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Krugman Is Told To Read More, Write Less, By Swedish Riksbanker

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Nobel laureate Paul Krugman is way off when he accuses the Swedish central bank of being guilty of “sadomonetarism,” according to the target of his criticism.

Deputy Governor Per Jansson says the U.S. economist’s analysis suggests he hasn’t read enough about Sweden.

Krugman has criticized the bank for raising rates at the height of Europe’s debt crisis in 2010 and 2011, and then for not cutting fast enough to fight disinflation. The moves made sense at the time, Jansson said, given a consensus among forecasters that prices were rebounding and as the economy was expanding faster than much of Europe, driving up credit growth and house prices.

“When he described Sweden as sort of a deflationary economy, and makes these parallels to Japan, you wonder, has he ever had a look at the data?” Jansson said in a March 12 interview in Stockholm. “Has he seen how Swedish GDP recovered over these crisis years? It completely outperformed the euro area, of course, but even the U.K. It’s close to the U.S.’s performance.”


The comparison to Japan doesn’t impress Jansson.

“You would wish when he says this, that Sweden looks like Japan and stuff,” that he “write fewer articles and have more of a look at the data and then come back again,” he said. “I don’t know why he does that; it’s a mystery and it doesn’t make him come across as a guy who is very well informed.”


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Monetarism and Keynesianism are both examples of one-parameter models that have become political ideologies. Both use spurious, unempirical equilibrium arguments to describe the behaviour and regulation of a complex system with a single parameter - money supply in the first instance, the level of govt spending in the second - while ignoring everything else. It's been known since the early 60s, when Lorenz first developed a simplified model of atmospheric convection, that the constant forcing of a dynamical system parameter is just as likely to lead to chaos as it is to the evolution of a steady state, there really is no excuse for economists to pretend otherwise.

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Is Krugman still insisting that banking is simply a 'veil over barter'?

Kind of ironic given the fact that barter itself as an economic 'system' has been totally debunked as something that never actually happened- there is no known account anywhere of a society using barter as it's primary means of exchange.

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