Paul Krugman: Mysteries of Deflation

"Actual inflation = A + B * (output gap) + Expected inflation"

Typical economic equation with a whole bunch of poorly defined fudge variables that can fit absolutely any data set and is completely lacking in falsifiability.

"But here’s the thing: the inflation-adjusted Phillips curve predicts not just deflation, but accelerating deflation in the face of a really prolonged economic slump."

Ah.. But what causes a prolonged economic slump? Deflation.. and what causes an end to the economic slump, inflation. So what causes inflation and deflation? Consumer Psychology? Animal Spirits? High Interest Rates? Low Interest Rates? Equations where you can plug in the right numbers and get the results that match the historical data set?

Ok Krugman, stop pussy footing around. You want us to blow out the deficit just like Japan did and have the government spend trillions on infrastructure and the fed to keep interest rates at zero forever.

What this will do is make sure that the economy stays in deflation until the entire generation that is mired in debt up to their eyeballs and lives paycheck to paycheck goes broke, or in the case of student loans, dies. See you on the other side of the Kondratieff wave in about 20 years pal. I know you'll take all the credit for it.

Krugman always argues in favor of more inflation. He has even said explicity that the government can create wealth by printing money, which is simple fantasy. Printing money - causing inflation - only steals wealth from people who already have dollars.