Issues & Insights

Hold On To Your Wallets — ‘Wrong Way’ Krugman Says Inflation Will Soon Ease

New York Times columnist and – we’re constantly reminded – Nobel Laureate Paul Krugman says that inflation, which hit another new high this month, will soon abate. Why? Because, he wrote on Tuesday, “Lumber prices have plunged in recent weeks. Prices of industrial metals such as copper are coming down. Prices of used cars are still very high, but their surge has stalled and they may have peaked.”

Oh, wait. That was from a column that Krugman wrote in June 2021.

What he wrote this week was that the gigantic bipartisan infrastructure bill passed last fall will get inflation under control because it will “alleviate the supply bottlenecks that have played a big role in recent inflation, while making workers more productive.”

Our apologies. That was Krugman in August 2021.

What he wrote was that “if we finally get this pandemic under control, the inflation of 2021 will soon fade from memory.”

Oops. That was Krugman in September 2021.

Here’s what he said. “The Fed can easily contain any pickup in inflation.”

Sorry, again, that was Krugman way back in January 2021, when he promised that President Joe Biden’s $2 trillion “rescue” plan wouldn’t cause an inflationary spiral and that the Fed could deal with any uptick in prices with a modest boost in interest rates.

It’s hard to keep up with all the times Krugman reassured us over the past year that inflation wasn’t and wouldn’t ever be a problem under Biden.

What Krugman actually wrote this Tuesday was that “inflation will probably fall significantly over the next few months.”

Why? Because, he now says, oil prices have moderated and retailers are “sitting on unusually large inventory. Car lots are filling up; demand for trucking is falling quickly. International shipping rates seem to be coming down.”

We certainly hope Krugman is right … for once.

Because high inflation is the most pernicious tax devised by man – one that hits the working class hardest, drains prosperity across the board, saps people’s energy, and does so without producing anything good in return.

But we suspect Krugman is wrong … again.

Once inflation takes hold and inflationary expectations set in, it is exceedingly hard to stop. Also, despite Krugman’s Pollyannish view of the economy, shortages are still bedeviling the economy. The latest example is infant formula. Staff shortages still plague much of the economy. Etc.

Plus, the day after Krugman’s op-ed posted, the Labor Department reported that producer prices – which measure inflation before it hits consumers – were up 11.2% in March, which is the fastest pace on record.

On Thursday, the Labor Department released a report showing that “U.S. import prices surged by more than expected in the month of March.”

Does any of this auger a sudden drop in inflation?

To be fair to Krugman, there was a time when he did predict a big inflationary hike.

That was back in 1983 when, as our friends at The Committee to Unleash Prosperity point out, he declared that Reagan’s economic policies would unleash an “Inflation Time Bomb.” The annual inflation rate had plunged from 13.5% in 1980 to just 3.2% in 1983. But Krugman argued that this drop was “merely temporary.” He said that “higher oil prices” and “increased consumer demand due to tax cuts,” would cause “prices to rise again.” 

What happened? Inflation fell to 1.9% by 1986.

The co-author of that paper, interestingly enough, was Larry Summers, who bravely stood up to attacks from Krugman to warn that Biden’s “rescue” would produce the very inflationary spiral we are now suffering. Which goes to show that some people are actually willing to learn from their mistakes. Just not Krugman.

Too bad the Nobel folks saw fit to give the prize for economics to Krugman, because it apparently unleashed an inflationary spiral of egoism that has never abated.

(By the way, if Krugman turns out to be right this time, we will be the first to admit it.)

— Written by the I&I Editorial Board

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The Issues and Insights Editorial Board has decades of experience in journalism, commentary and public policy.


  • Hyperstagflation next. Keep using the old tried and true method of raising interest rates. It will force more businesses to close increasing unemployment. This started when Biden imbeciles began their war on energy to “save” the planet. The real solution will be to unleash our energy industry. Oh, well. We have to learn the hard way.

  • “The growth of the Internet will slow drastically, … By 2005, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s” — Paul Krugman, 1998

  • Other gems from Krugman:
    – The internet will have no more impact on society, than the fax machine (paraphrased)
    – Electing Donald Trump would cause WW3, and destroy the economy (paraphrased)
    – Enron is absolutely, fiscally sound (paraphrased)

    Krugman is quite possibly, the most consistently incorrect person on the planet. Not just little shades of gray, but more in absolute black and white terms. Something like a “reverse Nostradamus”. His claims that inflation will start to decline, are truly frightening, to anyone who actually recognizes his track record.

  • “It is obviously in the interests of the tyrant to make his subjects poor. The people are so occupied with their daily tasks (trying to survive ) that they have no time for plotting. ” Aristotle. Judging by social media, he was right.

  • Hate to be a stickler, but what does “soon” mean? When Trump is President again?

  • Krugman is wrong as much as Bo Bo…Nobel deteriorated long ago into a meaningless liberal ego award…Obama got one after a short time in the White House and did nothing

  • Back 50+ years ago there was a TV weatherman who was always wrong-if he said the sun would shine bring an umbrella. Warm weather forecast brought on a cold snap. I fear Mr Krugman may be a close relative of that poor man.

  • Didn’t someone say Joe Biden has been wrong on every foreign policy issue for the last 40 years. It appears we’ve found his separated-at-birth twin. Paul Krugman, wrong on every fiscal policy issue for the last 40 years. Maybe I have it wrong, but shouldn’t a Nobel Laureate act be, idk competent?

  • Let’s not forget that Krugman famously predicted in the early days of the internet that it was only a passing fad, or that the election of Donald Trump would usher in the next Great Depression. But yes, he has a Nobel; which is worth about as much as the one Obama was awarded (for nothing)!

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