Monday, August 26, 2013

Krugman Warns of Possible Treasury Default

There will eventually be a default of some sort as interest rates continue to climb and it becomes more difficult to find buyers for Treasury securities, outside of the Fed. The default may come though in the form of accelerating price inflation. That said, the default won't come about as a result of the upcoming debt ceiling pseudo-drama. As usual, Paul Krugman is way off base.

And the debt ceiling looms, with many ideologues assuring the base that Obama can be bullied into gutting his main achievement, which he won’t.
Everyone seems to assume that this will be worked out somehow, but nobody has even a halfway plausible story about how this will be done. Default looks like a real risk.
Nonsense, Congress will buckle after a suitable amount of posturing, and raise the debt ceiling. Only Krugman could see a serious possibility of a limit placed on the ever expanding debt load that would lead to a default. This suggests a deep lack of understanding by Krugman on how Congress and the greater US government works, and the influences and pressures placed on congressmen.  


  1. C'mon Bob. Krugman knows very well how the government works, and has written numerous times that Washington can't default long as the Fed exists to finance debt.

    He is engaged in scaremongering for the sake of bashing Republicans as crazed evil-doers. We know the GOP are, in fact, sociopathic control freaks, but Krugman wants to differentiate them from the equally repugnant Democrats.

    This is all just inane rhetoric meant to score political points. In other words, typical Krugman.

    1. Whatever Krugman's purpose, RW is correct in pointing out it's absurdity. It further lowers Krugman's ranking as a serious economist. It is diluting the message to just say Krugman is being his usual political self. He is an economist and made am absurd economic forecast.

  2. Looks like Krugman was right again. When are people going to give this guy the respect he deserves? The guy is one of the greatest economist of our times.