My letter to the NY Times re: Krugman advises repeat of blunders of the 1920’s and ’30s’

Re:  Those Depressing Germans, by Paul Krugman

Smoot Dear Sirs:
Paul Krugman’s Keynesian view of the world has caused him to champion two of the most damaging economic policies of the 1920’s and ’30’s–monetary stimulus and national autarchy.  His incessant call for stimulating what he sees as inadequate demand perpetuates the very economic doldrums that he wishes to end.  Central bank money printing has caused the financial dislocations that have resulted in the the euro-debt crisis.  Calling Germany’s production of highly sought and attractively priced goods as “beggar thy neighbor” policy would have been applauded by those giants of economic autarchy, Mr. Smoot and Mr. Hawley of worldwide trade destroying fame.  Rather than the cause of the continuing economic crisis in Europe, Germany is its biggest victim.  As Mr. Krugman accurately stated, German capital initially financed large deficits in southern Europe, meaning that it paid the Greeks, etc. to buy German goods.  What a deal!  And now it is shipping the fruits of its industry to these same nations and being paid in ever depreciating euros.  Its TARGET2 balance at the European Central Bank offsets huge unfunded deficits by those same southern Europeans.  Germany is importing inflation; it is not beggaring its neighbors.  Patrick Barron

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