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girl gone mad

(20,634 posts)
Thu Apr 5, 2012, 12:01 AM Apr 2012

Krugman "Knocked out of Neoclassical Orbit" by Steve Keen's Meteoric Rise!

We knew him when...



Welcome to Capital Account! The internet has been abuzz over the blogosphere boxing match between Nobel Laureate and New York Times columnist Paul Krugman and debunker of economic conventional wisdom and superhero economist, Steve Keen. Remember that game "Mike Tyson's Punch Out?" Well, let's just say that Steve Keen gave Paul Krugman one upper-cut too many for the establishment intellectual to handle. Krugman declared victory and walked away before he could be dealt any more blows to his economic ego -- not before Krugman could land one more low blow though...we'll break it down!

And a too big to fail bank agrees to pay 20 million bucks to settle allegations from regulators that it mishandled customer funds before a major broker's collapse, but the details may surprise you. If you guessed JP Morgan, then you got half of the story right, but if you guessed the broker was MF Global, well, we have news for you: it's Lehman Brothers. That's right, JPMorgan Chase agreed to pay a $20m fine to settle allegations that the bank mishandled Lehman Brothers' customer funds for roughly two years before the broker filed for bankruptcy court protection. The Commodity Futures Trading Commission alleged that JPMorgan, at the request of Lehman, began using customer funds in November 2006 to calculate how much credit it would extend to Lehman Brothers intraday, in violation of customer segregation account rules.

And last Friday we exposed the myth of the billionaire investor/regular joe Warren "All You Can Eat" Buffett's proclaimed desire to be taxed more. Now he's singing a different song...LITERALLY. The owner of the Omaha World-Herald newspaper serenaded a crowd singing I'm just a paper boy. We'll attempt to demystify the oracle's message.
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Krugman "Knocked out of Neoclassical Orbit" by Steve Keen's Meteoric Rise! (Original Post) girl gone mad Apr 2012 OP
Yeah....that didn't so much happen outside Steve's head. jeff47 Apr 2012 #1
You should try actually reading Krugman some time. girl gone mad Apr 2012 #2
So....didn't read that 2nd sentence? jeff47 Apr 2012 #6
You're just repeating the same baseless claim you made earlier.. girl gone mad Apr 2012 #8
No, actually you didn't respond. jeff47 Apr 2012 #9
This has nothing to do with me. girl gone mad Apr 2012 #10
Also, you've only linked to a follow-up post.. girl gone mad Apr 2012 #3
Thanks for posting. Bookmarked to read later. snagglepuss Apr 2012 #5
Steve Keen's Debunking Economics - Very Good Book cantbeserious Apr 2012 #4
"superhero economist"? bemildred Apr 2012 #7
Not sure. westerebus Apr 2012 #11

jeff47

(26,549 posts)
1. Yeah....that didn't so much happen outside Steve's head.
Thu Apr 5, 2012, 12:46 AM
Apr 2012

How do you know? Krugman isn't a neoclassical economist. Plus Krugman had to correct Steve's own argument. But Steve's sure good at declaring victory.

Here's Krugman's post that he's trying to claim victory over.

girl gone mad

(20,634 posts)
2. You should try actually reading Krugman some time.
Thu Apr 5, 2012, 01:56 AM
Apr 2012

Heck, even his popular trade theory work was thoroughly grounded in the (deeply flawed) neo-classical mainstream. All of his models derive directly from the neo-classical framework. He's worse than your standard neoclassical new-Keynesian synthesis types since he persists in using pre-Keynesian reasoning in so much of his writing, particularly post-crisis.

jeff47

(26,549 posts)
6. So....didn't read that 2nd sentence?
Thu Apr 5, 2012, 08:56 AM
Apr 2012

Krugman's not neo-classical. Claiming his work is neo-classical is like calling Freedman a Keynesian. You can't go from that and then claim your (or Steve's) analysis is correct.

jeff47

(26,549 posts)
9. No, actually you didn't respond.
Thu Apr 5, 2012, 02:11 PM
Apr 2012

You just kept claiming Krugman is in a particular camp of economists he isn't in. And then you (and Steve) go on to demolish the arguments of that camp...which Krugman isn't in.

Fundimentally, Krugman's "critique" is "a lot of your argument doesn't make sense. Please show your work." Then you and Steve declared victory.

girl gone mad

(20,634 posts)
10. This has nothing to do with me.
Thu Apr 5, 2012, 02:58 PM
Apr 2012

I'm just a biased observer.

Are you really trying to make a case that Krugman is a heterodox?

Please. He writes textbooks for the mainstream. He is firmly ensconced in the neoclassical camp.

girl gone mad

(20,634 posts)
3. Also, you've only linked to a follow-up post..
Thu Apr 5, 2012, 02:31 AM
Apr 2012

wherein Krugman snarkily dismisses Keen after having improperly read Keen's comments.

You need to go back further to understand what this fight is actually about.

Here was Keen's original post, which was a critique of a Krugman paper on Minsky and debt deflation. The heart of this battle is over the faulty neo-classical money multiplier model.

Krugman responded here. Pay attention to the push-back Krugman received from his readers. At that point, many other bloggers began to weigh in.

You can find a good summary here.

I don't know what your background is in finance or economics so to describe this simply, the idea that banks are reserve constrained does not hold up under our modern floating rate fiat money system, but many neo-classical economists can't seem to evolve on that point.

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