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Sometime you get what you pray for :-/ Krugman wanted the housing bubble, he got it. Please tell me, has he asked for any education bubble? I'm not really fol

by guylhem 14y ago

Sometime you get what you pray for :-/ Krugman wanted the housing bubble, he got it. Please tell me, has he asked for any education bubble? I'm not really following what he says unless it's too wonky (like he last piece about Adam Smith hating bitcoin, because you know Adam Smith could have predicted bitcoin and peer to peer and computers http://krugman.blogs.nytimes.com/2013/04/12/adam-smith-hates-bitcoin/ http://krugman.blogs.nytimes.com/2013/04/12/adam-smith-hates...)

skylan_q 14y ago
Haven't seen him say anything about helping fund the education bubble. But then again, he believes all sorts of silly things. Like if you print money and pay people to dig and bury holes over and over again, you can revive an economy.
- nhaehnle 14y ago
  Like if you print money and pay people to dig and bury holes over and over again, you can revive an economy. It is pretty obvious that the economy can be in a state where doing this will revive the economy - because of the indirect positive effect on aggregate demand. Is is also pretty obvious that there will always be better ways to revive an economy - such as by paying people to do something that is considered to be useful. Then you get both the indirect positive effect on aggregate demand and you're directly getting something useful done (whether it's fixing the infrastructure, cleaning up rivers, taking care of the elderly, or painting pretty pictures really doesn't matter that much). Keynes actually implied all this in the often quote that Keynes-haters like to bring up again and again without properly understanding it.
coldtea 14y ago
>Krugman wanted the housing bubble, he got it. No, he didn't WANT a housing bubble. He (correctly) WARNED off one that the Fed will bring on: "To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." He doesn't describe what he thinks is right (himself). He describes what he thinks the Fed wants and will do.
- skylan_q 14y ago
  The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. Here's the whole paragraph for context. I don't know how it could be read any differently than as advocating this proposed solution.
  - danielweber 14y ago
    I'm hardly Krugman's biggest fan, but, really, he's saying "the economy is so boned that he's going to need a housing bubble to get out of it." Like if I said "you have saved so poorly for retirement that your only hope is lottery tickets."
  - cromwellian 14y ago
    "Tom lost all his money gambling in the market and now his bills are due. To overcome this, he'll have to run a Ponzi scheme." Do you think this endorses running Ponzi schemes? This old chestnut is continually dredged up by Krugman's detractors. Do you really think Krugman would publicly advocate for the creation of a bubble after just explaining the problems with the previous one? This is like believing Krugman advocates seriously for faking an alien invasion. BTW, let me finish your quote for you, here it is in full: "And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging." This paragraph is clearly critical of Greenspan and speaks about his motives.
  - icambron 14y ago
    It does sound that way. Here's Krugman in 2005 reconsidering: "Nobody thought the economy could rely forever on home buying and refinancing. But the hope was that by the time the housing boom petered out, it would no longer be needed." He doesn't come off too well there either. Edit: read the whole article. http://www.nytimes.com/2005/05/27/opinion/27krugman.html http://www.nytimes.com/2005/05/27/opinion/27krugman.html

by guylhem 14y ago

skylan_q 14y ago

Haven't seen him say anything about helping fund the education bubble. But then again, he believes all sorts of silly things. Like if you print money and pay people to dig and bury holes over and over again, you can revive an economy.

nhaehnle 14y ago
Like if you print money and pay people to dig and bury holes over and over again, you can revive an economy. It is pretty obvious that the economy can be in a state where doing this will revive the economy - because of the indirect positive effect on aggregate demand. Is is also pretty obvious that there will always be better ways to revive an economy - such as by paying people to do something that is considered to be useful. Then you get both the indirect positive effect on aggregate demand and you're directly getting something useful done (whether it's fixing the infrastructure, cleaning up rivers, taking care of the elderly, or painting pretty pictures really doesn't matter that much). Keynes actually implied all this in the often quote that Keynes-haters like to bring up again and again without properly understanding it.

coldtea 14y ago

>Krugman wanted the housing bubble, he got it. No, he didn't WANT a housing bubble. He (correctly) WARNED off one that the Fed will bring on: "To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." He doesn't describe what he thinks is right (himself). He describes what he thinks the Fed wants and will do.

skylan_q 14y ago
The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. Here's the whole paragraph for context. I don't know how it could be read any differently than as advocating this proposed solution.
- danielweber 14y ago
  I'm hardly Krugman's biggest fan, but, really, he's saying "the economy is so boned that he's going to need a housing bubble to get out of it." Like if I said "you have saved so poorly for retirement that your only hope is lottery tickets."
- cromwellian 14y ago
  "Tom lost all his money gambling in the market and now his bills are due. To overcome this, he'll have to run a Ponzi scheme." Do you think this endorses running Ponzi schemes? This old chestnut is continually dredged up by Krugman's detractors. Do you really think Krugman would publicly advocate for the creation of a bubble after just explaining the problems with the previous one? This is like believing Krugman advocates seriously for faking an alien invasion. BTW, let me finish your quote for you, here it is in full: "And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging." This paragraph is clearly critical of Greenspan and speaks about his motives.
- icambron 14y ago
  It does sound that way. Here's Krugman in 2005 reconsidering: "Nobody thought the economy could rely forever on home buying and refinancing. But the hope was that by the time the housing boom petered out, it would no longer be needed." He doesn't come off too well there either. Edit: read the whole article. http://www.nytimes.com/2005/05/27/opinion/27krugman.html http://www.nytimes.com/2005/05/27/opinion/27krugman.html