KRUGMAN HAS BECOME AN "INFLATION DENIER...."
BUT HIS HISTORICAL ARGUMENTS...ARE WRONG...AND COMPLETELY IGNORE ECONOMIC THEORY WHICH IS HIS CORE COMPETENCY...
THE JAPAN ANALOGY IS FALSE... THE YEN WAS NOT THE GLOBAL RESERVE CURRENCY DURING THE 80'S.... AND JAPAN HAS NEVER HAD THE MASSIVE STRUCTURAL TRADE DEFICITS THAT THE US HAS...
THE VERY FACT THAT THE US TRADE DEFICIT IS NOW COMPLETELY STRUCTURAL IS ALSO A FACTOR THAT IS INFLATIONARY....
SECOND, NO MODERN ECONOMY HAS BEEN RUN ON BUBBLES THE WAY THE US ECONOMY HAS BEEN... YOU'D HAVE TO GO TO THE 1720'S IN EUROPE TO FIND GOVERNMENTAL POLICY THAT WAS TOTALLY BUBBLE BASED...
THIRD, THE US IS IN EFFECT A TRADE COLONY OF CHINA NOW... CHINA IS THE "MOTHER COUNTRY" AND THE US IS PAYING "TRIBUTE" BY THE MATTER IT ACQUIRES MANUFACTURED GOODS...
THIS CHINA "TRIBUTE" IS NO DIFFERENT THAT THE REPARATIONS THAT WIEMAR GERMAN WAS PAYING IN THE 1920'S...WHEN THEY DECIDED THAT HYPER-INFLATION WAS THE ONLY WAY OUT...
FINALLY, KRUGMAN MAKES THE BIZZARO CLAIM THAT THERE IS NO INFLATION...
STOCKS ARE SOARING ON THE NEW BERNANKE BUCKS...
AND GAS IS HEADING FOR $3++ AGAIN...
EVEN AS GOLD IS A MOONSHOT...AND RATES ON TREASURIES ARE RISING...
KRUGMAN'S DEVOTION TO THE OBAMA ADMINISTRATION POLICY IS A GOOD THING...BUT YOU CAN'T BULLSHIT AWAY INFLATIONARY ECONOMICS FOREVER.
BANKS ARE NOT JUST SITTING ON THEIR CASH...AND THEY ARE NOT JUST "RE-INVESTING" IN BONDS...THEY ARE FINANCING THE RUN UP IN GOLD, OIL AND STOCKS...
THE ONLY DISAPPOINTMENT IS THAT THEY HAVE NOT BROUGHT BACK THE REAL ESTATE BUBBLE...YET.
