Krugman’s blog, 11/5/15

There were two posts yesterday.  The first was “Pyramid Schemes and Overderp Dot Com:”

Tom Weller, Cvltvre Made Stupid

Just your daily reminder that it’s even worse than it looks, even if you know that it’s even worse than it looks. The frontrunner in the Republican primary says that the pyramids — which are, you know, mostly solid — were built by Joseph to store grain. Meanwhile, the company run by the Republican candidate for governor in Utah has been hoarding gold and silver in anticipation of the coming crisis.

Yesterday’s second post was “Currency Wars at the ZLB:”

Ricardo Caballero, Emmanuel Farhi, and Pierre-Olivier Gourinchas have a new theoretical paper on how to think about a worldwide liquidity trap. I’m still working through the analytics, but it’s clearly consistent with the kind of thing I’ve been saying for years.

In particular, when they talk about how liquidity traps in some countries tend to get exported to everyone else, that’s very muchwhat I’ve been worrying about. And they point out that owning a reserve currency, so that people want to buy your assets, is actually a bad thing in a liquidity-trapped world — a point I’ve been trying to make for many years, with lamentably little impact on the what-if-China-stops-buying-our-bonds panic.



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