Paul Krugman has never seen a government spending program, or central banker easing program, he didn’t like, or at least didn’t wish to see expanded.

So it comes as no surprise that in his New York Times column he pens an article, A Permanent Slump? where here advises just what I’ve observed is practically inevitable:  The continuation unto infinity of quantitative easing and ZIRP, from the article:

Why does all of this matter? One answer is that central bankers need to stop talking about “exit strategies.” Easy money should, and probably will, be with us for a very long time. This, in turn, means we can forget all those scare stories about government debt, which run along the lines of “It may not be a problem now, but just wait until interest rates rise.”

He and I reach the same conclusion through different routes.  I believe the Fed will be forced to continue QE and ZIRP because it has painted itself into a corner.  Anytime it even hints at reducing the stimulus, the markets tank.  Krugman believes it should continue because, as he puts, the economy has apparently entered a “permanent slump”.  

I consider my conclusion regarding the inevitable continuation of QE and ZIRP unto the long-term, i.e., until we are all dead, something of a lamentable observation.  Krugman is recommending that it continue as the proper policy choice in the premises.

Krugman observes that there has been no real economic growth since about 1985 that can’t be attributed to temporary bubbles.  We mostly agree on that, too.  But the last crash after the housing bubble burst caused real pain on Main Street.  I don’t believe a process of serial bubble blowing, where capital is ceaselessly being misallocated in order to line some Wall Street fat cat’s pocket is the best means of enhancing overall welfare.  Some favored few get rich.  Everyone else loses.  But serial bubble blowing seems to be the strategy Krugman espouses, which is curious and illogical, as he laments serial bubbles of the past as having failed to benefit the middle class. 

The source of Krugman’s cognitive dissonance is that he pretends to be for the common man while always believing that centralized, bureaucratic solutions are the best means to serve him.  No.  All it would take is looking around–at anything from Obamacare to AIG and Fannie/Freddie–to understand that central government solutions propagated by either of the federal government or its central bank serve to enrich everyone except those who the solutions purport to help. 

If Krugman really wanted to help the common man, he would recommend that the $85 billion per month the Fed is creating from thin air to line some mortgage and Treasury banker pockets should instead be delivered directly to the common man, who surely would find more utility in a little extra money in his pocket than a hedge fund billionaire would find with a few more zeroes behind his bank balance. 

Then we would really have something upon which we could agree.

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