When we last left Alan “The Obfuscator” Greenspan, he was telling a Senate committee that his “faith in markets” had been shaken by the meltdown. Other than the fact that his statement demonstrated his own ignorance that the markets had not caused the downturn, but rather exposed the folly of the Wall Street Banksters who made bad decisions, knowing the Federal Reserve “had their backs,” to understand how markets work (and don’t work) really does not require “faith” at all.
Well, Greenspan is not giving up. No, he is onto a brand new theory of the meltdown. Forsaking the obvious, he blames the entire thing on the fall of communism two decades ago. Yes, yes, those damned commies did it. (I include my post on Lew Rockwell’s blog.)
Meanwhile, back at the Funny Farm, Paul Krugman continues his nonsense about our supposed “liquidity trap,” attacking Stephen Roach in the process. Roach had the audacity to question Krugman’s call for an all-out trade war against China (yes, jacking up tariff rates by 25 percent constitutes the beginnings of a trade war). You see, Krugman continues to insist that the pegging of China’s currency at a rate that undervalues the renminbi and overvalues the U.S. Dollar. (Gee, it used to be that “dirty rates” from places like China and Latin America undervalued the dollar, which really was an act of theft.)
However, Roach’s greatest “sin,” according to Krugman, was calling for Americans to save more money. Indeed, such words are anathema to the Keynesian Krugman, who really believes in the “paradox of thrift” nonsense.
What do we need to do now? We need to permit the economy to liquidate the malinvestments, build up our savings, and stop this ruinous government out-of-control spending. Like Herbert Hoover and FDR, George W. Bush and Barack Obama are pushing our economy into a long-term depression, and this current government (and people like Krugman) are demanding that we do everything possible to stymie a recovery.