On GPS this week, we explore the most important topic (the economy) with the most important economic voices. Fareed Zakaria talks to Nobel Prize winner Paul Krugman and Former IMF Chief Economist Ken Rogoff.
The show also turns a myth on its head. China’s not doing the U.S. a favor by buying its Treasury Bonds - the pleasure is very much China’s. We’ll explain.
All that, plus a fascinating look at America’s fractured relationship with Pakistan with the journalist Ahmed Rashid, and a smart, macro look at the London riots with two top British thinkers.
But first, why does Paul Krugman say space aliens could fix the U.S. economy? Here's an edited excerpt of what he and Ken Rogoff had to say:
Ken Rogoff: Infrastructure spending, if it were well-spent, that's great. I'm all for that. I'd borrow for that, assuming we're not paying Boston Big Dig kind of prices for the infrastructure.
Fareed Zakaria: But even if you were, wouldn't John Maynard Keynes say that if you could employ people to dig a ditch and then fill it up again, that's fine, they're being productively employed, they'll pay taxes, so maybe Boston's Big Dig was just fine after all.
Paul Krugman: Think about World War II, right? That was actually negative social product spending, and yet it brought us out.
I mean, probably because you want to put these things together, if we say, "Look, we could use some inflation." Ken and I are both saying that, which is, of course, anathema to a lot of people in Washington but is, in fact, what basic logic says.
It's very hard to get inflation in a depressed economy. But if you had a program of government spending plus an expansionary policy by the Fed, you could get that. So, if you think about using all of these things together, you could accomplish a great deal.
If we discovered that space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better –
Ken Rogoff: And we need Orson Welles, is what you're saying.
Paul Krugman: No, there was a Twilight Zone episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time...we need it in order to get some fiscal stimulus.
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Finally! Paul Krugman makes it onto GPS! Somebody worth listening to! I think you should look at the chart in this link and discuss why Obama looks as if he is going to lose to a generic Republican candidate (http://www.realclearpolitics.com/epolls/2012/president/us/general_election_president_obama_vs_republican_candidate-1745.html). Remember what Arianna Huffington said on your program, Obama's strategy is dissatisfying independents as well as liberals. That means Obama is losing support among those independents and centrists you love so much.
I was entertained by this article, but I agree with a lot of other people that it's just more theory and ideas, with nothing definite we can line up. Of course, even if the economists came up with some wonderful spot-on plan the politicians would mangle it into something unrecognizable before they voted it in. (See Obama's health care plan, it ended up so mutated it might as well have three arms and five feet.)
The problem we have is Obama isn't going to be running against a generic Republican, he's going to be running against one of these far right-wing Republicans.
I don't know where these guys came from (maybe the Kuiper belt?). I'm registered Republican, but I'm no longer sure why. The current GOP is unrecognizable to me. Obama is pretty far left for my tastes, but he hasn't launched into the stratosphere like a lot of Republicans have.
I doubt I'd ever be a "real Democrat" but I guess now I'm not a "real Republican" ... well, okay, I guess I'm not a Tea Party Republican. I see a gaggle of demagogues with no experience running around saying how they're going to "clean up Washington" while breaking everything they touch.
*sigh* Vote the Lesser of Two Evils, whoever that is, 2012.
Welcome to the "Independent" group.
Kim, I am with you. All of my Democrat friends here in Los Angeles are also inclined to leave the Democratic Party, but where would that leave our centrists? The Tea Baggers are truly a frightening lot.
I don't want to leave the Democratic party, I just want to be able to vote for a moderate Democrat next election who will get thing done. Hopefully such a candidate will beat out Obama for the nomination. If it were a choice between a teabagger or Obama, I guess I'd vote for Obama but I'd hate to have to make that choice.
Was the Iraq WMDs Bush's attempts at exactly the same thing? Aliens may be too preposterous, WMDs.. may be not? Sadly, we didnt see that bring us out of the slump. Or am I missing some other point that will make this alien hypothesis work?
The reason why the Iraq buildup didn't have a stimulating effect is because it used resources which were already in place. For WWII, we used our entire economy and our entire population in the act of waging war. Though Iraq has cost the government a lot, our economy already had a large enough war machine to support it. If aliens were attacking us, first of all, I think that we would have no chance, but you'd see huge amounts of money flowing to new research and I think no one would be complaining.
That's half true. Pretty much all of the aircraft (aside from the newer UAVs and maybe some V-22s) were already in the inventory, same goes for the seldom used tanks (great when the enemy has tanks, big hunks of steel taking up space when they don't and you're fighting in mountain caves and in streets) and the warships. However, plenty of smaller transport vehicles had to be produced (as Hummers, unsurprisingly, proved unsuited for a combat environment) and perhaps most importantly, we've had to step up missile production as the stockpile is burned through surprisingly quick. There's a lot of money in missiles, check out Raytheon's recently awarded contracts.
A lot of spending went to the IC, particularly DoD with respect to ISR as was mentioned. As far as tanks are concerned, the M1A1 behaved surprisingly well in the counterinsurgency role and saved many lives including Iraqi lives. Unfortunately, you will have to wait another ten years for the story to be told in detail. It seems in every war since WWI, armies have to relearn the benefits of armored vehicles of all types. Iraq was no different. Not a criticism, just an observation.
I love Krugman but he's dead wrong. It was the Outer Limits, not the Twilight Zone in which scientists fake an alien invasion to achieve world peace. The episode was called "Architects of Fear" and aired in 1963. But on economic matters, dude is still a flippin' genius.
u r right i have all five seasons of the twilight zone very awsm every year they go up in value
Same time as "The Report From Iron Mountain."
So we should continue to listen to those that advocate for one world currency, and government no matter what the cost?
Dude, no offense, but if you think Paul is a flipping genius, then you are not very bright.
Yes Professor Krugman is all we have against the forces of downright evil. No need for aliens.
Sad to say, Krugman's alien theories make more sense than his Keynesian economic theories ever will.
Clearly you are much more qualified than Paul Krugman to discuss the needed actions to correct our depressed economy; and you should have been on the show to debate Krugman so you could have told him his "... aliens theory make more sense than his Keynesian economic theories ever will". You should really try to get in contact with Krugman to let him know he has been wasting his time.
Comments such as yours are simply pathetic and you should be embarrassed by them. If you actually have something insightful to say, then by all means say it, but provide some justification for your comment. Educate yourself on the issues at hand before you open your mouth (or type on your keyboard); you and everyone else will be better off for it. I am directing this comment not just at you, but every other baseless comment.
Whose comment is more pathetic?
You are right; Paul Krugman is indeed a waste of time.
Doesnt take a degree to hold common sense. To quote one of Krugman's fellow Nobel Prize winners Al Gore "the interior of the earth is extremely hot, several million degrees" Hah, of course Al kind of is supporting his Alien idea, invest into a made up cause... so how is shutting down domestic oil and continuing importing foreign fuel where production isnt regulated good for the environment or jobs.... well who knows but at least all of Al's friends invested in bs gov subsidized "green" energy are doing great! You idiots are pathetic, assuming these tards know so much more than you, it's not that complicated.
Ok then, some backup to why Krugman is clueless. He thinks we can completely spend our way out of this hole. The man would run us past the 20 Trillion mark if he could. We are at point of no return NOW. Do the math, we cannot pay off the debt with current govt revenues, straight and simple. WE ARE DONE FOR. He contributed.
Amen brother.
I think the alien theory doesn't make any sense at all! The economy is about producing something that benefits the society. Producing defenses against fake alien doesn't help anyone, it just a waste to our planet's scare resources.
Um, the United States is not set up to be a welfare state, nor is it suited to interfere with our day to day lives. The people should help the people, there is enough food and resources to feed and sustain our people, but it is not the governments job to do it. We are a caring people, so lets embrace capitalism, less government and take care of each other, that's what Americans do. Have some pride America, WE ARE THE BEST! BE GREATEFUL!
@Cam.. nuts...
We need Aliens!!!
CUTE....but its a bit late...were already here...prove we arent.
..and not all of us INVADE.
Only the Aliens can save us now!! http://www.insuranceadjustertraining.net
the way they make it sound in ALL of our different media sorces that there WILL be an alien invasion. Im not a conspiracy theorist but all of the comments on alot of these sites and what I've heard alot of people say is that it will be staged to kill off the population. I hope that's not the case but sometimes I wouldnt doubt it. The mainstream media is obviously trying to tell us something with all of the celebrites doing the pyramid symbol and all knowing eye.
CNN/fareed zakaria, Today listening to analyst about why London burned? doesn't anyone think that the police killing 0ver 430 people in "Police custody" in the last 12 years, an equivalent off 1 murder a every month for 12 years! with no answers from inquires in all this time? none dismissed , none charged for the killings? just promotions!? have nothing to do with it? after a while everyone in every city can quote someone they know or heard off killed by police who act like there above the law! as they will never be brought to justice for their crimes instead patted on the back? I don't condone the looting but this is just a symptom off riots not the cause! they need to find fix the cause i.e like murdering policemen whom constantly lie to cover their backs after a killing if they speak at all! An investigation seem to be the government and heads off police buzz words to make the inquiry go away! as 12 years on and not one sufficient answer or arrest off any policemen for these murders or executions! just a few name
http://unityequalitypeace.wordpress.com/kingsley-burrell-brown-his-story/
" how quickly they have come back with response to the Mark Dugan case, do we have answer's for the Kingsley Burrell, Smiley Culture, Demetri Frazer RICKY BISHOP – Murdered in Brixton Police Station in 2001 ,these are just the black men that have died this year in police custody that we know off....out off the 430+ that has been killed in police custody in 12 years!
epi youshould have exxplained your poswition fully people are frightened to talk at length they dont feel that they are the ghandi around they dont explain hard aenough so i understand your not explaining it but you did wha tyou accused "not you" other of doing.
You call a discussion between and Marxist (Krugman) and a Socialist, (Rogoff) a debate? Since all of Krugman's Keynesidan solutions have failed totally and miserably, he has no credibility. He is a colossal fool, only given serious consideration by leftie lunatics who destroy economies and cultures, never fix them.
"You call a discussion between and Marxist (Krugman) and a Socialist, (Rogoff) a debate?"
Looks like you have no idea what either of those words mean. Please Google around and learn the actual definitions.
either redistribute the wealth or become a failed state.
Fareek: The #1 problem is not the economy, as politicians, the media, and much of the public are habituated to think. Rather, it is the collapse of a global civilization, the same phenomenon that caused the collapse of all known prior civilizations, via what anthropologists term civilizational hubris, i.e. our ignorance of laws of nature that supercede human power. You and your guests are brilliant, but somehow constrained to thinking within boxes of politics and economic laws of the past. You think in terms of politics, your guest Krugman in terms of economics of the past, your guest Rogoff more creatively in terms of trying to define the here and now financial crisis that will not be addressed by methods from the past. The natural law that is destroying us is Malthusian, there are simply too many of us, and our systems are really controlled by the wealthy, so wealth is rapidly being redistributed, enslaving more and more poor people in a global oligarchy... I, and many others, have answers to a more realistically defined #1 problem, e.g. google "sociocracy" and "holocracy", as our democracy is obsolete and needs revolutionary amendment. We can no longer divide ourselves into majorities, minorities, and pluralities because that only accelerates the pace of the collapse of civilization.
Sincerely yours,
Mark
for example, global warming will get us before deficits will. that is the malthusian part. the chinese rivers run red or green with whatever chemical produced. the sea is rapidly dying. 1.5 billion students have no job prospect. automation in the hands of the rich is making workers by the billions obsolete. the consolidation of wealth is increasing.
1.5 BILLION? Wow. That's impressive, since that far outnumbers the students graduating within the next few years.
graduating from where? You assume college? How about all schools......
Or more simply, growth cannot be perpetual, natural resources are running out, and soon enough, we will be in full-time catastrophic mode, WORLDWIDE!
Hooray for Krugman! He should be on CNN more often. Far more intelligent than most of your usual commentators.
First, Ken Rogoff is no Socialist, even if Paul Krugman has indeed seemed to be leaning much more that way since becoming a 'media scholar'. What they are each proposing is the Keynesian principle of increasing the circulation (or velocity) of economic goods by exogenously inducing an increase in aggregate demand. You might think of a hypothetical hydraulic pump whose volute is made of rubber. If you could somehow stretch the volute to twice its size, then the hydraulic throughput would indeed increase.
The theoretical problem of course faces the practical reality that the volute must eventually return to its natural size, at which point its excess reservoir of water is expelled. The economic analogue will be either a) wealthholder losses to inflation or b) wealthholder losses to taxation.
Keynesianism only works to the extent you are prepared to dismiss these very real losses in favor of nominal growth. A more honest way to frame a Keynsian action would explicitly provide how wealthholders are held harmless. That is a rather taller order than what Krugman is offering.
Suppose capital is guaranteed the full product of the expansion? Why, well, because labor is in excess – some 18% of it has no marginal value under the current environment. Well, then returns to labor are (intertemporally) zero, even if it receives a wage in the short run. So, you are looking at a guaranteed giveback by wageearners in the future.
That ensures a contraction at that time. The private sector, anticipating that contraction, should pull in its horns in advance, providing a counterstimulus in the present, opposing public sector stimuli.
So, you see, there is no free lunch. Only expropriation.
I believe that this economy will not, in fact, be susceptible of Keynseian stimulus. Rather, we shall have to endure the much longer process of very gradually rebuilding consumers' animal spirits within the context of the private sector, which will take a rather longer time.
Over the last four decades the world's economic growth has seen the U.S. proportion of the world's creation of wealth go from 40% to 20%. This is understandable because by the early 1970's the U.S. had achieved maximum development just as it's industrial production lost the ability to compete for the global market with the dominance that it had had for decades. Ironically, our economic models have treated phenomenon like these to be exogenous to the models to which economic models decribe - which is the distribution of goods and services in markets. We really need to understand that these theories from the Keynes and Hyack don't help us to determine how to make wealth to infuse into this system, nor the optimal ways of producing goods and services over the long run, because all these important processes are exogenous factors to the models being considered.
If we look at the behaviors of businesses' managers we don't see the kind of enlightened self-interest that is presumed by equilibrium models. The often get caught up in irrational behaviors that have bad results that only minds free from involvement in the markets could possibly control rationally.
The answer is “by making movies"
Krugman is proof positive that you can be an academic intellectual and know nothing about the real world.
And are you both, neither, or just in the real world with no intellect?
He is right, and your name is obviously not just an attempt to be cool.
The scary thing is, I think he might know, but he is so driven by a liberal agenda, he completely closes off to the idea that his method might not work. And this is from a hard left-winger.
This was a very informative discussion but I saw a dominant perspective which I think must be altered. Economics is the only social science with a unified theory that tends to allow discussions over policies that focus upon changing this or that factor, like we must increase demand, focus upon supplies, managing debt, etc. It rests upon a presumption that the economy can be described based upon equilibriums in the economy which permits models that can be examined with mathematical descriptions. The presumption is that we can describe economic phenomena as being linear in nature.
In reality, economics is not linear. It is complex, it includes related processes as well as interrelated processe and unrelated processes at any particular time. It includes processes that resemble change of state processes (where any possible state can be operating in parallel with many others). The global economy affects local economies and vice versa, too.
The disagreements between economists reflects the complexity, with economists tending to pick and choose what measures that they see to be more crucial to forecasting. Their convictions about the accuracy of their forecasts reflects their presumptions of linearity and simplicity in the models that they have concluded are representative of the economy.
Excellent debate. Paul Krugman pointed out his concern over individual debt. We have a much larger problem than individual debt or Government Debt or deficit. Most American Corporations operate bleeding red. Although companies like Google, Netflix, Priceline, Apple, and Humana have significantly more cash than debt, most American Companies are in debt up to their eyeballs. IBM, Exxon, Proctor and Gamble, Sears Holding, Hewlett Packard, Aetna and Dominos Pizza are just a few examples. You will hear that American companies are sitting on $2 trillion in cash, but if you add up all American companies on all three of our stock exchanges, and total their cash and their long term debt, you will see that our companies are in much worse shape than our citizens. One might point out their excellent revenue, but if our economy goes south, those revenues are going to dry up fast. Right now, we are operating in a self fulfilling prophesy of doom. By cutting spending alone, we cut jobs. Cutting jobs cuts revenue. Cutting revnue requires more spending cuts to balance the budget. We are operating like a family that is under water and continues to get more credit cards and more loans as long as they are able, and goes on a spending spree to incur more debt until someone shuts them down. It isn't a question of if, but of when, and it will be a very hard landing.
Exxon "up to their eyeballs in debt"?? Hardly!! Take a look at their June 30, 2011 balance sheet. 72.3 billion in current assets vs 74.5 billion in current liabilities. 326.2 billion in total assets vs 170.6 in total liabilities which allows both Moodys and Standard & Poors to assign them a triple A debt rating. Much more difficult to achieve than for the US Government in that Exxon can't print money to pay off debt like our government can. So much for your argument!!
Great Putin clip. What a guy! But, at least he can make a decision and stick to it.
I'm disappointed to see a sound bite featured rather than the whole discussion. Why do you think so little of your viewers?
The more I think about the way GPS handled the Krugman-Rogoff segment the worse it seems. The staffer who is responsible needs to be doing something else.
The Dems are certainly not great, but what bothers me about the entire GOP field is a lack of substantive solutions. We have 16 months till the next election - What legislation exactly, will the GOP champion during that time, that will help the economy? My guess is they will obstruct, filibuster, and block anything that could possibly be construed as helping the economy get better - all because any improvement will help Obama and the Dems keep control. Even though S&P said the Partisan bickering, along with the GOP's anti any Revenue stance, was cited as two of the main reasons for the downgrade. It is good politics just to blame the other party for our debt, when in reality , both parties are culpable. The Tea Party are the Hooverites of the 21'st Century, and offer the same Fiscal Austerity card, Hoover used, which caused Unemployment to soar from 9 to 25% during the Great Depression. It is not Rocket Science - If Govt. is the Countries largest employer, (Which it is) if you cut Trillions from the budget it will result in massive unemployment and reduced Revenue. It will create a whirlpool effect of decreased GDP. That is the fact. Its all been tried before during the Depression. The only true solution to our debacle is Lower Corporate taxes to 15% in line with the world's lowest, Repatriate offshored money without penalty, and Revise the tax code through a VAT, a Flat Tax, or National Sales Tax, with appropriate exemptions for the poor and elderly.End Income as a source of Revenue and we will end the two party stranglehold on Govt. A National Sales Tax would allow us to tax Imports without breaking Intl. agreements. The Tea Party will inadvertently create The Great Depression through Austerity. This is the Unintended Consequence of Fiscal austerity without fundamental tax Reform – We don't have just a spending problem ( IRS stats prove the Bush Tax cuts substantially lowered the Govt's Revenue from 18.5 to 14.9%) We have both a spending problem and a Revenue problem - To address one without the other is to both lengthen and court disaster.
I left a supporting reply - but nothing seems to have been accepted.
Currently the GOP only control the House of Representatives in DC. Nothing they propose to fix the economy (like repeal of Obamacare) will pass the Democratic controlled Senate or be signed by Obama. The best that can be hoped for is the reduction of spending and investigations into fraud, waste and abuse.
Taxpayers pay for government jobs. The more government jobs there are, the more taxes the taxpayers have to pay to support those jobs. It's a zero sum.
I have a question regarding the economy & markets.
Just why is that bond holders have no risk when they purchase bonds?
I thought that every investment carried some risk of loss, but now it appears that they only investment safer than US Treasuries is sovereign debt.
I am more than a little shocked that these investors have been isolated from risk of loss.
Would someone explain to me why this is so?
If the current investors were to shy away from future purchases, wouldn't there be other to take their place.
Or has the concentration of wealth become so limited that only a few are in a position to buy debt/bonds?
Fareed, Paul and Ken have all missed the most important Keynesian point:
We must understand that a "monetary system of production" produces both NEEDS (which are scarce and must be produced by an economy and distributed to people in need) and it creates the MONEY with which to buy them - and sustain a virtuous effective exchange cycle.
Therefore, there is NEVER too little money on hand to employ all idle production facility owners and managers and workers. There is only TOO LITTLE output of produced needs to motivate the love of MONEY that will fuel continued effort.
If we had the threat like WWII to mobilize the economy, it would not be 18 months, but rather 18 weeks, to end the jobless monkey-wrench in the global economy (wherever unemployment exceeds 3%).
We would see that MONEY (as a shortage) is only one half the money-coin. The other half is the THINGS THAT MONEY CAN BUY.
As to debt it can always bought for cash at a steep discout or long term bonds at par.
MONEY is not tangible like gold coin - it is an accounting system to facilitate PRODUCTION of needs. The history of money over centuries is interesting. But more important is the history of mass production over recent decades which is ready to go into orbit.
The idea that such production is too high for current monetized demand is an idea that Rogin is stuck with but Krugman knows is wrong. Current monetized demand must be made to match current production potentials.
Ancient aliens ran away from EARTH!!! They saw the mayans and failing people.
Paul Krugman is right!! About time you got someone like him on your show. I just wish our leaders would listen to him.
Ken Rogoff really helped me better understand why so many Harvard graduates are "glass half emptyy" thinkers and why they also tend to be so conservative. They must be scared silly by the time they graduate. Before today, I've never heard so many reasons that good ideas "might not" work as I've heard from Ken Rogoff on this show. How will our leaders ever get anything done to help us recover if they listen to the Rogoff's in our country?
Thank you for writing this! Obama was president of the Harvard Law Review. He's no dummy. He knows the problems America is facing and he also has some real limitations in doing what he wants to do in the way that the presidency itself defines what he can and cannot do. I wish people would quit thinking of him as not doing his job due to some 'personal failures' and see him as he is, the leader of our country doing the best he can in the situation he is in. It doesn't help when you have his own party and political pundits and media blaming him for the country's mess. The blame game is just that, a game.
Marilyn, I am just wondering what "personal failures" are you alluding to.
Smoking?
Brian and Gloria are certainly CORRECT.
Rogoff, Fareed and the President are certainly HALF-wrong.
But the picture of Orson Wells and Space Invaders is NOT the best Thought Experiment.
The Thought Experiment should be CHI-MERICA as an IMAGINED SUPER WAL-MART.
In this experimant we do not say KEYNES wanted infinite MONEY. That would spell
hyperinflation.
KEYNES - updated to after the revolutions in Technology in Info, Bio and Nano Tech -
demands near infinite capacity to produce necessities of the highest market-ready quality
Now when we say we will use QE 3, 4, 5, etc., to provide jobs based on liquidity and
rapiid recovery from "overhanging" debt, and will finance such recovery with debt-free
money - we mean finance that recovery with the "things that money can buy".
Now Rogoff cannot introduce historical examples of soft money. We are talking about
hard real wealth that we imagine we will produce.
That is what WW II style fast recovery was all about. Real wealth in that time was
planes, ships, tanks and competent forces. Today it is water, food, houses, schools,
colleges, world-class production facilities and world class output of everything.
Krugman and all true Keynesians know this in their bones. Debt can be reorganized.
Broken human beings who have not "fed" teir families are not the legacy we want
even if we went to Harvard.
Wake up Fareed. Obama is a failure if he does not see the difference between
money and the "things it can buy". We have the potential to produce all we need.
Therefore, if we are up to the job of Preisdent, we know that will allow us to
create greenbacks in sufficient amount to revcover jobs overnight as long as we
will be able to match the money spent with quality output soon and with inflation-
protected savings until shelves are full.
Marilyn and Fareed - you are making lame excuses for a hand-cuffed president
who has chosen Univ. of Chicago negativism ove Univ. of Missouri Kansas City
positivism.
He deserves to be removed from office if he cannot lead this country to take
full advantage of our pre-eminence in innovation and production to finance
fast and full recovery overnight - as though we had the potential, with all
the supply chains now in tact, to grow the global economy to fully meet
its capacity to produce - BECAUSE THAT IS EXACTLY WHAT WE HAVE !
Chicago and Harvard economics is past history. Today's economics is
free of all gold constraints. It is only an accounting system that must
lean more oin cost accounting than profit and loss accoujnting. Cost
accounting came to prominence in WW I. It won WW II. It can win the
current struggle between austerity thought and output based money
thought.
Marilyn and Fareed - your excuses for a lamentable Presidential performance
are all based on Fareed nonsense about th ratio of deficit or debt to production.
Do you not see that such ratio depends on the denominator if you care to take
your foot off the neck of the workers and middle class children who cannot
afford to wait for profit and loss mechanisms never meant to meet this emergency.
We have hear enough from Nial Ferguson, Ken Rogoff and Fareed Zakaria.
They pretend to understand free enterprise and the money it takes to make
it work on behalf of the numan race. They do not. Debtors prisons are
passe. Debt's power to defrat civilization is gone. Debt can be reorganized
to be fair to lenders and borrowers. The laws on reorganization of debt or
bankruptcy are sophisticated enough to be on the side of civilized pundits
and professors.
Artificial Intelligence will soon team with logistical sicience to produce our
way out of false crises like this Rogoff super contraction. Meanwhile, enough
of this anachronistic fear of debt. Debt, like stocks and shares of business, is
a convenience not a death sentence. Wake up Fareed. You are too smart for
your current excuse-making. Jon Huntsman ought to be tapped today to
come back to the administration as a roving ambassador - as Wilkie was for
Roosevelt in 1944. Then, a team of Keynesian QE 3,4,5,etc., experts ought to
be assembled to end this mess tomorrow.
Forgive typos in messages above. I'm a care giver at home with little time to
correct YOUR policy mistakes.
maybe the aliens can abduct krugman and save the US economy from these wacked out lefty academics.
What is poor thinking is the Hoover idea that we cannot mobilize an economy and produce what we need. If we did in peace what we do in war, work would produce the things we need. The the money we spent would be backed by production not debt. Debt could be repaid over a longer period of time at interest that made payment possible. Calling people names is wrong. Thinking by "thought expefiment" can be very effective.
I miss when GPS was about global politics/events.
Well, the government then needs to tell people that we are going to be attacked by Aliens so that the economy gets a quick fix. Sounds more like a Hollywood movie.
i wonder if they have ever been to sputnik fest? it landed in the middle of the street in some town in wisconsin and they have a sputnik fest...it has a cake decorating contest. fun.
is fareed zakaria from some other country? seems like we are getting more foreign people that don't really reflect the us very well. sometimes its comical, but they are so serious...so we can't laugh or anything.
is fareed zakaria from some other country? seems like we are getting more foreign people that don't really reflect the us very well. sometimes its comical, but they are so serious...so we can't laugh or anything.
I cannot believe this comment! It reflects the ignorance of some individuals and their lack of sophistication.
Solrry Fareed,, I feel ashamed with these comments. I believe you are one of the few comentators that is not biased and certaiknly know this country and the history that I am sure that individual ignores
Rogoff"s whole argument rests on the history of MONETIZED DEMAND. It is true that, that history suggests he and Fareed have a point when they consider debt, and what a free economyc can accomplish when ruled by profit and loss accounting for sustainable profits and capital.
But when we look at mass produced MASS PRODUCED SUPPLY, the history of demand must be ignored. We have not yeat accommodated excess production to modern economic problems. Never before in pertinent history has Asia been capable of becoming the workshop of the world for almost every necessary THING.
This means that Asia, Europe and the Americas are capable NOW of outproducign scarcity almost over night. On the way to that goal, there is no excuse of failure to monetize monetize sufficient demand to achieve full employment everyhwhere on earth.
This in turn means the end of poverty is in sight. But we must ignore th hisotry of super-contractions of demand. In such past exsperience, it may have been that grandiose spending of debt-based or gold-based spending was doomed to fail - as debt exceeded by far the ability of nations to mass produce supply to back naked fiat money.
Now, however, we have the means to make good as much greenback spending as may be called for, for both full green employment and ending poverty, pollution and resort to trade and real war.
Rogoff and Zakaria make a case of concern over debt ratios to future expected sales. But that was before future sales, based on future potential porduction, were relativelyh far below need. Need, we must remember (or realize) is now a minimum useful income ( based on technology and automation) is far more than the current median income. Such income is useful to individuals for a decent life style. It is even more useful to nations, to ensure prosperity and defense of the the four freedoms.
We must reject all conservative desire to crawl in a hole and die because the poor are bound to be rich. They will be riich for reasons beyond out control. Machines that thnink and work endless hours will outproduce need. The lazy will be rich. If not, the lazy will all be dead and so will all the ambitious. Failure to finance full employment will leave terror in charge of the disunited nations.
Krugman is arguing along these lines. Rogoff is mired in the past. There is no excusing Obama because he has inherited this opportunity to be the Hamilton of his day. Bernanke is in his corner. So is all but the brain washed set of Univ of Chicago fear of democratic success. We are talking of the Secoind Bill of Rights and how to pay for economic democracy. You pay for it in products - goods and sevices. You use debt as a convenience and adjust it to meet the power of equity to overcome events - not succomb to the first fire, flood or temporary over-production.
Money is the greatest invention of all time. It was invented to keep us all rich. Let us not ask it to keep us all sick, injured and dead. Money must never be short when productive potential demands otherwise.
Dear Mr. Zakaria,
I am glad to hear the debate between two great economists today. However, I feel that I did not learn anything new from Mr. Krugman and Mr. Rogoff then what we typically hear on TV every day. What our country need is not general economics theorems. We need action plans. I am sure millions of Americans have many great ideas to help our country and our leaders. I am just one of the millions of middle class voters. This middle class voter will start with a few ideas and I hope others will follow.
I divide my ideas into doable and hard to do. The doable ideas are the ideas that only require regulation changes which Present Obama can do right away. The hard to do ideas requires the participation of our dysfunctional congress. Many of the ideas have been discussed but our government is not doing it for reasons that I do not understand. I will just give some examples of the doable ideas in this post:
1) Present Obama should announce that the US government will freeze new regulations and relax old regulations. This will help the stock market (especially banking sector) to go up by thousands of points and strengthen banks.
2) Relax the rules for converting cars and trucks into gas/natural gas dual use cars. It cost $400USD-$1000USD to convert a car in Taiwan and China. It cost $15,000-$20,000 to convert a car. The reason is the government red tapes. Even Iran already converted their taxis to natural gas. Based on the 62million registered vehicles in US and assuming we can reduce the conversion cost to $1000 per car, this will create 1.8 million job years (assuming $33,000 per person per year). If we include the installation of $2000 in-home natural gas refueling unit, it will be at least another 1 million job years. We can train many employed work to do this. If I can use natural gas instead of gasoline, I can save ½ to 2/3 of my gas cost each month. This investment will return in less than a year. If Congress can give tax deduction, it will take off like you could not believe. However, I am not counting on our dysfunctional congress here. Instead of spending close to $500B/year to buy oil from other countries, we can use domestically produced natural gas for the next 100 years. This is like a half a trillion dollars stimulus in the US economy every year for the next 100 years. So, I do not understand why Obama is not doing that. He is like a robot who keeps on saying that we use all sources of energy. That means he does not want to use natural gas because he is afraid of losing votes.
3) We need to increase agriculture production. The world-wide food inflation is killing people and economy. Chinese eats more meat which needs more grains. We need to increase our agriculture production and export to China. This is how we make our money back. Instead of forcing other countries to accept our standards, we need to change our rules in livestock production so that we can export to other parts of the world. No more “US does not inspect for mad cow and you have to accept it” stuff.
4) We need to retrain our unemployed to realistic jobs. Do not make people believe that a fifty-years-old can be retrained to compete with a twenty-years-old for computer programmer jobs. We need to create retrain-able jobs. For example, we need to increase our tourism industry so that we can create the kind of job the employed fifty-years-old can be retrained to do. There are many jobs they can be retrained. For example, the natural gas conversion work and home installation work can be easily done by many other these people.
This middle class voter just wants to give some example actionable ideas to help our country. Maybe we need less sound bite from academic types. Maybe there are other middle class voters out there who can contribute more actionable ideas.
Only by export an economy can grow. So what US needs to do is open the energy market more as Bachmann suggests. Lower the price of oil and US will sell more products. Next thing is reduce costs by decriminalising, like Ron Paul suggests. Save costs on war on drugs, less crime on the streets. Look at what's the best health care system in the world (best quality/lowest costs). There are so many wheels US tries to invent again. That is totally not necessary, unefficient and money spending. What's US unemployment rate? 20%. That needs to change. With Obama you American end up asking for change on the streets.
Fareed, I think you should follow your "digging a ditch and filling it back in is productive" logic and insist on paying twice the normal retail price for everything that you purchase. You're no doubt plenty rich so I'm sure you can afford it. Plus you'll be helping our economy.
Creating fake jobs just to generate taxes, shows how bankrupt America is. Not just bankrupt financially, but bankrupt emotionally and intellectually. You are so wired to capitalism; it is taking you down and you don't have the guts to admit it. It's unfair to blame or expect Obama or any other human being to solve the crisis. Where Mr. Krugman is totally wrong is that he doesn't understand that UFO's and ET's are actually real. The antidote for our world that is so totally screwed financially is for us all to wake up one day and know that UFO's and ET's are real, and that money is false god.
Are there any thing else we can do beside Aliens?
Fareed – concerning your comments around liberals need to grow up: The issues liberals and moderates and independents are having with Obama are his failure to make a difference in DC. He hasn't made a difference. He has not changed anything. His legislative victories are well named shells, missing the pearl; bodies without a heart. The power of the country is in the hands of a very few folks. So while they will do well mostly on the back of cheap credit (they are the only ones that get it), poor and middle class society continue to be stagnant. A massive adjustment to the rules of Globalization needs to occur. Ask Europe. If we are a successful society, why do so many remain under educated and under or unemployed. If we were a successful society, more people would be able to work less, without a hit to personal income. But no, in our "successful society" we work (those that are working) are working like turn of the 19th century farmers and factory workers. The benefits from their hard work are diminishing. Its a really pathetic situation. Obama may have changed something, but he's actually changed nothing. He needs a credible challenge from the left and the right, which unfortunately has yet to materialize which points to a another failure, our political system.
BOOM! bye bye economy
Sorry, Krugman, but that was an Outer Limits episode, "The Architects Of Fear".
just as valid as Perry asking god to save the US economy
Mr. Krugman is totting in old line. We are in crisis because we are now in a global integral world. We are all part of a closed system and therefore we can no longer escape. Space is empty and full of rocks. We don't have the technology to expand into space and even if we did it would take thousand of years to reach another habitable planet.
We are going to have to work together , as the crisis that has emerged in only the effect of a larger and more substantial problem, which is one of human nature, the fundamental question is will we change by mutual agreement or mutual assured destruction>
Absolutely Geoffrey. Hmm space travel? I think we have just effectively stepped into the Twilight Zone. I'm just waiting for Rod Serling to introduce the episode. And how bout this one: population will continue to grow and natural resources will continue to dwindle. Carrying capacity on this planet has been reached. So how bout we fix the world we live in instead of living in the clouds. And like you said, the real problem is a lack of mutually beneficial behavior amongst nations.
> natural resources will continue to dwindle
Where do they go ,a parallel universe? What about natural resources organized by technology?
The more we hear Paul Krugman speak his mind the more ridiculous we realize he sounds. Everytime I see him with Fareed or on ABC those that appear with him always disagree with him.
He doesn't see to understand that at some point we have to stop spending money we don't have, reduce our expenditures, and then consider paying down our debt. The federal government has increased its spending every year for the past 60 years. we are tapped out. Paul, can't you understand that?
I am wondering when the men in the white coats will come and take Mr. Krugman away.
No thank you. I'll continue to study the Austrian School of Economics. The ONE school of thought that predicted the mess we are in and knows how to get us out of it. Keynesians live in a fantasy world that is filled with problems that they themselves have created.
Wow. You would think the one who replaced the great Henry Hazlitt at the NY Times, would have at least read his work. You know the one Paul, Economics in One Easy Lesson. Of course we see the old, tired arguements brought out, automations, free trade, blah, blah blah...Hmm if I remember correctly we now have fewer steel workers than ever, but now produce more steel, why the same goes for farmers, and coal miners, etc. This can't be so. Automation displaces workers, everyone knows that.
Please go back to being a paper bug, and extrapolate on excessive savings, the paradox of thrift, multiplier effects and so on. My your so smart! For me I'll continue to buy gold ($1792) and silver ($40.51) those barbarous relics I started buying back in 2000 when they hit $285 and $4 respectively. But hey, what do I know? I don't have a Nobel Prize.
when i turn on the news all i see is people homeless, out of work, starving africa, losen thier houses,etc and all states and countries in financial trouble.heres one suggestion on what we and other countries can do.. first you install pipelines in every waterway of fresh water that their is you take the e3lectri cell that is being used in california to produce electricity connect to pumpstations that connect to pipelines to keep water moving you are also useing solar panels and wind turbines for extra electric sourses. above pipelines sits a boot that your car drives up on and drops in youput car in neutral and punch in where you want to go engine off.you get to listen to music or talk on your cell phone, no oil being used bthyey can keep it for plastices.magnets eliminate weight of car to increase,plate that car drives up on is set by make of car and year no issue,filters are install to waterlines, that are replace periodioctley.watersupply will also be design to travel over drought prone areas of states and countries to keep farming alive just watch out for mansento corperation selling you the seed.this is just a start to get the economey going again and to eliminate floods and droughts in the future.
Very cute article. I wonder what would the impact on the economy would be if the zombies attacked, or the charactors from tune town, and don't forget the vampires they are very poltically active.
remember what devinci fear the most.
The way aliens (illegal ones, which is what I thought this was actually about when I clicked on the headline) is to go back where they belong, and take their "anchors" with them. Take the ones living better than hard-working Americans by lounging around in prisons, getting free cable and college and health care with you!
When the aliens make their presence known I'll certainly be on their side weather they are perceived as good or bad
He's always right – krugman2012.com
Aliens stimulating the economy? It might sound humorous but Mr. Krugman touches on an important idea. When people have a common enemy they will band together above their differences to achieve their goal, if the enemy is aliens, immigrants, foreigners, political parties, etc. But in our increasingly globalized, interconnected world, there just isn't any "othesr" any more for us to band together against. Short of aliens landing tomorrow to give us something to unite against, maybe we should unite against what it is that really divides us- our own ego. We are more interconnected than ever but at the same time we are more selfish than ever. Isn't it time that we start looking at the root of the problem?
AnnaBF, your comment reminded me of the movie, "Independence Day" with Will Smith in it? When global crisis arise, countries unite in order to defeat their enemy. Come to think of it, today we find ourselves in a very similar scenario, instead of aliens and UFOs, our world is being threatened by our own over-grown Egoism, which does not match the conditions of today's integral world, where care for balance and harmony is obligatory for it's normal functioning. So let us hope that the whole world will quickly recognize our common enemy, and unite to fight this problem.
AnnaBF, just brillliant!
Well said AnnaFB! We are divided amongst ourselves and we are own, and humanity's, enemies now.
"We are more interconnected than ever but at the same time we are more selfish than ever" this is too right, if we can't recognize the selfish inclination is the root of all problems, is the only mutual enemy, then no crisis would be solved. Seeking the inner correction might be the only way left for humanity to solve all the problems.
Aliens shouldn't be invited to assist with this issue, Obama will blame them for the US woes and start an intergalatic armaggeddon.
Towards the end of his life, Wernher Von Braun, a leading scientist not known for paranoia, warned us that there would be a hoaxed alien invasion to bring about world government.
If Krugman was anal-probed by Martians, would he be stimulated?
Krugman is an idiot.
Productivity that is demanded and satisfied expands the economy – government spending simply expands debt.
IF government spending solved problems then no government no nation would ever have gone bankrupt
I will bet my $50,000,000,000,000 zambi against any takers ounce of gold that I am right.
All those who criticize Krugman with nothing more than their biases against an economist who knows his stuff, the critics are simply ignormauses!
errata: the wrong spelling for "ignoramuses" is regretted. It was a typo.
Currency devaluation proved effective in ending the Great Depression. Why not now? Why keep propping up the dollar?
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I seen that episode of the twilight zone about the fake alien invasion and they FAILED Horribly at their plan as will be the case with this new real life attempt...Mark My Words...
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