Fourteenth Jacques Polak Annual Research Conference, IMF, Washington, November 7, 2013
Paul Krugman: Currency Regimes, Capital Flows, and Crises
Frederic Mishkin: Crunch Time: Fiscal Crises and the Role of Monetary Policy (2013)
"I wasn't thinking much about the importance of having your own currency at first. I learned about that a couple of years into this Don Quixote role." - Paul Krugman, April 11, 2013
Q: What have you been wrong about?
Krugman: "I was really quite wrong about fiscal crises. If you go back to the early 2000s I thought that the US could have a crisis - something like what eventually happened to Greece..."
Wolf: Why is the eurozone different? The strange case of Spain & UK
"Nobody seems to have laid out exactly how a Greek-style crisis is supposed to happen in a country like Britain, the US, or Japan -- and I don't believe that there is any plausible mechanism for such a crisis. [...]
A country that borrows in its own currency can't be forced into default, and we've just seen that it can't even be forced to raise interest rates." - Paul Krugman http://www.imf.org/external/np/res/seminars/2013/arc/pdf/Krugman.pdf
"It's very hard to come up with any reason why either the US or the UK might default, since they can simply print money if they need cash." - Paul Krugman
"For we have our own currency — and almost all of our debt, both private and public, is denominated in dollars. So our government, unlike the Greek government, literally can't run out of money. After all, it can print the stuff. So there's almost no risk that America will default on its debt.
But if the U.S. government prints money to pay its bills, won't that lead to inflation? No, not if the economy is still depressed.
Still, haven't crises like the one envisioned by deficit scolds happened in the past? Actually, no. As far as I can tell, every example supposedly illustrating the dangers of debt involves either a country that, like Greece today, lacked its own currency, or a country that, like Asian economies in the 1990s, had large debts in foreign currencies." - Paul Krugman http://www.nytimes.com/2012/11/26/opinion/krugman-fighting-fiscal-phantoms.html