http://www.nytimes.com/2010/11/01/opinion/01krugman.html?ex=1304395200&en=ccbeef7810685380&ei=5087&WT.mc_id=NYT-E-I-NYT-E-AT-1103-L20
S2D2. Some of you will know what that means.
Net argument: we need to spend more. Spin this time? Moral factors are preventing it from happening. Rehash of fatally flawed Keynesian arguments, that if no one is spending money, everyone’s wealth decreases.
First off, you obviously cannot solve the problem of debt with debt. Private debt cannot be financed sustainably with public debt. If I use one credit card to pay off another, have I really accomplished anything? This point is inescapable.
The goal, of course, always with these people is to transfer control of private capital to either the government, or reliable entities like some extension of the Fed.
Second, let us ask why it is people would not be spending money. First off, dunce that he is, Krugman conflates consumers with businesspeople. BOTH spend money, do they not? When someone builds a new corporate headquarters, expecting growth, does not a lot of money flow into the economy?
For entrepreneurs, one must always weigh risk versus reward. For established businesses, same thing. As exciting as playing the horses can be, when you are risking your own money you want some sense of stability. With Obamacare looming large, and a Socialist in the White House, American businessmen and women have no faith in the future; not enough to bet big on anything, until Obama gets stopped.
And to be clear, the money invested by businesses is the root of consumer spending. Toyota, say, creates a Prius, at considerable cost, since it feels people will spend money on THAT car, who would have sat on their money had it not existed. People who will not pay $2 for an apple WILL pay $1. Hence investments in apple harvesting technology and transportation, making it more efficient, will also spur spending growth.
The solution to slowdowns in spending is innovation. Innovation, in turn, is a function of private individuals, acting in their own interest.
And underlying all of this is the fundamental inflation/deflation/boom/bust cycle that causes slowdowns like this.
Krugman asserts that blaming Fannie Mae is ridiculous, but he doesn’t say why. Shortly, I will be laying that argument down in black and white. I have not read his book, but I suspect Thomas Sowell has already done so, as no doubt have others. It’s patently obvious. This is a classic inflation/deflation cycle. We are still seeing deflationary pressure from the housing market, which has yet to hit bottom.
Krugman is a paid hack. He shills for an agenda that WILL put us in a Depression, and which will be absolutely ruinous for everyone but he and his.