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<oembed><version>1.0</version><provider_name>naked capitalism</provider_name><provider_url>https://www.nakedcapitalism.com</provider_url><author_name>Yves Smith</author_name><author_url>https://www.nakedcapitalism.com/author/yves-smith</author_url><title>Scott Fullwiler: Krugman&#x2019;s Flashing Neon Sign | naked capitalism</title><type>rich</type><width>600</width><height>338</height><html>&lt;blockquote class="wp-embedded-content" data-secret="d1Zz2yFPaq"&gt;&lt;a href="https://www.nakedcapitalism.com/2012/04/scott-fullwiler-krugmans-flashing-neon-sign.html"&gt;Scott Fullwiler: Krugman&#x2019;s Flashing Neon Sign&lt;/a&gt;&lt;/blockquote&gt;&lt;iframe sandbox="allow-scripts" security="restricted" src="https://www.nakedcapitalism.com/2012/04/scott-fullwiler-krugmans-flashing-neon-sign.html/embed#?secret=d1Zz2yFPaq" width="600" height="338" title="&#x201C;Scott Fullwiler: Krugman&#x2019;s Flashing Neon Sign&#x201D; &#x2014; naked capitalism" data-secret="d1Zz2yFPaq" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"&gt;&lt;/iframe&gt;&lt;script type="text/javascript"&gt;
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</html><description>By Scott Fullwiler, Associate Professor of Economics and James A. Leach Chair in Banking and Monetary Economics at Wartburg College. Cross posted from New Economic Perspectives  The debate between Paul Krugman and my friend Steve Keen regarding how banks work (see here, here, here, and here) has caused me to revisit an old quote. Back in the 1990s I would use Krugman&#x2019;s book, Peddling Prosperity (1995), in my intermediate macroeconomics courses since it provides a good overview of what were then contemporary debates in macroeconomic theory as well as Krugman&#x2019;s criticisms of various popular views on macroeconomic policy issues from that era. One passage near the very end of the book has always remained in the back of my mind; in it, Krugman critiques a popular view that was and still is highly influential regarding productivity and trade policy. He writes:    So, if you hear someone say something along the lines of &#x2018;America needs higher productivity so that it can compete in today&#x2019;s global economy,&#x2019; never mind who he is or how plausible he sounds. He might as well be wearing a flashing neon sign that reads: &#x2018;I DON&#x2019;T KNOW WHAT I&#x2019;M TALKING ABOUT.&#x2019; (p. 280; emphasis in original)    In his latest post in this debate (which Keen replied to here), Krugman demonstrates that he has a very good grasp of banking as it is presented in a traditional money and banking textbook. Unfortunately for him, though, there&#x2019;s virtually nothing in that description of banking that is actually correct. Instead of a persuasive defense of his own views on banking, his post is in essence his own flashing neon sign where he provides undisputable evidence that &#x201C;I don&#x2019;t know what I&#x2019;m talking about.&#x201D;</description><thumbnail_url>http://www.nakedcapitalism.com/wp-content/uploads/2012/04/Screen-shot-2012-04-02-at-12.52.11-AM.png</thumbnail_url></oembed>

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