Comments on: To Be Frank, Krugman’s History is Careless

By: Anonymous

Anonymous — Fri, 16 Oct 2009 18:02:00 +0000

I don’t think Krugman is careless and I don’t (really) think he’s an idiot. I accuse him of willful blindness. He sees only what advances his agenda — it just seems like idiocy.

By: Anonymous

Anonymous — Fri, 16 Oct 2009 13:49:00 +0000

http://www.youtube.com/watch?v=VqU-AZh-wqU#t=4m04s

You sure?

And this one is an actual video of Hayek on Keynes, not some goofy recording on a blog.

By: Anonymous

Anonymous — Fri, 16 Oct 2009 13:43:00 +0000

I find it interesting that Reagan is to blame for signing a bill, but the authors Garn and St. Germain, co-sponsor Schumer and the Congress that debated the bill and voted to pass it bear absolutely no responsibility.

By: Anonymous

Anonymous — Thu, 15 Oct 2009 20:50:00 +0000

The thing is course that the STOP is not to worry about the bubbles; the government will clean up the mess later. That appears to be the consensus going forward at this point still. So we should expect another asset bubble in the next ten to fifteen years.

By: Anonymous

Anonymous — Thu, 15 Oct 2009 20:47:00 +0000

Given that the entire federal government (and this really isn’t an understatement – there is hardly a government agency that this doesn’t touch) was involved in making housing our very own industrial policy, our own version of what the MITI used to do – and that this continues to be the case – being “selective” is virtually impossible.

By: Anonymous

Anonymous — Thu, 15 Oct 2009 20:11:00 +0000

Oh definitely. You don’t have to convince me about the significance of the money illusion or the importance of nominal prices. I’m just saying that this decades-long decline is only as massive as your graph demonstrates when we’re talking in nominal terms. Nominal prices matter a whole lot, but the less steeply declining (if declining at all? I’m not sure) real interest rate matters too.

By: John Dewey

John Dewey — Thu, 15 Oct 2009 20:07:00 +0000

<danielkuehn: “these nominal rate changes may be less important than they seem at first glance.”

That might be true if lenders considered a borrower’s future income in determining his debt capacity. I don’t believe lenders do so. That’s why lower nominal interest rates enable larger home purchases, particularly for first time buyers.

Some lenders in the 21st century have ignored debt capacity in originating loans. But I think that practice has changed.

By: Anonymous

Anonymous — Thu, 15 Oct 2009 19:23:00 +0000

“After the US experience during the Great Depression, and after inflation and rising interest rates in the 1970s and disinflation and falling interest rates in the 1980s, I thought the fallacy of identifying tight money with high interest rates and easy money with low interest rates was dead. Apparently, old fallacies never die”- Milton FriedmanGranted, I agree that the 2002-2005 was silly, but not simply because they were low. The question is “low relative to what?”. The fact that a graph of inflation and inflation expectations matches your graph of the fed funds rate suggests that these nominal rate changes may be less important than they seem at first glance.

By: Justin P

Justin P — Thu, 15 Oct 2009 19:12:00 +0000

Thanks for the link.

By: Anonymous

Anonymous — Thu, 15 Oct 2009 16:40:00 +0000

Krugman’s history is selective, and his selection is politically motivated. A review of posts in this forum reveals similar selection effects. I don’t recall reading anything about the Garn-St. Germain Depository Institutions Act or other Reagan era reforms before.But Don and Krugman agree on one point. The statesmen did it. Krugman blames the Republicratic statesmen, and Don blames the Demoblicans. I agree with both of them.On the regulatory issue, I agree with Don. The problem with state “regulation” is that it obviously doesn’t regulate anything. So what if Reagan’s henchmen created the “unregulated” environment in which evil banking barons could loot the financial system? They did it, didn’t they? Why wouldn’t other statesmen do it again?State regulation is not about “protecting the system” from failures. It’s about selling “security” to nominal “capitalists”. It’s about socializing the risk and privatizing the profit. The “regulators” and “deregulators” are not rivals in this game. They’re on the same team. Each has his respective role to play.

The truly unregulated approach only works if individual investors and financial institutions continually fail. If they don’t fail, the system certainly is not “unregulated”. If any institutions are “too big to fail”, these institutions have simply been absorbed into the state and are “private” and “unregulated” only in some Orwellian nomenclature.

By: Anonymous

Anonymous — Thu, 15 Oct 2009 15:22:00 +0000

Flattery will get you everywhere johndewey

By: John Dewey

John Dewey — Thu, 15 Oct 2009 15:20:00 +0000

daniel kuehn: “Name’s post about ten hours ago that you neglected to raise similar concerns about.”

Sorry. I didn’t comment on Name’s post because I thought your intelligent response – with facts and relevant references – was much better than anything I could add.

By: Anonymous

Anonymous — Thu, 15 Oct 2009 14:47:00 +0000

Something tells me you wouldn’t have the same reaction to people who selectively quote Krugman, like, say, Name’s post about ten hours ago that you neglected to raise similar concerns about.

I can’t control what muirgeo thinks about these things (I don’t personally get the sense he has any animosity towards Russ), and I can’t control what you’d prefer I write every time I comment – I appreciated the context muirgeo provided.

By: John Dewey

John Dewey — Thu, 15 Oct 2009 14:45:00 +0000

daniel kuehn: “I would say it’s relevant to the housing bubble”

You are correct. Greenspan’s extremely low interest rates of 2002-2005 did contribute to the severity of the housing bubble and bust.

I got the sense that Don’s 2006 post was referring to a much longer decline in interest rates. After all, he was comparing 1981 and 2006, referring to changes over a quarter century. It was not the long term decline in interest rates but rather the sudden recent decline which contributed to the housing bubble. That’s why I felt – and still feel – that Don’s 2006 post is not relevant to criticism of the housing market meltdown.

By: John Dewey

John Dewey — Thu, 15 Oct 2009 14:38:00 +0000

daniel kuehn: “You may misunderstand me – I’m not trying to criticize Russ.”

I realize that. But the person seeking out Russ’s earlier comment while ignoring Russ’s admission of error was criticizing Russ. You encourage him to continue providing half-truths when you praise his selective legwork.

By: Methinks

Methinks — Thu, 15 Oct 2009 14:13:00 +0000

This is a great question. This post is more than the two words I wanted to post: “good question” because any one or two word posts are sent directly into the spam filter.

By: Methinks

Methinks — Thu, 15 Oct 2009 14:11:00 +0000

ignoring nutjobs is generally good advice.

By: matt

matt — Thu, 15 Oct 2009 13:45:00 +0000

what about policies that depress your head?

By: matt

matt — Thu, 15 Oct 2009 13:39:00 +0000

you’re stupid.

By: Anonymous

Anonymous — Thu, 15 Oct 2009 13:36:00 +0000

I remember that one.

You may misunderstand me – I’m not trying to criticize Russ. My point is lots of people had an inkling we were in a bubble, almost no one realized the full extent of our problems, and playing this blame game is silly. Since Krugman is the one criticized here and Russ defended, muirgeo picked up some good posts. On a liberal blog, the appropriate selection would probably be different. Starting work too – probably be back during my lunch hour. Have a good day.