Former Rolling Stone editor Matt Taibbi is waging what seems like a one-man war against the liberal media’s latest, though unsurprising, offensive to boost Joe Biden: attacking those who think the economy is fragile. We all know inflation is high—every American who heads to the grocery store feels the pain when they reach the checkout counter. Don’t believe your lying eyes is the pivot. For a time, there were inflated economic reports based on Chinese math that the media touted. That all collapsed in the past three to four weeks.
Inflation is still high, and the first quarter GDP report was so stellar that the markets crashed. The economy isn’t strong when 40 percent say they’re poorer than four years ago and credit card debt has shot through the stratosphere. The commercial real estate bubble is primed to burst, and banks must soak up that blow if they can. So, with Trump rising in the polls, Paul Krugman, The New York Times's most vocal liberal economist, went on a tangent about “magical thinking” as there are reports of Trump advisers toying with ideas on how to get a better handle on interest rates and the Federal Reserve should he win. Krugman wrote: “How would Trump respond if things went wrong? Remember, he suggested we look into fighting Covid by injecting disinfectant. Why expect him to be any less inclined to magical thinking in dealing with, say, a new surge in inflation?”
This opened the door for the op-ed writer to be raked over the coals because this man had the gall to declare the war on inflation over. It was a claim so outrageous that even non-conservative outlets mocked him. It’s one of those moments where you wonder how this man is a Nobel laureate. Taibbi did a deep-dive in all the ways Krugman was guilty of “magical thinking” to prop up the Biden presidency, and it’s a line-by-line bruiser:
Paul Krugman, worried about a magical thinking response to a “surge in inflation.” Why would that be funny? Let’s review:
Six months ago, Krugman made an announcement on Twitter. “The war on inflation is over,” he declared. “We won, at very little cost.”
[…]
This was the economic equivalent of George Bush’s “Mission Accomplished” stunt. Krugman graphed the Consumer Price Index excluding “shelter, food, and used cars.” The CPI, which ostensibly tracks changes in the price of consumer goods, is already a quasi-bogus number whose quirky methodology allows government to make prices seem lower. That wasn’t enough for Krugman, who simply removed three of the biggest household spending variables to take the real CPI of 3.7% and jam it below 2%, creating his own bespoke inflation monitor.
Krugman was instantly mocked, even by other mainstream outlets. “Nobel Economist Paul Krugman Mocked For Saying Inflation is Over if You Exclude Most of What People Buy,” was the take in Business Insider. “Inflation is not a problem if you don’t buy anything,” added TalkMarkets…
[…]
Krugman backpedaled slightly, but couldn’t help himself and went back month after month to argue the numbers were better than they seemed. In January, he posted the “NY Fed measure of underlying inflation” to confirm “the war is over, and we won.” In February, for instance, he posted a chart reminding us that “if it weren’t for owners’ equivalent rent, a price nobody pays, nobody would be talking about inflation.”
All this came a year after he had to write a column called “I Was Wrong About Inflation,” admitting to being on “Team Relaxed” when it came to the potential downside impact of a massive monetary rescue plan. One of the reasons for his miscalculation? “A big piece of the plan was one-time checks to taxpayers, which we argued would be largely saved rather than spent.”
Krugman calculates consumer prices without housing or food and assumes people in the middle of an economic crisis won’t spend six hundred bucks, but thinks other people are guilty of magical thinking on inflation?
Putting a bow on all this, in the “magical thinking” piece Krugman indulged in a catastrophic fantasy about Trump potentially devaluing the dollar to stimulate exports, an idea he ripped as “clearly inflationary — raising import prices and overheating a U.S. economy that is already running hot.” One can only assume he means hot in the Goldilocks sense, i.e. not too much inflation, and not too little, but just hot enough.
One last note. Krugman rails against Trump’s reported plans to expand tariffs. This is interesting because when Joe Biden told the World Trade Organization to shove it a year and a half ago after the WTO declared Trump’s last tariff regime (which Biden was continuing) illegitimate, Krugman declared, “It’s up to America to determine whether its trade actions are necessary for national security,” and “an international organization has no right to second-guess that judgment.”
Taibbi is not a Trump fan, but he’s fair. He’s not a conservative but an independent reporter who takes shots at both sides. It’s just that it seems it’s the Democrats and the left-wingers in Silicon Valley who have executed retaliatory measures for veering off the reservation, i.e., not being a loyal liberal. Mr. Taibbi did what we’ve done for years, track Krugman’s hackery and mocked him for being a cheerleader for anything when a Democrat occupies the White House while acting like the drunk uncle when a Republican is in office.
Regarding snobby liberals taking the role of philosopher king on these issues, Krugman is the undisputed high chancellor. Take this Krugman passage, which Taibbi used to make his point:
The elephant in the room — and it is mainly an elephant, although there’s a bit of donkey too — is partisanship. These days, Americans’ views of the economy tend to be determined by political affiliation rather than the other way around… Republican politicians and media are united in trashing the Biden economy… Democrats, on the other hand, are divided, with some progressives talking down the economy because they fear that acknowledging the good news might undermine the case for strengthening that weak social safety net.
“Got that? Ordinary people don’t have honest opinions about the economy, just partisan reactions, and when progressives say negative things, it’s only because they’re lying for a good cause, i.e. stumping for a wider safety net,” responded Taibbi. “Everybody is dishonest except the experts like Krugman, who have facts where the volk only have vibes, and wrong ones at that.”
It's nothing you haven’t heard, but seeing some non-conservatives catching on and roasting this clown is nice.