By Chris Rossini
Paul Krugman had some interesting words to say about Jeb Bush today:
Politicians who preside over economic booms often develop delusions of competence. You can see this domestically: Jeb Bush imagines that he knows the secrets of economic growth because he happened to be governor when Florida was experiencing a giant housing bubble, and he had the good luck to leave office just before it burst.
Krugman's observation is actually very true. When The Federal Reserve creates an artificial boom with its printing press, politicians who happen to be in office like to take the credit. Whether it be Jeb Bush during the housing bubble, or Bill Clinton during the dot-com bubble, politicians like to capitalize on the Fed-created delusion. They want the public to think that it was their brilliant policies that created the "good times".
The problem is not that Krugman is calling Jeb Bush out on this. The problem is that it's Krugman who's doing the calling out. You see, after the dot-com bust, it was Paul Krugman who wanted another fake boom to replace it. Here's what he wrote in 2002:
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.
Krugman, of all people, is in no position to be criticizing Bush for "delusions of competence". It was Paul Krugman himself who was pushing for the "giant housing bubble" in the first place.
Krugman is in the same boat as Bush! Jeb gets to falsely claim that his policies created economic prosperity in Florida, and Krugman gets to falsely claim that his Keynesian policies are necessary for the U.S. economy to function.
Contrary to both claims, Fed-induced bubbles are not prosperity. They are times of massive malinvestment. What appears to be prosperity is nothing but a dream that doesn't have a happy ending.
After the housing bubble burst, Krugman went on to claim that Ben Bernanke saved the U.S. economy by printing money like The Fed has never done before. We're not too far from waking up from that dream as well.
Hopefully, as a result, we move a step closer to saying goodbye to Paul Krugman's delusions once and for all.