In his column today, Paul Krugman takes on the cluelessness of our right-wing/mainstream experts in whats really happening to a global economy that looks to be in turmoil for none of the reasons theyve been predicting for eons. Well worth reading! Tom In the Middle Ages, the call for a crusade to conquer the Holy Land was met with cries of Deus vult! — God wills it. But did the crusaders really know what God wanted? Given how the venture turned out, apparently not. Now, that was a long time ago, and, in the areas I write about, invocations of God’s presumed will are rare. You do, however, see a lot of policy crusades, and these are often justified with implicit cries of “Mercatus vult!” — the market wills it. But do those invoking the will of the market really know what markets want? Again, apparently not. And the financial turmoil of the past few days has widened the gap between what we’re told must be done to appease the market and what markets actually seem to be asking for. To get more specific: We have been told repeatedly that governments must cease and desist from their efforts to mitigate economic pain, lest their excessive compassion be punished by the financial gods, but the markets themselves have never seemed to agree that these human sacrifices are actually necessary. Investors were supposed to be terrified by budget deficits, fearing that we were about to turn into Greece — Greece I tell you — but year after year, interest rates stayed low. The Fed’s efforts to boost the economy were supposed to backfire as markets reacted to the prospect of runaway inflation, but market measures of expected inflation similarly stayed low. How have policy crusaders responded to the failure of their dire predictions? Mainly with denial, occasionally with exasperation. For example, Alan Greenspan once declared the failure of interest rates and inflation to spike “regrettable, because it is fostering a false sense of complacency.” But that was more than four years ago; maybe the sense of complacency wasn’t all that false? nytimes/2014/10/17/opinion/paul-krugman-what-markets-will.html
Posted on: Fri, 17 Oct 2014 16:00:01 +0000
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