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I've yet to hear anyone protest manufacturing or retail. The outrage is over the government subsidizing the banking industry while refusing to do anything for t

I've yet to hear anyone protest manufacturing or retail. The outrage is over the government subsidizing the banking industry while refusing to do anything for the roughly twenty percent of the population that is essentially jobless, uninsured and mired in debt. As a case in point, right now the Federal Reserve is funneling free money to banks, which are using those funds not to lend but rather to engage in short-term arbitrage and leveraged trading activities. One example is taking almost zero-interest loans from the Fed and using them to purchase Treasury Bonds which pay much higher interest rates. According estimates published by Ron Suskind in his recent book "Confidence Men", simply printing the money and giving it directly to the government to spend would save something like 350 billion in interest. Leaving aside the question of how many jobs could be created with those funds, I'm sure there are plenty of individuals at the protests in New York and elsewhere who would be willing to act as middleman for considerably less than 350 billion. Why shouldn't they be angry?

Gfranc 15y ago
Here is what is most interesting. The "outrage is over the government subsidizing the banking industry", which is purely a Keynesian phenomena. This is the primary problem with Krugman's beloved Keynesian economics, it looks great in theory, but is horribly corrupt and fallible in practice. As long as one believes that governments don't make mistakes and bureaucrats are "for the people", Keynesian economics would likely work. When people are purely self interested and flawed it rewards the wrongdoers and punishes the masses. I firmly believe that people are always self interested...therefore Keynesian economics has no real world application. The Inflationists like Krugman can never be proven wrong, as the answer always is "the stimulus wasn't big enough", "the stimulus wasn't properly targeted", it's always that their was a small error in calculation rather than the philosophy is completely bogus. In circles we go.
- MaysonL 15y ago
  I guess you weren't paying any attention back in 2008 or so, when Krugman was vehemently arguing, not for subsidy of the banks, but for nationalizing them.
  - trevelyan 15y ago
    Agree. He also doesn't seem to know the difference between monetary policy and fiscal policy. Pretty much par for the course for right-wing Krugman attack-hacks.
    - Gfranc 15y ago
      Perhaps you can enlighen me. Let me oil the conversation. From wikipedia. Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. In economics, fiscal policy is the use of government expenditure and revenue collection (taxation) to influence the economy. So we lower interest rates and print money. Then we tell banks to loan and we use revenue (or printed money) to invest in "infrastructure" or to just drop money from helicopters. So what happens when debt gets so high from spending that you'll never repay it in several generations? What happens when all this doesn't work? What happens when the savers get wiped out? Did they write that part in the economics textbooks? I guess we just reset? And start all over at 1913? I'm seriously asking. What? I wonder if the #OWS gang understands that by reseting they wipe out their parents and their grandparents... are they ready for that? I'm far from right wing, I believe tax is essential to prosperity, I also believe in infrastructure spending, and social security to a point. I do however believe that government (both right and left) is eternally corupt. I also believe the taxes will never be high enough to give everyone everything they want. It's like talking to my 16 year old niece. She wants to live at home, play on her IPad, party till 2 in the morning, drink herself stupid, and has no idea where her dad is coming from when he says it will end one day if she doesn't wise up. It will end well, or very very poorly. She just riots in the street and talks about all the things that are owed to her for existing. I guess this is just frustrating because this really was simple. We should have forced people (banks) to bare the burden of their decisions (loans!). We force investment banks and investors to do the same. The market really does regulate itself...but when politicians tinker...bad things happen. Nationalizing the banks? Why the hell would any right minded fed chairman do that? Like I say, great in theory, horrible in practice. Krugman is pure theory. The bottom line is that Kenyesanism has been a disaster due to it's constant corruption from political parties and the revoloving doors. Krugman always provides the answer, straight from the textbook. In the end, we all end up like Greece. And I'm sure Krugman will be along saying, well the text book says....

Gfranc 15y ago

Here is what is most interesting. The "outrage is over the government subsidizing the banking industry", which is purely a Keynesian phenomena. This is the primary problem with Krugman's beloved Keynesian economics, it looks great in theory, but is horribly corrupt and fallible in practice. As long as one believes that governments don't make mistakes and bureaucrats are "for the people", Keynesian economics would likely work. When people are purely self interested and flawed it rewards the wrongdoers and punishes the masses. I firmly believe that people are always self interested...therefore Keynesian economics has no real world application. The Inflationists like Krugman can never be proven wrong, as the answer always is "the stimulus wasn't big enough", "the stimulus wasn't properly targeted", it's always that their was a small error in calculation rather than the philosophy is completely bogus. In circles we go.

MaysonL 15y ago
I guess you weren't paying any attention back in 2008 or so, when Krugman was vehemently arguing, not for subsidy of the banks, but for nationalizing them.
- trevelyan 15y ago
  Agree. He also doesn't seem to know the difference between monetary policy and fiscal policy. Pretty much par for the course for right-wing Krugman attack-hacks.
  - Gfranc 15y ago
    Perhaps you can enlighen me. Let me oil the conversation. From wikipedia. Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. In economics, fiscal policy is the use of government expenditure and revenue collection (taxation) to influence the economy. So we lower interest rates and print money. Then we tell banks to loan and we use revenue (or printed money) to invest in "infrastructure" or to just drop money from helicopters. So what happens when debt gets so high from spending that you'll never repay it in several generations? What happens when all this doesn't work? What happens when the savers get wiped out? Did they write that part in the economics textbooks? I guess we just reset? And start all over at 1913? I'm seriously asking. What? I wonder if the #OWS gang understands that by reseting they wipe out their parents and their grandparents... are they ready for that? I'm far from right wing, I believe tax is essential to prosperity, I also believe in infrastructure spending, and social security to a point. I do however believe that government (both right and left) is eternally corupt. I also believe the taxes will never be high enough to give everyone everything they want. It's like talking to my 16 year old niece. She wants to live at home, play on her IPad, party till 2 in the morning, drink herself stupid, and has no idea where her dad is coming from when he says it will end one day if she doesn't wise up. It will end well, or very very poorly. She just riots in the street and talks about all the things that are owed to her for existing. I guess this is just frustrating because this really was simple. We should have forced people (banks) to bare the burden of their decisions (loans!). We force investment banks and investors to do the same. The market really does regulate itself...but when politicians tinker...bad things happen. Nationalizing the banks? Why the hell would any right minded fed chairman do that? Like I say, great in theory, horrible in practice. Krugman is pure theory. The bottom line is that Kenyesanism has been a disaster due to it's constant corruption from political parties and the revoloving doors. Krugman always provides the answer, straight from the textbook. In the end, we all end up like Greece. And I'm sure Krugman will be along saying, well the text book says....