Paul Krugman blasts Treasury Secretary Scotts Bessent’s WSJ op-ed on mission creep. 
‘Gain of Function’ Monetary Policy
Please consider The Fed’s ‘Gain of Function’ Monetary Policy by Scott Bessent.
As we saw during the Covid pandemic, lab-created experiments can wreak havoc when they escape their confines. Once released, they can’t easily be put back. The “extraordinary” monetary-policy tools unleashed after the 2008 financial crisis have similarly transformed the Federal Reserve’s policy regime, with unpredictable consequences.
The Fed’s new operating model is effectively a gain-of-function monetary policy experiment. Overuse of nonstandard policies, mission creep and institutional bloat threaten the central bank’s independence. The Fed must change course. Its standard tool kit has become too complex to manage, with uncertain theoretical underpinnings. Simple and measurable tools, aimed at a narrow mandate, are the clearest way to deliver better outcomes and safeguard central-bank independence over time.
One might think that new tools created after 2008 and the centralization of the financial market would have given the Fed greater insight about the economy’s direction. At a minimum, all those gained functions should have allowed the Fed to steer the economy more effectively. That didn’t happen. In 2009, the Fed forecast that real gross domestic product would accelerate to 4% in 2011. Instead, growth slowed to 1.6%. Cumulatively over that period, the Fed’s two-year projections overstated real GDP by more than $1 trillion. Repeated misses demonstrate that the Fed placed too much faith in its own abilities and in expansionary fiscal policy to spur growth.
Successive interventions during and after the financial crisis of 2008 created what amounted to a de facto backstop for asset owners. This harmful cycle concentrated national wealth among those who already owned assets. Within the corporate sector, large firms thrived by locking in cheap debt, while smaller firms reliant on floating-rate loans were squeezed as rates rose. Homeowners saw their property values soar, largely insulated by fixed-rate mortgages. Meanwhile, younger and less affluent households, shut out of ownership and hit hardest by inflation, missed out on appreciation.
By failing to deliver on its inflation mandate, the Fed allowed class and generational disparities to widen. Its pursuit of a wealth effect to stimulate growth backfired. “Unprecedented inequality is clear proof that the wealth effect is all too effective for the wealthy, but an accelerant to economic hardship for everyone else,” financial analyst Karen Petrou wrote in her book “Engine of Inequality” (2021).
At the heart of independence lies credibility and political legitimacy. Both have been jeopardized by the Fed’s expansion beyond its mandate. Heavy intervention has produced severe distributional outcomes, undermined credibility and threatened independence. Looking ahead, the Fed must scale back the distortions it causes in the economy. Unconventional policies such as quantitative easing should be used only in true emergencies, in coordination with the rest of the federal government. There must also be an honest, independent, nonpartisan review of the entire institution, including monetary policy, regulation, communications, staffing and research.
The U.S. faces short- and medium-term economic challenges, along with the long-term consequences of a central bank that has placed its own independence in jeopardy. The Fed’s independence comes from public trust. The central bank must recommit to maintaining the confidence of the American people. To safeguard its future and the stability of the U.S. economy, the Fed must re-establish its credibility as an independent institution focused solely on its statutory mandate of maximum employment, stable prices and moderate long-term interest rates.
Paul Krugman Slams ‘Sleazy’ And ‘Underhanded’ Campaign
Please consider Scott Bessent, Sleazy Smearer by Paul Krugman on his substack site.
Donald Trump did learn something during his 1st term. He learned never to hire anyone who shows the least shred of integrity. You won’t find anyone like Gary Cohn or General Milley in Trump’s 2nd administration. Now he knows to only hire people who are corrupt, bigoted, dishonest, or all three.
And Scott Bessent, the Treasury secretary, clearly satisfies Trump II’s requirements.
His recent attacks on the Federal Reserve, part of Trump’s campaign to destroy the Fed’s independence, are vile, underhanded and sleazy. In a better world they would lead to his immediate removal as Treasury secretary.The vileness is right there in the headline and the first sentence. It’s immaterial whether you believe that Covid was caused by a lab leak or by natural viral infection from animals. The point is that Bessent began his article by pandering to the conspiracy-theory right by taking a contentious proposition popular in those parts, presenting it as if it were established fact, and then — in a complete non sequitur — associating that theory with his criticism of the Federal Reserve.
Mish Comment [Note that Krugman starts off with an unrelated attack on Trump, not what Bessent said. The first nine paragraphs of Krugman’s rant are ad hominem attacks or attempts to change the subject. They have nothing to do with anything Bessent said.]
So how does Bessent deal with the fact that the critics of quantitative easing were proved completely, decisively wrong? By pretending that the evils they wrongly predicted actually came to pass. Younger and less affluent households, he writes, were “hit hardest by inflation.” What inflation? Inflation didn’t spike until 2021-2022, and that was caused by Covid-induced supply bottlenecks. Bessent is clearly trying to rewrite history to smear the Fed.
The main threat to that credibility comes from Trump and his minions, Bessent being the most visible, who are trying to destroy the Fed’s independence.
Finally, this hit piece by Bessent shows why he is so valuable to Trump. In my opinion, unlike virtually all other Trump cabinet members, Bessent isn’t a fool. He’s highly intelligent and well-versed in his area of operation. He understands financial markets. Hence the fact that he willingly smears the Fed by invoking conspiracy-laden tropes and re-writing facts is a window into his character, showing that he isn’t, and never was, worthy of Americans’ trust.
Maybe we should be thankful that he is no longer in the running for Fed Chair.
Ivory Tower Economists
Krugman is an ivory tower economist who would not see inflation if it jumped up and spit grapefruit juice in his eye.
Krugman ignores home prices as if they don’t matter. Not only were home prices going out of sight, they accelerated after after the Fed’s QE madness extended during covid.
Home prices are not in the CPI. Nor are property taxes. Nor is homeowners insurance. So yeah, strip all of that out as if only consumer inflation matters and you get jackass policy from the Fed coupled with jackass comments from clueless economists.
Krugman never addressed any of Bessent’s key points such as ” This harmful cycle concentrated national wealth among those who already owned assets. Within the corporate sector, large firms thrived by locking in cheap debt, while smaller firms reliant on floating-rate loans were squeezed as rates rose. “
How can anyone deny that? Nor can anyone realistically deny the Fed’s alphabet soup of tactics to bail out corporations at taxpayer expense.
Does Krugman deny inept Fed policy created a housing mess of high prices and people trapped in their homes?
He cleverly does not say. Instead, he posts asinine charts of purported inflation and also inflation expectations.
Krugman is not bright enough to know the Fed’s own studies (and common sense) show inflation expectations are irrelevant.
Bessent’s Criticisms of Quantitative Easing
- Contributes to wealth inequality: Bessent argues that QE primarily benefits the wealthy by inflating asset prices, while hurting less affluent households who are hit hardest by subsequent inflation.
- Distorts markets: He contends that the Fed’s bond-buying programs interfere with the free market by artificially driving down long-term interest rates and effectively picking winners and losers in the economy.
- Undermines Fed credibility: Bessent claims that the Fed’s actions, including QE, have clouded its mission, politicized its actions, and damaged its credibility with the public.
Economist Paul Krugman accuses Bessent of misrepresenting the facts by suggesting the Fed’s post-2008 QE caused harmful inflation, when in reality inflation remained low until the post-COVID spike.
I side with Bessent. I thought his piece was well written. And I am certainly not a Trump apologist.
The hit job was by Krugman.
Fedthink! The Fed Is Incompetent by Design
In case you missed it, please see Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
We are trapped in “Fedthink”, especially the nonsensical proposition that two percent inflation is a good thing despite the fact that the Fed is clueless on how to measure inflation in the first place.
Is the Fed playing politics? Does the Fed know what it’s doing at all?
Q: Does the PCE count property taxes or insurance?
A: Of course not , silly, for the same ridiculous reasons as the CPI.
Supposedly, only consumer expenses matter and neither property taxes nor insurance are consumer expenses.
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September 17, 2025: Fed Notes “Challenging and Unusual” Setup on Unemployment and Inflation
Powell says risks to inflation are to the upside. Risks to labor market are to the downside.
The Fed knows exactly what it’s doing – destroying the dollar.
The Fed doesn’t work for the American people, or the American government. It works for the BIS, and they want a global currency.
And we won’t accept a global currency until our national currency is dead.
Ditto the BoE, the BoJ and the ECB.
Bessent’s essay is well written. It reflects his recent insight to Fed policies and their consequences for wealthy, middle and lower economic sectors. Negative repercussions, of liberal monetary policy on the lower class, is rarely presented by top government officials, particularly wealthy bureaucrats oblivious to their plight. The quandary, Bessent’s views oppose Trump’s ZIRP objective. The essay negatively highlights profiteering from the Fed’s QE by asset holders including real estate investors like Trump and his wealthy donors.
Bessent didn’t mention Powell’s $120B/month QE in 2019, a year before the pandemic, with $4T still on their balance sheet. Powell’s QE took 10-year Treasury rates down to the same lows of Bernanke’s mortgage crisis bailout. This was to repurchase the Fed’s maturing long Treasuries, acquired during the mortgage crisis, at a lower rate of repayment, and prevent rates from rising.
2026 will determine if Bessent’s words are hollow. Another huge block of the Fed’s 10-year Treasuries will mature and boost rates, unless the Fed buys back their debt obtained in 2016. The year Obama’s Fed Chairman, Yellen, took long Bond rates down again to the panic lows of the mortgage crisis, and kept suppressed until the elections. Interestingly, Yellen’s QE doesn’t appear on the Fed’s balance sheet record.
The Fed’s mandate has been achieved only by the acquisition of so much debt that they have operated at a loss since 2023. Which according to Fed stipulation, allows them to refrain from debt interest payments back to the government. Unfortunately, there is no provision that prevents the Fed from acquiring more debt or renovating their office. (Their credit card was not cut in half.) The Fed walks a thin line between QE and MMT.
he Fed’s Mission Creep and QE: Krugman vs Bessent, Who’s Right
====
THEY ARE BOTH MORONS!!!!!!
%rate is cost of money. in any loan transaction there are 2 parties!
if %rates are high, it is good for person who owns money, but risk is high he wont get money back
if %rates are low, and it is bad for person who owns money BUT RISK is small not getting it back
thus you cant say high rates are good or bad,! there is always trade off
ALX
The one and only function of the fed is to be a lender of last resort in time of liquidity crisis. The only reason for the existence was this when it was first established.
Agreed, but requires a little more complexity. The Fed should only be a lender of last resort if it can regulate bank to the degree that its lending is minimized. That’s what happened in 2008: Greenspan’s Fed worked to minimize bank regulation, and banks subsequently inflated the housing market and crashed. Bank lending inflates asset prices. That is what needs to be properly regulated. Once we decide to leave bank lending to the “free market”, the market will eventually crash, and the Fed will be forced to use tools like QE to stabilize banks and provide liquidity to the market. If they don’t, the federal government will be forced to step in with unpredictable results.
I side with Bessent too, but there are 2 phrases that divulge everything wrong with modern political economy.
The economy cannot be steered. Finance is a derivative of the economy, not the other way around. Finance should be the motor oil, not the steering wheel. It a gigantic conceit to put bankers in charge of economic policy, which should concentrate on creating an environment conducive to economic activity.
Bessent also has a sanguine view of the crisis we’re in.
He thinks 2008 was not a true emergency, nor today.
But the situation is decades of rot, which seems like it’s not too bad, until it gives way.
As is often the case, people see other’s actions and views (like Bessent and Krugman) through their own political POV.
Personally, I don’t think the Fed should have started this QE practice either in 2008. BUT I also remember liquidating many of my own investments at that time and literally stuffing it into my local bank so it would be FDIC-insured and I could walk to demand my money in cash if it got ugly enough. That time period was that scary!
But the Fed’s first QE was between 2008-2014. Annual inflation never got above 3% from 2008-2020. Did Bessent explain why we had such low inflation then? No.
And if you’re like Mish, and think inflation is mis-measured, look at what happened to housing prices during that same 2008-2020 time period here: https://fred.stlouisfed.org/series/ASPUS
Is that 2008-2020 rate of growth of housing (asset) prices substantially different from the 1982-1990 time period? No. Or the 1990-2008 time period? No. Why not, Bessent? QE did not exist before 2008 but we had similar inflation and housing price increases beforehand.
The Fed started up QE again from 2020-22 with COVID. Did inflation and housing asset price acceleration ramp up substantially then compared to the historical past? Yes. But does Bessent explain why that round of QE helped asset holders more than the first period of QE? No. A significant difference – as explained by Krugman – was that supply/production of many things – including housing – was drastically reduced temporarily while both the Fed and Congress tried to goose the economy massively through demand. Does Bessent try to explain these historical time differences? No.
Many would agree that the current administration is consistent in its disestablishment efforts of American institutions, trade policies, and treaties. The Fed primarily acts to accommodate government policy emanating from congress – including 1990 deregulation of stock trading (repeal of Glass–Steagall Act), 2005-2009 real estate lending regulatory oversight failure, corporate bail-outs(Emergency Stabilization Act of 2008), and bottom line average governmental deficit spending since 2009 of 2-3 times GDP % growth. Are Bessent’s goals really to decrease wealth disparity? Hardly. He presents an argument for the government to take over yet one more institution with the likely intent to rapidly lower interest rates and print even greater sums of money. If the desire is for the administration to take over all American institutions, then Bessent is your man. Krugman is an institutionalist and would likely support the same deficit spending via an ‘independent’ central bank.
Bessent is right as he often is. Krugman is ivory tower while Bessent has several decades of highly practical and relevant experience and it shows. He knows what he is talking about.
re: “In 2009, the Fed forecast that real gross domestic product would accelerate to 4% in 2011. Instead, growth slowed to 1.6%.”
Right, and the CPI became negative.
Krugman “Inflation didn’t spike until 2021-2022, and that was caused by Covid-induced supply bottlenecks.”
The trajectory of inflation relative to the injection of new money was classic. Nothing has changed in over a century.
Mish, You make your argument in favor of Bessant, primarily on your view that housing inflation is not properly gauged by BLS measures; but Bessant never quarreled with BLS measures. His argument was correctly shown by Krugman to have been highly disingenuous. I still love you, however.
Plan A: INFLATE.
PLANS B to Z: INFLATE.
The Fed Speak that is being dealt to us is Pure Bullshit and THEY KNOW IT WELL. That’s what all the hand-wringing and ridiculousness is all about (HEADLINES) and it is getting downright tiresome and a nuisance.
EVERYONE is on the same page. EXCEPT THOSE OF US WHO CALL BULLSHIT when we read it, see it and hear it.
p.s. Otherwise, all is well, right? RIGHT?
Bureau of Labor Statistics postpones key data report
https://archive.is/l25SR#selection-357.0-357.52
It’s a shame we’re having a conversation about something Krugman or Bessent write. I feel like Mish and readers are hostages on a crazy train. But I intend to stick my fingers in my ears and shout until this is over. “Lalalala…I can’t hear you!”
Yes, I just came here to complain. 😉
Mish is speaking out amongst the din of repetitiveness.
We know.
To Krugman, it seems, no amount of free stuff can affect anything for the worse. That doesn’t mean the menu alternatives are pristine.
Why even give the Krugmonster the time of day anymore? He’s a clown 🤡
The problem with bessent and the rest of taco’s cadre is that if taco turns a corner too quickly, there will likely be some broken noses.
Powell has to be shaking in his shoes. Interest rate cuts have not moved markets as expected. The first cut this cycle was in September 2024, after nearly a year of falling yield on the 10 year US bond, Days after the cut, the yield started what turned out to be a sharp rally. Then in November 2024, the Fed cut rates again. Rates dipped for a couple weeks and then challenged level where the cut was made. With the yield still in a general uptrend, the Fed made a third cut in a 3 month window. Yields continued higher. Now, after a choppy decline over the past 9 months, the Fed cut rates a 4th time. following the cut, rates are starting to climb again. After 4 cuts, Fed has been unable to prevent a rise in unemployment either.
Clearly the Fed does not control the bond and labor markets.
To make matters worse for the Fed, a ~7 month cycle low in yields is forming. The next move will be higher coming out of that low. As yields breach 5 year highs, the Fed will be forced to raise rates. Markets and officials will question the Fed’s ability to control inflation and employment.
The Fed controls the fucking news.
The US is #1 startup nation: Berkeley #1, Stanford #2. Harvard #3. U of PA #4.
MIT #5. Cornell #6….
Undeniable that despite its problems, the US is an order of magnitude better at fostering startups than any other country (Israel excepted maybe).
However it is worrying that as we enter a massive tech revolution (AI, abundant energy and quantum), that the social structure of America is collapsing.
What could have been a golden era seems destined to be an era of have and have nots.
And, the have-nots will be our unemployed with no asssets.
Krugman mentioning a trillion dollar coin could be minted and just shoved in a damn hole or whatever he said in the past is all one needs to know that a$$clown lives in theoretical nutjob world. How he still gets play is beyond me. Nobel Prize? How? Is that like Obama getting the Peace Prize where the committe bet on him on-the-come, having not yet achieving peace anywhere in the world, nothing but a million dollar progressive dream giveaway?
They are all clowns, the lot.
He must not care about what kind of country will be left for his children.
H-1B visa @ $100K. Good luck with your plant start-ups!
The start-up is everything, it must go well. There are no options.
Damn if you do, damn if you don’t.
Nothing is perfect in the world.
Krugman managing to make an ass of himself while debating a guy as sharp as a doorstop really goes to show what the fedthink does to a mind. When even a clown like Bessent can see (after he’s finished with his China obsessed babble) where the log is jammed in this economy, it’s not a good sign. And yes, I am inclined to agree that Bessent was much more well worded and clear aside from his rant at the start.
Makes one wonder though. If Bessent can actually put together that robbing taxpayers = bad, why is he fully on the train of using tariffs to rob everyone blind while discouraging all but the most desperate foreign investment?
“The state interfering with the economy is bad!” Yells the man whose government’s behavior is somewhere between communist revolutionary and Mafia.
Krugman is an ass-clown and a court apologist who was awarded the Noble prize to ensure plausible credibility for all the asinine things he would say in the future in defense of the establishment.
Krugman is as useful as a football bat. That guy should be getting no audience ever. Useless dipthong.
Appears that krugman would make a worthy addition to taco’s insiders.
NOBEL PRIZE WINNING JERK-OFF.
And that’s a microcosm of the fed. A boy’s club of useless dipthongs and hanging chads who aren’t elected and aren’t part of the government but get access to a bunch of levers to manipulate the economy at will. It’s ironically also a microcosm of Bessent and his gang who are just outright ignoring the law and good sense in hopes of bringing about commu- uh, a new golden age.
I feel pretty smug these days tapping my “this is why we weren’t supposed to have a gigantic federal government” sign at people.
The DJI and SPY closed below yesterday high.
?Does the Fed know how to combat inflation?
If you have read, understood and believe Uncle Milton, inflation is caused by “inorganic emissions of currency”, (words from Chilean National Bank c.1970). Or call it deficit spending. So the solution to inflation is to stop the excess government deficit spending. Otherwise we get into “fiscal dominance”, where the deficit spending forces the Central Bank to buy government debt, thus “printing money”.
What the bank instead does is increase interest rates, so that everyone else stops borrowing money (creating money in the private sector) and lends their money to the government. That also forces a shift in government spending from what they want to spend on to paying interest to the lenders.
?Does the Fed know how to combat an increase in unemployment?
?Does anyone really know how to combat an increase in unemployment?
Instead we see the Fed decrease interest rates, trying to push on the other end of the Philips Curve.
The old theory about inflation have changed two decades ago, under GW Bush and Bernanke. The Fed could legally short people’s bank accounts during a crisis. No QE. No printing. Short selling to save the primary banks, RE and the economy when the US was comatose until we know what we don’t. The Fed preferred to fight inflation instead of deflation. The Fed can help the gov to cut debt only if the gov is fully committed to cutting debt.
Keep it simple: if the banks are gone your money is gone. If RE is gone the banks are gone. It will take decades to rise from the ashes.
I keep it simple for Puta puta.
A dollar has lost 97% of its value since 1913 when the Federal Reserve was established. Why is there even a discussion?
There is a discussion because assigning uni-causes in 10-word bumper sticker phrases to vast events across huge tracks of history is simplistic, and is not itself a “discussion,” worthy of the name.
Paul Krugman is an absolute devote of Modern Monetary Theory. He believes there’s no limit to the M2 money supply that can be created. F inflation is his mantra.
It was tough, but I able to get a little further after reading this barf fest. Milley = integrity? Krugman, you’re a stooge.
And then he goes full Monty & calls the COVID lab leak a conspiracy theory. I mean like seriously. Is this column a race to the bottom of how many stupid things he can think of?
But there’s more. Krugman actually thinks that $6,000,000,000,000 of fed helicopter money had nothing to do with inflation. My God man, do you not understand how buying trillions of dollars in MBS drove interest rates down so low that boat loads of homeowners refi’d giving them ten’s if not hundreds of thousands of dollars to spend. And it fueled the biggest two-year home price increase that mankind has ever seen. Is he really stupid enough to think that a significant amount of that June 2022 9.1% inflation wasn’t related to the massive increase in home prices & related services that was directly tied to QE. Without QE, there would have been no sub 3% mortgage, Krugman. And the biggest criticism of the Fed was not addressed in his rant, the extremely late to the party for increasing rates. The Fed should have started raising rates as soon as the economy started to expand which was about 8 weeks after everything tanked from the extreme Dem governor lockdowns.
Somebody needs to check this guy’s Me & 23. He’s got to be related to Kimmel somehow with this massive disinformation campaign. Krugman has written a lot of stupid you know what, but this has got to be in his top 3.
Simp for trump all you like, you’re going under the pedobus like the rest.
His comment didn’t say a single thing about Trump.
Reading is difficult for ‘El Trumpedo’
Thanks!
He’s like Jasmine Crocket. Every white person who’s lived in the US since 1492 is racists, even those who stayed on the east side the pond. They’re all racists.
I’m not sure he even knows how to construct a sentence with Trump without using pedo.
My dog with dementia has more original thoughts than this guy.
per the WSJ, President Trump plans to add a $100,000 fee to H-1B visa applications in the administration’s latest crackdown on a system it says is used by tech companies to avoid hiring American workers.
Trump wants co to train black ad Latinos out of college, instead of Indian. The $100K is a barrier for those who are taking American jobs. No more
H1B for free.
So Trump can suddenly go 180, and masses of people just swallow, just rationalize? Amazing mental limberness. That’s quite a comment on the quality of mass cognition. Do you have faith those groups can fill the tech void in some reasonable time? And keep us competitive? I have a bridge to sell you.
Stop ranting. Co can hire the most talented foreigners, but have to pay a $100K/y fee for a few years. The average one will not get a free H1B. They can be replaced by American who can be trained and get secret clearance.
Top talent commands top dollar. $120k salary is not top dollar. It is mediocre talent and that is what we have been getting. The top end will not be hurt by the new fees.
I’m surprised ICE hasn’t already picked off some of the browner ones.
My recent readings on late Tzarist Russia uncover a world where everything was a trap, everything a setup, everyone playing sides against the middle. The Bolsheviks just kept the party going.
Since 74% of all H-1B holders are Indian with everyone else way behind I would say the visa has become an Indian employment agency.
Trump may be attacking fed independence, but it does not logically follow that Bessent is wrong. He seems spot on to me.
What if they are both wrong?
But… but… but… that would mean….
Maybe there is a third way?
Mish: all Trump cabinet members are idiots, ex Bessent.
DNI isn’t
Lutnick is much sharper than stiff face Bessent. Lutnick and Rubio are Trump’s best. It’s a team to remember. They rejuvenate the US for decades.
In Oct 2008 the Fed short bank account to save the large banks. Thereafter the Fed lifted the badly injured real estate market. In 2020 the Fed short the rich to distribute money to the poor. No printing. No QE. QT countered $2.5T RRP. RE are bank’s assets. The Fed don’t want them to plunge. The gov and the Fed constrict supply to keep RE prices high. Bubble #2 is a trading range.
Bessent ‘s piece is spot on, surprisingly on target compared to most of the BS out of Federal Administrations. Krugman comes off like the pompous ass he is. That being said I don’t feel comfortable with complete political control of the FED.
If they abolished the Fed, there would be no political control whatsoever.
No, if they abolished the Fed, a shadowy bank cartel would still control the supply of credit.
It just wouldn’t have a legal fig leaf in front.
Chuck will celebrate Rosh Hashana in Bklyn. No deal. The gov will shutdown. Keynes to the Fed ???
Take a pass on the cheeseburger.
Have to agree with Bessent here. I have found several things to disagree with Bessent on past Trump policies such as tariffs, but his criticism of the Fed is pretty spot on. I should also note that Bessent is not saying anything particularly new; critics of the Fed have pointed these things out since at least the Obama administration. Further, you can always tell what a good monetary policy is by finding out Krugman’s position on it. Whatever he is for, the exact opposite is the way to go.
I blame congress for no balanced budget
Somewhere aling the lines of recessions are bad and we should stop them. Recessions clean out debt and bad business practices.
Generations of congresspeople brought us here, because accountability evaporates at the top.
Trouble is that recessions also cause incumbents to lose elections. The career incumbents won’t vote for that.
I think Krugman let his dislike for Trump affect his response to the attack on Fed independence. The Fed should be independent of the executive branch. However its poor track record doesn’t help. The big problem was and isn’t the high interest rates now, it was the low interest rates post GFC. The Fed tried to make up with monetary policy what was lacking in fiscal policy and it failed miserably, causing asset price inflation which led to the great outperformance of those with capital over those with labor. Lowering interest rates will probably exacerbate the trend. Now we are so stuck in our debt situation that the upper 10% will continue to outperform. The most likely outcome is financial repression which will damage bond holders while equity holders profit or at least break even. Hopefully wages will rise faster than inflation for those who have jobs.
why can’t bessent AND krugman, BOTH be grifters ? the reality is the NYFED is a private entity. with only one mission. to keep the NYC money center investment banks in high cotton. the rest of this nonsense is eyewash and rubbish for the naive with no historical knowledge of what the 3rd USA central bank is. read creature from jekyll island for a primer.
Yes, they all agreed to let Krugman rant so as to give those OUT of power to Grift and to SEEM like they are not ALL in compliance with the same shit ass narratives.
This was a coordinated “hit piece.” AS IF a past BLOW HARD is taken seriously, in the way that they respond. They will ALL continue the plan: MORE MORE MORE.
It is a GRIFT ACROSS THE BOARD and the most important part is that THEY remain in power and the money grab continues. PERIOD, end of story.
Global M2 supply is increasing. It looks like stocks and assets prices are off to the races. Crazy to think they can keep going up.
But hey, we have gone from peak 7900 stocks in the Wilshire 5000 in the mid 1990s to 3400 now and it is still dropping. Yet we have 6 trillion more money invested in 401ks and trillion more in of M1 and M2 created since then. I am thinking PEs of 25 might be the new normal.
I tell this to my friends who are all in and doing great and they will respond, where else do I put my money. Housing? I tried to get them to buy a little gold and silver and they are not interested.
Krugman? Shirley you must be joking!
The guy is a MMT stooge.
Don’t call Mish Shirley.
Coincidentally, this story below is appearing on ZH today.
I agree that the dual mandate has to go. The two mandates are often in conflict with each other. The FED should focus only on inflation. PERIOD. Employment/labor participation is ona permanent downslope due to AI, which is not something that manipulating interest rates can address.
LOL “employment has been on a permanent downslope” ever since steam engines replaced horses … or since the printing press replaced church scribes in monasteries … or since iron replaced bronze…
… and yet employment has only gone up.
those evil tractors replacing farm girls. the biggest boom in usa was probably the erie canal. opened up the great lakes to nyc harbor and beyond. the biggest boom on planet earth was probably AC. populated cities from miami to hong kong…….
1) Sanitation
2) Refrigeration
3) A/C
A/C is third because its not needed everywhere like the first two are.
fire. and eating cooked meat. made primates evolve with larger brains.
Bacon. Bacon built civilization starting in Sumer.
Still haven’t found that wisdom you have been seeking, I see!
The wisest people are humble enough to continue seeking more.
Let me know when all the jobs start to disappear…
I agree with rest of your comment. Fed legal mandate should be stable prices and no asset bubbles. Zero inflation on average.
Bessent should punch Krugman in the nose!
ha ha ha.
I like the way he mocks the Kongress Karens, especially Lieawatha.
Want to take a moment to mention Tom Hoenig, KC Fed president who was the only one to dissent during the financial crisis on these policies and who was proven correct in most if not all of the scenarios that would result.
I am not a big fan of Bessent. But what is the alternative ? Take the side of Krugman who is outright communist ? Thanks. I’ll take the side of Bessent. Not happy about it, but is the world we unfortunately live in today.
It’s like a battle between two straw men.
“Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.”― Albert Einstein
A communist would unironically be smarter. Though good luck finding anyone who’s actually read Marx (or anything else on economics)
The first thing out of Krugman’s mouth is an ad Hominem?
An ad hominem fallacy occurs when someone attacks the character, traits, or circumstances of an opponent rather than addressing the argument they are presenting.
.No point in reading any further.
So option 3 of what I said yesterday. 😊
Remove the dual mandate at least until the employment data collection is fixed.
Thanks, one your best reviews
Bernanke admitted he wanted the wealth effect by inflating assets when he started QE1. Krugman is wrong.
https://www.federalreserve.gov/newsevents/other/o_bernanke20101105a.htm
Like Bessent says, the Fed has engaged in Gain-of-Function economic experimentation. That sums up the last 17 years perfectly.
There you go with your government issued catchphrase of the day. Were you the guy that liked apple horse paste? I get y’all mixed up.
You’re definitely stretching those infinite limits of human stupidity today…
Bernanke makes the mistake of what bond money didn’t buy, alternative assets.