Notes From Babel

Paul Krugman Loves His Bubbles

with one comment

There is something to be said for the notion that all we can do is to make the best choices possible given the information available.  When it comes to macroeconomics, the problem seems to be the opposite:  we are left to make the decisions offered up by a clergy of economists who, in a subject in which well nigh nothing is irrelevant, nonetheless purport to steer our macroeconomic policies, giving us the coordinates of the needle in a God-sized haystack.  In this endeavor, here was Paul Krugman’s advice on how to get out of the recession back in 2002:

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.

So, if I have this right, the solution to busted bubbles is to simply create more bubbles.  Brilliant.  When Lisa Simpson got gum stuck in her hair and the whole town chipped in with stupid ideas to get it out—e.g., mayonnaise, peanut butter, grapefruit, tartar sauce, bacon fat, freezing it with an ice cube, etc.—even then there was no one dumb enough in Springfield to suggest the way to get gum out of her hair was more gum.

Written by Tim Kowal

January 31, 2010 at 4:28 pm

Posted in Economics

Tagged with , ,

One Response

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  1. Is it okay to just hate Krugman and leave it at that?


    February 9, 2010 at 11:49 am

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