It is Monday, which means the latest set of howlers from the New York Times editorial page. First, Paul Krugman is there to give us the latest in Nobel Statism masquerading as “economics,” but today, we get a two-for-one package: Krugman AND an editorial praising inflation.
It does not get much better than this. I lead off with the nonsense from the editorial writers who still lecture the rest of us on proper economics, even as its own company is cannibalizing itself to make its payroll. Entitled “The Printing Press Cure,” (I am not making this up) they write:
The Federal Reserve as much as admitted last week that lowering the benchmark interest rate — even to zero — would not be powerful enough medicine to revive today’s ailing economy. And so it has opted for the printing-press cure, pledging for the foreseeable future to pump vast sums into banks, other financial firms, businesses and households.
Economic history — of the Great Depression of the 1930s and Japan’s lost decade in the 1990s — suggests that the Fed is doing the right thing. Confronted then, as now, with the twin scourges of deepening recession and incipient deflation, governments did more damage with too little intervention than they would have done with too much.
Yes, the editors later reason that inflation could be a bad thing — later on — but for now the “Argentina Solution” is what the doctor ordered (or at least Dr. Krugman). Actually, Krugman is more of a Keynesian “fiscal policy” guy, who thinks that if government borrows and spends (and spends and spends), that it will be enough. Today, the latest Nobel Statist writes:
…once the economy has perked up a bit, there will be a lot of pressure on the new administration to pull back, to throw away the economy’s crutches. And if the administration gives in to that pressure too soon, the result could be a repeat of the mistake F.D.R. made in 1937 — the year he slashed spending, raised taxes and helped plunge the United States into a serious recession.
The point is that it may take a lot longer than many people think before the U.S. economy is ready to live without bubbles. And until then, the economy is going to need a lot of government help.
Ah, even in these difficult times, it is nice to see that the comedians at the New York Times are on the job.5:19 am on December 22, 2008 Email Bill Anderson