Paul Krugman's Blog, page 637

A history lesson for Alan Meltzer

From today's Times:
Besides, no country facing enormous budget deficits, rapid growth in the money supply and the prospect of a sustained currency devaluation as we are has ever experienced deflation. These factors are harbingers of inflation.
Japan's lost decade:
Source: IMF, OECD

Bank capital hocus-pocus

Aha. When the proposal to bulk up bank capital by converting the government's preferred shares into common equity came out, I pronounced myself baffled. But was I missing something? Via Henry Blodget, Paul Kasriel of Northern Trust says the same thing, in more detail.
PS: Kasriel should be careful about hypothetical examples involving Gotham City Bank. [...:]

We're trapped!

Currently on a train. "All doors will not open at this station," says the conductor.
OK, I know he means "not all doors will open." But it does bother me.

Liquidity preference, loanable funds, and Niall Ferguson (wonkish)

Joe Nocera writes about Thursday's New York Revie/PEN event on the economy, but fails to mention what I found the most depressing aspect of the whole thing: further confirmation that we're living in a Dark Age of macroeconomics, in which hard-won knowledge has simply been forgotten.
What's the evidence? Niall Ferguson "explaining" that fiscal expansion will [...:]

Anti-green economics

Clearly, opposition to doing something about climate change has fallen back to a new position: claims that attempting to limit greenhouse gas emissions would be incredibly costly. Yet the most careful studies, like the big MIT study of Congressional proposals, find only modest costs. Pay no attention, say the critics.
Via Pete Davis, I found Robert [...:]

The Specter of Republican marginalization

Arlen Specter's party switch isn't all that startling. Richard Shelby and Ben Nighthorse Campbell switched to the Republicans right after the 1994 election, without (as far as I know) facing the same kind of primary challenge. But this switch is especially important, because once Al Franken finally gets seated it will give the Democrats the [...:]

Masters of disaster

So Bobby Jindal makes fun of "volcano monitoring", and soon afterwards Mt. Redoubt erupts. Susan Collins makes sure that funds for pandemic protection are stripped from the stimulus bill, and the swine quickly attack.
What else did the right oppose recently? I just want enough information to take cover.

Japan's recovery, again

Keiichiro Kobayashi accuses me of wanting to disregard the problems of the banks and focus only on fiscal expansion. Actually, I've never said that; he seems to have me confused with Robert Reich, who has.
But it's true that I'm a bit puzzled by the attribution of Japan's recovery to bank reform. If the bank-reform story [...:]

Bully is the new shrill*

David Warsh says I'm a bit of a bully. I think I'm gonna go beat him up.
*Reference explained here.

Trickle-down economics

Check out this photo from today's Times, about Iceland's rejection of the free-marketeers.