Tied to the mast
…but orange now and black

Posner on Krugman: “He is the gingham dog to Milton Friedman’s calico cat”

Posner urges Krugman to tone down the  partisanship and look beyond the short-term:

If there is any responsible economist who believes that the nation is on the verge of a hyperinflation, I do not know who it is, and Krugman names no names. In fact the danger of inflation in the short run is minimal, but the qualification is essential and can nowhere be found in the column…

[What we have is] a long-run budget problem indeed, as Krugman acknowledges. What we do not have is a long-run solution, or even the groundwork for it. There is much wasteful government spending–but try cutting it! Even the ridiculous farm subsidies are sacrosanct. We have low taxes–but try raising them! Every sensible path to a long-run solution seemed blocked by special interests and political demagoguery. We are likely to be left with either inflation, the standard debtor’s remedy, or an increased dependence on loans by foreign nations and foreign investors, at increasing interest rates because the more we borrow, the higher the interest rates we have to pay. And interest on loans from abroad is a drain on American wealth, when the loans are financing budget deficits distended by inefficient government programs, rather than productive activity.


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