EDITOR: I can't figure out if columnist Paul Krugman is an economic buffoon or just a shill for the government.
In recent columns, he chastised the "deficit scolds" and "inflation scaremongers" and then goes on to cite government statistics, such as a 2 percent inflation rate and a 9 percent unemployment rate. In the mid-1990s, the government changed the way unemployment is calculated, dropping the long-term unemployed from the unemployment rolls. Also in the '90s, the government changed the way it computes inflation, introducing substitution of products and dropping food and energy from inflation calculations.
I direct people's attention to shadowstats.com, which calculates inflation and unemployment the original way. According to shadowstats, the true unemployment rate is 23 percent, and the true inflation rate is 11.1 percent. Anyone who goes to the grocery store can testify that inflation is much higher than 2 percent. It then follows that Krugman's arguments are based on false statistics and therefore false.
I think Krugman is bucking for Ben Bernanke's job, so he takes the government's propaganda position.
There will be dire consequences for the dollar with the Fed pumping trillions into the economy. If interest rates go up to normal levels, the interest on the national debt will begin to exceed tax collected, leaving little for anything else.
EDITOR: The real story on public pensions is that in the 1970s the CHP negotiated a new retirement formula, allowing officers to retire at age 55 with 2 percent of their pay for each year they worked, up to a maximum of 75 percent. This eventually became 3 percent at 50, with a maximum of 90 percent. The new retirement was intended to reduce disabilities and encourage younger, fitter officers, and soon other agencies adopted similar formulas.