Paul Krugman: Ipse Dixit

by Mario Rizzo  

Under other circumstances, Paul Krugman would have made an excellent pope if we judge by his economics pronouncements. Let me take two examples from a recent New York Times column. This is my interpretation of what he is saying.  

1. On the one hand, as Keynesians have always taught: There is no real danger of interest rates rising as the Treasury accumulates massive amounts of debt. This is because there is a vast surplus of (ex ante) savings out there just waiting to buy US treasuries at low interest rates. This is our official teaching.  

2. On the other hand, there are economists out there sowing the seeds of heresies. It is understandable in this time of unprecedented events that even wise economists might be tempted to stray from the Truth. They are making statements that confuse the faithful in their daily activities (of buying and selling treasuries). They are frightening them with stories of inflation and high interest rates. Many, perhaps most, of these teachers have evil motives.  These heretics are making it more difficult for the “church” to help us all to salvation.  

Read the article yourself. Isn’t this what he is saying?

8 thoughts on “Paul Krugman: Ipse Dixit

  1. I was overjoyed when I read this particular Krugman piece. For some time now, I have been going out on a limb and predicting very large price inflation that will start kicking in later in 2009.

    So, if I’m right, I will look pretty good.

    But I was concerned that Krugman, even though he clearly has not been calling for inflation, would be able to wriggle out of it.

    Not so, after this particular column. Especially since he’s says anyone who disagrees with him must have an evil motive, it would be pretty difficult for him to explain away 10%+ inflation in 2010. He will either be a bad macroeconomist or a liar at that point (or both?), and we’ll let him choose.

    (For my part, if we are stuck in a deflationary liquidity trap next year, I’ll admit I was a bad macroeconomist.)

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