Deficit spending = earth rape, consumerism, and business as usual. It's sad when smart guys like Krugman back capitalism while trying to disguise it with weird contrivances like linking Iraq to "austerity." The fact is that humans via capitalism have outstripped the earth's carrying capacity while also proving that capitalism, greed, and worship of consuming doesn't produce a sustainable or pleasant world. Krugman is overrated as a writer and is hollow as a thinker. He is part of the elite, a wolf in sheep's clothing. What we need is to stop all wars, all subsidies to death industries, and all economic models that enshrine consumption as god.

Nicely said, David, I agree. Idealism, though. And if Krugman is right, we'll be flaky and unreliable in a few years.

David, I agree with you. Earth deserves to live.

I remember seeing a photograph of two GIs walking through what was left of an Italian town in WW2.The caption read,"Well we sure liberated the hell out of this place !"
Seems to me that that became a habit that repeats itself.The wreck that is Iraq has been" liberated"just as Nagasaki and Hiroshima were liberated.
The" In God we trust" on US banknotes should be replaced with "Bull in a China Shop"

I love Krugman, a steady stream of rational opinion
in a blizzard of bullshit.

Dear Truthout, if you want my continued financial support I would highly recommend you not publish any more crap like this article!

Here's a fact from Ronald Reagan 1985. This is from a meeting he had with the Taliban leaders in the White House. You remember when the republicans helped build the Taliban.

"These Gentlemen are the moral equivalents of America's Founding Fathers." Reagan 1985 (again)

Beck's March for Theocracy, an unamerican position, energized those of us who know what a republican win in November means for thinking people. Fool me once I'm a democrat but fool me again and again I'm a republican.Tea partiers can vote for Angle ignoring her positions on ending social security and medicare, Kentucky can vote for Rand Paul and live with an end to farm subsidies. You can vote against your own self interest because this is a democracy.

The far right is all over Truthout and we recognize your comments. It must be a new talking point--don't vote in the next election--but we aren't buying it. There are indeed two Americas. One, the red one, wants to surrender to corporatocracy and theocracy and the other , blue, wants to move forward into the modern world. We have great challenges concerning the environment, energy and economy. This divisiveness is fostered by cynical rightwingers. You don't have to join us in solving these problems but we will solve them with or without you. You can be obstructionists your strategy for the past two years or can offer viable solutions. Really do you want a religious government? Do you want no government, a Somalia solution? Why would elect someone who doesn't believe in government. I certainly wouldn't send my kids to a school where teachers did not believe in education. Why would you send someone like Whitman in California to government. The woman never voted and is spending over one hundred million dollars, $100,000,000 , of her own money.

Everyone who has been paying attention knows the real cause of the US' deficit is decades of ridiculously extravagant spending on military adventures that benefit NO ONE but the members of the US' Military Industrial Complex. Eisenhower knew it. So does everyone else knowledgeable, now. Our indebtedness is NOT due to Medicare, or Social Security, but to a foreign war policy that is head over heels out of control.

This is just one of quite a few propaganda articles recently published here. Something is very wrong with the new management.
Compromised would be putting it mildly.

I don't see too many of the previous posting rocket scientists producing articles, teaching, or winning a Nobel Prize. What Krugman seemed to have done is state an opinion that challenged your views.

Let me confess up-front: I'm a Krugmanite. This piece is a little quirky. I see Krugman moving toward becoming a political commentator, and letting some of the anger he feels towards some of our recent incredible stupidities--gratuitously smashing Iraq, for instance--show through. But what specially interests me here is the confused anger I monitor in the responses. It's not just the resentment of World War II references that in fact don't appear in the article. It's not just the "fat little Canute" phrase. In other responses too I fear I hear: "Hey, are we going to let smart fellows tell us what to think?" I hope I'm wrong; because if we're determined not to listen to smart fellows, we're going down fast.

There' a bit of a sting to Dr. Krugman's analogy. All those pundits that pushed for war in Iraq, giving various specious reasons for their advocacy, and some of them being paid by defense contractors to do so, are still considered "the experts" on foreign policy. They should be so embarrassed of themselves that they quit their jobs,(but then I remember that conservatives have no scruples and little decency). Dr. K is warning us that those now advocating for reducing the deficit have been wrong in their financial prognostications in the past. Why would anyone listen to them, they have already discredited themselves! Many of them are being hypocritical, also. Their stance on deficits during the Bush admin was quite different, anyone remember that? Where is the outrage from the public, where is the turning away?

Wed, 09/01/2010 - 08:38 — BarryT (not verified)

"Krugman is right. Deficits are a fake enemy.

All money (except coins) is created by borrowing. If the private sector stops borrowing and pays down debt you get destruction of money and recession."

Krugman is an idiot. And, if debt was good for the economy we'd be doing great right now.

http://www.babypips.com/blogs/currency_currents/images/110308/1.gif

BarryT, As a businessman I know that sometimes I have to borrow money, in order to get passed some unplanned expenditure or simply to make up for a slow month in sales. Sure I could fire people instead, but that would hurt my future prospects because I have lost capacity. Governments are no different and they have much larger horizons to work with. Money, gold, silver etc. have no intrinsic value. They have value in society by virtue of trust and agreement. i.e. "We trust that others will continue to value and accept these so we agree to use them to save and exchange them for goods and services."

I like and respect Paul Krugman - very much. And I agree with his premise. Unfortunately I'm disappointed in this article for many of the same reasons everyone else has offered here. Perhaps Mr. Krugman will provide us with a re-write.

The Voice Of A Man Who Has Never Been Foreclosed On - Yet.  Indeed, the Military Industrial Complex has played a major role in bankrupting the country - so has Social Security, as it always was a Ponzi scheme, requiring an ever growing population to pay off the earlier participants in the Pyramid while leaving the last participants (Baby Boomers and those after) holding the bag.  The Left/Right paradigm is a fraud, and the gargantuan Federal spending advocated by the snake oil salesman author above will finally destroy this country if it is allowed to continue.  Note that Krugman's precious 'Nobel Prize in Economics in memory of Alfred Nobel' is an award given by the Central Bank of Sweden - it has no relation to the Alfred Nobel Foundation and carries the title to pretend legitimacy and humanitarian purpose - but it is just a Banker's award to economists who advocate for the Banker's interests - which is to have as many people and other entities enslaved by their debt. 

Why is TO giving this clown space here?  For those still listening to this idiot:  Please explain what you think will happen when China, India, Russia or the rest of the world decide that the US Dollar is not worth investing in anymore (they have financed our deficits for decades), what will it look like when the US Treasury Bond auction finally fails?  Do you even know what that means?  Look it up - search Treasury Bond Auction Failure. You want a Greek economic outcome?  Well we're gonna get it Greek Style if Krugman has his way...
 

Wed, 09/01/2010 - 17:04 — Bill O'Rights (not verified)

"Please explain what you think will happen when China, India, Russia or the rest of the world decide that the US Dollar is not worth investing in anymore (they have financed our deficits for decades), what will it look like when the US Treasury Bond auction finally fails?"

That's already happened a few of times over the last couple of years. In that case, the FED creates money out of thin air and buys the bonds. Expect this to happen on a regular basis, then expect the FED to be the only customer for US bonds, then expect inflation to go thru the roof. After, and only after, the value of the dollar falls thru the floor will people realize that it can't work (they'll also realize that the real value of the already inadequate Social Security Trust Fund,* which is nothing more than a fixed-rate government bond, has fallen thru the floor, too.)

We're driving off of a cliff, and Krugman's advise is to hit the gas.

* - there is no fund and you'd be a fool to trust it.

Dr. Krugman is a man of great accomplishment and intelligence, and I certainly trust his opinion more than I do that of EvF or Bill O'Rights. What are their qualifications? Here is what Krugman wrote recently about SS: "About that math: Legally, Social Security has its own, dedicated funding, via the payroll tax (“FICA” on your pay statement). But it’s also part of the broader federal budget. This dual accounting means that there are two ways Social Security could face financial problems. First, that dedicated funding could prove inadequate, forcing the program either to cut benefits or to turn to Congress for aid. Second, Social Security costs could prove unsupportable for the federal budget as a whole.
But neither of these potential problems is a clear and present danger. Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund. The program won’t have to turn to Congress for help or cut benefits until or unless the trust fund is exhausted, which the program’s actuaries don’t expect to happen until 2037 — and there’s a significant chance, according to their estimates, that that day will never come.
Meanwhile, an aging population will eventually (over the course of the next 20 years) cause the cost of paying Social Security benefits to rise from its current 4.8 percent of G.D.P. to about 6 percent of G.D.P. To give you some perspective, that’s a significantly smaller increase than the rise in defense spending since 2001, which Washington certainly didn’t consider a crisis, or even a reason to rethink some of the Bush tax cuts."

Ken Hall: The projections for SS you quote from Krugman ignore monetary inflation's effect on the cost of living. Firstly, note that the Fed's figures are bogus - they use meaningless metrics, any working person over the decades has noticed a profound loss of purchasing power relative to income - this amounts to a gradual pay cut disguised as a pay raise - focusing on GDP ignores WHAT is being produced by the Nation - GDP is a bogus number - it ignores whether the nation is producing what people need - e.g., if people worked an hour less a day in a paying job and spent the time developing their own organic garden, Krugman would say that the GDP had shrunk and therefore we are more 'poor' - it's all BS - the very language that these clowns use is based on metrics chosen to benefit the Banker's game. Krugman's policy recommendations will lead to a Weimar style hyperinflation - look it up - a wheelbarrel full of currency, denominated in trillion mark notes to buy firewood - they quickly figured it was cheaper to just burn the money to stay warm... Please explain how printing money creates 'wealth'.

Ken Hall: The Qualifications of Krugman that you cherish so much are suspect - the Central Bank of Sweden created the so-called 'Nobel' prize in Economics and named it such so as to make it sound legitimate - it is in no way connected with the other Nobel Prizes we're all familiar with - for Science and Peace - it is a marketing lie. You have accepted it because it has been repeated so much, e.g. by the New York Times. It is time to actually THINK and ANALYZE and see if the commonly cited units of measure even have any meaning. Here's a great thought experiment - If the Military Industrial Complex grew to twice the size of the current GDP and all the farmers quit growing food to work in a bomb factory, along with all the other industry workers - we would have double the GDP to finance Social Security (using Krugman's 'wealth engine' of GDP) - So how much do you think those retired people would pay for food with their fat SS checks? Who would eat better, the pensioners or the bomb makers? The GDP number is a useless measure and you quoted Krugman tying it to the success of Social Security. Start thinking for yourself!

Bill O'Rights: I read the three pieces you recommended and find them revisionist and utterly unconvincing to anyone but an unrepentant Friedmanite, and even Alan Greenspan has admitted he was wrong. The articles you directed me to do not make sense, some of them ignore facts, but you seem to find them convincing, so I think you should start thinking for yourself. We can differ but we must respect facts. Krugman did predict the housing bubble, he predicted its collapse, he predicted that the stimulus package would not be big enough, it isn't. I can direct you to the articles he wrote but it's probably better if you learn to do your own homework.

BO'R: You want me to read more of Katz, a man who maintains there was no depression in the 30's. That will surprise my father, who lived through it. He'll be delighted to know it was just Republicans "restoring the currency." Utter claptrap! His grandfather let customers take food on account from his grocery store. Most all of them came back AFTER the depression and paid him back. I will not waste more of my time reading the words of a moron, one taste was enough. If you actually believe what Katz writes I don't know what to say. Krugman predicted that Greenspan would generate a housing bubble, that it would collapse because it was just that, a bubble, and that it shouldn't have been allowed to happen because of the "free market" generosity of Greenspan and the Fed. And yes, I do believe the US gov't can and should stimulate the economy for the short term until new jobs are generated in the private sector. Conservatives don't seem to have any problem with deficit spending when it comes to wars and tax breaks.

Ken - to be clear - I am not a 'conservative' - I was a lifelong Democrat (fourth generation) until very recently, after figuring out that both parties were working for the same crooks - I now call myself a Libertarian and believe in Local - not Federal solutions to problems. I don't believe that the Great Depression was a cake-walk either, although I would like to see other information regarding consumption - Katz's observation that meat and butter consumption went up during the GD is an interesting footnote - and it was despite the massive drought throughout the great plains which devastated crops for those years. 

What bears more focus is the fact that during the time of the GD, half the country's population were farmers, and our food production was not in the hands of the Oligarchy as it is now - Monsanto has us by the throat. People (like your Father and my Grandfather) helped each other and had the farming infrastructure to do that - despite the drought - and they survived.  Why they survived was because of the wealth of the land and their real productivity - not to be confused with so-called GDP - not because they did or didn't have 'money'.
 
We have a population now who does not know how to grow food (or make anything thing needed to live, for that matter) - and printing more money will not fix that.  Hopefully, any new stimulus packages will at least go to something real - like growing food - and not to 'cash for clunkers' or the 'first home buyer's stimulus' - those had nothing to do with producing anything - they were based on consumption alone - this is the fallacy of modern economics.  
Maybe Obama will come up with a stimulus program to empower Americans to grow more food themselves - even if it does not raise the GDP at all - it would however stimulate the 'real' economy.  It won't happen because Monsanto has to much power over him - our department of Agriculture and
the FDA are owned by them - the regulations in place in the name of 'food safety' are increasingly shutting out the small farmer and giving Agri-Giants their monopoly to sell us tons of toxic food.  It will be delivered as 'emergency aid' to save us, too.  

Another question to ask is - why hasn't Krugman called for abolishing the Federal Reserve Bank (as opposed to nationalizing some of the bad banks under it) and restoring the responsibility to issue currency and control interest rates back to Congress and in public, as is so clearly stipulated in the Constitution?  Or to abolish the legal tender law and allow Citizens to use the currency of their choice without punishment by the Federal Government?

Peter Schiff, Ron Paul, and the economists of the Austrian School predicted the housing bubble long before Krugman, btw - if you're using that as evidence of competency in Economics.
 

Barry: I like your mini-essay on money and wealth. Though I've almost always voted Democrat, I have great respect for the mind of Alexander Hamilton--whom many of my liberal friends think was "the first real bad Republican." Hamilton understood, as you clearly do, what money is. It's a means. He was neither greedy for money nor aversive to money. He saw--what neither Meg Whitman nor Carly Fiorina (both candidates for high office in the November election)--don't seem to see: that without money (yeah--from debts to be repaid with TAXES) government cannot provide public services. He said unblinkingly: "A public debt, if not excessive, is a public good." He said in fact that such a debt IS money. The debate, of course, can circle the word "excessive." But I think Hamilton and you set the premise for Krugman's defense of expanding the deficit at this time.