Paul Krugman Is An Idiot #7,941a

Sometimes I just want to tear my hair out. The guru of “liberal economic thought” goes from nonsense to insanity. Paul Krugman now says in today’s op-ed that the problem causing our current economic doldrums is insufficient government debt, and that the solution is to engage in even greater government deficit spending.

He starts by saying that “issuing debt is a way to pay for useful things” without, of course, saying that one can also pay cash for useful things or that debt is also a way to pay for utterly useless things like wars of choice and graft.

He then describes how at this point “the federal government can borrow at historically low interest rates” and goes on with one of his favorite songs with lyrics about how “this is a very good time to be borrowing” and a tune that sounds to me like fingernails on a blackboard. Low interest rates is an utterly stupid reason to be borrowing money. It may make sense in terms of timing, but to advance it as a reason for the act of borrowing is beyond ridiculous.

Reminds me of the television commercial which tells me that “You can save $1000 by buying a new car this month,” to which I reply by saying, “No, I can save $30,000 by not buying a new car at all.”

Krugman’s argument about the “good time to borrow” is made more absurd by the fact that government does not incur debt at a fixed rate. It sells bonds which are redeemed after a period of time, at most thirty years, many of them shorter than that, at which time the government either has to pay down the debt by redeeming the bonds, or “roll over” the debt by selling new bonds at whatever interest rate is prevailing at the time. So what happens if the interest rate, as it inevitably will, goes up?

The current national debt is $18.1 trillion, on which we paid $430 billion in interest last year, an average rate of 2.5%. About twenty years ago the prevailing rate was around 10% so assume we increase the national debt to $25 trillion, which Krugman would certainly applaud, and are paying 10% interest; that means interest payments of $2.4 trillion per year. Our current total spending is $3.3 trillion, so does that still sound cheap, Paul?

He then goes into some even more nonsensical babble about “what markets want” which I will discuss in a post tomorrow. At the moment it is time to go see if the lady on Alvarado Canyon Road can stick me with all the rest of the dead bodies that I know she has hidden in that gym.