OK, the weather gods really didn’t want me to start this course. If I had left home 5 minutes later I might not have made it — I barely got up the quite mild slopes, and there were already accidents.

But I did make it, I’m parked under cover, and a double Americano from Small World is in my hand. Now we see how many Princeton students are willing to show up at 8:30 AM in a blizzard.

Slides for my first lecture are here.

Chris Christie’s political success in New Jersey was based on the perception that his personal style — which involved lots of yelling at people — was a sign of his governing effectiveness. This perception may have flourished most easily in a state whose informal motto is “You got a problem with that?”

But what some of us suspected all along was that Christie didn’t yell at people because he was a get-results kind of guy; he yelled at people because he had anger management issues. And his office’s bizarre screed against David Wildstein, his former ally now turned enemy, confirms that diagnosis.

I mean, talking about things Wildstein’s high school social-studies teacher wrote about him? Now I’m worried: Did I do anything bad to my social-studies teacher? No, but I seem to remember snickering once in 10th-grade chemistry class. Oh no! There goes my career!

Also, is the official Christie position “This guy is scum. Everyone has always known that he was scum, since he was a teenager. And that’s why I appointed him to a major policy position”?

What’s remarkable here, actually, is how many pundits were taken in by the Christie persona. How could they not at least have wondered whether this guy’s bullying style reflected deeper flaws?

Anyway, kids, this is a reminder: Be nice to your teachers, or it may come back to haunt your political career.

Matthew Yglesias says what needs to be said about Argentina: there’s no contradiction at all between saying that Argentina was right to follow heterodox policies in 2002, but it is wrong to be rejecting advice to curb deficits and control inflation now. I know some people find this hard to grasp, but the effects of economic policies, and the appropriate policies to follow, depend on circumstances.

I would add that we know what those circumstances are! Running deficits and printing lots of money are inflationary and bad in economies that are constrained by limited supply; they are good things when the problem is persistently inadequate demand. Similarly, unemployment benefits probably lead to lower employment in a supply-constrained economy; they increase employment in a demand-constrained economy; and so on.

So sometimes the relationship and money looks like this, from the best economics principles textbook:

Money growth and inflation in Zimbabwe.

But sometimes it looks like this:

And just to repeat a point I’ve made many times, those of us who understood IS-LM predicted in advance that the actions of the Bernanke Fed wouldn’t be inflationary, while the other side of the debate was screaming “debasement”.

There’s something else to be said about Argentina and, it seems, Turkey — namely, that we’re seeing a mini-revival of what Rudi Dornbusch and Sebastian Edwards long ago called macroeconomic populism. This involves, you might say, making the symmetrical error to that of people who think that running deficits and printing money always turns you into Zimbabwe; it’s the belief that the orthodox rules never apply. And it’s an equally severe mistake.

It’s not a common mistake these days; a few years ago one would have said that only Venezuela was making the old mistakes, and even now it’s just a handful of countries. But it is a mistake, and we need to say so.

I have to admit, I had a hard time warming up to Arcade Fire’s new album. It was a break from the previous sound, and it’s taken me a while to find the thread of continuity. But I have been listening, and am increasingly getting it. As I mentioned on WNYC (btw, I start at around the 25-minute mark) my appreciation of their music grows when I get a chance to hear them do stripped-down performances, like this one just up, which among other things shows that the intensity and commitment is undiminished. Also that they’re having fun:

Jonathan Chait — who’s been on a roll — has fun with the idea that the Bowles-Simpson commission is a model for, well, anything:

If you define the goal of Bowles and Simpson as creating policies outside the political process that can be held up by centrists as emblematic of the failure of both parties in equal measure, then the Bowles-Simpson commission succeeded brilliantly. Why not extend the power of the Bowles-Simpson brand beyond mere deficit scolding to other policy areas? What about a Bowles-Simpson commission for everyday life decisions? The husband says we should spend $5000 to repair our car, the wife says we can’t afford it. Then they hire a Bowles-Simpson commission to tell them they should reject that debate and instead ride around on an invisible unicorn.

But it’s actually much worse than that. At a time when we face a gigantic crisis of unemployed workers and idle capacity, a crisis that is causing immense pain in the short run and undermining our future too, the great and good — the kind of people who rallied around BowlesSimpsonism — decided that the defining issue should be … budget deficits.

You may say that the fiscal responsibility types sympathetic to BowlesSimpson (BoSimps?) were always about long-run deficits, that they were OK with a bit of short-run stimulus. But the short run was always contingent on a long-run Grand Bargain — that is, OK, maybe we can create a few jobs, but you have to catch that invisible unicorn first. So de facto they were a force on behalf of short-run austerity, under conditions when such austerity isn’t just job-destroying, but very probably actually worsens the long-run fiscal position (pdf).

Chait therefore has only half the story: BoSimps completely failed to solve the problem they were supposedly addressing, but were quite effective at worsening the policy response to the real problems they chose to ignore.

So let a hundred BoSimps bloom!

Some comments I’ve seen indicate that people still think the trillion-dollar platinum coin idea was self-evidently ridiculous. Guys, you missed the memo — literally. From last month:

The Obama administration was serious enough about manufacturing a high-value platinum coin to avert a congressional fight over the debt ceiling that it had its top lawyers draw up a memo laying out the legal case for such a move, The Huffington Post learned last week.

The Justice Department’s Office of Legal Counsel, which functions as a sort of law firm for the president and provides him and executive branch agencies with authoritative legal advice, formally weighed in on the platinum coin option sometime since Obama took office, according to OLC’s recent response to HuffPost’s Freedom of Information Act (FOIA) request. While the letter acknowledged the existence of memos on the platinum coin option, OLC officials determined they were “not appropriate for discretionary release.”

A bad idea? Maybe — Obama and company seem to have successfully played chicken on this issue. But ridiculous, no — it was seriously considered as an option.

Dean Baker is, of course, completely right here. There isn’t a red line you cross when going from positive to negative inflation, with all sorts of bad things suddenly happening. What matters is inflation relative to the rate that best suits your circumstances. Since the euro area would clearly be best off with an inflation rate well above current levels, this is a disastrous report:

To restate Dean’s points slightly, there are three reasons low inflation is bad for the euro area. First, the euro area as a whole remains depressed, with core interest rates near zero; falling inflation raises real rates, and deepens the slump. Second, many players in Europe, private and public, are burdened by an overhang of debt; inflation makes it easier to work down this debt, so low inflation makes things harder. Finally, Europe still needs large adjustments in relative wages, with wages in Club Med falling relative to wages in Germany; it’s much easier to do this via rising German wages than falling Club Med wages, so low inflation makes this much harder.

And yes, Europe is very much in a trap. Inflation is falling because the economy is weak, and the economy is being weakened in part by falling inflation. That’s the Japan syndrome. It leads eventually to actual deflation, but to the extent that there’s a red line (or more accurately, an event horizon), it’s crossed when monetary policy starts being limited by the zero lower bound, which happened years ago.

A wise guy, yes. And maybe — I like to think so — someone with a pretty good though by no means error-free track record on depression economics. But Chris House is right, even though he refuses to say what nutty things I’ve said that come remotely close to Ed Prescott.

What he’s right about is that having a medal from Sweden doesn’t mean that you’re wise, or even sensible. And it certainly doesn’t grant you the right to have your opinion treated as gospel. Maybe the prize entitles you to a hearing, but no more than that; from there on, it’s the quality of the argument that matters. And if an economist, no matter how credentialed, consistently makes low-quality arguments, he should be tuned out — whereas someone who consistently makes very good arguments deserves attention, even if he or she lacks impressive-sounding formal credentials.

And oh yes, I deliberately included the “or she” in the second half of that sentence, but not the first. At this point we don’t have any highly credentialed female economists making insane arguments, while we have many women who deserve more attention than they get.

House is also right about one reason people smart enough to win a big prize can say remarkably stupid things: in many cases they are hedgehogs rather than foxes, experts in one narrow area with little sense of others. Worse, it’s pretty common to have done one big thing which turns out to be wrong. And it’s a natural human tendency to refuse to accept that, to let ego dominate empirical evidence.

But while this is a natural human tendency, it’s also a mortal sin. I see it all the time: economists and public intellectuals of all kinds (and pundits of all kinds too) digging into an obviously false position because they refuse to admit that they were wrong — and it’s truly shameful. Folks, we’re talking about real policies that can make or break millions of lives. If you let your ego dictate your position on, say, monetary policy, rather than do your best to get it right, you’re doing something truly vile.

It takes a real effort to, as Brad DeLong says, mark your beliefs to market. And since none of us are saints, ego will all too often find a way in. But you have to make the effort. Unfortunately, not enough famous economists do.

Not my line, alas — Jonathan Chait uses it as the excerpt for his report on the WSJ’s editorial defending Tom Perkins, now famed for comparing criticism of the one percent to Kristallnacht. And boy, am I jealous.

Chait also makes a very good point: what the WSJ piece really does is to confirm that Perkins-style paranoia is actually the norm over there. For throughout the piece the Journal equates criticism with persecution. If you say that the one percent is taking an excessive share of the pie, or that the Kochs exert undue influence on American politics, you’re engaged in vile persecution — OK, maybe not as bad as Hitler, but in the same ballpark.

May I say that if being criticized is a form of unjust persecution, every day of my life is a pogrom?

And what about freedom of speech? Hey, that’s only for corporations, I guess.

Slightly more seriously: the attitude of that WSJ editorial brought to mind Lincoln’s description of the attitude of Southern politicians in his Cooper Union speech. Obligatory declaration: I am not saying that a high income share for the top one percent is anything like slavery. The similarity lies not in what is being defended, but in the demands of those feeling insecure — namely, that any form of criticism be banned. Lincoln:

These natural, and apparently adequate means all failing, what will convince them? This, and this only: cease to call slavery wrong, and join them in calling it right. And this must be done thoroughly – done in acts as well as in words. Silence will not be tolerated – we must place ourselves avowedly with them … The whole atmosphere must be disinfected from all taint of opposition to slavery, before they will cease to believe that all their troubles proceed from us.

Yep. Until we all declare that the one percent is the source of all good, until all mention of inequality as a potentially troubling thing is expunged from public discussion, the rich are being persecuted by totalitarian liberals.

So, I wondered about “Bette in Spokane”, mentioned in the official GOP SOTU response. I wondered how she could face a $700 a month increase in premiums, and speculated that she must have had “a really bare-bones policy offering hardly any protection.”

Well, now we know, and I was right: her previous plan was catastrophic coverage only, with a $10,000 deductible — and the “$700 a month more” was the most expensive option offered by her insurer. She didn’t go to the healthcare.gov website, where she could have found cheaper plans.

So this wasn’t sticker shock, at least as described. This was someone finding out that the ACA requires that you have a minimum level of insurance, and that minimalist plans are no longer allowed — and it was also Ms. Rodgers misrepresenting what had happened.

Oh, and why isn’t catastrophic coverage only allowed? For the same reason we have a coverage mandate in the first place: everyone has to be in the risk pool. If you’re allowed to have insurance that barely covers anything, that’s almost the same as not participating at all.

Soundcheck on WNYC, talking musical tastes.

If you want to see my head, and hear it talking economics, I’ll be on Stephanopoulos this Sunday.

Slight scramble the next few days, which will probably limit blogging. I have 200 students registered for my course on the Great Recession, which starts 8:30 AM Monday, although the numbers may thin once the crowd learns that my professor persona isn’t the same as when I’m shouting down Newt Gingrich. Otherwise, we’re gonna need more precepts!

Update: I’m going to break my once a week rule and post the Civil Wars performance you get a snatch of on the program:

There cannot be a crisis next week. My schedule is already full.

– Henry Kissinger

OK, did we need this? Turkey? Who was paying attention to Turkey?

Some people were, of course, because that was their job. The IMF released the results of its latest Article IV consultation — regular reports that are supposed to provide a sort of early warning system — just over a month ago. It mentioned some worries. For example:

The most concerning aspect is the widening short FX position of the non-financial corporates. This has jumped from US$78 billion in 2008 to US$165 billion now.

But it went on to suggest that the risks weren’t large, among other things because “the floating exchange regime reduces the probability of a very large and abrupt adjustment in the exchange rate.”

Ahem:

Turkish exchange rate against euro

Qualitatively, this looks like a classic emerging-markets crisis: foreign funds came flooding in, there was a sharp rise in private-sector foreign-currency-denominated debt, and then foreign money turned on its heel and fled. Quantitatively, it shouldn’t be that bad: Turkish external debt is only 40 percent of GDP (or was before the lira plunged), and supposedly Turkish businesses aren’t that leveraged. On the other hand, there’s a political crisis as well as a currency crisis.

Oh, and contagion among emerging markets.Lovely.

All this is happening with recovery in the West still very weak and growing deflation risk. Ambrose Evans-Pritchard goes more purple prose on this than I’m willing to — these economies are either fairly small (Turkey, South Africa) or not that heavily indebted (India). But definitely not what we needed right now.

And not really an accident either. If you take secular stagnation seriously, as you should, then we have a chronic problem of too much saving chasing too few good investment opportunities, which means that you only feel prosperous when money thinks it has found more good places to go than it really has — and soon enough figures that out, with nasty effects.

Lots more on this, probably, as I get up to speed on the Bosphorus.

I think Josh Marshall gets this right. Obama came across relatively relaxed last night, basically because he knows two things: he isn’t getting anything substantive out of the GOP, but he’s achieved a lot, and his signature achievement is looking increasingly secure. The real theme of the SOTU was “Whatever.”

I think the fading of the deficit both in reality and as an issue is important here. A missive from Fix the Debt landed in my inbox:

We are disappointed that President Obama did not choose to place a greater focus on our nation’s long-term debt problems in tonight’s State of the Union address. The President should be actively working with Congress seeking solutions to our debt problem rather than relegating it to the political sidelines. The State of the Union was a chance for him to lead on this issue instead of leaving these tough choices to be made by the next President.

That’s the whine of people who have found themselves irrelevant. Obama isn’t afraid of the big bad deficit any more, and he knows that there won’t be a Grand Bargain, so there’s nothing he can or should do on the front that absorbed so much of his energy for three years.

Meanwhile, health reform. Substantively, there has been an impressive comeback from the two horrible first months. The workability of the law is now clear — in California, which never had the teething troubles, enrollments are running ahead of expectations, most insurers are pretty sanguine about the age and health mix, and the polling is slowly improving.

Republicans are meeting these developments with a mixture of denial and Benghazification — insistence that the law is collapsing, that people may be signing up but they won’t actually pay for their policies, etc., combined with the belief that if they just tell a few more dubious horror stories about rate shock or losing your favorite doctor, the public will rise up and demand repeal.

I’d be interested, by the way, to know the details about the constituent described in the official GOP response, who supposedly faced a $700 a month rise in premiums. What kind of plan did she have? Did that number include subsidies? The ACA is supposed to keep health costs to 8 percent of income, so the only way you could get numbers like that is if the individual (a) had a really bare-bones policy offering hardly any protection and (b) has an income well over $100,000.

We don’t know the particulars here, but many if not most stories of rate shock turn out to involve people who didn’t actually apply for a policy, and therefore never found out what it would really cost.

Anyway, the point is that despite his low poll numbers, time is on Obama’s side, and he knows it.

So one thing I learned last night is that the right has a new meme: inequality is the fault of the government — you see, it’s all those overpaid government workers.

I made the mistake of replying on the substance, which is that once you correct for education, government workers are paid about the same as their private-sector counterparts; basically, government workers are school teachers, which means that they need college degrees.

But there is a better answer, and a teachable moment here, which gets at the real nature of inequality in America. It’s not about overpaid teachers.

Let’s start by looking at the real winners in soaring inequality — the people who not only make incredible amounts of money, but get to pay very low taxes (and if you suggest closing their loopholes, you’re just like Hitler.) According to Forbes, in 2012 the top 40 hedge fund managers and traders took home a combined $16.7 trillion billion.

Now look at those supposedly overpaid government employees. According to the BLS, the median high school teacher earns $55,050 per year.

So, those 40 hedge fund guys made as much as 300,000, that’s three hundred thousand, school teachers — almost a third of all high school teachers in America.

OK, teachers get benefits, so their total compensation cost is higher than their wage, so maybe it’s only 200,000.

But you should keep numbers like these in mind whenever anyone tries to shift attention from the one percent (and the .001 percent) to Americans who aren’t even upper-middle class.