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Krugman writes: "It's tempting to argue that the economic failures of recent years prove that economists don't have the answers. But the truth is actually worse."

Portrait, New York Times columnist Paul Krugman, 06/15/09. (photo: Fred R. Conrad/NYT)
Portrait, New York Times columnist Paul Krugman, 06/15/09. (photo: Fred R. Conrad/NYT)


The Big Fail

By Paul Krugman, The New York Times

07 January 13

 

It’s that time again: the annual meeting of the American Economic Association and affiliates, a sort of medieval fair that serves as a marketplace for bodies (newly minted Ph.D.’s in search of jobs), books and ideas. And this year, as in past meetings, there is one theme dominating discussion: the ongoing economic crisis.

This isn’t how things were supposed to be. If you had polled the economists attending this meeting three years ago, most of them would surely have predicted that by now we’d be talking about how the great slump ended, not why it still continues.

So what went wrong? The answer, mainly, is the triumph of bad ideas.

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+65 # jmac9 2013-01-07 11:56
Economists can't see farther than banks,corporations.

The basic concern - the only measure - of capitalism is: Profit.

check any economics 101 book.
Profit is the only concern.

Not people.

So right from the get go - the system is for pollution, poison, fake wars, drug prohibition - to justify police state, forced starvation and poverty...becau se

you don't count...only profit.

the7facts.info

To change the world takes a change of motivation - change the "bottom line" from Profit at any price
to People...Be a benefit to people.
 
 
+3 # Mannstein 2013-01-07 17:49
Is drug the prohibition such as crack cocaine or meth really against or for the benefit of the people? A medical doctor of internal medecine and close friend has related to me the state of health of young patients on these dangerous drugs; their heart muscles turn to mush and their brains are riddled with holes. As fellow human beings is it not our moral duty to keep these dangerous poisons out of the hands of unsuspecting users? Are we not our brother's keepers, never mind the financial cost to society as a whole?
 
 
+4 # Activista 2013-01-07 19:58
Quoting Mannstein:
Is drug the prohibition such as crack cocaine or meth really against or for the benefit of the people? A medical doctor of internal medecine and close friend has related to me the state of health of young patients on these dangerous drugs; their heart muscles turn to mush and their brains are riddled with holes. As fellow human beings is it not our moral duty to keep these dangerous poisons out of the hands of unsuspecting users? Are we not our brother's keepers, never mind the financial cost to society as a whole?

Check on alcohol destroying brain - similar effect ....
 
 
+4 # dkonstruction 2013-01-08 12:09
Quoting Mannstein:
Is drug the prohibition such as crack cocaine or meth really against or for the benefit of the people? A medical doctor of internal medecine and close friend has related to me the state of health of young patients on these dangerous drugs; their heart muscles turn to mush and their brains are riddled with holes. As fellow human beings is it not our moral duty to keep these dangerous poisons out of the hands of unsuspecting users? Are we not our brother's keepers, never mind the financial cost to society as a whole?


Sorry, but alcohol, tobacco and legally (overly and wrongly) prescribed drugs cause far more harm (including serious illness and death) and are far more costly to us as a nation (in terms of health care costs) than all illegal drugs combined. If you're concern is about drugs, start with the ones that are doing the most damage both physically as well as economically (and legalize marijuana which costs us a ton in law enforcement and in the criminal justice system).
 
 
+4 # Activista 2013-01-07 20:13
Maximizing Profit - maximizing greed. Wars are very profitable.
My expertise is BI - business intelligence - databases. All the tools are there to maximize SHORT term profit.
AARP magazine article estimated and documented that the retired couple medical care savings should be $250 000 at present prices.
80% of the bankruptcies in USA are due to hospital bills. People in Greece and Spain do not have this problem.
 
 
+49 # fredboy 2013-01-07 12:47
Amen.
And so much was intended. To gut most of us. For the big boys' profits.
What's most amazing is how the screwed were silenced.
Most are afraid to speak up -- about anything.
It's kind of like the heart of America was pierced, and its voice silenced.
Perhaps forever.
 
 
+32 # Pickwicky 2013-01-07 13:54
Remember when a bank CD earned 11% interest? I know that was out of line, but it's a lovely memory. When percentage rates dropped to 1% and less, my elderly parents went into shock and they're still in shock. They don't have enough money to make risky investments, and they don't have enough coming in from their safe CD's to live on--we help them out, but that lowers all of our ability to buy stuff. So we stand around wondering what to do.
 
 
+4 # Rick Levy 2013-01-07 21:18
Yes I remember those days, and now that my wife and I are now retired seniors and earning next to nothing on our retirement savings, we can only imagine how desperate our lives would be trying to get by on our income if we hadn't expatriated. Fortunately, our social security enables us to live abroad in modest comfort.
 
 
+55 # ER444 2013-01-07 12:48
Austerity. Isn't working in Greece, isn't going to work here.
 
 
-9 # edge 2013-01-07 15:17
Quoting ER444:
Austerity. Isn't working in Greece, isn't going to work here.


GREECE can't grow because of the Euro!

The US prints its own money and can devalue as much as it needs to.
 
 
+6 # Mannstein 2013-01-07 18:03
The result is the same. First it wipes out folks living on fixed income including their savings. If the printing continues it becomes the hyperinflation of Germany after WWI. Then the middle class will really get. My parents and grandparents experienced it first hand. The only protection is to divest from dollar denominated assets ie US dollars, stocks, and bonds. In other words dump dollars buy foreign currencies, precious metals, real estate, rare paintings etc. well before when the shit hits the fan as everyone heads for the exit.
 
 
-5 # edge 2013-01-08 05:31
Quoting Mannstein:
The result is the same. First it wipes out folks living on fixed income including their savings.
SNIP.


You have it wrong!

If you devalue your currency then your products are cheaper to the rest of the world and they buy more of your goods bringing you to full employment!!

That is why the US complains about China and not letting China's currency rise in value.
 
 
+3 # dkonstruction 2013-01-08 06:42
Quoting Mannstein:
The result is the same. First it wipes out folks living on fixed income including their savings. If the printing continues it becomes the hyperinflation of Germany after WWI. Then the middle class will really get. My parents and grandparents experienced it first hand. The only protection is to divest from dollar denominated assets ie US dollars, stocks, and bonds. In other words dump dollars buy foreign currencies, precious metals, real estate, rare paintings etc. well before when the shit hits the fan as everyone heads for the exit.


To compare the US or the current fiat money system to Germany post world-war 1 (whose productive capacity had been largely destroyed) is simply wrong and shows a complete misunderstandin g both of history and of economics. The US is not germany post-world war 1 nor is it Greece. If printing money causes hyper-inflation then how come the $16 trillion or whatever it is that we printed in recent years as part of the bailout/stimulu s has not caused inflation or devealued the dollar one bit.
 
 
-7 # Martintfre 2013-01-07 20:07
Greece can't grow because no one wants to get a loan from a government that is unlikely to fulfill its obligations. It is not the Euro's fault there are scamming politicians and stupid people who are trying to vote them selves bread and circuses at some one elses expense.
 
 
0 # edge 2013-01-08 05:28
Quoting Martintfre:
Greece can't grow because no one wants to get a loan from a government that is unlikely to fulfill its obligations. It is not the Euro's fault there are scamming politicians and stupid people who are trying to vote them selves bread and circuses at some one elses expense.


If Greece were not in the Euro then their currency would be worth less which has the effect of making their products cheaper than the surrounding Countries!
SO, people would buy more goods from Greece because they are cheaper which would increase the value of their currency and also their bonds.

Right now you have Countries like Germany with strong economies but their currency can't rise in value because they are tied to Greece and Spain. Germany gains at the expense of Greece which is why they keep bailing out Greece!

Greece needs to leave the Euro so their economy can grow!
 
 
+5 # dkonstruction 2013-01-08 06:44
Quoting Martintfre:
Greece can't grow because no one wants to get a loan from a government that is unlikely to fulfill its obligations. It is not the Euro's fault there are scamming politicians and stupid people who are trying to vote them selves bread and circuses at some one elses expense.


No, Greece can't grow because they do not control their own currency. If the Greeks either left the Euro or went to a dual currency system rather than impose more and more austerity to please the foreign banksters they would be on the road to recovery and growth again. They should threaten default (and if need be default as Argentina did and then look at their growth rates...much, much higher).
 
 
+4 # dkonstruction 2013-01-08 06:40
Quoting edge:
Quoting ER444:
Austerity. Isn't working in Greece, isn't going to work here.


GREECE can't grow because of the Euro!

The US prints its own money and can devalue as much as it needs to.


It's not so much that Greece can't grow but rather that they don't control their own currency being part of the eurozone and thus cannot do what the US (or any other sovereign nation that controls its own currency can do in a fiat money system) namely "print" money. The US has printed, given and "loaned" (at virtually 0% interest) almost as much as the total Federal deficit in recent years as part of the "bailout" programs and yet this has not affected the value of the dollar one bit. So, much for your argument that printing money in and of itself will devalue the currency. This notion is based on economic principles that applied when money was backed by precious metals but which, as the Modern Money Theorists have shown no longer apply. so, yes Greece should either leave the Eurozone or go to a dual currency system (as some other countries have done) and the US should print enough to pay off the entire federal deficit tomorrow (we could borrow from the FED and then pay them back over time at the same almost free interest rates that they are currently lending to the private banks) which would save the US nearly 1/2 trillion dollars a year in debt interest payments.
 
 
0 # edge 2013-01-08 09:35
Quoting dkonstruction:
SNIP. So, much for your argument that printing money in and of itself will devalue the currency.

SNIP.


LEARN TO READ, I had an "AND" in my statement!
 
 
+2 # dkonstruction 2013-01-08 12:15
Quoting edge:
Quoting dkonstruction:
SNIP. So, much for your argument that printing money in and of itself will devalue the currency.

SNIP.


LEARN TO READ, I had an "AND" in my statement!


thanks for respectfully pointing out that i perhaps misread your statement...So, in other words, your sentence that reads "The US prints its own money and can devalue as much as it needs to" was not meant in any way to draw any connection whatsoever between the printing of money AND the devaluation of currency? How could i have possibly made such a blunder and thought that you were drawing a connection between the two by putting them in the same sentence (without even a comma to break the connection)? My apologies for making such an obvious linguistic interpretive faux pas. And, again, thank you for so courteously and respectfully drawing it to my attention.
 
 
-10 # Martintfre 2013-01-07 20:09
How is the terrorist state of Iceland solving their problem?
Give me and A...
give me a U ..
Give me an S ..
Give me a T ... ...
 
 
+10 # RLF 2013-01-08 05:49
Iceland nationalized the insolvant banks...then the economy started up.
 
 
+10 # dkonstruction 2013-01-08 06:47
Quoting Martintfre:
How is the terrorist state of Iceland solving their problem?
Give me and A...
give me a U ..
Give me an S ..
Give me a T ... ...


Terrorist state? So, i suppose that they are a terrorist state because unlike in the US where we make the population as a whole pay for the financial crimes of the banksters in Iceland they actually made the bankster pay....terrror indeed. Nice of you to inform the readers about exactly what Iceland did to deal with it's banking and broader financial crisis...for those that are interested in what they did see the link below.

http://www.washingtonsblog.com/2012/08/top-economists-iceland-did-it-right-everyone-else-is-doing-it-wrong.html
 
 
+2 # CAMUS1111 2013-01-08 13:40
I'll give ou an A-S-S....
 
 
+20 # wantrealdemocracy 2013-01-07 13:37
The problem we are not only not facing but making worse, is that the corrupt bankers are killing us and making a wonderful profit doing it. We live under system of fiat money. That means the money has no real tangible value. The money you have in your pockets only a symbol of someone else's debt. There is no there there. The banksters fabricate that dollar five or six times over the original amount of fiat (phony) money the bankster gave the first loan (which was must more of that phony money) This is a very effective way for the banksters to have all the money. They take some of that money to corrupt our elected officials so nothing is done about the fact that our dollar has no value and trust in it if failing. The dollar will crash and what then? We should get rid of the Federal Reserve and put our monetary system under the control of Congress. Which brings us to the case of the high level of corruption in that gang of boys in very high priced suits (but no trace of any human emotions such as empathy, compassion or any trace of concern for anyone but themselves. We need public finance of the campaigns. We need a heck of a lot of change in this government. We need to think about just what a just and equitable government would be like....and work to get it. What we got is pretty damn bad.
 
 
+2 # RLF 2013-01-08 05:52
The only good thing about a crash is that the bullshit goes with it...along with our homes, our jobs, our food, our belongings...al l of it...and then what a great business opportunity! Where do you think business wants to take us?
 
 
+17 # ladypyrates 2013-01-07 14:02
Until someone asks the question "What is wealth and how is it created", everyone will be wandering around in the dark complaining and still following those same errant economists who refuse to seek the truth. Debt is not wealth...it is only a tool that global banks use to suck up ALL of the true wealth. The founders knew this...why do we now listen to the lying Pied Pipers who have strayed us from the American system?
 
 
+4 # Mrcead 2013-01-07 18:56
"Borrow and Blame", our new economic model, certainly not something our grandparents did.
 
 
+1 # RLF 2013-01-08 05:53
I thought it was Big Profits from Government Bailouts!
 
 
+1 # TJGeezer 2013-01-09 05:35
Quoting RLF:
I thought it was Big Profits from Government Bailouts!

I thought it was Buy Politicians and Thrive!
 
 
+18 # Mrcead 2013-01-07 14:11
Easy, it is now a "shoot from the hip" type of economy where any risk is outsourced to the public and the profit stays in the pockets of the business minority.

How else could the US fall from prominence in 20 years time? The rule book has been thrown out of the window.

The barbarians have won. Last one out, please switch off the lights.
 
 
+24 # reiverpacific 2013-01-07 14:52
Well, I've said my piece on this a few times on RSN and written enough to the President (wonder if he even got to read it) and my Oregon rep's to not bear repeating again but it links national and regional infrastucure revitalization including inter-city high-speed rail and regional spurs, to inner-city and suburban renew, buying up properties rotting from foreclosure and selling then back to people at competitive but realistic interest rates, using LOCAL and REGIONAL banks and Credit Unions to handle the transactions.
All the loot given to bail out the causers of the problem in the first place would have gone a long way to funding this and let THEM have a taste of "Austerity". No more Corporate Socialism -let it take root where it belongs, at the grassroots.
But the criminals get the Guinea-stamp as always through history -and don't even get me started on the IMF, who love austerity as long as it's not imposed on they and their Wall Street Mafia buddies "Doing God's work"!
Which reminds me; if churches were taxed, or at least the ones that involve themselves in politics and even more especially the Mega ones, that would be a great fund raiser (I know, I know; fat chance!).
 
 
+8 # dick 2013-01-07 15:22
PK, ordinarily spot on, does not give enough attention to those who WANTED a pretty severe enabling recession, in the US & elsewhere. Similar to those who WANTED a terror attack, but not the one they got. Look at public employee disempowerment, labor disempowerment in general. ECON 101. MASSIVE corporate profits. DEMANDS for safety net draconian budget cuts. Although corps are sittings on megaBillions, "The US just cannot afford to help Sandy victims" in blue states. Govt small enuf to fit in your womb.
 
 
+19 # Marxian 2013-01-07 15:51
Read the veto of the bank bill by Andrew Jackson on July 10, 1832. Now we have the Federal Reserve system which handed the nation's money system to a group of banksters, which resulted after the greedy, stupid Congress reversed the intent and warnings of Jackson. He was correct when he called the banksters a den of vipers… The top 1% must be a collection of sociopaths and psychopaths.
 
 
+1 # Mannstein 2013-01-07 18:15
"The top 1% must be a collection of sociopaths and psychopaths."

Come to think of it weren't Lenin, Trotsky, Stalin and their willing executioners a gang of "sociopaths and psychopaths" also as you so nicely put it?

Nothing personal. Just the intuitively obvious musings of a casual observer.
 
 
+4 # dkonstruction 2013-01-08 06:53
Quoting Mannstein:
"The top 1% must be a collection of sociopaths and psychopaths."

Come to think of it weren't Lenin, Trotsky, Stalin and their willing executioners a gang of "sociopaths and psychopaths" also as you so nicely put it?

Nothing personal. Just the intuitively obvious musings of a casual observer.


In his early writings (see What Is To Be Done) Lenin explicitly calls for "bourgeois democracy" i.e., multiple political parties, open elections, etc as a necessary step to socialism. After the revolution he then calls for All Power To The Soviets (i.e., participatory democracy)....W hen the newly created Soviet Union is invaded (including by the US) Lenin (unfortunately) abandons his early democratic impulse but then comes back to it at the end of his life where he again calls for a multi-party open election political system. After Lenin's death (and even before) Trotsky loses most of what power he had (and is then killed on Stalin's orders) but was the only one (other than Gramsci in Italy) who is warning about the dangers of Fascism. I would agree though that Stalin was evil and destroyed whatever promise there was in the Soviet socialist revolution.
 
 
+13 # genierae 2013-01-07 16:48
We are witnessing the end of the old ways and they are not going quietly. Screaming and kicking, these corrupt plutocrats hold on for dear life to a past that has outlived its usefulness, and they absolutely refuse to recognize the new age that has now arrived. Their days in the sun are over and unless they make a real effort to change, and learn to think in a new way, they will be left behind in the dust. Selfishness is the way of the past, the future belongs to those who know how to share.
 
 
-8 # Martintfre 2013-01-07 20:04
//my spending is your income; your spending is my income. If everyone tries to slash spending at the same time, incomes will fall — and unemployment will soar. //

This is based upon the premise that the money supply is static - conveniently ignoring the theft and redistribution of real wealth from those who earned it to those who are busy printing it.


The fact that we are an additional 6 trillion in debt over the last 4 years and the economy is still tanked is proof that stimulus heralded by the politicians sycophants only works for politicians who are purchasing re-election at the cost of the economy in general.

If government stimulus actually worked for anything other then politicians welfare then the economy would be red hot, the government would have no debt and it be operating off of a surplus accumulate over the years.
 
 
+8 # dkonstruction 2013-01-08 06:55
Quoting Martintfre:
//my spending is your income; your spending is my income. If everyone tries to slash spending at the same time, incomes will fall — and unemployment will soar. //

This is based upon the premise that the money supply is static - conveniently ignoring the theft and redistribution of real wealth from those who earned it to those who are busy printing it.


The fact that we are an additional 6 trillion in debt over the last 4 years and the economy is still tanked is proof that stimulus heralded by the politicians sycophants only works for politicians who are purchasing re-election at the cost of the economy in general.

If government stimulus actually worked for anything other then politicians welfare then the economy would be red hot, the government would have no debt and it be operating off of a surplus accumulate over the years.


No, the only thing it proves is both that the stimulus wasn't large enough and more importantly that you don't provide real stimulus by giving trillions to the very same banksters who caused the crisis in the first place. Had all of these trillions been spent on a national jobs program to rebuild our crumbling infrastructure and providing energy efficiency retrofits to every public building (to start) in the country we would be in a very different situation today.
 
 
+1 # Activista 2013-01-07 20:06
Tired of reading NYT and Krugmans. 90% of USA problems is military oligarchy - wars in the Middle East - this is the hole the money goes.
Greek and Spain have SOCIAL/Health net - they do not have to live in pain and pull their own teeth like in the USA.
 
 
+4 # RLF 2013-01-08 05:57
If we quit making weapons then we wouldn't be making anything...isn' t that pathetic!
 
 
+2 # TJGeezer 2013-01-09 05:43
Quoting RLF:
If we quit making weapons then we wouldn't be making anything...isn't that pathetic!

No, we'd probably still be making hamburgers. Didn't that get redefined as a production job rather than a service job? And some folk are getting pretty good at making "Will Work for Food" signs.
 
 
0 # robcarter.vn 2013-01-08 00:05
Jmac9 has it really Capital -v- Labor, Put people before profit works. Austerity didn't work in greece one said Drugs are good for people another said. Christ uis it any wonder RSN lefties are failing.

Keynesians know Stimulus works as does Austerity, it's who you give it to and how they use it matters.

Australian Regional Employment Development REDS Scheme worked. Local Government, State Government even NGO's could submit a good labor intensive plan like labor intensive overdue past decaying Infrastructure for unemployed laber taken off the UEB and do it rather than high subcontract to Corp Mechganised profit boosting and high material content stimulus (Not give Banks to give 1% hoarders as profit) that's stimulus and austerity they save the welfare and fix overdue maintenance and infrastructure at the people labor klevel. Same time austererity for USA just stop bullying with wars you won't win trying to dictate all Muslims become Jews and the like poure pissn in the wind.
 
 
+4 # Marxian 2013-01-08 07:12
Mannstein:
So what have Lenin, Trotsky, & Stalin got to do with the U.S. money supply being controlled by a private, exclusive gang of corrupt, sociopathic banksters have who have a monopoly on the nation's money supply and manipulate the economic system? I have a problem understanding the responses posted by some people who can't see the forest for the trees and create diversions to obscure the real issues commented upon. BTW- you left out Hitler, etc., and remember that Mussolini defined fascism as the merger of corporations and the government. Sounds like the U.S.A. to me. The perfect system for capitalism...
 
 
+1 # TheCoyote 2013-01-10 10:00
Right on, Marxian. Impoverish the middle class so they have nothing to fall back on, have unemployment so desperate people will work for any wage, create a class of indentured servants by saddling our graduates with crushing debt, take control of the money supply...... what's so hard to understand about that. It's still us against them, as it has been from the start of this little "democratic" experiment of ours.
 

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