Paul Krugman

Paul Krugman @paulkrugman

Completely forgot to promote this https://t.co/UZ7hwE87aO — PolitiTweet.org

Paul Krugman @paulkrugman

Trussonomics is deeply stupid. But there seems to be a lot of hyperventilating going on. No, it won't cause a global crisis — for God's sake, Britain is only 3.2% of world GDP. And while British markets are a mess, we're a long way from 1976. Get a grip. — PolitiTweet.org

Paul Krugman @paulkrugman

Market rents get reflected in official measures with a lag. But the market rent data offer some hint that disinflation may be easier than many people now expect. Again, be cautious — but not all inflation surprises are bad 4/ — PolitiTweet.org

Paul Krugman @paulkrugman

One answer may be that much of the rent surge was a one-time shock caused by the rise of work-from-home rather than general overheating 3/ https://t.co/bGmfKZHHg5 — PolitiTweet.org

Paul Krugman @paulkrugman

Shelter is 40 percent of core CPI, so this is a pretty big deal if it persists. But why is this happening even though the labor market still looks very tight? 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

Those of us who used to be on Team Transitory have been burned repeatedly, so don't want to make too much of this. But now multiple indicators that seem to show rents leveling off 1/ https://t.co/wwwEYgpXID — PolitiTweet.org

Paul Krugman @paulkrugman

Today in "Do you even FRED, bro?" The top opinion piece in the WSJ is titled "a nation of quitters", about how prime age adults are refusing to work and sponging off their parents. Meanwhile: https://t.co/8lkxY8Kw2Y — PolitiTweet.org

Paul Krugman @paulkrugman

Republicans claim to be a working-class party, but they're still all about tax cuts for the rich and cutting social spending https://t.co/PMV3ot52Sk — PolitiTweet.org

Paul Krugman @paulkrugman

*had to look up*. Yes, I now know what it means — which is why I can never use it 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

Elsewhere they use a Britishism I have to look up: Squeaky bum time for the BoE. Unfortunately I don't think I can ever use that in The Times 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

Pleased to see FT Alphaville using a term I think I just coined: zombie Reaganomics 1/ https://t.co/0gfFzPiGAf — PolitiTweet.org

Paul Krugman @paulkrugman

Don't want to make too much of one data point. But this is the kind of thing we want to see. Housing is 40% of core CPI, basically keyed off rents (with a lag). A clear leveling off of market rents would be an important argument for a Fed pause https://t.co/s9pIeceCPN — PolitiTweet.org

Paul Krugman @paulkrugman

No idea whether that's realistic, but yes, fiscal dominance could produce a 1976-type currency crisis 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

I've been getting emails from City economists who agree that balance sheet effects won't be a problem, but are worried that the BoE will not, in fact, offset the fiscal stimulus — that it will in effect monetize deficits 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

From ISW 2/ https://t.co/xYaT2Hu6Sr — PolitiTweet.org

Paul Krugman @paulkrugman

I was sort of joking here; hard to see where the heavy or high-tech equipment comes from, but small arms shouldn't be an issue ... or maybe they are ... 1/ — PolitiTweet.org

Paul Krugman @paulkrugman

Today the UK has an independent central bank and everyone is (excessively?) worried about inflation. So little risk that deficits will be monetized, making a currency crisis unlikely despite the govt buying into supply-side nonsense 9/ — PolitiTweet.org

Paul Krugman @paulkrugman

Now, Truss/Kwarteng may match Heath/Barber for irresponsibility. But back then the BoE was just a branch of HM Treasury, and nobody thought about stagflation. 8/ — PolitiTweet.org

Paul Krugman @paulkrugman

And Britain's monetary credibility was low, largely because of the deeply irresponsible Heath-Barber "dash for growth" in the early 1970s. 7/ https://t.co/GXDPNXPUhI — PolitiTweet.org

Paul Krugman @paulkrugman

So why the panic? For one thing, inflation was *very* high 6/ https://t.co/VYYmdaShM4 — PolitiTweet.org

Paul Krugman @paulkrugman

And Britain's *level* of debt was pretty low 5/ https://t.co/xGSQQvfFn2 — PolitiTweet.org

Paul Krugman @paulkrugman

But while the deficit was indeed large, we've become accustomed to bigger temporary deficits in the years since, all without financial crises 4/ https://t.co/rYIc3a6lAi — PolitiTweet.org

Paul Krugman @paulkrugman

That crisis was clearly a budget/sovereign debt crisis manifesting itself in the currency market; reading histories of the time, it was all about public borrowing and fears thereof 3/ — PolitiTweet.org

Paul Krugman @paulkrugman

But, people ask, what about 1976? Suddenly an old crisis has relevance today. And understanding 1976 is harder than may seem obvious at first glance. 2/ — PolitiTweet.org

Paul Krugman @paulkrugman

More thoughts about the UK. As I tweeted earlier, while the not-a-budget is stupid and cruel, hard to see a sterling crisis 1/ https://t.co/2ybbKV1Suo — PolitiTweet.org

Paul Krugman @paulkrugman

RT @sjwrenlewis: The budget was terrible, but its not another Barber Boom (reasons here https://t.co/Zoc4POBBOx ) and as Paul's thread argu… — PolitiTweet.org

Paul Krugman @paulkrugman

But at a guess, the moron risk premium has now been priced in. I guess I don't see the mechanism for a continuing sterling crisis. What am I missing? 10/ — PolitiTweet.org

Paul Krugman @paulkrugman

So why did zombie Reaganomics produce currency depreciation, not the excessively *strong* currency caused by the original version? Well, it did say bad things about the competence of the new government 9/ https://t.co/tzDi7XgDMD — PolitiTweet.org

Paul Krugman @paulkrugman

But the Bank of England is independent these days, and unlikely to monetize debt. And despite everything, UK debt isn't *that* high by long-run standards 8/ https://t.co/NxdUmpoPL6 — PolitiTweet.org

Paul Krugman @paulkrugman

The other way you can have a currency crisis is if markets believe that you can't or won't service your public debt, and will monetize it instead; this was the story behind the 1926 franc crisis and, I think, the 1976 sterling crisis (which needs revisiting) 7/ — PolitiTweet.org