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Paul Krugman

Tuesday, May 01, 2012

Nobel Prize–winning economist Paul Krugman looks at the economic slump and discusses ways he thinks we can lift ourselves out of it. In End This Depression Now! he argues that a quick, strong recovery is possible if our leaders can find the "intellectual clarity and political will" to restore the economy.

Guests:

Paul Krugman

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Comments [36]

shm224 from NYC

Why does Krugman keep misquoting Friedman?

Friedman did not want activist monetary policy - what Friedman said about the Great Depression was to illustrate the Fed's incompetency, not that they didn't print money fast enough. Not surprisingly Friedman wanted to get rid of the Fed altogether.

May. 02 2012 09:23 PM
MC from Manhattan

Jgarbuz from Queens speaks for the right wing when he says: "WE are in a very different world today than the post-WWII world." Well I guess in his universe we are not in a post WW2 world, perhaps WW2 never really happened? How can you offer wisdom if you do not even know what era we (in this universe that I exist in ) are in? come back to planet earth...
where Krugman lives and offers opinion on and maybe you wil be able to understand what is really going on....

May. 02 2012 01:08 PM
Howard from Bronx.

Well, Leonard, you've put your foot in it at least twice today: Once with Ms. Obama saying that athletic ability must be in her genes (if you don't know what I'm saying, ask someone) and saying, at the end of the Krugman interview, that you wonder if any of what he's saying will do any good, implying that it won't. He's trying to get some action to happen and you stomp on it. Nice going! You work for Fox?

May. 01 2012 02:11 PM
Jewel from nyc

Just a trivia question,
How much does and average congress man cost now?

steak dinner isnt going to do it, right?

May. 01 2012 01:57 PM
thomas a p*ge from U.S.

Prof. K. speaks with expressions like " getting government back to previous levels will create 1.? million jobs JUST LIKE THAT.

I agree with his concepts, but it seems to me that people expect results in an unrealistically short period of time. Would it not require many months to get state & local governments to realize that funding is available, then many more months to administer civil service exams or other application processes?

Back in the 70's, I was taught that changes in economic policies took years to have their full effect.

May. 01 2012 01:56 PM
Nick from UWS

I've never heard more mental masturbation in my life.

May. 01 2012 01:55 PM
Amy from Manhattan

What's the best way to counter conservatives who talk as though tax cuts were magic--just sprinkle them over the economy & presto-change-o, the jobs appear?

May. 01 2012 01:55 PM
jgarbuz from Queens

When I studied economics and history in Brooklyn College back in the 1960s, most of my professors were avowed Marxists. Krugman is still from the old discredited school of Brooklyn Marxism-lite and I doubt most of what he proposes will do any good in the 21st century. WE are in a very different world today than the post-WWII world.

May. 01 2012 01:55 PM

Calls'em from Uranus ~

zzz.

May. 01 2012 01:55 PM

John Kenneth Galbraith, today ignored because he was too progressive for post-Reagan terror tastes, made Krugman's point 25 years ago. The obsession of the elites is on inflation because inflation is the one thing that can hurt them. They don't suffer unemployment. They don't want for anything. But inflation can devalue what We the People owe them. Our debt is in dollars owed to the 0.1%. So the rich, and thus the government, the editors at the New York Times, CNN, NPR, etc., focus on inflation to the exclusion of employment.

May. 01 2012 01:54 PM
Leo from Queens

I agree and respect Mr. Krugman's views and premise on what is wrong with our economy and how to get us out of the depression. But I think he is trivializing the lack of confidence that we the consumers have in government and the financial institutions - Many of these institutions were taken over by organized crime or are being run by irresponsible individuals and nothing has been done to correct it. Many of us who acted responsibly during the bubble and who took a buzz cut or a shave during this depression are hesitant to make any major financial moves (buying a new car, buying a house, investing, opening a business, etc) because we don't trus the financial sector and that anything has been done to correct the underlying structural problems with government and finance.

May. 01 2012 01:54 PM
Chris Garvey from Anti Fed Reserve

We tax domestic production at over 50%. [Add up all the taxes]
Our tariffs are now much less than that.
How does such policy encourage domestic jobs?

May. 01 2012 01:53 PM
Calls'em from McLean, Va.

Krugie is a liar and a political propagandist. He sounds reasonable, but he is not. Why is WNYC afraid to have alternate voices and scholars on the air or at least have a debate, like you guys used to for the 1st 70 years? Afraid of the truth? His Nobel Prize is as about as meaningful as 0bama's Nobel Peace Prize. Both are jokes. This regime and its policies are both EPIC failures. The Dems are going to lose in a landslide in 2012.

May. 01 2012 01:51 PM
Nick from UWS

What a stupid conversation. We revive the economy by STOP farming jobs to other countries, STOP manufacturing things in other countries, and MAKE THINGS IN THIS COUNTRY, WITH AMERICAN WORKERS. THAT'S ALL IT TAKES.

May. 01 2012 01:48 PM

BO turned to Lloyd Blankfein's cozy lapdogs, Summers and Geithner!!

These guys should be out of work and in JAIL!!!

SicK!

May. 01 2012 01:48 PM
Chris Garvey from Anti Fed Reserve

On October 24 [1929], the feathers hit the fan. Writing in “The United States’ Unresolved Monetary and Political Problems”, William Bryan describes what happened:

“When everything was ready, the New York financiers started calling 24 hour broker call loans. This meant that the stockbrokers and the customers had to dump their stock on the market in order to pay the loans. This naturally collapsed the stock market and brought a banking collapse all over the country because the banks not owned by the oligarchy were heavily involved in broker call claims at this time, and bank runs soon exhausted their coin and currency and they had to close. The Federal Reserve System would not come to their aid, although they were instructed under the law to maintain an elastic currency.”

The investing public, including most stock brokers and bankers, took a horrendous blow in the crash, but not the insiders. They were either out of the market or had sold “short” so that they made enormous profits as the Dow Jones plummeted. For those who knew the score, a comment by Paul Warburg had provided the warning to sell. That signal came on March 9, 1929, when the Financial Chronical quoted Warburg as giving this sound advice:

“If orgies of unrestricted speculation are permitted to spread too far the ultimate collapse is certain … to bring about a general depression involving the whole country.”

From:
http://hidhist.wordpress.com/banksters/how-a-group-of-international-bankers-engineered-the-1929-crash-and-the-great-depression/

May. 01 2012 01:47 PM
Betty from nyc

I see in NYC the Econamy is once again booming

There are bid wars for apartments and building every where...

What depression is this man talking about?

May. 01 2012 01:46 PM
Mike from Queens

As a frequently depressive person, I have to agree that the best way to "end this depression now" is to go out and be even more active than previously. If I try to be careful and comfort myself, I spiral in even deeper.

May. 01 2012 01:46 PM
jgarbuz from Queens

Yes, increase inflation and make things more expensive so that we can hire more left wing professors like Krugman to teach us all how simple it all is.

May. 01 2012 01:38 PM
Opal S. from NYC

With all due respect to Mr. Krugman, the Republicans are so intent on defeating Pres. Obama, nothing he could do would be approved by the Republicans. He has been fighting an uphill battle and it's amazing what he has accomplished. Pres. Obama is not perfect, but he sure beats, by far, the alternative.

I also have very little faith in the pronouncements of economists; ecomomics is unscientific and the variables so great, nobody can predict or have all the answers.

May. 01 2012 01:37 PM
sanych

@ rprp2

Hiring more teachers will produce bad teachers since the entry level into the position will be artificially low. Fire-fighters will be sitting idle or starting fires to prove that they are needed. Police officers will be planting evidence or faking crime statistics...

May. 01 2012 01:36 PM
Chris Garvey from Anti Federal Reserve

What is a "non-productive" government job?
Economist.

May. 01 2012 01:36 PM
Marta I. from Rahway NJ

Fidel Castro wrote that we bought the world with paper --after the gold-standard "adjustment" during the Nixon Administration--. What your guest take on that?

May. 01 2012 01:35 PM

THANK YOU, Prof. Krugman!!

May. 01 2012 01:32 PM

rprp2 ~

There is no reasoning with limited capacity.

May. 01 2012 01:31 PM
sanych

Nobody understands quantitative easing?????????!!!!!

It is just simply printing money!

May. 01 2012 01:31 PM
Tuviya from NYC

Leonard, can you pls ask your guest if he agrees that many Republicans are using the current crisis to destroy the government as we have known it and rebuild it according to their agenda -- privatization of public schools, healthcare, social security etc...

May. 01 2012 01:30 PM
Chris Garvey from Anti Fed Reserve

When the central bank became law in 1913, Congressman Charles Lindbergh had warned: 'From now on, depressions will be scientifically created.'

1929 "Actually, it was the calculated 'shearing' of the public by the World-Money powers triggered by the planned sudden shortage of call money in the New York money market."

Congressman Lindberg said in a Congressional Record dated, December 22, 1913, vol. 51, "This new law [the Federal Reserve Act] will create inflation whenever the trusts want inflation. It may not do so immediately, but ... if the trusts can get another period of inflation, they figure they can unload the stocks on the people at high prices during the excitement and them bring on a panic and buy them back at low prices... The people may not know it immediately, but the day of reckoning is only a few years removed."

"That day of reckoning, of course, came in 1929," said Perloff, "and the Federal Reserve has since created an endless series of booms and busts by the strategic tightening and relaxation of money and credit." Speaking about the historical disinformation regarding the crash, Perloff said, "Establishment historians present the '29 stock market crash as they do most events: an accident, evolved from erroneous policies, not from deliberate planning. We have all heard how foolish speculation bid stock prices high, but that the bubble finally burst, plunging brokers out of windows and America into the Depression."
It was no accident when the banks called in all the margin loans on one day.
Neither was the present depression.
http://www.thehiddenevil.com/crash.asp

May. 01 2012 01:30 PM
sanych

Leonard, there is a bubble in Nobel prizes.

Because this one talks a lot of bs. Of course this country lost technology and know-how.

Example - in 1980 I worked at Sear-Bath Gear company in North Bergen - the company specialised in making gears. This plant is now shut. There is NOBODY in New Jersey who knows how to make those complex gears any more. This knowledge is gone...

May. 01 2012 01:27 PM

To Sanych:

What is a "non-productive" government job? Teacher? Fire-fighter? Police officer? Construction worker? Engineer? Forester? Researcher?

These are the some of the jobs which have been severely contracted and can be restored only by the government. These people will spend their salaries in the private economy, on goods and services that they need.

My idea of a "non-productive" job is a banker who creates risky products that have no purpose WHATSOEVER except to make money for the bank, and lies to sell them into the marketplace

May. 01 2012 01:26 PM
jgarbuz from Queens

We had unemployment of only 5% only because we were borrowing and buying, borrowing and buying, homes, cars, widescreen TVs, higher education, you name it! Well the national and personal debt hit its limit, and them some. Now we have to crawl our way out of the mud. There are no quick fixes. That's magical thinking that ain't gonna happen. It's going to be a long, hard slog all the way. And that's no fairy tale.

May. 01 2012 01:25 PM
sanych

And this would be my last comment before the interview.

I understand that Paul Krugman is arguing for the creation of jobs via government spending. Essentially, he is advocating expanding this "giant pool of money" for non-productive government jobs.

There is a simple principle - nothing comes out of nothing. In the Soviet Union everybody was employed. Actually, it was illegal to be unemployed. This, however, did not make the economy working. In the long term the things got only worse.

Another aspect of this, is that government spending often results in wars. Soviet, Nazi Germany's economies were militaristic (Actually, did not Mr. Krugman just recently wished for an equivalent of a war?).

The bottom line - this country was working, had a strong middle class, which was the guarantor of democracy and liberties. Then, at some point (Reagan? Clinton? NAFTA?) the system was broken. We see the result. So, first we need to fix it.

May. 01 2012 01:07 PM
jgarbuz from Queens

The main problem with the arguments of Krugman and others of his mindset regarding the stimulus spending preceding and during WWII, is that the result of the war was the destruction of pretty much all of America's ECONOMIC competition. All of Europe, the USSR, Japan and others were bombed out and flat on their back. We were the only ungrazed countryi, that came out of it better than ever. Everyone owed us money, and everyone was dependent on American manufactures and imports.

But by the mid 1970s this had begun to change, and with the fall of communism and the liberation of 3 billion slaves from socialist bondage after 1991, instead of preparing ourselves, we went even deeper into debt spending like drunken sailors.

We cannot get out of this with another World War which destroys our competition. We have to scrape our way out by saving more and being content with a lower standard of living for the next generation or two. Vast government spending will to get us out of it as it did in WWII.

May. 01 2012 12:56 PM
sanych

I am a member of Programmers' Guild. As early as 2002, we argued against outsourcing and importation of H-1B workers replacing American IT workers.

I remember that one of our arguments then was that this country was only producing mortgages and rap music. Essentially, everything else was produced elsewhere and we paid for it with IOU's. Mortgages, of course, were used for inflated housing prices - one of the few industries which are impossible to move to China.

These IOU's then created this "giant pool of money" (listen to This American Life and Planet Money) which was looking for higher return than the artificially low interest rates set by the Fed. All of this resulted in securitarization of mortgages and the housing bubble. The rest is history.

I don't think you need a Nobel prize to understand this...

How to move forward? Bring jobs back, stupid! And stop importation of foreign workers, so that our kids can safely invest in their education and have long-term careers!

May. 01 2012 12:40 PM
sanych

American middle class has been devastated by the labor policies advocated by both the left and the right. These policies include outsourcing of well paying jobs and importation of cheap labor via so-call "best and the brightest" visa programs.

Conservatives advocated these policies from the trickle-down argument as the "free" market, the way to maximise corporate profits, access to foreign markets, etc.

Liberals, including Paul Krugman whom I've heard on this very radio station, advocated these policies as the way to raise the standard of living in third world countries, which he claimed would benefit people in this country. There were other similarly "feel-good", but illogical arguments.

So, the question for Mr. Krugman - does he feel responsible in any way for advocating these very short-sighted policies which resulted in the mess we are currently in?

May. 01 2012 12:10 PM
Antonio from bayside

Question: Wondered if the percentage the Fed offers to students for loans could be lower?
The republicans want 6%, the Obama administration 3%...
I ask because doesn't the Fed give banks a rate of 1% or lower to borrow money?

Has Mr. Krugman ever been in the running for a role in the Obama administration?

I don't think it's partisan to want someone with brains in washington...

regards,
Liberal with a conscience

May. 01 2012 11:14 AM

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