September 23, 2012

A NYT headline: "Mitt Romney Says, 'I Am The Confidence Fairy!''"

But Romney never said "I Am The Confidence Fairy!" There's some other Romney quote — some dull thing about economics — and then Paul Krugman says: "In effect, Romney was saying, 'I am the confidence fairy!'"

Krugman really, really wants Romney to lose. So, presumably, does the NYT. I don't have a problem with an opinion writer paraphrasing somebody's quote like that. It's the use of quotation marks in the headline that's wrong.


And the use of the word "fairy" demands some attention. I understand that Krugman is using the word in the sense of the tooth fairy — a magical creature. But the word is also a homophobic epithet. If a Republican had used equivalent language against a Democrat, we would hear criticism, so let me provide the criticism in this turnabout.

And by the way, creating confidence isn't like changing a tooth into money. The supposedly fairy-like power Romney claimed was to inspire optimism about the economy. Compare that to Obama's "this was the moment" speech, given at the point of accepting his party's nomination in 2008. At that moment, he proclaimed, "the rise of the oceans began to slow and our planet began to heal... we ended a war and secured our nation and restored our image as the last, best hope on Earth... we came together to remake this great nation so that it may always reflect our very best selves, and our highest ideals."

If we're going to ridicule presidential candidates asserting magical — godlike — powers, that was the ultimate.

And that was 4 years ago. Many moments ago. How are we doing with "our highest ideals"? How did Obama do remaking this great nation? Is this the reflection of our very best selves? These are the real questions, not some inconsequential remark Romney made about optimism at a fundraiser.

Now, Krugman thinks he has a very funny point about economics, which is that the stock market is up, even though Romney's looking less likely to win according to Intrade. And what Romney said — what that "quote" in the headline paraphrased —was:
If it looks like I’m going to win, the markets will be happy. If it looks like the president’s going to win, the markets should not be terribly happy. It depends of course which markets you’re talking about, which types of commodities and so forth, but my own view is that if we win on November 6th, there will be a great deal of optimism about the future of this country. We’ll see capital come back and we’ll see — without actually doing anything — we’ll actually get a boost in the economy.
We're deprived of the text of the question he's responding to. But we can see that Romney inserts a qualification about "which markets you’re talking about, which types of commodities," before moving on to a generic statement about "optimism about the future" and "a boost in the economy." I'm not a Nobel-prize winning economist, but I can see that Romney is making a decision not to get into saying something complicated, and that there are different types of markets and some go up when others go down. But if you want to talk about the stock market, isn't that where people put extra money that they aren't investing in expanding their own businesses in a way that might produce more commodities and increase employment?

Fairy forbid that the economics expert would actually explain some economics now and then. Why bother when there's one more thing about Romney that's supposedly soooo hilarious? It seems we've all turned into idiots.... here in this remade great nation that reflects our very best selves.

Is this your very best self, Mr. Krugman? Is this your very best newspaper, New York Times?

76 comments:

campy said...

It's not wrong if it helps the Glorious Leader.

Mark O said...

It is the word "fairy" they want, as if Obama were macho. We've seen him throw and ride a bike.

Now to the macho chant, "Bin Laden is dead and GM is alive," the GOP can respond, so are Ambassador Stevens and Al Qaeda.

Paul Zrimsek said...

But if you want to talk about the stock market, isn't that where people put extra money that they aren't investing in businesses that might produce commodities and increase employment?

What?

David said...

Careful, Krugman, or Romney and his henches may hold you down and shave off your fairy beard. All in fun, of course.

Ann Althouse said...

@Paul Zrimsek I tweaked the language a bit. I didn't think it was such an abstruse point.

People with money could expand their own business and hire more people and make things, or they could buy stock so they can make some interest off their money. I'm not an economist, but I am under the impression that businesses are holding off spending money this way and that's why the stock market spikes when no jobs are being created.

America's Politico said...
This comment has been removed by the author.
America's Politico said...

Am at the K-street shindig this A.M. THE word is that all the big-guns of the WH are about to destroy Romney. All the head-lines in the papers, led by NYT, will be totally:
- Romney, wrong man for the right time.
- Romney cannot convince GOP to vote for him.
- World leaders have problem with Romney's vision for America.
- Romney cannot get support from African American voters.
- Women have deep problems with Romney.

The WH Office of Communications is in 24/7 contact with the Press.

Romney: give up. you cannot win. you know that. we know that. the voters know that. so, why are you even campaigning? go away and save your soul.

Curious George said...

"Ann Althouse said...
@Paul Zrimsek I tweaked the language a bit. I didn't think it was such an abstruse point.

People with money could expand their own business and hire more people and make things, or they could buy stock so they can make some interest off their money. I'm not an economist, but I am under the impression that businesses are holding off spending money this way and that's why the stock market spikes when no jobs are being created."

Shoulda quit while you were behind.

Phil 3:14 said...

AP, I liked your 1st post better.

Tim said...

"So, presumably, does the NYT."

So, what, there's not enough evidence in yet to call it, that it isn't completely obvious the NY Times wants Romney to lose?

Pogo said...

The fake quote is why I won't bother even clicking the NYTimes link to see the mendacious headline.

Even thei Nobel economist is in on the Big Lie. A la Reynolds, the MSM are just Democrat operatives with bylines, so they are not a news source except in the way Pravda was a newspaper.

Contra Romney, I think the stock market is up because 1) the Fed is trying help Obama by pumping even more dollars into the economy, but 2) there's nowhere else to put money.

No new businesses, no new jobs, no confidence in improvement ahead, just hoping to be make some money, any money, especially those giant pension funds that promised huge ROIs. A bidding war for the last remaining place to make some dough.

But I could be wrong, and Krugman correct, that the stock market is pumped full of confidence in Obama, rather than full of devalued currency, and that recovery is just around the corner. Hoover and FDR thought the same thing, however.

rhhardin said...

The stock market doesn't have any money. The money that goes in goes right back out, from buyer to seller.

Skookum John said...

Ann, if you want interest, you buy bonds. If you want dividends and capital gains, you buy stocks.

Aridog said...

rhhardin said...

The stock market doesn't have any money. The money that goes in goes right back out, from buyer to seller.

True dat. Then, there is the "Fed" where nothing goes in and fiat money comes out.

Freder Frederson said...

But the word is also a homophobic epithet.

Oh give me a freaking break. The "confidence fairy" is used frequently to describe the belief that if only if businesses only were more confident they would create more jobs.

Next, you'll be telling us niggardly is a bad word.

Freder Frederson said...

The article is clearly is on the opinion pages, and a Krugman piece no less. Only a fool would believe that it is a direct quote. Frankly if you are that ignorant, you shouldn't be voting, much less teaching graduate students.

America's Politico said...

Just heard Stephanie C. say that she and Paul K. are friends. She said: "I have a direct contact to the NYT".

How much I love the brunches on Sunday. I am in power. Once the Obama-Biden DESTROYS Romney-Ryan, I will have a corner office in the WH.

How do you like your apples? Suckers.

Freder Frederson said...

Krugman is right. Romney is contending his election, in and of itself, will boost the economy. That is extreme arrogance at best, but more likely delusional.

cubanbob said...

The market is up because of the bubble created by the fed. As long as interest rates are near zero it's dumb to keep money in cash, you lose to inflation and the minuscule interest income is taxable. Yield chasing is what is propping the market up. Come January if congress does nothing about the massive tax hikes that go in to effect the first of the year, the market will crash.

Once Krugman was an economist and would have known this but now he is just a democrat hack with a byline. Move along, there is nothing here to see.

America's Politico said...

Just got a video-call from the POTUS at the K-street brunch:

"Hey, you guys, we have to win this thing. You are the change. You can make it happen. Thanks for every-thing you all do. Enjoy the weekend."

The crowd roars. Many people are writing checks for the super-pacs. Oh my what a morning.

Romney' staff must be wetting their pants/skirts.

edutcher said...

The Romster hasn't said anything we all don't know.

Dictator Zero has been awful for business and is engaged in trying to kill whole industries.

As for the Gray Lady, what the Hell else (please pardon my language, Madame) do we expect?

wyo sis said...

The closer Romney gets to the truth the louder liberals yell.

Gabriel Hanna said...

Best commentary I've seen on the use of quotes to indicate what someone did not say:

I’m interested in the sleight-of-hand the columnist pulled here. The guy he’s quoting didn’t use the word “jihad.” The columnist put the word in quotes to signal that the guy didn’t use that word, you see.

Got it. Oh, I can imagine that conversation with the boss I'd have if I did this:

So you wrote that he believed in a Christian jihad.

(Coyly channeling Michael Palin in the dock as a professional Cardinal Richelieu impersonator) Ah did that thing.

But he didn’t say that.

Exactly? Well,he meant, it though.

He meant it.

Yes, and that’s why I put it in quotes.

Quotes. Which are usually reserved for, you know, quotes.

Right, but I used them here to set the word apart. You know, show that it was a paraphrase.

By using the means we use to indicate direct transcriptions.

Well, sometimes, sure. But I meant them more as, you know, those air quotes you do with your fingers?

So in the future should we have a picture of you with your fingers in the air to indicate that the quote is not, actually, a quote?

Look, the point is true. The guy wants a jihad; look at what he said -

Why look at what he said, when we can just ask you to describe the general aroma? You moron! There’s one standard in this business, and that these little curvy things, these dots with hooks, mean we are using the words of the person we’re talking about. WORDS.



America's Politico said...

Reid to release taxes next week. Oh my, the GOP is finished. Romney's taxes are a joke! We will have a memo about this to the NYT and it is all over. Oh my, the election is like taking a candy from a baby.

Karnival said...

Is this your very best self, Mr. Krugman? Is this your very best newspaper, New York Times?

Of course the long-obvious answer is- Yes.

Rusty said...

I like how the left likes to equate a rising stock market with Barrak Obama's popularity.
Perhaps it isn't his popularity. perhaps it's the only place left to store value.

Hagar said...

Paul Krugman, the former Enron economic adviser, has not been an economist for a long time now - if indeed he ever was.

The stockmarket is up because Bernanke and Geithner being Wall Streeters themselves - have been pouring money into it, and the investment banks and stockbrokers have been investing in each other and giving themselves big bonuses, so on Wall St., things look rosy.
But it is a false prosperity with "Monopoly money" that there is little deemand for outside of Wall St. since the economy - the real stuff - is stagnant.

Chip S. said...

Freder Frederson said...
Only a fool would believe that it is a direct quote.

According to the Frederson Doctrine, this would also be an acceptable headline:

Romney: "Obama's Done a Great Job, Should Be Re-elected"

Balfegor said...

Well, as Lord Salisbury said:

If I were asked to define Conservative policy, I should say that it was the upholding of confidence.

And Romney is much more that type of Conservative than the modern ideological sort.

cubanbob said...

America's Politico said...
Reid to release taxes next week. Oh my, the GOP is finished. Romney's taxes are a joke! We will have a memo about this to the NYT and it is all over. Oh my, the election is like taking a candy from a baby.

9/23/12 9:40 AM

I hope you signed the lease for your pizzeria in Tampa because your going to need to switch careers come January. If your pizza is as good as your parodies, I will gladly break my diet and drive 7 hours for what should be an extraordinary pizza.

The Crack Emcee said...

The use of the word "fairy" demands some attention. I understand that Krugman is using the word in the sense of the tooth fairy — a magical creature. But the word is also a homophobic epithet.

Your mind is weird sometimes,...

America's Politico said...

CubanBob: you are welcome to try my pizza. The vegan pizza is the best. It is what the POTUS and FLOTUS prefer.

rhhardin said...

The value of a stock is the present value of all of the money the company will ever earn, or equivalently the present value of all the dividends it will ever pay.

There's not only uncertainty about growth prospects, but over what interest rate to use in discounting future money.

At the moment the pricing is probably more about the low interest rate than company growth.

If so, perhaps people are speculating that they can sell the stock before interest rates rise.

Long term bonds have the same problem: an interest rate rise will cut their value hugely.

Romney would be good for business, restoring jobs that are now uneconomic through regulation and taxes. That's good for new companies, and adds growth; but the interest rates would also rise as the Fed undoes the money flood they've given us, or for that matter to offset the inflation resulting if they don't, which is a negative for current bonds and for companies that don't ride the growth wave.

I can't justify the long term bond current low yields, though, so may not know what's going on at all. It seems like a sure loser.

cubanbob said...

America's Politico said...
CubanBob: you are welcome to try my pizza. The vegan pizza is the best. It is what the POTUS and FLOTUS prefer.

9/23/12 10:21 AM

Sounds rather good. Do stock up on decent Chianti to go with the pizza and lets us know when your open for business. And good luck to you.

Hagar said...

AA,

You are too touchy. "Fairy" is also the term for Tinker Bell, etc. and so on, with no sexual connotations.

Since we are talking about Democrat economics, the term "pixie dust" and "unicorn horns" also come to mind.

Hagar said...

rhardin,

"Value" may be debatable, but "price" is what we are talking about here, and the price of anything is what someone else is willing to pay for it - at the moment, and subject to change without notice.

Bob Ellison said...

How did Obama do remaking this great nation?

This is the big question that dominates Presidential elections. We re-elected Clinton in 1996, despite my conviction (why does nobody listen to me?!) that he was a jerk. He was effective, especially in the way he became a GOP tool after 1992.

Is Obama effective? No. That obvious conclusion, and the proposed alternative candidate, will decide the election.

Chip S. said...

Mitt Romney: Confidence Fairy

Barack Obama: Confidence Man

Michael K said...

"Contra Romney, I think the stock market is up because 1) the Fed is trying help Obama by pumping even more dollars into the economy, but 2) there's nowhere else to put money. "

I agree but there is another aspect of this. I think the stock market is anticipating the coming inflation. Bonds do not represent the hedge against inflation that stocks do. Those of us who lived through the last such surge of inflation know that houses are no longer the hedge they were in the 70s when my house tripled in price, if not in true value.

In 1981, I bought US treasuries with a coupon rate of 16% and I got them at a discount that made the true return 18%. Unfortunately for me, the maturity was in five years but it good for the time until then. Mortgage rates were at 21% in southern California in 1980. Imagine that again. The alternative is what we see in Argentina. That's the choice we face in November.

Michael K said...

"The vegan pizza is the best. It is what the POTUS and FLOTUS prefer."

I think it was also the favorite of the guy who jumped into the tiger enclosure of the Bronx Zoo.

Dust Bunny Queen said...

Krugman thinks he has a very funny point about economics, which is that the stock market is up, even though Romney's looking less likely to win according to Intrade.

The stock market is up for the very simple reason that there is NO WHERE ELSE to invest and get a return. Buy a 10 year US Treasury at pitiful returns?? Not to mention that the US credit rating has been lowered again.

Bank CD at less than 1%? Might as well put the money under the mattress.

Seniors and Pension Fund Managers have to get some sort of a return. The seniors have to live on their investments and you might be able to make a connection between the underfunded pension plans and the rock bottom interest rates. Pensions, by law are prohibited from investing in certain risky investments or to hold more than a certain percentage of high risk investments.

Nope, the only game in town is the Stock Market and taking on higher risk than you would have done in the past. As money pours into the stock market in a desperate attempt to get some sort of, ANY sort of return, supply and demand drives up the stock prices.

Bubble bubble toil and trouble.

rhhardin said...

A side-effect of low interest rates is that defined benefit pensions that had been fully funded are no longer fully funded, since they're not getting any return to speak of.

That's an incentive to cancel the pensions and offload them to the pension guarantee fund, through a couple of choices the law gives to companies.

The former Lucent just voted itself the option to do that. I think the NYT just did.

Higher value pensions take haircuts, there being a maximum payment that's guaranteed.

rhhardin said...

On no return on savings in retirement: it's not as bad as it sounds.

Retirees have always been living on principal, just not noticing it because of inflation.

The so-called income just compensated for inflation, so it was as if they earned zero and just withdraw a steadily declining amount from real savings every year.

Also in their favor, there's no taxes on no income, so that loss is avoided.

So long as inflation is low, low interest rates aren't a disadvantage.

bagoh20 said...

If Romney says something Krugman knows is true does Krugman make a sound?

He stands up and claims: "That tree didn't fall, it grew sideways right there on the ground. I know these things. I have a Noble Prize and you don't."

Dust Bunny Queen said...

The so-called income just compensated for inflation, so it was as if they earned zero and just withdraw a steadily declining amount from real savings every year.

Also in their favor, there's no taxes on no income, so that loss is avoided.

So long as inflation is low, low interest rates aren't a disadvantage.


Please...tell me that was sarcasm!!

The job of a financial advisor/investment counselor is to invest the client's funds so as to compensate for inflation using historical trends and out and out guessing of future trends. At the same time balancing risk/return of principle and tailoring the portfolio to the income needs and personal issues affecting each individual client. You think that is easy? In the ordinary times it can be done and wasn't really all that difficult.

Today.....fuggedaboudit.

Imagine you are retired or soon to be retired and you have a finite amount of funds to last you for the rest of your life expectancy. If you can count on an ROI of say a modest 5% and inflation at 3.5% the advisor can look for investments that suit the client. Today at 0 to 1% interest in so called safe investments*** and inflation creeping ever higher on items people need to live, it is impossible to get a decent return without taking on higher and higher levels of unacceptable risk.

*** Don't make me explain the inverse relationship between bond pricing, interest rates and bond duration price sensitivity.

Please say you were joking. If not I sure hope you aren't managing your own finances.

rhhardin said...

@DBQ: Suppose there's no inflation.

You have some amount of money.

You live on X percent of your remaining money each year.

The money lasts forever.

You have less to live on each year, is all. If you had enough, you die before things get tight.

With inflation, say you earn enough interest to live on each year, and your principal is unchanged. Each year, owing to the inflation, your income is worth less in real terms, and your principal is worth less in real terms.

It's the same situation. And if you had enough money, you die before things get tight.

In addition, you owe no taxes on any fake inflation-caused income in the former cars.

Damon said...

"Without actually doing anything." Romney sells himself short. Winning an election and ushering in a new economic model for growth is actually doing something.

Krugman is reprehensible in every way. Intellectual dishonesty makes him unworthy of even discussing.

Ann's intellectual honesty is why I come back day after day, thanks Ann!

deborah said...

"You are too touchy. "Fairy" is also the term for Tinker Bell, etc. and so on, with no sexual connotations."

Gay fairy or magical fairy, both are perceived as light in the loafers, and that is the NYT intention, subliminally or not.

Ann Althouse said...

"Ann, if you want interest, you buy bonds. If you want dividends and capital gains, you buy stocks."

Yes, I know. The point is people have money that they don't want to invest in their own business so they do what they can to make some money with it.

Ann Althouse said...

I'm not trying to instruct on economic points here. I'm complaining about Krugman's failure to use his expertise in a more neutrally expert way.

Ernst Stavro Blofeld said...

Romney is contending his election, in and of itself, will boost the economy.

Maybe that's because businessmen will believe there's someone in the White House who isn't actively hostile to businesses making money, will approve Keystone XL, repeal Obama Care, and not tax them into oblivion.

Ann Althouse said...

"Ann, if you want interest, you buy bonds. If you want dividends and capital gains, you buy stocks."

What people want is money. They don't say: I want interest/I want dividends/I want capital gains. You have a extra money and you want to at least use it to get some income. The technical category that income falls into isn't what's relevant. (I know there are tax questions too.)

My point is that if people don't want to put their money into growing the businesses they are running, then you can get a rising stock market during a time of poor job growth.

If you want to argue with me, please argue with me over that.

Rusty said...

Bunny.

I also suspect that there are a lot of dollars coming back from China and Europe as the uncertainty there is rising and our stuff is cheap right now.

Hagar said...

"Sometimes a cigar is just a cigar" - even if it is Bill Clinton's.

And, what interest?
Last month my bank accounts combined made 17 cents.
I own no bonds, but are they doing much better?

I think this is another indication that the stockmarket high is phony, and there is something seriuously off camber in the way our economy is being "managed."

Rusty said...

Althouse said,
"My point is that if people don't want to put their money into growing the businesses they are running, then(when?) you can get a rising stock market during a time of poor job growth."


uncertainty is driving the market. As DBQ said corporations that have done well are parking their money in the stock market rather than having cash on hand or investing in infrastruxture that may go unused for another decade or so if Obama is relected.
There is also my contention that overseas money is coming back as China and Europe no longer seem to be a safe bet.
Of course if Obama is reelected look for a large dip in the market.For a very long time.

Aridog said...

Hagar said...

I think this is another indication that the stockmarket high is phony, and there is something seriuously off camber in the way our economy is being "managed."

As I think I remarked earlier Do Tell. Just how much value *dilution* can we absorb?

McTriumph said...

Growth or creating wealth is not driving stock market gains. The devaluation of the dollar and the Fed printing money is. We are living in a fantasy economy that we are going to have to cleanup sooner or later.
Krugman is the Andrew Sullivan of economics.

Nathan Alexander said...

Alternate title:
The Coming Stock Market Crash. (Which will be blamed on the GOP in some way)

rehajm said...

Krugman and Obama's Council of Economic Advisors predicted real GDP in 2013 would be 15.6 percent above real GDP in 2008. Remember that next time you hear Krugman or Obama say recoveries are slower after a financial crisis. If they are, why didn't their forecasts reflect this?

And if they manage to get re-elected, expect 'Summer of recovery' to be an annual event.

chickelit said...

Lots of Obama-style stocks, e.g., green energy stuff, is in the crapper. One needs to look at which kinds of stocks are up before concluding some sort of cause and effect.

rehajm said...

My point is that if people don't want to put their money into growing the businesses they are running, then you can get a rising stock market during a time of poor job growth.

In fact, many public firms are unusually lean, having reduced employee head count significantly since 2008. Instead of hiring new workers, many are investing in upgrading technology, which produces gains in productivity- doing more with less, (or the same). This makes earnings better, which leads to higher equity prices. That's how you can have poor job growth and rising equity prices.

There are numerous other factors- Fed pumping liquidity into the system, investors anticipating future inflation and rising commodity prices, raising the value of commodity based equites- oil, mining, etc. Sentiment matters- extraordinary bearishness amongst investors like we saw back in July leads to spikes in equity prices. Short covering. Institutional managers that missed the early part of the rally chasing returns to catch up to their peers.

As to Romney's claim, as usual there's truth to what he says. Wall Street and main street would love a Romney victory- It would mean no more EPA lynchings, no more Boeing style lawsuits from NLRB. An advocate for cost control from government. An advocate for reasonable taxation. The possibility for positive major tax reform. That said I don't think an Obama victory necessarily spells a Nov.7 collapse.

a psychiatrist who learned from veterans said...

Would Archie Bunker say 'I am the confidence fairy.' No; then Romney didn't say it.

Aridog said...

...Fed pumping liquidity into the system,...

Why is it so hard to just call this what it really is....printing money by fiat, when there is insufficient productivity to support it.

When will the crash come? After QE3 now, or QE4, QE-X?

a psychiatrist who learned from veterans said...

Maybe the stock market reflects the state of international business. With billions lifting from poverty world wide there is bound to be more global economic activity or near term potential.

Comanche Voter said...

Don't definitely know that Krugman wants Romney to lose; but I definitely know that Krugman is a LOSER!

cubanbob said...

rhhardin said...
On no return on savings in retirement: it's not as bad as it sounds.

Retirees have always been living on principal, just not noticing it because of inflation.

The so-called income just compensated for inflation, so it was as if they earned zero and just withdraw a steadily declining amount from real savings every year.

Also in their favor, there's no taxes on no income, so that loss is avoided.

So long as inflation is low, low interest rates aren't a disadvantage.

9/23/12 11:27 AM

Inflation is low? Have you been food and fuel shopping lately? No one buys a home every week or consumer electronics every week but they do need food and fuel every week.

damikesc said...

Only a fool would believe that it is a direct quote.

...except that the use of quotes, universally, indicates a quote.

Remember that next time you hear Krugman or Obama say recoveries are slower after a financial crisis. If they are, why didn't their forecasts reflect this?

The usual "Things were so much worse than we thought" bullshit will be uttered ---- even though they referred to the crisis in 1929-type terms.

When will the crash come? After QE3 now, or QE4, QE-X?

Should we even worry about the devastation when this crashes?

You can't create multiple trillions of dollars out of nothing and not have any negative repurcussions. And few problems become less bad the longer you put off fixing them.

rhhardin said...

Inflation is low? Have you been food and fuel shopping lately? No one buys a home every week or consumer electronics every week but they do need food and fuel every week.

A drought isn't inflation. It's prices allocating the food when the supply drops.

I'd guess speculation on war is driving fuel prices, which is reducing consumption now in favor of supply later when there's very little fuel, if the speculators are right. If not, they lose their shirts.

The fed printing money isn't itself a problem so long as it's not chasing goods, which apparently it is not. It's sitting at the fed as bank reserves. The Fed is going to have to mop it all up pretty fast though when the economy begins to recover.

The government spending money is the problem. It takes resources from productive use and uses it for crony payoffs, which has only bad effects.

Aridog said...

rhhardin said....

The fed printing money isn't itself a problem so long as it's not chasing goods, which **apparently** [???] it is not. It's sitting at the fed as bank reserves.

The government spending money is the problem.


I think I am losing it. Can you explain that phrasing to me...seriously. I do not get it.

Wouldn't be the first time for me, but it's still irritating :-))

rhhardin said...

@airdog

The Fed bought securities from banks. The Fed winds up with securities and the bank winds up with cash. The bank, instead of lending it out, deposits it at the Fed as reserves, which pay interest; or they use the cash to buy Treasury bonds.

The effect is to make the bank a better credit risk, risky securities having been moved off their balance sheet and onto the Fed's balance sheet.

So far, no money is being spent. It's the same money used over and over to move securities.

There is a big credit balance out there, however, should the banks decide to lend it out.

The government at the moment borrows the money it spends, which isn't inflationary either, since it takes out of circulation the money it then puts back in circulation by spending it. There's a growing debt for this, but no inflation.

The latter is what actually hurts the economy, by misallocating real resources, present and, owing to the debt, future.

rhhardin said...

I've heard that the Fed itself is buying some Treasury bonds, which if true would amount to printing money and spending it, but with the offset that it winds up as debt to be paid back, and so has an extinguish date.

The inflation threat is what will happen when the economy picks up, and the Fed has to mop up all those bank reserves before they're lent out, which means an interest rate rise and an appearance of killing off the recovery.

Politically that will be very hard.

But the alternative is killing inflation.

Which way will the Fed go? Nobody knows.

AF said...

"A NYT headline: "Mitt Romney Says, 'I Am The Confidence Fairy!''"

Nobody above the fourth-grade reading level would see that blog post (not "headline") and think either (1) that Mitt Romney actually said "I am the confidence fairy" or (2) that Krugman or the NYT want us to believe he did.

As for fairy, you can perhaps be forgiven for not reading enough Paul Krugman. He uses that phrase all the time, virtually always in contexts where it doesn't have any plausible homophobic overtones.

Fen said...

In effect Paul Krugman is saying: "I like to molest little boys!"


a psychiatrist who learned from veterans said...

@ AF 8:26 PM

I know the NYT is most concerned about the less fortunate. For those of us who only read at the third grade level, does it come out with an edition in which those columns that are written about an alternate reality are marked as such?

Aridog said...

rhhardin ....thanks for the explanation so far. The banks' buying up mortgage backed securities appears to be along the lines you've outlined. Especially with what this article suggests as problematic.

I read both and my brain goes tilt over the cause versus effect issue.

Sam L. said...

Paullie "The Beard" Krugman. Gets it right sometimes, and then contradicts himself later. Or the other way around.

A lead sinker amongst the gold of life.