And other times he adopts MMT without acknowledging the source. Yesterday, for example.
For some time he’s been wondering why Japan–with a government debt ratio just north of 200%–enjoys essentially zero interest rates, while periphery Euro nations suffer under government bond rates of 6%, 7% or more–with debt ratios half as high. Of course, MMT has explained the reason for the past decade and a half–and correctly predicted the crisis currently gripping Euroland.
But on 11-11-11 Krugman “discovered” the answer: Euro members gave up their currency sovereignty in favor of what is essentially a foreign currency–the euro. Who wudduv thought?
Yesterday John Carney at CNBC picked up on the argument made by MMT-er Cullen Roche that Krugman is channeling MMT.
Here’s the link to Carney’s post:
http://m.cnbc.com/us_news/45260177
Here’s the basic argument:
Krugman: “A question (to which I don’t have the full answer): why are the interest rates on Italian and Japanese debt so different? As of right now, 10-year Japanese bonds are yielding 1.09%; 10-year Italian bonds 5.76%. …I actually don’t have a firm view. But it seems to be an important puzzle to resolve.” (See here: http://krugman.blogs.nytimes.com/2011/07/16/italy-versus-japan/)
Yesterday, however, Krugman finally found his answer in MMT (here: http://www.nytimes.com/2011/11/11/opinion/legends-of-the-fail.html?_r=1)
Krugman: “What has happened, it turns out, is that by going on the euro, Spain and Italy in effect reduced themselves to the status of Third World countries that have to borrow in someone else’s currency, with all the loss of flexibility that implies. In particular, since euro-area countries can’t print money even in an emergency, they’re subject to funding disruptions in a way that nations that kept their own currencies aren’t — and the result is what you see right now. America, which borrows in dollars, doesn’t have that problem.”
Well, live and learn, as they say! Welcome aboard, Paul!