Wednesday, December 14, 2011

Ron Paul versus Paul Krugman

Here's the cheap shot Paul Krugman took at Ron Paul in his attack on Dr. Paul and me:
Now, Paul is unique among the GOP contenders, or for that matter among politicians in general, in making monetary policy his signature issue. So it’s worth noting that he is among those who have been wrong about everything in this slump
Here's the truth, Ron Paul saw the entire thing coming. I'll let Joe Scarborough explain what went down heading into the crash.

As for Dr. Paul's recent warnings about accelerating price inflation, we will be playing clips of those also, in the not to distant future. And, they will all be asking, "How did he know?" That is except for Paul Krugman who will have smoothed out the price inflation over a 20 year period.


  1. I can't help noting the following news item:

    "Treasuries Climb as Auction Yield Slides to Record Low on Europe Concern"

    Let me say that again, so it sinks in:

    "Record low".

    This is what the free market is demanding in interest rates to loan the US government money for _30 years_: 2.925%

    "...the offering’s bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 3.05, the highest level since August 2000"

    If hyperinflation is bound to appear Any Day Now, why are all of these people falling all over themselves to lock in their dollars at under 3% till 2041?

    I suppose it's a good thing that (as one poster here recently asserted) that Austrian economics is "not predictive"... 'cause if it were, like any rational, useful, disprovable theory, it would have been...umm..discredited, y'know?

  2. Published: 15 December, 2011, 02:28

    Less than a month after he threatened to veto terrifying legislation that would cease constitutional rights as we know it, Obama has revoked his warning and plans to authorize a bill allowing indefinite detention and torture of Americans.

  3. Hi,
    I just want to ask--what kind of inflation window are you expecting here? Because if inflation stays in the 2-3% range for the next year, will that be a cause for concern for you? When do YOU expect inflation to pick up? Krugman, whether you like his views or not has been pretty clear about his predictions and why. When exactly do you expect inflation to start--"flying" to use your expression? Because, when I talk to folks who hold about the imminent rise in inflation, they are really coy about WHEN this event is going to happen; only that it will happen at some point in the future. So, when will this future point occur--2012, 2013, or later? Or is this something that is not really a testable proposition, as we might understand such terms?

  4. Krugman is so reliably wrong, you can almost read his column, invert what he's saying and be correct. For him to say Ron Paul has been wrong about everything means he is either a liar or has cognitive dissonance on a scale too high to measure.

  5. [["As for Dr. Paul's recent warnings about accelerating price inflation, we will be playing clips of those also, in the not to distant future. And, they will all be asking, "How did he know?" "]]

    This is your rebuttal to Krugman's article? Really?

    As a regular reader of your website, I'm a little disappointed. :(

  6. Ron Paul to Alan Greenspan February 2000. Predicting the pummeling correction coming after AG’s inflation (and subsequent deflation) of the money supply.

    Ron Paul to Ben Bernanke November 2007. Predicting the inflationary bubble in first half of 2008 before the house of cards came falling down. Ben desperately trying to save the system after subprime blew up in his face in summer of 2007.

    Ron Paul’s investment portfolio.

    Paul Krugman owes Ron Paul a big apology. The record over the last decade shows Ron Paul 5 - Paul Krugman 1.

  7. Ron paul was predicting exactly what would happen and Krugman in 2003 was calling for the Fed to make the housing bubble bigger to restore the economy! Krugman never gets it right.

    Krugman also said there was no way commodity prices would rise if QE2 was implemented unless demand was stimulated.

    He said the Japanese earthquake was good because it stimulated the economy, lol.

    The only time krugman has ever been right is when he said that social security is a ponzi scheme!

    Keep it up, Wenzel. You have clobbered him so far in the debate. He is going to have to rethink whether he should attack you again because he will get owned every time.

  8. Did RP say there that we've been in a slowly inflating bubble since '71? Cool. And that's supposed to make him look good?

  9. Krugmanite warning.... So about that Ron Paul video.... Paul got the cause of the financial crisis wrong. Fannie and Freddie were late comers to the CDO and CDS instruments that ultimately led to the bubble and crisis. >70% of mortgages were refi's - not a market Fannie and Freddie play in. And a very high number of the mortgages were actually "sub-prime". All of that was engineered by Wall St since the 80s. Fannie and Freddie simply joined in the fun, late, since "everybody's doing it" and virtually all the public discussion was about how these instruments made the market safe. All of this is explored in Bethany McLean and Joe Nocera's book, All The Devils Are Here, from primary sources.

    The only thing Ron Paul really got right was the rather inane observation that prices cannot keep going up indefinitely. But he's wrong when he says a Fannie and Freddie policy change is what triggered the bubble. The bubble was already happening - and the nozzle blowing air into it was Wall St firms using unregulated and opaque markets to exploit information disparities.

    But what do I know - I'm just a lowly reader of Paul Krugman.

    I'm still waiting for that devaluation of the dollar. Actually, it sure would be nice if the dollar WOULD devalue a bit to bolster our domestic economy versus imports and outsourcing.

    But as to hyperinflation, Krugman posted charts today showing FED monetary base now at 400% pre-crisis levels (~$800T to ~$2.6T) and yet inflation has done what? Stayed flat going on 3 years now? US 10-year inflation-protected bonds have a negative interest rate?

    See, this is like Ron Pauls' model is the economy is a kettle and the FED is a fire, and the kettle's been on the fire for 3 years but the temperature of that kettle hasn't changed. There comes a time when you just have face reality and toss out false ideas.

    (And if anyone reading this is smart enough to know that a kettle of ice will essentially stay at 32 deg F until all the ice is melted - bravo - but the economy isn't ice and isn't experiencing anything like what would be an obvious phase change. All analogies can be taken too far, and you'd would be doing that.)

  10. Fantastic. Krugman's linear one-dimensional modelled economic universe will never accept the validity of Ron Paul's straight-shooting non-mainstream analysis. Austrian economics does not get everything right, but when it comes to understanding how monetary policy can create bubbles, it makes most of the mainstream look totally blind and dumbfounded.

  11. Many economists predicted the crisis. Krugman for example...
    From his wiki page (because I can't be bothered to find a better reference):
    "In September 2003, Krugman published a collection of his columns under the title, The Great Unraveling, about the Bush administration's economic and foreign policies and the US economy in the early 2000s. His columns argued that the large deficits during that time were generated by the Bush administration as a result of decreasing taxes on the rich, increasing public spending, and fighting the Iraq war. Krugman wrote that these policies were unsustainable in the long run and would eventually generate a major economic crisis. The book was a best-seller."

    And for the record, there is nothing particularly unusual about making a claim that when asset prices increase more than their intrinsic value, and animal spirits drive a bubble, at some point, the bubble will burst and there will be a period of price adjustment.

  12. Krugmanites, every Austrian knows the monetary base is not money in circulation. Please stop this form of argumentation.

    Now check out the price of gold since 2008. How is that working for you? How about price of gasoline, tuition, milk, dentist?

    You called deflation and you failed miserably. This is because your theories are based on a crack-pot who lost nearly all his money in 1929.

    Furthermore, check out total credit in the U.S. Fractional Reserve has started to work again and you will be proved wrong again.

  13. Krugman kept predicting deflation -- where is that? As far as "inflation not existing" -- have you been to a grocery store lately??? Or a restaurant? The price of food has soared to the point that the portions at restaurants are tiny compared to a few years ago, and i am someone with a background in the restaurant business. I am sure most companies realized if they raised prices too much, there would be a backlash led by idiots like Krugman accusing them of "price gouging."

    The solution is to charge a little bit more, but give a lot less food. This includes everything from sit down places to fast food -- take a look at how much meat is on your next Subway or how the Big Macs have gotten smaller if you don't believe me.

    While RP in 2001 on the House Floor or in 2003 on the house floor is specifically predicting exactly what will happen, Krugman was saying the following:

    So Krugman was calling for more interest rate cuts and expanded credit while RP was stating a housing bubble had already been created. Who knows more about economics?

    Also, what happened to Krugman's prediction that the "stimulus" would work? Or his prediction that QE2 would not raise commodity prices unless demand was stimulated? Interesting how Krugman and the same failed keynesian types -- remember the 1970s when the Phillips Curve was disproven by reality, yet it is still taught by keynesians! -- who got us into this mess have set it up where they are never wrong, but the government just "didn't do enough" stimulus, or as Krugman kept begging in 2001, didn't do enough of an interest rate cut. That way, they can never be proven wrong or blamed for failed policies.

  14. “During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn’t you lower interest rates?” - Paul Krugman

    "In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package”

  15. Just out: Wholesale prices up 5.7% YoY.

    Is this inflation or deflation Krugman? Does it help the poor or the Elite?

  16. "Paul got the cause of the financial crisis wrong."

    Are you mentally ill? He got it EXACTLY right. You can read right?

    "But what do I know - I'm just a lowly reader of Paul Krugman."

    Nothing, just like you said.

  17. Krugmanites...appears they've become the directed swarm onto all Mise Econ sites. Maybe they see the need to attack RP?

  18. We are still waiting on our deflation just like we are waiting on Obama to end the wars and oppose the Patriot Act!

  19. One of the things that helped me to get more people to listen to what Ron Paul was saying was pointing to the things he said in 2007 during his Presidential campaign. So many people ignored him, laughed and said he was nut, but they weren't laughing six months later when "financial markets exploded" and the government had to "step in to prevent the next Great Depression".

  20. Yup. RP was specifically stating a housing bubble had been created with fannie and freddie in particular in 2001 and 2003 while Krugman was calling for lower interest rates by the Fed, and then saying he didn't know and no one did if a recession was going to take place as late as 2007! Bernake was arguing pretty much the whole time that there was no housing bubble and no pending economic collapse.

    Good thing those two are PhDs in economics, or else people might think they are clueless, right?

  21. You're too kind, Mr. Wenzel.

    Tell it like it is: Krugman is a lying fraud.