Here is how the Nobel-prize winning economist applies his famous intellect to fears of a possible bond-market bubble:
[H]ow do austerians deal with the reality of interest rates that are plunging, not soaring? The latest fashion is to declare that there's a bubble in the bond market: investors aren't really concerned about economic weakness; they're just getting carried away. It's hard to convey the sheer audacity of this argument: first we were told that we must ignore economic fundamentals and instead obey the dictates of financial markets; now we're being told to ignore what those markets are actually saying because they're confused.
You see, then, why I find myself thinking in terms of strange and savage cults, demanding human sacrifices to appease unseen forces.
Step 1: Pretend that people who have made a long and principled argument against both hysterical government growth and the dangerous debt it requires said anything about obeying "the dictates of the financial markets."
Step 2: Pretend that, therefore, they are not to be believed because of their opportunistic hypocrisy, even though many were saying the same thing in 2009, and 2006, and on back.
Step 3: Evil or stupid, I don't know which! (Also: profit!)
Remember: If bond-bubble worriers are wrong (maybe!) but win the argument (unlikely), then government in the U.S. won't spend as much money. If Krugman is wrong (maybe!) but wins the argument (likely), this country is truly hosed.
As I said last month, this college newspaper-grade rhetorical style is itself a shining example of bubble mentality. But on the positive side, it's a good rule of thumb that whatever person or idea Paul Krugman tries banishing from Serious society is probably on the upswing.