Paul Krugman penned a column in today's New York Times in which he accuses Chinese political leaders of having talked themselves into having "delusions of competence," and then describes at great lengths the wrongness of their economic claims.
This is the guy who claims to be an advocate of Keynes' economic theories and then says that "governments never pay their debts," because of some theory about debt shrinking to the vanishing point due to ever growing GDP, and believes that inflation will solve our economic slump. Economic "delusions of competence" forsooth.
One of the problems I have with the debt to GDP thing is the GDP is not "money in hand" or a receiveable. It's just an indicator of economic activity. I suppose something comparable would be my salary vs the company I work for balance sheet.
ReplyDeleteOf course, if the chinese government is playing a card game with the chinese stock market, then it may well blow up on them. But I don't know if I blindly believe what or how Mr. Krugman says.