Posts Tagged ‘Paul Krugman’


Gingrich Tries To Grab Some Votes

It has turned out that Ron Paul's critique of the Federal Reserve has caught on. Polls have revealed that voters (especially Republican voters) are actually partial to the idea of going back to a gold standard. This was revealed in a Rasmussen poll in early January, which characterized the gold standard debate as a 'sleeper issue' that 'could tip the scales of the race'.


„Phone interviews with 501 likely caucus-goers were conducted in Iowa in mid-November. The potential respondent was screened to ensure a. registration to vote in Iowa b. registration as a Republican and c. self-described as “definitely” or “probably” going to participate in the caucuses to select the Republican nominee for president. The survey has an overall margin of error of 4.4 points at the 95 percent confidence interval.

“A majority (57 percent) of those surveyed are favorable to the United States returning to a gold standard and over one-quarter is ‘very’ favorable to the idea,” reports pollster Erin Norman. “Only 17 percent are unfavorable to this idea, which equates to a better than three-to-one favorability ratio among likely Iowa Republican Caucus goers. These are remarkably high numbers given that the question contained no information about the gold standard specifically.”

Translated out of pollsterese? The gold standard drives votes both in the caucuses and primaries and in the general election.“


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Interpreting the Activity of Banks and the ECB Correctly

It appears that market observers are only very slowly coming around to grasping the fact that what the ECB has done in December does indeed amount to a major dose of monetary pumping. The misunderstandings center mainly on the use of the ECB's deposit facility by banks, which overshadows the far more legitimate debate over whether the commercial banks are going to use ECB funding to play the sovereign debt carry trade or rather 'play it safe' in view of the large amount of bank bonds maturing in the first quarter.

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Paul Krugman on Keynes

As a friend of ours remarked when sending us the link to Paul Krugman's December 29 editorial, 'he's trying to get in the last word for the year'. The editorial is entitled 'Keynes Was Right' and it is at least somewhat reassuring that it appeared on the NYT's 'opinion pages', because that is all it amounts to – an opinion.

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An Intractable Problem

Something that keeps exercising our mind is the seeming contradiction between two stances uttered as firm principles by the German political leadership. The first is that often repeated assertion that it is determined to ensure the euro's survival. The second is the equally often repeated assertion that using the ECB's printing press to stem the run on euro area sovereign bonds is completely out of the question.


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A Paucity of Imagination

We want to return to a theme we have recently discussed in these pages, namely the allegedly exhaustive hypotheses regarding the possible solutions to the euro area's problems that are regularly presented to us in the media.

Leading intellectuals and economists usually list a set of choices based on the views of the current economic orthodoxy, which choices they insist are all that is possible or even imaginable.

We have briefly mentioned the topic last week and so has Mish in a recent post that similar to our article looked critically at Martin Wolf's recent 'Thinking the Unthinkable' editorial at the FT.

The main problem from our point of view is of course that no-one in the mainstream has as of yet really given voice to the so-called 'unthinkable', which in a way demonstrates what it really consists of (if it weren't 'unthinkable', they would have thought of it).

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A Historical Mistake

There once was a time when the science of economics – based on sound reasoning –  concluded that economic liberalism was the best way to achieve lasting and growing prosperity. Classical economists may have been stumped by the theory of value, a problem satisfactorily solved by Carl Menger in the 1870's,  but on the whole, their teachings were conducive to the adoption of free market capitalism. This ushered in an age of unprecedented capital accumulation and prosperity.

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Euro Area PMI – Ireland Must Be Doing Something Right

Manufacturing in the euro area continues to contract noticeably – the crisis is taking its toll not only on financial markets, but also the real economy. Note here that what the present economic situation reveals are the results of the policy errors of 2008-2009, namely massive monetary pumping and various wealth-misdirecting and wealth-destroying  government intervention schemes designed to 'avert recession'. Why are these mistakes revealed now? This is due to the lag time of monetary policy. On account of the ECB's approach (the ECB – so far – accommodates booms, but is reluctant to actively pump during busts except in order to rescue insolvent banks) monetary policy has become much tighter in the course of the past year than the still very low administered interest rate would suggest. Money supply growth in the euro area as a whole has only been 1.3% year-on-year (in terms of money TMS), with several peripheral nations experiencing outright monetary deflation. Read the rest of this entry »

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