Think Progress: 'Let's Not Pay Back China'

If there’s anything that should convince China to become more capitalist, and put less faith in socialism, it is American progressives.


Yesterday Matthew Yglesias’ head shook violently and he barked out like Paul Krugman with Tourette’s :

…you could start musing allowed about how many we just won’t pay the Chinese the money we owe them. Or you could reflect on the fact that if the People Bank of China is determined to buy bonds and prevent the dollar from falling at all costs, then we may as well totally forget about the short-term deficit and just not collect any taxes at all for the rest of FY 2010.

Ladies and Gentlemen, I believe this marks the first time in modern history a liberal has suggested we stop collecting taxes.

Welcome to the naked liberal mind. Technically, it shouldn’t shock us, Matt is just riffing off the subtext of Paul Krugman’s prescription for what ails us – massive inflation. Liberal economics springs forth from this assumption: We just keep printing money to payoff Dem voters until our debts aren’t so big any more.

This is not economics, this is an agenda.

In December, progressive economists were arguing for a “target” of 3% inflation. If they’ll say 3% now, they’ll say 5%, and then 7% soon after. Because when the mask is ripped off, it is really Chavez under there. To wit, it is February and Obama’s serious economists are screaming that Chinese peasants have too much money saved. Those ungrateful job stealing bastards simply refuse to let us devalue their savings – they keep buying our bonds with their ill-gotten gains.

This is legendary social planning economist Steven Cohen story boarding the last decades of the International economy:

As other nations began to develop, moving from agriculture to industry, they needed someone to buy their end products. Peasants in developing countries have little purchasing power, so the United States stepped in and bought “stuff” from all over the world, said Cohen. “We got the government out of the economy” and bought half of China’s GDP. “We imported so much more than we exported that now we cannot pay it off.”

In this cretin’s world view, little yellow foreigners can’t afford the Nikes and iPods they’ve been stupidly making, so to pull them out of the dirt we bought a bunch of stuff we didn’t need or want. And now that they’ve amassed a small fortune of $2 Trillion of our bonds, we shouldn’t feel bad about making it worthless. He goes on:

Ninety-eight percent of economists think a weaker dollar will help the economy, but it is a difficult sentiment to express without being seen as treasonous

The idea is perfectly true if the only economists you know are treasonous and none of them live in China. Here are the editors of The People’s Daily Online:

By January 2010, RMB had appreciated by 21.2 percent against the U.S. dollar and 4.6 percent against the euro, compared to July 21, 2005 when the RMB exchange rate formation mechanism reform was adopted.

(I urge you to read the whole article to get the Chinese perspective on the current state of affairs.)

At least one lefty economist is wiling to admit that we at least wanted to buy those Chinese goods. Here’s Brad DeLong explaining why:

Seventy percent of our current debt happened since 2000. Rising income inequality created a negative cultural pattern where people “overleveraged” themselves to financially compete with one another,

To DeLong the culprit isn’t easy credit brought about by a crappy government monetary policy;the problem is all of us stupidly wanting new Nikes and iPods in the first place. This is a re-occurring theme with liberal economists: people all make stupid decisions, and we need these market intrusions to aid them.

But what of Krugman? In my darkest heart, I suspect, The Conscience of the Liberal really doesn’t care about high unemployment numbers any more than he cares about inflation… I think he just cares about his Nobel Prize.

I think in 2009, Krugman had his little poodle jaws locked on covering 30M uninsured, and there was literally NO economic news that would make him say, “well we can’t afford health care.” Canada could have presented itself in moral surrender and ask to become a state. And Krugman would have insist we adopt their health insurance system to make them feel welcome.

But now, as the people have wised up in 2010, his policy prescription has changed… he still wants to print money, and he says he wants to do it subsidizing jobs.

And in my next post, I’m going to argue Republicans should take him up on the second part of that offer.