Point-Counterpoint: The Back Door Bazooka


Point: Paul Krugman argues today that nobody understands debt. You can read the whole thing if you want, but if you’ve read any of Paul Krugman’s columns since 2008, you don’t need to, because you’ve read it already. 

Counterpoint: Chris Ciovacco explains the problem with the back-door bazooka. I’d say that the existence of this video proves that someone understands debt quite well.

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    Claire Berlinski, Ed.: Point: Paul Krugman argues today that nobody understands debt.

    Least of all a NYT journalist…

    Mr. Ciovacco fails to mention any understanding of the market as defined by the two great financial minds of our generation- Steve Eisman and Michael Burry.

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    More bluster from Krugman. Prof. John Cochrane of Chicago, who just recently started blogging, has it about right:

    PS: Why is it my new year’s resolution not to respond to Krugman blog posts? Really, what do you do with a guy who insults fellow economists, while admitting in writing that he doesn’t even read the opeds and blog posts that are the cause for his insults (let alone their actual academic work, where ideas can be documented and defended)? He often doesn’t even link or name the articles he’s criticizing so his readers can decide for themselves!If you don’t believe me, look here , here, here, here and… well, I could go on. Just search his column for anyone he disagrees with. (And dear New York Times, is there anyone left in the journalistic ethics or fact-checking department?)

    “Conscience of a Liberal” indeed.

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    It’s interesting that Krugman cites the UK, writing: “Britain, in particular, has had debt exceeding 100 percent of G.D.P. for 81 of the last 170 years.”

    The time period he cites shows two things: UK’s debt/GDP ratio in long-term decline during Britain’s rise as industrial behemoth with a world empire (♫ “Rule Britannia! Britannia rule the waves. Britons never, never, never shall be slaves.” ♫) and it spiking upward during its fall from world-leader status. Post WW II, as it became increasingly a socialist quagmire and economically defunct, the ratio again bends downward. Now they have no empire to rule, a diminishing tax base and an aging population. UK’s active duty military numbers around 190,000 and it is releasing people from service due to budget cuts. Meanwhile, UK’s National Health Service (NHS) numbers 1.43 million employees (about the same as US active duty military) and is growing. NHS has some five-thousand more managers and senior managers than the Royal Navy has personnel of all ranks.

    This is the future Krugman and Obama envision for America and by convincing us that debt doesn’t much matter they hasten it.

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    Thanks for the video. It explains the almost nausea-inducing volatility of the markets over the last several months, as well as the fact that according to the DJIA we have barely moved in 12 months.

    For those of you who have the time on this quasi-holiday – I type those words from my desk at work – I think it would be beneficial not only to read Krugman’s article, but to continue down his spiral and read the comments on the article from NYT readers.

    Conservatives spend a lot of time listening to talk radio, watching Fox News and reading congenial web sites like Ricochet. But to brace up polemical skills, or simply to see what other, equally lucid people actually believe, it is sobering to read what others think of us, our arguments and our leaders.

    Although it is impossible to change the mind of a devout Democrat, we need to be able to mock and dismiss them. To do that, we need to know what they are saying.

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    Ok. This video has convinced me that all this stuff is Voodoo. The government prints bonds and buys bonds to keep demand for bonds high enough to keep people buying them. Banks buy the bonds from the government and then leverage them back to get money from the government to buy bonds. How do people make money on this scheme. From what I can tell the only sources of real wealth in this system of interlocking circles comes from deposits, and tax revenue. Everything else is people selling debt to each other…

    I am now convinced that Ron Paul is right. This system is unnatural. I am also convinced that we should just bite the bullet slash government spending and raise taxes to get us out of this terrible cycle of bond and money printing. We should aim for raising 50% more revenue than the government needs and work to pay off our debt double quick.

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    Claire, Jewish mysticism isn’t as explicit as say Dante’s Inferno. However, I really feel there is a special place in the next world being prepared for Krugman. This isn’t pinocchio telling a fib and having his nose grow. He is playing with the productive structure of the whole world. His motive is obvious. He will say anything to grasp after power.

    Lately, I’ve been thinking that Krugman and Friedman are only going to be put on the sixth level of H-ll. It’s Sulzberger who will inhabit the seventh. Alls well that ends well.

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    Apparently Paul Krugman is making the Dick Cheney argument regarding deficit spending.

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