Tuesday, September 3, 2013

Krugman to Summers: If You Become the Fed Chairman, Print More Money

Here's one for the Krugman File, to be re-posted once price inflation starts to intensify. If Larry Summers becomes Fed chairman, Paul Krugman says he should print more money (My bold):
Now, we can hope that if Summers actually does get the job, he’ll realize the problem — and realize that he needs to pull his own version of what Abe has pulled off in Japan, saying and doing things that shock people into realizing that he isn’t going to be the conventional-wisdom guy they expected. And this is, in fact, my advice to Summers if he is the guy: don’t spend your first few months being mild-mannered and winning friends. What this economy needs is a monetary shock — and if you don’t do it right away, you probably won’t get a second chance.


  1. I highly recommend buying Jeremy Hammond’s short book “Ron Paul vs. Paul Krugman: Austrian vs. Keynesian economics in the financial crisis”. It is primarily a compilation of all the things said by Krugman in his columns over the last 15 years. The book is excellent and devastating and only costs $4.99 for the Kindle edition.


    Each of the voluminous Krugman quotes has a footnote containing working links to the original Krumgan article or post. Towards the end of the book, Hammond writes:

    By conjoining the spurious charge that the bubble was his “fault” with the legitimate criticism that he had called for it, he could create the strawman argument that since he hadn’t personally created the bubble (and whoever claimed that?), therefore his critics were not only wrong, but so bizarre in their criticism that they must be delusional. The fact remained that he had repeatedly argued in favor of artificially low interest rates specifically in order to spur a housing boom. As for his denial that this had been “just economic analysis” and not “policy advocacy”, is it possible that he did not know the meaning of the noun “advocacy”, meaning “supporting a cause or proposal”, or the verb “advocate”, meaning “to plead in favor of”?[ 104]

    When Krugman wrote, “let’s have at least one more rate cut, please” (May 2, 2001), he was not advocating cutting interest rates? When he wrote that creating a demand for “housing, which is highly sensitive to interest rates, could help lead a recovery” (August 14, 2001), he was not advocating lowering interest rates to create demand for housing? When he expressed that he was “a little depressed” because “long-term rates haven’t fallen enough to produce a boom” in housing (August 2, 2001), it did not qualify as advocacy for cutting interest rates to spur a housing boom? When he wrote that, to “reflate the economy”, the Fed had to increase demand and that “housing, which is highly sensitive to interest rates, could help lead a recovery” (August 14, 2001), he wasn’t advocating that the Fed cut interest rates? It was not policy advocacy when he wrote that “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” (October 7, 2001)? It would be superfluous to continue. The fact is that Krugman did advocate a policy of creating a housing bubble to replace the dot-com bubble, his disingenuous protests to the contrary notwithstanding.

    Humorously, one commenter on Krugman’s blog post replied with a link to an interview Krugman had given to a Spanish TV channel just a few months before. In the interview, Krugman said, “To be honest, a new bubble now would help us out a lot even if we paid for it later. This is a really good time for a bubble…. There was a headline in a satirical newspaper [The Onion] in the U.S. last summer that said, ‘The nation demands a new bubble to invest in’. And that’s pretty much right.”[ 105] Krugman’s record is clear and unambiguous. “Guys, read it again,” indeed!

    [105] Ibid., Comment #108, June 21, 2009.
    Interview with Paul Krugman, Weekly Report (Spain), May 2, 2009,


    Krugman’s reference was to the following piece of satire: “Recession-Plauged Nation Demands New Bubble To Invest In,” The Onion, July 14, 2008,


    Krugman, as seen, took the joke quite seriously.

    Hammond, Jeremy (2012-03-31). Ron Paul vs. Paul Krugman: Austrian vs. Keynesian economics in the financial crisis (Kindle Locations 3050-3059). Kindle Edition.

    1. Hi Bob! EPJ is a daily read for me, so it's a nice surprise to see your comment about my book here! Thanks for the referral!

  2. Because printing gobs of money is the road to prosperity!

    What's it going to take for this statist shill to be ignored?

    1. That's the question that prompted me to write the book.

  3. More likely scenario is 2% inflation and $500 gold. It will be funny to see what influence the Austrians have over the GOP in 2016. Of course when the published numbers don't tell you what you want you can always measure inflation with a Big Mac.

  4. lol! $500 dollar gold eh?

    Would you do us all a favor and show us how "right" you are and go ahead and short gold futures?

    At least those promoting the purchase of gold and silver are putting their money into their promotions.

    The least you can do is the same. Let's check back with each other a year from now and see who's doing better.