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Money is free, conservative economists are cheap whores and private debt is killing the US – Paul Krugman

August 13, 2012

August 10, 2012 ‘Culture of Fraud’ Paul Krugman – Glenn Hubbard, Greg Mankiw and John Taylor authoring Romney’s white paper on economic policy and in the process delivering outright untruths about the nature of the US’s economic woes – detailed analysis by Ezra Klein here.

August 2, 2012 ‘Debt, Depression, DeMarco’ Paul Krugman – detailing Ed DeMarco, a Republican bureaucrat, who, due to Senate Republican obstructionism, has been unable to be replaced, and is blocking the process of reducing private household debt by reducing principals and providing some kind of debt relief.

August 2, 2012 ‘Theses On Taxes’ Paul Krugman – Neither candidate’s tax policies are plausible – Obama should raise more revenue, only does it by $80b annually, and Romney reduces by $450b annually. Tax Policy Centre/Brookings Institute study of Romney’s taxes reveals that his policies, if revenue neutral, would greatly increase taxes on the middle class whilst lowering those of the rich.

July 26, 2012 ‘Money for Nothing’ Paul Krugman – Krugman’s argument: For far too long, conservative economists and Austrians have been predicting that the huge deficits of the US are going to send interest rates soaring, ergo one must implement austerity to reduce the deficit so the market does not ‘punish’ the government for creating large deficits, ergo many of the principles of Keynesian economics are wrong. Of course right now most advanced countries, including Australia and the US (two extremely different economies at the moment), the latter of which has seen treasury bonds (inflation adjusted) go from 2% pre-crisis to -0.6%, ie: investors are paying governments money to keep their wealth safe. Even when the Fed temporarily suspended bond purchases, there was no substantial change in interest rates, thus confirming that the status quo is not government-based but market-based. Markets appear to trust government debt. Business are not investing as there is too little effective demand, due to the deleveraging shock of all people attempting to pay down their debt at once, otherwise known as the Debt-Deflation theory of Irving Fisher (which, after famously declaring stocks to be at a permanently high plateau days before the crash of 1929, must be one of the greatest recoveries in academia). There mere fact that government debt is so cheap represents a once in a lifetime opportunity to fund many of the infrastructure programmes that the US needs; not to mention all the unemployed workers that are able to be employed into building public housing, private housing, repairing bridges, roads, highways and perhaps even an inter-city rail project so desperately needed. Sadly it won’t happen.

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