Krugman Is Clearly Delusional
From his Oct 10 column:
The truth is that the falling dollar is good news. For one thing, it’s mainly the result of rising confidence: the dollar rose at the height of the financial crisis as panicked investors sought safe haven in America, and it’s falling again now that the fear is subsiding.
The dollar is falling because of reckless economic policies like those Krugman advocates. Yet he actually thinks it’s falling because of confidence? It’s the exact opposite. Foreign banks are dumping dollars because they have no confidence in us. They’re switching to Euros, gold, and other currencies. New foreign reserves were 63% dollars in 1999. Today that number has fallen to 37% (see bottom).
We are losing our status as the world’s reserve, and it is most certainly not a good thing. Having the dollar as the world’s reserve brings extraordinary benefits. And we’re giving them all up, just to save bankers butts’ and attempt to stimulate our way to prosperity.
Consider this Bloomberg article: Dollar Reaches Breaking Point As Banks Shift Reserve.
Unless we change course immediately, the dollar will keep falling. Krugman doesn’t get it. He continues to advocate horrible fiscal policy. Excerpt from Bloomberg piece:
“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”
Sliding Share – The dollar’s 37 percent share of new reserves fell from about a 63 percent average since 1999. Englander concluded in a report that the trend “accelerated” in the third quarter. He said in an interview that “for the next couple of months, the forces are still in place” for continued diversification.
7 Comments
Foreign Central Banks are dumping dollars because of what has already happened, not what will happen. The crisis in the US affected the entire world. This has nothing to do with fiscal policy, as evidenced by the bond market. Let’s see if you can even explain why a weak dollar is bad for the U.S.
Because if the currency devalues by 50%, it raises prices to us domestically by 100%. how much is made in America anymore? Even alot of our food is imported from mexico, central/south america, canada, etc. if we had a strong manufacturing base still, before the mass exodus outsourcing to india/china, a weaker dollar wouldnt be as bad – it would create jobs. however having an economy that is 72% consumption base, inflation takes hold/costs increase, while jobs decline and/or wages stagnate. it is called stagflation of the 70s at best.
If someone stood up in Congress to suggest that we cancel our military budget, he’d [she'd] be pilloried.
yet, we have not come to the realization that our
power in the world comes not primarily from our
military might, but our stature in the economic
world. destroy this, and we’ll have a rough time repairing it.
after all, in a country the size of texas [iraq], we had a pretty difficult time militarily.
just think about what we are demolishing bit by bit, job by job, and business by business.
none can be dismantled without real cost to us.
gentlemen:
The dollar will continue to fall. Hopefully at a slower rate.
That will give all of you you have not bought gold and silver to do
so.
good luck
Palamedes3
The dollor need to rise or else the problems will continue for USA. We stop listen to Krugman and other economics. Finally, the feds create these dilemmas.
From economist John Maynard Keynes’ book “The Economic Consequences of the Peace”:
“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
Obama’s budget is an example of the Cloward-Pivin model of planned economic destruction of a functioning capitalist economy via sabotage. Outlays are so gigantic, and so dreadfully misspent, that our financial infrastructure will soon collapse. A trillion dollar tax increase and spending rising by $10 trillion dollars over the next decade is probable. If so, government default will occur, only offset by mass currency printing, which will then bankrupt the general populace. The middle class will fall. Chronic inflation will result, causing America to lose its sterling credit rating. Global financial players must dump the dollar as it swan-dives. Then, hyperinflation will accelerate, and the era of superpower America will end.
I propose that these “news” sites that publish the always-erroneous opinions of Paul Krugman do themselves all a favor: Hire a team of about 8 third-graders to proofread and fact-check his submissions. I would put my trust in these schoolchildren to get it right 100% of the time over anything Paul Krugman has to say.