Krugman: There’s ‘Real Amnesia’ About Financial Crisis & Next One ‘WILL Be Worse’
Paul Krugman, a Nobel-prize winning economist, says that this next financial crisis will be a shock to most because there’s not one clear indicator that would signify an impending crash. He also says many people have a “real amnesia” about an economic crash and the next one “will be worse.”
According to Money And Markets, when surveying the global economy, there is nothing obvious to point to as the next big thing primed to crash the markets. Previously, the housing bubble in 2007 signaled the 2008 recession. But now, we are in an “everything” bubble where global government and private debts are at disastrous levels and the housing bubble continues to get even larger than it was in 2008.
Krugman believes that the nest time the economy tanks, it will be even worse than the recession of 2008. Perhaps the biggest red flag, Krugman says, is selective memory as to why the last crisis happened in the first place, particularly when it comes to shadow banking institutions that look and function like banks but are not regulated like banks. Krugman insists that more government interference in the economy will help stave off an economic crash. But other economic gurus, such as Peter Schiff, allege that government is the very reason we are repeatedly in the cycle of “crash and recovery.”
“We are poorly prepared to deal with the next shock,” Krugman said. “Interest rates are still close to zero in the US and in most of the rest of the advanced world. The fiscal policy we did was badly handled in the aftermath of the 2008 crisis, and there’s no particular reason to think it will be better. In fact, there’s good reason to think it will be worse.”
The trade war is also a potential economic destructor as well. While everything is in a bubble of epic proportions, president Donald Trump insists on charging Americans for a drawn-out trade war that has already proven to be a ding to most Americans wallets. Krugman would not go as far as to say the next financial crisis hangs in the balance of a new trade deal, Fed policy, further deregulation. or any other specific force. He instead, insisted the “tragedy” is that the recession was so disastrous. “The tragedy of all this is that we actually had the knowledge and we had the tools to make this a much less severe crisis than it actually turned out being,” Krugman said.
The article, "Krugman: There’s ‘Real Amnesia’ About Financial Crisis & Next One ‘WILL Be Worse’", was syndicated from and first appeared at: http://www.shtfplan.com/headline-news/krugman-theres-real-amnesia-about-financial-crisis-next-one-will-be-worse_11272018.
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