Tuesday, March 9, 2021

The Economist Who Gets Everything Wrong Just Said Everything is Going to Be Wonderful for the Rest of the Year

Paul Krugman

As accelerating price inflation continues to creep ever closer, New York Times columnist Paul Krugman writes in his column at the Queer Black Lady:

It’s morning in America!...

On the economic front, the Senate has passed a relief bill that should help Americans get through the remaining difficult months, leaving them ready to work and spend again, and the bill will almost surely become law in a few days.

Economists have noticed the good news.

I’m very optimistic about economic prospects for the next year or two. 

He couldn't be more wrong. Destructive price inflation is almost here. But complete off-the-mark forecasts seem to be Krugman's stock-in-trade. 

Here is a bit of his track record. He wrote in 1998:

The growth of the Internet will slow drastically...By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.

In 2103 his book, End This Depression Now!, was published at a time when anyone looking at the data could see the Great Recession was already over for a couple of years.

Check out GDP in 2013:

So now this forecaster is forecasting happy times for the next year or two, and to make matters worse for his forecasting record he goes on to say the economy will need more government spending after that:

What markets are telling us, in effect, is that after the boom they expect a return to stagnation — which would, again, be a bad place to be. How can we avoid it?

The answer is actually obvious: a large program of public investment, paid for largely with borrowing, although with a case for new taxes, too, if it’s really big. Such a program would do double duty. Macroeconomics aside, we need to spend a lot to rebuild our crumbling infrastructure, fight climate change, and more. And public investment can also be a major source of jobs and growth, helping to pull us out of the stagnation trap.

This is absolute insanity. 

The real problem is we already have far too much government spending which is what will be behind the real developing problem, price inflation. The last thing we would need in a year or two is even more government spending.

This is utterly irresponsible commentary by Krugman. 

Does he really believe what he writes?

On top of his lack of concern for the developing price inflation threat, he appears to have adopted the insane MMT position that deficits don't matter:


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