Krugman Takes on Sumner's Austerity Myth

     I've complained more than once about Krugman failing to take Sumner on effectively.

     http://diaryofarepublicanhater.blogspot.com/2013/05/is-sumner-krugmans-real-enemy.html

     http://diaryofarepublicanhater.blogspot.com/2013/06/sumner-and-krugman-frenemies-forever.html

     On the one hand, Krugman avoids 'feuds' that are about little more than personalities.

      http://diaryofarepublicanhater.blogspot.com/2013/05/krugman-doesnt-worry-over-krugman.html

      On the other hand I don't think the issue with Sumner is about personalities. Sumner had very quietly come up with his own counter story of why austerity isn't a problem-monetary offset; the Fed is capable for making up for any growth lost from austerity-like the current sequester. In addition, as government spending 'increases debt' we're actually better off with X amount of growth with fiscal austerity and monetary easing than we would have been had we just not done the austerity in the first place. Ergo, the more austerity you do the more monetary easing, and since that's always optimum for Sumner, I guess we should do a great deal of austerity so that the Fed can offset all of it.

     http://diaryofarepublicanhater.blogspot.com/2013/05/sumner-continuing-to-push-monetary.html

     R-R's 90% debt bomb doomsday scenario has been totally discredited as has the idea of stimulative austerity thanks to market confidence. It seems to me that Sumner's monetary offset story is what's left standing. Krugman really should consider weighing in on it. There is reason to believe it's catching on in certain influential quarters.

     "This is from OECD’s Economic Outlook report published earlier today:

In the euro area, the area-wide fiscal consolidation (measured as an improvement in the underlying primary budget balance) of just over 4% of GDP between 2009 and 2013 was similar to that in the United States over the same period. This casts doubts about the role of fiscal tightening in explaining the comparatively weak performance of the euro area.

      http://diaryofarepublicanhater.blogspot.com/2013/05/is-sumner-krugmans-real-enemy.html

     Yesterday Krugman did actually speak of the Market Monetarists-very rare for him. He surely understands that Sumner will read this and that it's very easy to get a rise out of him. 

   
   http://diaryofarepublicanhater.blogspot.com/2013/06/krugman-on-market-monetarism.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29

     Today, Krugman has a very important post as it calls out a narrative that Sumner has certainly been peddling very loudly lately: there was no real austerity in Europe-he also often claims that there was more in the U.S.

     Krugman calls out this narrative today-he doesn't use Sumner's name at all-which doesn't mater in the least. He calls out this piece of revisionist history which is a very good thing:

     "OK, this is really shocking: a Heritage Foundation economist has been accused of presenting false, deliberately misleading data and analysis to the Senate Budget Committee."

     "What’s so shocking? Not the false, misleading data and analysis — that’s SOP at Heritage. Remember the disappearing forecast of 2.8 percent unemployment under the Ryan plan, and various other Heritage escapades? What’s shocking is that they got called on it, in real time."

     "The claim in particular, by the way, is widely popular on the right; it’s the claim that there isn’t any real austerity in Europe. Wonkbook goes through some of the reasons this is wrong, aside from the simple walk-around-any-city-and-take-a-look test. There are actually other reasons; notably, the way the IMF and other organizations calculate potential output leads them to understate the real amount of adjustment (sorry, technical issue that I’ll have to explain another day). But anyway, it’s nonsense."

      "One does wonder, by the way, whether Heritage may at this point be destroying its own usefulness. Its purpose was never to do real research; it was always a propaganda arm of the movement. But it was supposed to create a plausible illusion of intellectual rigor, good enough to take in gullible journalists."

      "But is there anyone not a committed right-winger who, at this point, believes anything coming out of Heritage? And in that case, what’s the Foundation for?"

     http://krugman.blogs.nytimes.com/2013/06/05/heritage-shock/

     As to the Heritage what can we say? This is the group commissioned to kill immigration reform with that sloppy train wreck of a paper. Even better the author just happened to be a Bell Curver-he has written about the supposed intellectual inferiority of Blacks. 

     It is about time though that this austerity narrative is taken on. This is going to be used to advocate for austerity in the future-however much Sumner personally will disavow supporting austerity.. 

     Clearly he at least believes that crime does pay. 

     " I don’t believe the GOP has suddenly become inflation hawks.  In 2012 Gov. Perry indicated that he was concerned that QE could help Obama be re-elected.  They were silent when inflation was even higher under the Bush administration.  If the GOP were in power, the WSJ would be taking the same position that they took when Reagan was running for re-election in 1984, when they criticized the Fed for excessively tight money, despite an inflation rate more than double the level we’ve seen under Obama.  I’m quite optimistic that market monetarism can eventually become the standard conservative position on monetary policy."

     http://diaryofarepublicanhater.blogspot.com/2013/06/its-not-apples-fault-for-not-paying-its.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+DiaryOfARepublicanHater+%28Diary+of+a+Republican+Hater%29