Krugman’s Blog, 2/12/13

There were 3 posts yesterday.  The first one was “Hearsay Economics:”

Jonathan Chait is boggled by Joe Scarborough’s latest rant. (Dear Jon: I am not “prickly”: I’m aggressive and annoying. But that’s by design, and I only do it when the situation calls for it.) What’s really striking is Scarborough’s certainty that we’re experiencing “explosive” spending growth, which is very much not the case:

How do JoScar and others like him come by such misconceptions?

Well, I’ve gradually come to the realization that most of the commentariat doesn’t do what, say Martin Wolf or I do — grub around in published data, read reports, and all that. Instead, they rely on what they heard somebody say the facts are; hearsay economics. Of course, they don’t listen to any old bum on the street; they listen to people of repute, people in their circle. But the repute in question has nothing to do with technical expertise; hey, Admiral Mullen is a serious person, so if he says something on any subject, such as economics, it must be solid.

And where do the reputable people get their information? Why, it’s what they heard somebody in their circle say. It’s hearsay economics all the way down.

You can see how this leads to the incestuous amplification I’ve written about. Everyone they know — tous le monde, as Tom Wolfe used to say — says that we have exploding spending and the deficit is a crucial problem. How could it not be true?

It may seem hard to believe that this sort of petty small-group sociology exerts a vast influence on actual policy, and that it is actually responsible for millions of lost jobs. But the more I look at it, the more that seems to be right.

Also, Paul, we must always bear in mind that JoScar is a moron…  His next post was “It’s Always 1923:”

David Glasner writes sensibly about the “currency war” issue and related subjects, set off by recent commentary by Irwin Stelzer. As Glasner says, expansionary monetary policy can cause currency depreciation — but it is not currency manipulation. There’s a world of difference between Chinese-style intervention-plus-tight-money and either the Fed’s quantitative easing or Japan’s new turn to inflation targeting.

But what really seems to get Glasner going is Stelzer’s bad history — bad history that is, one has to say, very widely accepted out there. No, the 1923 hyperinflation didn’t bring Hitler to power; it was the Brüning deflation and depression. Hard money and a gold standard obsession, not excessive money printing, was the proximate disaster.

One thing Glasner doesn’t do, though, is point out not just that Stelzer seems weirdly obsessed with inflation risks despite the complete absence of any evidence, but the unchanging nature of that obsession. A quick bit of googling says that Stelzer has been warning about an inflationary explosion for at least four years (pdf). (In the same piece he also insisted that it would be very hard to find anyone to buy all the bonds the US would be issuing).

This gets at one of the true wonders of this ongoing economic crisis: the inflation-and-soaring-rates crowd has been wrong, again and again, year after year, yet seems completely undaunted in its certainty that it possesses The Truth. You might think that someone, at some point, would have a creeping suspicion that he might be working with the wrong model. But it never seems to happen.

The last post of the day posed a question:  “Where Do ‘Facts’ Come From?”

Just a quick observation: for the past couple of days I’ve been seeing in a lot of places, including comments on this blog, the assertion that federal spending has risen 37 percent under Obama — that specific number. Does anyone know where it’s coming from? Because if I look at the actual data, I see federal spending rising from $3.475 trillion in fourth-quarter 2008 to $3.917 trillion in fourth-quarter 2012 — a rise of 12.7 percent.

Obviously this is coming from somewhere, and being broadcast by Rush or somebody. But it’s still kind of amazing how a totally wrong number can become part of what everyone on the right just knows to be true.

A lie, when repeated often enough, becomes the truth.


One Response to “Krugman’s Blog, 2/12/13”

  1. Mal Content Says:

    Ample evidence exists to wit that the gold standard is amplification of currency. The idea that one can stop the earth from rotating on its axis by behest is best left to philosophers and tyrants.

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