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'Krugman's Kryptonite' Pedro Schwartz On Creating Money Out Of Thin Air

Tyler Durden's picture




 

"A serious inflationary disaster will only be prevented if governments succeed in reducing their deficits and stop selling bonds" is how the infamous destroyer of Krugman, Pedro Schwartz, describes the dangerous 'tennis match' being played between The Fed and The ECB. In an excellent interview with GoldMoney's James Turk, the Spanish 'Austrian' economist talks about bank regulation, the creation of money out of thin air, and the beauty of a trult free market system. From fictional reserve lending to the fragility (and boom-bust cycles) of our financial system, the mild-mannered 'Keynesian-Krusher' concludes that "there has to be a change in social mentality - so that people realize that nothing is free, and the government has to shrink."

 

 

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Wed, 09/19/2012 - 18:26 | 2813145 TheCanadianAustrian
TheCanadianAustrian's picture

Off topic:

Royal Bank CEO calls Goldman Sachs CEO a socialist:

http://blogs.wsj.com/canadarealtime/2012/09/19/rbcs-ceo-says-blankfein-i...

Wed, 09/19/2012 - 19:16 | 2813269 Stackers
Stackers's picture

Cat Herding

Wed, 09/19/2012 - 19:18 | 2813270 Pladizow
Pladizow's picture

Krugman's kryptonite is reality!

"You Rang" :http://www.youtube.com/watch?v=an_by5r8EUc

Wed, 09/19/2012 - 19:49 | 2813358 LMAOLORI
Wed, 09/19/2012 - 18:26 | 2813147 TruthInSunshine
TruthInSunshine's picture

 

Paul Krugman, the Self-Contradicting Economist

 

 

Below is a collection of actual quotes from Paul Krugman with links to sources. The quotes are arranged by topic and are in pairs (with an additional quote in one case), with the two quotes in a pair making arguments for contradictory positions.

 

Minimum wage and unemployment Would cutting the minimum wage raise employment? - New York Times, Dec 16, 2009

...the belief that lower wages would raise overall employment rests on a fallacy of composition. In reality, reducing wages would at best do nothing for employment; more likely it would actually be contractionary.

 

Training touted to close widening wage gap - Milwaukee Journal Sentinel, page 8A - Feb 6, 1996

 

Stanford University economist Paul Krugman, however, said raising the minimum wage and lowering barriers to union organization would carry a trade-off --- increased unemployment.

 

Institutional finance: Bad banks

 

1998 interview of Krugman - Business Standard (India)

 

Close the weak banks and impose serious capital requirements on the strong ones...You see, it may sound hard-hearted, but you cannot keep unsound financial institutions operating simply because they provide jobs. There can be a huge amount of damage a bad bank can create. There is a cruelty to our market system, but that cruelty cannot be eliminated. The alternative is fraught with danger, that of carrying on with the weak banks.

 

Depression Economics [Paul Krugman interview] - Newsweek, Dec 3, 2008

Letting Lehman fail-letting the market work, as some people said-basically brought the entire world capital market down.

 

Bailouts

 

Workouts, Not Bailouts New York Times, Aug 17, 2007

 

Many on Wall Street are clamoring for a bailout -- for Fannie Mae or the Federal Reserve or someone to step in and buy mortgage-backed securities from troubled hedge funds. But that would be like having the taxpayers bail out Enron or WorldCom when they went bust -- it would be saving bad actors from the consequences of their misdeeds... Say no to bailouts - but let's help borrowers work things out.


Is saving our Fannie enough?
 - Seattle Times, Sep 9, 2008

The just-announced federal takeover of Fannie Mae and Freddie Mac, the giant mortgage lenders, was certainly the right thing to do - and it was done fairly well, too... So Fannie and Freddie had to be rescued...

 

Deficits and interest rates

 

Deficits and interest rates - New York Times, Aug 14, 2009

 

It turns out that there's a strong correlation between budget deficits and interest rates - namely, when deficits are high, interest rates are low ... On reflection, it's obvious why...

 

A fiscal train wreck - New York Times, Mar 11, 2003
But we're looking at a fiscal crisis that will drive interest rates sky-high. A leading economist recently summed up one reason why: ''When the government reduces saving by running a budget deficit, the interest rate rises.'' 

 

National debt

 

Quote Without Comment - Lakeland Register, Oct 18, 1985

 

It's a very good deal for those close to retirement who will never see the taxes that will have to be levied to pay it (the national debt), but it's a very bad deal for people early in their careers. A 30-year old, if she understood it, should be pretty upset, because when she hits peak earnings at age 50, she will be paying for spending now through higher taxes then." -- Paul Krugman, an economist at the Massachusetts Institute of Technology, commenting on the national debt climbing to the $2 trillion mark.

 

In 2003, Krugman held the same view that debts would affect future generations when he wrote in his article titled Passing it Along in New York Times on Jul 18, 2003:

 

And tarnished credibility, along with a much-increased debt, is a problem that Mr. Bush will pass along to other Congresses, other presidents and other generations.

 

The burden of debt - New York Times, Aug 28, 2009

 

How, then, did America pay down its debt? Actually, it didn't... But the economy grew, so the ratio of debt to GDP fell, and everything worked out fiscally... Which brings me to a question a number of people have raised: maybe we can pay the interest, but what about repaying the principal? ...But why would we have to do that? Again, the lesson of the 1950s - or, if you like, the lesson of Belgium and Italy, which brought their debt-GDP ratios down from early 90s levels - is that you need to stabilize debt, not pay it off; economic growth will do the rest.

 

Debt to GDP ratio

 

On the Second Day, Atlas Waffled - New York Times, Feb 14, 2003

Dear Alan Greenspan:

...Moreover, since you advocate accrual accounting, you obviously realize that the ratio of debt to G.D.P. is a highly misleading number.

 

A couple of notes on the 40s and 50s - New York Times, Aug 30, 2009

 

I think they're missing the point - if even Italy can handle debt/GDP ratios of 100 percent, we should be able to do it too.

 

Impact of governments on recessions

 

TWO CHEERS FOR THE WELFARE STATE SURE, IT'S GOT PROBLEMS. BUT DESPITE WHAT THEY THINK THEY WANT, THE VAST MAJORITY OF AMERICANS WOULD BE SORRY TO SEE IT GO. - Fortune, May 1, 1995

 

The fact is, all these promises are silly: Administrations don't cause recession and recoveries--if anyone is in charge of the business cycle, it's the nonpartisan technocrats at the Federal Reserve. 

 

What didn't happen - New York Times, Jan 17, 2010

 

Mr. Obama could have done the same - with, I'd argue, considerably more justice. He could have pointed out, repeatedly, that the continuing troubles of America's economy are the result of a financial crisis that developed under the Bush administration, and was at least in part the result of the Bush administration's refusal to regulate the banks.

 

Sustainability of social security

 

TWO CHEERS FOR THE WELFARE STATE... - Fortune, May 1, 1995

 

So by all means, let's have a vigorous national debate about reforming Social Security; it can't be sustained in its present form. 

 

About the Social Security trust fund - New York Times, Mar 28, 2008

 

But the privatizers won't take yes for an answer when it comes to the sustainability of Social Security... Social Security, with its own dedicated tax, has been run responsibly; the rest of the government has not. So why are we talking about a Social Security crisis?

 

Investment of social security funds

 

Fabricating a Crisis - New York Times, Aug 21, 2001

 

The outlines of a plan that would sustain Social Security without destroying it are clear: Allow the system to invest some of its surplus in private assets, and close the system's modest long-run financial shortfall by making minor adjustments to benefits and rescinding part of the recent tax cut. 

 

Gambling with your Retirement - New York Times, Feb 4, 2005

 

A few weeks ago I tried to explain the logic of Bush-style Social Security privatization... you should borrow a lot of money, buy stocks and hope for capital gains... So people are expected to take a loan from the government and use it to buy stocks, and if that turns out to have been a mistake -- well, too bad...Do you believe that we should replace America's most successful government program with a system in which workers engage in speculation that no financial adviser would recommend? Do you believe that we should do this even though it will do nothing to improve the program's finances?

 

Privatization of social security

 

Notes on Social Security from Personal website of Paul Krugman

 

None of this says that privatizing Social Security is necessarily a bad idea.

 

Inventing a crisis - New York Times, Dec 7, 2004

 

Privatizing Social Security - replacing the current system, in whole or in part, with personal investment accounts - won't do anything to strengthen the system's finances. If anything, it will make things worse. 

 

Labor unions

 

Macroeconomics, 2nd ed., by Paul Krugman and Robin Wells, Worth Publishers, 2009 (page 210)

 

The actions of labor unions can have effects similar to those of minimum wages, leading to structural unemployment.

 

State of the Unions - New York Times, Dec 24, 2007

 

Once upon a time, back when America had a strong middle class, it also had a strong union movement. These two facts were connected. 

 

Globalization

 

Maverick Economist debunks theories - Eugene Register-Guard, Apr 18, 1996

 

Lecture: Paul Krugman rankles many when he refuses to blame this nation's woes on the global economy. Yes, thousands of Americans have lost jobs in some industrial sectors, Krugman says. But global competition isn't to blame... "A lot of what people say about these issues is just dead wrong and silly," Krugman says.

 

The Trade Tightrope - New York Times, Feb 27, 2004

 

The accelerated pace of globalization means more losers as well as more winners; workers' fears that they will lose their jobs to Chinese factories and Indian call centers aren't irrational.

 

Healthcare

 

TWO CHEERS FOR THE WELFARE STATE... - Fortune, May 1, 1995

 

That means that, while I believe in free trade and have no sympathy with the sort of liberalism that wants to centralize economic decision-making in Washington (cases in point: Jimmy Carter's energy planners and Bill Clinton's health planners)...

 

The Swiss Menace - New York Times, Aug 16, 2009

 

True "socialized medicine" would undoubtedly cost less, and a straightforward extension of Medicare-type coverage to all Americans would probably be cheaper than a Swiss-style system. That's why I and others believe that a true public option competing with private insurers is extremely important: otherwise, rising costs could all too easily undermine the whole effort.

 

Role of the government in the economy

 

Benefit of Dole Tax Plan is Hotly Debated - New York Times, Aug 24, 1996

 

''Nothing Government has done -- for good or evil -- seems to have mattered,'' concluded Paul Krugman, an economist at Stanford University. Given the size of the American economy and the difficulty of altering its course, ''it's like using a water pistol to shoot an elephant.'' 

 

Saved by Big Government - Guardian, Aug 10, 2009

 

What saved us? The answer, basically, is big government.
Wed, 09/19/2012 - 18:29 | 2813151 roadsnbridges
roadsnbridges's picture

Thanks for filling up the first page.  Good compilation.

Now go fuck yourself.

Wed, 09/19/2012 - 18:34 | 2813174 TruthInSunshine
TruthInSunshine's picture

Hey, fuck you and the horse you rode in on, too, pal.

Everyone is free to either read or skip the amazing compilation of contradictory quotes I've listed from everyone's favorite bi-polar economist, Paul "Forget Everything I Said Yesterday" Krugman, Ph.D.

Wed, 09/19/2012 - 18:43 | 2813193 roadsnbridges
roadsnbridges's picture

My shittles beat your skittles, Touchy.

Wed, 09/19/2012 - 19:33 | 2813311 Bay of Pigs
Bay of Pigs's picture

Hey bitch, he isn't touchy and you couldn't carry his jockstrap.

Now STFU, read and learn something.

Thu, 09/20/2012 - 06:48 | 2814212 francis_sawyer
francis_sawyer's picture

Thanks TIS... Quite a compilation...

Wed, 09/19/2012 - 19:19 | 2813274 EuroInhabitant
EuroInhabitant's picture

Exactly. Thanks for your copy/paste. Krugman never won a Nobel Prize, BTW.

Wed, 09/19/2012 - 23:27 | 2813815 flacon
flacon's picture

What is a "Nobel Prize"?

Thu, 09/20/2012 - 07:44 | 2814271 JPM Hater001
JPM Hater001's picture

You get one for being black apparently.

Thu, 09/20/2012 - 06:28 | 2814192 GCT
GCT's picture

+1 Truth and thanks for posting it.  I see some pundits are a tad sensitive this morning!

Wed, 09/19/2012 - 19:10 | 2813257 runlevel
runlevel's picture

as i scrolled the endless page of what appears to be a thread hijack.. i thought to myself "man i hope someone calls this guy a jackass..".  Thank you sir.

Wed, 09/19/2012 - 19:27 | 2813297 Citxmech
Citxmech's picture

The topic was, more or less, about bashing Krugman - so Sunshine's post seems close enough on-point to me.

Besides - that was a REALLY good compilation.  Gonna forward that around for sure.

Wed, 09/19/2012 - 18:47 | 2813206 Ratscam
Ratscam's picture

+100 TIS

Wed, 09/19/2012 - 19:50 | 2813354 TruthInSunshine
TruthInSunshine's picture

This can be a "teachable moment." While what I posted was unquestionably long, whether it was or was not a "hijack" is debatable.

I invite everyone over to my house to discuss it over a beer.

To my supporters I wish you health, wealth and happiness. My detractors are free to carry on with their vaginal hurt.

Wed, 09/19/2012 - 21:31 | 2813560 Umh
Umh's picture

I need a beer; address?

Wed, 09/19/2012 - 22:49 | 2813740 Snidley Whipsnae
Snidley Whipsnae's picture

I did not see your post as a 'thread hijack'. You were simply pointing out the ever shifting sands upon which Krugman stands and voices opinions.

Over time I have come to believe that Krugman is a very shallow thinker and probably has little memory of what he said in the past on a particular subject.

Our classically educated founding fathers understood well the problems that democracys always encounter. Democracy works only so long as the citizens have the moral fortitude to work hard and earn a living by their productivity. Once the citizens begin to vote for pols that promise the moon and stars by bebasing the currency or stealing from group A to give to group B then it's game over for democracy.

Where I disagree with the Professor and Turk is their optomistic view that soverigns/bankers will be willing to downsize themselves to save individuals and the Main St economy. There is scant evidence to support their optomisim.

We would all prefer a happy ending to this mess but getting one would require a change in human nature... and that strikes me as something that only occurs in a Hollywood production.

Thu, 09/20/2012 - 01:57 | 2814015 A Nanny Moose
A Nanny Moose's picture

Kruggybear's greatest hits. TYVM TIS!

Thu, 09/20/2012 - 02:58 | 2814059 AnAnonymous
AnAnonymous's picture

The first pick on employment is not contradictory.

In one, it is stated that lowering wages would not increase employment (which is a claim often made by 'americans', one must admit) and could even has a contractionistic consequence.

In the other, it is stated that raising wages and lowering barriers to union organization will come with a consequence: higher employment.

I did not read the rest. But I suspect it is the same vein.

'American' stuff...

Thu, 09/20/2012 - 12:26 | 2815262 Diplodicus Rex
Diplodicus Rex's picture

"I did not read the rest."

never a truer word spoken....

Wed, 09/19/2012 - 18:27 | 2813148 TheCanadianAustrian
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On another note, it seems like we get at least 5 articles posted here every day explaining why fiat money doesn't work and why deficits and ZIRPs will kill currencies and nations. Obviously I agree, but do we really need to be repeatedly told what amounts to most of us as common sense? There's beating the dead Keynesian horse, and then there's pulverizing what's pretty much a pile of fine horse paste.

Oh well, better too much education than too little I suppose.

Wed, 09/19/2012 - 18:51 | 2813216 ACP
ACP's picture

They're just really headers for the material presented, is all.

In other news, the first bomb goes off in France:

http://www.businessweek.com/ap/2012-09-19/report-4-injured-after-explosion-at-kosher-store

Wed, 09/19/2012 - 19:52 | 2813366 Citxmech
Citxmech's picture

The shit is really starting to spin out of control it seems. . .

Wed, 09/19/2012 - 19:23 | 2813286 NidStyles
NidStyles's picture

There are still a lot of members on here that do not understand what we understand.

Wed, 09/19/2012 - 19:39 | 2813310 akak
akak's picture

There are certain members here who quite obviously will NEVER understand what most of the rest understand --- just as the large majority of Americans, and people around the world in general, will most likely never understand; some because they are intellectually incapable, some because they will simply never have the opportunity to be exposed to the truth, but many others because they are fundamentally too cowardly or too morally weak, and therefore unwilling, to understand.

Stepping outside of the Matrix, like being president for George Bush Jr, is just flat-out hard.

Wed, 09/19/2012 - 19:39 | 2813333 knukles
knukles's picture

LOL
There are some here that not only do not get it but I'd bet are considered dumb as door rocks by thier peers. 
Which speaks holy and magnificant wonderous of the rest ....

(shaking head....)

Wed, 09/19/2012 - 19:57 | 2813364 akak
akak's picture

 

There are some here that not only do not get it but I'd bet are considered dumb as door rocks by thier peers.

One must include in that select and august group the kneejerk haters of gold, Ayn Rand, limited government, and so-called 'US Citizenism' (whose imaginary nature is eternal, don'cha know).  They will forever be remembered for such classic lines as "Only $5 to dig from the ground!", "Canned ham, bitchez" and "blobbing-up".

Wed, 09/19/2012 - 20:19 | 2813416 LetThemEatRand
LetThemEatRand's picture

Yes, anyone who disagrees with Akak's chosen ideology is necessarily as dumb as a door rock.   I think that qualifies as a GW #1, and the fact that it is part of a thread of similarly minded posts also makes it a #6.  I would add that anyone who believes that whether one respects the self-absorbed religion of Ayn Rand is a binary test of human intelligence has serious issues.  But carry on.  I know you all love yourselves so very much, consistent with Ms. Rand's teachings.

Wed, 09/19/2012 - 20:28 | 2813435 akak
akak's picture

Notice that I stated "kneejerk haters" --- that is "kneejerk", as in "willfully unreasonable, close-minded and excessively emotional regarding a particular obsession or passion".  I believe that you have eminently qualified yourself for such a descriptor.

Carry on --- all those copies of Atlas Shrugged are not going to burn themselves you know.

Wed, 09/19/2012 - 20:32 | 2813440 LetThemEatRand
LetThemEatRand's picture

Ayn Rand was a human piece of shit whose philosophy appeals only to douchebags and the simple-minded (and simple-minded douchbags).   Does that qualify?  

Wed, 09/19/2012 - 20:40 | 2813451 akak
akak's picture

Is that the opinion of her you picked up from a comment while reading the Huffington Post, or did you absorb that opinion from the ravings of the disturbed man who screams at the pigeons in your local park?  Because clearly you have NEVER actually read anything that Ayn Rand wrote herself ---- as you have abundantly demonstrated in this forum on numerous occasions, by attempting to twist and distort her writings and philisophy into something that they are not and never were.

I wonder, who is more hypocritical, Krugman or you?  It's a tight race, anyway.

Wed, 09/19/2012 - 20:41 | 2813466 LetThemEatRand
LetThemEatRand's picture

Right, no one who read and understood her could possibly disagree with her because her philosophy is one of simple perfection.  And if someone does disagree with her, you will insist that such a person is "dumb" and/or could not possibly have read her brilliant words.  See above.

Wed, 09/19/2012 - 20:46 | 2813476 akak
akak's picture

And yet again, more obfuscation and evasion from you, the king of Ayn Rand haters, who condemns her without actually having read anything that she wrote herself!  (And more to the point, without understanding what she did write.)

You are a raging hypocrite and a laughing stock when it comes to honest and sincere intellectual discourse.

Wed, 09/19/2012 - 20:50 | 2813484 LetThemEatRand
LetThemEatRand's picture

Fucking pitiful.

Wed, 09/19/2012 - 20:57 | 2813498 akak
akak's picture

I agree.

Now, having made that admission, you should keep going --- they say that confession is good for the soul.

Wed, 09/19/2012 - 21:45 | 2813600 Umh
Umh's picture

Essentially you are just an asshole. I've read your many post and can't see why you are still here. I would consider your post more seriously if they were not so repetious.

Thu, 09/20/2012 - 01:54 | 2814011 A Nanny Moose
A Nanny Moose's picture

At the very least, LTER provides an opportunity to break out of the echo chamber and engage in some persuasive rhetoric, rather than a cacauphony of logical fallacies.

Data, logic and rhetoric are critical skills in the battle of ideas. Without them, we are just regressing back to clubs and spears.

Thu, 09/20/2012 - 01:46 | 2814002 A Nanny Moose
A Nanny Moose's picture

Argumentum ad hominem. You can do better.

Wed, 09/19/2012 - 19:29 | 2813290 akak
akak's picture

 

do we really need to be repeatedly told what amounts to most of us as common sense? There's beating the dead Keynesian horse, and then there's pulverizing what's pretty much a pile of fine horse paste.

It depends on how much the additional pulverizing of the Keynesian dead horse to a pile of fine horse paste adds to net GDP. 

(That is quite aside from the additional and well-justified revenge factor.)

Wed, 09/19/2012 - 19:35 | 2813315 Yen Cross
Yen Cross's picture

You again?  Actually, you do have a "unique way" with vernacular.

Wed, 09/19/2012 - 19:42 | 2813343 akak
akak's picture

Dziekuje bardzo!

Wed, 09/19/2012 - 19:52 | 2813365 Yen Cross
Yen Cross's picture

 I was able to translate,without the "accent points'. Dziekuje bardzo!   Was my interpretation correct?

  If so, "Composo on for the masses".

Thu, 09/20/2012 - 10:49 | 2814964 Vlad Zerox
Vlad Zerox's picture

Over at Western Rifle Shooters (which has taken to cross linking ZH all the time) they had a nice thread about where to get bulk nylon sand-bags, of high quality.  Now that's information we can all use!

Thu, 09/20/2012 - 10:54 | 2814982 goldfish1
goldfish1's picture

What I think would be very helpful for the laymen is an alphabetical compilation of acronyms on the sidebar for quick and easy reference.

Like:

ZIRP - Zero Interest Rate Policy

 

 

 

 

 

 

Wed, 09/19/2012 - 18:31 | 2813160 Meesohaawnee
Meesohaawnee's picture

"A serious inflationary disaster will only be prevented if governments succeed in reducing their deficits and stop selling bonds"   no... not if like they are this week, just fliping a coin on the price of crude. Lets see. What we want Heads 70$ Tails 80$ .. thats how it works these days. The last 4 only confirm that

Wed, 09/19/2012 - 18:37 | 2813171 Landotfree
Landotfree's picture

"there has to be a change in social mentality - so that people realize that nothing is free"

If people didn't want something from nothing they would have never started charging interest.  Interest is the perfect tool to use to get something for nothing.

Hairless monkeys haven't learned anything in 1000s of years, everything you are about to witness has already happened before.

"A serious inflationary disaster will only be prevented if governments succeed in reducing their deficits and stop selling bonds"

Sorry buddy there is no way to avoid the disaster, humans elected to do the crime, now it's pay back time.   1-3 unfunded liabilities are going to taken off the books is my number guess.

Pedro Schwartz is an hairless monkey that thinks he can outrun the equation, only in death can you outrun the equation.

 

Wed, 09/19/2012 - 21:53 | 2813621 shovelhead
shovelhead's picture

You appear to confuse the legitimate use of capital (stored wealth) with a fictionally created use of credit (data entry) as being one and the same.

One represents labor and it's premium for time preference and the latter is essentially a counterfeit of labor.

Fractional banking IS the business of the free lunch...for bankers.

Legally counterfeiting money.

 

 

Wed, 09/19/2012 - 18:44 | 2813195 buzzsaw99
buzzsaw99's picture

that may be true in spain but not necessarily for the usa perra-bitchez

http://www.youtube.com/watch?v=lAD6Obi7Cag

Wed, 09/19/2012 - 18:45 | 2813203 roadsnbridges
roadsnbridges's picture

Repudiate and issue no more.  The 99-weekers and Medicaid moochers can suck wind.

Wed, 09/19/2012 - 18:51 | 2813217 Yen Cross
Yen Cross's picture

 That was a good"ass rippin" session, Tyler. ;-)

Wed, 09/19/2012 - 19:21 | 2813263 e-man
e-man's picture

No one can wipe that smug look off Krugman's face like Pedro can.  Gotta love him.  Both him and Nigel Farage.

Wed, 09/19/2012 - 19:31 | 2813306 caimen garou
caimen garou's picture

as long as the good ol USA hands out check to everyone that crys they are depressed,got a back ache, or has ed we are going to keep getting suck into a black hole! As long as we have idiots like paul k,big government will always create the the big black sucking holes!

Wed, 09/19/2012 - 19:40 | 2813334 Argos
Argos's picture

Nice to hear a slow, calm and rational interview for a change

Wed, 09/19/2012 - 19:39 | 2813335 Bay of Pigs
Bay of Pigs's picture

"reality brings down bad theory".

+1 Prof Schwartz

And FUCK YOU Krugman...

 

Wed, 09/19/2012 - 23:31 | 2813826 Jim B
Jim B's picture

I feel obligated to second the FUCK YOU Krugman.....  You blockhead! 

Wed, 09/19/2012 - 19:44 | 2813342 knukles
knukles's picture

Who did I piss off to keep getting shit in the mail from the Council on Foreign Relations?

Wed, 09/19/2012 - 19:54 | 2813370 Yen Cross
Yen Cross's picture

   " Vladamir Putin".

Wed, 09/19/2012 - 22:05 | 2813652 shovelhead
shovelhead's picture

They want your Zippy the Pinhead avatar for their Foreign Policy mascot.

Thu, 09/20/2012 - 01:58 | 2814012 James
James's picture

Who did I piss off to keep getting shit in the mail from the Council on Foreign Relations?

 

 

When I read that my first thought was your friends you've spoke of whom you debate the issues of the day as you wander the links?

Wed, 09/19/2012 - 21:07 | 2813386 THE DORK OF CORK
THE DORK OF CORK's picture

How is the ECB printing money ?

When a commercial bank buys goverment debt (using credit from whatever means)   ,tax is deducted (deposits are destroyed) from your credit account (at the other side of the bank balance sheet)

This is deleveraging is it not ?

Less money is available as a circulating medium.............commerce comes to a grinding halt.

money does not "become scarce because people lose confidence" ,Fiat money is not a Physical good.

Money becomes scarce because they run out of money.

Money becomes scarce (at least in the early stages) because in a envoirment of zero bank credit growth for consumption the now static credit money supply must flow to sovergin holders interest payments.

Where else can it go ?

When goverment stops spending money the only money can come from Bank credit growth.............how do you know what to invest in if all money is consumer bank credit.

There is no longer a rational money demand.

You get a malinvestment crisis.

This is what has happened in Ireland & Spain at a dramatic level.

This man is a rep for the rentier sector.

When goverments Print real money the true input costs become clear......and malinvestment decreases....the wealth does not disappear...where does it Go ? .....

These guys are sick Joke.

They will kill your mother to get a interest yield on overvalued "sovergin" debt.

Medicine is very cheap when looked at in a input , output fashion.

It is not very cheap when you think a symbolic token is wealth.

These guys will kill mothers, fathers sons and daughters for symbolic collateral tokens.

Issue pure interest free Fiat and forget about this double entry collateral money nonsense.....as it is a total failure for all but the powerful few who cannot live their lives without getting a yield off poor people.

 

 

Thu, 09/20/2012 - 00:36 | 2813907 sitenine
sitenine's picture

@THE DORK OF CORK

Money becomes scarce because they run out of money???

Next time, try to at least pretend you watched the video.  Don't you know that DEBT IS MONEY, and in case you haven't been paying attention, I can assure you that there is no shortage of debt.

And here's something to think about - When everything is 'free', what's anything really worth?

Thu, 09/20/2012 - 05:40 | 2814126 THE DORK OF CORK
THE DORK OF CORK's picture

@Sitenine

Sure , you are correct.

I should have been more clear.

The poor (most people) run out of money because money is subtracted via tax to pay interest on "sovergin" debt....most of the rich and banks don't spend this money so you get a collapse of demand / commerce etc. and even if the banks /rich did create  credit again they would most likely waste it on their "investments".

  Credit bubbles  service the interest on sovergin debt (that is their function  , when they can't do this they simply dump people....this becomes more politically senstive but they dump people anyway as they (the credit banks) cannot survive without Usuary.

Goverments are in debt also.........but they need not be........they can merely create debt free money by truely printing the stuff.

The physical malinvestment costs of the previous bank credit hyperinflation becomes obvious at that point....i.e. houses built far from services which therefore require greater input costs.

Try to imagine Ireland during the boom.

Houses became unaffordable in Dublin...........if the Goverment stopped spending  money on wages during that time nurses ( sometimes people were living 100 miles from work.) would not have the money to live in Dublin.

A city without Nurses - how would that work exactly ?

The Human and natural resourse constraints become huge at this point of course ...see 2007.

These guys are rentiers ........please don't listen to them.

There is a big difference , a very big difference between fiat (goverments printing) and collateral money which includes sov debt & consumer / business / credit which reside on both sides of banks balance sheets.

 

Looking at Irish national accounts....

 Y2006 : National debt interest paid to

residents : 826 million

Rest of the world :990 million

 (external payment of interest was easy in 2006 because the credit bubble created deposits that could be taxed with little pain)

Y2011 : national debt interest paid to

residents :1,101 million

rest of the world : 4,067 million........

4 billion Euros does not seem much even for small Ireland but you must look at this figure from the new context....almost all consumer /businesss bank lending has stopped in Ireland.......which means deposit growth has stopped.....any further subtraction of money from Goverment accounts turns the domestic economy into negative GNP as the now stable rather then growing deposits are taxed and the money is externalised.

The banks have set up a system where there cannot be a final settlement between nations and therefore no logical trade (this was the Bankers primary role in previous times)

In Irelands case this lack of settlement means a Permanent state of Bankruptcy

They have used this lack of clarity for their own ends.

Real Goverments should just create domestic Fiat and renationalise their economies and forget about the banks double entry system as it is far too corrupt.

 

Thu, 09/20/2012 - 11:51 | 2815150 sitenine
sitenine's picture

Hmm. I appreciate your view, even if I still think it's a little off. I think we could all use a good, open, honest debate over what money IS or ISN'T. I doubt that many of us prolatariats would come to much agreement at first, but with knowledge there is promise of progress. Cheers good sir :-)

Wed, 09/19/2012 - 20:09 | 2813391 Benjamin Glutton
Benjamin Glutton's picture

Juanny come lately,imo.

Thu, 09/20/2012 - 01:55 | 2814013 A Nanny Moose
A Nanny Moose's picture

Vote for Pedro

Wed, 09/19/2012 - 21:32 | 2813562 howenlink
howenlink's picture

Paul/Schwartz 2016!

Wed, 09/19/2012 - 22:12 | 2813669 americanspirit
americanspirit's picture

The predominance of idiotic comments here and the failure to address and discuss the important issues raised in this interview shows how impossible the core premise is- that there are enough intelligent people capable of thinking beyond their immediate context to make a critical mass that can change the direction of society. We are doomed. And rightly so IMO.

Thu, 09/20/2012 - 12:38 | 2815295 Diplodicus Rex
Diplodicus Rex's picture

Please lead the way. Please point out the important issues as you see them and provide a critique sympathetic to your view. We will consider the proposition and respond in kind.

Wed, 09/19/2012 - 22:31 | 2813706 nah
nah's picture

if we pay less in taxes all the faggots will have to raise their own children

.

Obama 2012

Wed, 09/19/2012 - 23:41 | 2813848 jomama
jomama's picture

with all due respect, the deer shit on the bottom of my boots would suffice as "Krugman Kryptonite".

Thu, 09/20/2012 - 03:16 | 2814072 AnAnonymous
AnAnonymous's picture

Another good one.

The credit emission thing.

'Americans' like to claim troubles in understanding anytime multiple causes overlapse to create an effect (see for example global climate change, 'americans' love to conceal behind the possible natural causes to the phenomenum to dismiss the 'american' cultural causes)

So here, hyperinflation:

two causes that might overlapse:
-too much currency expansion
and
-depletion of resources as set path by 'americans'

The 'american' author claims that acting on the first one will preserve from a disaster.

What makes for the second cause? A world running to depletion of resources will know severe inflation. It is how it works.

But this point is not mentioned, mostly because 'americans' came with the claim they could overcome the environment. Therefore depletion of resources should not exist in 'american' world. Only abundancy.

The last remark is that power comes with obligations. One is to deal in reality.

'Americans' in charge know that 'americanism' has put the world on the path of depletion.
They know that the story of overcoming the environment is just that, a story, to hide the theft streak 'americans' owe their success to.
They provide 'american' solutions, that is trying to rob as much as possible as long as there is something to rob. Therefore they will keep expanding currency in order to optimize debt issuance and consume as much as possible before it is too late to consume.

If 'americans' were not duplicitous, they could come up with that fundamental 'american' scheme.

But they cant. They cant come and tell what they are doing. So 'americans' in charge have to put up with some other 'americans' who are envious of their position, keep claiming another 'american' way of dealing with the situation and finally, when in position, end with performing the 'american' solution, that is the very same that 'americans' in charge are carrying out right now.

It is a matter of rivalry. Alternatives stem from diversity. And 'americanism' has been uniformizing the world. In an 'american' world, there can only be people who want the same and act the same, positions of power being limited, the ballet can be danced.

For the world to escape serious inflation events, 'americans' must come out and show their aptitude to overcome the environment.
'Americans' are more likely to ask part of humanity to hold their breath, waiting for 'americans' to perform the 'overcoming the environment' show. That would be kind of an 'american' solution.

Thu, 09/20/2012 - 03:38 | 2814092 akak
akak's picture

Give us a clear definition of "american" and "americanism" as you use those words, or let us continue to assume that you are nothing but a hate-filled, malicious and bigoted troll.

Thu, 09/20/2012 - 12:09 | 2815192 fuu
Thu, 09/20/2012 - 03:33 | 2814086 centipede
centipede's picture

I found it very interesting unlike your ofending post.

Thu, 09/20/2012 - 07:47 | 2814275 lastzollverein
lastzollverein's picture

"there has to be a change in social mentality - so that BANSTERS  realize that nothing is free, and the BANKSTERS and POLITICIANS have to shrink."

Thu, 09/20/2012 - 07:59 | 2814300 poldark
poldark's picture

I think we are getting close to the end game. QEfinity will prove to be the inflexion point, when the printed money will enter the real economy and start to cause serious inflation. What next? Does the Fed start selling the debt it bought with QE taking money out of the economy? As soon as that starts the stoclmarkets will tank. So will the Fed then start to buy more commercial paper (ETFs etc.)?

The Fed is by far the biggest holder of US debt, it will soon be the biggest holder of US shares through the banks.

Thu, 09/20/2012 - 15:05 | 2815824 Amagnonx
Amagnonx's picture

I watched the video of Pedro and Krugman, and found Krugman's closing comments extremely annoying.  First he got petty regarding the tone, but one thing really annoyed me when he tried to assert that cutting government spending was 'obviously' contractionary.  What a tard - if the govt is 40% of the economy, and it contracts - the economy will contract .. in the short term.  In the medium to long term, cutting govt spending to zero would be the best news an economy could have - obviously people spend their own money more wisely than money they stole from other people.

 

Of course if for example the US govt cut spending to zero over night - the impact would be wholesale negative .. in the short term - in the long term, it would be a return to the golden days of true capitalism.

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