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Paul Krugman: Rick Santelli Needs to Make His Full Apologies to the Emperor

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Paul Krugman:

Fish in a Barrel, Rick Santelli Edition: The tale of Monetary Hawks Down continues to get ever more interesting, although it makes one ever less sanguine about human nature. The story so far: back in 2009-2010, as the Fed greatly expanded its balance sheet, there was a real debate over consequences--with each side making falsifiable predictions. One side said that the Fed’s moves would be hugely inflationary; the other said that expanding the monetary base in a depressed economy that was, furthermore, in a liquidity trap wouldn’t be inflationary at all. Years have now passed, and reality has closely tracked the liquidity-trap view. Argument settled,right?


For the most part, the inflationistas have quietly dropped the whole inflation thing, never admitting that they made a wrong prediction, and gone on to demanding the same thing as before--but with a new rationale, financial stability. A few have supplemented this strategy by spouting what appears to be gibberish. But some have moved even further, vehemently denying that they ever said anything about inflation, that it was always about something else. A prime case in point is CNBC’s Rick Santelli, who flatly declared, “I never said it was about inflation.” Of course, Business Insider went back to the tape, and found Santelli back when not only declaring “of course I’m talking about inflation”, but going the full Weimar.

Rob Wile:

We're Pretty Sure Rick Santelli Said It Was About Inflation:

Santelli: To be nor not to be — of course I'm talking about inflation. But what's very interesting is, as I look up at gold — of course it's reversed off its highs — but today it hit a high of $1794.40. That's the highest intraday level for 2012, indeed it goes back to November last year when we traded over $1,800. But the issue is ,'To be nor not to be?' Is it inflation vacation or inflation gestation?… Let's consider a couple of things. Printing money--is it really the answer??…. If we just print a million dollars for every man woman and child in the country, and handed it to them, won't that fix everything? Because in order to really look at printing--I like to take everything to the extreme…. Look at the Weimar Republic and their hyperinflation in the early '20s. It didn't happen overnight, I've ued the analogy, it's a lot like soybeans you plant em, you wait, conditions take some time, you need some sun you need some water, but ultimately things start to grow, and are we in that phase or not?

And Krugman continues:

Still, he’s still doing it, insisting that it was never about inflation, that

The real argument was that these programs create a boatload of foreign exchange volatility.

So, how’s that going?… See how stable the dollar was before the Fed starting QE? See how much it has plunged since? Neither do I…. I guess what gets me about all of this isn’t just the bad economics, it’s the stunning lack of menschlichkeit.