Tuesday, June 23, 2009

Krugman Exposes Himself

"Suddenly it seems as if everyone is talking about inflation. Stern opinion pieces warn that hyperinflation is just around the corner. And markets may be heeding these warnings: Interest rates on long-term government bonds are up, with fear of future inflation one possible reason for the interest-rate spike. But does the big inflation scare make any sense? Basically, no--with one caveat I'll get to later. And I suspect that the scare is at least partly about politics rather than economics. ... It's important to realize that there's no hint of inflationary pressures in the economy right now. ... Deflation, not inflation, is the clear and present danger. ... Some claim that the [Fed] is printing lots of money, which must be inflationary, while others claim that budget deficits will eventually force the US government to inflate away its debt. ... So is there any reason to think that inflation is coming? ... All of this raises the question: If inflation isn't a real risk, why all the claims that it is? ... But when it comes to inflation, the only thing we have to fear is inflation fear itself", my emphasis, Paul Krugman (PK) at the Houston Chronicle, 30 May 2009.

Come on PK, you're a smart guy. What gives? Is this your best "Timmy Boy" imitation? My guess: you are giving Zimbabwe Ben (ZB) a justification to monetize more debt. Did you give your old Princeton buddy, ZB the "secret handshake" which means, "run those presses"? Stop. ZB doesn't need any encouragement! PK, if you are short gold and will hold that short for the next ten years, I will believe you believe what you wrote.

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