Old Testament Economics

| Fri Jan. 14, 2011 12:39 PM EST

Paul Krugman:

A further thought inspired by the meditations that led me to today’s column: I think I now understand the otherwise weird resurgence of paleomonetarism in the midst of a prolonged liquidity trap. It’s not really about analysis, it’s about morality.

You see, if you’re the kind of person who views being taxed to pay for social insurance programs as tyranny, you’re also going to be the kind of person who sees the printing of fiat money by a government-sponsored central bank as confiscation. You may try to produce evidence about the terrible things that happen under fiat currencies; you may insist that hyperinflation is just around the corner; but ultimately the facts don’t matter, it’s the immorality of activist monetary policy that you hate.

Sure. Temperamentally, liberals are New Testament critters and conservatives are Old Testament critters. Conservatives believe in retribution. They believe in suffering for your sins. If you went into debt, it's right that you should suffer for it. If the economy partied too hard, a hangover is the proper cure. We may or may not learn from our mistakes, but it's still right and proper to pay for them.

The irony, of course, is that most of the tea party types who believe this are basically suffering for the sins of others. They've been conned into thinking that somehow they're the ones responsible for our economic woes, and the folks doing the conning are delighted to get away with this. I probably don't need to tell you who those folks are.

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