New York Times columnist Paul Krugman comes up with quaint little terms for those who dare to disagree with him.  (One charming example is "confidence fairies.")  The term Mr. Krugman uses for those concerned about the federal deficit is "deficit scolds," and he thinks them quite misguided.  In his recent column "Fighting Fiscal Phantoms," Krugman writes:

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 -- I'd say no risk at all if it weren't for the possibility that Republicans would once again try to hold the nation hostage over the debt ceiling.

First, if Republicans were to resist raising the debt ceiling, there would still be enough money coming into the treasury to cover debt obligations.  So we wouldn't default unless Treasury Secretary Geithner decided to pay non-obligations, like entitlements, before he paid actual obligations, like interest.  So the problem with not raising the debt ceiling is not default, but rather that retirees wouldn't get their Social Security checks.

It's amazing that we've degenerated to the point where Krugman's rhetoric can gain any traction.  According to Krugman, the nation is being held "hostage" unless we go another trillion into debt.  Some Americans actually buy this perverse "logic."

Second: "So our government ... literally can't run out of money. After all, it can print the stuff."  Right, so why not just print all the money Congress wants to spend?  Why levy taxes or sell U.S. Treasuries?  Why not just print it all?

The reason we don't print even more money than we have is because we'd devalue the money that's already been printed even more than we've already devalued it.  Default, as in national bankruptcy, has never been the threat from Congress's trillion-dollar deficits.  Insolvency in America will instead take the form of a blasted dollar, a ruined currency that other nations will want no part of.

Krugman may have written more than he wanted to: "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."

But when the "U.S. government prints money," that is inflation.  The more interesting point here is that Krugman is asserting that the "depressed" economy is what's keeping inflation in check.  Isn't that a vindication of the "deficit scolds"?  Not for Herr Krugman, who considers inflation desirable:

Now, it's true that investors might start to expect higher inflation some years down the road. They might also push down the value of the dollar. Both of these things, however, would actually help rather than hurt the U.S. economy right now: expected inflation would discourage corporations and families from sitting on cash, while a weaker dollar would make our exports more competitive.

(Well, we mustn't have folks "sitting" on their cash -- it would be too much like saving.)

If the federal government is going to persist in printing trillions of dollars, then I say let the economy stay "depressed."  Inflation, not a slow economy, is the great economic evil.  Inflation is what ruins currencies.  Were America to catch a nasty case of hyperinflation, the current "depressed" economy will seem like the good old days.

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.

The Weimar Republic didn't have its own currency?

For those who think Paul Krugman is a serious analyst, read this 2011 article at NRO by Don Luskin, author and frequent guest on The Kudlow Report.  On the second page of the article are links to the Krugman Truth Squad archives.  The entire collection of articles is here in PDF -- all 94 columns.

Jon N. Hall is a programmer/analyst from Kansas City.