All posts tagged "paul krugman"

'Line of fire': Nobel Prize-winning economist drops bombshell worry about Trump probe

President Donald Trump is not only trying to remove Lisa Cook as a U.S. Federal Reserve governor — he also wants her investigated for mortgage fraud allegations, although she hasn't been charged with anything.

Liberal economist and former New York Times columnist Paul Krugman discussed Trump's campaign against Cook during a Saturday, August 30 appearance on MSNBC. Krugman warned that a range of Trump economic policies — from steep new tariffs to efforts to destroy the Fed's independence — risk getting the United States into a major economic crisis. And he pointed to the mortgage fraud claims about Cook as a glaring example of Trump's willingness to use the U.S. Department of Justice (DOJ) as a weapon against political opponents regardless of a case's merit.

Trump, Krugman warned, is risking an "inflation crisis" and a "financial crisis" with his "completely insane" policies.

The economist told host Ali Velshi, "We have Donald Trump saying, at a time when inflation is rising, that he wants the Federal Reserve to cut interest rates by 300 basis points — three full percentage points, which is completely insane. We have him insisting that there is no inflation, which is false…. He gets a bad jobs report, he fires the head of the Bureau of Labor Statistics….. We already know that we have somebody who shouldn't be allowed within a mile of setting monetary policy…. So this is not a hypothetical disaster. This is something where we know that things will go very, very badly if he gets away with this."

Krugman noted that friends are wondering if he could be targeted for some type of bogus investigation by the Trump Administration given how critical of the president he has been.

"You know, once you have the principle that we can rummage through your records and try to find something that can be considered dirt, anybody could be in the line of fire," Krugman told Velshi. "I mean, I've been getting a bunch of e-mails from friends saying: I bet the FHA is rummaging through your mortgage records right now. Me personally, which seems quite likely. And, you know, I think it was (Josef) Stalin's chief of secret police who said, 'Show me the man, and I'll find you the crime.' And that's kind of the America that we're becoming."

Attorney Lauren Libby examined the Trump Administration's use of mortgage fraud allegations as a weapon in an article published by Slate on August 30.

Libby observed, "It's a new twist on a long, ugly tradition. Trump's use of mortgage fraud is relatively novel, but he's far from the first president to use the federal government's vast trove of financial data as a political cudgel. Just this Monday, Trump fired Federal Reserve Board Governor Lisa Cook after accusing her of falsifying records on past mortgage applications. In recent weeks, Sen. Adam Schiff and New York Attorney General Letitia James have faced the same allegation. Mortgage fraud, for the uninitiated, typically means intentionally misstating something on a loan application, such as income, assets, or even whether you intend to live in the house."

Watch the full MSNBC video with Paul Krugman below or at this link.

Nobel Prize-winning economist: Trump may have 'irretrievably' destroyed key US alliances

The term "Pax Americana" (which is Latin for "American Peace," similar to "Paz Americana" in Spanish or "Pace Americana" in Italian) refers to a period of relative stability the West enjoyed for many years after World War 2. According to the concept, the alliances between the United States, Canada and countries in Europe — including members of the North Atlantic Treaty Organization (NATO) — kept the Pax Americana strong.

Liberal economist Paul Krugman considers Trumpism and the MAGA movement harmful to the Pax Americana — an argument he made in an October 16, 2023 column for the New York Times and a column he posted on his SubStack page on February 10, 2025. With Donald Trump now seven months into his second presidency, Krugman revisits the Pax American subject in an August 29 Substack column — and he warns that Trump is "throwing away" everything the Pax achieved.

"For today's post," Krugman explains, "I thought I would enlarge on this point — and on what we've lost, possibly irretrievably, thanks to just a few months of Trumpism. The Pax Americana that emerged after World War 2 — and basically ended on January 20, 2025 — was, in many ways, an American Empire. Even after Europe recovered from wartime devastation, the United States retained a dominant economic and military position among non-communist nations. And we built international economic and military alliances to support a world order in effect designed to U.S. specifications."

Krugman continues, "But for Europe and Japan, the American Empire was a subtle thing, with the United States avoiding crude displays of power and bending over backwards to avoid being explicit about its imperial status."

Trump's aggressive tariffs and attacks on longtime U.S. allies, Krugman argues, have done a lot to damage the Pax Americana and hurt the United States both militarily and economically. And he makes his point by embedding a live YouTube video of David Bowie performing "This Is Not America" (which he wrote with jazz guitarist Pat Metheny) in 2000.

"In just seven months," Krugman warns, "Trump has completely ripped up the foundations of the Pax Americana…. Trump has vandalized the world trading system as casually as he has paved over the Rose Garden. We haven't yet had a test of whether he would honor our obligations under NATO, but he's said that his willingness to abide by the most central obligation, the guarantee of mutual defense, 'depends on your definition'…. In a world in which America is no longer the dominant economic and military power it once was — measured by purchasing power, China's economy is already 30 percent larger than ours — our role in world affairs depends, even more than it did in the past, on having willing allies who trust our promises."

Krugman adds, "We used to be very good at having allies. But Trump has flushed all of that down the golden toilet."

Paul Krugman's full SubStack column is available at this link.

Watch: Historian warns Nobel-winning economist midterms could spark a 'dark' global period

During his four years as president, Joe Biden worried that if Donald Trump ever returned to the White House, it would pose a major threat to the North Atlantic Treaty Organization (NATO). Trump, during his first term, toyed with the idea of withdrawing the U.S. from NATO — whereas Biden, as president, aggressively championed NATO's expansion when Sweden and Finland opted to join the alliance.

Seven months into Trump's second presidency, the U.S. is still a NATO member. But author/military historian Phillips O'Brien, during an interview with economist Paul Krugman, stressed that Trump's return to the White House marks a dramatic change in U.S./Europe relations.

Krugman, on August 23, posted video of the interview on his SubStack page and also published it as a Q&A article. And O'Brien voiced major concerns about the United States' relationship with Europe.

"The United States is going to great lengths to antagonize its allies," O'Brien told Krugman. "I don't get it. None of this makes any sense to me."

The author/historian said of the Ukraine/Russia War, "I think what happens to Ukraine will determine how Europe deals with this. If Ukraine is sacrificed, I think Europe is going to have a terrible future. Because it's going to be dependent on the U.S., which has basically sacrificed Ukraine to (Russian President Vladimir) Putin's Russia. Europe might even break apart, structurally, such that you'll have the Central Eastern Europeans, the ones who want to stand by Ukraine, the Finns, the Baltics, the Nordics going one way and then the Western Europeans sort of pretending things are OK."

O'Brien added, "So, I think people are underrating the chance of Europe splitting over Ukraine, which is why it's so important, I think, that Ukraine comes out of the war in good shape."

According to O'Brien, U.S. allies in Europe will be paying very close attention to the outcome of the United States' 2026 midterms.

"Well, that's the key thing, isn't it? The 2026 midterms," O'Brien told Krugman. "I don't think people are paying enough attention, because they have to be run fairly. I do think the Democrats have a very good chance of winning them if they are run fairly and happen under normal conditions. But they could also be easily perverted…. I would say that 2026 elections will show not whether America can come back, but whether it has a chance to come back — or whether the period we're going into could be a lot longer and darker than we imagined."

Paul Krugman's full interview with Phillips O'Brien is available on his SubStack page as a video and a Q&A article.

‘Insane’: Nobel-winning economist torches Musk’s failed bid to MAGA-fy AI

Nobel-Prize-winning columnist Paul Krugman claimed in a new Substack article that Elon Musk's Grok chatbot started calling itself "MechaHitler" and spewing antisemitic tropes because it was pushed too far to the right by its creator in an overcorrection gone horribly wrong.

Musk has been working to undo the damage ever since, and the fallout even led to the ouster of X CEO Linda Yaccarino this week.

In the article, Krugman explained that AI naturally skews its answers more to the left of the political spectrum because the "reality" it has gleaned doesn't "adhere to the right-wing party line."

He argued that since Republicans have "staked out positions" on issues like climate change and social programs "that run completely counter to informed views." Republicans and Libertarians like Musk consider AI's answers to be biased to the left.

"Hence the Musk/MechaHitler disaster," Krugman wrote. "Musk tried to nudge Grok into being less 'politically correct,' but what Musk considers political correctness is often what the rest of us consider just a reasonable description of reality. The only way to move Grok right was, in effect, to get it to buy into conspiracy theories, many of them, as always, involving a hefty dose of antisemitism."

Krugman argued that MAGA will always have an issue with AI because chatbots often give answers "the movement doesn’t want to hear."

"And there’s no good fix for this problem, because the fault lies not in the models but in the movement," Krugman continued. "As far as we can tell, there isn’t any way to make an AI MAGA-friendly without also making it vile and insane."

Read the Substack article here.

Major Trump 'lie is beginning to unravel': Nobel-winning economist

A Nobel Prize-winning economist believes Americans are souring on the Trump administration's draconian immigration policies because they finally realize "they've been lied to" about the inherent "criminality" of people fleeing oppression and looking for steady work inside the United States.

In a new Substack article, Paul Krugman cited a recent Gallup poll showing that "When asked if immigration is generally a good thing or bad thing for the country, a record-high 79% of U.S. adults call it a good thing; a record-low 17% see it as a bad thing."

In addition, "30% of Americans want immigration decreased, down from 55% a year ago," with more Americans rejecting Trump's border wall and mass deportation policies.

Krugman maintained that Trump's initial call for mass detentions and deportations was always based on the lie that "America is facing a huge immigrant crime wave." After all, last week, Department of Homeland Security Secretary Kristi Noem declared that Los Angeles was not so much a city of immigrants as one of "criminals." And yet, LA officials reported last week "that LA is on track to have the fewest homicides in 60 years."

As Americans start to parse fact from fiction being fed to them from the Trump administration's claims that rapists, murderers, and the worst-of-the-worst from "insane asylums" were being released into the streets, Krugman wrote, "it seems to me that the lie is beginning to unravel as it becomes clear that ICE is having a really hard time finding violent immigrants to arrest."

"Why aren’t they rounding up more undocumented criminals?" Krugman asked. "Because that would be hard work, and anyway there aren’t that many of them. Preliminary numbers found that "only around 78,000 undocumented immigrants with criminal records, and 14,000 convicted of violent crimes," had made their way over the border.

"Meanwhile, Stephen Miller is demanding that ICE arrest 3,000 people a day. Do the math, and you see why they’re grabbing farm workers and chasing day laborers in Home Depot parking lots," Krugman wrote.

"So, Americans may be turning on Trump’s immigration policies in part because they’re starting to realize that they’ve been lied to. But an even more important factor may be that more native-born Americans are beginning to see what our immigrants are really like, rather than thinking of them as scary figures lurking in the shadows," he concluded.

Read the Krugman article on Substack here.

Trump’s 'radical' tariff proposals fail 'basic math': libertarian economist

Prominent liberal economists, from Robert Reich to New York Times columnist Paul Krugman, have been vehemently critical of presumptive 2024 GOP presidential nominee Donald Trump's tariff proposals. Trump is claiming that tariffs could be used to eliminate the United States' federal income tax, and Reich and Krugman are among the many economists who have been warning that if his proposals were implemented, they would, in effect, amount to a massive tax hike for low-income Americans.

But not all of the criticism is coming from the left.

In a biting article published by The Dispatch on June 19, libertarian Scott Lincicome — who serves as vice president of general economics and trade for the Cato Institute — lays out some major flaws of Trump's tariff proposals.

"Even setting aside the many economic problems that tariffs create," Lincicome explains, "trying to use them to fund the U.S. government is not only mathematically implausible even with radical spending cuts, it also raises all sorts of practical problems and economic uncertainties…. The first big problem is basic math."

The libertarian continues, "The United States imported around $3.8 trillion total last year — $3.1 trillion in goods, $714 billion in services — but the federal government spent $6.1 trillion while raising just $4.4 trillion…. So, in a situation where nothing changed in response to higher tariffs…. the federal government would need to impose a tariff on all imports of goods and services of around 160 percent to cover current spending and 116 percent to replace just revenues."

Lincicome points out that "total income tax revenue" for the United States in 2023 "was almost $2.2 trillion," which means that a "58 percent global tariff" would be needed "to cover that amount."

"Apply tariffs to just goods, and you shrink the tax base — meaning you'd need even higher tariff rates to cover whatever revenues you’re trying to replace," Lincicome argues. "Nix only income taxes for the bottom 50 percent of American taxpayers, and you can apply much lower tariff rates — maybe just a few percentage points."

Scott Lincicome's full article for The Dispatch is available at this link (subscription required).

Donald Trump Jr. lashes out at Nobel prize-winning economist at his dad's rally

You don't need a Nobel to see the dire effects of inflation, the ex-president's son said on Wednesday.

Don Jr. took the stage in Hialeah, Florida to warmup the crowd he estimated at 10,000 deep. He delivered the hits against the Biden regime and bolstered a second term for his dad.

He also took a shot at New York Times columnist Paul Krugman for a recent bellwether read of the economy in a written piece.

"Did you see last week, The New York Times," he asked the crowd. "Paul Krugman, Nobel Laureate economist. He won a Noble Prize in economics."

Krugman won the award in 2008.

He continued: "He shows nice beautiful graphics with inflation going down. Then problem is there's an asterisk: Inflation, he says is going great...Inflation is going along perfectly if you don't include a couple of things."

"If you don't include housing. Energy. Food. And transportation."

The article Don Jr. is likely referring to ran on Nov. 7 titled, "Why Did So Many Economists Get Disinflation Wrong?"

In it, Krugman defines inflation as "the rate at which prices are increasing, not their absolute level" and shows some graphs to bolster the argument that the economy is essentially in a better place than it was a year ago.

"Well, from where we’re sitting a little over a year later, things (thankfully) look quite a bit different," he writes.

Don Jr. hit back and took notice of one of the graphs that specifically omitted the critical items of "food and energy."

"Hey, if you don't include literally everything you need to surviving things are going great folks," he said laying the sarcasm extra thick. "You can get transgender surgeries at 50% off and everything else is 3X."

"That's what they're doing."

Paul Krugman slams 'puppet' Kevin McCarthy

Speaking to MSNBC on Friday, Nobel Prize-winning international economist Paul Krugman scorched House Speaker Kevin McCarthy (R-CA) for holding the debt ceiling hostage — and expressed his fears about the endgame of the situation.

President Joe Biden, McCarthy, and their respective staffers are wrapped in intense talks to try to craft a compromise that will avert a first-in-the-nation's-history default on the debt, which experts believe would have devastating effects on the global economy. Krugman was interviewed on the subject by MSNBC anchor Chris Hayes.

"You covered this and witnessed this in 2011, as did I," said Hayes. "One of the things that makes, that I think it's been a little lost to history how destructive that was. Not just the use of the threat of default, but the actual austerity regime that resulted from it. Every bit of evidence would show tangibly stalled in the recovery that went too slow and contributed at some level to that. Why do you think the lessons of 2011 are — do you fear the same thing happening again here?"

"I feel much worse," said Krugman. "Because each successive Republican Speaker makes the previous one looked like a sane, a reasonable guy by comparison. John Boehner and Paul Ryan were terrible, but they were not Kevin McCarthy. Kevin McCarthy is largely a puppet of extremists in his party. What we saw there, we avoided a potential meltdown. But we had this fiscal austerity in the face of mass unemployment. It took us eight years to get back to more or less full employment after the financial crisis of 2008. This time, we did it in three years. We are back to record levels of employment. We have a terrific job market and that largely, you know, you can say we overdid it, we have inflationary bumps, although that seems to be coming down, but we have a starting job recovery which, in retrospect, shows you just what a terrible mistake this was."

"The one to me, the one bright side, it's also a devil's advocate argument, which is we are in a very different situation now than we were in 2011, insofar as the fiscal policy and the expansionary injection was much larger, right?" said Hayes. "Several rounds of CARES, and then the American Rescue Plan. We actually got some very tight labor markets and inflation that cuts right now would not be as destructive as they were in 2011."

"I'm less worried about and the immediate macroeconomics, as the fact that you would be savaging a lot of crucial government services and setting a precedent," said Krugman. "The Biden people have been saying, now we are worried that they will lobby, they've been saying they will not be blackmailed. This will not be the last time that they get in. It will just keep happening. On the other hand, if we go into default, nobody knows. This is the U.S. government, it is the U.S. dollar. It's in U.S. Treasury bills, which are the collateral on which the whole world financial system rests. So it's scary stuff."

Watch below or at the link:

Paul Krugman on debt ceiling standoffwww.youtube.com