Krugman's worry-free Kool-Aid

Tuesday February 19, 2013

Recently there has been some controversy over remarks on one of the early morning shows by the darling of the Eagle’s op-ed page, New York Times columnist Paul Krugman. I believe he opined that we should not be worrying about the national debt yet but should wait until it becomes untenable sometime off in the future.

Mr. Krugman is a Nobel Prize winning economist (an honor somewhat diminished by the fact that Al Gore and President Obama are also Nobel Prize recipients). His position makes you wonder where he got his degree; from the Zimbabwe School of Economics? A few years ago Zimbabwe, after adhering to the Krugman "What Me Worry?" theory of economics found it necessary to take 12 zeroes off its currency. So if you went to bed one night, having accumulated, through hard work and moderate habits, one trillion Zimbabwe dollars, you woke up the next morning with a grand total of one (1) Zimbabwe dollar. Evidently the "Krugman Threshold" had been reached and it was finally time for remedial action.

I suspect our moment of truth will not be as dramatic, but we are subject to the same universal laws as Zimbabwe. The systematic cheapening of Zimbabwe’s currency had little external impact. Our dollar is quite another matter. It is the world’s reserve currency and its debasement would have cataclysmic repercussions, not only for the U.S. but globally.

With our debt climbing steadily, the president unwilling to rein in spending, the Treasury borrowing excessively and Ben Bernanke (The Federal Reserve) printing money that is only backed by his personal guarantee, the entire leadership of our financial ship seems to have drunk the Krugman Kool-Aid. JAMES W. COTTER



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