THANK YOU Mr. Schumann for these first-rate programs---For me the 2 best are "Trail of the Troika" and the full talk with Varoufakis. PLEASE keep this going---major help for people who really want to connect dots, understand and find the best all-around solutions, vs. the mainstream media liars who oil the wheels of injustice and catastrophe. Also a great consensus among guests that A) EU and America have what it takes to solve these crises intelligently, and B) "it's not going to happen" because of political and private-profit agendas among an elite who bask in each other's power and, through that narcissism, make stupid unsustainable choices for everybody. It's up to each country's PEOPLE to refuse any more scapegoating, to interconnect and demand return to established law and accountability.
Super! Yes, follow the advice and watch with English captions! Very interesting. Krugman on one of the reasons politicians are so stubborn in clinging to their erroneous policies: 10:10: "That my income comes from selling to you, and your income comes from selling to me is not easy for people who think in slogans to grasp!" Fantastic quote. I don't know if he invented that picture ("people who think in slogans") but I will borrow that. It certainly is a very telling image.
Amazing interview! Love Paul Krugman and his lovely and vivacious wife! Another interview would be very useful and enlightening now in the current state of affairs in the EU and the world.
Krugman said that it is a curious case that only the debtor takes the total blame for their irresponsible borrowing, whereas, in fact there are 3 parties: the debtor, the agent and the main lender. i.e. an investor who seeks high compensations, i.e. mainly the systemic banks of the core Euro area. He's making a very legitimate point, which is aligned to what Varoufakis has claimed as in private banking sector's (potential) losses being converted into sovereign debts to the shoulders of the peoples of the indebted countries through these troika programs and consequently to all European taxpayers through EFSF. Many other economists have supported this view, from Japan, America and elsewhere, yet nobody even dares to articulate it in official Europe's circles (except perhaps for Varoufakis). Of course, one may argue that the PSI was the necessary private sector losses. But since it was done in the wrong time (AFTER the bailout deal), and having only the smaller private sector contributors incur losses (like banks of Cyprus), it was also another failure. Schaeuble said nobody forced the booming periphery economies to take easy money to create their debt bubbles. Yet, the responsibility is collective in all sensible minds. My opinion. And I know I will be attacked by Republicans or citizens of smaller EU countries that are in the unfortunate position to have to contribute to the Greek "bailout" in order to qualify for Schaeuble's favour.
Agree, spot on as far as EU and intervened countries PK is 100% correct. Robin Wells has certainly contributed for such an accurate view. Things have bent so much towards the awkward right that for many PK sounds like a extreme left socialist. I love his views, his modesty and his love for my country too.
I agree. That is a startegy they often employ to later have a get out of jail card. A common ploy of people who when questioned say yes to two questions which are opposite and put a qualification on each. This serves as a way of getting out of making a definitive statement which might disclose the facts yet wanting to appear to answer truthfully. Such answers often contain like " well yes and no depending on the circumstances ra. ra. ra." Non communicative and very often accompanied by a body language that is negative and closed rather than open. Often when the truth is they just don't know or can't answer becasue they feel the facts they disclose might incriminate them.
its obvious that public debt is not the same as private debt, as PK notes, but governments lie and use public debt and other means to back and secure the banks at the public's expense especially the lower half of the economy, ie austerity means gross disparity -- gov hurries to help the banks 1st and says the hell with rest of society.
11:37 very funny " when someone has strong beliefs evidence doesnt change their mind the better informed they are the more resistant to evidence they are"
MrHalified - You have not read or taken into consideration what I have said before. The fact is the 95% of the money that banks crete by fractional reserve processes goae into the economy as loans - Rerepayable loans that relate to a person or organisatioin producing goods and services. (e.g like a house mortage to build ahouse). When those goods or servicices are completed and the person pays back the loan by doing other work in the community and the process of expansion is reversed and the bank loan (e.g. mortgage) is finished and ceases to exist. That process is distinct from what happens with teh Fed's expansion of money process. In case of the Fed the new money is never finished since the debt is never paid off. You don't seem to grasp that difference at all. You just keep repeating the same old incomlete story of treating Fed expansion money the same as bank loans for mortgages etc which are paid back. The two are seperate activities. Note the difference !! If they were the same then there would be no need at all for a Fed to do what they do since the private banks could do it. The Fed's money creation would be redundant !! Earth calling Mr Malified - Do you understand that ? Come In Halified !! Earh calling.
Another wrong assumption and conclusion by Krugman at 5.25 . Corelation between what he calls "Austerity" and a downturn does not mean one caused the other. It never does because correlation proves nothing about a cause and effect especially when the factors are not taken into account or even shown to be considered in this video. Not mentioned or explained at all. For example it may be a correct observation of facts as such as in the following example:- People keep falling on the footpath where there are cracks therefore the people are causing the cracks when falling. It may be true but cannot be said to be so since other factors may wel be involved - eg it might be also slippery or the cracks might have been caused by cars mounting the footpaths to do U turns. Also people may be falling because of the slipper pavement alone. The same errors in logic are evident in many of Krugman's statements. Totally incorrect conclusion drawn from unrelated observations. Poor homework revealed on this. He states at that point "Every euro in spending cuts seems to uh on average have cost one point five euros of gross domestic product". The inference by Krugman that the cuts caused the other. So he has quarantined the two and says one necessarily caused the other. Yet they are not the only two things that happened , and not by any means. It may have been Interst rates that caused the both or outside influences which caused the both like a default by a partner of the EU. But that is not mentioned at all as a factor since it is awfully inconvenient to do so. Basic, basic error of logic Mr Krugman. . Besides this claim that 'Austerity' is the cause of problems in the EU the fact is that Krugman LOVES what he calls "Austerity". He loves it in economies since he is in favour of it being compulsory for every government and organisation except Federal sovereign governments who issue their own currencies. He knows that without his so called "austerity" for all those other institutions the economy would fail even more badly. Just as the failures of Federal sovereign governments are evident. Exception from accountability for a select few is his game. His exception is of course made since he wants Federal governments to have power over the other governments and organisations and private individuals. Not a result of good economics at all just power plays for greedy politically motivated people in government and empowered by centralist governments but paid for by the everyday person. He is not in favour of Equality at all. He speaks of it but he is not really in favour of it. He is totally hypocritical as far as economics and accountability are concerned since he want one rule for one organisation and a totally different rule for others. He wants centralist governments to be unaccountable to the people. It's all a power play by him to gain power for Federal governments and particularly governments of one ilk who he sees as supporting his thoughts. i
so Krugman if austerity doesn't work because people hold onto their money, and people spending money makes us all have more money, why don't billionaires and corporations spend their money? in your theory only poor people can drive an economy,
At 3.30 Krugman states about Spain "they are able to borrow historically cheaply ". Then he follows with "and they didn't do that by balancing their budget" "they didn't do that by balancing their budget, they didn't do that though austerity, they did it because the ECB has stabilised the markets." He doesn't disclose the reason why Greece can't borrow as much as Spain because he fails to finish his next sentence and changes tactics half way through. "not because of those programs but because the ... Basically countries that are .... that don't have their own currency , markets can get very nervous. " No answer given as to why he fails to finish the first sentence. Why The real question is -'Why doesn't Greece borrow like Spain can ? The real answer is because they have not demonstrated the restraint in spending that Spain's government austerity shows as evidence of not going down the bankruptcy path of Greece (and Krugman ) - Spend, spend, spend, which got Greece into so much trouble and others are rightly wary of because it results in financial chaos and loss of wealth for who invested in Greece. As if nobody cares if a borrower runs out of money and starts repaying in worthless currency they printed by expanding their money supply massively to pay their debts. After all what would people who lent Brazil money do with inflation affected Barzilian Cruzeiros which Brazil printed to infinity in the late 1980's to pay their debt. And Brazil issued it's own currency since it was a sovereign currency country. But that's OK as far as Krugman sees it. All those Americans who lent Brazil money are still either trying to get some value back rather than the heavily inflated soverign currency that Brazil printed or have just given up the ghost in frustration !! He doesn't let the facts so evident in reality get in the way of his crazy rubbish theory of money printing.
In USA we are doing better! - No, you just don't give a damn about your poor people! - We have a lecturer in Danmark who compares having the same currency in Europe to going into a hospital and measure all patients' temperature and find the average - and everybody would be equally sick.......
"Unchecked markets led to the 2008 recession." What a ridiculous, ridiculous argument. Krugman has the same tired arguments over and over. It can all be summed up with "the liquidity trap." Yes... we get the point there is a liquidity trap. That doesn't mean YOUR solution is the right way to solve it. Yes, your spending is my income and vice versa, but spending must come from SAVINGS. So don't give me a recession created by Keynesian policies then tell me Austrians are immoral and evil for driving austerity measures and pushing for more household savings. Is it any wonder Krugman has failed to acknowledge the Austrian Business Cycle Theory? That crucial interaction between savings levels and long-term vs. short-term investment is a crucial element that has been neglected by many. What we clearly need is to cut off the Fed's ability to inflate while driving a return to the gold standard. Let business cycles return their course after bubbles have purged their toxic gas, matching savings rates with appropriate investment in long-term vs. short-term projects.
Taint man : How can anybody respond to you if you get all agitated like a little child ,and remove the reply option to your post? :) I suggest you get into the most important matters of 2015 economy like I suggested for you. You seem so far just like any average stocktrader being hysterically afraid of any critics against crony-capitalism. And I didnt even say I disagree with you that Krugman is flawed. Why you believe otherwise is perhaps a matter of psychology?
Krugman at 4:34 . 'Look at Britain . countries that continue to have budget deficit, ran very large deficits during the worst time have never had a problem with market confidence ". FACTS WRONG AGAIN - Britain's credit rating was downgraded in 2013 From AAA for the first time since 1978 when it lost it previously. And that was not a downgrade by some officials in Brussels. That was from the international credit ratings agency Moodys. !
Rob Mews Moody's isn't 'the market' you serial dope. And in fact sentiment in 'the market' is irrelevant to the returns on short term UK debts anyway which is entirely controlled by the BOE. That moodys thinks there's even a 0.0001% that the British state might run out of British pounds sterling which it creates out of nothing ad infinitum is yet another testament to the complete irrelevance of the big rating agencies.
Charlie Duran And just who has an idea of what the reality of the market really is? Mr Krugman? If he is so aware of what is happening in th market and in business and finance or ever was then he woud not have been making crazy misleading statements about things that are completely outside his narrow field of experience. Things like his statement about the future effect of the Internet he said :- " The growth of the Internet will slow drastically, as the flaw in “Metcalfe’s law”-which states that the number of potential connections in a network is proportional to the square of the number of participants-becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s."
so explain to me how debt IS a GOOD thing. Being in debt is the exact opposite of being independent. Just listen to the ridiculousness of what he's talking about. I'm not even saying he's dumb or that he's not right.....it's simply the entire idea behind the system that he speaks about just seems terrible to me!
Isaiah Bishop I get that. I mean debt that you KNOW you can pay back is relatively ok. Problem is apparently everyone loves to to go into debt beyond their means.
He says at 9:35 - "They aren't really worried about budget deficits but just want to shink the welfare state". He fails to connect that the two are so closely related that shrinking the welfare state is the what will reduce the budget deficit and that the objective is to Reduce the budget deficit !! He missed the point completely !! Again. But in the prvious sentences he said that was the objective !! He thies again to have things both ways by saying something and denying it in the next breath.
***** You say - "thanks to commercial banks printing money" That is WRONG. Commercial banks do NOT print money!! You have it fundamentally Wrong !! If you satart from WRONG assumptions you can only go to Wrong Conclusions.
***** You are totally confused if you think new money comes from commercial banks or private people printing money per se. You are WRONG. If a commercial bank prints money it is Fraud !! Have you not heard of counterfeit. The CEO's would be jailed. In the US the only organisation allowd to print new money and expand the money supply is the Federal Reserve and it does so with the approval of congress.
***** Show me where commercial banks print money to expand the money supply. You are unable to do so since it doesn't happen. What commercial banks do is expand their loans when they are allowed by the reserve deposits requiremet of the reserve bank. They also contract their loans to respond to market requirements . If people pay off loans the system works in reverse and the money (credit) represented by loans is destroyed. Show me where the Federal reserve in the US does this and has done so in the past ten years or more. - It hasn't to my knowledge. Perhaps you know better and can point this out in some book you have read . . But I doubt it. What you allege would mean a bank could continue to print more and ever more money and lend it to anyone without risk of them not paying it back since they could loan defaulters themself with more printed money to cover the failure to pay it back. That understanding is totally idiotic.
***** You say "The Irish bailed out their banks with taxpayer money and now Ireland is broke. Bernanke on the other hand created reserves to the tune of $80 billion a month since 2008 and moved them onto the banks' balance sheet in exchange for the toxic debt. Now some say this will cause inflation, the Fed says it won't because they are paying the banks interest on those reserves higher than what they would get if they loaned them out. They are keeping a close watch on them. " Of course the Fed said it won't cause inflation - But it already has. Where have you gotten your information from on inflation ? The facts are you have missed out on what has actually happened by ignoring a huge part of the economy which is the share prices and the long term indicators of commodities. The inflation genie is not in a bottle. It is already out of the bottle and into the share market. It is reflected in the share index prices. They have gone off the planet for no legitimate reason. You really have stop believing in people like Bernanke and Krugman and ask "why have the share prices risen so much?" How could they if the income returns from them have not and the output of goods and services has not risen more than a fraction of what the share prices have. Added to that is the velocity of money flow index has decreased which normally would mean there would be less economic activity indicated by the manufacturing index and other statistics. It would also mean decreased of prices by way of decreased demand. You have already heard no doubt and you have indicated there is decreased demand for productive resources. Just look at the Wilshire index information to see that. It is dangerously high and this is a good indicator of a coming crash. You also should be asking why the purchasing power of retirement pension funds has fallen. This is simply because they cannot afford to purchase shares like they used to since the share market give so little income based on a percentage of price to earnings. Yes the Fed has moved toxic debt onto it's balance sheet. That debt is still there. It has not gone away and sits as a threat to them when it comes to selling their debt like they say they will do. You already said the Fed is paying higher rates to banks keep the banks interest up. Higher rates on toxic debt !! That's a distortion of the market to start with and requires channelling money into that area. . Who will buy toxic debt that was no good when the banks had it on their balance sheet and now is on the Fed's ? This debt means the public is to be stuck with it one way or another either by way of toxic bonds or some other device. A cost to the economy paid for by everyday peoeple out of their savings which have fallen in value on a comparative basis. Just ask the pension funds or see their reports. They have the stats about what has happened and you constantly must have heard that the middle class is being wiped out by the actions of what happened in the GFC and since the collapse of 2008. It is all a huge pack of cards about to have a big correction.
***** As for the crappy loans. Most of them were in the housing mortgage area. This area had been set aside as an area of the finance business by the respective US governments for favourable loans. The governments themselves advanced this part of the finance sector as having privilege which other sectors did not have. A good example of this was Fannie and Freddie whose products were pushed by Bush jr not long before the crash. He is on record as saying the government would see housing as a priority. Risky loans were being promoted in an unbalanced way by this compared with other loans. Governments were pursuing home loan policies ahead of other loan policies reagardless of risk and legislature backed them up. That added to the whole issue. .
Krugman wrong again !! He uses double standards and muddles things up and fails to see the real connections. He must know that the creation of debt starts with government since debt is expressed in monetary terms and that money comes into creation by government expanding the money supply. He must also know that government debt is not paid out by governments. This is in sharp contrast to private debt which is created by fractional reserve expansion by private banks and then contracted when the debts are paid off. This private debt is obtained to carry out enterprises that are directly related to demand by the public as consumers. The situation with government debt is it is Never paid off. Consequently taxpayers (the private sector) pay the interest on it through taxation which funds government borrowings internally and overseas. That situation does not happen in reverse. Governments do not pay off private debts in any circumstances. Can anyone illustrate a situation where governments pay off private debts? So that comes to the conclusion which is easy to see and that is all debt eventually becomes into the private sector from government. It cannot fo the other way simply because governments don't pay off private debt . Krugman says governments who do not have their own currency may run out of money That is a crazy statement if you examine it and is based on some idea that there will not ve enough money to operate. If a government like a private individual does not have their own currency printing ability then they must borrow it at the prevailing rate from other counties. The can do this just as people borrow. Sure the interest is a burden but overseas organisations and banks will lend it just as the US government and private institutions lend it. Just like what happens in fractional reserve banking in the private sector !! This is crazy since there is no fixed amount of money in any economy that is a magic figure which is ideal. The problem is where governments have created too much money like all of those thirty or more countries that expanded their money too high and caused a currency crisis. Such names a s Hungary, Argentina, Brazil, Zimbabwe come to mind for having done that. There are NO examples anywhere of countries who "ran out of money". There are plenty who failed to balance their budgets and tried to pay for their debts by more budget deficits and further money expansion. The lack of what he terms "austerity" is the problem since he selectively uses the word "austerity" as if it is something undesirable when he should be using the words " responsible budgeting" . He does not use the word " austerity" when private people or organisations fail to balance their budgets but rather accuses them of causing the GFC bubble. It is a crazy fabrication created by him maybe for and excuse for his money expansion mania. .
***** NO - You have it the wrong way around. You obviously just read books and have little understanding of what they are talking about. You say "Loans create deposits" If that were true then banks could just lend and continue to lend. This is clearly nonsense. How can a private banks get money to lend other than from deposits or from expansion of the money supply through fractional reserve which is limited by the expansionary policy of the Government reserve banks who are the only institutions who can expand the money supply. No private bank can expand the money supply. No private bank can print money. Banks are limited by deposit and lending rule limits set by reserve governments. The answer is No Private bank can. If private banks could the they could expand credit ad infinitum and nobody would be in financial trouble since they could just go to a bank and get more money. The second point you make about the US never having barrowed rom overseas is an interesting one since it illustrates your introverted view of economics. The fact is the US government is not the only government that has sovereign currency. Have you not noticed that most countries do. And if you apply your explanation to those countries and what you say about the US dollar then the whole of your explanation is found to lack all credibility. You are just parroting what some paragraph in a book has said without understanding that the perspective of the US dollar seen from another country gives a different answer. To a business in that other country the US dollar is just another currency. Not something you would necessarily need or want more than any currency. You say in your example that the US dollars the Chinese business gets for their goods as payment is then exchanged for renmimbi. That is incorrect. Have you heard of floating exchange rates? You may have or may just misunderstood what you have read. There is no exchange system for renmimbi organised by governments making up values for exchange rates. That system is what got and gets many countries into financial exchange trouble just as it recently did in Argentina. And that is despite Argentina having it's own sovereign currency. It is an open market system that dictates exchange rates. The exchange is based on what Chinese business can use to purchase goods from other countries not renmimbi from their government. That begs the question as to why would the Chinese want US dollars in the first place. They increasingly don't want US goods since they produce most goods they need themselves. The Chinese want Asian raw materials like Australian Iron ore and grain. They also want Brazilian iron ore and African minerals. They want Russian oil which they pay for in rubles or renmimbi. They now can pay for those materials by direct bi lateral trading without reference to US dollars at all. Have you not heard of the Chinese bi lateral trade agreements which have been agreed to for most traders. Probably not, but simply because you have your head stuck in an outdated incorrect book written by some introverted US economist or some now debunked Keynesian.
***** Your argument about the savings bond proves taht "uncle Sam" needs to borrow the maney from you or someone else in the future. This is proven by your statement that Uncle Sam will pay out the bond when it matures. And on present and past inflation rates it will be worth only a fraction of what it was today. You have to understand that money creation by 'Uncle Sam' in this example proves what you say is wrong. The term ofetn used for money creation is "borrowing into existence". What do you think that means? All money created by governments is borrowed into existence !! .
***** So if a sovereign government currency is printed by expanding the money supply that is 'an investment'. So why is it not an investment if some counterfeiter inflates the money supply to invest by printing more dollars or creating more debt by issuing bonds without any asset backing. By your reckoning a business or private person could just print bonds for payment of debt with a face value on them raher than assets to back them. That would be acceptable to you would it ? Would you be happy investing in such a bond? Would the government be prepared to accept bonds from organisations with a face value on them as payment for a tax? After all the government could think of 'them as an investment' !! Pension funds have been ripped off lately by being excluded from the cheap interest rates made available by government to banks so they can supply cheap loans to businesses to buy back shares. The cash pension funds will get in a number of years if they invest in treasury bonds will definitely not be worth much at all based on existing returns. You say that when the economy expands the deficits go away. They don't. The deficits have built over the last fory or more years in total value and in inflation adjusted values as well as a percentage of GDP. What happened in the last forty years is the purchasing power of the US dollar has dropped dramatically due to money base expansion since the gold standard was abandoned. It has fallen over 1500 percent since the mid 1960's when gold and precious metals have gone up about the same amount or more. So has the price of oil. So have basic food prices. Now share prices have risen over the past 5 years due to more cheap QE money being put into shares. This rise is not because of increased income from the companies issuing the shares. Check the facts to see this. Check your facts !! You assume what is incorrect and proven so by the figures. You are on the wrong track and can only go more wrong if you don't check facts against the theory you are putting forward. If you invested in treasury bonds then you are bound to lose purchasing power massively in the near future. This will be because of the falling purchasing power of the US Dollar.
***** I disagree totally with your conclusion about the governemnt knowing when to spend into a deficit. Governments are politicians. They are not experts in the economies of countries. The theory might be in ideal terms OK but in practical terms it is Junk. Just like expecting politicians from different countries to agree on divisions of power over borders or trade or payment of outstanding loans. Just look at Greece and the EU now. It is just a game of one upmanship most of the time. It is politicians who decide on economic matters and they do this in an environment of political drivers (numbers who will vote for them) for their re election. Not on good economics but just politics. Yes there has been little inflation at times when deficits are run. This may be because the expansion of the economy for other reasons like as simple as the deficit has been covered the growth of GDP. But on a long term basis the deficits are funded by money expansion which causes inflation in the long term. If you disbelieve this just look up the graphs of long term (60 or more years) money growth compared to the long term inflation rate. They are one and the same with a short delay between one and the other. By the way if I had a spare 200 miilion dollars or US treasury bonds or into in US dollars. I have instructed the holders of my accumulated savings money to steer well clear of them. I would the 200 million put it into diverse agriculture, fish farming and medical research areas and some into a precious metals buy. Agriculture has been a huge growth area, so has agro fisheries and medical research area since they are heavily science based.
***** Your allegation that "Deficit spending in the stimulus went to pay checks and to shore up local governments so that they did not have to lay off more workers. That went directly into consumption. If it had not been for that, we would indeed be more like Greece and Spain with 50% unemployment in some age groups. " It is also wrong and evidenced by the following example. That argument was used in 1945 by Keynsian economists to justify the idea that government expanding the money supply by deficit spending would be needed to take up the slack in employment from millions (7.6 million from overseas and another 4 million in the US) of those who would return into the economy from serving in armed forces. It was argued there would be massive unemployment if the government did not act by having emeployment programs funded by deficits. The idea was not taken up by the government, fortunately, and the Federal budget was cut by 40% or more from the previous year. The result was a huge drop in US unemployment over the next few years and a return to lower deficits and a booming economy. A more vast improvement in economic conditions than at any time in the depression itself.
My god a minute and a half in and hes already made the most ridiculous statement I've ever heard a nobel prize winner make. It was the private sectors fault - governments didn't overreach... hilarious.
Taint Man it was both the private sector's and the government's faults. Controlled by banks . Well and accurate explained in the austrian docu about Martin Armstrong, the excellent wall streeter who got 2nd thoughts, and got jailed for it
KibyNykraft Yes perhaps a few financial institutions would have worked with too many low quality home buyers on their own thus causing them to go under... however the government actually forced all lenders to participate with various legislative and regulatory actions starting in the 80s.. It's hard to blame private sector when the private sector was literally forced to behave the way they did. en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis Armstrong was primarily targeted because he pointed his finger at successful politicians.
Taint Man Do we talk about the private sector as small enterprise and individuals, or do we talk of private sector as corporations and banks? :) Btw have you studied the talks of Varoufakis with Schumann, and Armstrong in The forecaster documentary?
KibyNykraft So by your response I'm guessing you did not click the link I provided... I'm guessing you're one of these guys that saw a documentary and thinks you know all about it now. This will be my last response. The "private sector" is comprised of all free market participants. Obviously when you have the type of legislation in the link I previously posted the idea of a free market itself is compromised(again by government). To me it's surprising for someone that claims to know the Martin Armstrong story yet contends that the private sector should have acted differently... they were not allowed to do so. I have seen the documentary, I saw it the week it was released- but I don't study documentaries, I study financial history, economies, and markets.... I am a self directed investor/trader with 14 years experience. Krugman has seen the success he has seen because he frames financial calamity in a light favorable to politicians.. Krugman is almost the polar opposite of what Armstrong was prior to his incarceration.
I didnt even see the link until now. And I guess from your response that you are one of those guys who think they know all about why others point to a documentary? :-) I find it hard to see that Krugman or any classic (average) macroeconomist is even close to address what there is talk about in Schumann's long interview with Varoufakis or Armstrong's points in the austrian docum (which you obviously havent watched). Perhaps you should do that first.
Yep - Only a complete fool would think that printing pieces of paper and failing to account for one's finances would bring harmony and prosperity. It's not only printing pieces of worthless paper he belives is wealth creation but he also believs making a trilion dolar coin is wealth creation. Seems he is doing his best to impersonate a complete fool or is becoming one. Or perhaps he is just practicing his acting skills by pretending to be a fool.
Wont run out of money? HAHA. Just because the central bank prints, does not mean that lenders arent nervous. In this case its not about being paid back but being paid with worthless money. Krugman seems off his rocker.
He is not OFF his rocker but is OFF in dreamland and fails to connect his theory with reality. He designs theories to fit a pre conceived idea that governments are NEVER wrong when they expand the money supply. That is his one and only string on his guitar. The dull tune of "Expand money supply" !! it's always the private sector who is wrong by his reckoning. You should see the one about the trilion dollar coin!! He wants a trillion dollar coin to be minted to fix the US economy. People need better medical and hospital care and housing and transport and communications so he wants to create a trillion dollar coin !!
Rob Mews Yeah the trillion dollar coin is the same misconception. He thinks that central banks can create real purchasing power via the printing press. If that were the case, we wouldnt need to work anymore! All we needed to do is print. A totally insane concept. Lenders dont need to worry, we can always print the money we owe. Haha. What a ridiculous concept. We dont need to produce, lets create a trillion dollar coin. Its the same nonsense, only from a different angle. The interviewer seems to buy into the same bullshit.
***** ??? Try to form a coherent argument, which refutes any of the above statements. Krugman claims that lenders dont have to worry, as the central bank can print enough money to pay them off. As I have explained, thats hardly soothing, as the process destroys purchasing power. Your rant doesnt refute nor really address the points made above. Fractional reserve banking is another matter. So calm down and stop with unwarranted attacks. Jerk.
***** Ok, you are just a run of the mill Keynsian. Your argument has so many holes in it, I wont even start to adress them, as you will not accept any of the corrections made anyway. Thus continue with your delusions. You are just a supporter of collectivism. Next.
***** Haha. EMOTION: SHAME GAME: You want that people starve to death etc. TYPICAL DELUSIONAL mantra of a keynisan. We will see who is right later. But you will deny reality again and blame in on the rich.
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THANK YOU Mr. Schumann for these first-rate programs---For me the 2 best are "Trail of the Troika" and the full talk with Varoufakis. PLEASE keep this going---major help for people who really want to connect dots, understand and find the best all-around solutions, vs. the mainstream media liars who oil the wheels of injustice and catastrophe. Also a great consensus among guests that A) EU and America have what it takes to solve these crises intelligently, and B) "it's not going to happen" because of political and private-profit agendas among an elite who bask in each other's power and, through that narcissism, make stupid unsustainable choices for everybody. It's up to each country's PEOPLE to refuse any more scapegoating, to interconnect and demand return to established law and accountability.
This interviewer is great, asks all the right questions. Tha k you for this episode
Super! Yes, follow the advice and watch with English captions! Very interesting.
Krugman on one of the reasons politicians are so stubborn in clinging to their erroneous policies:
10:10: "That my income comes from selling to you, and your income comes from selling to me is not easy for people who think in slogans to grasp!"
Fantastic quote. I don't know if he invented that picture ("people who think in slogans") but I will borrow that. It certainly is a very telling image.
Vielen Dank für das Hochladen des vollständigen Interviews!
Amazing interview! Love Paul Krugman and his lovely and vivacious wife! Another interview would be very useful and enlightening now in the current state of affairs in the EU and the world.
Krugman said that it is a curious case that only the debtor takes the total blame for their irresponsible borrowing, whereas, in fact there are 3 parties: the debtor, the agent and the main lender. i.e. an investor who seeks high compensations, i.e. mainly the systemic banks of the core Euro area. He's making a very legitimate point, which is aligned to what Varoufakis has claimed as in private banking sector's (potential) losses being converted into sovereign debts to the shoulders of the peoples of the indebted countries through these troika programs and consequently to all European taxpayers through EFSF. Many other economists have supported this view, from Japan, America and elsewhere, yet nobody even dares to articulate it in official Europe's circles (except perhaps for Varoufakis). Of course, one may argue that the PSI was the necessary private sector losses. But since it was done in the wrong time (AFTER the bailout deal), and having only the smaller private sector contributors incur losses (like banks of Cyprus), it was also another failure. Schaeuble said nobody forced the booming periphery economies to take easy money to create their debt bubbles. Yet, the responsibility is collective in all sensible minds. My opinion. And I know I will be attacked by Republicans or citizens of smaller EU countries that are in the unfortunate position to have to contribute to the Greek "bailout" in order to qualify for Schaeuble's favour.
Agree, spot on as far as EU and intervened countries PK is 100% correct. Robin Wells has certainly contributed for such an accurate view. Things have bent so much towards the awkward right that for many PK sounds like a extreme left socialist. I love his views, his modesty and his love for my country too.
I agree. That is a startegy they often employ to later have a get out of jail card. A common ploy of people who when questioned say yes to two questions which are opposite and put a qualification on each. This serves as a way of getting out of making a definitive statement which might disclose the facts yet wanting to appear to answer truthfully.
Such answers often contain like " well yes and no depending on the circumstances ra. ra. ra." Non communicative and very often accompanied by a body language that is negative and closed rather than open.
Often when the truth is they just don't know or can't answer becasue they feel the facts they disclose might incriminate them.
its obvious that public debt is not the same as private debt, as PK notes, but governments lie and use public debt and other means to back and secure the banks at the public's expense especially the lower half of the economy, ie austerity means gross disparity -- gov hurries to help the banks 1st and says the hell with rest of society.
11:37 very funny " when someone has strong beliefs evidence doesnt change their mind the better informed they are the more resistant to evidence they are"
Did they have someone hold the camera the entire time?
@Yo ski yeah your right who whose Paul Krugman just another noble prize winning economist
It seems that is the limit of your thinking and articulation.
MrHalified - You have not read or taken into consideration what I have said before.
The fact is the 95% of the money that banks crete by fractional reserve processes goae into the economy as loans - Rerepayable loans that relate to a person or organisatioin producing goods and services. (e.g like a house mortage to build ahouse). When those goods or servicices are completed and the person pays back the loan by doing other work in the community and the process of expansion is reversed and the bank loan (e.g. mortgage) is finished and ceases to exist.
That process is distinct from what happens with teh Fed's expansion of money process. In case of the Fed the new money is never finished since the debt is never paid off.
You don't seem to grasp that difference at all. You just keep repeating the same old incomlete story of treating Fed expansion money the same as bank loans for mortgages etc which are paid back.
The two are seperate activities. Note the difference !!
If they were the same then there would be no need at all for a Fed to do what they do since the private banks could do it. The Fed's money creation would be redundant !!
Earth calling Mr Malified - Do you understand that ? Come In Halified !! Earh calling.
Another wrong assumption and conclusion by Krugman at 5.25 . Corelation between what he calls "Austerity" and a downturn does not mean one caused the other.
It never does because correlation proves nothing about a cause and effect especially when the factors are not taken into account or even shown to be considered in this video. Not mentioned or explained at all.
For example it may be a correct observation of facts as such as in the following example:- People keep falling on the footpath where there are cracks therefore the people are causing the cracks when falling. It may be true but cannot be said to be so since other factors may wel be involved - eg it might be also slippery or the cracks might have been caused by cars mounting the footpaths to do U turns. Also people may be falling because of the slipper pavement alone.
The same errors in logic are evident in many of Krugman's statements.
Totally incorrect conclusion drawn from unrelated observations. Poor homework revealed on this.
He states at that point "Every euro in spending cuts seems to uh on average have cost one point five euros of gross domestic product". The inference by Krugman that the cuts caused the other. So he has quarantined the two and says one necessarily caused the other. Yet they are not the only two things that happened , and not by any means. It may have been Interst rates that caused the both or outside influences which caused the both like a default by a partner of the EU. But that is not mentioned at all as a factor since it is awfully inconvenient to do so.
Basic, basic error of logic Mr Krugman. .
Besides this claim that 'Austerity' is the cause of problems in the EU the fact is that Krugman LOVES what he calls "Austerity". He loves it in economies since he is in favour of it being compulsory for every government and organisation except Federal sovereign governments who issue their own currencies.
He knows that without his so called "austerity" for all those other institutions the economy would fail even more badly. Just as the failures of Federal sovereign governments are evident. Exception from accountability for a select few is his game.
His exception is of course made since he wants Federal governments to have power over the other governments and organisations and private individuals.
Not a result of good economics at all just power plays for greedy politically motivated people in government and empowered by centralist governments but paid for by the everyday person.
He is not in favour of Equality at all. He speaks of it but he is not really in favour of it. He is totally hypocritical as far as economics and accountability are concerned since he want one rule for one organisation and a totally different rule for others.
He wants centralist governments to be unaccountable to the people.
It's all a power play by him to gain power for Federal governments and particularly governments of one ilk who he sees as supporting his thoughts.
i
so Krugman if austerity doesn't work because people hold onto their money, and people spending money makes us all have more money, why don't billionaires and corporations spend their money? in your theory only poor people can drive an economy,
+maxximuss The answer is simple. Someone who has 1000 would never eat as much as 10 people having a 100. It is basic logic.
+Valerio Maggi loot at
Greeks Vote No: Keynesian Crisis Continues
by RonPaulLibertyReport
At 3.30 Krugman states about Spain "they are able to borrow historically cheaply ". Then he follows with "and they didn't do that by balancing their budget" "they didn't do that by balancing their budget, they didn't do that though austerity, they did it because the ECB has stabilised the markets."
He doesn't disclose the reason why Greece can't borrow as much as Spain because he fails to finish his next sentence and changes tactics half way through. "not because of those programs but because the ... Basically countries that are .... that don't have their own currency , markets can get very nervous. "
No answer given as to why he fails to finish the first sentence. Why
The real question is -'Why doesn't Greece borrow like Spain can ?
The real answer is because they have not demonstrated the restraint in spending that Spain's government austerity shows as evidence of not going down the bankruptcy path of Greece (and Krugman ) - Spend, spend, spend, which got Greece into so much trouble and others are rightly wary of because it results in financial chaos and loss of wealth for who invested in Greece.
As if nobody cares if a borrower runs out of money and starts repaying in worthless currency they printed by expanding their money supply massively to pay their debts.
After all what would people who lent Brazil money do with inflation affected Barzilian Cruzeiros which Brazil printed to infinity in the late 1980's to pay their debt. And Brazil issued it's own currency since it was a sovereign currency country.
But that's OK as far as Krugman sees it.
All those Americans who lent Brazil money are still either trying to get some value back rather than the heavily inflated soverign currency that Brazil printed or have just given up the ghost in frustration !!
He doesn't let the facts so evident in reality get in the way of his crazy rubbish theory of money printing.
In USA we are doing better! - No, you just don't give a damn about your poor people! - We have a lecturer in Danmark who compares having the same currency in Europe to going into a hospital and measure all patients' temperature and find the average - and everybody would be equally sick.......
"Unchecked markets led to the 2008 recession." What a ridiculous, ridiculous argument. Krugman has the same tired arguments over and over. It can all be summed up with "the liquidity trap." Yes... we get the point there is a liquidity trap. That doesn't mean YOUR solution is the right way to solve it. Yes, your spending is my income and vice versa, but spending must come from SAVINGS. So don't give me a recession created by Keynesian policies then tell me Austrians are immoral and evil for driving austerity measures and pushing for more household savings. Is it any wonder Krugman has failed to acknowledge the Austrian Business Cycle Theory? That crucial interaction between savings levels and long-term vs. short-term investment is a crucial element that has been neglected by many. What we clearly need is to cut off the Fed's ability to inflate while driving a return to the gold standard. Let business cycles return their course after bubbles have purged their toxic gas, matching savings rates with appropriate investment in long-term vs. short-term projects.
Taint man : How can anybody respond to you if you get all agitated like a little child ,and remove the reply option to your post? :) I suggest you get into the most important matters of 2015 economy like I suggested for you. You seem so far just like any average stocktrader being hysterically afraid of any critics against crony-capitalism.
And I didnt even say I disagree with you that Krugman is flawed. Why you believe otherwise is perhaps a matter of psychology?
Krugman at 4:34 . 'Look at Britain . countries that continue to have budget deficit, ran very large deficits during the worst time have never had a problem with market confidence ". FACTS WRONG AGAIN - Britain's credit rating was downgraded in 2013 From AAA for the first time since 1978 when it lost it previously. And that was not a downgrade by some officials in Brussels. That was from the international credit ratings agency Moodys.
!
Rob Mews Moody's isn't 'the market' you serial dope. And in fact sentiment in 'the market' is irrelevant to the returns on short term UK debts anyway which is entirely controlled by the BOE. That moodys thinks there's even a 0.0001% that the British state might run out of British pounds sterling which it creates out of nothing ad infinitum is yet another testament to the complete irrelevance of the big rating agencies.
Charlie Duran And just who has an idea of what the reality of the market really is? Mr Krugman? If he is so aware of what is happening in th market and in business and finance or ever was then he woud not have been making crazy misleading statements about things that are completely outside his narrow field of experience. Things like his statement about the future effect of the Internet he said :- " The growth of the Internet will slow drastically, as the flaw in “Metcalfe’s law”-which states that the number of potential connections in a network is proportional to the square of the number of participants-becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s."
How does any of that address what i just said? Read it again.
so explain to me how debt IS a GOOD thing. Being in debt is the exact opposite of being independent.
Just listen to the ridiculousness of what he's talking about. I'm not even saying he's dumb or that he's not right.....it's simply the entire idea behind the system that he speaks about just seems terrible to me!
Isaiah Bishop I get that. I mean debt that you KNOW you can pay back is relatively ok. Problem is apparently everyone loves to to go into debt beyond their means.
Isaiah Bishop This would only work in a fully finite economy. Something any indebtor is against. How funny :)
He says at 9:35 - "They aren't really worried about budget deficits but just want to shink the welfare state".
He fails to connect that the two are so closely related that shrinking the welfare state is the what will reduce the budget deficit and that the objective is to Reduce the budget deficit !! He missed the point completely !! Again. But in the prvious sentences he said that was the objective !! He thies again to have things both ways by saying something and denying it in the next breath.
***** You say - "thanks to commercial banks printing money"
That is WRONG. Commercial banks do NOT print money!!
You have it fundamentally Wrong !!
If you satart from WRONG assumptions you can only go to Wrong Conclusions.
***** You are totally confused if you think new money comes from commercial banks or private people printing money per se. You are WRONG.
If a commercial bank prints money it is Fraud !! Have you not heard of counterfeit. The CEO's would be jailed.
In the US the only organisation allowd to print new money and expand the money supply is the Federal Reserve and it does so with the approval of congress.
***** Show me where commercial banks print money to expand the money supply.
You are unable to do so since it doesn't happen.
What commercial banks do is expand their loans when they are allowed by the reserve deposits requiremet of the reserve bank.
They also contract their loans to respond to market requirements . If people pay off loans the system works in reverse and the money (credit) represented by loans is destroyed.
Show me where the Federal reserve in the US does this and has done so in the past ten years or more. - It hasn't to my knowledge.
Perhaps you know better and can point this out in some book you have read . . But I doubt it.
What you allege would mean a bank could continue to print more and ever more money and lend it to anyone without risk of them not paying it back since they could loan defaulters themself with more printed money to cover the failure to pay it back.
That understanding is totally idiotic.
***** You say "The Irish bailed out their banks with taxpayer money and now Ireland is broke. Bernanke on the other hand created reserves to the tune of $80 billion a month since 2008 and moved them onto the banks' balance sheet in exchange for the toxic debt. Now some say this will cause inflation, the Fed says it won't because they are paying the banks interest on those reserves higher than what they would get if they loaned them out. They are keeping a close watch on them. "
Of course the Fed said it won't cause inflation - But it already has.
Where have you gotten your information from on inflation ?
The facts are you have missed out on what has actually happened by ignoring a huge part of the economy which is the share prices and the long term indicators of commodities.
The inflation genie is not in a bottle. It is already out of the bottle and into the share market. It is reflected in the share index prices. They have gone off the planet for no legitimate reason.
You really have stop believing in people like Bernanke and Krugman and ask "why have the share prices risen so much?" How could they if the income returns from them have not and the output of goods and services has not risen more than a fraction of what the share prices have.
Added to that is the velocity of money flow index has decreased which normally would mean there would be less economic activity indicated by the manufacturing index and other statistics. It would also mean decreased of prices by way of decreased demand. You have already heard no doubt and you have indicated there is decreased demand for productive resources.
Just look at the Wilshire index information to see that. It is dangerously high and this is a good indicator of a coming crash.
You also should be asking why the purchasing power of retirement pension funds has fallen. This is simply because they cannot afford to purchase shares like they used to since the share market give so little income based on a percentage of price to earnings.
Yes the Fed has moved toxic debt onto it's balance sheet. That debt is still there. It has not gone away and sits as a threat to them when it comes to selling their debt like they say they will do. You already said the Fed is paying higher rates to banks keep the banks interest up. Higher rates on toxic debt !! That's a distortion of the market to start with and requires channelling money into that area. .
Who will buy toxic debt that was no good when the banks had it on their balance sheet and now is on the Fed's ? This debt means the public is to be stuck with it one way or another either by way of toxic bonds or some other device. A cost to the economy paid for by everyday peoeple out of their savings which have fallen in value on a comparative basis.
Just ask the pension funds or see their reports. They have the stats about what has happened and you constantly must have heard that the middle class is being wiped out by the actions of what happened in the GFC and since the collapse of 2008.
It is all a huge pack of cards about to have a big correction.
***** As for the crappy loans. Most of them were in the housing mortgage area. This area had been set aside as an area of the finance business by the respective US governments for favourable loans.
The governments themselves advanced this part of the finance sector as having privilege which other sectors did not have.
A good example of this was Fannie and Freddie whose products were pushed by Bush jr not long before the crash. He is on record as saying the government would see housing as a priority. Risky loans were being promoted in an unbalanced way by this compared with other loans.
Governments were pursuing home loan policies ahead of other loan policies reagardless of risk and legislature backed them up. That added to the whole issue. .
Paul Crookman? Nah, I go with Ron Paul!
If Ron Paul was right, the Euro zone should be booming right now. Oops...
Noah Klinger Ron Paul shouldve known that the fucks from the US govt initiated the war in Ukraine? Is that what youre saying?
Noah Klinger Bingo!
***** I don't believe exploiting white supremacist email lists will return enough for Europe to dig itself out of the hole it's in?
simials What email lists are you talking about?
Krugman wrong again !!
He uses double standards and muddles things up and fails to see the real connections.
He must know that the creation of debt starts with government since debt is expressed in monetary terms and that money comes into creation by government expanding the money supply.
He must also know that government debt is not paid out by governments. This is in sharp contrast to private debt which is created by fractional reserve expansion by private banks and then contracted when the debts are paid off. This private debt is obtained to carry out enterprises that are directly related to demand by the public as consumers.
The situation with government debt is it is Never paid off. Consequently taxpayers (the private sector) pay the interest on it through taxation which funds government borrowings internally and overseas. That situation does not happen in reverse.
Governments do not pay off private debts in any circumstances.
Can anyone illustrate a situation where governments pay off private debts?
So that comes to the conclusion which is easy to see and that is all debt eventually becomes into the private sector from government. It cannot fo the other way simply because governments don't pay off private debt .
Krugman says governments who do not have their own currency may run out of money
That is a crazy statement if you examine it and is based on some idea that there will not ve enough money to operate. If a government like a private individual does not have their own currency printing ability then they must borrow it at the prevailing rate from other counties.
The can do this just as people borrow. Sure the interest is a burden but overseas organisations and banks will lend it just as the US government and private institutions lend it.
Just like what happens in fractional reserve banking in the private sector !!
This is crazy since there is no fixed amount of money in any economy that is a magic figure which is ideal. The problem is where governments have created too much money like all of those thirty or more countries that expanded their money too high and caused a currency crisis. Such names a s Hungary, Argentina, Brazil, Zimbabwe come to mind for having done that.
There are NO examples anywhere of countries who "ran out of money". There are plenty who failed to balance their budgets and tried to pay for their debts by more budget deficits and further money expansion.
The lack of what he terms "austerity" is the problem since he selectively uses the word "austerity" as if it is something undesirable when he should be using the words " responsible budgeting" .
He does not use the word " austerity" when private people or organisations fail to balance their budgets but rather accuses them of causing the GFC bubble.
It is a crazy fabrication created by him maybe for and excuse for his money expansion mania. .
***** NO - You have it the wrong way around. You obviously just read books and have little understanding of what they are talking about.
You say "Loans create deposits" If that were true then banks could just lend and continue to lend. This is clearly nonsense.
How can a private banks get money to lend other than from deposits or from expansion of the money supply through fractional reserve which is limited by the expansionary policy of the Government reserve banks who are the only institutions who can expand the money supply. No private bank can expand the money supply. No private bank can print money. Banks are limited by deposit and lending rule limits set by reserve governments.
The answer is No Private bank can. If private banks could the they could expand credit ad infinitum and nobody would be in financial trouble since they could just go to a bank and get more money.
The second point you make about the US never having barrowed rom overseas is an interesting one since it illustrates your introverted view of economics.
The fact is the US government is not the only government that has sovereign currency. Have you not noticed that most countries do. And if you apply your explanation to those countries and what you say about the US dollar then the whole of your explanation is found to lack all credibility.
You are just parroting what some paragraph in a book has said without understanding that the perspective of the US dollar seen from another country gives a different answer. To a business in that other country the US dollar is just another currency. Not something you would necessarily need or want more than any currency.
You say in your example that the US dollars the Chinese business gets for their goods as payment is then exchanged for renmimbi. That is incorrect.
Have you heard of floating exchange rates? You may have or may just misunderstood what you have read.
There is no exchange system for renmimbi organised by governments making up values for exchange rates. That system is what got and gets many countries into financial exchange trouble just as it recently did in Argentina. And that is despite Argentina having it's own sovereign currency.
It is an open market system that dictates exchange rates. The exchange is based on what Chinese business can use to purchase goods from other countries not renmimbi from their government.
That begs the question as to why would the Chinese want US dollars in the first place. They increasingly don't want US goods since they produce most goods they need themselves.
The Chinese want Asian raw materials like Australian Iron ore and grain. They also want Brazilian iron ore and African minerals. They want Russian oil which they pay for in rubles or renmimbi. They now can pay for those materials by direct bi lateral trading without reference to US dollars at all.
Have you not heard of the Chinese bi lateral trade agreements which have been agreed to for most traders. Probably not, but simply because you have your head stuck in an outdated incorrect book written by some introverted US economist or some now debunked Keynesian.
***** Your argument about the savings bond proves taht "uncle Sam" needs to borrow the maney from you or someone else in the future. This is proven by your statement that Uncle Sam will pay out the bond when it matures. And on present and past inflation rates it will be worth only a fraction of what it was today.
You have to understand that money creation by 'Uncle Sam' in this example proves what you say is wrong. The term ofetn used for money creation is "borrowing into existence". What do you think that means? All money created by governments is borrowed into existence !!
.
***** So if a sovereign government currency is printed by expanding the money supply that is 'an investment'.
So why is it not an investment if some counterfeiter inflates the money supply to invest by printing more dollars or creating more debt by issuing bonds without any asset backing.
By your reckoning a business or private person could just print bonds for payment of debt with a face value on them raher than assets to back them.
That would be acceptable to you would it ? Would you be happy investing in such a bond?
Would the government be prepared to accept bonds from organisations with a face value on them as payment for a tax?
After all the government could think of 'them as an investment' !!
Pension funds have been ripped off lately by being excluded from the cheap interest rates made available by government to banks so they can supply cheap loans to businesses to buy back shares.
The cash pension funds will get in a number of years if they invest in treasury bonds will definitely not be worth much at all based on existing returns.
You say that when the economy expands the deficits go away. They don't. The deficits have built over the last fory or more years in total value and in inflation adjusted values as well as a percentage of GDP.
What happened in the last forty years is the purchasing power of the US dollar has dropped dramatically due to money base expansion since the gold standard was abandoned. It has fallen over 1500 percent since the mid 1960's when gold and precious metals have gone up about the same amount or more. So has the price of oil. So have basic food prices.
Now share prices have risen over the past 5 years due to more cheap QE money being put into shares. This rise is not because of increased income from the companies issuing the shares. Check the facts to see this.
Check your facts !! You assume what is incorrect and proven so by the figures.
You are on the wrong track and can only go more wrong if you don't check facts against the theory you are putting forward.
If you invested in treasury bonds then you are bound to lose purchasing power massively in the near future. This will be because of the falling purchasing power of the US Dollar.
***** I disagree totally with your conclusion about the governemnt knowing when to spend into a deficit. Governments are politicians. They are not experts in the economies of countries.
The theory might be in ideal terms OK but in practical terms it is Junk.
Just like expecting politicians from different countries to agree on divisions of power over borders or trade or payment of outstanding loans.
Just look at Greece and the EU now. It is just a game of one upmanship most of the time.
It is politicians who decide on economic matters and they do this in an environment of political drivers (numbers who will vote for them) for their re election. Not on good economics but just politics.
Yes there has been little inflation at times when deficits are run. This may be because the expansion of the economy for other reasons like as simple as the deficit has been covered the growth of GDP. But on a long term basis the deficits are funded by money expansion which causes inflation in the long term.
If you disbelieve this just look up the graphs of long term (60 or more years) money growth compared to the long term inflation rate. They are one and the same with a short delay between one and the other.
By the way if I had a spare 200 miilion dollars or US treasury bonds or into in US dollars.
I have instructed the holders of my accumulated savings money to steer well clear of them. I would the 200 million put it into diverse agriculture, fish farming and medical research areas and some into a precious metals buy. Agriculture has been a huge growth area, so has agro fisheries and medical research area since they are heavily science based.
***** Your allegation that "Deficit spending in the stimulus went to pay checks and to shore up local governments so that they did not have to lay off more workers. That went directly into consumption. If it had not been for that, we would indeed be more like Greece and Spain with 50% unemployment in some age groups. "
It is also wrong and evidenced by the following example.
That argument was used in 1945 by Keynsian economists to justify the idea that government expanding the money supply by deficit spending would be needed to take up the slack in employment from millions (7.6 million from overseas and another 4 million in the US) of those who would return into the economy from serving in armed forces.
It was argued there would be massive unemployment if the government did not act by having emeployment programs funded by deficits.
The idea was not taken up by the government, fortunately, and the Federal budget was cut by 40% or more from the previous year. The result was a huge drop in US unemployment over the next few years and a return to lower deficits and a booming economy. A more vast improvement in economic conditions than at any time in the depression itself.
My god a minute and a half in and hes already made the most ridiculous statement I've ever heard a nobel prize winner make.
It was the private sectors fault - governments didn't overreach... hilarious.
Taint Man it was both the private sector's and the government's faults. Controlled by banks . Well and accurate explained in the austrian docu about Martin Armstrong, the excellent wall streeter who got 2nd thoughts, and got jailed for it
KibyNykraft Yes perhaps a few financial institutions would have worked with too many low quality home buyers on their own thus causing them to go under... however the government actually forced all lenders to participate with various legislative and regulatory actions starting in the 80s..
It's hard to blame private sector when the private sector was literally forced to behave the way they did.
en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis
Armstrong was primarily targeted because he pointed his finger at successful politicians.
Taint Man Do we talk about the private sector as small enterprise and individuals, or do we talk of private sector as corporations and banks? :) Btw have you studied the talks of Varoufakis with Schumann, and Armstrong in The forecaster documentary?
KibyNykraft So by your response I'm guessing you did not click the link I provided... I'm guessing you're one of these guys that saw a documentary and thinks you know all about it now. This will be my last response.
The "private sector" is comprised of all free market participants. Obviously when you have the type of legislation in the link I previously posted the idea of a free market itself is compromised(again by government).
To me it's surprising for someone that claims to know the Martin Armstrong story yet contends that the private sector should have acted differently... they were not allowed to do so. I have seen the documentary, I saw it the week it was released- but I don't study documentaries, I study financial history, economies, and markets.... I am a self directed investor/trader with 14 years experience.
Krugman has seen the success he has seen because he frames financial calamity in a light favorable to politicians.. Krugman is almost the polar opposite of what Armstrong was prior to his incarceration.
I didnt even see the link until now. And I guess from your response that you are one of those guys who think they know all about why others point to a documentary? :-)
I find it hard to see that Krugman or any classic (average) macroeconomist is even close to address what there is talk about in Schumann's long interview with Varoufakis or Armstrong's points in the austrian docum (which you obviously havent watched).
Perhaps you should do that first.
Yep - Only a complete fool would think that printing pieces of paper and failing to account for one's finances would bring harmony and prosperity.
It's not only printing pieces of worthless paper he belives is wealth creation but he also believs making a trilion dolar coin is wealth creation.
Seems he is doing his best to impersonate a complete fool or is becoming one.
Or perhaps he is just practicing his acting skills by pretending to be a fool.
Wont run out of money? HAHA. Just because the central bank prints, does not mean that lenders arent nervous. In this case its not about being paid back but being paid with worthless money. Krugman seems off his rocker.
He is not OFF his rocker but is OFF in dreamland and fails to connect his theory with reality.
He designs theories to fit a pre conceived idea that governments are NEVER wrong when they expand the money supply. That is his one and only string on his guitar.
The dull tune of "Expand money supply" !! it's always the private sector who is wrong by his reckoning.
You should see the one about the trilion dollar coin!!
He wants a trillion dollar coin to be minted to fix the US economy.
People need better medical and hospital care and housing and transport and communications so he wants to create a trillion dollar coin !!
Rob Mews
Yeah the trillion dollar coin is the same misconception. He thinks that central banks can create real purchasing power via the printing press. If that were the case, we wouldnt need to work anymore! All we needed to do is print. A totally insane concept.
Lenders dont need to worry, we can always print the money we owe. Haha. What a ridiculous concept. We dont need to produce, lets create a trillion dollar coin. Its the same nonsense, only from a different angle.
The interviewer seems to buy into the same bullshit.
*****
??? Try to form a coherent argument, which refutes any of the above statements.
Krugman claims that lenders dont have to worry, as the central bank can print enough money to pay them off. As I have explained, thats hardly soothing, as the process destroys purchasing power. Your rant doesnt refute nor really address the points made above. Fractional reserve banking is another matter. So calm down and stop with unwarranted attacks. Jerk.
*****
Ok, you are just a run of the mill Keynsian. Your argument has so many holes in it, I wont even start to adress them, as you will not accept any of the corrections made anyway. Thus continue with your delusions. You are just a supporter of collectivism. Next.
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Haha. EMOTION: SHAME GAME: You want that people starve to death etc. TYPICAL DELUSIONAL mantra of a keynisan. We will see who is right later. But you will deny reality again and blame in on the rich.