Friday, May 11, 2018

Is Paul Krugman the New Intellectual Front for Donald Trump?

New York Times columnist Paul Krugman has gone from bad to worse. During the current period where the stock market and cotton are high and the living is easy with unemployment low, straight Keynesian theory would call for a shrinkage in government spending. But not Paulie K.

He tells his readers at the Gray Lady:
The bottom line here is that the case for aggressive monetary and, when necessary, fiscal policies to sustain demand is much stronger than we used to think. Errors like the turn to austerity and the ECB’s 2011 rate hike were much bigger mistakes than the previous doctrine allowed for; premature Fed rate hikes would be a bigger sin than even the Fed seems to realize now...

On that view, the failure to supply enough demand after 2008 imposed an enormous cost, which we can never regain. And looking forward, the risks of being too loose versus too tight are hugely asymmetric: letting the economy slump again will again impose big costs that are never made up, while running it hot won’t store up any meaningful trouble for the future.

Got that? He is trying to nudge the Federal Reserve to go slow on interest rate hikes.

This is straight out Donald Trump theory. See: Fed Chairman Finalist Leaks His Oval Office Conversation With Trump.

Krugman should be embarrassed. He has become the intellectual front for wacky Trump economic thinking.

-Robert Wenzel  


  1. An audit may or may not be a good idea. It depends on who conducts it - a true “arms length” third party or some government controlled or affiliated group with a predetermined outcome a la Reagan’s 1981 Gold Commission. In the words of Gary North Reagan’s Gold Commission “was a set up from day one.” With only two members of the Commission - Congressman Ron Paul and businessman Lewis Lehman - in favor of a gold standard, it came out with a report against the gold standard.

    If Rand’s push for legislation to audit gold at Fort Knox is a “set up,” it (the audit’s conclusion) may do more harm than good.

    Be careful Rand. Be very careful.

  2. When has Krugman not pushed for monetary inflation?
    I would guess that Trump's economic thinking comes from Krugman with regard to this topic.

  3. Paul Krugman - a Trumponomicist. He would hate that...