Thursday, July 12, 2012

An EPJ Reader Calls Out Krugman on His Urging of the Fed to Create a Housing Bubble

Yes, Paul Krugman is "too busy" to come on the Robert Wenzel Show, but that doesn't mean Krugman is free of EPJ-type questions. Diego Sánchez de la Cruz emails:
Dear Robert,

As a regular follower of your blog, I'm happy to see that you covered Paul Krugman's debacle in Madrid. I wanted to share with you a Q&A exchange I had with him, questioning his repeated calls for the FED to create a "housing bubble" (which he claims was just a joke) and his stance that Fannie & Freddie had nothing to do with the on-going economic downturn (which he said was the "biggest lie of this crisis")

It should be noted that Diego at his blog has responded to Krugman's claim that he was "joking", in a post called "Krugman the Joker". The blog is written in Spanish, but here is a Google translation:
On the evening of yesterday I had the opportunity to question the Nobel Prize in Economics Paul Krugman in his debate with Professor Peter Schwartz. The chronicle of the event and is available in Free Market , so I just want to take this opportunity to expand on an issue capital raised in Princeton yesterday. I speak of the repeated occasions when asked the U.S. Federal Reserve that would create a "housing bubble" in order to "stimulate" the economy.

Peter Schwartz, who had an intensive discussion, and reminded him to New York Times columnist some of its catastrophic "recipes" to exit the recession. Now it was talking about monetary policy, so Krugman asked for a statement he made in 2002: "To combat the recession (...) Alan Greenspan has to create a housing bubble to replace the Nasdaq bubble."

Krugman sought to sidestep the issue by writing that "he was joking." At other times they simply said "I was reflecting on the limits of the powers of the Federal Reserve." However, the archive is treacherous to those who change their approach, so it is worth remembering that Krugman repeated this request on countless occasions.

- In an interview with German publication Die Zeit, wondered "why we are not going to lower interest rates?" After posing that such actions might help "because it generates an increase in housing activity and, It expands the construction sector. "

- In a speech to CNN said the credit to the construction "is not enough even cheaper to produce a" boom "in the industry."

- In a column for The New York Times wrote that the housing sector "could help lead the recovery."

- In an interview with Lou Dobbs stated that "low interest rates to promote real estate spending is the main solution" to encourage investment .
- On his personal blog, quoted Paul McCulley (PIMCO) to argue that "Greenspan needed to create a housing bubble to replace the technology, that is, within limits, would have done the right thing."

Ten years of that and Krugman is very willing to make self-criticism. Indeed, it has come to proclaim himself "the only voice of truth in a sea of ​​corruption." A phrase and shows that it lacks confidence in itself, but it looks like it has more faith even in the "magic wand" of central bankers, because in his conference yesterday and in his recent speeches has repeatedly called for the ECB monetize public debt massively. Worse, bet Krugman actively create more inflation in Europe and denies that this may have some negative consequences.

The second question I asked him the Nobel Prize was about the housing crisis. Since many of the mortgages "subprime" were mediated by two semi-public entities, Fannie Mae and Freddie Mac, questioned the Nobel Prize on the need to limit the state's presence in this area. In that vein, I remembered that also in Spain have experienced a similar phenomenon, with the savings banks as a transmitter excessive flow of credit to the sector.
Read the rest here.


  1. Here is a link to the NY Times article in which Krugman claims he was joking. Maybe some of you will read it differently than me, but I don't know how anyone who is fluent in English and knows how to read could possibly say this was meant as a joke. Krugman seems be the real joke here. Maybe we should automatically assumed EVERYTHING he writes is indeed meant as a joke. That would certainly explain his horrendous economic forecasts and recommendations.

    1. Not everything Krugman writes was written by Krugman...

  2. These are not the droids you are looking for ::waves hand::

  3. Where does Krugman get his moral standing? Describing his article as a joke, what, was he playing his audience! What contempt! It's clear how important it is to examine relentlessly this guy's statements--he is the deranged priest cloaked in a mantle of moral turpitude. This Madrid event is the perfect debacle. A European book-signing tour is exactly what we need--it lets more people learn who and what he is. His handlers will have to double their efforts. More people will learn who and what Krugman is. Do you note how Krugman always referred to the crisis as a debate as a way to shame his opposition, as though monetary policy has no real-world effects, as though it is only an academic exercise. Disgusting. Is Krugman scheduled to do a book-signing event in Chicago any time soon?

    1. "Where does Krugman get his moral standing?"

      He doesn't. The job he's been tasked by the Establishment is to convince us the emperor is wearing clothes. The more the crisis deepens, the more people take time to learn. And thanks to good folks like Wenzel and the Internet, it's happening. At some point, there's going to be a global Mussolini-in-square moment...

    2. Krugman has no standing, especially with this recent evidence. If only FOX News would cover this. ph yeah, they won't because they love the fed just like cnn.

  4. The Nobel prize gives him a big piece of his mantle. The same group of world government/central bank supporters who gave Obama and Kissinger a peace prize.

    They have been at this a long time and their project has gone pretty far. The internet has shed a bright light on their goals if people are willing to look.

  5. I think a vacation in Spain is in order, very attractive people over there; reminds me a bit of my native Sweden in that regard. It'd be a nice break from the UK...