Krugman: Empire Not At Risk
EmailWith the headline “How Great Powers Fail” on this week’s cover of Newsweek, Harvard economist Niall Ferguson writes in an article titled “An Empire at Risk” that the massive growth in federal debt could lead to a, “major weakening of American power.”
In the piece Ferguson challenges Nobel Prize winning economist Paul Krugman’s argument that deficits are not of great concern. Krugman fired back on our This Week roundtable, saying, “these [debt] numbers look huge, but our entire economy is huge.” Krugman added that the U.S. has had greater debt burdens in the past, as a percentage of GDP, and did just fine.
George Will noted that even with cheerful assumptions about economic growth and interest rates, the U.S. will likely spend $700 billion per year just to service the national debt.
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Krugman is so brilliant, he didn’t predict last year’s economic collapse in the first place.
Posted by: Jenn | November 29, 2009, 1:01 pm 1:01 pm
Kind of wish it was. I am tired of killing all these civilians around the world that exist under regimes that we do not approve of. On top of that we get our boys maimed in the process, and the enemies we create is both justified and mindboggling.
Krugman didn’t see the housing/derivative crisis so what he says carries little weight to me. One of the reasons he may not say for why deficits don’t matter is that holders of debt that facilitate the empire are to be paid in dollars. We can always print the money so as long as creditors give us money, we really don’t need to worry about debt per say. When creditors say enough is enough watch out. The huge economy that he talks about is 72% consumer spending based. This will come to an end if the dollar is greatly debased and consumer prices don’t follow suit because of demand outside the country, not to mention continued unemployment rising. I do not share Krugman’s optimism. To me there is a great wealth transfer underway from our country to others.
Posted by: Huh | November 29, 2009, 1:09 pm 1:09 pm
Krugman wrote an opinion piece in the New York Times stating that no one saw the housing crisis coming. I would like to offer a few names: Ron Paul, Peter Schiff and Gerald Celente. Remember Ron Paul in the debates during his 5 minutes given for each debate. I have also heard Warren Buffet say that no one saw this. What is wrong with Krugman and Buffet? Where is the love for people like Ron Paul and Schiff? If I were you reading this blog, I would trust the likes of Schiff way before I take anything Krugman says seriously.
Posted by: Ben | November 29, 2009, 1:25 pm 1:25 pm
I should articulate one of my sentences better. Prices will rise on some goods and deflate on others. Housing will continue to deflate for years as will most other luxury-type goods. Prices on oil and food however will go up. This is due to the fact that energy and food are necessary and coveted by other throughout the world. With so many dollars chasing these necessities in the future expect them to rise significantly. I just feel for the older folks that didn’t expect what is coming.
Posted by: Huh | November 29, 2009, 3:13 pm 3:13 pm
$700 billion per year to service the debt is “dumber than dirt”! With the debt increasing each year (actually with each bill passed by congress) $700 billion is a low guess, it will increase asymptotically until the dollar approaches zero.
Google Cloward-Piven Strategy to see the plan of community organizers.
Posted by: Ed Taylor | November 29, 2009, 4:09 pm 4:09 pm
Yes, USA can always get out of its economic predicament, because it is devious when it comes to dealings with other world powers. We can always manipulate the supply and demand for goods and services, and the survival of U.S. dollar as the most dependable currency in the world can be ensured also by manipulating the foreign exchange rate to our advantage and pay foreign creditors with cheaper U.S. currency. We do not have to unload any of our gold reserves for this contingency.
Posted by: Prof. Narumanchi | November 29, 2009, 4:13 pm 4:13 pm
How about some diversity of economic thought. Have you never heard of the Austrian School (these crackpots predicated the mess we are in and one of them won the Nobel Prize in Economics) or the Chicago School (Milton Freidman style) or the Classical School? No. All we ever see and hear on This Week is Keynesian Krugman. The only diversity we get is when Krugman disagrees with himself. That wouldn’t be so bad if Krugman knew anything about economics.
Posted by: Richard Conboy | November 29, 2009, 4:21 pm 4:21 pm
Prof. Narumanchi – How much gold is there? We have not had an audit of Fort Knox in some time. You are assuming that we can continue to manipulate. What if someone else wants the reserve currency or a manipulated exchange rate to their advantage? Others are catching on unfortunately.
Posted by: Huh | November 29, 2009, 7:41 pm 7:41 pm
Don’t forget, George Stephanopoulos rudely dismissed Ron Paul’s presidential aspirations to his face in an ABC interview.
The number of inept and unprofessional economists and journalists who naively blather around with their blinders on is apalling.
Posted by: Darryl Schmitz | November 29, 2009, 7:49 pm 7:49 pm
Darryl Schmitz – Yep, I don’t know whether to laugh, cry or be angry in hindsight. Ron Paul is honesty incarnate.
Posted by: Huh | November 29, 2009, 8:37 pm 8:37 pm
I love the old video with Peter Schiff and a few other economists arguing, Ben Stein being one. Alas, Peter was the only one who was right. Ron Paul and Peter Schiff helped me save my 401K, for now anyway, until the dollar crashes.
I have to laugh and cry when I watch the news, these people just don’t get it and they are destroying our country from within! Good luck folks!
Posted by: Rosco1776 | November 29, 2009, 11:29 pm 11:29 pm
I am amazed that Paul Krugman, who was called ‘deficit-loving economist’ by Harvard historian Neill Ferguson, still advocate bigger and bigger stimulus spending, even knowing that the current stimulus money was largely unspent and so far it can not suppress the rising jobless rate as the Dem. administration hoped.
Posted by: austin | November 30, 2009, 12:49 am 12:49 am
Worse. There is a great possibility that the country, could be taken over through financial foreclosure. That is a very real and present danger.
Posted by: Rick McDaniel | November 30, 2009, 10:00 am 10:00 am
I think some of you have Krugman completely wrong. He is one of the few that warned of the current economic crisis. And you are misrepresenting his article able who was/wasn’t able to see it coming.
Posted by: Billy | November 30, 2009, 10:24 am 10:24 am
Krugman is a bit of a Keynesian idealist, so I’m going to take what he says with a grain of salt.
The idea that the government should be allowed to overspend as much as we currently are on the domestic economy as a way to stimulate it has failed, has historically failed, and will continue to fail. The Federal Reserve allows this type of deficit spending, the kind a liberal like Krugman likes. It’s also the reason why we had that mortgage bubble that pushed us into a recession, and allowed us to declare ill-advised wars like Iraq. It is killing our currency to pay for everything, from the bailouts in Wall Street to all the troops we have around the world. This isn’t World War II.
It’s a house of cards that I do not want our country to continue building. We will bottom out sometime.
Why anyone still listens to Krugman is beyond me. Why don’t we cut government spending instead? Let’s bring most of our troops home and shore them up on our borders or send them back into the workforce, open up our markets like ending embargoes, tarriffs, and open up interstate trade (like in health care), end corporate subsidies and ease regulation on small businesses so people can start a new life and grow our economy again?
That seems like common sense to me instead of constantly looking at government for answers, and asking them to spend this amount here and regulate this industry there.
Posted by: Brian Defferding | November 30, 2009, 11:59 am 11:59 am
krugman did see some problems in housing. there was a debate with him and some mortgage guys on CNN in 2006-7. thats how I first heard about him. with that said he’s pretty clueless on the current dilemna and I’d prefer to get my advice from a Peter Schiff or Ron Paul anyday in comparison.
F
Posted by: Fenley Fearon | November 30, 2009, 2:50 pm 2:50 pm
If you think Krugman has had this right then you haven’t paying attention. Krugman called for a housing bubble earlier in the decade to get us out of the dotcom mess. When I first researched him I thought this was something out of an Onion story but it’s true! Peter Schiff was the only one who nailed this, and Ron Paul who is also a follower of the Austrian school had this right too.
Posted by: Mike | December 1, 2009, 2:55 am 2:55 am
Krugman in 2005 “U.S. housing bubble is over won’t come in the form of plunging prices; it will come in the form of falling sales and rising inventory”
Paul is great guy, maybe you should start quoting great economists.
Posted by: VB | December 1, 2009, 3:55 am 3:55 am
Krugman was ahead of the curve in regards to the liquidity trap which plagued Japan in the 1990s.
Ron Paul is not the answer. You mean the same Ron Paul who stated “The Founding Fathers envisioned a robustly Christian yet religiously tolerant America, with churches serving as vital institutions that would eclipse the state in importance.”
If Paul were in power, the ruling class would be even more onerous in their greed running roughshod over the American people. There would be no teeth in the government to enforce laws of corporate fraud or Enron-style abuse.
It is time for our government to establish tax and labor policies which will put an end to our current Guilded age. Let’s bring back the time when being in the middle class was worth something.
Posted by: Max | December 1, 2009, 1:25 pm 1:25 pm
Max,
I don’t think you’ve read enough of Ron Paul. Dr. Paul believes that government should enforce contracts and
prevent fraud. That’s why he applauded the prosecution of Enron executives. However, as Paul has famously stated,
“It’s kind of hard for the government to prosecute fraud when it participates in fraud” (e.g. printing money and
thus devaluing your money against your will).
Caleb
Posted by: Caleb | December 1, 2009, 3:13 pm 3:13 pm
Max – Krugman endorsed the exact same moves Japan did that brought Japan into their “lost decade.” He endorsed the same low interest rates, the bailouts, all the stimulus subsidies – in fact, he even had the nerve to say the spending wasn’t enough. Uh, okay.
Posted by: Brian Defferding | December 1, 2009, 4:14 pm 4:14 pm
Looks like we have a lot of True Believers here. Ron Paul would be a disaster if he ran this country. First and foremost, his philosophy is inconsistent with the Preamble of the Constitution.
Posted by: Joelle | December 1, 2009, 6:15 pm 6:15 pm
@Joelle
“…his philosophy is inconsistent with the Preamble of the Constitution.”
In what way? If you mean the part about the “general welfare” then you mistake the word “promote” for the word “provide”
The words are:
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence,[1] promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
“Promote the general welfare” does not mean provide welfare. So what is it you think you are saying about Ron Paul?
Posted by: Deefburger | December 1, 2009, 6:47 pm 6:47 pm
@Joelle is right. RP’s statements on Katrina show that he does not understand what “insure domestic Tranquility” means.
Count me as one who thinks Ron Paul is a dope. He would take our great USA back to the 19th century, or make the USA a 3rd world nation, or both.
Such are the consequences of the “I’ve got mine, **** you!” morality that he advocates.
We voted. Ron Paul lost. Get over it. You Republicans now have Sarah Palin. Enjoy yourself.
Posted by: smart | December 2, 2009, 11:14 am 11:14 am
Krugman was being modest. He consistantly predicted a housing bubble burst causing economic problems for 18 months prior. He has been right all along.
Posted by: max faulkner | December 5, 2009, 10:06 pm 10:06 pm