Remember when Paul Krugman called for a Housing Bubble in 2002? [View all]

[cthulu2016]

If you are a right-winger you probably "remember" it well, in that way one "remembers" things they wish had happened.



Did Krugman say that? Yes, in a NYT column in 2002. The quote is accurate. The following line was:

Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off.

http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html?src=pm

The 2002 column was about the Fed's difficulties in fighting a recession caused by the NASDAQ bubble bursting, and that since the NASDAQ bubble was unsustainable, that the only way to return to the same level would be another bubble, and that perhaps Alan Greenspan was trying to do just that.

"Greenspan needs to..." was what Greenspan "needed to do" to make his rosy predictions come true, not what he needed to do for the good of the nation of the health of the economy.

The comment by Pimco's Paul MCulley to which Krugman was referring was:

"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing."

http://www.nytimes.com/2005/05/27/opinion/27krugman.html?_r=1

Does that sound like someone saying a housing bubble would be a good idea?

This was two guys (Krugman and McCulley) theorizing, in 2002, that Alan Greenspan intended to replace the internet bubble with a housing bubble to keep the numbers up.

I wish I had predicted in 2002 that Greenspan thought he could get away with creating a housing bubble to replace the NASDAQ bubble. That's an impressive prediction.

But the quote appears on dozens or hundreds of RW web-sites as proof that Paul Krugman called for the creation of a housing bubble in 2002.

And Jonathan Swift called for eating Irish children. He did. I've seen the quotes!