The Germans Know How to Treat Krugman

Paul Krugman writes:

Gah. I’m still in Germany, and the event was lovely. The policy conversations, not so much.

We talk about the euro crisis. They say, “Clearly, this was about fiscal irresponsibility, and we need to enforce much stricter rules.” I say, No fiscal rule would have constrained the Spanish housing bubble and its consequences.

And they say, “Thank you for your contribution. Clearly, this was about fiscal irresponsibility, and we need to enforce much stricter rules.”

All joking aside, Krugman was actually correct, but for the wrong reasons. It was money printing that caused the housing bubble in Spain (as everywhere). The fiscal irresponsibility is a separate problem, though a problem. It is unlikely Krugman gets either of these points.

So to Krugman, I say, "Yes, yes! Money printing caused the housing problem and fiscal irresponsibility is a separate problem, though a problem."