The NYT columnist forgets that the 'net is forever.
These days he's screaming for mo' printing-press.
In 2003--with Bush as President--not so much:
...How will the [fiscal] train wreck play itself out? ...[M]y prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt.
And as that temptation becomes obvious, interest rates will soar. It won't happen right away. With the economy stalling and the stock market plunging, short-term rates are probably headed down, not up, in the next few months, and mortgage rates may not have hit bottom yet. But unless we slide into Japanese-style deflation, there are much higher interest rates in our future.
Uh-huh.
HT: JustOneMinute
"But unless we slide into Japanese-style deflation, there are much higher interest rates in our future."
ReplyDeleteIOW,......unless we fall into a liquidity trap and depression economics comes into play. Which we did.
Krugman's position is entirely consistant and has been articulated hundreds of times. He's also made it very clear that QE, without simultanious fiscal stimulus, will produce limited positive results.
Austerity and tight (relative) monetary policy will not improve our debt burden since debt is a function of GDP.
P.S. It appears that the English will be happy to demonstrate in the coming years what happens to a nation's debt burden when you collapse your government's balance sheet, raise taxes and leave the private sector to fend for itself during a time period of depressed demand and high unemployment. If the English government does what it says, they should be well on their way to default like their Irish neighbors.