When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Tuesday, July 3, 2012

Paul Krugman's Follies?

I've given a lot of coverage to Krugman and his position that the government should spend, spend, and spend, on this blog--so here's some coverage critical of the economist's views--

Paul Krugman's Follies by Guy Sorman - City Journal: " . . . But he knows well—or should—that President Obama has already tried to rekindle growth this way. He admits that the results were not impressive, but only because public spending didn’t go far enough and wasn’t sustained. The argument is dubious. All economies are built on confidence. An increase of the public debt now, as Krugman urges, would create a crisis of confidence, not a quicker recovery. Robert Lucas, the originator of rational-expectation theory, has shown how and why consumers and entrepreneurs reject Keynesian policies: in essence, the marketplace is wiser than the government. Entrepreneurs and consumers alike understand that an increase in public demand is artificial and short-term. Consequently, public demand leads not to increased consumption or investments but to price hikes. This unintended consequence of Keynesian demand has been repeatedly demonstrated in theory and practice. Milton Friedman and the late Anna Schwartz, in their Monetary History of the United States, showed that excessive money printing, which Krugman strongly recommends, always leads to inflation, not growth. . . . "


The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects