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Wednesday
Jul162014

APIA - Is Paul Krugman Leaving Princeton in Quiet Disgrace? 

Dear Monetary Policy Observer,

 

Outgoing Princeton Professor Paul Krugman has been broadly criticized for his economic theories over the past year.  Forbes.com columnist Ralph Benko details how the former Federal Reserve Chairman, Paul Volcker, appears to be joining the criticism of Krugman’s argument that there isn’t enough inflation in the economy.

We hope you find this material of interest.

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Shortly after Krugman’s departure was announced no less than the revered Paul Volcker, himself a Princeton alum, made a comment — subject unnamed — sounding as if directed at Prof. Krugman.   It sounded like “Don’t let the saloon doors hit you on the way out.  Bub.”

To the Daily Princetonian (later reprised by the Wall Street Journal) Volcker stated with refreshing bluntness:

The responsibility of any central bank is price stability. … They ought to make sure that they are making policies that are convincing to the public and to the markets that they’re not going to tolerate inflation.

This was followed by a show-stopping statement:  “This kind of stuff that you’re being taught at Princeton disturbs me.”

Taught at Princeton by … whom?

Paul Krugman, perhaps?  Krugman, last year, wrote an op-ed for the New York Times entitled  Not Enough Inflation.  It betrayed an extremely louche, at best, attitude toward inflation’s insidious dangers. Smoking gun?


Volcker’s comment, in full context:

The responsibility of the government is to have a stable currency. This kind of stuff that you’re being taught at Princeton disturbs me. Your teachers must be telling you that if you’ve got expected inflation, then everybody adjusts and then it’s OK. Is that what they’re telling you? Where did the question come from?

Read the full article here:  http://www.forbes.com/sites/ralphbenko/2014/07/14/is-paul-krugman-leaving-princeton-in-quiet-disgrace/

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