So, never then?

Krugman is much like Chomsky - very interesting academic work but usually not too bright on politics

though this post is correct

finito in uno

In order to recover you have to move forward, not backwards, not to the side, not forwards, but always whirling, whirling, whirling towards freedom!

/Palin is Peggy Hill

fta The implications for Fed policy are also striking. If we use a Taylor rule that suggests zero rates until the unemployment rate reaches the vicinity of 7%, the Fed should stay on hold for around 6 more years.

I realize this is just a brief post and Krugman is surely more informed than I am, but it seems like 6 years might be optimistic. An awful lot of jobs need to be created and filled to get down to 7%.

aden_nak: So, never then?

this

Larofeticus: /Palin is Peggy Hill

Peggy Hill : Spanish :: Palin : Governing.

So basically we'll get back to where we were with fake economics when we should have actually gotten there with semi-legit economics.

I hate the stock market

Krugman always seems skittish in interviews - he never makes eye contact and he stammers. It makes me wonder what he's up to.

Six years is uncharacteristically optimistic of him. The numbers I've seen indicate much worse.

Link (new window)

Real unemployment-measured the honest way it used to be 30 years ago, to include those who have given up looking for work or who are working part time involuntarily-is hitting 20% (for those who are bad at math, that's one out of five working-age Americans). Foreclosures are hitting a record. Half of laid-off workers are cashing out their 401(k)s in order to buy food. State and local governments, both major employers, are hitting a wall as tax collections plummet and federal stimulus funds run out.  This is not the foundation for a renewal of economic growth; it is the precondition for a renewed or prolonged recession.

My suggestion to Americans: Learn to speak on of two languages ASAP

Either Mandarin or Cantonese. Your choice.

Sarah Palin's second term?

Given that she a half-way quitter, recovery would come sooner than expected.

And that's assuming the planet would survive one term with her at the top.

BigJake: Krugman is much like Chomsky - very interesting academic work but usually not too bright on politics

This. If he weren't a shill for his own political ideology, I might trust some of what he says. I know he's smart, but he's written a book promoting the beliefs of liberalism. If he were a staunch conservative in the same way, everything he said would be discredited.

Yomoxu: Six years is uncharacteristically optimistic of him. The numbers I've seen indicate much worse.

It depends on what you're talking about. If you mean unemployment to drop down to low levels, maybe only two years. Real GDP to reach its peak, maybe 4-6 years. Same with the stock markets. Housing prices? Yeah, maybe by the time I die they're have neared their peak values in those bubbly areas.

Best case scenario we have right now is a "jobless" recovery and a decade of "90's Japan style" economics. The catch though is the debt. Look at Japan (new window).

Our debt problem (public and private) has been growing for decades. There are only two ways to get rid of debt, pay it off or bankruptcy. We are doing neither but instead are adding to it. If we go through a decade of stimulus packages, bailouts, and zombie banks being propped up by the government, we will be up there with Zimbabwe.

FarkIlk01: Our debt problem (public and private) has been growing for decades. There are only two ways to get rid of debt, pay it off or bankruptcy.

3. Inflate your way out of it

jjorsett: FarkIlk01: Our debt problem (public and private) has been growing for decades. There are only two ways to get rid of debt, pay it off or bankruptcy.

3. Inflate your way out of it

Point nuclear weapons at our creditors and say "How much do we owe you again?" Problem solved.

jjorsett: 3. Inflate your way out of it

The Fed can print money, but they can't print debtors. Outside of some quantitative easing they can't create money out of thin air as our dollars are are Federal Reserve Notes, ie. debt. Money is created in our economy by debt.

Hyperinflation can't happen unless: the Federal Reserve Act is altered or done away with, Federal Reserve Notes circulating currently cannot be repudiated (our current money still has to be money), and people have to be convinced by government we aren't in a "Weimar" scenario (which we would be).

sckonkh: Point nuclear weapons at our creditors and say "How much do we owe you again?" Problem solved.

It would actually be better to point nukes at them and force them to buy more debt, then not pay it back. We could also blow up major manufacturing around the world like in Europe and be the factory for the world once again like after WWII. It would give us 10-20 years of prosperity.

FarkIlk01: jjorsett: 3. Inflate your way out of it

The Fed can print money, but they can't print debtors. Outside of some quantitative easing they can't create money out of thin air as our dollars are are Federal Reserve Notes, ie. debt. Money is created in our economy by debt.

Hyperinflation can't happen unless: the Federal Reserve Act is altered or done away with, Federal Reserve Notes circulating currently cannot be repudiated (our current money still has to be money), and people have to be convinced by government we aren't in a "Weimar" scenario (which we would be).

sckonkh: Point nuclear weapons at our creditors and say "How much do we owe you again?" Problem solved.

It would actually be better to point nukes at them and force them to buy more debt, then not pay it back. We could also blow up major manufacturing around the world like in Europe and be the factory for the world once again like after WWII. It would give us 10-20 years of prosperity.

John Hodgman agrees:

so we need more growth like a dot com bubble or another Enron? Is that what he means by most people don't realize how good the growth was?

If Obama does not get elected for a second term and a Republican gets elected, I would not be surprised to see Krugman on the economic team for the new administration. Obama has virtually ignored the guy and it will him bite back.

I don't want Palin be the Republican nominee, her retard baby can run a government more effectively and put Krugman on the economic team.

CarnySaur: Krugman always seems skittish in interviews - he never makes eye contact and he stammers. It makes me wonder what he's up to.

He assumes people will detect he's a fraud.

second term of the Sarah Palin administration

Is that the same as "the 12th of never"?

The US Economy is like an East German Swimmer, we've been hopped up on so many steroids and other drugs for short term performance we've totally screwed up our internal chemistry.

Here's the math, 66% of our economy is consumer spending. 80% of consumers have lost ground over the last 30 years. 15% kept pace, 5% outperformed the GDP. Until the bottom 80% can get out from under the crushing burden of debt, education and health care. This economy will not recover.

Funk Brothers: and a Republican gets elected, I would not be surprised to see Krugman on the economic team for the new administration.

This will happen when the Knicks put a cetacean on the court. And no, I don't mean a Miami Dolphin, I mean an actual from-the-sea mammal.

You are deluded about where the Republican party is. Even someone like Bloomberg wouldn't pick Krugman as more than window dressing (e.g. Deputy Treasury Sec), and Bloomberg would never win the GOP nom.

Nouriel Roubini is the economist known as Dr. Doom. Subby fails.

Obnox: Nouriel Roubini is the economist known as Dr. Doom. Subby fails.

Entered thread to say exactly this.

Komplex: The US Economy is like an East German Swimmer, we've been hopped up on so many steroids and other drugs for short term performance we've totally screwed up our internal chemistry.

Here's the math, 66% of our economy is consumer spending. 80% of consumers have lost ground over the last 30 years. 15% kept pace, 5% outperformed the GDP. Until the bottom 80% can get out from under the crushing burden of debt, education and health care. This economy will not recover.

Sadly, this.

sirrerun: Obnox: Nouriel Roubini is the economist known as Dr. Doom. Subby fails.

Entered thread to say exactly this.

You're both wrong. It's Victor van Doom.

I think Krugman is operating under a flawed assumption. He's averaging GDP growth over the Clinton years and taking the overall unemployment drop over that same time and basically assuming a direct correlation.

If you actually look at the numbers, unemployment dropped pretty sharply from 7.5% to around 5.5% between 1993-1995. Thereafter unemployment continued to decrease fairly slowly from 5.5% to 4% over the course of the next roughly five years. Those same five years saw some of the best periods of economic growth under Clinton.

One could reason that the reason that unemployment took so long to move from 5.5% to 4% was that once you get such a nearly completely employed workforce, its just hard for employers to find qualified candidates from among such a tiny pool. Since we don't have that same problem in this recession, it may be possible for our unemployment rate to drop sharply for longer.

. . . Or this recession won't follow that recession's model at all, and this whole discussion is meaningless.

in the second term of the Sarah Palin

people shouldn't even joke about this. for Christ's sake. maybe if we don't talk about her, she'll just go away.

The problem in a nutshell - we don't need full employment to satisfy society's needs due to technological advancements. Tertiary industries do not add economic value, instead shuffling it around or causing economic inefficiencies. The thrust of technological development in a capitalist economy has been to reduce those inefficiencies. At the same time, there has been a push to minimize the needed labor utility in secondary industries with technological utility. Conclusion - those jobs are gone, they're never coming back, and we've got to figure out what to do with all of those people who society just doesn't need to work anymore.

AnotherDisillusionedCollegeStudent: The problem in a nutshell - we don't need full employment to satisfy society's needs due to technological advancements. Tertiary industries do not add economic value, instead shuffling it around or causing economic inefficiencies. The thrust of technological development in a capitalist economy has been to reduce those inefficiencies. At the same time, there has been a push to minimize the needed labor utility in secondary industries with technological utility. Conclusion - those jobs are gone, they're never coming back, and we've got to figure out what to do with all of those people who society just doesn't need to work anymore.

There is no "society" to not want them to work. Human wants are unlimited. The problem is figuring out what new wants to fulfill.

SurahAhriman: There is no "society" to not want them to work. Human wants are unlimited. The problem is figuring out what new wants to fulfill.

That's a pretty damn strong assertion you've made there - I'd say the opposite. Human desires are fairly easily fixed into a number of general categories. The categories extend out of the most basic of desires - survival, socialization and reproduction. The entire course of human progress has been a series of modifications of these core desires.

What do humans demand out of the raw materials of the earth that requires a vast amount of labor power?

but but but but keynes!

AnotherDisillusionedCollegeStudent: SurahAhriman: There is no "society" to not want them to work. Human wants are unlimited. The problem is figuring out what new wants to fulfill.

That's a pretty damn strong assertion you've made there - I'd say the opposite. Human desires are fairly easily fixed into a number of general categories. The categories extend out of the most basic of desires - survival, socialization and reproduction. The entire course of human progress has been a series of modifications of these core desires.

What do humans demand out of the raw materials of the earth that requires a vast amount of labor power?

New and exciting ways of making survival, socialization, and reproduction more comfortable, convenient and novel. As an example, no one *needs* a cell phone, but people like them, and I'm sure someone could cram all the ways people like them into your narrow view of humanity. That's one the of benefits of sentience: we're capable of deciding sex is better with central air and sleep-number beds than on a pile of pine leaves spread over a comfortable rock.

To put it another way, technological innovation, and thus productivity, has been increasing by an enormous rate for the last two centuries. What is so special about *this* particular level of technology that it implies an utter inability to accommodate productive roles for everyone? why didn't it happen once we developed steam power? The assembly line? The story of technological innovation has a parallel story of people finding new productive activities to devote time, materials, and effort into. Claiming that we've suddenly hit a brick wall in that second story seems much more a "pretty damn strong assertion" than what I said.

It's how an economy specializes. The fundamental limiter is the energy in/energy out ratio. With oil, that ratio is an awesome 1:~103. We could have used that to provide everyone the basic, animal desires you claim to be paramount (assuming such centralization wouldn't destroy itself). Instead, we have neurosurgeons and community colleges, cyber-cafe's and iPhones. As that ratio gets better, we find new niches that can now support a sub-industry.

TDBoedy: but but but but keynes!

I doubt many fark Keynesians have ever read Keynes.

Kick ass... is that after this term of of the promise everything do nothing administration ?

SurahAhriman: New and exciting ways of making survival, socialization, and reproduction more comfortable, convenient and novel. As an example, no one *needs* a cell phone, but people like them, and I'm sure someone could cram all the ways people like them into your narrow view of humanity. That's one the of benefits of sentience: we're capable of deciding sex is better with central air and sleep-number beds than on a pile of pine leaves spread over a comfortable rock.

Yeah, but what happens when you run into a whole host of people who are satisfied with "good enough"? That's why planned obsolescence was developed in the first place - when demand is satisfied for the most part, for many people, they aren't going to buy the newest and greatest just for that reason, even if there are plenty of people who do just that.

To put it another way, technological innovation, and thus productivity, has been increasing by an enormous rate for the last two centuries. What is so special about *this* particular level of technology that it implies an utter inability to accommodate productive roles for everyone? why didn't it happen once we developed steam power? The assembly line? The story of technological innovation has a parallel story of people finding new productive activities to devote time, materials, and effort into. Claiming that we've suddenly hit a brick wall in that second story seems much more a "pretty damn strong assertion" than what I said.

The majority of demand for labor power is unnecessary with this go-around - steam power requires many people to keep it maintained, assembly lines need workers until robotics come around. Technology didn't "accommodate" the people it displaced; see "Depression, Great". It took the US having a manufacturing near-monopoly to create the amount of demand for US labor to fully employ our population.

It's how an economy specializes. The fundamental limiter is the energy in/energy out ratio. With oil, that ratio is an awesome 1:~103. We could have used that to provide everyone the basic, animal desires you claim to be paramount (assuming such centralization wouldn't destroy itself). Instead, we have neurosurgeons and community colleges, cyber-cafe's and iPhones. As that ratio gets better, we find new niches that can now support a sub-industry.

Specialization isn't necessarily a good thing, when no real utility arises out of the specialized area. Likewise, concentrating on niches unavailable to the vast majority of the population is a good path to social unrest when people start starving because they can't afford food, since they make no money. Just because we were able to borrow our way out of it in the last 30 years doesn't mean that the same will be the case tomorrow.

Sadida: Kick ass... is that after this term of of the promise everything do nothing administration ?

They probably still have that "Mission Accomplished" banner around the White House somewhere (under that box of "bubbling" xmas lights, behind the macrame kit)...should we raise it over Goldman-Sachs so you feel better?

Komplex: The US Economy is like an East German Swimmer, we've been hopped up on so many steroids and other drugs for short term performance we've totally screwed up our internal chemistry.

Here's the math, 66% of our economy is consumer spending. 80% of consumers have lost ground over the last 30 years. 15% kept pace, 5% outperformed the GDP. Until the bottom 80% can get out from under the crushing burden of debt, education and health care. This economy will not recover.

So we are basically proper farked then?

AnotherDisillusionedCollegeStudent: SurahAhriman: New and exciting ways of making survival, socialization, and reproduction more comfortable, convenient and novel. As an example, no one *needs* a cell phone, but people like them, and I'm sure someone could cram all the ways people like them into your narrow view of humanity. That's one the of benefits of sentience: we're capable of deciding sex is better with central air and sleep-number beds than on a pile of pine leaves spread over a comfortable rock.

Yeah, but what happens when you run into a whole host of people who are satisfied with "good enough"? That's why planned obsolescence was developed in the first place - when demand is satisfied for the most part, for many people, they aren't going to buy the newest and greatest just for that reason, even if there are plenty of people who do just that.

To put it another way, technological innovation, and thus productivity, has been increasing by an enormous rate for the last two centuries. What is so special about *this* particular level of technology that it implies an utter inability to accommodate productive roles for everyone? why didn't it happen once we developed steam power? The assembly line? The story of technological innovation has a parallel story of people finding new productive activities to devote time, materials, and effort into. Claiming that we've suddenly hit a brick wall in that second story seems much more a "pretty damn strong assertion" than what I said.

The majority of demand for labor power is unnecessary with this go-around - steam power requires many people to keep it maintained, assembly lines need workers until robotics come around. Technology didn't "accommodate" the people it displaced; see "Depression, Great". It took the US having a manufacturing near-monopoly to create the amount of demand for US labor to fully employ our population.

It's how an economy specializes. The fundamental limiter is the energy in/energy out ratio. With oil, that ratio is an awesome 1:~103. We could have used that to provide everyone the basic, animal desires you claim to be paramount (assuming such centralization wouldn't destroy itself). Instead, we have neurosurgeons and community colleges, cyber-cafe's and iPhones. As that ratio gets better, we find new niches that can now support a sub-industry.

Specialization isn't necessarily a good thing, when no real utility arises out of the specialized area. Likewise, concentrating on niches unavailable to the vast majority of the population is a good path to social unrest when people start starving because they can't afford food, since they make no money. Just because we were able to borrow our way out of it in the last 30 years doesn't mean that the same will be the case tomorrow.

I think you missed the entire point of what I was saying. Are you sure you're not a disillusioned highschool student?

Palin's own term, or the one of Michele Bachmann's that she finished after Bachmann died trying to bicycle to Hawaii?

I think Krugman is working under a false assumption here that unemployment is tied to GDP growth at least in the way he is looking at it. Yes there is a connection but in the way that he is going on overlooks the rehiring after Bush 1's recession. During tough economic times companies will layoff and trim wherever they can. But in doing this they know they are hurting their ability to provide services but they need to protect their cashflow. When consumer confidence is boyed at the end of a recession, the need to protect cashflow ends and the companies can go back to close to full employee needs. If/when this recession end we will see unemployment drop from double digits to about 7% in less than a year (my guess would be 2012 is when we see 7%)and then slowly creep down in relation to GDP growth. Not where we were but still not as doom and gloomish.