"And I do mean fantasies. Washington has spent the past three-plus years in terror of a debt crisis that keeps not happening, and, in fact, can’t happen to a country like the United States, which has its own currency and borrows in that currency. Yet the scaremongers can’t bring themselves to let go."
October 26, 2013
Megalomania is an occupational hazard in blogging, and I have witnessed any number of prominent blogmeisters succumb to the siren song of intellectual grandiosity. Karl Denninger at Market Watch is a prime example. He has gotten completely carried away with his Nostradamus Complex and with his "mathematical" certainties about the economic future. Plus, he now knows everything, as indeed everyone does in this age of Wikipedia. Karl was among the first to downplay the dangers of Fukushima, a call he made early in the ongoing disaster at the Daiichi plant. He simply would not countenance the "hyperbole" surrounding what little real reporting there has been about radiation from the site, even as 300 tons of radioactive water began flowing from Daiichi into the Pacific Ocean, even as reports filtered in that all large fish caught in the Pacific these days contain traces of Fukushima radiation. Even as we have learned that three of the nuclear reactor cores "have gone missing." Yes, that's right; TEPCO, the hapless operator of the plant, cannot tell us where the molten remains of the melted-down reactor cores of Reactors 1, 2 & 3 are right now. Somewhere down there, they're pretty sure, maybe under the concrete floor of the reactor buildings. Maybe they're in the groundwater, maybe they've already reached the Pacific Ocean. Maybe they're in China. They'll turn up.
TEPCO is now about to undertake the most dangerous engineering project in the history of human civilization. It's going to remove the 1,500 fuel rods from the spent fuel pool in Reactor Building 4. This building was badly damaged in a hydrogen explosion that occurred early in the disaster in March, 2011. The spent fuel pool is leaking, listing, it has no roof, and the computer-controlled apparatus designed to remove the fuel rods doesn't work anymore and cannot be repaired. Mr. Denninger, who favors nuclear power (of the thorium breeder-reactor type) remains serene. He even warns his readers, mostly of the libertarian persuasion like Mr. Denninger himself, that any "alarmist" commenting on his site about Fukushima will be deleted and the commenter will be banned.
Kind of touchy, I think. Mr. Krugman, Ace Economic Scientist for a Great Metropolitan Newspaper, is similarly touchy. The care and feeding of his own enormous ego is essentially Mr. Krugman's entire shtick. He deliberately provokes controversy by attacking those who disagree with him in the most ad hominem terms possible, then retreating behind a facade of decorous propriety and civility. Mr. Krugman was recently the subject of a three-part broadside by Niall Ferguson, the Scottish writer and historian at Harvard and Stanford's Hoover Institution. Ferguson pointed out errors that Krugman has made, despite Krugman's oft-repeated assertion that he's right about everything. Ferguson's attack was followed up by a long piece in Forbes that piled on with more anti-Krugman diatribes (h/t: W of the Show-Me State).
Well, of course Krugman is as wrong as often as he is right, whatever those designations may mean. Krugman is an economist. He's involved in a silly game of posting graphs and describing the correlations he wants to tease out of them. Krugman doesn't even talk about the American economy. I don't think he's very interested in it.
Krugman is the ultimate Bar Bet Economist and Faculty Lounge Debater. His goal is to draw attention to himself, and he is extraordinarily good at that. And Krugman is smart enough to know that the field in which he plies his dubious trade is about as rigorous as third-grade social studies. He knows he can't be "right" about anything, not in the same way his Princeton colleagues at the Institute for Advanced Studies are right about things. And by the same token, he can't be wrong about anything, either. Mr. Krugman wants to be taken seriously as a "scientist," but he knows that's not possible, because he's in the wrong field. So he's doing what he can with his field, which is to make himself rich and famous, and a man of his somewhat limited intellectual resources (and awful, clunky writing style) can best do this by creating controversy about himself. Thus, Niall Ferguson has played right into Mr. Krugman's hands. Mr. Krugman revels in this stuff. It's what he's after: attention.
As he travels from his home in the leafy neighborhood of Princeton, to his apartment in Manhattan, or jets down to his condominium in St. Croix, Mr. Krugman makes a big show of demonstrating his deep compassion for poor people. They are his cause. Okay, sure. But to fill in the time and the blizzard of blog posts, Mr. Krugman will throw down the gauntlet to keep himself the center of attention, challenging those things that "everybody knows" that Mr. Krugman knows just aren't true.
1. Contrary to popular belief, globalization is a good thing, and it has not harmed the American working man.
2. Contrary to another popular belief, America does not need Chinese support for its Treasury bond market; indeed, it would be good if China sold out its position altogether, if the dollar became weaker, and we simply allowed the Federal Reserve to buy all of our own debt, and, Friday's capper:
3. Contrary to the "apocalyptic" ravings of the Deficit Scolds:
There you have it. Mr. Krugman has at last arrived in the bulrushes of the Hamptons, along with George Costanza. America cannot have a debt crisis, because the dollar is our currency, we borrow money denominated in dollars, and therefore we can never run out of money. If those holding dollars won't lend it to us anymore, our own central bank can just conjure the money out of thin air and buy our own bonds. It's that simple. You wanna get nuts? Let's get nuts!