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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe Deflation Caucus By PAUL KRUGMAN at the NY Times
The Deflation CaucusBy PAUL KRUGMAN at the NY Times
http://www.nytimes.com/2014/09/05/opinion/paul-krugman-the-deflation-caucus.html?smid=re-share&_r=0
SNIP..........................
And there but for the grace of Bernanke go we. Things in the United States are far from O.K., but we seem (at least for now) to have steered clear of the kind of trap facing Europe. Why? One answer is that the Federal Reserve started doing the right thing years ago, buying trillions of dollars worth of bonds in order to avoid the situation its European counterpart now faces.
You can argue, and I would, that the Fed should have done even more. But Fed officials have faced fierce attacks all the way. Pundits, politicians and plutocrats have accused them, over and over again, of debasing the dollar, and warned that soaring inflation is just around the corner. The predicted surge in inflation has never arrived, but despite being wrong year after year, hardly any of the critics have admitted being wrong, or even changed their tune. And the question Ive been trying to answer is why. What is it that makes a powerful faction in our body politic call it the deflation caucus demand tight money even in a depressed, low-inflation economy?
One thing is clear: Like so much else these days, monetary policy has become very much a partisan issue. Its not just that talk of dollar debasement comes pretty much exclusively from the right of the political spectrum; inflation paranoia has, to a remarkable extent, become a matter of conservative political correctness, so that even economists who should know better have joined in the chorus. So we can focus the question further: Why do people on the right hate monetary expansion, even when its desperately needed?
One answer is the power of truthiness Stephen Colberts justly famed term for things that arent true, but feel true to some people. The Fed is printing money, printing money leads to inflation, and inflation is always a bad thing is a triply untrue statement, but it feels true to a lot of people. And, yes, a tendency to prefer truthiness to more complicated truth is and pretty much always has been associated with political conservatism, and this tendency is especially strong in an era when leading politicians get their monetary theory from Ayn Rand novels.
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The Deflation Caucus By PAUL KRUGMAN at the NY Times (Original Post)
applegrove
Sep 2014
OP
pampango
(24,692 posts)1. "'truthiness' — Stephen Colbert’s justly famed term for things that aren’t true, but feel true ..."
... a tendency to prefer truthiness to more complicated truth is and pretty much always has been associated with political conservatism, and this tendency is especially strong in an era when leading politicians get their monetary theory from Ayn Rand novels.
Another answer is class interest. Inflation helps debtors and hurts creditors, deflation does the reverse. And the wealthy are much more likely than workers and the poor to be creditors, to have money in the bank and bonds in their portfolio rather than mortgages and credit-card balances outstanding.
And the important thing to understand is that the dominance of creditor interests on both sides of the Atlantic, supported by false but viscerally appealing economic doctrines, has had tragic consequences. Our economies have been dragged down by the woes of debtors, who have been forced to slash spending. To avoid a deep, prolonged slump, we needed policies to offset this drag. What we got instead was an obsession with the evils of budget deficits and paranoia over inflation and a slump that has gone on and on.
I love Colbert's "truthiness". It describes conservatives, particularly the far-right, so well.
Thanks posting this, applegrove.
Laelth
(32,017 posts)2. k&r for the truth, however depressing it may be. n/t
-Laelth