Paul Krugman Quotes

The economics profession advances by one confusing financial disaster at a time.

Not every business cycle has a financial crisis. Frequently they do.

Even if consumer confidence hit rock bottom, that most likely would not be enough, by itself, to cause a depression.

The economic repercussions of a stock market crash depend less on the severity of the crash itself than on the response of economic policymakers, particularly central bankers.

Economic downturns in the United States generally occur when the Federal Reserve raises interest rates to keep inflation in check When the Fed's Open Market Committee believes that it has brought inflation under control, it can start to lower rates and reverse the downturn. But the recession that began in 2007 [The Great Recession] was unusual: since the Fed did not casuse that downturn by tightening monetary policy, it could not reverse it by lowering short term interest rates. The downturn was the result of market mispricing assets, including financial assets such as equities and mortgage-backed securities and real assets such as housing.

Bulls don't read. Bears read financial history. As markets fall to bits, the bears dust off the Dutch tulip mania of 1637, the Banque Royale of 1719-20, the railway speculation of the 1840s, the great crash of 1929.

Developments in financial markets can have broad economic effects felt by many outside the markets.

The trouble is that the average trader on Wall Street, he or she is so young, he doesn't even remember the recession of 2001, let alone the previous one.

Should that worse scenario materialize, then most probably our propensity to increase interest rates will be weaker.

The world is still in deleveraging.

How much would you pay to avoid a second Depression?

Economic and financial crisis are getting much more usual, and they are not confined to a given country but they immediately spread all over the world, and you have to be prepared for that.

Viewed from a distance, or through the eye of the All-Knowing CEO of the Universe, the crash of 2008 followed the usual pattern. A long-lived boom driven by cheap credit, going back as far as 1982 (though subject to interruptions in the mid-1980s and 1990s, and in 2001), came to grief because of a rise in the cost of borrowing money.

If the fiscal cliff occurs, I don't think the Federal Reserve has the tools to offset that event.

If the program goes off track again due to recession, this should not become a pretext for the imposition of more austerity measures.

Our first goal is to stop the recession and start with recovery.

I don't think it's the end of the world even if we have a recession. We'll pull back out of it again. No big deal.

The Federal Reserve's job is to take away the punch bowl just when the party gets going.

I think that this is the most significant financial crisis in the post-War period for the United States, and it has in fact a global reach.... I think it is extraordinarily important to understand that, as we have seen in many previous examples of different countries and different times, choking up of credit is like taking the lifeblood away from the economy.

I have 13 bankers in my office, and they say that if you go forward with this you will cause the worst financial crisis since World War II.

The way you create deflation is you create an asset bubble.

During an economic crisis, what matters is that the government keeps its foot on the accelerator.

New policy tools, which helped the Federal Reserve respond to the financial crisis and Great Recession, are likely to remain useful in dealing with future downturns.

I believe that the root cause of every financial crisis, the root cause, is flawed government policies.

What would happen if the markets suddenly questioned our ability to keep public finances in check? What would be the effect on growth?