Another Republican Shows Us They Don’t Have A Clue What They’re Talking About

Paul Krugman writes about yet another ostensibly “serious” Republican trying to say something intelligent about economics and policy.

Tom Coburn ought to look at this graph showing that over the time period Sweden has allegedly been so responsible and their debt-to-gdp has fallen 20%, the nominal value of their debt has been FLAT!!!

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Sweden is a great example of how you can (and probably ought to) GROW your way out of debt rather than trying to hack it (and your economy) down with (real) austerity…

Incidentally, did Sweden see a corresponding improvement in their bond rates as their debt position improved? No, they didn’t. Swedish bond rates actually rose until late 2008. Why did they fall then? Because of Liquidity Preference – a rush to perceived-safe assets.

Despite this, we have a Republican senator using Sweden, of all countries, as an alleged example of how austerity reduces debt. Truly, these know-nothings really do make it “even worse than you thought.”

Unfortunately, Coburn doesn’t realize that this isn’t an “exception” to what Krugman’s been saying – it’s actually a real example of one of the things Krugman advocated in his latest book. Krugman points out that the US didn’t “pay down” the WWII debt at all (our debt-to-gdp was much higher then than it is now). The nominal value of that US debt only increased over the following decades, but because the US economy grew and the US debt was merely “maintained”, the US debt-to-gdp fell dramatically – until Reagan came into office…

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About stormculture

In pursuit of reality.
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