This page has been archived and commenting is disabled.

Guest Post: Wealth Inequality – Spitznagel Gets It, Krugman Doesn’t

Tyler Durden's picture


Submitted by Pater Tenebrarum of Acting Man

Wealth Inequality – Spitznagel Gets It, Krugman Doesn’t

We wrote an article on wealth and income inequality on July 1 2011, in which we criticized a speech by Fed governing board member Sarah Bloom Raskin. In her speech she bemoaned the growing wealth and income gap in the US, indicating that more government intervention was needed to close it.

We started out by asking: why should it even matter how wealth is distributed as long as everybody partakes of the fruits of the free market? Should not those who serve consumers better than others be entitled to earn more? Are they not taking risks? Who cares if income and wealth are unequally distributed as long as everybody's living standard increases?

Most readers are probably aware of these arguments, so there is no need to rehash them here. The point we finally made was that the reason people were worried – besides envy, that is – was that the great mass of people has not seen its economic lot improve for a long time period.

The time period during which the real income of the middle class and the poorer strata among the citizenry began to stagnate  curiously coincided  with the abandonment of the gold exchange standard and the unfettered growth in money and credit that followed on its heels.

So the question that suggested itself was: perhaps the Fed itself is at fault?

This is what we concluded, but not merely from the empirical data, as supportive as they are of this particular case. It follows logically that whenever an inflationary policy is pursued, the richest citizens will profit from it, while the poorest will lose ground. Inflation is effectively a reverse redistribution scheme from the poor to the rich. This is so because the wealth of the rich is largely parked in assets the prices of which tend to rise disproportionally due to the inflationary policy. Moreover, they have easier access to credit and thus can get 'first dibs' on newly created money. By the time this money has percolated through the economy and reaches the wage earners and the poor,  prices have already risen and they will be confronted with the fact that their purchasing power has declined.

We concluded it was hypocritical of a Fed board member to decry the situation while not even once mentioning the critical role her institution played in bringing it about. Moreover, her proposed solution, while not spelled out in detail, amounted implicitly to a recommendation to the government to go down the path of socialist redistribution.

Mark Spitznagel on Wealth Inequality

You have to hand it to the WSJ – eventually it sometimes catches up to 'acting man'. :)

Well known hedge fund manager Mark Spitznagel has published an editorial  in the WSJ last week, in which he basically makes our argument all over again – only for a bigger audience.

He writes:

“A major issue in this year's presidential campaign is the growing disparity between rich and poor, the 1% versus the 99%. While the president's solutions differ from those of his likely Republican opponent, they both ignore a principal source of this growing disparity.


The source is not runaway entrepreneurial capitalism, which rewards those who best serve the consumer in product and price. (Would we really want it any other way?) There is another force that has turned a natural divide into a chasm: the Federal Reserve. The relentless expansion of credit by the Fed creates artificial disparities based on political privilege and economic power.


David Hume, the 18th-century Scottish philosopher, pointed out that when money is inserted into the economy (from a government printing press or, as in Hume's time, the importation of gold and silver), it is not distributed evenly but "confined to the coffers of a few persons, who immediately seek to employ it to advantage."


In the 20th century, the economists of the Austrian school built upon this fact as their central monetary tenet. Ludwig von Mises and his students demonstrated how an increase in money supply is beneficial to those who get it first and is detrimental to those who get it last. Monetary inflation is a process, not a static effect. To think of it only in terms of aggregate price levels (which is all Fed Chairman Ben Bernanke seems capable of) is to ignore this pernicious process and the imbalance and economic dislocation that it creates.


As Mises protégé Murray Rothbard explained, monetary inflation is akin to counterfeiting, which necessitates that some benefit and others don't. After all, if everyone counterfeited in proportion to their wealth, there would be no real economic benefit to anyone. Similarly, the expansion of credit is uneven in the economy, which results in wealth redistribution. To borrow a visual from another Mises student, Friedrich von Hayek, the Fed's money creation does not flow evenly like water into a tank, but rather oozes like honey into a saucer, dolloping one area first and only then very slowly dribbling to the rest.


The Fed doesn't expand the money supply by uniformly dropping cash from helicopters over the hapless masses. Rather, it directs capital transfers to the largest banks (whether by overpaying them for their financial assets or by lending to them on the cheap), minimizes their borrowing costs, and lowers their reserve requirements. All of these actions result in immediate handouts to the financial elite first, with the hope that they will subsequently unleash this fresh capital onto the unsuspecting markets, raising demand and prices wherever they do.”

(emphasis added)

Very well put – this is precisely what happens. Money is not 'neutral' – the uneven spreading of inflation guarantees that there are winners and losers. It is obvious that the financial elite is foremost among the winners. The so-called '99%' meanwhile are losing out and the lower they are in the income strata, the more they tend to proportionally lose.

Spitznagel concludes:

The Fed is transferring immense wealth from the middle class to the most affluent, from the least privileged to the most privileged. This coercive redistribution has been a far more egregious source of disparity than the president's presumption of tax unfairness (if there is anything unfair about approximately half of a population paying zero income taxes) or deregulation.


Pitting economic classes against each other is a divisive tactic that benefits no one. Yet if there is any upside, it is perhaps a closer examination of the true causes of the problem. Before we start down the path of arguing about the merits of redistributing wealth to benefit the many, why not first stop redistributing it to the most privileged?”

(emphasis added)

Note here that as a hedge fund manager, Spitznagel himself is among the privileged who are in a position to profit from the Fed's largesse. Of course he would probably prefer to invest an environment of sound money, as the constant second-guessing of what the bureaucrats might do next is actually distracting investors from what they should really do, namely appraise the individual fundamental merits of various investment alternatives. As we often point out, these days investing is instead all about the 'macro' environment  – which is to say much valuable time and effort must be spent on deciphering and dealing with the effects of interventionism.

Naturally, whenever someone attacks the policies of an institution that keeps hundreds of macro-economists in bread, it doesn't take long for the the counter-attacks to be launched. This time Paul Krugman took it upon himself to defend the money printers, revealing his utter ignorance in the process.

Krugman's Weak Defense of Money Printing

Krugman tried to deflect Spitznagel's arguments from his perch at the NYT in an article entitled 'Plutocrats and Printing Presses'.

As we have pointed out in the past, Krugman is either willfully ignoring and misrepresenting the arguments of Austrian economists, or he simply doesn't understand them. Looking at his past critiques of the Austrian school, it seems rather obvious he hasn't even read any of the works associated with it, so he is actually in no position to pen a serious critique. The Austrians are generally in a better position when it comes to criticizing Krugman, since most of them had to endure large doses of Keynesianism at university.

Krugman made a tactical mistake though: by coming to the defense of the Fed's bank bailouts and its money printing, he apparently managed to incense his own fan base (see the comments section below his screed).

He writes:

What’s wrong with the idea that running the printing presses is a giveaway to plutocrats? Let me count the ways.


First, as Joe Wiesenthal  (sic) and Mike Konczal both point out, the actual politics is utterly the reverse of what’s being claimed. Quantitative easing isn’t being imposed on an unwitting populace by financiers and rentiers; it’s being undertaken, to the extent that it is, over howls of protest from the financial industry. I mean, where are the editorials in the WSJ demanding that the Fed raise its inflation target?

So a winner of the Nobel prize in economics requires the testimony of Joe Weisenthal and someone from the 'Next New Deal' blog (which as the name implies is in favor of an FDR style command economy) to buttress his arguments? And proof that 'QE' is happening over the 'howls of protest from the financial industry' is provided by a lack of editorials in the WSJ demanding a higher 'inflation target'?

It is difficult to reply to this nonsense mainly because it is so utterly dumb. One almost doesn't know where to begin, but let us just 'count the ways' by mentioning two small factoids: without the Fed's interventions, many of the stalwarts of the financial industry would no longer be with us. They would have gone bankrupt in 2008-9 and their assets would now be in the hands of better stewards of capital. Yeah, they sure 'howled in protest' when they were presented with that gift horse.

Secondly, the true broad money supply in the US has increased from $5.3 trillion to $8.424 trillion between January of 2008 and February of 2012. This is a money supply inflation of roughly 60% in four years. There are simply no WSJ editorials clamoring for 'more inflation' required, even if one believes in the inflationist snake oil peddled by the likes of Krugman. The people supporting the policy are probably eager not draw too much attention to what has actually happened thus far on the inflation front.

Having exonerated (in his mind) the financial elite and the 'plutocrats' with the help of Mr Weisenthal's testimony – whose stance is (mis)informed by none other than Paul Krugman himself (i.e., Krugman actually uses his own testimony through a relay station) -  Krugman continues:

“Beyond that, let’s talk about the economics


The naive (or deliberately misleading) version of Fed policy is the claim that Ben Bernanke is “giving money” to the banks. What it actually does, of course, is buy stuff, usually short-term government debt but nowadays sometimes other stuff. It’s not a gift.


To claim that it’s effectively a gift you have to claim that the prices the Fed is paying are artificially high, or equivalently that interest rates are being pushed artificially low. And you do in fact see assertions to that effect all the time. But if you think about it for even a minute, that claim is truly bizarre.


I mean, what is the un-artificial, or if you prefer, “natural” rate of interest? As it turns out, there is actually a standard definition of the natural rate of interest, coming from Wicksell, and it’s basically defined on a PPE basis (that’s for proof of the pudding is in the eating). Roughly, the natural rate of interest is the rate that would lead to stable inflation at more or less full employment.”

(emphasis added)

First of all it should be noted that in his typical demagogic fashion, Krugman does not even address the argument Spitznagel made. He always does that – he really would be great as a leader of a Marxist debating society, as he has their techniques down pat. He simply ignores what his opponents say, and then proceeds to erect straw men which he thinks can be easily knocked down.

Well, let's look at his voodoo economics claims (how on earth did this guy get a Nobel prize in economics? If ever you needed proof that the prize has become a contrary indicator, Krugman provides it in spades). First of all, you will notice that he fails to mention how exactly the Fed comes into a position to 'buy stuff'. It does that by printing money from thin air, which is actually the central point of Spitznagel's critique. Let's just ignore it!

Then he claims that one can not prove that the Fed 'overpays' for the assets it buys. This is the functional equivalent of claiming that increasing the money supply has no effect whatsoever on prices. How can an economist make such a claim? Not to forget, the reason why the Fed makes these purchases consists  – in its own words – of its desire to depress interest rates! In reality, the entire price structure of the economy is revolutionized when the amount of fiduciary media is increased and interest rates are artificially suppressed by the monetary authority. Lastly, the banks and other financial players the Fed buys assets from are not led by complete dummies. They naturally front-run the Fed every time – there is in other words a clearly discernible feedback loop between the Fed's activities and the prices of the financial assets it buys.

As to Wicksell's definition of the natural interest rate, it reads verbatim:

“There is a certain rate of interest on loans which is neutral in respect to commodity prices, and tends neither to raise nor to lower them.”

There is not one word there about 'full employment'. As to the Austrian definition of the natural interest rate, it is simply the rate of societal time preference. In other words, the time preferences of all market participants as expressed in the discount of future gods versus present goods represent the natural interest rate. If we actually wanted to establish what the natural interest rate is, we would indeed have to abolish the Fed as well as introduce 100% reserve banking, so as to forestall the issuance of fiduciary media. It is actually downright comical that we have a central economic planning agency that is allegedly trying to 'mimic' the natural interest rate when we could obtain it very easily by simply abolishing the planners and rigorously enforcing property rights.

Following his faux re-defintion of the natural interest rate, Krugman continues – n.b., while still completely ignoring the arguments Spitznagel made:

And we have low inflation with high unemployment, strongly suggesting that the natural rate of interest is below current levels, and that the key problem is the zero lower bound which keeps us from getting there. Under these circumstances, expansionary Fed policy isn’t some kind of giveway to the banks, it’s just an effort to give the economy what it needs.”

(emphasis added)

This is why we are so bold to accuse Kugman of using voodoo economics. Readers may be aware that the current interest rate is 'zero'. The Fed wants us to pretend that the cost of capital is zilch. Krugman now claims that the 'natural interest rate' – by his definition – should  actually be below zero. In other words, what he is saying is that if the market were left to its own devices, the time preferences of economic actors would be completely reversed, so that future goods would be considered to be worth more than present goods at the moment. This is such abject nonsense it truly defies belief.

Oh yes, and giving the banks money at no cost is therefore 'not a give-away to the banks'.  You would think no-one could actually make stuff like this up, but there it is. Economist William Anderson has given Krugman the nickname 'Krugpot'. Now you know why.

Krugman then expands on why the bankers really just hate to get money for absolutely free:

Furthermore, Fed efforts to do this probably tend on average to hurt, not help, bankers. Banks are largely in the business of borrowing short and lending long; anything that compresses the spread between short rates and long rates is likely to be bad for their profits. And the things the Fed is trying to do are in fact largely about compressing that spread, either by persuading investors that it will keep short rates at zero for a longer time or by going out and buying long-term assets. These are actions you would expect to make bankers angry, not happy — and that’s what has actually happened.”

First of all, the buying of long term assets to compress the yield curve spread is a relatively recent policy ('Operation Twist') and it is in fact not directly inflationary such as 'QE' was, as the Fed is not printing new money but merely exchanging short term bills for long term bonds. Its balance sheet has stopped growing when 'QE2' ended. However, we note that the expansion of the money supply has continued well beyond the end of 'QE2'.

There are several reasons for this – the most important are: the fractionally reserved commercial banks have actually begun to expand money and credit on their own again (with their current reserve base they could in theory create about $15 trillion in new money if we were to generously assume a required reserve ratio of 10%. In reality they could create far more money, as de facto, required reserves are close to zero, mainly on account of sweeps). Secondly, dollars have fled from the crisis stricken euro area and have been deposited with US banks – in short, some of the dollars that were overseas have 'come home', while the Fed and the ECB are acting in tandem to replace the dollars lost in Europe with freshly printed ones via their dollar swap window. Thirdly, there has been a rule change that has forced banks to acknowledge the existence of funds that have previously been regularly swept offshore overnight  – in short, the money supply data now contain evidence of past inflation that was previously hidden by this practice.

The claim that bankers are 'angry' at getting money at zero percent from the Fed is exactly as ludicrous as it sounds. Even with the yield spread now smaller, the banks are stuffing a lot of money into treasuries to 'ride the curve'. They simply lever these traded as much as they can. It's a trade in which they figure they cannot lose. Take for instance a two year and a one year note. The two year note now yield 27 basis points, the one year note yields 17 basis points. If one buys a two year note today, it will become a one year note one year hence. Given the Fed's 'guarantee' of a zero federal funds rate until 2014, this implies a certain capital gain plus the 27 basis points in interest. Lever the trade 100:1 and you're actually making serious money. Yes, the bankers just hate it!

We must however also note here that the assertion we have made above (namely that 'it's a trade in which they cannot lose') should be qualified by 'it's a trade in which they cannot lose as long as faith in the central bank administered fiat money system doesn't suddenly crumble'.

The two year note yield vs. the one year note yield. 'Riding the curve' with leveraged trades remains highly profitable as long as this spread is positive.



Krugman then continues to parade his ignorance as follows:

“Finally, how is expansionary monetary policy supposed to hurt the 99 percent? Think of all the people living on fixed incomes, we’re told. But who are these people? I know the picture: retirees living on the interest on their bank account and their fixed pension check — and there are no doubt some people fitting that description. But there aren’t many of them.”


The typical retired American these days relies largely on Social Security — which is indexed against inflation. He or she may get some interest income from bank deposits, but not much: ordinary Americans have fewer financial assets than the elite can easily imagine. And as for pensions: yes, some people have defined-benefit pension plans that aren’t indexed for inflation. But that’s a dwindling minority — and the effect of, say, 1 or 2 percent higher inflation isn’t going to be enormous even for this minority.

(emphasis added)

Countless seniors, widows and orphans would vehemently disagree with Mr. Krugman. There are currently about $6.3 trillion in savings deposit and about $730 billion in small time deposits. Via anecdotes, we keep hearing about senior citizens who feel they have no choice but to divert savings into the extremely risky stock market as they can no longer count on their interest income to sustain them. For Krugman (who himself is among the '1%') to wave all these people away as though they didn't exist is quite callous. As a good Keynesian he probably is all for 'euthanizing the rentiers', even if he doesn't spell it out here.

As to social security income being 'indexed for inflation': yes, indexed to the government's 'official' inflation data, which have been contorted in countless 'reforms' precisely to keep these expenses as low as possible by pretending that the price effects of the inflationary policy are far smaller than they actually are. He also ignores the fact that the basket of goods contained in the 'CPI' typically does not reflect the expenses that are most important for the majority of the middle class, the majority of retirees and the poor. Rich people don't care if the price of vegetables and fruit doubles and they don't care whether gasoline costs $2 per gallon or $4. Retirees living on social security, the middle class and the poor definitely do care about these prices and are hurt by them in spite of the laughable 'indexing' of social security payouts to 'inflation' (inflation as in the change of the 'general price level' as calculated by the government).

Krugman then closes his defense of inflationism with a for him typical demagogic flourish, only it really backfires in this case:

“No, the real victims of expansionary monetary policies are the very people who the current mythology says are pushing these policies. And that, I guess, explains why we’re hearing the opposite. It’s George Orwell’s world, and we’re just living in it.”

(emphasis added)

There you have it! The Fed's inflationary policy is really 'victimizing' the 1% and the financial elite! It is 'Orwellian' to say otherwise! Krugman is apparently completely unaware of the irony of this final sentence.

To summarize: Krugmann fails to address even a single one of the arguments forwarded by Spitznagel. This is no surprise, as he has often demonstrated he does not even understand the arguments of the Austrians and moreover has frequently shown that his style of debate consists largely of attempts to knock down straw men.  After appraising us of his economic ignorance (see the idea that time preferences can actually 'go negative' implied by his argument on the natural interest rate above), he finally closes a truly Orwellian screed by claiming that everybody who is critical of the Fed and the financial elite is guilty of being 'Orwellian'.

As we often say, you really couldn't make this up.

Self-appointed 'liberal conscience' guardian Paul Krugman: now he's suddenly springing to the defense of the financial elite and the '1%' in his misguided mission to defend central economic planning.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sat, 04/28/2012 - 21:29 | 2382948 GeneH3
GeneH3's picture

Debating keynesiians is like debating Charles Manson.

Sat, 04/28/2012 - 21:33 | 2382952 Paracelsus
Paracelsus's picture

If we are going to be a nation of gamblers,then we need to go back to Vegas rules:Ya win,great.Ya lose,take a haircut.No margins,no bailouts,no leverage.Oh,and the rating agencies should have their heads on pikes for giving the MBS crap a AAA rating which will end up wiping out a few pension funds here and there.That whining sound is the sound of ten thousand learjets warming their engines up for takeoff. 

Sat, 04/28/2012 - 23:06 | 2383088 bobert
bobert's picture

Please no, not the pension funds.

Sat, 04/28/2012 - 21:44 | 2382967 Baptiste Say
Baptiste Say's picture

Nice to see Murray Rothbard referenced.


Aside from printing his name when the lame streams pathetic attempts to link him and Ron Paul to racist views were in full tilt, I bet they hoped to have banished his name from their pages.


I think any Wall Street type who name checks Rothbard has got to be an honest type, if I had any money to invest I'd probably look to Spitznagel.

Sat, 04/28/2012 - 21:47 | 2382973 Yen Cross
Yen Cross's picture

 Mr. Krugman is the " ELEPHANT" that shits out it's half eaten waste!  The " Natives" , pick out the undigested parts, and sell them for profit!  Then Mr. Krugman trys to tax the " shit" !  

Sat, 04/28/2012 - 21:49 | 2382976 jomama
jomama's picture

he's obviously siding with the elite.  not like this is a shocker to anyone here.

i mean, the guy 'won' a nobel for re-writing someone else's thesis?!

Sat, 04/28/2012 - 22:56 | 2383072 nmewn
nmewn's picture

"i mean, the guy 'won' a nobel for re-writing someone else's thesis?!"


He's never had an original thought in his life. But he makes a helluva living off it.

Sat, 04/28/2012 - 23:05 | 2383087 Yen Cross
Yen Cross's picture


Sat, 04/28/2012 - 23:20 | 2383107 JR
JR's picture

But you gotta admit, nmewn. He IS an original!

(Greetings! Yen.)

Sat, 04/28/2012 - 23:35 | 2383121 Yen Cross
Yen Cross's picture

 I like the both of you, J.R.   Ya think it's time to kill those ( GBP ) flows?  The weekly chart looks ready for a breather. ( back to that 50% fibi arround 1.59?

                                          The move from 1.5230 / 1.6745.   ( gbp/usd)  The 200 week ( sma), comes in across that area!

Sun, 04/29/2012 - 00:17 | 2383168 JR
JR's picture

You’re the pro! to call Ben’s tally-ho, Yen. Will the life blood of purchasing power flow to the high inflator or the low inflator? Only Ben, the shadow monetary scientist, knows….

Or, there’s always Krugpot.

Sat, 04/28/2012 - 21:50 | 2382977 luna_man
luna_man's picture



NOT TO WORRY...Not one of these CRIMINALS, with all their wealth, can escape the grave!

Not to say, we can't make the rest of their lives, a living hell!

Sat, 04/28/2012 - 22:03 | 2382991 steelrules
steelrules's picture

Krugman is right about one thing and one thing only, the government must keep spending money to keep the economy going, on unemployment, food stamps social security and medicare, but not for the reasons he gives, the real reason is that the 1% don't stand a chance if 44 million are cut off food stamps the 13 million on unemployment and the 9million social security have nothing to eat.

Just think for a minute what the US will look like when the government finally pulls the plug on these programs, and in my humble opinion that time is coming soon.

Sat, 04/28/2012 - 23:09 | 2383090 bobert
bobert's picture

Sorry, but the 1% use the riots to their advantage also.

They won't be overthrown.

Sat, 04/28/2012 - 22:03 | 2382992 dexter_morgan
dexter_morgan's picture

That Krugman has any influence anywhere in this country is indicative of how stupid, corrupt, and shallow we have become. And I used to think winning a Nobel Peace prize was a meaningful thing. WOW

Sat, 04/28/2012 - 22:36 | 2383043 Peter Pan
Peter Pan's picture

I was told a long time ago that people like Krugman serve a useful purpose. Because they are always wrong you know that doing or assuming the opposite will be correct.

Sat, 04/28/2012 - 22:42 | 2383052 batterycharged
batterycharged's picture

I hate all economists. Both of these ass clowns can lay under a bus for all I care.

Economics is psychology with better charts. Dr Phil could be an economist if they had economists on daytime TV.

All these absolutes are ridiculous. Yeah the Fed can suck, but being able to print money does serve a purpose. The problem with the Fed isn't what it can do, it's that it's run by bankers with self-interest.

Economics is actually quite simple, the consequences are usually very obvious. It's the morons that think we need to abide by some "Austrian" movement or Keynesism that fuck everything up.

No, tariffs and closed trade isn't always bad! Sometimes it helps your local economy.

Instead of deeming one thing evil or not, put everything in context. Right now free trade is equivalent to opening up our labor force to competing with poor and starving labor across the globe. That's more of the reason the wealthy are getting wealthier than Fed policy.

Your extreme capitalism usually ends like a game of Monopoly, one man is left standing with all the assets. That's what is happening, the wealthy of the world are accumulating the means of production, right out of Marx.

Mom and pop shops, gone. Poor slave labor working 80 hours per week. Western citizens in heaps of debt. It's all monopoly, stop on Boardwalk, pay the toll.

This is good?  This is efficiency? Yeah, thank god I can get a cheap computer, too bad I know work for $7/hr with no health benefits. OH, I guess that's the more efficiency thing. YES, let's reward the MONOPOLISTS.

I'm surprised you didn't say JOB CREATORS one fucking time.

1 star. Total rubbish.



Sat, 04/28/2012 - 23:08 | 2383089 MoneyMagician
MoneyMagician's picture

I think your summary is actually rubbish. First off capital goes to the place where business is most practical. Access to natural resources, qualified labor, access to capital. The communist in Cuba during the revolution didn't like capital outflows from their country to the US, now you are complaining that job creators are creating jobs outside the US. So you want to have a closed economies across the world, even the fact that communist Cuba, which protested, fought, and reclaimed US companies in Cuba, because of capital outflows still imports around 80% of their supplies. Just from this alone suggests your entire summary is rubbish.


US has a very low savings rate, instead most americans depend on social security which is basically a hollow government promise, which social security is basically another tax, and the money can be spent however the government sees fit. So there is less capital for new investments to occur in production compared to the average Chinese person who saves 20% of their income. Money saved is money that is not consumed, foreigners can't consume it, neither does domestic consumption exist from it, but there is capital there for liquidity, and investment for local venture capital, & established businesses. How you think Japan grew to be a economic powerhouse after WWII? You would think Sony, Nissan, etc would be going to Ethiopia, which does have starving people despite fertile land. I take your post with a grain a salt, and relegate to someone who has a simple view about economics like most marxist, socialist, fascist, syndicalist, etc do.

Sat, 04/28/2012 - 23:12 | 2383099 bobert
bobert's picture

Shouldn't "god" be capitalized?

Come on where is your hope?

I'm an economist who can be trusted. Just ask me.

There is hope. Just keep reading Z Hedge (with a filter).

Sat, 04/28/2012 - 22:44 | 2383055 MoneyMagician
MoneyMagician's picture

I don't understand how anybody can listen to Krugman. I think the guy is a nutcase.

Sat, 04/28/2012 - 23:14 | 2383102 bobert
bobert's picture

I'm happy to say that I've never listened to him.

Or if I did I've forgotten every word he had to say.

Maybe I'm just getting older.

Sat, 04/28/2012 - 23:10 | 2383094 JR
JR's picture

Fed governing board member Sarah Bloom Raskin in her speech... bemoaned the growing wealth and income gap in the US, indicating that more government intervention was needed to close it.  --  Pater Tenebrarum 

Thank goodness! The government is going to get involved! Finally! This is so unique. For too long the government has been sitting on the sidelines!

I’ve got it! Susan. Let’s have the government tax people and take the tax money and balance things out. Wow! What an idea! Why, we could have an entire branch of government that did nothing but collect taxes from some of the people and give it to the other half! But, alas, I can’t see the Congress taking someone's money and re-divvying it to someone else, can you?  Why Obama, he’d be so shocked.

Yes.  I really do think the government of the people should get involved........but I think it should get one of those wagons and put Sarah Bloom Raskin in it and take her to the guillotine! But where are the Jacobeans when you need ‘em?

Sarah brings to the Fed table not only how Americans’ wealth should be redistributed, but she is married to a radical progressive who knows just how to get it done.

In the words of Trevor Loudon of New Zeal: Sarah Bloom married into what is perhaps the closest America has to a radical ‘royal family’Sarah Bloom Raskin is the wife of Jamin (Jamie) Raskin, a legal academic, Maryland State Senator and the son of Marcus Raskin - founder of the deservedly notorious Institute for Policy Studies (IPS)…

“IPS quickly grew to become a highly influential, source of ideas, guidance and training for the U.S. and international left. Its critics claimed that IPS consistently supported policies that aided the foreign policy goals of the Soviet Union and weakened the position of the United States… Raskin’s connections to SEIU, ACORN, Greenpeace and the radically led Students Against Sweatshops are here>>>>>>>>>>

Appointments such as Sarah Bloom Raskin’s, with her family’s extreme Socialist agenda, bring additional criticism which has been intensifying lately that Jews appointed and promoted to positions of policy management in the United States are promoting an agenda for world Socialism, a professed general tenet of the Jewish quest for a one world government. It’s the same criticism that follows the careers of Bernanke, Krugman, Rubin, et al.; in short, all the Keynesians.

Sun, 04/29/2012 - 02:18 | 2383154 Element
Element's picture

BTW, some new 'stimulus' may be heading our way. As pointed out almost two weeks ago, the NORKs are indeed getting ready to test-fire more nukes, perhaps several.  So much for their capitulation on DPRK nuclear-weapon-program-goes-away-in-exchange-for-USSA iFood-shipments ... er ... proposal from last month ... which I'm pretty sure they were laughing their arses off the whole time that Washington would be so unforgivably arrogant and stupid to actually assume or believe that the NORKs would consider doing something like that.



Satellite images show activity at N. Korea nuclear site

Published: 28 April, 2012, 12:33

"Satellite imagery reveals an escalation in activity at North Korea’s Punggye-ri atomic site in possible preparation for a third nuclear test, experts say. However, there is no clear indication from the photos when the test may occur."




So, the already tremendously popular sport of ruthlessly and mercilessly bitch-slapping the US's utterly asinine leadership continues its relentless global ramping in popularity ... that would be you, Barry and Hilly.


Google Maps Link to Test-Site Location:




"We are aware that many countries that have never admitted having a nuclear arsenal, actually have one," the [Russian ] Chief of General Staff said, without specifying exactly which countries he has in mind. - RT: 25 April, 2012

Sun, 04/29/2012 - 03:20 | 2383253 heinrich6666
heinrich6666's picture

Egh. Fuck the so-called 'Austrians'. Another dogma.


How about economics as empirical scientific theory? Anyone?

Sun, 04/29/2012 - 13:20 | 2383706 AnAnonymous
AnAnonymous's picture

Trouble is that we have rivalry in sight.

They want Krugmann's position, not having their facts right.

Sun, 04/29/2012 - 14:29 | 2383771 Centurion9.41
Centurion9.41's picture

Economics as empirical scientific theory!  LoL 

One must be truly ignorant of two facts to arrive at such an idiotic assumption:

1st the difference between application of the scientific process and scientific analysis

2nd the inability to empirically measure, control, or know all the variables that would make up the observable factors of economics, the actions of man.

Don't you realized 95% of the "science" of economics is no different than the BS of political science, sociology and psychology? 

Sun, 04/29/2012 - 18:26 | 2383314 Fish Gone Bad
Fish Gone Bad's picture




Sun, 04/29/2012 - 06:49 | 2383374 jmcadg
jmcadg's picture

Krugman v Santelli would be good ...

Krugman v Hendry would be amazing.

Ultimatley Krugman is irrelevent and he knows it.

Sun, 04/29/2012 - 07:49 | 2383410 fiddy pence haf...
fiddy pence haff pound's picture

Look at the stupid face on his official picture. He's looking slightly upwards and has his mouth open

like he's about to say something but he's too meak to do so.

He looks like 'real' folks, instead of being a distant intellectual. It's the same

thing that got Bush43 elected.

The Ponzi is trying to placate those intelligent enough to sit through a bullshit

economics talk without their eyes glazing over. So, Krugman fans think themselves

to be serious armchair economists. And here we are.

Eventually, the zh message will get outside these walls. but it may be too late.

Sun, 04/29/2012 - 08:08 | 2383425 cooperbry
cooperbry's picture

He really is crackpot.

Sun, 04/29/2012 - 08:27 | 2383440 Ying-Yang
Ying-Yang's picture

Tyler, last night I read the work of this guy named TUNA.... (hi girls) who nails the global outlook for 2012 and goes further with his US residential and commercial outlooks.

His outlooks are clear and concise and would be great additions for ZH readers. You should formally invite him to the Fight Club.

Sun, 04/29/2012 - 11:40 | 2383605 tony bonn
tony bonn's picture

"...We started out by asking: why should it even matter how wealth is distributed as long as everybody partakes of the fruits of the free market?..."

fuck you pater. the market is free for the 1% - all others can eat shit. naomi klein does a fine job demolishing the friedmanite drivel about unregulated markets and freedom. keep riding your straw horse....

debt as money guarantees a growing inequality and it matters because the wealthy are stealing from the poor, widows, and orphans.....again, fuck you.

Sun, 04/29/2012 - 11:59 | 2383621 theTribster
theTribster's picture

He Is completely delusional in addition to being an idiot. Clearly he is a manufactured mouthpiece of the 1%, that's why they gave him the NPP as it creates integrity for a person that would otherwise be considered an idiot.

If I met hiim somewhere and spoke with him I would walk away thinking he is 'a little slow' because let's face it thats how becomes off (because he is).

Sun, 04/29/2012 - 12:25 | 2383645 I am a Man I am...
I am a Man I am Forty's picture

Our system is based on doing whatever is good for the banks, then they march out krugman to give the intellectually dishonest spin which makes no sense to any critical thinking individual.

Sun, 04/29/2012 - 12:34 | 2383654 marriedgeordie
marriedgeordie's picture

i am quite sure that many of you are often puzzled how dumb famous economists, including the "nobel" laureates, can be. let me clarify how this so-called academic economics profession works, and what is really behind the economics "nobel" (neither of the two will probably surprise you, but still).

so, econ "nobel". as you most probably know, this prize is not managed by the nobel foundation. in fact, it is given out by the central bank of sweden, and the name is something like "swedish central bank prize in economic science in memory of alfred nobel". further, both general rules (e.g., no post-morterms) and timing of econ prize are set up to dupe the general public into believing that this is a legitimate nobel. that is, the idea in the 50-s (that's when swedish central bank introduced the prize) was to place economics in the same list with the legitimate sciences, for which prizes are given out from the nobel foundation. in other words, econ nobel is a fraud designed to make general public believe econ is a science. i think it is a very dangerous fraud, for two reasons. first, actual science nobels are given for inventions and ideas which really change people's lives (lead to new products or cure illnesses previously believed incurable). in the eyes of the public, then, economics "nobel" laureates are viewed as people capable of producing something that can change their lives for the better. second, actual nobels give their laureates some degree of public prestige, and the econ "nobel" fraud includes voodoo economists into this list. now, i am not against prizes in economics per se (i myself have received a couple of low-key awards in economics), but i am fundamentally against the idea of linking economics with nobel prize. just think about mathematicians - they have their fields medal, and few outside of mathematics cares who received it and for what. this, in my opinion, would be an appropriate setup for economics as well. mind you, i am a ph.d. economist and work in academia.

as an academic economist, i can also tell you something about how this club functions. the currency of the club is publications in certain top journals. it does not matter how well you teach or what you know about the outside world - to get ahead in the club, you need to publish. to get publications, you are supposed - in theory - to write papers which convincingly advance new ideas. in fact, to publish in top journals, you need to know editors and reviewers (there is a rather strong bias in the club, i can tell you as both an author, an editor, and a reviewer). in the end, editors push their students and their friends, and keep the door largely closed to the outsiders. all this is funded, mind you, with college tuition (funny it suffices for a club member to be a mediocre teacher) and taxpayer money (what did you, taxpayer, get for this money, if the club members have largely missed the financial crash). now, there are a number of good people and true professionals in the club - we sometimes give sound advice to governments and policy-makers, some firms hire some of us as consultants; but by and large, this is a rather disfunctional and corrupt group of infantile intellectuals.

Sun, 04/29/2012 - 12:51 | 2383682 grgy
grgy's picture

The only thing more unbelievable than Krugman getting the Nobel is Obama also getting one. The Nobel institution may never recover their credibility after those two blunders.  What a joke!

Sun, 04/29/2012 - 13:14 | 2383696 Monk
Monk's picture

Financial speculation, the Federal Reserve, and generally money creation are the results of free market capitalism.


Sun, 04/29/2012 - 13:18 | 2383704 AnAnonymous
AnAnonymous's picture

They are favoured solutions in US citizenism, and therefore US citizen economics.

Sun, 04/29/2012 - 13:16 | 2383700 AnAnonymous
AnAnonymous's picture

The time period during which the real income of the middle class and the poorer strata among the citizenry began to stagnate curiously coincided with the abandonment of the gold exchange standard and the unfettered growth in money and credit that followed on its heels.


It is good. US citizens have this knack at making friends by introducing themselves through their propaganda fetish.

If you accept it then you can make friends.

You have a good solid US citizen friendship based on lies.

The real income? What is that? US citizen middle class have not grown richer from 1970s to now? The real income has declined.

The middle class standard of life has been redefined, going from families who do not feel the need to balance the budget against food etc to today's lavish style.

But the real income has declined. The real income has declined. The fake income has surged.

The real. The fake.

Negros enjoyed real freedom when living under the institution of slavery as they could not figure things out by themselves while US citizen indo Europeans were preparing themselves to endure fake freedom by supporting and developing the state marshmallow man.

Raving. US citizenism at its best. Fake. Real.

This kind of debate is what you get thanks to US citizenism.

No debaters can speak about what US citizens are so that's strawsmen after strawsman.

Start: wealth inequality, how the US middle class has grown poorer.

Good to see the US citizen middle class instant classics: the reference to poorer class timely as a stepping stone.

Suddenly, once again, the poor deserve attention. They are no longer that part of humanity that must be neutered in fear they overrun the US citizen middle, the loser who could not get it right etc...
Now victims of credit emission flood.

Sun, 04/29/2012 - 14:42 | 2383790 ArmchairRevolut...
ArmchairRevolutionary's picture

Krugman is too smart to believe what he wrote. This was clearly a deceptive argument designed to make people believe that printing does not benefit the banks. To those of you who think he does not get it, you are wrong. He is lying; straight up. He is either under pressure to sell a bad idea or he has decided to play ball.

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