Bogus Gold

Paul Krugman is concerned about inflation. No... That's not quite correct. He's concerned that YOU are concerned about inflation. In fact he thinks you're kind of a moron who just may be pissing away our unicorn and rainbow dreams in this era of Hopenchange by all your scaremongering about inflation.

The first reason Krugman says you shouldn't worry about inflation is because it could only be a problem if the economy ever actually recovered. But as there's no real indication this is happening (he's not a big believer in those "green shoots" the White House boasts about seeing apparently), forget about inflation. Depression era deflation should be the worry (soming soon: Paul Krugman's column calling you a moron for worrying about deflation).

Okay so... let's say some day in the distant future the economy actually recovers. Inflation could be a problem then, right? I mean... we're accumulating a massive debt "stimulating" our way into the recovery Paul Krugman thinks we needn't worry about. That eventually has to be paid to the people who loaned us all the money, right? And if the debt gets too massive, it could look awfully tempting to inflate the currency so the real value that needs to be paid back becomes relatively less. We should worry about that, right?

No, says Paul Krugman. You know why? Because it's just possible we won't do it, that's why. Belgium, Canada, and Japan didn't after all, when their debt exceeded 100 percent of their GDP. I mean... sure France did once after World War I. And, he doesn't mention, but I will, Argentina did it in the 90's. But look we don't have to do it, so just stop worrying about it. Shut up, that's why.

But then he gets to the heart of the matter... the shadowy reason he suspects all this nonsensical inflation scarin' is spreading around like Swine Flu... Because not everyone has embraced the free spending ways of the Lightbringer In-Chief...

But it’s hard to escape the sense that the current inflation fear-mongering is partly political, coming largely from economists who had no problem with deficits caused by tax cuts but suddenly became fiscal scolds when the government started spending money to rescue the economy. And their goal seems to be to bully the Obama administration into abandoning those rescue efforts.

I don't know. Call me a skeptic, but I have a feeling the inflation fear is not so much about whether or not the deficit comes from tax cuts or massive spending increases, but rather because folks see a bit of a difference between hundred billion dollar deficits sitting as the outliers of an economic plan and a projected stream of trillion dollar plus budget deficits with no plan to ever resolve them. You know... kind of like they looked at this old chart (which, I should point out, erred on the optimistic side by presuming the economy would be growing again by the end of the year - Krugman says we needn't "worry" about that):


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That's either one loooooong rescue, or just maybe we've got a spending problem that's going to catch up with us sooner or later. So we don't inflate when the debt hits 100 percent GDP, eh? How about when it hits 200 percent? 500 percent? What is the president's plan to prevent that from happening?

He hasn't given one yet. But it apparently has to do with creating a new health care entitlement to cover every American. Does that sound like deficit reduction or even more massive debt to you?

In other words, yes Mr. Krugman, there is some fear of inflation out there. And no, your assurances that all will be okay aren't quite the reassuring tonic for our nerves you seem to believe.