The Ultimate Krugman Take-Down

Tyler Durden's picture

Forget Ali - Frazier; ignore Santelli - Liesman; dismiss Yankees - Red Sox; never mind Silva - Sonnen; the new undisputed standard by which all showdowns will be judged happened in Spain over the weekend. During a debate on Europe's crisis, Pedro Schwartz (a mild-mannered Spanish 'Austrian' economics professor) took on the heavyweight Paul 'I coulda been a Fed Chair contender' Krugman, and - in our humble opinion - wiped the floor with his Keynesian philosophy. From the medicinal use of more debt to fix too much debt, to the Japanization of world economies and the demand-side bias of every- and any-thing - interested only in the short-term economic growth; the gentlemanly Spaniard notes, with regard to the European crisis, the fact that "Keynesians got us into this mess and now we have to sacrifice our principals so that they can get us out of this mess". Humble and generous in his praise - though definitively serious with his criticism - Schwartz opines: "Often Nobel prize winners are tempted to pontificate on matters that are outside the specialty in which they have excelled," noting "the mantle of authority whereby what ever they say - whether sensible or not - is accepted with resignation from some and enthusiasm by others." Krugman's red-faced anger is evident at the conclusion as he even refused to shake Schwartz's hand after the debate.

For 15 minutes of both education and entertainment - this is as good as it gets...

  • Starting from around 35:00 the Spanish professor praises and criticizes in a thoughtful and gentle tone
  • At around 39:00, he addresses the demand-side description of the world
  • Krugman's less-than-happy response (which sparks quite a rowdy argument) begins around 48:20


(h/t Jean Luis Martin of the Truman Factor)

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Jim B's picture

Deleveraging will take place in slow motion (Krugman style) or more quickly! It will happen regardless...

GernB's picture

- we don't have a supply problem, but rather a lack of demand (shops are fully stocked, while wallets are empty!),

I don't find that argument particularly persuasive because if it were true the enormous amount of government spending we've had above prior levels (over 2 trillion above 2007 outlays) would have supplied the demand needed. The problem is viewing it as a demand problem skips over any underlying reasons for the lack of demand and assumes if you just artifically supply the demand it will fix things.

- interest rates are near record lows despite giant expansion of money supply (ZBU near all-time high),

One of the primary means of expanding the money supply is through keeping interest rates low. So is the argument that keeping interest rates low is proof that keeping interest rates low won't increase interest rates?

- sharp cuts in public spending in times of contraction won't free any capital for economic growth (as confirmed by Greece, Spain, Italy and more major economies), and

That is a difficult claim to substantiate when you look at total expendetures of Greece, Spain, and Italy for the years of 2009 to present. I don't see any sharp cuts in total government outlays. If you want to claim that austerity legislation doesn't work then sure, I'm with you, but until the legislation is turned into actual austerity I don't think that claim holds water.

Inthemix96's picture

Here my two pence worth krugman,

Fuck you you little petulant fucking child, even when you are wrong your fucking right?  And then you go on like a spoiled little girl chucking your toys out the pram eh?  Little cock sucking criminal.  You should be in jail with the rest of your gobshite mates who have ruined the world for the rest of us.

Pray you never meet me you little scum fuck.

jomama's picture

you know just how fucked up this planet we live on is, when this guy has as much clout as he does.

Overdrawn's picture

Ándale! Ándale! Arriba! Arriba.

Didn't understand a word of it, so what's the point if you don't have a set of translation headphones?

Tirpitz's picture

The point could be to create jobs for language teachers, Keynesian style.

XtraBullish's picture

I wish that Spanish prick has begun with "Paul, you ignorant slut!" and then watch Krug get slapped around like a rented mule; punished like a common farm animal; scolded like a misbehaving schoolboy. 

writingsonthewall's picture

Is that the level of 'economic debate' you're used to?


No wonder you're fucked.

dcb's picture

krugman is just another toolofthe establishemnt and elite. I am not ure he thinks he is. of course his solution involves making the rich richer, the poor moor poor. simply have deposit insurance out of the ecb, by the ecb. a banking using it gets it's bonds and equity wipted out. cut elites loose populace wins. notice it's never offered, and that's why.

nathan1234's picture


Not just a "tool"


tennisdude's picture

Pointing to low interest rates as evidence of being right is like pointing to high tech stock prices in 1999 or real estate prices in 2007. Yes congrats, the bubble still exists.

I_Am_'s picture

The arrogance of the dick sitting with his legs crossed and the shoes pointing...........

dcb's picture

otice how guy s like krugman crumble when confronted by the simple truths of this guy and steve keen. when you know something it's easy to explain it to the average person. so economists invented a way to hide what they say. it a very old school trick

sablya's picture

Yes, it goes back to ancient Greece.  It's called sophistry.

nathan1234's picture

Paul Krugman

The Nobel Prize winner for Con-omics

The Illuminati darling.

Print paper- call it money- and control the world


Its_the_economy_stupid's picture

What's the name of the woman who closed her futures brokerage when MFG blew up and blogs? She's a gun toting Catholic. I wanna read her take on this 200 million vaporization.

writingsonthewall's picture

This post (and the comments that follow it) - demonstrates that ZH is a victim of it's own success - and it has it's usual 'cult' following who have no understanding of economics and are simply retards jumping up and down about matters that they don't understand.

Clearly their intention is to scream 'Krugman is wrong' as loud as they can - but never answer the very fundamental question of.


"If supply is the problem, why are the shops full of unsold goods?"


The crisis is (and will always be) caused by the extraction of surplus value from the system which is taken from the worker - who are also the consumer - until a point when they cannot consume as fast as they can produce - this leads to Marxist overproduction and a glut of supply causing prices to fall (rapidly)


There is no supply problem - Austrians are archaiac 'religious' types who stick by their traditions despite the weight of new evidence.


Krguman is just a desperate man - too afraid to admit that there is nothing any economist can do other than (unpopularly) calling for a change in the system.


Neither of these clowns are worth much as they are arguing about how the deckchairs should be arranged and not discussing the 80 foot hole in the hull.


...and look at the huge following of morons they have - all willing to defend the cause they don't understand.

dark pools of soros's picture

It is simple really. The hottie nailed it but didn't go further. Inflation is theft and the crooks know that the ones who use the new money first retain the purchase power while the ones that get it last are fucked. So they will forever stay at the top of the river and leave the dam open

Hondo's picture

Give me a use so much space and actually say nothing!  Like Krugman you pontificate without actually saying anything of value or with knowledge.  Where is your debate...your facts???  Hell, give me a theory based on something.

sablya's picture

Are you sure you're the one who doesn't understand?  We're talking about the supply of _money_ not the supply of goods in stores.  The problem of supply and demand is quite different when the thing in question is money and not goods, don't you think?  But somehow you've misconstrued the whole question and so you've confused yourself.

Right now there is high demand for money.  People don't want to spend.  They don't want to buy.  Banks don't want to lend.  Oddly enough there is no shortage money either, in the sense that there is a ridiculous amount of liquidity in the system.  

The more liquidity is pumped into the system to try to decrease the demand for money, the greater the demand for money becomes because the overall debt increases.  We're really in uncharted waters.  There is simply too much debt - but creating more debt to fill the void is the only answer the Central Bankers know.  Their process is inefficient because there is always loss and thus the problem just gets worse and worse.  

There will be bloodshed before this is over.

Dumpster Fire's picture

Right now there is high demand for money.  People don't want to spend.  They don't want to buy.  Banks don't want to lend.  Oddly enough there is no shortage money either, in the sense that there is a ridiculous amount of liquidity in the system.  



I see a down arrow but no cogent rebuttal.  What a shame.


resurger's picture

FUCK YoU douche!

Paul Shwartz FTW

USisCorrupt's picture

You know its a GREAT Day in America when you can still trade little pieces of green paper & electronic digits for REAL Stuff. I am sure glad I am not a slave to where I must work for those little pieces of green paper & electronic digits. I have my collection of slaves as to where they send me their mortgage payments. Everyone needs to own some slaves.

Its_the_economy_stupid's picture

Gotta read arnhardt's rant. It starts like this....

POSTED BY ANN BARNHARDT - JULY 9, AD 2012 11:22 PM MST Uh, so do you believe me now?

When I said, "Get the hell out," do you understand that I meant to GET. THE. HELL. OUT.?

When I wrote in my Going Galt Letter that the problem was SYSTEMIC, do you now understand that I wasn't just typing big, fancy words so that I could hear the soft pitter-pat of my keyboard?

When I said over and over again in interview after interview that the so-called regulatory system overseeing the futures industry was no such thing, but rather an evil, despicable mafia, administered by politicking psychopaths on the take, and staffed by affirmative action hires to provide plausible deniability and scapegoats, WERE YOU NOT LISTENING?

Continue at

GMadScientist's picture

41:53 -> wishful thinking.

Just as deluded as the Keynesians, only obsessed with supply-side instead of demand. Two fools each with one eye open.

azzhatter's picture

Schwartz lecturing asshole Krugman on savings (and by proxy Bernanke) is priceless

GMadScientist's picture

50:00 -> C'mon P-Krug...dig a little deeper on why we have "low interest rates" it your position that would be the case without blatant monetization of the deficit?!

Your sleight of hand is pathetic.

dark pools of soros's picture

Lots of long healthy legs in that audience. Can we trade our short chunky cow leg women for some of them?

Hondo's picture

Krudman is an AH and intellectually bankrupt........

LouisDega's picture

Who is Krugman? The anals of my mind deleted him a long time ago. No anal jokes please.

Cunnial's picture

P.S is a complete Legend!

Steel_Preacher's picture

Yeah,'s all fun and games till someone pokes the self-organizing criticality.

DavidC's picture

I actually feel quite sorry for Krugman.


GMadScientist's picture

1:06:54 -> good intentions about deficits don't change the fact that the end of keynesian stimulus necessitates recession.

Doug_Canada's picture

Watch who you pick as heros, Pedro Schwartz was just clearly rude. Go on You Tube and find Krugman in a lot of debates with a bunch of people and you will clearly see he has no problem with disagreement. The guy just came out and called a Nobel winner unqualifed. Also he pined on him the Euro which Krugman never thought was a good idea. Other spealkers raosed issues witht he book and that is great but Schwartz is a hack. I thought  Krugman's  rebutal which was a return to the facts that Demand side is the key to fixing this and how Supply side attempts have clearly failed was perfectly and politely put.

Cunnial's picture

The truth is, schools of thought cannot admit when the are worong. They are all ideologies, riddled with over complicated hypothesis that albeit set out to do good, inevitably fail as they discount human behaviour. Modelling human behaviour on an A4 scrap is one thing, but whats more important is not proving you are right, it's admitting you are wrong. Keynesianism has run it's course. Markets are infinitely different from the 40's and so are the poilicies needed to run them. A pragmatic approach to all schools of thought should be considered. But the human ego and arrogance (evidenced by Paul "the Crutch" Krugman) will always trump logic.

Jim B's picture

Krugman is wrong and arrogant, his interns probably wrote his Nobel prize winning paper on trade.


It really isn't that complicated, the world has went on a debt binge, and now it is time to pay the price.  More debt may post pone the day of reckoning, but that day will come! 


Doug_Canada's picture

That is a very wrong headed idea of why the world economy is in trouble. Time to pay the price? The middle class have had negative growth for 30 years. They have paid. The only wealth they had was in property and most of that has been transfered into the hands of a very few. Bubble after bubble getting all the last bits of meat off the bone.


Want to know what the price should be? 90% Estate Tax. Captial Gains taxed in the year they are earned and at the same rates as income.

centipede's picture

The world economy is in trouble because of debt bubbles. How can you fight a debt bubble and deficits?  With more government spending and another debt? Or more taxing (capital gains) and suffocate the growth?

The middle class is in toruble exactly because of ideas like yours and people like Krugman.

Doug_Canada's picture


It is not the guy with 100 Shares of Nortel that caused the tech bubble. It is not the home owner that caused the housing bubble. And I have no idea who you were going to falsely blame for the commodities bubble but it wasn’t that guy’s fault either.

BUT if you read Krugman you will see that he not even about who is at fault. He is about the problem of how to restart the economy. And he is not wrong about how to deal with a Liquidity Trap.

Bitch all you want but we need to get the economy producing all it is able to with as little pain as possible. Stimulating demand is the only way. So can we hold off on your misplaced witch hunt till after we fix it. Then we can argue about how you are after the wrong guys and letting the real ass holes walk free.


centipede's picture

It's you and Krugman who want to "fix it" again at the expense of innocent people. So we should accept your freedom oppressing nonsense without any decent proof of their "guilt"? Free market should be free until proven guilty.

Your "stimulation" is nothing but another cheating and stealing first of all from the middle class.

GMadScientist's picture

1:13:37 -> Sure, Krugman, the fact that government is deeply involved with care for seniors has nothing to do with cost increases in private sector healthcare.

Where are Hear No Evil and Speak No Evil? You guys usually hang out together.

nowhereman's picture

Baffle them with bullshit.  While eCONomists prattle on about which response to the crisis is more effective, the criminal bankers escape under the radar.

Nothing, I repeat - nothing - will change until the rule of law is re-established.  Then and only then, could we start debating "theories".

This is nothing more than a diversion from the task at hand.

thurstjo63's picture

What's amusing is how Krugman uses the media definition of "austerity" (i.e. when you use taxes and borrowing that previously were for public sector services to bailout banks thus leaving the state even deeper in debt vs. a cut in spending and taxes that leave taxpayers with more money to spend) and "inflation" (i.e. general rise in prices when the organisation that calculates inflations has introduced statistical methods to minimise the weight of items that impact the most of cititzens pockets like food or fuel vs. an increase in the money supply) as though they are equivalent to defend his premise that the only way to get the economy growing again!