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Friday, October 25, 2013

Paul Krugman, "Addicted to the Apocalypse": An Asteroid or an Earthquake?

Do you like a good science fiction movie? I do, particularly owing to their marvelous special effects. For example, the tsunami depicted at the beginning of "Hereafter" (2010) was overpowering.

And then there are the disaster films involving asteroid collisions and earthquakes.

But note the difference between an asteroid collision and an earthquake. Although both of these phenomena can have catastrophic consequences, an asteroid collision can be predicted in advance, owing to its course and speed. On the other hand, whereas we might know that another earthquake will ultimately hit San Francisco owing to its proximity to the San Andreas fault, we can't say when.

In his latest New York Times op-ed entitled "Addicted to the Apocalypse" (, Paul Krugman mocks those warning of an "oft-prophesied, never-arriving debt crisis." Krugman concludes:

"Look at Japan, a country that, like America, has its own currency and borrows in that currency, and has much higher debt relative to G.D.P. than we do. Since taking office, Prime Minister Shinzo Abe has, in effect, engineered exactly the kind of loss of confidence the debt worriers fear — that is, he has persuaded investors that deflation is over and inflation lies ahead, which reduces the attractiveness of Japanese bonds. And the effects on the Japanese economy have been entirely positive! Interest rates are still low, because people expect the Bank of Japan (the equivalent of our Federal Reserve) to keep them low; the yen has fallen, which is a good thing, because it make Japanese exports more competitive. And Japanese economic growth has actually accelerated.

Why, then, should we fear a debt apocalypse here? Surely, you may think, someone in the debt-apocalypse community has offered a clear explanation. But nobody has.

So the next time you see some serious-looking man in a suit declaring that we’re teetering on the precipice of fiscal doom, don’t be afraid. He and his friends have been wrong about everything so far, and they literally [sic] have no idea what they’re talking about."

Debt, which hasn't yet sunk Japan, can't sink a nation? Oh really? Krugman, of course, doesn't mention what debt did to the Weimar Republic and what arrived in its aftermath.

So why the Weimar Republic and not Japan? My answer: Who is saying that it won't happen to Japan?

Okay, wise guy, if a disaster is about to befall us, tell us when?

But herein lies the quandary. Economics is not an exact science, and it is not possible to know exactly when human beings lose faith in their country's currency. An economic implosion is not a pending collision with an asteroid whose timing can be predicted. Rather, it is more akin to an earthquake, whose arrival is predestined, but whose timing cannot be foretold.

Rely on Krugman? Yeah, right. Remember how he once wrote concerning Occupy Wall Street (

"Occupy Wall Street is starting to look like an important event that might even eventually be seen as a turning point.

. . . .

It’s clear what kinds of things the Occupy Wall Street demonstrators want, and it’s really the job of policy intellectuals and politicians to fill in the details."

And just where is Occupy Wall Street today? As I said earlier, economics is not an exact science.

I am not a "serious-looking man in suit" and perhaps not deserving of respect, but when Douglas Elmendorf, head of the nonpartisan Congressional Budget Office, declares, "The federal budget is on a course that cannot be sustained indefinitely" (, maybe it's worth listening to what he has to say.

Was that a rumble I just heard?

1 comment:

  1. Yes, Krugman liked OWS. Not only him. So did the American Nazi Party.
    On September 17, 2011, around 10?11? a.m., I asked a visiting then friend (still, but not for long) who was pushing to see the rally: "Why Occupy Wall Street?" Actually, the question was rhetorical - I knew the answer the moment I heard the name.
    Unlike Krugman, I am a historian by training and unlike him I am not an "internationalist," full of complexes and pretensions and empty of ethics.
    I have no illusions about Krugman. Good people don't write for the NYT, don't support such sickos as Beinart, don't serve bigoted,evil crowds the food they like.
    People often confuse Friedman and Krugman. It isn't surprising. They are similar. Bastards.