Smug Krugman's advice, followed, failed.
Perhaps my least favored columnist at the New York Times is the smug Paul Krugman. Krugman, in my opinion, is one of the least honest columnists around. So it is with some amusement that I read what he said on August 2, 2002.
The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
Got that? Krugman's solution to a downturn in the economy in 2002 was to "create a housing bubble." To quote the obnoxious Dr. Phil: "How's that working for you?"
Of course, the Left still worships Krugman.
Labels: Paul Krugman