| | You only have to take a good look at Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo approach, Gauti B. Eggertsson (NY Fed) Paul Krugman (Princeton) 11/16/2010
especially the figures 1,2,3 for aggregate demand purporting to explain 'the paradox of toil' to realize that Mr. Pragmatism is trying to pull a rabbit out of his political hat.
http://www.princeton.edu/~pkrugman/debt_deleveraging_ge_pk.pdf
Look carefully at the shape of his figures for aggregate supply and demand: they have different slopes, which is fine but ... they both have the same sense/sign -- which is total nonsense.
If you wade through the uncalibrated cargo cult science gibberish, what he did was claim a flash-bang 'dynamic event' -- a 'Minsky moment' -- resulted in a dynamic shift of the curves, which is fine. But then he waved his hands and claim that they not only shift, but end up with a new static shape that has both supply and demand having the same sense/sign (ie, both with increasing Q-amount with increasing P-price.)
This is clearly gibberish, but is key to his point ("the paradox of toil.")
It is total nonsense.
He is not a pragmatist. He is a political charlatan.
He calls forever borrow and spend more "Keynesian Theory."
He's an idiot, or else, believes America is.
Keyne's theory had two parts:
1] Save and invest during boom times, pay down past debt.
2] Borrow and spend during bust times.
Not what our government ever did. What we did was:
1] Borrow and spend during boom times.
2] Borrow and spend faster during bust times.
Krugman complains that what we should have done instead was:
2] Borrow and spend even faster during bust times.
Just look at the man. He even looks like he is pulling one over on us.
He is, and it is blatant. That Nov 2010 paper is evidence.
I want to hear a student of economics explain the static shape of his aggregate supply demand curves, even with a hand waving dynamic 'Minsky Moment' upstream.
I am calling bullshit on Krugman. He is busted. That paper busts him.
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