Osborne made a monkey out of himself; Krugman likewise August 12, 2011Posted by larry in nature of science.
I neglected to add to my summary of Osborne’s statement that in a response to a question from a Tory backbencher querying whether it might not now be the time to go back on the gold standard in order to restore some sense of stability, Osborne, incredibly, ducked the question. He failed to reject the suggestion outright, which would have been the best response, but contended that this option was not presently on the table nor was it part of the coalition’s current thinking. To imply that such a suggestion might in the future be a consideration shows a disregard or ignorance of the economic history of the past 100 years. Perhaps the backbencher was conflating the gold standard with the recent platinum seignorage issue. If so, that is unfortunate as they are not at all comparable.
Reference on the gold standard: Eichengreen, Gold Fetters.
Even more absurd was Osborne’s reliance on what the rating agencies say. Not only do such ratings not apply to sovereign governments with sovereign control over their own currency, the ratings of these agencies are suspect in and of themselves. Peter Tasker has a nice, short piece in the Financial Times showing this sort of thing to be the absurdity it is – http://www.ft.com/cms/s/0/b8d489a8-c363-11e0-b163-00144feabdc0.html.
Krugman has also made a bit of a monkey out of himself once again by showing that he is not prepared to understand the essential characteristics of what has become known as Modern Monetary Theory, which is a descendant of Keynes-Kalecki, Kaldor, Minsky and others (with a little Marx thrown in). He repeatedly misrepresents their views. Perhaps he is desperately trying to avoid being characterized as a lefty, which might lead certain people to think he is a kind of nut job, and wishes to be seen as a moderate. If so, then this just shows how right-wing the US has become. By any other comparison, Krugman stands only a little left of center. Krugman should take this on board and deal with it head on rather than attempting to deflect such obviously outrageous characterizations of the positions of people like himself.
Krugman’s recent MMT post: Franc Thoughts on Long Run Fiscal Issues
Krugman #FAIL: Wrong on MMT, again – Lambert Strether (also note some of the comments)