Monday, February 6, 2012

Quote of the day

Alexander Gloy:
Krugman’s rhetoric matches that of a mayfly rejecting the possibility she might die at the end of the day because so far the sun has never set during its life.

FLG's time horizons theory is still relevant.


The Ancient said...

1) Bear in mind that he's not an economist but an investment advisor. Presumably he has a track record, but if it's any good, they're certainly being quiet about it.

2) There's no inconsistency between being very, very concerned with the long-term debt picture (which Krugman essentially shrugs off) and feeling the economy needs vastly more short-term stimulus, even if that worsens the short and mid-term debt picture (though not just any stimulus).

3) Gloy's debt/GDP chart is misleading, as it omits data showing how the debt piled up by WWII was "disappeared" through economic growth. (This is not an argument that future long-term growth will make the size of the debt irrelevant. No one really knows what will happen. But hiding the post-war data is not in the interest of clarity.)

FLG said...

The Ancient:

Oh, I don't agree with everything he wrote. For example, I totally agree with your second point.

But, as you say, Krugman is so short-term oriented that govt debt might as well be some sort of magical manna from heaven.

That's why I liked the quote.

The Ancient said...

FLG --

It's the second point that's the sticking point.

Paul can't bring himself to make it, and even those conservative economists who agree -- and there are more of them than one might think -- won't give up their careers to create running room for a fellow conservative who could explain it.

(Mankiw, for instance, is notably silent on salient matters -- for reasons I can't understand. It can't be that he wants two years away from his family to take Larry Summers's old job at the WH. And he's much too old to believe that there's ever anything like a guaranteed ear at court.)

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