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May 30, 2009

Economists and historians

It is hardly surprising, then, that the bond market is quailing. For only on Planet Econ-101 (the standard macroeconomics course drummed into every US undergraduate) could such a tidal wave of debt issuance exert "no upward pressure on interest rates".

Of course, Mr Krugman knew what I meant. "The only thing that might drive up interest rates," he acknowledged during our debate, "is that people may grow dubious about the financial solvency of governments." Might? May? The fact is that people - not least the Chinese government - are already distinctly dubious.

Niall Ferguson can't resist pointing out that he, the historian, was right and that Paul Krugman was not. I can't blame him.

Posted by CrankyProfessor at May 30, 2009 11:23 AM