Paul Krugman Flip-Flops...Again

Tyler Durden's picture

Presented with little comment...

h/t @KevinWGlass

In other words, 5 months after telling the world "it's time to borrow," ...

..investing more in infrastructure would clearly make us richer. Meanwhile, the federal government can borrow at incredibly low interest rates: 10-year, inflation-protected bonds yielded just 0.09 percent on Friday.

 

Put these two facts together — big needs for public investment, and very low interest rates — and it suggests not just that we should be borrowing to invest, but that this investment might well pay for itself even in purely fiscal terms. How so? Spending more now would mean a bigger economy later, which would mean more tax revenue. This additional revenue would probably be larger than any rise in future interest payments.

Suddenly the esteemed 'economist' says - after Trump's election - 'this time is different'...

In the depressed economy that prevailed for years after the financial crisis, government borrowing didn’t drive up interest rates, money creation by the Fed didn’t cause inflation, and nations that tried to slash budget deficits experienced severe recessions. But these predictions were always conditional, applying only to an economy far from full employment. That was the kind of economy President Obama inherited; but the Trump-Putin administration will, instead, come into power at a time when full employment has been more or less restored.

 

Now, government borrowing can still be justified if it serves an important purpose: Interest rates are still very low, and borrowing at those low rates to invest in much-needed infrastructure is still a very good idea, both because it would raise productivity and because it would provide a bit of insurance against future downturns. But while candidate Trump talked about increasing public investment, there’s no sign at all that congressional Republicans are going to make such investment a priority.

 

No, they’re going to blow up the deficit mainly by cutting taxes on the wealthy. And that won’t do anything significant to boost the economy or create jobs. In fact, by crowding out investment it will somewhat reduce long-term economic growth. Meanwhile, it will make the rich richer, even as cuts in social spending make the poor poorer and undermine security for the middle class. But that, of course, is the intention.

Which is all very odd given the market's reaction to this pro-growth agenda.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Stan522's picture

This is why no one listens to you krugman....

NotApplicable's picture

Tyler, you forgot the "Tuesday Humor" label!

Ghost of Porky's picture

He is a genius. We peons simply can't hope to understand the heights of his towering intellect.

Arnold's picture

Award winning and Accredited

NoDebt's picture

Hey, Paulie, why don't you go get your shine box.

 

Ramesees's picture

Paul Krugman is scum and his wife writes parts of his columns.  Utter scum, the both of them.

bania's picture

This guy's a walking Schodinger cat!

evoila's picture

why these people even have a voice is beyond me.

knukles's picture

Guy's a Political Hack under the Guise of neo-liberal statist NWO economics endorsed by what used to be a newspaper of record.
As well as an Asshole

Propaganda Puppet

mtl4's picture

Just like any good consultant the report matches the outcome, not the other way around.......these ivory tower bozos couldn't predict the sun coming up tomorrow.

tdag's picture

What is with the Tylers' obsession over Krugman. Who gives a shit what this asshat says?

asteroids's picture

This asshat was part of the mob that decided to borrow $10T during Obozo's term that will NEVER be paid back. What sustainable growth did that buy? None!

Creative_Destruct's picture

"....but the Trump-Putin administration will, instead, come into power at a time when full employment has been more or less restored."

Blatant, partisan Trump political blocking operation, as evidenced by this subjective smearing. Changed his rationale specifically for this purpose over a measly 5 month interval where his leftist candidate lost. This guy is a bowl-clogging POS. ZERO credibility.

UmbilicalMosqueSweeper's picture

Shining shoes is a valid job. Work, no matter how simple, beats sitting on your ass and sucking the fruit of others' efforts.

City_Of_Champyinz's picture

A true intellectual powerhouse if I have ever seen one.

SILVERGEDDON's picture

His towering intellect is like your dick on a frosty Minnesota morning when you go out buck naked to take a piss off the porch - about the size of a fifty cent stack of dimes. 

// //
Oldwood's picture

Same shit as ever.

When Obama was running the first time he constantly attacked Bush for deficits and excessive spending. Once in office he declared all spending is stimulative so evidently it didn't matter how or where the money was spent (wasted) (political corruption)

http://www.businessinsider.com/2009/2/obama-all-spending-is-inherently-s...

MrBoompi's picture

So true.  But the big secret is still being withheld from the public.  There is no way we can pay off our debts without a debt jubilee.  There is simply way more debt than there is is money to pay it off, by a long shot.  And now there must be borrowing in order to make our interest, and other, payments, otherwise the entire house of cards will crash.  Without debt forgiveness, we will be stuck adding $1 trillion+ of new debt regardless of what Trump or Congress does about it.  And the bankers would just as soon kill half the world before forgiving debt.  

Oldwood's picture

I think the perceived exception is as we see with large corporations where they become so heavily indebted that to call them on it would result in massive losses for those holding the debt. After all, the money really doesn't even exist. Everything is transparently based on perception, not reality, and I think they believe that as long as everyone is equally at risk, NO ONE will call them on it.

Virtually the entire world is trapped by this shit storm with the exception possibly of Russia. Given that they have been shut out of so much of the market and still are doing relatively well is probably a serious threat to everyone else. Russia appears to be the "irrational prepper" who is stacking and holding....and waiting, and this is seen as a real THREAT because EVERYTHING is premised on the notion that no one can stand apart from this global indebtedness. MADD economics is their perceived protection from their profligate policies. MADD only works if the destruction is MUTUAL. I think that they think that Russia thinks they are NOT mutually at risk, except to outright war. That is why they are putting so much pressure on Russia to kneel and capitulate under threat of war.

It's about ECONOMICS....or the illusion of such, and this is how globalism is intended to work. It is what Communists have always understood....that their scheme can ONLY work in a closed system with no competition of thought or ideas and absolute control of perceptions, of thought, of REALITY. It IS funny how Russia appears to have become the enemy of communism, of international collectivism....which explains the left's sudden turn against them.

Just a thought

illuminatus's picture

It's about economics, yes, but even more than that it'a about power and control. The big to do about Russia in my opinion is a fake reason to send massive military buildup into Europe, so the enforcement arm of the PTB ie. the US military can support the E.U. against any populist movements against said E.U. when the PTB finally get their civil unrest or war they are trying so hard to achieve with their influx of islamists in Europe. 

May you not live in interesting times.

Offthebeach's picture

Federal Reserve assumes the debt. Done. Finished. Pooft. It's in a lockbox. It will never be paid off. It will just sit there. What has happened is all out standing money has been diluted. Assests have been overpriced, savings have been crushed, but paid off? No. Fughedaboutit. Everything else, worry.

Badsamm's picture

You can't argue with science

Quellist's picture

What part of,
"Interest rates are still very low, and borrowing at those low rates to invest in much-needed infrastructure is still a very good idea"
don't you idiots understand?

Zerohedge is becoming more and more of a joke each day and how much of a brainless cheerleader would you have to be not to read the short fucking article you are commenting on? Yeah, you are the best and brightest America has to offer...

Stan522's picture

Perhaps Salon, Huf-Po, or Politico is more your home....

Krugman is a politically driven ideologue hack and you are a sycophant Lib and a philosophical bag of egalitarian, neo-Marxist feces

Quellist's picture

Your lack of reading comprehension is obviously a sore subject, as it should be considering how stupid it makes you look when you expose it.

Say what you want about Krugman, at least he doesn't get confused when faced with more than two sentences of text, you should keep that in mind when you try to insult your betters.

malek's picture

We're still waiting for your fact-based justification of Krugman's flip-flopping

Other than "deficits only don't matter under a democrap government", of course.

Quellist's picture

It is in plain fucking english in the text that Tyler posted, there is no "flip-flopping". Do you need it in crayon to have a chance at understand the argument?

The part I quoted,

"Interest rates are still very low, and borrowing at those low rates to invest in much-needed infrastructure is still a very good idea"

is about the coming government, he even writes "STILL". He holds the same position on the subject of borrowing for needed public spending, he just thinks republicans will spend the money on other shit which he doesn't agree with.

malek's picture

"STILL"

Remind me again what fabulous much-needed infrastructure projects Obama's almost $10 trillion of additional public debt funded during the last 8 years?

Stan522's picture

Perhaps you just like krugman up the butt you condescending piece of shit, MSNBC and Huff Post-indoctrinated, constitution-contemptuous, traitorous, racist, sexist, baby-butchering, sodomy-celebrating, marriage-devaluing, rights-from-government-not-from-God believing, 2nd Amendment-hating, innocents-murdering, criminal and domestic terrorist-empowering, illegal alien foreign invader enabling, societal-parasite-pandering Tyranny Party excrement-bagger's who smear the constitution, and the blood of those who died to defend it, with the pathogenic excreta of elitist fascist contempt drawn from their ever-present, power-and-control-greedy, liberty-hating, slavery-to-the-state-supporting, government-is-god hermaphrodite....

Haus-Targaryen's picture

Krugman is a political hack.  Nothing more, nothing less. 

 

NoDebt's picture

All economists should be banned from expressing their opinions.  They're all fucking idiots.  I'm very concerned, as a matter of public safely, that some people might get the erroneous impression economists would know anything about anything simply because our society inexplicably seems to hold them in high regard as "educated" people.

- NoDebt  (Economist)

 

Kayman's picture

Krugman and Obumbler are the Poster children as to why a Nobel Prize has become a "Participation" trophy. Although an over-rated elitist, self-congratulatory propaganda tool, a Noble prize once had some panache.

Now it is an anachronism used by self-important narcissists. 

Mike in GA's picture

Yeah.  I've never seen a real economist speak more about democrats and republicans, the first with admiration the second with venom, in every "economic" opinion of his the NYT prints.  Speaking of the NYT, why shouldn't they be forced to shitcan Krugman as an obviously pandering democrat first, economist second?  

 

We on ZH should bomb their editorial email with that recommendation.

 

Journalistic Integrity and News Judgment

Our public editor, Liz Spayd, looks at issues of journalistic integrity and news judgment at The New York Times. You can reach her by email or on Twitter. Read more about her role, and her latest columns, here.

economessed's picture

I'd like to recommend that Paul Krugman seek immediate medical attention for his mental illness before he shoots a bunch of innocent people in an airport in a fit of unhinged delusion.

stinkhammer's picture

go fuck yourself paulie

sheikurbootie's picture

Krugman and Obama have much in common. 

Both won the Nobel prize.

Both are complete asshats.

FireBrander's picture

500,000+ KILLED in Syria due to a FAILED Obama/Hillary "strategy" to build that Qatar pipeline which would severely, financially, strategically, damage Iran/Russia....and still no talk of repealing that "Peace" prize.

sheikurbootie's picture

100% agree FireBrander!

I'm still waiting for someone to explain why the hell the "west" attacked Libya?  WTF was that all about.  Did Libya pose a threat? 

Doesn't look like we'll ever know because the "press" is corrupted with liberal political sycophants.

 

FireBrander's picture

The USA was/is running guns to ISIS in Syria through Libya on their way to Turkey; Kadafi wan't playing along...time for regime change...100% on Hillary's resume.

One wicked women: https://youtu.be/cu41CPQw0hg

UnschooledAustrianEconomist's picture

Translation: No printing press for the deplorables!

January Jones's picture

More Krugman ideology masquerading as economics. Nothing to see here.

Just my opinion but If lowering Corporate taxes and repatriating overseas profits to boost the economy or create jobs is the objective, then there should be some threshhold for insuring the benefits should not be squandered on stock buy backs and dividend increases. It should tied to meaningfully to compete and actually improve worker productivity and the revenue line by making real stuff. 

Otherwise it would look like just another sheep in wolf's clothing, Fed trickle down, QE, nation of shopkeepers scheme. 

small axe's picture

krugman has done enough damage for one lifetime...GO AWAY

Bryan's picture

Krugman, Gartman and others seem to flip flop all the time...which reinforces my point that people generally are only concerned with the 'next' weeks or months.  They are hardly interested in a 5-year plan, 10-year plan, 20-year plan any more.  And thus the reason we are all myopically crowded on this road headed to the edge of a cliff, busily engrossed in and entertained by the smartphone in our hands.

OfAllElaboratePlans's picture

I don't have a smartphone. So I got THAT going 4 me.

Bryan's picture

Me either, actually.  I try to live somewhat simply in a complex world, at the risk of being 'lost' by the current culture.

Clowns on Acid's picture

Dude....its not the Stock its the Flow....for the Banks to make money you need a volatile money flow from one asset class to another and inflation to make the price level of everything volatile. Except technology of course, because that is the way they control you and the volatile expectations of the maddening crowds.

Trump uis promoting the "Stock" over the "Flow" with his focus on Manufacturing jobs. Definitely will slow down the Flow and a lot of equity prices as well.

You mean you haven't shorted AMZN yet? AMZN Puts are cheaper than dirt. 

Cautiously Pessimistic's picture

He and Gartman need to team up and form a Flip-Flop Hedge Fund.