Well, way to "cover your ass" at the end there Krugman. You know deep down that what the FED does is essentially kick the can down the road instead of allowing the economie's true nature to come forth. Ron Paul wants to confront the issue head on, unlike you and anyone else who supports the unconstitutional Federal Reserve and it's puppeteering of the money supply. The longer the U.S. puts this issue off, the worse it will be to deal with in subsequent generations. (if we even make it to the next one).

This article seemed to break off suddenly after paragraph 13, with a rewrite of paragraph 2. Was Paul Krugman suddenly interrupted? Was he edited? Very odd.

mr krugman
please tell us why you think the fed stopped reporting the amount of M3 in the world....

Paul Krugman is to economics what a witchdoctor is to medicine...

The man is flat out wrong at everything he thinks and says... Unbelievable that he still finds ways to earn income.

Milt Friedman and his disciples are silly, dangerous people. His theories need to be taken on by thinking people in academia and destroyed.

As for the Fed and its games, what do Republicans - and Democrats, of course - have to offer in place of the screwed-up monetary system we have now?

Aside from all that A-list gamesmanship, how does any of this contribute to employment here?

It's all about scratching the itch.

Mr. Krugman,

You continue to harshly criticize Dr. Paul (yes he's a doctor so you should address him as such) and the Austrian School of Economics, yet you shy from debates every time you are challenged by an Austrian economist. If you're fraudulent Keynesian theory is so powerful why not accept a debate? Are you afraid to be embarrassed by those who speak the truth? Are you afraid people will stop reading your column?

Whatever it is you are making a big mistake. There are plenty of people out there who aren't sure what side of the debate they fall on. But, seeing you dodge debate after debate surely makes them lean to the Austrian side. If you want to win over the economic "independents" then debate an Austrian economist and win...oh wait debates are about truth...never mind.

"What is money, anyway?"

Judging from your answer, you meant your question to ask, "What kinds of things are equivalent to money?"

If would have been helpful if you had tried to address another interpretation of that question: "What is the nature of money?"

The answer is, "Money is essentially a promise."
A promise to give the holder some desired good. The good is understood to ultimately come either from the person who gave the money/promise, or from others.

When you deposit money into a savings account, and it gets loaned out by the bank, the bank gives you a promise (in the form of a bank statement) to return your promise.

This creates a promise to give a promise to give a good.

Further shuttling of money from one account to another produces an ever higher Tower of cards: Promises to give promises to give promises...etc.

These promises may eventually mushroom far beyond the amount of goods available to meet those promises.

When that happens, those promises/dollars lose credibility. The result is deflation and an economic Depression.

Ron Paul Chairing the sub committee will be the best thing that ever happened to our economic system in the last 100 years. The Fed needs to go!

Silver was at $5 for many many years, now it is about $30, all in about 10 years. This, although it benefits people like me, hurt this country because people are not really storing wealth in any of the normal baking or savings and load accounts. Ron Paul and John Kennedy were both correct. We don't need to be paying interest on money that is generated out of thin air. Kennedy saw this, started printing Treasury notes, and they shot him. I guess you may be planning on neutralizing Ron Paul soon, but I would not want to be you if you do and we find out your group of elites, did it.

Krugman is a pale Uncle Tom doing the bidding of corrupt banking elite who control the not-too-federal Federal Reserve.

Truthout has been compromised and infiltrated by the banks. They print what they are paid to print.

truthout is now a propaganda rag.

All forms of debt money banking must die, along with all corporations.

Why do they hate the Fed. I still don't get it. I thought it made our banking system more secure?

Same song so many times, what a gig to keep getting paid for! Why would someone in such a vaunted position put down an honest man to pump up a different kind? Was there once an ability to interact, before the needle got stuck in the vinyl groove? I can only hope it will evenually become evident why Paul Krugman has continued to defend policies that produce the opposite of what is promised and that harm ordinary people in favor of cronies. We may get more of a chance to find out more about the stuffed cronies, with Ron Paul possibly able to find more out about exactly where so much money went.

Krugman understands economics about as well as Obama understands constitutional law. Who listens to this clown?

Any stimulus will work, the PROBLEM is the money$ continually leave the USA b/c there is inusfficient PRODUCTION in this country to retain and recycle it--we are exsanguinating--continual loss of blood.We need to quit selectively obsessing about 'constitution'-al--the document has allowed to grow with the time--by the approval of 'wethepeople' as constitutional procedures--I donot think any of these 'constitutionalists' are not having dentistry, going by horse and buggy or having families of 13 children??

Who let the Washington Post crowd in?

" it’s not clear that any single number deserves to be called “the” money supply"

Mr Krugman, While I agree with the overall thrust of your point, I think this is a rather semantic piece of sophistry.

You and I both know the term "money supply" In the context of monetary policy takes credit markets into account.

This is one of the reasons printing money will NOT result in inflation right now.

The credit markets hardened faster than rush limbaugh's arteries after the crash as the massive de-leveraging process went into full swing.

Trillions upon trillions of what people considered to be "money" not one month previous became worthless, the "money supply" utterly imploded. Abusing the fiat system is one way to counter the even greater threat of deflation to a heavily indebted economy.

""The problem with Socialism is that you eventually run out of other peoples money"

This can also be said about capitalism.

profits depend upon people having wages to spend on the stuff that gets made.

Just like the ocean currents, the money has to flow down before it can come back up. Block that flow, and end up with recessions. The wealthy can't really comprehend this, they want to maximize their rewards relative to the rest of the population, and in their zealotry they choke themselves.. much like blocking both major veins in your legs will eventually kill you.

Government intervention when necessary is what prevents this manner of market failure. It has been prevented now for some 30 years to devastating effect on our nation.

Gary North has argued for ages that the main problem is the Fed's MONOPOLY on money creation. Why not open up the market a bit and let people use gold, silver, cash or whatever else sellers will accept as payment for goods and services? Can we handle that level of economic freedom? Will the system collapse? Is that a good thing? I'm not even recommending this, just wondering: Will it work?

What bothers me about the Fed is that it is made up of private bankers who serve their own interests. As a former Dem and newly minted :-} Independent I'm going to look carefully at what Ron Paul has to say. I'm impressed by the number of responders who have spoken out against the Fed.
"But now we have a large shadow banking system in the United States — hedge funds, investment banks and so forth," quoting you Mr. K. This is the statement that hit home for me, and frankly all I can see is collusion b/w the Fed and the shadow bankers.

If I had the wherewithal I'd buy gold, but I don't and more's the pity for me.

Finally, I'd like Truthout to provide an opinion counter to your views. Until they do I won't give them another dime.

I am confused.

Folks here are talking about the Fed as if it's something evil, or unconstitutional, or bad. No institution is perfect, but the alternative to having a central bank is what we had prior to the Fed: cycle after cycle of prosperity followed by bank panics; cynical rich (and unregulated) bank owners taking "theirs" out before taking their banks under. And the people who are telling us how bad the Fed is are trying to sound populist when, in fact, they are making the rich man's argument.

The genius of the right is their strange ability to get ordinary folk to speak up (and vote) against their own interests. In order for our 250-year-old, self-governing, Capitalist experiment to work, it continues to require informed citizens who actually work to protect their own interests. Sadly, if this comment blog is any indication, that isn't happening.

The problem is the money itself.

The FED's debt backed money and the onerous interest it carries is a fundamental structural problem that must be changed.

This is only possible with the elimination of the FED system. The national bank has been abolished in the past. It happened during Andrew Jackson's administration. If Obama wasn't so beholden to the bankers and their "interest", he would do what Lincoln did and issue greenbacks and conduct his own quantitative easing without incurring all of the debt in the process.

So... Ron Paul is actually looking better and better every day.

"yet you shy from debates every time you are challenged by an Austrian economist. If you're fraudulent Keynesian theory is so powerful why not accept a debate?"

The austrian school is to economics what intelligent design is to biology. Wackjobs in this school of economics publish books which assert the new deal was deleterious to the economy, and extended the depression until world war II.

The Austrian school uses revisionist history and does not provide testable hypotheses.

As for their assertions about the great depression, There's a positively decadent city in Nevada which was born strictly because of the new deal, and continues to prosper to this day from that tiny seed of federal intervention.

"Surely money is not merely pieces of green paper bearing portraits of dead presidents." --Mr. Krugman

Certainly not! Consider the $100 bill, for instance. Ol' Benjie was never elected President.

"Like Federal Express, the Federal Reserve is a private corporation."

Bullsh*t.

the federal reserve is a non-profit founded by the US and run by officials appointed by the current administration at their sufferance.

The fed is non-profit, any revenues greater than its expenses are sent back to the US treasury.

It's purpose is to stabilize and insure the deposits of the american people, and part of that process is the promotion of economic growth.

Now please, take some prozac and calm down.

That idiot would be Mr. Anonymous of the previous two posts.

Brent is correct.

The FED is a private corporation. It is NOT a non profit. It is not part of the Federal Government.

The enabling legislation of 1913 made it illegal to disclose who the owners are.

Now why would that be??????

They are the lender of last resort true. Ever ready to loan more money to a government with insatiable empire driven desires just as long as the "money" they invent is paid back with interest.

whats a dollar worth? that's an easy one ,answer, how fast are the presses running ,or another way is to gauge it by oil prices ,the fed prints up a batch of money ,the reaction of oil producers is to raise prices , they're not stupid we are

The crazies in this response column, just like reaganites, prove how woefully inadequate our economics curriculum is in the U.S.

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