Bloomberg Television: Ron Paul Vs. Paul Krugman
On Monday, after the market close, Bloomberg Television played host to a much anticipated showdown between Congressman and GOP Presidential candidate Ron Paul and noted Princeton economics professor Paul Krugman. Not only are the two men among America's leading voices on American economic and fiscal policy, but they also hold diametrically opposed viewpoints.
Ron Paul has been a consistent opponent of runaway federal debt, deficit spending, and Federal Reserve policies. Krugman on the other hand supports Keynesian economic policies and believes that the Fed should continue to engage in more quantitative easing programs to raise the rate of inflation. He also believes that increased government spending is necessary to pull the country out of the current economic malaise.
In their debate, Congressman Paul framed the debate between himself and Krugman in terms of "big government" ideology and "small government" ideology. Paul said that his small government point of view supports personal liberty and free markets.
Krugman, on the other hand, while asserting that he is a defender of capitalism and wants for the market to be "as free as it can be," said that at times the government has to step in to prevent prolonged depressions and economic collapses. He said that prior to the creation of the Federal Reserve, the U.S. economy was extremely volatile and prone to sharp downturns.
Krugman added that he supports the economic policies which were enacted after World War II when there was mild inflation and effective regulation of the financial system. The Princeton economist also believes that the Federal Reserve should be targeting a higher inflation rate in order to spark the economy. Ideally, he said that inflation should be running at around 4%.
Paul, on the other hand, said that inflation is just a form of government theft in that it steals people's purchasing power and destroys savings. He noted that the value of the Dollar has declined 98% since the creation of the Federal Reserve in 1913 and that the Federal Reserve has a terrible track record of getting things right. On the issue of federal debt, the two men also drew sharp disagreement.
Paul contended that the debt is the primary problem because it pulls capital out of the private sector through excessive taxation. According to the Congressman, this is one of the primary reasons for the high rate of unemployment. Krugman, on the other hand, said that the U.S. is nowhere near the "red-line" in terms of debt and that the real solution to the current economic crisis is a stronger commitment to Keynesian economic policies.
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