Sorry, I was trying to come up with the analog of a Krugman Kontradiction for Nick Rowe, and this was it…
Some of you may recall that I happily linked to Nick Rowe explaining just how nutty was Paul Krugman’s praise of a hypothetical bond vigilante attack on the US. (Remember, Brad DeLong had to chime in, to defend Krugman from Rowe’s post.)
Well, today Nick said that Japan should welcome a debt crisis. Then he and I had this exchange in the comments:
Nick, I’m having trouble reconciling this with your critique of Krugman on the bond vigilante stuff. A naive reader would have thought you believed his post saying bond vigilantes would help, was borderline dangerous. And yet, a naive reader would also think you were here saying Japan should welcome a debt crisis.
Posted by: Bob Murphy | December 17, 2012 at 08:16 PM
Bob: it wasn’t really a critique of Krugman. More of a qualification and extension.
I really wish I could find the right metaphor. Andrew’s “avalanche” helps a bit, but it’s not quite right, because….we are short of snow down here in the valley.
Japan should welcome a debt crisis. Just not too big a crisis.
Posted by: Nick Rowe | December 17, 2012 at 08:39 PM
Nick, OK, let me try it this way: Should the US welcome a debt crisis too?
Posted by: Bob Murphy | December 17, 2012 at 11:36 PM
Bob: yes. Not too big a one. Just like Japan.
Posted by: Nick Rowe | December 17, 2012 at 11:52 PM
Sometimes I pause and think, “Is it really possible that all these sharp guys–who clearly have studied macroeconomics more than I have, in some cases for longer than I’ve been alive–are so totally wrong about monetary policy? Do I really want to be constantly criticizing a Nobel laureate?”
But then I think, “Well, these guys are saying the problem with the world economy is that Bernanke has had an ultra-tight monetary policy, and they are hoping for a debt crisis.” And that reassures me that something is screwed up with their worldview.