Niall Ferguson Refutes the Arguments of Niall Ferguson

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There's nothing wrong with a healthy dose of pessimism, but Harvard historian Niall Ferguson has made something of a fetish of it recently, globe-trotting from England to Aspen to warn everybody who will listen that the end is nigh for the American Empire.

Is he right? I have no idea. But he's certainly inconsistent. In the early aughts, it turns out, he did a great impersonation of circa-2010 Paul Krugman, extolling the virtues of loose money on the cusp of a deflationary cycle and poo-poohing deficit hawks (the fore-bearers of today's Niall Ferguson) who worried that the United States could trigger a borrowing crisis. Matt Yglesias chronicles the Ferguson-Ferguson debates, with 2010 Niall in italics and 2003 Niall in bold:

New York Times columnist Paul Krugman, who likens confidence to an imaginary "fairy" have failed to learn from decades of economic research on expectations. All it takes is one piece of bad news - a credit rating downgrade, for example - to trigger a sell-off.

But this will not be the kind of inflation experienced in the 1970's and 1980's. So powerful are the deflationary forces today (notably in the second and third biggest economies, Japan and Germany) that Washington can splurge on its military and social services with only a modest impact on expectations of inflation.

But it is not just inflation that bond investors fear. Foreign holders of US debt - and they account for 47 per cent of the federal debt in public hands - worry about some kind of future default.

But the United States has a unique advantage over all other sovereign borrowers: central banks and other institutions around the world need to hold dollars as the currency most frequently used in international transactions. While this is true, America can count on selling large amounts of dollar assets, like 10-year Treasury bonds, to foreigners -- very large amounts.

And on and on it goes. I'm not prepared to call Ferguson a charlatan or a purposeful pessimism peddler, because I don't know the guy, or his motives, and it's not as though he's the only distinguished intellectual sweating deficits these days. Instead let's draw the absolute simplest conclusion possible: that these debates are complicated and that reasonable informed people can disagree ... even with themselves.

But for the record: 2003 Niall sounds pretty convincing in these excerpts.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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