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Krugman Rebutts (sic) Spitznagel, Says Bankers Are "The True Victims Of QE", Princeton-Grade Hilarity Ensues

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At first we were going to comment on this "response" by the high priest of Keynesian shamanic tautology to Mark Spitznagel's latest WSJ opinion piece, but then we just started laughing, and kept on laughing, and kept on laughing...

As a reminder, on Thursday Universa's Mark Spitznagel, best known recently for explaining in very vivid ways just how central planning has sown the seeds of its own destruction, wrote the following in the WSJ:

How the Fed Favors The 1%

 

The Fed doesn't expand the money supply by dropping cash from helicopters. It does so through capital transfers to the largest banks.

 

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.

 

The Fed, having gone on an unprecedented credit expansion spree, has benefited the recipients who were first in line at the trough: banks (imagine borrowing for free and then buying up assets that you know the Fed is aggressively buying with you) and those favored entities and individuals deemed most creditworthy. Flush with capital, these recipients have proceeded to bid up the prices of assets and resources, while everyone else has watched their purchasing power decline.

 

At some point, of course, the honey flow stops—but not before much malinvestment. Such malinvestment is precisely what we saw in the historic 1990s equity and subsequent real-estate bubbles (and what we're likely seeing again today in overheated credit and equity markets), culminating in painful liquidation.

 

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?

And here is how Krugman, who among other pearls of insight references ... Joe Wisenthal, responds. This is seriously Princeton-grade humor. We leave it up to readers to enjoy it for themselves unobstructed by our cynical interjections. Fom the NYT (highlights ours)

Plutocrats and Printing Presses

 

These past few years have been lean times in many respects — but they’ve been boom years for agonizingly dumb, pound-your-head-on-the-table economic fallacies. The latest fad — illustrated by this piece in today’s WSJ — is that expansionary monetary policy is a giveaway to banks and plutocrats generally. Indeed, that WSJ screed actually claims that the whole 1 versus 99 thing should really be about reining in or maybe abolishing the Fed. And unfortunately, some good people, like Daron Agemoglu and Simon Johnson, have bought into at least some version of this story.

 

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 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?

 

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.

 

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.

 

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.

 

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.

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.

It... just... does.... not.... compute.... is this the type of thinking of needs to exhibit to get a Nobel?

Does Krugman seriously still not understand that NIM as a business model for banks died about the time banks stopped making loans and relying exclusively on prop, pardon flow, trading and using infinite rehypothecation leverage to juice their returns into the stratosphere, using the offbalance accounting permitted by shadow banking (really read this Paul - you may finally understand how finance DOES work these days), while doing all their best to limit origination and mortgage lending exposure, thank you Bank of Countrywide Lynch (i.e. the opposite of the NIM business model)?

Well at least Krugman is right about thing: there sure aren't many people living on fixed income anymore. Most of them have already died. And he is most certainly not referring to the $5 billion on average in capital that is weekly rotated out of stocks and into bonds.

Whatever anyone does, do not point out our previous post that it was none other than the Fed warning that monetization and excess reserves could lead to hyperinflation. Or, that none other than JPMorgan pointed out a month ago that his beloved central planning has destroyed Okun's Law which makes all Krugman Op-Eds in the past 4 years about the same intellectual quality as one-ply Cottonelle.

We may get a scene straight out of Scanners. And we don't want that - we just want more Krugman humor and more LSAP, aka Large Scale Asshat Publications. In fact, it is time for the Fed to stop printing money and just print Krugman Op-Eds. Following the laughter-induced genocide, unemployment will indeed finally drop for once naturally, instead of as a result of millions of people dropping out of the labor force on a monthly basis.

 

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Sat, 04/21/2012 - 16:09 | 2363939 Unprepared
Unprepared's picture

Watching all videos/pictures at lemonparty would prove less damaging to one's eyes than reading this Keynesian apologist.

Sat, 04/21/2012 - 16:10 | 2363940 Careless Whisper
Careless Whisper's picture

The Careless Whisper Saturday News Update & Threadjacking

 

Feds Use Resources To Prosecute Teenagers' Pump & Dump; MF Corzine Still Free; $1.2 Billion Still Stolen From Customers Accounts

http://www.latimes.com/business/la-fi-0421-robot-scam-20120421,0,2038354.story

Foreign Judge To Decide MF Case

http://www.ft.com/cms/s/0/79ec9314-8b06-11e1-912d-00144feab49a.html#axzz1sgxyL7Es

EXCLUSIVE PIC - CENSORED BY MSM; Ron Paul, April 20, 2012, Pittsburgh PA

http://gallery.mailchimp.com/9b8827e2d9e8f8bf88bfe6fcb/images/Pitts2_500x281_.jpg

 

 

Sat, 04/21/2012 - 16:34 | 2363973 Troll Magnet
Troll Magnet's picture

when i was a kid, winning the nobel was considered one of the greatest achievements for any human being. now? not so much. not so much AT ALL. especially those who win the peace prize, economics, et al.

Sat, 04/21/2012 - 16:48 | 2363994 spiral_eyes
spiral_eyes's picture

You know Krugman is fucked up when he started citing Joe Wiesenthal as a source on macro.

Sat, 04/21/2012 - 17:29 | 2364037 toady
toady's picture

I just threw up in my mouth a little.

If ANYBODY, let alone someone whose opinion might be respected, actually BELIEVES this drivil we are in a world of shit.

Sat, 04/21/2012 - 17:57 | 2364058 nmewn
nmewn's picture

"I just threw up in my mouth a little."

Me too.

The time it takes to unwind the assumptions & fallacies of any Krugman article is better spent watching the national debt clock spin.

Sat, 04/21/2012 - 18:50 | 2364088 TruthInSunshine
TruthInSunshine's picture

Krugman quotes and relies on Joe Wiesenthal, and jumps an even bigger shark than any he has jumped previously.

The guy is 100%, absolute, full-tilt batshit crazy, or a total tool of the fractional reserve alchemists.

 

It's incredible.

Krugman actually wrote in one of his bullshit op/eds that the Fed's purchasing of 60%+ of all U.S. Treasury Bonds over the last 24 months has "insignificantly impacted yields," and that yields on treasuries (and competing assets, such as corporate bonds) are essentially priced in accordance with free market equilibrium.

Can anyone with a functioning brain possibly believe this load of shit?

He's a disgrace to economics, which is at any rate more a religion than a science anyways, and he's a disgrace period. No matter what he claims or how he tries to split his semantical hairs in his arguments and views that he's endorsed, he is just a simpleton, who is of the "deficits don't matter" school of idiocy that Cheney spewed, and essentially and perpetually calls for the creation of more debt to solve the existing debt problem.

And the icing on the cake (or grave) of Krugman's complete lack of credibility (one of just many examples that can be found), with respect to Krugman's claim that social security is the go-to repository of sustenance for the elderly, rather than savings:

 

 

Blast From Paul Krugman's Past: "Social Security Is A Ponzi Scheme"
Sat, 04/21/2012 - 18:53 | 2364106 francis_sawyer
francis_sawyer's picture

I suppose the only good thing one could say about Krugman is that in this fucking retarded world, 99% of the morons probably don't even know who the hell he is, & 99% of the people who DO, know he's FOS...

Whatever remains of the rest are just the satisfied customers whose dick he sucked to become recognized...

Sat, 04/21/2012 - 19:03 | 2364117 TruthInSunshine
TruthInSunshine's picture

I'm trying to find two op/eds by Krugman in the NYT.

I know the following as fact:

In one op/ed, Krugman explicitly stated that QE was necessary because it was critical to keep interest rates as low as possible given high unemployment and weak aggregate demand for goods and services (at least implying that QE had the affect of significantly impacting yields on treasuries and interest rates, generally).

In another, Krugman explicitly stated that QE had an insignificant impact on U.S. treasury bond yields and interest rates in general, and that market forces were driving interest rates lower.

I am absolutely positive he espoused these two contrary positions in two separate op/eds that he wrote within the last year or so. Any help in sourcing links would be appreciated.

The guy is a certifiable hack who lost any shred of credibility that he may have ever held a long, long time ago.

Sat, 04/21/2012 - 19:12 | 2364128 knukles
knukles's picture

Many people sincerely believe and eagerly await Krugman's prognostications.
Unfortunately, they vote.

Sat, 04/21/2012 - 21:04 | 2364229 The Limerick King
The Limerick King's picture

 

 

Krugman is now quoting Joe

From the Business Insider shit-show

I guess it makes sense

They're both very dense

And simply too stupid to know!

Sat, 04/21/2012 - 21:19 | 2364246 The Big Ching-aso
The Big Ching-aso's picture

 

 

Krugman is baboon butt ugly and has his head up his ass.  Other than that he has a lot going for him.

Sun, 04/22/2012 - 01:30 | 2364371 Oh regional Indian
Oh regional Indian's picture

Keeeesinger got the nobel.

Case closed, no?

ori

Sun, 04/22/2012 - 01:40 | 2364374 Paul Krugman
Paul Krugman's picture

I can't believe you dummies can't understand my perfect logic. Don't you understand that the Fed exists to help you. The Fed through masterful monetary policy has improved all your lives immensely.

Sun, 04/22/2012 - 11:10 | 2364728 EscapeKey
EscapeKey's picture

I didn't realize there was a worst troll of the year award.

Mon, 04/23/2012 - 01:13 | 2366020 Harlequin001
Harlequin001's picture

Yeah, it should be illegal to use somebody else's name like this. I think the name 'Tosser' might be a little more apt for him...

Sat, 04/21/2012 - 22:14 | 2364292 ChrisFromMorningside
ChrisFromMorningside's picture

One of my business clients is fairly wealth (tens of millions of dollars in assets) and very educated (Ivy B.A. + J.D.) and he gobbles up *everything* that Krugman writes. Hook, line and sinker. Looks up to him as an informative source to educate him about the markets. I *long* ago gave up on trying to set him straight or trying to open his eyes.

There is a population of people who love credentials and who love herd-thinking. If someone has a particular degree from a particular school, or won a particular award (Nobel), or is looked up to by a herd of mindless useful idiots -- then it is cemented in their minds that this is a person that they must respect.

Krugman is the favorite of upper class liberals who don't know *anything* about finance but like to imagine themselves as intellectually superior. His policies allow for unending giveaways to the financial sector while giving it all a veneer of social democracy and care-for-the-poor by tossing a few cents into some bureacratic black hole that is ostensibly meant to help those who are struggling economically.

The thing is, many of those who most support Krugman are so far detached from reality that they can't tell his spiel is pure bullshit. They don't shop for themselves and they don't have to budget so, yes, they do believe Krugman and Obama that inflation is at 2% or whatever the Party Line is. They have the government in their back pocket so they have no appreciation for how much money goes into government and then never sees the light of day. They think that forming some 501(c)3 and holding a soiree fundraiser actually equals "doing something" to help the less foruntate. Then when someone, especially someone without the right credentials, points out that inflation is really at 10%, that unemployment is really at 20% and that most of the "stimulus" money and bailouts never even came close to reaching the physical economy -- then you're labeled a "conspiracy theorist" or worse.

Fuck Krugman and fuck the Obama administration. Two of the biggest terrorist criminals on our planet right now.

Sun, 04/22/2012 - 00:07 | 2364348 Fred Hayek
Fred Hayek's picture

Even some of those pretentious lemmings might hesitate if they read that quote from Krugman circa 2002 to the effect that what we must do is start a real estate bubble to avoid a recession.

Sun, 04/22/2012 - 08:31 | 2364540 TheFourthStooge-ing
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ChrisFromMorningside lamented the unfortunate reality:

There is a population of people who love credentials and who love herd-thinking. If someone has a particular degree from a particular school, or won a particular award (Nobel), or is looked up to by a herd of mindless useful idiots -- then it is cemented in their minds that this is a person that they must respect.

Many people find that thinking is an unfamiliar and unpleasant process. Referring to a list of credentials is much easier and far less painful than making the effort to understand. Sadly, 'twas always thus.

 

Sun, 04/22/2012 - 09:35 | 2364623 uno
uno's picture

Ultra libs (limousine liberals) look at anything in the NY Times as 100% reality.  To them O, Clinton, Pelosi, Reid are gods to be worshipped.

Mon, 04/23/2012 - 15:48 | 2368098 nicxios
nicxios's picture

Appeal to authority. He must have skipped class the day they taught that.

Sun, 04/22/2012 - 08:20 | 2364533 Freewheelin Franklin
Freewheelin Franklin's picture

I am absolutely positive he espoused these two contrary positions in two separate op/eds that he wrote within the last year or so. Any help in sourcing links would be appreciated.

 

You might want to try here (if you haven't already):

 

http://krugman-in-wonderland.blogspot.com/

Sat, 04/21/2012 - 19:13 | 2364130 nmewn
nmewn's picture

"...perpetually calls for the creation of more debt to solve the existing debt problem."

Exactly right.

Anyone with a functioning brain knows a debt based system is premised on the principle being repaid. Putting it on another credit card does nothing to repay the debt incurred now...his present credit cards are time & currency debasement.

He continually avoids this not so small detail of principle, while disguising his true motives as fighting for present "social fairness" which is really opting for the certain mutually assured destruction of all of this society...in the future...which he must be gambling on happening long after he has departed this mortal coil.

He can only be best described by me as a parasitic leech who infects others while sucking off the host.

Sun, 04/22/2012 - 11:14 | 2364734 EscapeKey
EscapeKey's picture

yes and no. the current system rests on the pretense of the debt getting paid. but the wall st bankers sit under a rain of fees and interest payments, and that's what they ultimately care about.

Sat, 04/21/2012 - 22:19 | 2364293 mendigo
mendigo's picture

This is not about economics or reason, this is in your face soviet style disinformation.

He says that interest rates are not artificially low yet the fed is openly usint "printed" money to buy government debt which he knows has the effect of surpressing rates. Obvious lie.

The fed is loaning money at essensially zero percent - that is not buying anything and the banks profit from those cheap loans. Another obvious lie.

Somebody needs to take this guy to task. The public does not have the familiarity to see this Nobel prize winning voice of a major source of "news" is a lying sack of shit.

Sun, 04/22/2012 - 00:14 | 2364350 Fred Hayek
Fred Hayek's picture

Some cracks in the Krugman facade probably started to show with his attempt to sort of debate Steve Keen. Krugman almost risibly misrepresented Keen's arguments and even the sycophants at his blog started to wonder if the all powerful Oz was really all he was cracked up to be.

Sat, 04/21/2012 - 19:09 | 2364098 The Alarmist
The Alarmist's picture

Actually, it takes little to no time to unwind Krugman. He lives and breathes "post hoc ergo propter hoc," to wit:

"And we have low inflation with high unemployment, strongly suggesting that the natural rate of interest is below current levels, "

Go ahead and pull on that one thread ... if for some reason the measure of inflation is questionable, most of his reasoning unravels.

While many, including myself, would argue that current official inflation measures, the ones used by Krugman, are hardly representative of the inflation experienced by the average person (99%) or myself (the next 0.99%), I will avoid resorting to doing a Krugman here and merely say that he is demonstrating an amazing lack of academic or scientific integrity by presenting questionable lemma to draw the reader into accepting what may be a questionable hypothesis as a sound theorem.

BTW, Krugman is one of the 0.01%, who stands to benefit from the use of his reasoning to loot the rest of us ... would be nice if he believed in fair disclosure.

Sat, 04/21/2012 - 19:28 | 2364142 akak
akak's picture

Spouting big sloppy lies loudly and directly from one's ass: So easy, a Krugman can do it!

Sat, 04/21/2012 - 20:16 | 2364183 The Alarmist
The Alarmist's picture

It depends on the audience and the intended effect, but I learned long ago that I should sometimes say that sombody "Lied" and other times say that somebody made a "Material mis-statement of fact."

Krugman deals in the hypothetical, so one needs to consider being a little more nuanced to ensure his arguments are soundly countered.

He does not lie ... he opportunistically frames the problem. Hell, I'm willing to concede that he actually believes what he is espousing.

Sat, 04/21/2012 - 22:33 | 2364204 mendigo
mendigo's picture

I find it hard to believe he is that stupid. It must be a calculated lie - to the average person they accept this ass as an authority.

He is right in at least one respect - as much as wall street needs another injection of QE, the banks must fear a serious case of inflation. I imagine that is what has caused Ben to blink.
Perhaps Europe will start that fire.

Sun, 04/22/2012 - 00:59 | 2364362 ElvisDog
ElvisDog's picture

I would say un-insightful and ivory-tower rather than stupid. He lives in an academic world surrounded largely by syncophants who praise his insights on aggregate demand and so on. He is enormously well paid and probably never travels or exists outside the cloistered world of Princeton or Martha's Vinyard. His premises and opinions are based on academic models that support his own political agenda.

The bottom line is his arrogance and ego will never allow him to admit he is wrong. Any failures will be attributed to not following his policies strongly enough.

Sun, 04/22/2012 - 17:43 | 2365356 mendigo
mendigo's picture

His reasoning seems to me to be based on the premise that the banks are focused on maximizing return to shareholders and that this results in efficient allocation of resources. I don't think there ismodel that correctly accounts for greed, fear and incompetence. and any rational person allows for this descrepancy.

Sun, 04/22/2012 - 09:49 | 2364638 Gohn Galt
Gohn Galt's picture

I spewed my coffee and one of the kids saw it on the computer while I was cleaing up.  Maybe you shouldn't bring up lemonparty or at least give us a warning.

And as long we are referencing the bizarre.  Did anyone else think what was happening in the over Norway when Obama was accepting the Noble Peace Prize might not have been the sign we hoped for?

http://blogs.discovermagazine.com/80beats/2009/12/10/russias-flawed-inte...

It is unfortunate about those twin teens getting hit for $1.2million pump & dump.  Our people are morally bankrupt.  At least if the kids were going to do something they should use protection.  I am sure if they want to shed some heat they could do a follow up on how Gandhi was homosexual

http://www.ynetnews.com/articles/0,7340,L-4048776,00.html

and how Gandhi is an enemy to religions

https://occidentallibertas.wordpress.com/2012/02/13/gandhian-enemy-of-th...

which I am sure is just payback for denouncing Zionism and the fact that Gandhi supported Palestine and was against turning the region into a Jewish state.

http://www.gandhiserve.org/information/writings_online/articles/gandhi_j...

And let's run Gandhi's grandson out of his institute for speaking up against oppression.

http://www.washingtonpost.com/wp-dyn/content/article/2008/01/25/AR200801...

 

For the record I do not promote oppression.  I am not looking to be the master or slave of anything.

 

 

Sat, 04/21/2012 - 20:09 | 2364181 Seize Mars
Seize Mars's picture

I think I just sharted.

Sun, 04/22/2012 - 18:58 | 2365486 Quaderratic Probing
Quaderratic Probing's picture

Poor banks have tones of money on deposit with the Fed right now getting a crappy 3% interest. Al they have to do is take it out and buy their own stock with it. This will force the price up creating huge capital gains for themselves... my God this is easy

Sun, 04/22/2012 - 07:43 | 2364499 TheFourthStooge-ing
TheFourthStooge-ing's picture

Troll Magnet said:

when i was a kid, winning the nobel was considered one of the greatest achievements for any human being. now? not so much. not so much AT ALL. especially those who win the peace prize, economics, et al.

While our lawless exterminator-in-chief has shit on the reputation of the Nobel Peace Prize, we must remember that there is no Nobel Prize in Economics. It is really an award created in 1969 by Sveriges Riksbank, the world's oldest central bank. It is a ham-fisted attempt to purchase credibility and legitimacy for the pseudo-science of economics by way of an annual bribe of a million dollars to the Nobel Foundation for "administrative expenses".

If Krugman could somehow be compelled to tell the truth, this would have been his opening statement:

These past few years have been lean times in many respects — but they’ve been boom years for agonizingly dumb, pound-your-head-on-the-table economic fallacies, which, incidentally, is how I won my quasi-Nobel Sveriges Riksbank Participation Trophy in the Economic Pseudo-Sciences.

 

Sun, 04/22/2012 - 13:43 | 2364897 Lednbrass
Lednbrass's picture

+1, this is a point I rarely see mentioned. If there were any honesty and the media reported this as the "Central Bankers Prize in Economics in Memory of Alfred Nobel" (which it really is) it would take a bit of the lustre off this "award".

Sun, 04/22/2012 - 13:11 | 2364876 Whoa Dammit
Whoa Dammit's picture

Krugman bought his Nobel at the Obama Store.

He also seems to be plagerizing Bart Simpson's homework: "What it (the Fed) actually does, of course, is buy stuff, usually _____, but nowadays sometimes other stuff."

Sat, 04/21/2012 - 17:01 | 2364013 El
El's picture
Corzine, Amid Scandal, Is Among Obama's Top Bundlers http://www.realclearpolitics.com/articles/2012/04/21/corzine_amid_scanda...
Sat, 04/21/2012 - 17:06 | 2364019 CuriousPasserby
CuriousPasserby's picture

Did you see Corzine is a major bundler for Obama? Wanna bet it's payment for the pardon he'll need?

Sat, 04/21/2012 - 18:11 | 2364069 Red Heeler
Red Heeler's picture

Ron Paul is packing arenas like that everywhere he goes. It will be interesting to see what the millions of Ron Paul supporters do when he is fraudulently denied the nomination. I hope it will be something more forceful than to weep themselves to sleep. As well organized, numerous, and patriotic as they are it would only be fitting for them to make the kleptocracy howl. 

Sat, 04/21/2012 - 21:17 | 2364245 philipat
philipat's picture

If Ron Paul threatens to stand as an Independednt, Romney is fucked because the consistent 10-15% who vote for Paul, well, will vote for Paul. This would hand re-election to Obama. IMHO, Paul should stay in until the end then demand some real influence in the Romney administration, without commitments to which, he would announce his Independent candidacy.

Sat, 04/21/2012 - 22:24 | 2364298 i-dog
i-dog's picture

You are making an [incorrect, IMO] assumption that the Republicrats are trying to win!

The most conservative and influential repub backroom boys are actively spoiling Romney and attempting to get Santorum back into the starting gate---knowing full well that he is even less appealing to the electorate than Mittens. They totally shun Ron Paul, notwithstanding his very close connection to many of them that goes all the way back to his days in the John Birch Society.

I strongly suspect that the repub leaders know there will not be an election and that they are all, including Ron Paul, just treading water to keep up the show.

Sat, 04/21/2012 - 22:39 | 2364305 mendigo
mendigo's picture

I don't understand your point about no election but I agree that it appears the repubs are taking a pass on this one. I think they are getting most of what they want with obama in office - his administration is so inept and so needy.

Sun, 04/22/2012 - 08:48 | 2364559 TheFourthStooge-ing
TheFourthStooge-ing's picture

mendigo said:

I don't understand your point about no election but I agree that it appears the repubs are taking a pass on this one. I think they are getting most of what they want with obama in office - his administration is so inept and so needy.

You are more correct than you realize. The republican branch of the War Party loves Obama. He is like a third-term Bush Jr., except he's a better republican than George W ever was.

They can't openly campaign for him, as that would spoil the two-party illusion that they've worked so hard to develop with their partners, the democratic branch of the War Party. What do they do to assure an Obama victory? They run a flip-flopping milquetoast (Romney), a pariah of corruption (Gingrich), and a religious extremist kook (Santorum), while simultaneously undercutting at every opportunity the only credible threat to Obama's re-election (Paul).

 

Sun, 04/22/2012 - 08:59 | 2364573 dcb
dcb's picture

Ta DA, you got it!!!

Sun, 04/22/2012 - 09:45 | 2364632 TheVirginian-HGWT
TheVirginian-HGWT's picture

You are correct. The 'Left' and 'Right' wing parties are both attached to the same bird (neo-feudalistic fascism).

Sat, 04/21/2012 - 22:44 | 2364311 philipat
philipat's picture

I agree it makes no difference which party wins. It's called divide and conquer, a game invented by the British in the days of Empire. But you really believe the Totalitarian takeover, or the revolution, will come before November?

Sun, 04/22/2012 - 01:02 | 2364364 ElvisDog
ElvisDog's picture

Such talk is silly because collapses of great empires always take longer than most people think. Rome took 200 years from when it was on the brink until it finally died (the western empire that is). There will absolutely be an election in November. If any don't think there will be, please tell me what event will prevent it.

Sun, 04/22/2012 - 12:00 | 2364792 hadriansnightmare
hadriansnightmare's picture

Paul should run as an independent. Period.  Let Obuma have another four years.  The sooner this mess gets pushed over the cliff the better.  The friggin repubs have had their shot on and off for thirty years.  Paul should go out starting something (a third party with legs) not pandering for some BS cabinet position.  Romney is a Fed lover and a Wall Streeter through and through- you gotta be kidding me "demand some real influence".....that's a good one.  The toast is already burn't black and your solution is to scrape it with a knife.  Been there, done that. 

Sat, 04/21/2012 - 20:51 | 2364215 SILVERGEDDON
SILVERGEDDON's picture

What a cluster of fuck. Banks are victims. Well, then so are child molesters, drug dealers, pimps, war criminals, the aristocracy, heads of organized religion, sadists, and all sorts of other misunderstood people. Excuse me, while I vomit all over this Klingon cocksucker from Uranus. Fucking nervy bastard, I;ll give him that.

Sat, 04/21/2012 - 23:02 | 2364322 williambanzai7
williambanzai7's picture

KRUGMAN

Sun, 04/22/2012 - 10:28 | 2364681 TheFourthStooge-ing
TheFourthStooge-ing's picture

Krughead: Huh huh...hey Beavis, pull my finger.

Beavis (Jeethner): OK... (pulls finger)

Krughead, after sharting: Huh huh...check it out, dude, I wrote an editorial in my shorts.

 

Sun, 04/22/2012 - 08:16 | 2364530 Chuck Walla
Chuck Walla's picture

“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it."

 

JK Galbraith

Sun, 04/22/2012 - 11:24 | 2364748 Nukular Freedum
Nukular Freedum's picture

The market rate of interest could have been found organically in 2008 by dropping treasury bond coupons below the zero bound and banning the central bank from chewing on its own garbage. We'd soon see what the "natural rate" was then. 

Sat, 04/21/2012 - 17:37 | 2364040 vmromk
vmromk's picture

FUCK YOU Krugman and more importantly FUCK Bernanke. 

Sat, 04/21/2012 - 21:13 | 2364238 philipat
philipat's picture

Actually, and I am not defending Keynes, there is an unfair and consistent misrepresentation of the central positions of Keynesian theory. Keynes believed that Governments should build reserves during the expansionary phase of the business cycle (Arguably, now) and then deploy those reserves during the down cycle. Unfortunately nobody seems to mention this distinction. Politicians have, of course, conveniently ignored the first part and presented Keynesian theory as just infinite QE. That is NOT what Keynes either said or intended.

Sat, 04/21/2012 - 22:27 | 2364299 i-dog
i-dog's picture

So what?

Sat, 04/21/2012 - 22:39 | 2364304 philipat
philipat's picture

So don't call it Keynesianism when it isn't. That's all.

Sun, 04/22/2012 - 02:27 | 2364395 Knobbius
Knobbius's picture

Here here.

I've met so few people who could really explain the central tenets of Keynesian thinking.  The other tenet (in addition to counter-cyclical fiscal/monetary policy) is that government's creation of demand during a downturn to "fill in" the drop-off in private sector demand must be temporary.  Private demand must be restored as promptly as possible, i.e. government must not permanently expand as a result of counter-cyclical policies.  

As you said, Keynes would not approve of the things being done in his name....

 

 

Sun, 04/22/2012 - 00:29 | 2364351 Fred Hayek
Fred Hayek's picture

What you say is true. The way that governments act is not actually true Keynesian practice. They never run surpluses in good times and then disburse them in bad.

But a theory which human nature dictates will never be followed as it must be to work is a useless theory at best and most likely a pernicious one.

Sun, 04/22/2012 - 07:38 | 2364497 ISEEIT
ISEEIT's picture

Krugman is to obama as Goebbels was too?

http://www.psywarrior.com/Goebbels.html

And no, I am not necessarily suggesting apples to apples equivalency. Deception however is always employed to mask true purposes. The question then is what objective or objectives are being sought? That they are intentionally being deceptive is beyond dispute. To serve what purpose is a reasonable question...That they must employ deception in pursuit of attaining whatever it is that they seek to achieve reveals that their intentions are devious.

These people are not dumb, they are evil.

Dumb is funny.

Evil is dangerous.

Sun, 04/22/2012 - 08:01 | 2364513 hamurobby
hamurobby's picture

If you no longer want some part of your flock of sheep, isolating them in a pen and slowly starving them to death is not more humane than shooting them.

Sat, 04/21/2012 - 16:10 | 2363941 SheepRevolution
SheepRevolution's picture

Die Krugman Die!

Sat, 04/21/2012 - 16:42 | 2363975 akak
akak's picture

Unfotunately, Keynesians are like the Hydra --- for every head you lop off, two Princeton-"educated" central banking shills grow back.

Sat, 04/21/2012 - 16:49 | 2363995 spiral_eyes
spiral_eyes's picture

Taleb recently proved that stupidity can be antifragile.

Sat, 04/21/2012 - 20:27 | 2364167 TruthInSunshine
TruthInSunshine's picture

The sad fact of the matter is that Keynes, were he alive today, would go to the greatest lengths to distance himself from Krugman, as Krugman has bastardized many of Keynes' views/positions.

I say this as more of a follower of the Austrian school, too (although I'm not dogmatic, and fear that complying too much with any one "school of thought" might signal intellectual weakness/laziness in terms of one's own views).

 

Here's one example of something one would never hear Krugman mention, let alone emphasize, even though Keynes thought it necessary:

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth"

 

"As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery."

 

"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

 

J.M. Keynes; The Economic Consequences of the Peace (p. 235-6)

Sat, 04/21/2012 - 16:53 | 2363999 Ignatius
Ignatius's picture

MillionDollarBonus is writing op-eds now, I see.

Sat, 04/21/2012 - 17:07 | 2364020 HelluvaEngineer
HelluvaEngineer's picture

German for "The Krugman, the"

Sat, 04/21/2012 - 23:12 | 2364325 t_kAyk
t_kAyk's picture

LOL

Sat, 04/21/2012 - 16:19 | 2363943 ebworthen
ebworthen's picture

Fucking Krugman.

So a natural interest rate would be below zero?

A negative interest rate would be "natural"?

Big banks are the "victims" of QE?

What a tool.

What a God of Sophistry (bullshit).

Krugman's head is so buried in mark to fantasy economic alchemy he couldn't tell the difference between a debit and a credit for a lemonade stand.

What a crock of steaming stupidity.

So Professor, why can't underwater hoemowners get a 0.05% 30 year loan from the FED?

Why can't I apply to the IMF for funds to hlep me pay my mortgage until I can impose austerity on my government?

Fucking academic shill.

PhD = Piled higher and Deeper

Sat, 04/21/2012 - 16:27 | 2363961 narnia
narnia's picture

There's an easy way to solve this.  Let's liquidate the left side of the Fed's balance sheet back to $800B and see who that affects.  I mean, if we're in a "liquidity trap", the economy doesn't need the excess reserves, right Paul?

The TBTF need ZIRP because any serious spike or tightening in the overnight lending rate would cause the mother of all margin calls.  

Sat, 04/21/2012 - 16:53 | 2363998 LowProfile
LowProfile's picture

If they did that, CASH WOULD BE KING and any of us would be able to buy a (formerly) TBTF bank with the change in our pocket.

Sat, 04/21/2012 - 21:46 | 2364270 TruthInSunshine
TruthInSunshine's picture

Props, narnia & lowprofile.

Sat, 04/21/2012 - 17:53 | 2364052 Ratscam
Ratscam's picture

money is natural?
but even more funny, natural interest rates.
there is no exponential function that works in nature in the long run, hence the survival rate drops to zero eventually.
Krugmans piece reads like a bad fiction novel.

Sat, 04/21/2012 - 17:20 | 2363948 resurger
resurger's picture

He will pop at this post at any second now!

 

Sat, 04/21/2012 - 16:20 | 2363950 ZackAttack
ZackAttack's picture

The naive ... version of Fed policy is the claim that Ben Bernanke is “giving money” to the banks.

He is. I think the total's up to about $17 trillion now, directly and indirectly, not counting that little matter of TARP. He's facilitating their attempts to trade their way out of a hole. He's directly supporting the value of the assets on their books, and we also changed securities law to allow them to be valued more favorably.

 

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.

They are, and, they are.

Sat, 04/21/2012 - 16:54 | 2364003 hellas4life
Sat, 04/21/2012 - 16:22 | 2363953 Vegetius
Vegetius's picture

First we had hamartia — the tragic flaw that a group of people believed they had it all figured out. Which led to hubris — the belief the good times would never end? Now we are in the beginning of nemesis — disaster. When will we reach anagnorisis — the moment of recognition well doesn’t hold your breath on this one arriving for a while. Finally catharsis, — the experience of purgation and relief, well that’s how the Greeks saw it. However we are far more likely to face War, Famine and a whole heap of broke angry people. So happy days all round.

Sat, 04/21/2012 - 16:24 | 2363955 Britonomist
Britonomist's picture

"is this the type of thinking of needs to exhibit to get a Nobel?"

No, he got his nobel in trade and geography, he has no experience in banking & finance.

Sun, 04/22/2012 - 01:42 | 2364375 malek
malek's picture

I'd say he got his nobel mainly as an anti-BabyBush statement from some Scandinavian do-gooders.

Sun, 04/22/2012 - 16:24 | 2365197 lotsoffun
lotsoffun's picture

along with big bad bama.  a man that never accomplished anything in his entire life.

at least baby bush had the chance to run a few of his daddys biz into the ground.

 

 

Sat, 04/21/2012 - 16:25 | 2363956 LowProfile
LowProfile's picture

"The real victims of expansionary monetary policies are the very people who the current mythology says are pushing these policies... It’s George Orwell’s world, and we’re just living in it." - Paul Krugman, Nobel Prize Winning Economist

“There is no more risk that the euro will implode.”  -Nicolas Sarkozy, President of France

"When it gets really serious, you have to lie." -Jean Claude Juncker, head of the Eurogroup council of eurozone finance ministers

Sat, 04/21/2012 - 16:26 | 2363957 Misean
Misean's picture

"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."

OOO...OOO...Mr. Krugman Mr. Krugman!!!
The Feral's stated policy IS TO HOLD F***ING interest rates DOWN! Did you miss that? Perhaps the hopium smoke is in your eyes...

"I mean, what is the un-artificial, or if you prefer, “natural” rate of interest?"

Ummm...that which the market, unimpeded by the state or central skank, sets. Really, what is the price of water? What is the price of a diamond? Perhaps you need to go read a bit about prices being set on the margin.

"Roughly, the natural rate of interest is the rate that would lead to stable inflation at more or less full employment."

Bwahahaahahahhahaahahah! OMG! You really are an idiot! There is NO stable rate of inflation, nor is there a thing such as full employment. Therefore, this definition is inane. In a productive economy prices FALL!

Does one get a Princeton Ebubblegnomics PHuckeD by getting a lucky Cracker Jack box?

Sat, 04/21/2012 - 16:26 | 2363959 Unprepared
Unprepared's picture

"...over howls of protest from the financial industry"

OK, I said to myself maybe I missed an important point here and went to read the pieces "supporting" this claim, and couldn't find any banker quoted complaining, rather a bunch of analysts warning of the outcome.

When the financial industry doesn't like something, it makes it known and stops it, like ... er, the Volcker rule

WTF? 

Sat, 04/21/2012 - 16:56 | 2364008 Miss Expectations
Miss Expectations's picture

Paul Krugman is tired of trying to reason with you people (photo):

 

http://www.flickr.com/photos/joebehr/6162902873/

 

 

Sat, 04/21/2012 - 16:26 | 2363960 digalert
digalert's picture

Oh ya, I see Jamie Dimon on the TeeVee and he looks like a victim...bovine excrement

Sat, 04/21/2012 - 16:30 | 2363962 q99x2
q99x2's picture

Handcuff and throw them into jail for being accessories to financial terrorism. The Business Insider went the way of Yahoo about two years ago. Probably about the time they began getting paid by GS.

Sat, 04/21/2012 - 16:32 | 2363967 chinaguy
chinaguy's picture

Holy fuck - Which are you Krugman.....stupid or a lying?

Sat, 04/21/2012 - 16:56 | 2364007 adr
adr's picture

Answer - All of the above plus every vulgar insult every uttered from the mouth and ass of man.

Sat, 04/21/2012 - 17:33 | 2364038 Winston Churchill
Winston Churchill's picture

Read it three times.

Laughed the first time.

Cried the second.

Now I'm looking for directions to Princeton, and a short rope.

Sat, 04/21/2012 - 19:22 | 2364132 akak
akak's picture

Read it three times.

Crapped my pants in laughter the first time.

Crapped my pants in outrage the second time.

Crapped my pants in contempt the third time.

Mailing three pairs of unwashed second-hand pants to Princeton on Monday.

Sat, 04/21/2012 - 16:32 | 2363969 t_kAyk
t_kAyk's picture
douche bag

noun 1. a small syringe having detachable nozzles for fluid injections, used chiefly for vaginal lavage and for enemas. 2. Also called douche . Slang: Vulgar . a contemptible or despicable person. 3. this fucking guy

Sat, 04/21/2012 - 18:50 | 2364103 The Alarmist
The Alarmist's picture

I love having to explain to Europeans that when I refer to a person as a Douche, I am not calling him a shower.

Sun, 04/22/2012 - 08:59 | 2364572 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

I love having to explain to Europeans that when I refer to a person as a Douche, I am not calling him a shower.

You could always try calling Klugman a fleet nozzle.

 

Sat, 04/21/2012 - 16:33 | 2363970 francis_sawyer
francis_sawyer's picture

PLUTOCRATS!... It's what's for dinner...

Sat, 04/21/2012 - 16:34 | 2363971 pauhana
pauhana's picture

I am one of "these people," God damn it!  And I'm beyond annoyed with Krugman and his ilk who have no understanding of the damage they are doing to the economic fabric of America. 

Sat, 04/21/2012 - 17:16 | 2364025 Zero Govt
Zero Govt's picture

Krugman is the "economic fabric" of the elite ...think a butler of some fat Roman plutocrat (Ben?) living on borrowed time as the Empire crumbles but still singing its praises because he wouldnn't last a week going back to working the fields with the phesants 

Sat, 04/21/2012 - 18:08 | 2364067 brettd
brettd's picture

Oh, he understands the damage.

But like the great "Gatsby" said:  "They (the powerful) are careless people."

And to think people pay money to send their kids to his classrooms.

Are he and Robert Reich lovers?

Sat, 04/21/2012 - 16:39 | 2363980 Sudden Debt
Sudden Debt's picture

This week I went to a seminar about the viability of the pension system starting 2015... Damn it scared the shit out of me. I don't think there's a lot of people who realize what awaits them when they'll retire.
I'd lose about 80% of my current income.
Most people over here in belgium will have to get by one a 900 euro pension while everybody thinks the number will be double of that!

Sat, 04/21/2012 - 16:41 | 2363983 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

900 euros at todays vaule??? You should be lucky...sounds like bloody luxury to me

Sat, 04/21/2012 - 16:47 | 2363992 Misean
Misean's picture

Aye. By retirement time, 900 Euro will buy a pensioner a stale, lightly molded slice of bread.

Sun, 04/22/2012 - 09:42 | 2364629 TruthInSunshine
TruthInSunshine's picture

Sudden Debt - if I'm not mistaken, calPERS is using a projected 8.3% annual (and compounded) rate of growth as its basis to claim it should be able to fund pension payments of various retired and to-be-retiring state, county, local employees, including teachers.

Anyone who understands the first thing about average historical returns derived from institutional funds could only howl in laughter at such a projection made for any given year, or 5 year, or 10 year period, let alone an essentially 'forever and ever' period.

Sun, 04/22/2012 - 16:20 | 2365187 lotsoffun
lotsoffun's picture

s&p up how much in 3 1/2 months?  20%  come on.  bernake is  a genius.  a virtual savior!  annualize that.  (sarc)

 

Sat, 04/21/2012 - 16:43 | 2363986 dwdollar
dwdollar's picture

"It’s George Orwell’s world, and we’re just living in it."

It sure is Paul, but I will let you in on a little secret. You're no Winston Smith.

Sat, 04/21/2012 - 17:18 | 2364030 Beam Me Up Scotty
Beam Me Up Scotty's picture

I wouldn't mind seeing the starving rat in a cage strapped onto Krugmans face though.

Sat, 04/21/2012 - 16:46 | 2363991 I should be working
I should be working's picture

"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."

Um, when the market gives no bid to your toxic assets and you face bankruptcy, but the fed swoops in to buy them what do you call it?

I guess if you run one of those banks you call it an unbearable burden.

How about when the fed buys treasuries from you for more than you paid to the treasury? I guess from Krugman's view you call it a kick in the balls.

Sat, 04/21/2012 - 16:51 | 2363996 Hedgetard55
Hedgetard55's picture

Under Sharia law Krugman, along with Bernanke and Greedscam, would have already forfeited both hands and their tongues.

I wonder if Krugman's Obamabotomy was paid for by Obamacare?

 

Sun, 04/22/2012 - 05:39 | 2364451 WTFx10
WTFx10's picture

If we valued our own laws they would be in prison, gitmo should be shared by the criminals and the terrorists they created. Jewish mafia cellmates with radical muslims is that inhuman treatment? Or just desserts?

Sun, 04/22/2012 - 16:18 | 2365182 lotsoffun
lotsoffun's picture

anybody seen jonny corzine lately?

 

Sat, 04/21/2012 - 16:53 | 2364001 Imminent Collapse
Imminent Collapse's picture

Here's the bad part: a lot of people believe Krugman. I know because they quote him to me in discussions. There will be a lot of surprised people when TSHTF.

Sat, 04/21/2012 - 19:16 | 2364131 UP Forester
UP Forester's picture

Let me guess:  These are the same people who believe inflation is under 3%, unemployment is under 9%, and expect to live off of either Social Security or pensions, right?

Sat, 04/21/2012 - 20:22 | 2364191 chinaguy
chinaguy's picture

No, No surprise...the same idiots who listen to the MSM & believe Krugman are the same idiots who will believe the current administration when the new admin blames the crash on a Black Swan " there was no way to foresee this terrible event which destroyed the foundations of our great nation" blah- blah -blah...

Sorry, I'm past caring - fuck the sheeple - take care of your family & friends - flame me if you like, but I'm making a difference - where I can.

 

Sat, 04/21/2012 - 16:54 | 2364002 adr
adr's picture

I was in Pittsburgh for my college's annual spring carival. The RonPaul rally was right down the street at Pitt. I went, it was awesome.

On Krug, jebus frickin christ. The bankers are the true victims??? He's out of his mind.

If the Fed decided to plop $1 billion on my doorstep, I would be a victim? Having someone buy my worthless asset for the full original value makes me a victim???

All of the fresh capital was given to those with the pwoer to enter the markets first. Flushing the system with cash in the hopes that massive infusion would cause the value, in dollars, of the assets to increase. Thus causing massive inflation. The early invenstors would see the value of their holdings increase massively. This is somehow bad for them?

If the massive bailouts were never enacted and QE never started, yes the stock market would probably be half its current level, but oil would be $40 a barrel and food prices would probably be half what they are now. 46 million americans wouldn't beon food stamps and the world's largest zombie corporations would all be dead. True organic growth would have already started to take hold and our country would be on its way towards a real recovery.

Yes blue bloods would probably be begging in the street. The Hamptons may have ended up looking like "Life after people", Cramer wouldn't have a job and CNBC would be off the air.

Yes Krug, I would take that later scenario every time.

Sun, 04/22/2012 - 16:16 | 2365174 lotsoffun
lotsoffun's picture

life after people in the hamptons would be ok.  they could grow potatos again. the cnbc bimbos could go back to doing nails and 'waxing' other bimbos.  krugman could get a job deliviring the ny times.  geithner would have to hope his father could find him something.  and big bad bama - i can't even imagine what he's actually qualified or capable to do.  it would be heaven.  work never hurt anybody.

 

Sat, 04/21/2012 - 16:55 | 2364004 theTribster
theTribster's picture

The Nobel just ain't what it used to be, first Krugman and then Obama. The organization has lost its integrity by lowering its standards and playing global political games. What happens when the global economy implodes or when Obama takes us into more wars? They should take them back and apologize to the world and previous winners of the Nobel....

Obama, what a joke!

Sat, 04/21/2012 - 16:59 | 2364009 t_kAyk
t_kAyk's picture

"The Status Quo, what a joke!"

there, fixed it for you

Sat, 04/21/2012 - 17:00 | 2364011 Misean
Misean's picture

Nobel prizes are as meaningful as awards handed out by the local rotary club.

Sat, 04/21/2012 - 21:32 | 2364255 Praetor
Praetor's picture

Please remember that the Nobel Prize in economics is not a recognised prize as willed by Nobel. It is an abomination created at a later date riding on the coat-tails of the Chemistry, Physics, Medicine Literature and Peace .

 

Why the Peace prize is so fucked up needs to be explained.

 

 

Sun, 04/22/2012 - 01:14 | 2364366 ElvisDog
ElvisDog's picture

Here's some Nobel trivia I read somewhere. Do you know why there was no Nobel prize in mathematics originally? Because there was a famous European mathematician who was having an affair with a young woman that Nobel was infatuated with. Nobel was afraid that if he offered a prize in mathematics he would have to give it to the guy who was screwing this girl he had the hots for.

Sun, 04/22/2012 - 03:52 | 2364421 akak
akak's picture

So, in other words, Nobel was not very noble?

Sun, 04/22/2012 - 10:43 | 2364700 rwe2late
rwe2late's picture

Thorbjorn Jagland, former prime minister of Norway, supporter of military intervention, pro-NATO, was head of the Nobel prize committee when it awarded the “peace” prize to Obama.

Among his political foes in Norway, Jagland is called “our own George Bush Jr.”

“That vanguard role continues today, with Norwegian troops on the ground in Afghanistan, its naval vessels curbing piracy off Somalia, Pentagon anti-ballistic missile systems and anti-satellite technology waging the struggle for outer space, and the world’s most advanced anti-submarine technology. Norway has the highest per-capita troop deployment among NATO’s 28-member states.”

http://www.globalresearch.ca/index.php?context=va&aid=21512

Sat, 04/21/2012 - 17:27 | 2364036 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Would be? When ever was it?? Kissinger, Hitler, Stalin, Genghis Khan....all celebrated winners...

The only deserving winner I can think of is Knut Hamsun.

Sat, 04/21/2012 - 18:46 | 2364093 dwdollar
dwdollar's picture

At the very least, the "prize" should be awarded AFTER death when a person's actions are thoroughly documented.

But... that would defeat the purpose would it not? ;)

The "prize" IS MEANT to levitate a mortal human to demigod status so their opinion my trump all those around them and thereby be the grand muppet of TPTB by which all other muppets must follow.

Sat, 04/21/2012 - 20:26 | 2364195 chinaguy
chinaguy's picture

...then Yasser Arefat.... keep electing the winner boys!!!!! 

 

 

 

 


Sat, 04/21/2012 - 23:18 | 2364331 CrockettAlmanac.com
CrockettAlmanac.com's picture

Arafat shared the prize with Peres and Rabin. If an insane Zionist hadn't assassinated Rabin in an act of terror things may have played out differently for Palestine and Israel.

Sun, 04/22/2012 - 11:20 | 2364743 Nukular Freedum
Nukular Freedum's picture

Yeah, apologise to Kissinger you swines.

Sat, 04/21/2012 - 17:00 | 2364010 hellas4life
hellas4life's picture

I think krugman has had some great op-eds over the years and he did predict the demise of the euro and the us housing crisis, but bloody hell 0hedge you nailed this one. Nice work

Bailouts = socialism down with central planning and wall st
29 trillion in bailouts and counting http://www.levyinstitute.org/pubs/wp_698.pdf

Sun, 04/22/2012 - 01:53 | 2364380 malek
malek's picture

You're delusional.
Krugman predicted anything and everything over the vast number of NYT Op-Eds he posted.

If you read a Krugman editorial again and it somehow blabbers about the current predicament or even how we got here, try to find the word "debt" - in a negative connotation.
Then draw your own conclusions.

Sun, 04/22/2012 - 05:32 | 2364450 WTFx10
WTFx10's picture

“If one understands that socialism is not a share-the-wealth program, but is in reality a method to consolidate and control the wealth, then the seeming paradox of super-rich men promoting socialism becomes no paradox at all. Instead, it becomes logical, even the perfect tool of power-seeking megalomaniacs,” explained the late Gary Allen. “Communism or more accurately, socialism, is not a movement of the downtrodden masses, but of the economic elite.”

Sat, 04/21/2012 - 17:04 | 2364012 steve from virginia
steve from virginia's picture

 

Hate to break it to ya but Krug has the advantage this time.

He did get KOed during the 'banks are reserve constrained' 10 rounder with Steve 'Super' Keen.

Spitznagel gets hammered early and often, K-man is landing unanswered overhand lefts. Wall Street Journal: what do they know? Suckups to the Koch brothers.

The finance industry is the source of all of our 'new money' slash debt.  Dig a hole ... adding 'money' is digging more ... this digging business is claimed to be a good strategy.

What does govt do? It services private enterprise's debts. For every surplus there must be a (perpetual) deficit. Only government can sustain a deficit for long periods (without going out of business like private firms).

We have populist 'hard-money' junior plutocrats all jingling gold coins in their silk purses as if miserliness is a virtue of some kind. Just remember: ALL money and wannabes are claims against an industrial economy that is in the process of falling apart.

The problems are with the industrial part, not the money part.

Have a nice day.

Sat, 04/21/2012 - 17:07 | 2364021 Misean
Misean's picture

Perhaps the asshat from Virginia would care to elaborate his...teeheee...definition...sniggle...of money? Or is the oh so trenchant "...jingling gold coins in their silk purses as if miserliness is a virtue..." supposed to be a sufficiently effective appel that no further discussion isnecessary?

Sat, 04/21/2012 - 20:33 | 2364201 chinaguy
chinaguy's picture

@SfV -

waste of time to respond to an obvious paid and idiot troll....but

"What does govt do? It services private enterprise's debts"  

Yes, this is Crony capitalism...in real capitalism the government would not be within 1,000 miles of "servicing private enterprises" that is the job of the free market and other private enterprises.....

your argument is so fucking stupid I can hardly begin to counterpoint.


Sat, 04/21/2012 - 21:37 | 2364262 steve from virginia
steve from virginia's picture

 

Private enterprises cannot run deficits for long without going out of business. If half the businesses are in surplus the other half are out of business. There is consequently no net growth in credit, that is, there is no business growth (and no growth in wealth).

Only govt can run perpetual deficits.  Eliminate govt. deficit and private credit collapses entirely as federal govt deficit is debt service for $40 trillion in US private debts.

Private enterprise is incapable of servicing its own debts. That is the current crisis.

Sun, 04/22/2012 - 01:05 | 2364365 Terra-Firma
Terra-Firma's picture

Elaborate please as I Am having trouble understanding . Are you saying govt. is backstopping all private debts. If so, how?

Sun, 04/22/2012 - 11:02 | 2364718 Nukular Freedum
Nukular Freedum's picture

Ignore him he doesnt know what hes talking about. Hes obviously never heard of banks.

Sun, 04/22/2012 - 01:20 | 2364369 ElvisDog
ElvisDog's picture

Only govt can run perpetual deficits

Homework assignment for you - name me a government anywhere in recorded history that was able to run perpetual deficits. tick, tick, tick. I'm waiting.....

Fact is every single time a government has tried it at some point there has been a currency crisis and the whole ponzi collapse. In fact, mathematically speaking, exponential growth of anything, including government debt, ensures that a collapse will happen at some point. Does "No Tree Grow to the Sky" ring any bells? Eliminating the government deficit would cause a very sharp, short-term contraction, but your "perpetual deficit" premise is utter crap.

Sun, 04/22/2012 - 02:27 | 2364394 TWSceptic
TWSceptic's picture

Bankruptcy is an absolutely necessary part of capitalism. The govt. should never ever bailout anyone at any time. Not the banks, not GM, nothing.

 

'Private enterprise' was doing fine until govt. with help of the fed screwed with the free market and replaced it with cronyism and corporatism. People like you are precisely the problem. I bet you'll vote Obama too.

Sat, 04/21/2012 - 17:06 | 2364016 Zero Govt
Zero Govt's picture

Krugman is an a-hole

this 'piece of work' is so disengenuous and packed with deceipt you just want to throw bad eggs at the rotten little squirt all day

over 70% of economists are directly or indirectly funded by the Fed. They're a bunch of doting crones. Krugman is the most pitiful of the lot

Sat, 04/21/2012 - 17:17 | 2364029 Waterfallsparkles
Waterfallsparkles's picture

With regard to Krugman, I did not know that they gave awards for Stupidity.  The Man has no common sense.

I mean really his quote about who are those people living on fixed income, there are not many of them.  He is very mistaken.  There are lots of us who he calls "THEM".  Does he really think that we all just live on the pittance of Social Security every month?  And Social Security tied to inflation GIVE ME A BREAK, they changed the formula for inflation for SS to cap the increases. Way too many retired THEMS rely on interest on their savings to survive.  There are a lot of us that will not put Money into a daily Casino called the Stock Market to have it taken away by Wall Street Bankers. 

Some of us like to think that our principal is safe and getting a decent return.  Actually, a lot like what the Bankers are doing now at the FED.  The Bankers are borrowing Money from the fed for 0% and then redepositing that Money for a safe return.

Sat, 04/21/2012 - 17:20 | 2364031 Waterfallsparkles
Waterfallsparkles's picture

Maybe we all should send the Banks Money out of pity to help them out in such a tough time. 

Oh, wait I think we all did to the tune of Trillions of Dollars that will have to be paid by us, our Children and our Grandchildren.

Sat, 04/21/2012 - 17:25 | 2364033 Jim Quinn
Jim Quinn's picture

A senior citizen with $100,000 of savings and living off $18,000 of Social Security income was able to generate $5,000 of interest income in 2007 to supplement their SS. That was 22% of their living income.

Today, that same person can generate $150 of interest income. They have taken a 21% reduction in their living income.

Meanwhile, Krugman’s non-existent inflation has gone up 14% since 2007, according to the BLS.

There are millions of senior citizens who have experienced this impact.

Krugman is a slimy weasel.

Sat, 04/21/2012 - 18:17 | 2364074 brettd
brettd's picture

Wait till the tax rate on interest doubles next year!

Hey grandpa...need a roommate?

Sat, 04/21/2012 - 18:59 | 2364113 The Alarmist
The Alarmist's picture

Just for shits and giggles, money market rates on $10M yield less than $2K per month. That would be enough to feed a pensioner, but if they have $10M in the bank, they don't need to worry about supplementing Soc Sec. Sad thing is, more than a few might have had $10M in the bank if they had been allowed to save and invest the money they were instead forced to divert to Soc Sec.

Sat, 04/21/2012 - 19:04 | 2364119 Waterfallsparkles
Waterfallsparkles's picture

Bankers should be taking a 22% hit on their Income and Bonuses.  Then we would see who is complaining.

After all they are the ones that got us into this mess to begin with.

Sat, 04/21/2012 - 20:01 | 2364175 Dburn
Dburn's picture

Estimates are that the asset side of the Banks Blance sheets are overstated by 30% +, while they use mark to market on the bond debt which means the appearence of lower debt once their bonds sell below par and more profitability plus additonal capital. All of which is total bullshit.

They should mark their income and bonuses to market; that the average of  income and bonuses that complete and utter fuck-ups get in the private market, better add small business market.

Sat, 04/21/2012 - 19:57 | 2364169 Dburn
Dburn's picture

Good Comment to which I'll add: The general retirement idea for those of us who aren't government employees or part of the 1%,  was to downsize at age 65 by selling the house which would have created near or more than $100,000, add that to savings, and get a 5-7% non-destructive ROI to supplement Social Security.

THE ZIRP environment (Protect the Banks Act) alongside the great THEFT by the banks crashed housing values to the point, people are lucky to catch ANY bid on their property if they were/are in the wrong location. They lost their jobs earlier than expected and their other forms of investments from 401Ks to IRAs are ghosts of their former selves. So no earned or unearned income, no savings,  social security age has been raised for many except if they want the early out program at 75% of the full benefit with the limitation of 17G of earned income. (Think how stupid the stipulation of 17G of earned income limitation is on early filers) .

Now it's down to just Social Security which of course needs to be cut now that people really NEED it not because it's underfunded but because it forces the Government to pay back the 2.6 Trillion it borrowed from the fund at 3% interest, which means paying down the Social Security Notes with more borrowed money because now there is a deficit. It used to be just fine when Social Security meant a surplus for the general fund, but by God, now that it has to be paid back, it must be, it has to be cut. Just because seniors and soon to be seniors just haven't taken enough in the gut , they need their asses ripped off too.

Sat, 04/21/2012 - 17:40 | 2364042 Miss Expectations
Miss Expectations's picture

I made the mistake of going over to the Times and started to read the comments attached to Krugman's article...but, I did find one gem:

  • Lee Adler
  • West Palm Beach, FL

ZIRP has left America's seniors destitute while the banksters feed at the trough of zero cost of funds. It's Bernankecide, a financial holocaust for America's elderly savers. Any argument to the contrary, citing a click merchant like Weisenthal as an expert is hollow and morally bankrupt.

Lee Adler
The Wall Street Examiner
http://wallstreetexaminer.com
Twitter @Lee_Adler

Sat, 04/21/2012 - 17:42 | 2364044 GernB
GernB's picture

You have to love the side-splitting humor of using an academic definition of the Natural price of credit to justify an academic theory and claim the Fed is not keeping interest rates artificially low. Only in acedemia would natural be used to describe the artificial. How about we consider the normal price of credit to be the price a willing borrower would pay a willing lender. Or is that too radical a concept for a Nobel prize winning economist to wrap his head around. Apparently they need to teach the fundamentals of spotting circular logic in universities because I think Krugman would flunk

Sat, 04/21/2012 - 17:53 | 2364053 bugs_
bugs_'s picture

i'd like to be

a victim of QE

in a vampire squid's garden

in the shade

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