Krugman: The changing arguments put forth by austerity hawks

The Stability Two-Step

The thing that strikes me about the financial stability group is that they are all permahawks. Taylor and the BIS have often argued that money is too loose; have they ever, at least in the past two decades, argued that it is too tight? Not that anyone has noticed.

But if monetary policy is too expansionary on a sustained basis, surely we expect to see accelerating inflation. And there have in fact been repeated warnings from this group that inflation is about to take off. But what we see instead is this:



You might expect some rethinking, given this absence of inflationary trouble to materialize. But the only rethinking that seems to happen is a search for new reasons to make the same complaints about loose money. Inflation is still perpetually looming — no argument is ever abandoned — but now loose money is also a danger to financial stability.

One True Rule, the two-step — the ever-changing rationale for never-changing policy — is reason in itself to discount the whole thing.

http://krugman.blogs.nytimes.com/2015/04/21/the-stability-two-step/

The budget hawks, austerity hawks, inflation hawks - they go by different names - all worry that government spending that will stimulate the economy will also cause inflation. The fact that history and evidence prove otherwise is, as always, irrelevant to conservatives.