Paul Krugman

Paul Krugman @paulkrugman

RT @carlquintanilla: Andy Puzder’s @washingtonpost op-ed on the economy gets fact-checked by the eagle-eyed @TBPInvictus — and WaPo issues… — PolitiTweet.org

Paul Krugman @paulkrugman

As others are pointing out, this thread is one for the history books, as the veil of more or less normal policymaking is ripped away by the madman in authority, who hears voices on the airwaves (economists will get the allusion) — PolitiTweet.org

Paul Krugman @paulkrugman

This one, which is a lot more relevant to our actual situation, tells a pretty different story 2/ https://t.co/ANznv6M0Dk — PolitiTweet.org

Paul Krugman @paulkrugman

A tale of two pictures. This one makes it look as if we are desperately in debt, with no "fiscal space" to fight a slump 1/ https://t.co/fL1NWR1qUW — PolitiTweet.org

Paul Krugman @paulkrugman

But the Very Serious People who brought us austerity after the Great Recession are still out there. Expect them to show up in special force if Trump is defeated and a Democrat tries to rescue the economy 5/ — PolitiTweet.org

Paul Krugman @paulkrugman

The only way to make us debt-constrained is to invent some novel principle not based on standard economics (like the infamous 90 percent rule). The arithmetic says not to worry about debt if jobs are at stake 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

So the question should be, does adding to the debt for a stimulus endanger solvency? And the answer is, clearly not. We can stabilize the debt/GDP ratio while running a primary (non-interest) deficit; and the size of this stability deficit would *rise* with a higher debt ratio 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

Net interest payments are 1.8% of GDP, i.e., average interest rate about 2.2% (and current borrowing costs less than that). Real borrowing costs barely positive, while potential GDP is growing ~ 2% per year 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

What Jared says in this thread. The US currently has a debt-to-GDP ratio of about 80 percent, which is high by historical standards and could easily be presented as an obstacle to stimulus. But it really isn't 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

Hoo boy. We seem to be in a vicious circle, in which the worse things get, the more Trump doubles down on whatever caused the problem. Is there a name for this? A dementia spiral? https://t.co/udxhWvUxuV — PolitiTweet.org

Paul Krugman @paulkrugman

Of course, the composition of the test group might matter. Such experiments usually involve college students; but we're getting a real live version involving Republican senators. Results so far are not encouraging 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

Imagine a variation on the famous Milgram experiment. In this one, instead of getting people to torture others, the authority figure would act in an increasingly demented fashion, to test how long they continued to follow his instructions 1/ https://t.co/7dtrIfJsuX — PolitiTweet.org

Paul Krugman @paulkrugman

One reason 2008 didn't turn into a full replay of the Great Depression was global cooperation: instead of beggar-thy-neighbor policies, major players helped keep markets open and money flowing. Try to imagine how such a crisis would play out now https://t.co/IGrPVkzvLZ — PolitiTweet.org

Paul Krugman @paulkrugman

It's just more consequential, at least potentially. For all I know, markets will still decide that it doesn't matter. But that's looking like an ever-less-secure bet 5/ — PolitiTweet.org

Paul Krugman @paulkrugman

Again, not clear whether Trump is any crazier than he was; maybe he's deteriorating, but is calling Powell an enemy notably worse than the stuff about crowd sizes at his inaugural and refusing to admit he lost the popular vote? 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

But now, at the first hint of a setback — I mean, no recession yet, no major market plunge, just a modest slowdown (so far) — he's disintegrating before our eyes. And the closest thing we have to a grownup on the scene is the Lego Batman guy 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

For quite a while this was sort of a self-fulfilling prophecy: as long as the market was rising and the economy doing well, Trump managed to sound only moderately crazy 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

The story of both the markets and the economy since 2016 has been that investors decided, in effect, either that Trump isn't really as demented as he sounds or that it doesn't matter, because grownups will restrain him 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

The thing is, it’s not clear whether Trump is getting any crazier. It’s just that events have stopped accommodating his madness. — PolitiTweet.org

Paul Krugman @paulkrugman

Trump has taken magical economic thinking, which already rules the GOP, to a new level https://t.co/apF8bPd6rc — PolitiTweet.org

Paul Krugman @paulkrugman

RT @nytopinion: Trump's version of voodoo economics is the ultimate policy zombie, a belief that seemingly can’t be killed by evidence, @Pa… — PolitiTweet.org

Paul Krugman @paulkrugman

I would be interesting if someone at Jackson Hole besides LHS makes the case for sustained fiscal stimulus, and invokes Blanchard on the near-irrelevance of debt. Eager to hear reports 8/ — PolitiTweet.org

Paul Krugman @paulkrugman

I suspect that the answer is a mix of sociology and politics: obsessing over the evils of stagnation both served a conservative agenda and played to economists' desire to be ever more neoclassical. But the contrast remains striking 7/ — PolitiTweet.org

Paul Krugman @paulkrugman

After all, at this point ultra-low interest rates and persistent demand shortfalls have gone on much longer than stagflation ever did. Why did 7-8 bad years in the 1970s change everything, but 11 bad years since 2008 change so little? 6/ — PolitiTweet.org

Paul Krugman @paulkrugman

Larry also mentions how the inflation of the 1970s led to a major rethinking of macro, and suggests that we should do the same. It seems to me that we should be asking hard questions about why that hasn't happened already 5/ — PolitiTweet.org

Paul Krugman @paulkrugman

In other words, this is what normal looks like in the 21st century. Great Moderation macroeconomics — central banks rule the business cycle, fiscal policy only as an emergency measure — isn't coming back. 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

Two further points. It seems to me that central bankers still talk and to some extent act as if this were a temporary post-crisis situation, and that we'll be able to "normalize" sometime in the near future. But we're coming up on the 11th anniversary of Lehman's fall! 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

Central bankers aren't saying this — but consider their position. If Draghi or Powell were to say "I don't think I have the tools to fix this" it could set off a market panic. They sort of have to sound confident even if they aren't 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

Interesting thread from LHS. I have a few points of skepticism — not sold on IS curve sloping the wrong way — but the overall thrust is clearly right. There is little reason to believe that central banks have the power to fight the next downturn, whatever its source 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

Finally, anyone with a knowledge of history knows that when bigotry runs free — and when autocrats rule — Jews always end up in the line of fire. In modern America, this means that the dangerous anti-Semites are on the right 3/ — PolitiTweet.org