Most Austrian Economists would jump at the chance to debate Paul Krugman. Under traditional arrangements, such a debate is extremely unlikely to ever happen. Krugman has little to gain, and much to lose.
So Mises.org’s Robert P. Murphy is using a carrot, of sorts, in an attempt to lure PK into debate. He is using ThePoint.com, a site that collects charitable donations in escrow, to be paid to a charitable organization (FoodBankNYC.org, in this case) if the desired individual participates in the debate.
The plan in essence: Raise $100k for a NY food bank, on the condition that Mr. Krugman participate in the debate. It’s a simple incentive program, like Celebrity Jeopardy.
$17k has been raised so far.
If you need a reminder on why effectively rebutting Mr. Krugman is so important, refer back to this July 2010 column from Krugman’s objectively-titled Conscience of a Liberal blog, in which he scolds the Fed for not printing enough money.
What should it be doing? Conventional monetary policy, in which the Fed drives down short-term interest rates by buying short-term U.S. government debt, has reached its limit: those short-term rates are already near zero, and can’t go significantly lower. (Investors won’t buy bonds that yield negative interest, since they can always hoard cash instead.) But the message of Mr. Bernanke’s 2002 speech was that there are other things the Fed can do.
It can buy longer-term government debt. It can buy private-sector debt. It can try to move expectations by announcing that it will keep short-term rates low for a long time. It can raise its long-run inflation target, to help convince the private sector that borrowing is a good idea and hoarding cash a mistake.
Nobody knows how well any one of these actions would work. The point, however, is that there are things the Fed could and should be doing, but isn’t. Why not?
Summation: Whatever the Fed could be doing, it should. Punish savers, reward borrowers.
He admits that he has no idea if any of this will work, but argues that we have to do something — no matter the logic or chance of success. Shovel the banks more money, essentially. Mr. Krugman has been a strong supporter of high inflation. A supporter of so-called “price stability”, which somehow involves 2% + inflation per year.
This is the faulty logic of PK. He continues to ignore the fact that stimulus/easing is inevitably wasted. It is put in the hands of appointees with little accountability, used to pay back political favors, and wasted in countless other ways. Also see this.