Krugman: Swiss Currency Move Shows 'Just How Hard it Is to Fight Deflation'

[NACBA]

Krugman is smarter than Schiff


In the Swiss National Bank's decision Thursday to drop its ceiling on the franc, there's a lesson for other nations, says Nobel laureate economist Paul Krugman.

"What’s important is the demonstration of just how hard it is to fight the deflationary forces that are now afflicting much of the world," he writes in The New York Times. (Editor's Note: Deflation is a decrease in the general price level of goods and services and occurs when the inflation rate falls below 0 percent, or a negative inflation rate).
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And it's not just Europe and Japan at risk, Krugman explains. "While America has had a pretty good run the past few quarters, it would be foolish to assume that we’re immune."

Many economists believe the Federal Reserve should raise rates soon. "But why?" Krugman asks.

"There’s no sign of accelerating inflation in the actual data, and market indicators of expected inflation are plunging, suggesting that investors see deflationary risk even if the Fed doesn’t."

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[Madison320]

There's 2 big problems with this. One is that there's never been any significant deflation in the history of irredeemable fiat currency. Two is that if, for the first time in recorded history, we actually had some real deflation, we could end it in 2 seconds by firing up the printing presses. So basically Krugman is worried about a problem that has never existed and if it did it could be fixed instantly. How the hell did he win a Nobel prize?

If you want to see a real problem wait for prices to start rising rapidly and interest rates to start rising. With our current massive debt level and huge misallocations from ZIRP and QE the fix is going to be incredibly painful. Depression, debt restructuring and hyperinflation are a few of the possibilities.

 

[GunnyFreedom]

I can tell you that as a person with a mortgage, deflation scares the hell out of me.

 

[willwash]

In other words, Nobel laureate krugman, who won the Nobel prize and is therefore smarter than you, says big government is good.

 

[The Gold Standard]

I can tell you that as a person with a mortgage, deflation scares the hell out of me.

The slow, gradual deflation of a free market wouldn't be a huge problem for people with debt, it would just make it a bit more expensive. The deflation that needs to happen to right this ship though, would ruin most people with debt.

 

[DamianTV]

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered." - Some Dood

 

[Madison320]

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered." - Some Dood

That Dood was wrong. The problem is not that the banks are private or that there's deflation (what deflation?). The problem is that the government has granted a monopoly to one private bank, which more or less makes it a govt bank. And the last thing the Fed and the govt wants is deflation. They profit from inflation not deflation.

 

[Acala]

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered." - Some Dood

Thanks for NOT attributing this to Thomas Jefferson, who almost certainly did not say this.

 

[CaptUSA]