Tuesday, August 20, 2013

Moved by political wind...

In a recent New York Times OpED, Paul Krugman derides what he sees as conservative policymakers' successful attempts to mislead the public into thinking the budget deficit has been growing while in fact it has been, in his word, "plunging".

He cites consumer polls (one 2013 [Obama emphasis], one 1996 [Clinton emphasis]) that suggest a "plurality of voters (in both polls) and the majority of Republicans (the 1996 poll) believe it has gone up." What Krugman surely must know is that many, if not most, voters will confuse the deficit with the debt. And if a Republican occupied the Oval Office (and yes folks, if a Republican occupied the Oval Office we'd still be talking huge debt and a huge deficit), the majority of Democrats would likely be (rightfully so) bemoaning the debt and deficit, as was Krugman in 2003 (Bush emphasis).
Last week I switched to a fixed-rate mortgage. It means higher monthly payments, but I'm terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits...my prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt.

Fascinating how one's positions can be so moved by political wind...

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