Paul Krugman Hates The Poor

Beating up Paul Krugman – a Nobel Prize-winner who is a poster-child for “narrow expertise” – is a little like fact-checking Heather Martens; it’s easy, and there will never be a shortage of material.

Rich Karlgaard at Forbes spells out yet another reason Krugman is jumping from Princeton in disgrace:

Krugman says the rich sock their money in low-yield bonds. But he fails to consider the obvious. Stocks have almost tripled since March 2009. Urban real estate is in a boom. Art is in a boom. If you believe Krugman, it must be the poor folks who are feeding these asset bubbles. Because the rich, Krugman says, are stuck in low-yield bonds.

This is utter nonsense. The excess liquidity created by U.S. monetary policy does not wind up in the hands of the poor. It winds up in the hands of the rich. The rich then put it into stocks, real estate, hedge funds, and art.

It’s actually the poor and lower middle classes whose wealth — such as it is –lies fallow in no-interest bank accounts (or wealth-eroding cash if they have no bank account at all). It’s not the rich, but middle-class retirees that try to eke out a living on low-yield interest rates.

Krugman has it exactly, 180-degrees wrong. Cheap money is a transfer payment to the rich. It is a tax on the poor. The rich-poor divide grew vast under the cheap money policies of Ben Bernanke. This trend will surely accelerate under Janet Yellen.

Wonder what it’ll be like, someday – maybe decades from now, maybe in the afterlife – when “progressives” realize they’ve been squeeeeeing like a bunch of teenager grrrls at a One Direction concert over the permanent destruction of the middle class.

6 thoughts on “Paul Krugman Hates The Poor

  1. Donald Luskin used to maintain a website titled “The Conspiracy to Keep You Poor and Stupid” that cataloged the latest Krugman idiocy. He stopped updating it in ’09 – likely because he was overwhelmed with all the material he had to catalog. Anytime someone cites Nobel Prize (given to Arafat & Obama, too. Talk about ruining your brand, geez.) winning economist Krugman in their argument regarding some economic related topic I ask them if they know what he won it for. They never know (analysis of trade patterns and location of economic activity, if you care). He is rarely right about anything and if you followed his economic predictions through the years – exuberant optimism for anything Democrats do and doom for Republican actions, you would be very poor.

  2. Awesome. Krugman is telling us that the rich get rich by being stupid with money. In the same way, farmers get rich by throwing their seed corn on the road.

  3. Krugman is usually promotes the idea that deliberately chosen economic policies are causing increasing income inequality (such as it is). Krugman is also considered an inflation dove.
    In this blog post he contradicts both positions, presumably to support the policies of the administration and Yellen. This is why he is a hack.
    Also he is a hack because he is an ideologue who misuses economics in attempt to support what are often poorly thought out, and inevitably liberal, political opinions.

  4. Karlgaard is an interesting guy. I hired him a few years ago to speak to a group of our clients and he was both entertaining and insightful. One thing he mentioned is not to put too much stock in financial writers – even people like himself. Paraphrasing: “If we really understood this business we would be working for the investment banks or analysts, making big money instead of reporting. We’re really just sportswriters for a sport few understand.”

  5. Krugman won his Nobel because he was an early and strident critic of W. It defies common sense to suppose that it was for any other reason.

  6. Two things. Something like 3/4 of a trillion in interest is being stolen from savers. When retirees spend this, IT’S STIMULUS PLUS THEY ARE GETTING WHAT THEY *N*E*E*D *A*N*D* W*A*N*T*. Why the *&^% do you have to become a 100% speculator when you save money? This makes zero sense for a sane, functional society.

    Also, it’s very, very hard to run pensions and insurance companies in this type of environment. More instability.

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