It is easy to pick on Paul Krugman. So easy in fact, that it is not even fair sport.



However, if you can separate the wheat from the chaff, sometimes there are nuggets of truth in what Krugman writes.



For example, please consider The Third Depression.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.



And this third depression will be primarily a failure of policy.

"governments are obsessing about inflation when the real threat is deflation"

"And who will pay the price ..."

"The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again."

Krugman Also Correct About Inflation

essentially

The Price We Pay For Budgetary Murder

essentially

"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises



Greenspan and Bernanke combined to stave off paying what was due in 2001-2002. The result was a massive housing bubble that ultimately collapsed.



Congress and the Fed added to the misery by wasting trillions of taxpayer dollars bailing out banks and Wall Street while leaving the private sector in shambles, and millions of homeowners debt slaves to their houses.



Each time the day of reckoning is put off, the bigger the price down the road. Thus, we should all be fearing more Keynesian and Monetarist attempts to forestall the inevitable collapse.



Attempting to stave off further debt writedowns and another recession is like attempting to stave off a hangover by drinking more whiskey.

How Policy Errors Cause Depressions

Was Krugman a Housing Bubble Proponent?

To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Policy Error #2

European Policy Errors

How Policy Errors Cascade

As long as the ECB's "extend and pretend" policy is in play, Greece, Spain, and Portugal will remain wrecked while burdened by loans they will eventually default on anyway.



In that timeframe, European growth will be anemic at best. Indeed, it is far more likely that Europe will slide back into a deep recession than simply sputter along.

As long as European growth is weak, China will be weak because Europe is China's largest trading partner.

If China's exports decline, China will need fewer imports from Australia and Canada.



If China and Europe are weak, there will not be tremendous demand for US exports.

Global job growth will remain weak.

Fiscal stimulus measures will fail.



Earnings estimates will surprise to the downside and the global equity markets will be extremely vulnerable to further losses.

Further equity losses in conjunction with absurd pension benefit assumptions will bankrupt many city, state, and municipal pension funds.



US Public Sector Policy Errors

Policy Errors in Europe