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Paul Krugman Profile picture
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27 Oct, 4 tweets, 1 min read
As Joe says: we aren't having stagflation, we're having a (temporarily?) inflationary boom 1/
We talk a lot about supply-chain disruptions, but mostly what we have is supply chains delivering more than ever, but unable to keep up with demand 2/
That's what's happening at the Port of LA 3/ ft.com/content/f116d3…
As far as I can see, this looks much more like the Korean War inflation than the 70s. And while that inflation lasted well over a year, it didn't persist 4/

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More from @paulkrugman

Paul Krugman Profile picture
28 Oct
What's actually happening on Democratic plans? I have no idea. We still seem to have a standoff between corporate Dems who won't say unambiguously that they'll vote for Build Back Better and progressives who won't vote for infrastructure without that assurance 1/
Assuming Dems get past this, one remaining question is whether the pay-fors will actually work — whether tax hikes and improved enforcement will actually cover the cost of new spending. But the key point here is that *it doesn't matter* 2/
The main reason Dems want a deficit-neutral bill — whereas Rs have no qualms about unfunded tax cuts — is that Joe Manchin seems to think deficits are important. But they aren't, in a world of negative real interest rates 3/
Read 4 tweets
Paul Krugman Profile picture
26 Oct
Friends tell me that this tweet was obscure — and it seems that many people, even in the finance world, don't get why velocity is unhelpful now. So, a thread 1/
Start with what happened in the first few years of the financial crisis and aftermath. Here's the monetary base, which is what the Fed controls directly, one measure of the money supply, and nominal GDP 2/
Obviously monetary base (M0) grew enormously, M2 some but not much, GDP even less. So as a matter of arithmetic velocity of either M0 or M2 fell. But why? Because M0 was in a fundamental sense disconnected from GDP 3/
Read 15 tweets
Paul Krugman Profile picture
21 Oct
For reference: I'm revisiting the 2017 Tax Cut and Jobs Act, which was supposed to induce corporations to bring back the money they had invested overseas. For a few quarters it looked as if something was happening: 1/
On paper, overseas subsidiaries of U.S. corporations were disinvesting and sending funds back to their parent companies via dividends. But there was no real investment surge here 2/
What was really happening was almost surely just a rejiggering of the accounting. A large part of reported US investment abroad is just an accounting fiction, resulting from profit-shifting into tax havens 3/
Read 5 tweets
Paul Krugman Profile picture
19 Oct
Scott Sumner has an interesting thread about his recent paper on the "Princeton school" of macroeconomics, which includes among others yours truly and a guy named Bernanke (what ever happened to him?) 1/
I mean, I have to like this thread and the paper ... 2/
Indeed, I think that 98 paper may be the best thing I've done. And it offers an occasion to maunder on a bit about doing economics 3/
Read 10 tweets
Paul Krugman Profile picture
18 Oct
A bit more on fossil fuels and West Virginia. The thing that always strikes me is that the state stopped being a coal-fueled economy a *long* time ago. Here's the share of coal mining in total compensation (a better measure than share of GDP, as I'll explain) 1/
Joe Manchin began his political career in the state legislature in 1982; at that point coal was responsible for 16 percent of payrolls. But it plunged in the years that followed, thanks to strip-mined coal in Wyoming and automation 2/
So King Coal had been dethroned a generation ago. It's fallen even further since, but the big decline is far in the past 3/
Read 6 tweets
Paul Krugman Profile picture
17 Oct
As always, Adam Tooze's latest, this time on coal and the West Virginia economy, is interesting and thought-provoking. But also, unusually, a bit credulous 1/ adamtooze.substack.com/p/chartbook-46…
Tooze's numbers rely a lot on a study I cited for direct coal employment; but a lot of the rest of that study is, well, dubious 2/ wvcoal.com/news-2/latest-…
First of all, the study counts coal-fired electricity generation as part of the coal industry. But think about it: if we phased out coal, WV would still be generating power, just from other energy sources. Including this sector indicates an attempt to inflate the numbers 3/
Read 7 tweets

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