Krugman Demanded a Housing Bubble
Everybody should know that Nobel prize winner and archetypal mainstream Keynesian economist Paul Krugman was demanding a housing bubble in 2001 and 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.
The little problem that the economics profession won’t face up to yet is that Keynesianism has been dead wrong from its very conception. The urgent task for everybody else is to stop these people from inflicting their policies on us for any longer.
Brian
dermotk
Graham
20000miles
I wondered how he got a Nobel!
What a plonker! I knew he pretended to be a liberal, but to call the bubble and wish for it!!!
Wasn’t he also interested in negative interest rates? He is just a fascist! He wouldn’t know a free market if it bit him!
Pat Donnelly
June 25, 2009 at 10:23 am
I was not aware that Keynes called for a housing bubble! Just because he assigned the restart of an economy to the government, with the taxing power and often the best ability to borrow cheaply, dos not mean that it was his idea to ruin housing first!
Pat Donnelly
June 25, 2009 at 10:26 am
I hear that Keynes did call for a housing bubble too:
“The remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and keeping us permanently in a quasi-boom.”
Keynes, p. 322
20000miles
June 25, 2009 at 4:22 pm
He appears to have been describing income and not assets, being increased or at least continued by lower interest rates.
Still wrong, the remedy is to allow the market to dictate rates.
I doubt that Keynes was familiar with liars loans, ninjas, 125% loans, or rates of interest of less than 3%!
A quasi-boom? One that clearly has no hangover. If he had paid more attention to his words, (he should have realized that dead mens’ words are parsed….oh he did realize it!) he might have said that varying the interest rate is part of the problem?
If he could have solved the boom bust cycle in one paragraph, why did he use 322 pages? Sorry, not buying that one! We would have had all those awful features long ago, if that was what he advocated!
Pat Donnelly
June 27, 2009 at 9:50 am
The fact that he was awarded the prize, by ‘the club’, says it all. Nail on the head there, we need to “stop these people from inflicting their policies on us for any longer”
The general public have no hunger for financial issues, even though they affect them more than anything else. The message needs to be given to them in a much simpler format, and maybe they will wake up and be utterly horrified.
Blatant News
July 23, 2009 at 7:40 pm
Their shepherds are asleep! The flock can be raided and lo! it is!
Pat Donnelly
July 24, 2009 at 12:20 pm