VERY Christian.  I agree they have to repay us.  I think we need to have all the corporations repay us for all the largesse of the central banks to the corporations.

Next time, never again, no ZIRP, no bailouts, no stock buy-backs....that is all theft from the taxpayer, given to the rich of the world.  The FED gave trillions to foreign banks and bankers.  When the dust clears, throw them all in jail for this.  Rico laws; and repayment need to be the basis of 'resettlement'.

Sat, 02/14/2015 - 18:18 | 5785128 The Count
The Count's picture

Krugman you turd, you like debt?

Well, you are now responsible for all the stuff I am going to buy. You pay that all back.

Sat, 02/14/2015 - 18:20 | 5785136 yogibear
yogibear's picture

Each time the debt to fund expansion has to be larger to pull them out of a mess.

Sat, 02/14/2015 - 18:24 | 5785148 jc125d
jc125d's picture

If my farts spoke english they'd win a debate with that self-appointed smart fellow.

Sat, 02/14/2015 - 18:31 | 5785168 Augustus
Augustus's picture

That Greek finance minister ViralFukus must hae been a Krugman student.  The idea that governments never have consequences from debt really took hold with him.  Krugmeister should be doing the explaining to the EZ creditors to get those problems resolved.

Sat, 02/14/2015 - 18:51 | 5785237 nailgunnin4you
nailgunnin4you's picture

Halfway through writing a quick rebuttal alluding to the consequences of the creditors lending money to a broke sovereign I then realise who wrote this. Oh, just this faggot again.

Sun, 02/15/2015 - 00:38 | 5786105 Augustus
Augustus's picture

Faggot?  Faggot?

Tkhat is the stick Puutie uses on you if you don't perform your licking duties as your were trained by the bath house boys.

The broke sovereign of Greece represented the broke population of the country.  It was Greek fraud that induced the lending.  According to Krugman it should not matter what the circumstances were when the loans were obtained.  Certainly there will be more credit available to fund repayment as well as additional ouzu.

If Puutie does stop beating you for poor performance, maybe you can use the free ouzu on the bleeding parts. 

Sat, 02/14/2015 - 20:17 | 5785509 Accounting101
Accounting101's picture

Varoufakis knows that the Greek Bailout didn't bailout the Greek citizenry. It instead made large banks whole, particularly German, and heaped the cost on the Greek public. Maybe Yanis doesn't give a fuck if that socialized private debt ever gets paid back. Maybe that is the debt that doesn't matter.

I wonder how much of the $18 trillion U.S. is socialized private debt.

Sun, 02/15/2015 - 00:30 | 5786093 Augustus
Augustus's picture

The Greek public has born no cost. yet.  They never paid or repaid anything.  They just gladly spent money borrowed from EU funding from others.  Now that they finally are faced with paying some costs, they are threatening to default so that will never pay anything.  Of course ViralFukus dose not care about how the citizens of other EU countries get screwed.  He is a socialist of perfect form.

Sun, 02/15/2015 - 08:48 | 5786483 Accounting101
Accounting101's picture

You haven't been paying attention and because of it, you are ignorant.

Sat, 02/14/2015 - 18:48 | 5785230 jmaloy5365
jmaloy5365's picture

Debt doesn't matter if there is no intention to pay it back, 

Sat, 02/14/2015 - 18:51 | 5785238 rejected
rejected's picture

True,,, even better,, if the Fed burned a notional trillion worth of bonds and wrote it off their books, who would suffer?

Sat, 02/14/2015 - 19:15 | 5785314 VWAndy
VWAndy's picture

Humpty dumpty sat on a wall.

Sat, 02/14/2015 - 19:58 | 5785364 Hannibal
Hannibal's picture

Money ain't nothing....but perhaps a mere believe system.

Don't much care for Krugman,,....but "money created out of thin air"  (i.e. a computer entry) by Govt's Central Banksters is/was never intended to be "paid back",  since it's fantasized invention (money) never exisited in the first place,... pay it back to who?

Hence the dirty little secret: Govt debt do not matter!

Govt's and the mafia banksters want to keep it secret so that, you, I and everyone else continues to make payments to the,....banksters.

As for the peasantry: it's hight time for "debt" jubilee, if not happening, well then don't forget that "ownership is 99% of the law."

Recommended reading on this topic.

"The Construction of Social Reality" by John R Searle

 

Sat, 02/14/2015 - 19:40 | 5785403 Goldilocks
Goldilocks's picture

Funny Goats Screaming like Humans
http://www.youtube.com/watch?v=nlYlNF30bVg (1:44)

Sat, 02/14/2015 - 20:14 | 5785503 bobdog54
bobdog54's picture

C'mon folks, actually wasting any time with Krugman and his totally utopian crap is just what the problem is.... Ignore him and let him rot in his academic wormhole. Nothing more than an oxygen thief....

Sat, 02/14/2015 - 20:26 | 5785533 coast
coast's picture

who is paul krugman?

Sat, 02/14/2015 - 20:56 | 5785643 SnatchnGrab
SnatchnGrab's picture

When the whole thing collapses and there is nationwide brownouts and violence and the EBT cards are reading $0.00.....when "leaders" are being drug out of their home and shot in the street or hung from a lampost.....

I already told my crew - I got 'dibs' on Krugman.

Sat, 02/14/2015 - 21:06 | 5785661 cynicalskeptic
cynicalskeptic's picture

But we are NOT paying the interest on all that debt to 'ourselves' - it enriches a VERY few.  

All that debt pays INTEREST which has to come from SOMEWHERE - either directly out of the economy in the form of taxes or indirectly through more debt issuance in the form of INFLATION (the decreased purchasing power of the money held by citizens).

Hell... if you're going to create money out of thin air, JUST CREATE IT.  Why are we issuing government interest paying DEBT to cover the 'cost' of all the new money that the Fed creates.   This approach is just as inflationary (look at Lincoln's Greenbacks) but at least you save the interest expense which ius growign and growing - sucking capital out of the economy.  

And if you use all that newly created money to ctually do VALUE CREATION things like fixing roads and bridges instead of propping up banks or pissing it away on pointless wars that cost more than they return back to the Empire, you're actually accomplishing SOMETHING positive - even if you ARE causing inflation.   One analysis says oil from Iraq has cost the US well over $1000 a barrel - it was a lot cheaper to just BUY it from Hussein.

 

I am so sick of the MOPE lies trying to convince me 'All is well.. don't worry....'      

Having reached the final years of my expected life I figure I've got enough to ride out the time I've got left - or I can always cut it a little short.  But if you're just starting out - you're screwed.  Big time.   

Sat, 02/14/2015 - 21:42 | 5785770 golden raccoon
golden raccoon's picture

It would not surprise me in the least to discover that Krugman's wealth is concentrated in gold and other tangible assets.  Sociopathy and hypocrisy go hand in hand. 

Sat, 02/14/2015 - 21:43 | 5785771 golden raccoon
golden raccoon's picture

-

Sat, 02/14/2015 - 22:24 | 5785847 dexter_morgan
dexter_morgan's picture

U.S. debt is, to a large extent, money we owe to ourselves.

Really? I'm still waiting on my interest check, anyone else?

Sat, 02/14/2015 - 23:49 | 5785994 Yen Cross
Yen Cross's picture

 Dr. Paul Krugman

   " Misguided" and lost/

 BoJ signatory/ Abe used Krugman to define risk for the BoJ.

Sun, 02/15/2015 - 01:15 | 5786149 Spungo
Spungo's picture

It's ok to welch on the debt because we owe it to ourselves in the form of social security and medicare. We all know how politically easy it will be to default on social security because we owe it to ourselves, right? Old people never vote.

Sun, 02/15/2015 - 08:36 | 5786472 brushhog
brushhog's picture

Clearly our government and central banks are on board with Krugman's economic model. Rather than fight it, all you can do is do your best to profit from it. Make believe, paper wealth will jack the value of your stocks, bonds, and real estate long enough for the smart people to get out and convert their wealth to hard assets.

Sun, 02/15/2015 - 09:33 | 5786535 Lazane
Lazane's picture

Krugs you are dumb and the rest of us who allow you are dumber

Sun, 02/15/2015 - 09:49 | 5786564 Apolitical Blues
Apolitical Blues's picture

Considering the volume of negative ink this Krugman turd plys as words of wisdom, and the subsequent hammering his preverted logic takes afterwords, I'm amazed he's given a forum. His opinion is, and has always been a non-starter.

Being a shill pays well but, when you're on the verge of being a bankrupt hack, you'll write whatever you're told to....

Sun, 02/15/2015 - 10:48 | 5786644 boooyaaaah
boooyaaaah's picture

Hey yall

 

ZERO hedgies, and all you gold buggers

 

Did you ever hear of A Gary Shilling

 

Check it out on realclearmarkets

 

 

HomeEditorials
Contributors Topics QuickTake More
LOOK OUT BEHIND YOU, MARIO DRAGHI! PHOTOGRAPHER: RALPH ORLOWSKI/BLOOMBERG EUROPEAN ECONOMY
The Economic Monster Called Deflation

42 APR 23, 2014 6:03 PM EDT
By 

  • a
  •  

  • A

(This is the second in a three-part series.)

In part one of this series, I wrote about the deflation specter that is haunting Europe. Central bankers are so fearful of deflationthat they want an inflationary cushion to prevent an economic shock or geopolitical crisis from sending low inflation into negative territory. The Federal Reserve, European Central Bank, Bank of England and Bank of Japan have inflation targets of 2 percent.

 

 

Sun, 02/15/2015 - 10:48 | 5786645 boooyaaaah
boooyaaaah's picture

Hey yall

 

ZERO hedgies, and all you gold buggers

 

Did you ever hear of A Gary Shilling

 

Check it out on realclearmarkets

 

 

HomeEditorials
Contributors Topics QuickTake More
LOOK OUT BEHIND YOU, MARIO DRAGHI! PHOTOGRAPHER: RALPH ORLOWSKI/BLOOMBERG EUROPEAN ECONOMY
The Economic Monster Called Deflation

42 APR 23, 2014 6:03 PM EDT
By 

  • a
  •  

  • A

(This is the second in a three-part series.)

In part one of this series, I wrote about the deflation specter that is haunting Europe. Central bankers are so fearful of deflationthat they want an inflationary cushion to prevent an economic shock or geopolitical crisis from sending low inflation into negative territory. The Federal Reserve, European Central Bank, Bank of England and Bank of Japan have inflation targets of 2 percent.

 

 

Sun, 02/15/2015 - 10:52 | 5786652 boooyaaaah
boooyaaaah's picture

 

HomeEditorials
Contributors Topics QuickTake More
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The Economic Monster Called Deflation

42 APR 23, 2014 6:03 PM EDT
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(This is the second in a three-part series.)

In part one of this series, I wrote about the deflation specter that is haunting Europe. Central bankers are so fearful of deflationthat they want an inflationary cushion to prevent an economic shock or geopolitical crisis from sending low inflation into negative territory. The Federal Reserve, European Central Bank, Bank of England and Bank of Japan have inflation targets of 2 percent.

Sun, 02/15/2015 - 10:55 | 5786662 boooyaaaah
boooyaaaah's picture

Hey y'all a zero hedge

Ever heard of A Gary Shilling

 

He found a Big Bear in the wood pile

 

Read more of his articles at real clear markets

 

 

 

The Economic Monster Called Deflation

 

42 APR 23, 2014 6:03 PM EDT By A. Gary Shilling a A (This is the second in a three-part series.)

 

In part one of this series, I wrote about the deflation specter that is haunting Europe. Central bankers are so fearful of deflation that they want an inflationary cushion to prevent an economic shock or geopolitical crisis from sending low inflation into negative territory.

 

The Federal Reserve, European Central Bank, Bank of England and Bank of Japan have inflation targets of 2 percent.

Sun, 02/15/2015 - 11:40 | 5786749 Peter Pan
Peter Pan's picture

Government debt destroys private wealth.

Government debt eats into future wealth.

Government debt if allowed to grow ahead of inflation is a precuror to overall destruction.

Sun, 02/15/2015 - 12:47 | 5786927 Accounting101
Accounting101's picture

Fabulously wrong! I'll let you rant, not very long mind you, about inflation but the bullshit stops at public debt destroys private wealth. Lots of your capitalist heroes got real wealthy by the creation of public debt.

Sun, 02/15/2015 - 12:16 | 5786852 fremannx
fremannx's picture

Keynesians believe consumers must perpetually be coaxed into borrowing and spending in order to maintain growth in an economic system, whereas the Austrian School does not believe the economy can be controlled and that any attempts to that end only lead to mal-investment and credit bubbles of potentially catastrophic proportion. Producing and saving is the only true path to prosperity. Perpetual credit (debt) promotion only leads to bubbles in the economy.

 

http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...

Sun, 02/15/2015 - 12:41 | 5786911 Accounting101
Accounting101's picture

You stopped your logic half way through the thought. Don't you need someone to purchase what you are producing? Do you think that someone (consumer right?) might need to incur debt to buy your product?

Sun, 02/15/2015 - 12:30 | 5786885 CHX
CHX's picture

The majority of this debt will never be repaid, at least not in fiat with current purchasing power. It will be inflated away (as they do rigth now) or defaulted upon (as happend several times in Greece already), covered through bail-ins (Cyprus trial balloon), or it will be backed by PM, or some sort of combination of these possibilities. But the amount of debt does and will matter, and greatly so. 

Sun, 02/15/2015 - 12:36 | 5786896 loub215
loub215's picture

Is this guy even relevant anymore? I mean, he advocates unsustainable policy for ad infinitum… The world will never recover using his ideas. A truly useful idiot…

Sun, 02/15/2015 - 12:44 | 5786918 theyjustcantstop
theyjustcantstop's picture

this is an article for the choir, 35% of American voters, (the self-sufficient, working American tax-payers), try explaining this article to 50% of Americas voters, (free-shit army), that govt. debt isn't free money.

every election cycle this 50% are either chauffeured to the polling stations, delivered ballots to their home to where there's no inconvenience, or community organizers just vote for them. 

remember ben franklin, we gave you a constitutional republic, now it's up to you to keep it.

headed into 2015, were closer to losing it, than keeping it.

 

 

 

Sun, 02/15/2015 - 13:36 | 5787100 Herdee
Herdee's picture

Rick Rule; "You are your own greatest risk"Buy the best of the best.Hedge yourself against Keynesian economics for the long run.

https://www.youtube.com/watch?v=mjQ7eKI2kcs

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