Paul Krugman may be the dumbest man in America who is not named "George Bush".
Like a stopped watch he managed to stumble onto something a few days ago....
Quote:
The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend.
Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?
The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it....
...Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.
Think of the way almost everyone important [nb: ron paul and peter schiff?] missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.
After all, that’s why so many people trusted Mr. Madoff.
Now, as we survey the wreckage and try to understand how things can have gone so wrong, so fast, the answer is actually quite simple: What we’re looking at now are the consequences of a world gone Madoff.
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No kidding the financial service industry has gotten s--- kicking rich in recent years. The last few years was a great time for mortgage bankers, no? And the vast monies collected by investment bankers is well documented...etc., etc...
gee, why has this been the case? all the liberals in the room now shout "greed", but it would never occur to Krugman that the reason this has been the case is because when the Fed pumps new dollars into the economy, those dollars have to enter somewhere. they don't just magically appear dispersed through the economy in such a manner that the prices and wages of everything are impacted all at once and equally. New dollars enter into the economy via the ....
... anyone?
...anyone?
....Bueller?
via the financial services industry. Not too surprisingly, those greedy little bankers are the first to get their grubby little hands on those new dollars, and what do they do? they do what any of us would do -- they keep a big freaking chunk of it. So....all this money being pushed into the economy vis a vis the financial service industry has created this little "world gone Madoff."
So, that was a few days ago and today we get
a big freaking load of bigtime Krugman again...
Quote:
Greg Mankiw suggests that the Fed respond to the crisis by committing to substantial inflation over the next decade. Great idea, wish I’d thought of it. Oh, wait …
Actually, Greg has arrived at the same conclusion I did more than a decade ago, when I tried to model the problems then facing Japan, and now facing us. As I pointed out back then, the essence of a liquidity trap is that the real interest rate is too high, even when the nominal rate is zero. So the theoretically “correct” answer, if you can swing it, is to create expected inflation, pushing the real rate down.
As I put it, perhaps too glibly, the central bank needed to “credibly promise to be irresponsible.”
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There's the prescription from this man concerned about a "world gone Madoff", the fed needs to print dollars like mad men and push those dollars into the hands of the Bernie Madoffs of the world!
Paul Krugman makes Scoop Jackson look like a freaking genius.