Nice one from Krugman, who gets more and more frustrated:
"How obsessive are these people? So obsessive that when the financial doom they predict fails to materialize, they consider this a bad thing: punishment must be administered, so what are the markets waiting for? Here’s Alan Greenspan a while back:Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.
Gosh, it’s regrettable that the markets aren’t confirming my warnings! And today Ronald McKinnon laments, yes, laments the failure of the invisible bond vigilantes to show themselves — they’re supposed to be “disciplining the government”, so why aren’t they here?"
Krugman, unfortunately, fights the fight with one hand tied behind the back, as our friend TC likes to say (pragcap.com/krugman-still-doesnt-understand-mmt/comment-page-1#comment-69803
):"I think PK and MMT are very close in one way, and very far apart in another. Paul Krugman is a bond vigilante. He believes the same thing as a bond vigilante - that is, the U.S. can go broke. He might be the worlds kindest bond vigilante that's been a traitor to the cause, but he's still a bond vigilante. As a result, he always needs to hedge his statements with -well, we do have to worry about the long term deficit. MMT says this is wrong. MMT says we cannot go broke. So any concerns about the long term deficit are not just stupid, they are actively counter productive. MMT says that the only things to worry about are unemployment and inflation. We have tools and techniques we know work to combat inflation and unemployment."For what is MMT:http://moslereconomics.com/wp-content/powerpoints/7DIF.pdfhttp://pragcap.com/resources/understanding-modern-monetary-system