Works so nice, apparently we should try it twice. Then thrice…
Dr. Paul Krugman is calling for another bubble, this time in Germany, to solve the problems of a previous bubble in the PIIGS nations (Portugal, Italy, Ireland, Greece, Spain) of southern Europe (or, hilariously, the “GIPSI”). Jumping from bubble to bubble is (almost?) guaranteed to to lead to disaster. An “economy” is just the collected results of all of the production and consumption decisions of all of the people involved, not a machine waiting to be “jumpstarted,” lacking only qualified mechanics to get it on the road. You can’t attach a defibrillator to the “heart”; doing so in real life would only electrocute everyone in the vicinity. Doing so through the money supply will have similar results, along with being plain ol’ fashioned immoral behavior. Let the German people decide to send their money to Spanish banks and Greek government union employees and you can have the result you desire without inflation and in a morally and economically sustainable way. To call for it via inflation rather than through voluntary charity is to admit that deception and theft are the only means to accomplish your goal.
The assumption at the heart of all of Krugman’s prescriptions is centralized control; it is that the “economy” is something to delicate, too intricate, and too important to be left to everyone to participate in. Bill Anderson has a great post over at his blog dealing with this latest call for “only the good half” of Boom/Bust economics.
Finally, from Zerohedge.com, “The Ultimate Krugman Takedown” on his prescriptions for Spain and Europe. (begins at 35:20) Enjoy!