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Krugman writes: "It's hard to believe, but almost six years have passed since the fall of Lehman Brothers ushered in the worst economic crisis since the 1930s."

Paul Krugman. (photo: NYT)
Paul Krugman. (photo: NYT)


The Forever Slump

By Paul Krugman, The New York Times

15 August 14

 

t’s hard to believe, but almost six years have passed since the fall of Lehman Brothers ushered in the worst economic crisis since the 1930s. Many people, myself included, would like to move on to other subjects. But we can’t, because the crisis is by no means over. Recovery is far from complete, and the wrong policies could still turn economic weakness into a more or less permanent depression.

In fact, that’s what seems to be happening in Europe as we speak. And the rest of us should learn from Europe’s experience.

Before I get to the latest bad news, let’s talk about the great policy argument that has raged for more than five years. It’s easy to get bogged down in the details, but basically it has been a debate between the too-muchers and the not-enoughers.

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+3 # RicKelis 2014-08-15 17:30
FYI- abstract of the Krugman article "The Forever Slump: Too-Muchers Versus Not-Enoughers" Center Cut:
Paul Krugman: "None of the predictions and warnings of the too-muchers have come to pass — [no] Greek-type crisis of soaring borrowing costs. Even within Europe the debt crisis faded away once the European Central Bank began doing its job as lender of last resort. Meanwhile, inflation has stayed low.
[And] the not-enoughers concerns about actual deflation haven’t yet come to pass, provoking a fair bit of rethinking about the inflation process, but not-enoughers continue to worry about the risks of a Japan-type quasi-permanent slump.
[Concerning] Europe’s woes, the too-muchers have had much influence in Europe, while the not-enoughers have had [none]. European officials embraced fiscal austerity even in depressed economies (although America has done austerity, too, thanks to the sequester and cuts at the state and local level). And the E.C.B. actually raised interest rates back in 2011 to head off the imaginary risk of inflation.
The E.C.B. reversed course when Europe slid back into recession, and under Mario Draghi’s leadership, it did a lot to alleviate the European debt crisis — but not enough. The European economy did start growing again last year, but [only] enough to make a small dent in the unemployment rate."
 
 
+13 # ritawalpoleague 2014-08-16 05:06
Doesn't take a brilliant economist (God knows, I'm not one) to figure out that our 2008 'crash' (or, as I call it, economic bash of the 99%) was contrived plus.

The bash was supposed to be even worse, including a two week 'bank shutdown'. And, (as folks in the EU, including most certainly family and friends in Ireland and the UK laughed at how naïve we Yanks are), the 1%ers have flourished, with knowledge of the 'bash' that was coming, and still with their ability to sell short.

My point: while we the sheeple have suffered plus, the evil villainaires are doing better than ever. Keeping us/U.S and folks across the globe who are connected to our "greed and need for power over all" corrupt plus system in an economic slump, merely assists the villainaires to keep and maintain total control over us all.

Reality: More and more folks in the U.S. will find themselves having to enlist. Marvelous that is, for the villainaires, most certainly including the 1%er MITC (military, industrial, terrorism complex) villainaires. Endless war, war, war for $$$ and oil, oil, oil is exactly their goal is. And, mass deficits incurred, as happened in the purposefully allowed to happen, 9/11 "what we need is another Pearl Harbor" push us/U.S. into war prod. With an endless economic slump, they get survival enlistments, as was the case with Kimberly Rivera (pull her up on KRDO and KOAA and search for press conference).
 
 
+1 # RicKelis 2014-08-15 17:30
FYI- abstract of the Krugman "The Forever Slump: Too-Muchers Versus Not-Enoughers" article, Pt.1:
Paul Krugman: "Almost six years have passed since the fall of Lehman Brothers ushered in the worst economic crisis since the 1930s. Many people would like to move on to other subjects — but we can’t, because the crisis [isn't] over. Recovery[isn't] complete, and the wrong policies could still turn economic weakness into a permanent depression.
That’s what seems to be happening in Europe —and the rest of us should learn from Europe’s experience.
The great policy argument that has raged for more than five years basically has been a debate between the too-muchers and the not-enoughers.
The too-muchers have warned that the things governments and central banks are doing to limit the slump are setting [up] something even worse; deficit spending could provoke a Greek-style crisis any day now. Asset purchases by the Fed would “risk currency debasement and inflation,” declared Republican economists, investors, and pundits in a 2010 open letter to Ben Bernanke.
The not-enoughers have argued that the danger is Japanification rather than Hellenization— that inadequate fiscal stimulus and a premature turn to austerity could lead to more of economic depression, that the Fed should be doing more to boost the economy, that deflation, not inflation, was the great risk facing the Western world."
 
 
+2 # RicKelis 2014-08-15 17:32
FYI- abstract of the Krugman "The Forever Slump: Too-Muchers Versus Not-Enoughers" article, Pt.2:
"And now growth has stalled, while inflation has fallen far below the E.C.B.’s target of 2%, and prices are falling in debtor nations. Mr. Draghi & Co. need to try to turn things around, but given the political and institutional constraints they face, Europe will arguably be lucky if all it experiences is one lost decade.
Things don’t look that dire in America, where job creation seems to have picked up and the threat of deflation has receded, at least for now. But all it would take is a few bad shocks and/or policy missteps to send us down the same path.
Janet Yellen, the Fed chairwoman, understands the danger [and] would rather take the chance of a temporary rise in the inflation rate than risk hitting the brakes too soon, the way the E.C.B. did in 2011. [But] she and her colleagues are under a lot of pressure from the too-muchers, who have learned nothing from being wrong year after year, and are still agitating for higher rates.
There’s an old joke about the man who decides to cheer up, because things could be worse — and sure enough, things get worse. That’s more or less what happened to Europe, and we shouldn’t let it happen here."
 
 
+8 # keenon the truth 2014-08-15 19:55
Thank you again.
 
 
+9 # Activista 2014-08-15 22:04
Of course the government isn't worried about inflation. It has changed how it calculates inflation more than 20 times since 1978.
Each and every change drove down the official inflation rate, masking what was really happening as prices rose and your wealth eroded.
The official rate is under 2%, but switch back to the way inflation was calculated in 1980 and we've really seen 7% to 8% inflation in recent years.
Officials at the Federal Reserve have openly stated they want more inflation. How much more will Americans have to suffer through?
With $4 trillion and counting on its balance sheet, interest rates at virtually 0%, and widespread economic manipulation, the Fed has no way to limit inflation when it inevitably rises.
We could see real inflation rates that easily exceed the 10.27% annualized return of the S&P 500 we've seen over the last 25 years.
subscribe.outsiderclub.com/55610?gclid=CJ7A5L7wlsACFQgFaQodCHMAXQ
Mr. Krugman is not on fixed income .. what was $40 grocery bill few years ago is now $100 ... my Medicare Advantage doubled last year ... car insurance and house insurance (required) area 2x more. Price of gasoline over $4/gallon. THIS IS NOT 2% inflation.
Maybe the cost of bombers and missiles (overpriced) did not rise much .. but for 90% of Americans cost of living is raising more than 2%.
 
 
+9 # kyzipster 2014-08-16 10:08
Thanks for posting this. I remember as a kid in the Carter years how inflation was front and center in the news, it had a lot to do with Reagan getting elected, the rest is history.

You'd have to be oblivious to not be aware of inflation today, groceries and energy as you mention as wages haven't gone up in any real way in well over a decade. Hardly anyone is talking about it, no one seems concerned, amazing how much power the media has over the collective conscience.
 
 
+17 # Nominae 2014-08-16 01:58
From the article: "the too-muchers .... seem to have learned nothing from being wrong year after year, and are still agitating for higher rates."

The too muchers are delighted to be wrong so long as no one kills the cash cow. This is also *why* they are demanding higher rates.

For six years to date, all of *our* checking and savings accts - the 99% - which used to pay between 4 and even 6 percent interest have been receiving between 0% and just under 2% interest.

Remember when that was a "temporary emergency measure" that had to be taken until the "too big to fail banks" were back on their feet again ?

The big banks are all now, and for years have been, recording record profits since the 2008 crash.

Can you imagine the pure amount of money that accumulates if one were able to add up all of the interest that is *NOT* being paid on mom & pop bank accounts anymore ?

Just like the "Forever Slump", this practice of paying little to no interest upon small checking and savings accts. is guaranteed to be among the now *countless* legions of scams which are part of the "Forever Rip-off".
 
 
+1 # moafu@yahoo.com 2014-08-16 07:22
"The responsibility of a patriot is to protect his country from its government"
Thomas Paine
 
 
+3 # Nominae 2014-08-16 17:32
Quoting moafu@yahoo.com:
"The responsibility of a patriot is to protect his country from its government"
Thomas Paine


"The United States has no distinctly criminal class ... except Congress."

~ Mark Twain
 
 
+15 # fredboy 2014-08-16 09:07
As long as our economy is guided by the "invisible hand" of the "free markets" as extolled by the Ann Rand imps Milton Friedman and Ronald Reagan, it is doomed.

It's blending with the intent of the carbon spewing industries has also doomed our planet and the future of our grandchildren.

Time for good people to rise up and turn this all around.
 
 
+4 # dbrize 2014-08-16 10:10
Quoting fredboy:
As long as our economy is guided by the "invisible hand" of the "free markets" as extolled by the Ann Rand imps Milton Friedman and Ronald Reagan, it is doomed.

It's blending with the intent of the carbon spewing industries has also doomed our planet and the future of our grandchildren.

Time for good people to rise up and turn this all around.


The "invisible hand"? Surely you jest.

Our economy is awash in thousands of pages of regulations mandated by government. You may find them agreeable, even desire more, but this does not endorse your proposition that we are guided by "free markets".

Our economy is dominated by a government/corp orate consortium run by policies known euphemistically as "Too Big to Fail", government/busi ness cooperative "sponsorships" along with a central banking system that artificially controls interest rates.

Our politicians, through an elaborate system of lobbyist "profit-sharing ", keep this system afloat so that they and their corporate sponsors get rich while Main Street pays the bills. That is to the extent that any of the bills get paid, or ever will.

If anything, our current system resembles national socialism as practiced under Mussolini with vestiges of mercantilism.

You may be for or against "free markets" (another euphemism incidentally) but to blame them for our problems is far from accurate.
 
 
+3 # Nominae 2014-08-16 17:55
Quoting dbrize:
Quoting fredboy:
As long as our economy is guided by the "invisible hand" of the "free markets" as extolled by the Ann Rand imps Milton Friedman and Ronald Reagan, it is doomed....


The "invisible hand"? Surely you jest....

You may be for or against "free markets" (another euphemism incidentally) but to blame them for our problems is far from accurate.


Excellent analysis, but fredboy is not in disagreement with you in the first place.

Placing, as fredboy does, both "invisible hand" and "free market" in quotation marks is a convention of English which alerts the reader to the fact that the author, (fredboy) is alluding to the *so called* invisible hand, or *so called* free market.

It is an indicator that such definition is *not* that of the author, but is espoused by others.

The quotes actually shout *attention, euphemism coming* while economizing space.

Your economic points are unassailable. The usage and purpose of quotation marks, however, may benefit from a refresher.

Quotation marks, btw, are not used as a substitute for emphasis.

fredboy has used them accurately.
 
 
+11 # wantrealdemocracy 2014-08-16 10:14
"The good news is that things don't look that dire dire where job creation seems finally to have perked up." Yeah, you maybe can get a minimum wage job with no benefits and still be below the poverty line. That ain't no Good News! We are screwed and we know it. This 'nice' talk is meaningless when your kids are hungry.
 
 
+5 # fredboy 2014-08-16 16:47
The 'free market' is BS and you know it.

You are correct in one sense, dbrize: our govt. agencies are owned and controlled by those they claim to regulate.

Whores all. All we need is red lights in the windows.
 
 
0 # barbaratodish 2014-08-18 17:35
Maybe the "FREE MARKET" is an oxymoron just like "free will"?
 

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