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Paul Krugman

Nobel Prize-winning economist Paul Krugman says we’re in an economic depression and we’ve got to act to end it. He joins us.

American economy Nobel Prize laureate Paul Krugman talks to journalists during a news conference before being awarded an Honoris Causa degree by Lisbon University, Lisbon Technical University and Lisbon Nova University Monday, Feb. 27, 2012 in Lisbon. (AP)

2008 Nobel Prize laureate Paul Krugman talks to journalists during a news conference before being awarded an Honoris Causa degree by Lisbon University, Lisbon Technical University and Lisbon Nova University Monday, Feb. 27, 2012 in Lisbon. (AP)

Nobel Prize-winning economist and policy warrior Paul Krugman is not shy about spelling out exactly what he thinks. And right now it’s this: Despite all the talk about “green shoots” and signs of recovery, the United States is, says Krugman, in an economic depression. The stimulus wasn’t enough to shake it. Austerity, here and abroad, is making it worse. Lives are being ruined.

And it’s going to stay bad until and unless we act. Krugman’s going after budget-cutters as blind. Ben Bernanke as part of the ‘the borg”.

This hour, On Point: Paul Krugman, on economic depression and how to end it.

-Tom Ashbrook

Guests

Paul Krugman, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University. He is also an author and columnist at the New York Times. His latest book is End This Depression Now! An excerpt of the book was published in the New York Times Magazine here.

From Tom’s Reading List

The New York Times “While the Fed went to great lengths to rescue the financial system, it has done far less to rescue workers. The U.S. economy remains deeply depressed, with long-term unemployment in particular still disastrously high, a point Bernanke himself has recently emphasized. Yet the Fed isn’t taking strong action to rectify the situation.”

Audio: Hear Federal Reserve Chairman respond to charges made in Krugman’s New York Times article. Here is New York Times reporter Binyamin Appelbaum questioning Bernanke during a press conference at the Fed on April 25, 2012.

Washington Post “Bernanke is making two arguments here. First, he’s saying that the situation in the United States isn’t as bad as it was in Japan. “We are not in deflation.””

Business Week “Krugman’s own stance is clear. A Princeton University professor who won the 2008 Nobel Prize in economics, he’s best known as a New York Times columnist who hews to the teachings of John Maynard Keynes. “

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  • Roy Mac

    Keynes’s ideas led us out of the Depression, and were supplemented by JK Galbraith.  Why are there so many who insist that Mises was right, even though he has been discredited as a complete crackpot?

  • Beth Kelley

    Could Dr. Krugman please comment on Robert Reich’s “Beyond Outrage?”  THANKS!!

  • Aaron

    Dear Paul;

    Do you scream and say “this is b.s.!” every time you hear a GOP politician or conservative pundit say that we’re going to end up like Greece?  I know I do…

    • JNC

      Yes, Treasury Bills have near-zero interest rates, and the US government – unlike Greece – has its own currency.  There are is nearly no analogy here.

  • Paul Kane

    One side of me wants Romney elected and the Ryan budget enacted so we can get on with finally proving all this trickle down, austerity only (see England’s double dip recession) nonsense is not the way out of our economic malaise. Short of that and given the irrational views of half the country, which vote against their economic interest, is there any way forward,  short of revolution?…And, yes I mean with blood in the streets. I don’t mean to be alarmist, but citizens united, a century long fight for universal health care bill potentially overturned by the supreme court, workers stripped of rights to collectively bargin…it’s bad out here for regular people going forward…    

    • Victor Vito

      I love your post.  Thank you for saying it.  I’ve long been a sad subscriber to the theory that no solution is possible until we drive this thing completely off the road and into the ditch.  We are giving up 150 years of hard earned labor rights and turning corporations into people.  We Americans are just too damned stupid (or about half of us are).

    • William

      Ryan’s budget does not reduce spending much compared to the massive spending increases the last ten years. With both wars being gone should we now start a much greater level of spending cuts?

      Did the UK actually reduce spending much? I looked online real quick and their budget spending in 2007 was 587 billion in pounds vs 711 billion in pounds for 2011.

      • Victor Vito

        That seems pretty drastic to me.  If my weekly take-home went from $711 to $587…..

        • JNC

          Yes, it’s nearly a 20% cut.  That’s equivalent to the entire defense budget, all of Social Security, all of Medicare/Medicaid, double all of our social safety net expenditures, or everything else that the government does (the remaining 10% is debt interest).

          http://www.cbpp.org/cms/index.cfm?fa=view&id=1258

        • William

          He is not delivery a balanced budget for years and spending is being held to 2 percent. What is so drastic about that?

      • TFRX

        Does Ryan’s budget reduce spending, period? In what, with what, how specific?

        • Don_B1

          The SPENDING cuts are unspecified, but to “enough to equal the tax cuts (revenue decline) of some $5 TRILLION over 10 years. In other words, the question that Ryan will not answer is what discretionary spending he will cut to accomplish his fiscal deficit reduction, because no one will believe that the people will accept. He can always infer that those cuts will affect those “others” who do not deserve a “free handout.” And Ryan complains about “class warfare”!

          • TFRX

            The magical “I’ll cut it in the future, I’m a Republican” trick.

            But at the end, the lady he’s sawed in half is never shown whole again.

    • NewtonWhale

      Been there, done that.
      W. ran us into a ditch and proved that supply-side economics and deregulation is a disaster.

      If we had a legitimate media doing it’s job that would have been its death knell.

      Instead, we have an entire cable “news” channel and Clear Channel Communications acting as the propaganda arm of the Republican party, while Meet The Press and the other Sunday Morning gas bag shows are dominated by conservative guests:

      FAIR’s Peter Hart, who wrote the study, told TPM the Republican tilt isn’t just a product of the 2012 election. “No matter what the partisan balance of power in Washington is,” the shows feature more conservatives, he said. “For whatever reason, the Sunday shows are wedded to this format.” 

      http://www.fair.org/index.php?page=4514 

      And there is never any accountability for failure, if you’re a conservative.

      Newt Gingrich was driven from the Speakership in disgrace in 1998, yet was the most frequent guest on Meet the Press in 2009, when Nancy Pelosi was not on at all, in spite of the fact that she was the actual sitting speaker.

      http://thinkprogress.org/politics/2009/12/29/75443/gingrich-mtp/ 

      Yesterday we saw Carly Fiorina on the panel with Krugman. She drove Hewlett Packard into the ditch, and has been called “the anti-Steve Jobs”. Yet there she was, prominently offered as an authority, regurgitating misinformation about the need to cut taxes on business to spur investment.

      Krugman accurately told her “Nothing you said about corporate taxes is true.”

    • Chgessner

      Paul – you seem to ignore 30 years of dumbing down the population. We have lost our willingness to work. We have lost the public education system that USED TO prepare kids for a working career. There are thousands of underperforming schools and millions of children and young adults who cannot write, manipulate numbers, and thus are not qualified for the 21st century jobs. Why reward them with more hand outs when they do no want to do the ard work of getting educated?

      • denis

        And why have we “lost” the education system? Along with many public services could it have something to do with “the haves” refusing to pay for them?

        • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

           More like the progressives destroying  the system.

      • TFRX

        “Lost our willingness to work” sounds scarily close to saying that tens of millions of Americans who were middle class a decade and change ago are now lazy, shiftless and useless.

        You want to rephrase that without the hint of “moral hazard” for the non-rich?

    • JNC

      Emotionally, I’m 100% with you.  I’m young, I benefit from these types of Republican policies personally, and I could easily move abroad if the whole country went to pot.  Sometimes, I get tired of being frustrated with those who support these tired trickle-down economic policies, even when it will obviously hurt them down the road.

      That being said, a lot of people would see their standards of living decline.  Rationally, I hope it doesn’t happen.

    • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

      Public unions should have no rights to collective bargaining. In fact, there should be no public unions. What is one of the greatest threats to fiscal sanity for cities and towns? Pensions. Why are the American people willing to allow a small subset of the population get outrageous benefits that is bankrupting their cities and towns and destroying education? I don’t want to be paying huge amounts of more taxes to pay for these union thugs who feel entitled.

      • kelty

        The contracts were agreed to by the city & town who did not fund their agreements properly, sometimes not at all. That is thier problem, not the unions who bargained in good faith.

        • TFRX

          As we speak, I’m getting my mortgage reclassified as a public union pension fund.

          That way I can give my bank a check for 20% of the agreed amount and tell them to stuff it!

          “Paying a contract? It’s only for little people.”

          • kelty

            it would be funny if is wasn’t so sad

  • http://banicki.biz steve banicki

    Why does Mr. Krugman not speak out more  about our lingering debt problem. Why is he not concerned about it?

    • Kurt

       Mr. Banicki, Professor Krugman has included the long term debt problem of the U. S. A. In a nut shell idea, as I understand it, is to have the government put people to work with a massive stimulus. The stimulus distributed to state and local governments would put police, firefighters, and teachers back to work in one part and another part would be infrastructure projects like highways, high speed rail, water/sewer upgrades, upgrades to the power grid, etc.

      Putting people back to work would increase the income to state and local government which would render stimulus unnecessary it could then go toward reducing the federal debt.  Allowing inflation to go up a few percentage point would ease the debt  as well. Of course restructuring the entitlements is crucial… And raising taxes is a part of it.

      In a nut shell this is what professor Krugman has been advocating for from the start of this economic downturn. It is classic Keynesian (rising tide) economics as opposed to the Austrians (trickle down) economics.

      • William

        Would it not be smarter to reduce the wages of police, firefighters, teachers and most all federal, state, city employees? This does not require any funds from the taxpayers. The manufacturing and construction industries have been much harder hit during this recession and need the assistance if any additional federal funds are going to be spent.

        Raising taxes in a bad economic downturn would repeat the failure of Hoover and FDR who both raised taxes during the Great Depression.

        We have had nearly three years of trickle up economics with Obama and there is very little economic growth.

        • http://banicki.biz steve banicki

          Raising taxes on the wealthy would not hurt the economy. Bill Gates will not stop spending or investing because his income is decreased by a couple $100,000. 

          The problem of inequality is a related problem to the recession that we are in. Our economic system is broken.  http://goo.gl/mi1kU

          • William

            Both Hoover and FDR raised taxes and that was a mistake. We spent some 3 trillion dollars a year just by the feds so we have sufficent spending, too much in wasted areas, but taking more out of the private sector seems a mistake at this time. Why not just eliminate or downsize various government agencies and use those existing funds to stimulate the economy in areas that are hit the hardest, construction, manufacturing.

        • margbi

          Would you want to live in  a place without adequate police and fire protection, a poor education system, and none of the things like libraries and museums which constitute a good life for most people? I didn’t think so. 

          • William

            Crime has fallen the last twenty years, fire dept. personnel work a very easy schedule and are well paid considering the skills required to become one,  we spend more on education than any other nation, libraries, museums can be supported by private charaties. Professor Krugman says we have to take risks so now is the time to go bold.

          • kelty

            They also can be killed doing their job on any given day – how about you?

          • Richard

            the top ten professions with the highest rate of on the job fatalities do not include either firemen or policemen , but nearly all of them do not have pensions : i.e. fishermen, taxi/livery/truck drivers, farmers/ ranchers, logging workers , roofers, etc. i.e. the working classes that have to pay exorbitant pensions and medical expenses for the police and fire men who live twenty thirty years on the  dole , upon the backs of the working classes who have pittance when they retire 

          • TFRX

            William’s off in his own little world, where “transaction costs” like finding a new job, public safety employees getting treated like disposable napkins, or actual signed contracts for the “little people” mean nothing.

            None of these things in this point in the business cycle disrupt lives and add to social unrest. The lessons of the ’30s were different than economists learned.

            I guess it just hasn’t happened to him.

            Yet.

          • William

            The old days civil servants were paid low salaries but received good benifits and adequate retirement. These days they receive very good salaries and great benifits. They are no longer exempt from economic downturns and have priced themselves out of the market. You need to live in the real world and like Prof. Krguman said “take risks”.

          • TFRX

            You’re following a little too much Fox News crap about overpaid public employees.

          • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

             Don’t be so stupid, public unions are killing  CA and IL.

        • ebw343

          Reducing public sector wages would decrease the amount of money in the pockets of people who actually need to spend the money they get.

          We have not had “trickle up economics”, as you call it, due to obstructionism from a congressional Republican caucus quite happy to extend the downturn for partisan political gain.

          • William

            But if you lower the wages on the public sector that keeps the money in the hands of the producers who will spend the money wisely. We have nearly 50 percent of working Americans not paying federal income taxes, massive numbers on food stamps, WIC, Section 8, etc…we have a huge trickle up economy and it is failing.

          • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

            Yup, better to have smaller govt, less waste and fraud, and more money in people’s pockets.

          • kelty

            “But if you lower the wages on the public sector that keeps the money in the hands of the producers who will spend the money wisely”
            Your kidding right?????

      • http://banicki.biz steve banicki

        The problem is the public does not buy that we have enough room to do this, Our debt/GDP is almost as high as after the Second World War. Back then we were the last country standing and therefore there was great demand for our products. This is not true today. 

        Confidence is needed to go deeper in debt. It needs to be explained and sold that we have room to stimulate. I am not opposed to a stimulus. However, the reality is it needs to be sold. See: http://goo.gl/kw38H

    • ptp1600

      Because the more immediate problem is the depression. Real interest rates are negative right now, which means new debt that we take on right now is literally free money, people are PAYING US for the privilege of using their money. 

      Use that money to prop up demand and get the economy chugging again, fix the tax system and cut taxes for the poor and middle class, increase it at the top and put in a law that requires debt and deficit reduction when GDP growth is above 2 or 3%. 

      • http://banicki.biz steve banicki

        Krugman is right. His ideas are correct and need to be sold to the general public. Occupy Wall Street has done a great job of increasing public awareness. Now someone must take the next step and implement. OWS could do it but they need a plan and a leader and here he is.  http://goo.gl/7KYVu

    • NewtonWhale

      Krugman has explained this:

      “Deficit-worriers portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing. They see America as being like a family that took out too large a mortgage, and will have a hard time making the monthly payments.

      This is, however, a really bad analogy in at least two ways.

      First, families have to pay back their debt. Governments don’t – all they need to do is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.

      Second – and this is the point almost nobody seems to get – an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves.

      This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of GDP, than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.”

      http://www.chron.com/opinion/outlook/article/Krugman-Debt-matters-but-not-that-much-2437271.php

      • http://banicki.biz steve banicki

        The reason Krugman’s ideas are not being followed is one of confidence. The public, and many politicians, think we are in debt as much as we can go. I disagree and believe Krugman is on the right path. The problem is an idea not implemented is worthless. Somehow it needs to be sold. See  http://goo.gl/kw38H

  • Brian

    Isn’t it true that the big corporations and wealthy people are sitting on enormous cash reserves because there’s no expectation of inflation?  So some expectation of inflation in the economy might produce much-needed investment and real job creation, it seems to me…

    • Victor Vito

      I’m of the opinion that they are sitting on these reserves waiting for conservatives to take back the White House, and hold one house of congress.  That way their profit can be maximized without fear of redistribution.

      • ptp1600

        That’s an asinine assumption, they’re sitting on cash reserves because there is no extra demand to expand for and to service. A business owner would have to be an absolute moron to spend more money just for the sake of expanding when he has no new demand for his widgets or whatever.

        Also, taxes rarely come into the picture, I haven’t seen ONE business that would create an extra position just because they got a tax cut, that’s stupid and is why tax cuts don’t really have the wealth “trickle down” or create jobs.

        • Victor Vito

          You’re a little too angry/hostile to respond too.  I don’t need it.

          • TFRX

            I dunno, I think both of you are on to something.

          • ptp1600

            Sorry if I came off that way, but Republican talking points do tend to upset me.

  • NewtonWhale

    Say goodnight, Bonzo.

    The Earth is not flat, and supply-side economics is still
    voodoo. Just as Paul Krugman has been telling us for years.‏

    Britain just proved that the entire guiding philosophy
    of  the Republican party has been wrong for the last 30 years:

    “Yesterday I returned to London from a family holiday in
    the United States – where a small stimulus has led to a growing economy and 25 consecutive months of job growth – to discover that the British economy has now re-entered recession, after shrinking a further 0.2 per cent in the first quarter of 2012. If any further evidence was needed that austerity isn’t working, that cuts don’t work, that George Osborne is a “kamikaze chancellor”, this is it. Critics of the New Statesman’s economics editor, David Blanchflower, must feel rather foolish right now. Once again, Blanchflower and the Keynesians are vindicated while Osborne and the Austerians are humiliated.”

    http://tinyurl.com/boylc4t

    IT’S OFFICIAL: Keynes Was Right

    I’ve listened to Keynesians like Paul Krugman argue that the way to fix the mess is to open the government spending spigot and invest like crazy. And I’ve listened to Austerians like Niall Ferguson argue that the way to fix the mess is to cut spending radically, balance government budgets, and unleash the private sector.

    And I’ve also looked back at history—namely, Reinhart and Rogoff’s analysis of prior financial crises, the Great Depression, Japan, Germany after Weimar, and so forth.

    And more and more it appears that Keynes was right.

    Basically, austerity puts you into a death spiral in which you keep trying to cut your way to prosperity, but all you end up doing is digging a bigger hole. And in the meantime, tens of millions of people are out of work, the economy is retrenching, and everything is generally miserable.

    http://tinyurl.com/d6f5yyt

    • William

      What about the American Depression of the early 1919-1921 time frame?

      • NewtonWhale

        see here:

        http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1591030 

        “My conclusion is that fiscal intervention was indeed inappropriate in the 1920-21 downturn, and that markets were perfectly capable of self-adjustment, but that monetary policy was far more effective and commendable than just about any of the critics – Austrian or otherwise – give it credit for. Thomas Woods shockingly calls the Fed’s actions “hardly noticeable,” which for quite a while made me wonder whether he and I were discussing the same depression. In addition to these fundamentally historical points, I also make the analytic point that Keynesian policy recommendations aren’t discredited at all by the 1920-21 downturn, and that Woods (2009), Powell (2009), and Murphy (2009) only argue that it is discredited because they misunderstand or ignore Keynes’s ideas on (1.) nominal wage adjustments, (2.) the interest rate, and (3.) deflation. “

        • William

          But we successfully overcame the depresion in the early 1920′s  with rather large decreases in federal spending and little intervention by the feds by creating such failed ideas as the FDR’s Blue Eagle.

          • Don_B1

            William, I have great trouble taking you seriously. Did you even read the  Abstract of the paper linked to by NewtonWhale? The Abstract reads:

            “A series of recent reviews of the depression of 1920-21 by Austrian School and libertarian economists have argued that the downturn demonstrates the poverty of Keynesian policy recommendations. However, these writers misrepresent important characteristics of the 1920-21 downturn, understating the actions of the Federal Reserve and overestimating the relevance of the Harding administration’s fiscal policy. They also engage a caricatured version of Keynesian theory and policy, which ignores Keynes’s views on the efficacy of nominal wage reductions and the preconditions for monetary and fiscal intervention. This paper argues that the government’s response to the 1920-21 depression was consistent with Keynesian recommendations. It offers suggestions for when Austrian School and Keynesian economics share common ground, and argues that the two schools come into conflict primarily in downturns where nominal interest rates are low and demand is depressed. Neither of these conditions held true in the 1920-21 depression.”

            This explains how “Austrians” have distorted the real facts of the economics of the period AND the nature of Keynesian economics. But that seems to be the only way that Republican economics can be explained in a way that wins converts. They have to become believers in something that does not exist.

            You should get smarter and not try to spin false stories about the economy (and other Republican myths) because you WILL be called on it and everyone can see the Republican duplicity.

  • Victor Vito

    Conservative ideology and supply side economics couldn’t possibly benefit more than a maximum of 25% of Americans.  What must happen for the other 75% to realize that the only power they have is their numbers?  Let’s now expand this problem to a global scale.  Why has the vast majority of the world’s population been taking it on the chin from the elites since the beginning of intensive agriculture, several thousand years ago?

    I believe that true egalitarianism lies in our future.  Some trigger event, some great awakening must occur first.  I have no idea what it will be.  Perhaps it will come when millions and millions of Americans are denied Social Security and Medicare when they get old.  Maybe then folks will see that they truly have nothing to lose. 

    • William

      If this were true why did Communism, i.e. the USSR fail?

      • ebw343

        Because they overspent on a national-security police state which became a vortex sucking in all the nation’s resources, as such things always do.

      • Victor Vito

        The answer to your question is complex.  Communism has failed in a lot of forms in a lot of places.  I’m not sure that I am advocating communism as a solution either.  Concentration of wealth, power, and assets in so few hands also doesn’t make sense to me.  I have faith that something better and more logical is going to come along.  I can’t accept free market capitalist democracy as the be all end all of human governance and organization.

    • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

       Complete nonsense. When a country destroys their meritocracy (like the US is doing) for the sake of egalitarianism then it will fail.

  • http://twitter.com/salahmaker Salah Maker

    2.7 is low.

  • U.S. Vet.

    Mr. Ashbrook,

    Please ask your esteemed guest, an advocate of Keynesian economics, how many nations have borrowed and spent there way into economic prosperity.

    Thank you.

    • Historian

      The United States, for one. We borrowed and spent our way out of the Great Depression and into prosperity, not so much with spending on the New Deal programs as with spending on the Second World War. It was that massive spending and borrowing that fueled the great prosperity of the ensuing quarter century.

      • U.S. Vet.

        So you’re advocating the U.S. enter another World War to get out of this depression?

        WW2 cost the U.S. over 416,000 K.I.A.

        How many Americans do you think ‘Historian’, should die in the next war to get us out of this depression?

        P.S., I suggest you should change your moniker from ‘Historian’, to Neo-Con.

        • http://banicki.biz/ steve banicki

          Of course he is not. The point is World War !!, like it or not, was a giant stimulus. This time the stimulus can be an investment into our future by building infrastructure including roads, the internet, airports and schools. Speaking of schools:  http://goo.gl/8m1US

        • aj

          WW2 cost the Soviet Union over 20,000,000 K.I.A. and took Berlin.

          Uncle Sam going into debt to its own citizens (trade surplus, war bonds) and then inflating our way out of the debt burden after the war was not so bad. Especially when compared to what every Slav man woman and child went through, namely a hell twice as long and twice as hot, with all due respect to our boys who took Omaha beach, and dug in at Guadalcanal.

          Times is different now. Americans are broke, so we woud borrow from China and the Saudis, or be padding Goldman Sachs quarterly profits by their arbitrage of free Bernanke greenbacks.

          P.S. Sheila Bair wants to raise interest rates. In 08′ I wanted her to be the first female Secretary of the Treasury (or atleast since Hamilton), not because she’s female but because she’s smart. Instead we got Tiny Tim Geitnher (a.k.a. Goldman’s jockstrap). Thanks Barack Obama!

          P.S. To all the comfy suburban yuppie liberals out there. Send your donations to ChangeWeCanREALLYBelieveIn.org!!!

          • aj

            Here’s the real link for you affluent suckers…
            http://www.BarackObama.com

            Do you think they take foodstamps? I’m off to get mines in the street, all you liberals got yours already, Right? One.

          • Don_B1

            As for Sheila Bair’s wanting to raise interest rates, see:

            http://krugman.blogs.nytimes.com/2012/04/23/the-urge-to-tighten/

            Regulating (savings) banks (those under FDIC) does not require an understanding the occurrences of Depressions and Liquidity Traps when the Fed rate is up against the Zero Lower Bound. This says that Sheila Bair has expressed a lack of understanding, which could be only temporary — she is a smart, usually thoughtful person — but time will tell whether she is an example of the Peter Principle.

            And this country is FAR from broke. Financial experts, those making investment decisions, ratify that every day as the interest rate they require to place money in Treasuries is basically near nothing. This is basically a confidence vote that their capital will be preserved.

            And if China is a buyer of Treasuries, that is all to the good as they will want our economy to prosper in the future so they can get paid back.

        • ebw343

          War has an unparalleled ability to shut up deficit hawks and allow spending programs through Congress without whittling them down to ineffectualness or larding them with tax cuts.

          • Don_B1

            Exactly; back in FDR’s administration they could not wrap their heads around the size of the “stimulus” that was necessary; they might not even have had the data and theory (Keyes did not publish his book until 1936) to know how big   to make it, but when WWII came along, an amount was spent that turned out to be sufficient.

            The 2009 Congress was mouth agape with a number over $800 billion and to get Republican support it was whittled down to the $770 billion figure and moved from direct support to the states and unemployment to bigger tax cuts. I don’t know just where President Obama was, but at least some in the administration felt that more stimulus would be available as the recovery showed was necessary. But the Republicans had cowed the Senate during the healthcare reform debate and there was no stomach for more stimulus as Republicans had turned that debate into deficit scare talk.

            But Republicans wil lie to their eyeballs to try to say all that is not true. If they are shown to have been working against the best interest of the country, they should be toast.

      • Gregg

        If war causes booming economies then we should be fine.

        • Don_B1

          If the emissions of CO2 are not mitigated soon, there will be wars; but NOBODY (maybe you are an exception?) on the left feels that war is necessary (and ALL feel it is NOT desirable) to meet the need for a sufficient stimulus. And the spending to mitigate CO2 emissions is a good way to put some of that necessary stimulus to good use.

    • http://banicki.biz steve banicki

      The United States did in the thirties and forties.

      • GretchenMo

        The prosperity only came when Europe had to be rebuilt and we were the only ones left to do it; so I guess you think we need a good war.

        • Don_B1

          It was the rebuilding of Europe and the spending on the G.I. Bill, not the spending on the war where “prosperity” became evident, but the savings that fueled it were built during the war effort from the bonds that were bought to finance it.

          But instead of spending on destruction to spend on reconstruction, all we have to do now is spend to repair all that infrastructure that has deteriorated because the rich have demanded tax cuts instead of the maintenance that should have been performed for the last three decades.

    • Lost Cat 00

      The USA in the 19th century for one.

  • MadMarkTheCodeWarrior

    Paul, 
    Are not the markets being systematically manipulated by organizations with no purpose in commerce other than to exploit uncertainty to harvest money for the wealthy to the detriment of the system as a whole? Would changes in the tax code that penalize this behavior actually benefit our system by reducing rather than increasing the Republican’s favorite bogey man “uncertainty in the market”? We’ve got plenty of that right now:

    1) Oil futures trading is today slowing down our economic recovery. This pure speculation (gambling) is taking huge amounts of spending money from the pockets of consumers that would otherwise go to purchase goods and services and redirects that money into the accounts of hedge fund managers. To what legitimate end?

    2) Our  do nothing “fair” trade policies have been exploited by Chinese predatory capitalism to very efficiently and systematically destroy one US industry after another and weaken us profoundly. Only recently Solidra was the victim of Chinese solar technology which cut the cost by one half in only one year. With that kind of uncertainty who would invest anywhere but in China?

    3) Program trading which has caused major disruption of the
    markets more than once.

    4) Day trading – C level executives too often make long term strategic decisions based upon the whims of swing traders who might hold stake in their companies for as long as 5 minutes.

  • Gregg

    “The fiscal 2003 deficit was about $377 billion, or 3.4% of GDP.
    Krugman worried “that the 10-year deficit will be at least $3
    trillion” and about “the future liabilities of Social Security and
    Medicare.”

    Cut to the present. The deficit hit $1.4 trillion in 2009, or 9.9% of
    GDP. It’s expected to climb to $1.6 trillion in 2010, part of an $8.5
    trillion shortfall over a decade. With baby boomers now starting to
    retire, the liabilities of Social Security and Medicare aren’t much
    in the future anymore. But now Krugman claims, “The long-run budget
    outlook is problematic, but short-term deficits aren’t — and even the
    long-term outlook is much less frightening than the public is being
    led to believe.”

    http://blogs.investors.com/capitalhill/index.php/home/35-politics/1372-paul-krugmans-breathtaking-hypocrisy

    Staggering hypocrisy, what gives?

    • Don_B1

      Yes, the distortions of your post show an incredible staggering hypocrisy on YOUR part. With a slightly bigger stimulus those first two years the decade deficit number would be a LOT LESS, and the damage of long-erm unemployment would also be a lot less.

      If you spend a bit more time reading Professor Krugman instead of the debunked Republican “Austrian” economics, you might understand that. Start with the book he was discussing today.

      And then you should read the paper by Lawrence Summers and Brad DeLong on the costs of austerity in a Liquidity Trap/Depression.

  • Chgessner

    Please ask Prof Krugman how to overcome the flaw in his “pay down debt later” theory – the absolute propensity of liberal – aka Democrat – legislators to spend all revenue all the time!

    • Victor Vito

      ONLY liberals do this, ey?

      • TFRX

        Right-wingers are protected by their Birthrighteousness: No matter how deep a hole they blow in the budget during an ecomonic expansion, they are awarded the mantle of FiscallyResponsible(TM). Nothing they do will lose them that title.

    • Lost Cat 00

      So the GOP during the 2000-2008 period was liberal? The Republican in Congress authorized the folly of fighting two wars on borrowed money. As we know wars are not economically productive,. . .except forthe  private contractors who lobbied the Republican Congress.

    • Don_B1

      Since the Johnson administration, DEMOCRATIC administrations have had LOWER deficits than than REPUBLICAN Administrations. President Clinton presided over the first surpluses in decades. And then Alan Greenspan gave George W. Bush the green light to end them so that the government could continue to be a “borrower of last resort with a ‘platinum’ rating.” [In other words, Greenspan was saying that a world without Treasuries would be lacking a parking spot of last resort for occasions like the current one.]

  • Gregg

    How does taking money out of the private sector and redistributing it help squat? It’s dipping water out of the deep end of the pool and pouring it into the shallow end. Or does Mr. Krugman suggest we print more… or borrow more from China?

    • Victor Vito

      Folks at the bottom put the money directly into the economy, as opposed to an address in the Cayman Islands or investing in China.

      • Gregg

        So redistribute more?

        • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

           Look at Europe, the rich pay a  huge amount of taxes and still it’s not enough for their socialist utopia that is falling apart. And even with the middle class paying high taxes, it’s not enough. It’s the spending, stupid.

          • Gregg

            Absolutely, Germany had the sense to reject Obama’s advise and they are doing better that those who took it.

          • denis

            And what advice was it that was rejected? Germany’s tax structure and health care are nowhere near the philosophy you and your friends advocate for.

          • Gregg

            Obama said spend more and Merkel told him to pound sand.

          • denis

            Documentation please… what is per capita tax obligation in Germany compared to U.S. and well we are at it what is per capita gov spending in Germany vs. U.S. And how about medical spending comparisons?

        • Don_B1

          What I wrote above is not REDISTRIBUTION; it is earned sharing of the growth in the economy, and it benefits ALL members of that economy.

    • Lost Cat 00

      President Reagan was the one who got into borrowing money for covering up the deficit. How easely some people forget their heroes.

      • Gregg

        So borrow more?

        • Don_B1

          Absolutely right NOW; as soon as the unemployment rate drops under 6%, say, start paying it back and even reduce the total debt with the growth in revenues from a strong, growing economy. 

    • jpa

       Bad analogy and faulty reasoning.

      • Gregg

        So print more?

    • Don_B1

      The “money in the private sector” that you talk about is NOT BEING USED by the private sector because it sees no return on that capital now because there is INSUFFICIENT AGGREGATE DEMAND. In other words, the people who would buy the products the over $2 trillion held in business coffers is not being used and the $1 trillion of GDP that could be created by using that and other capital to put factories and labor to work.

      The jobs that are created by this government spending create spending which businesses see as demand and they create more spending and demand, which becomes a positive cycle and that becomes self-sustaining. Then government can cut back and trim that part of its deficit that remains after revenues have increased and safety net expenses have declined.

      EVEN the rich will not gain in the end if all the citizens of the country do not share in its growth and that lack of sharing is at the heart of the current crisis.

  • JoshLB

    It would be nice to hear Prof Krugman’s thoughts on why the DEMS do not/cannot/will not make the argument to the American people that NOW – when there is low demand in the private sector – is the time to “create” demand by updating and fixing the nation’s crumbling infrastructure, and/or investing in sustainable energy (wind, solar, the ever-elusive smart grid).

    Skip their obvious phobia of seeming like they’re on the wrong side of the debt debate. Do they not believe it themselves?

    This seems like a solution, not in search of a problem, but in search of a policy champion, or 2.

    • TFRX

      It’s all about the mediascape: Too many Beltway inbreds are too locked into their one mindset.

      These are the same gatekeepers who call Paul Ryan an intellectual for his impossible budget, and in 2000 were telling everybody that there wasn’t a dime’s worth of policy difference to be had between Bush II and Gore.

      NPR is too close to it. We’ll get an interview with Krugman today, and All the Things they’ll Consider tomorrow will be the same old centrist narratives full of false equivalence.

  • Ryan_hennings

    How great, we get to hear how it benefits the US to piss away another couple of trillion!

  • Worried for the country(MA)

    Dr. Krugman, we’ve had $5T+ in stimulus in the past 3 1/2 years.  As you know, deficit spending is stimulus.  How much spending is enough?

    Perhaps if we had a budget over these 3 years, then the spending could be targeted more efficiently?

    Things must be interesting these days in the Princeton faculty lounge.  Does Dr. Bernanke still visit?

    • Victor Vito

      Your snarkiness should guarantee an answer.

  • Patrik

    Between FB and here everyone has posted great questions!  Can’t wait to listen. 

    Prof. Krugman:  Is it inevitable for economic systems, like ours, to reach a wealth gap such as we have now or possibly worse not matter what actions are taken? 

    Is there actually a tipping point where the system will self correct or is that just an imaginary carrot that is dangled in front of the populous to keep them in line?

  • Worried for the country(MA)

    Keynes promoted building up a rainy day fund during good times to soften the blow during downturns.

    Has Dr. Krugman (or any liberal who supports Keynes) promoted this philosophy?  Not so much.

    It appears they only pull out Keynes during bad times to promote additional spending.

    • snand

       I believe that is the philosophy that all Keynesians believe – it’s just hard when we start unfunded/off-budget wars during the “good times”.

      • TFRX

        I ask cheekily, “What do you mean we start unfunded wars during the good times?”

        Because I was called a traitor for that question a decade ago, as I guess you may have been also.

    • Roux Benoit

      Not true. When Bush took over after Clinton, we had a budget surplus.  This was a good time to do this, but Bush enacted an unnecessary tax cut at the time that did not stimulate the economy and just produced a larger deficit.

      • Ryan_hennings

        Roux,

        Clinton did not create a budget surplus.  That is myth.

        http://www.craigsteiner.us/articles/16 

      • Gregg

        The tax cuts certainly did stimulate the economy.

        • nj_v2

          Greggg continues to spew his cluelessness.

          http://www.americanprogress.org/issues/2011/06/marginal_tax_charticle.html

          Altogether, in years when the top marginal rate was lower than 39.6 percent—the top rate during the 1990s—annual real growth averaged 2.1 percent. In years when the rate was 39.6 percent or higher, real growth averaged 3.8 percent. The pattern is the same regardless of threshold. Take 50 percent, for example. Growth in years when the tax rate was less than 50 percent averaged 2.7 percent. In years with tax rates at or more than 50 percent, growth was 3.7 percent.

          These numbers do not mean that higher rates necessarily lead to higher growth. But the central tenet of modern conservative economics is that a lower top marginal tax rate will result in more growth, and these numbers do show conclusively that history has not been kind to that theory.

    • denis

      Worried once again stating a philosophy that should make us truly worried.
      Why did Pres. Bush implement his big tax cuts? I believe it was stated at the time that we were headed to pay down the debt and build up a surplus and the “haves” should not be obligated to spend their money on such things.
      It always amazes me when the right, often claiming to be Christian, forgets so quickly Jesus’’ admonition to give to Caesar that which is Caesar’s.

    • GretchenMo

      Exactly, after Clinton frittered away the internet bubble and depleted the military; we were left with stark choices. 

      • Ray in VT

        Hold on, Clinton frittered away the Internet bubble?  I mean for one thing there was that early bubble that burst around 2000, so when I think of bubble I think of the falsely inflated .com prices that were just baseless.

        Now, last I checked, Clinton left office with the government in the black.  He and the GOP controlled House worked fairly well together to correct the deficits of the 1980s and early 1990s.  The budget got blown up after 2001.

        As for the military, for what purpose did we need a large land army built to fight the Red Army in a European ground war after the fall of the Soviet Union?

      • TFRX

        Depleted the military?

        Take your hack talking points elsewhere.

      • jpa

         Use data not ideology… what stark choices? He left office with a no deficit and yes, the internet revolution helped.

      • Lost Cat 00

        Did President Clinton deplete the military? The military did wonderfully well when they intervene in Bosnia-Herzegovina.

    • Lost Cat 00

      Let me tell you, the idea of rainy day funds would have gotten the ire of the rightwing ideologists who have been promoting institutional greed at the global level.

      Their argument would have gone like this “Why is the government hoarding our tax money when we can invest it profitably for the well-being of all? See? If the government can hoard money, the government does not need our tax money, and we can keep it.”

      As we all know, it is the damn fault of the liberals.  

      • TFRX

        Yep. Remember in 2000 when Shrub told us that the surplus was getting too big?

        GWB solved that problem, didn’t he?

  • denis

    1]One of the rights standard talking points is we are broke and therefore cannot spend for infrastructure, education, “the safety net” etc. I also heard a rebuttal that says as a nation we do not have less wealth; we just have less Gov. revenue due to the current tax philosophy. could you have Mr. Krugman address this please?
    2] We constantly hear we cannot leave all of this debt for our children and grandchildren. Is it not more costly to leave our crumbling infrastructure and declining educational system to our children and grandchildren? Again, can Mr. Krugman comment on this?
    3] And finally what is the tax paid per capita today compared to 30 years ago?

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    The 1% are making money faster than ever before – so apparently they’ve been able to isolate this depression based on economic class.

    • Ryan_hennings

      Re-distributing wealth is not a function of government.  Don’t buy into Obama’s class warfare.

      • Ray in VT

        One of the stated purposed of our government is to promote the general welfare, and I believe that that can be done in part through various government initiatives and social programs, which may require some measure of wealth redistribution.

        • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

           Welfare only works in homogenous populations like Sweden and Germany where there is a shared vision of hard work and valuing of education. The US does not have that and welfare should be abolished for most people. We have two substantial minority populations, blacks and hispanics, and they both have high drop out rates, high illegitimacy rates, and high welfare use. Despite throwing billions at the problem, they are still underachieving. It’s not whitey’s fault anymore and I refuse to contribute more to people who will not value education or personal responsibility.

          • Ray in VT

            I would disagree that it can and does not work here.  I take, to a certain extent, your point on rates, however, your comments come off in a bad light when you only identify the poor and lazy as minorities.  Take a look in some of the poor, rural, white parts of this county.  There are plenty of lazy, ignorant people of all shapes, sizes and colors.

            I don’t want to support people who want to live off of the system, and I support measures to minimize that.  On the other hand, I have seen many people who have been able to right their lives due to the social welfare programs in this country.

      • GretchenMo

        It’s all he’s got.

        • Victor Vito

          How about killing Bin Laden.

        • nj_v2

          Oh goody, another day of mindlessly partisan, vacuous posts from WretchAndBlow.

      • Victor Vito

        You didn’t really address his comment.

      • Patrik

        Everyone cant ‘win’ in this economic system, there will people who EARN less than what the market demands to exist on, those earners need assistance to survive.  People that end up in a tough spot somtimes and its out of their control.  So when a few people continue to increasingly earn more than they need to sruvive and don’t reinvest into the society in a direct way, it’s just wrong. 

        • William

          Who determines how successful companies and individuals should invest their money? Big government seems to fail at investing wisely or uplifting the poor. Should we not let people and companies keep their money and at best ask them to help certain segments of the population that are in need rather than trust Congress or some government agency?

          • Patrik

            Yes, ask those with the most to give back into the system that which they don’t need to survive in a more direct way.  Unfortunately the human nature of greed prevents many top earners from doing so. 

          • William

            The problem will arise, like we saw with FDR, the “amount people are allowed to keep” will shrink. Is it greedy for a person to want to succeed through hard work and sacrifice?

          • TFRX

            Big government saved GM and Chrysler when the private sector wouldn’t loan them a plug nickel.

            And you should learn the difference between actual governance and the right’s patented “run it to ruin it” strategy.

          • William

            But did government save GM or just prolong the failure. If GM had gone into a structured bankruptcy and shed it’s dead weight they would be better off today. We as taxpayers should not be bailing out companies that made repeated bad decisions for decades.

          • TFRX

            Pfft.

            At the cost of tens of  millions of jobs, and given the multiplier effect, a huge chunk of Americans’ lives, well-being, retirements, homes and educations.

            Nobody wanted to take GM into structured bankruptcy.

            Your Libertopia has no answer for this.

          • William

            The idea of pushing off what will happen eventually hoping that in the future the impact won’t be as severe does not work. You feel sorry for those that lose their jobs now, but what about in the future? Do you think China is not going to build cars? Will GM be able to survive then?

          • TFRX

            It’s not “feeling sorry”. It’s economic sense in not throwing an anchor to someone who’s paddling after a shipwreck.

            Why don’t you take your fiscal responsibility rhetoric to all those fiscally responsible right-wingers? They should eat it up with a spoon.

          • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

             GM still owes $25 billion to the US. We will never see that money. Thanks, Obama.

      • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

        As long as a government spends it is in the business of redistributing wealth. Keep in mind that almost all billions sent out in entitlements this month are sitting on business’ balance sheets next month. Along with all the government spending and subsidies that go to businesses directly.

      • nj_v2

        The self-flagilating right-wingers are always good for a laugh. Wealth has been being redistributed since Reagan under the guise of “tax cuts.”

        Any attempt to rebalance societal obligations is now labeled “class warfare.” If only Obama were serious about fighting this “class war,” this, but he really isn’t.

        News flash. The war started years ago, and the rich won.

        Here’s a question for Ryan and his ilk: What was the highest tax rate during the period of the greatest economic expansion in the U.S. in the 20 years or so after WW@8bfadd952e4c24a7831e8bf3d58641ab:disqus ?

        • Ryan_hennings

          nj_v2,

          What was the highest tax rate during the period of the greatest economic expansion in the U.S. in the 20 years or so after WWPatrik ?

          Are you referring to the ~90% tax rate on the rich?  If so, that is a total myth.  The “rich” NEVER paid 90% of their income in taxes.  There were several tax deductions which calculated an effective tax rate much lower than the unbelievable 90% rate.  I’ll leave it to you to believe the facts.http://almostclassical.blogspot.com/2011/03/90-tax-rate-myth.html 

        • Ryan_hennings

          nj_v2,

          No response, hmmmm.Maybe you should reverse your comment to “The self-flagilating LEFT-wingers are always good for a laugh.”

          Hard to argue with facts, huh?

      • RChicago

        Let’s see how the rich like living in a country with only two classes – rich and poor. It isn’t going to be fun for anyone. Just look at the quality of life in a third world countries.

        • Josh

          As the rich impoverish  the people of this country hatred of them will be the norm.

          They will be prisoners in their mansions. Afraid to come outside among the people whose lives they destroy.

          • TFRX

            When they need actual gated communities and armored limos to get around, the rest of us will be derided as “jealous”.

            Think Brazil, then imagine that schism here, in a dozen years.

        • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

           It’s happening in CA, a Democratic lunacy state. High taxes and illegals are driving out the middle class. What will they do then?

        • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

           They’ll just move to Switzerland and leave the poor for you to support, as it should be with your crappy attitude.

      • TomK in Boston

        The top 1% have more of the income than any time since 1929 and are paying the lowest tax rate since 1929. Do you think you might find a more reality-based picture of where income is getting redistributed and who is engaged in class warfare? 

        • Pete

          And they pay the bulk of all taxes. The top 5% pay over half of the total amount of taxes collected. In actuality, they have paid a higher percentage of the total tax burden as the rates have gotten lower.

          Income is not a static pile of money that all people are entitled a portion of. Income is created and earned. The market rewards certain skills and services more than others, as it should.

          • TFRX

            Tax rates aren’t “the market”. It’s a government-changed lobbied-for set of purposeful choices with a predictable outcome.

            The next expansion or contraction during which the rich suffer will be the first one.

          • Victor Vito

            Poor overtaxed 5%.  My heart bleeds for them.

          • Pete

            I’m not sure where your faux bleeding heart puts you in the debate? Do you think they should be taxed more?

        • Ryan_hennings

          TomK,

          I’m not sure what your point is about the top 1% paying the lowest tax rate since 1929.  Why is that a problem for you?  What makes you and others on the left think you are entitled to decide how much money one can keep?

          The fact is talking about raising taxes is going to do NOTHING about our debt and deficit.  You could take 100% of all the wealth the top 1% has and we still would be in huge trouble.  We have to cut the spending.  That is the cancer on this country.

          Who is engaging in class warfare?  Have you heard any of the Community Organizers speeches?  You could almost pick any speech and he spouts his line “this all could be avoided if the rich would pay their fair share.”  (Side note:  What about the 47% that pay NO income tax and receive tax credits?)  Is 47% of the American population disabled and not able to work?  

          The liberal mindset is a parasite on production and the well being of everyone as a whole.

          • TFRX

            You want to look up how many of that 47%, of those Lucky Duckies, are employed?

            It should embarrass you.

          • Ryan_hennings

            How would it embarrass me?

            Can you be more specific about your point?

          • TFRX

            You directly equated the 47% who don’t make enough to pay Fed inc tax with “disabled and not able to work”.

            You stopped thisclose to calling them “lazy freeloaders”.

            Millions upon millions of them have a job. Two or three even.

            Your slip is showing.

          • Ryan_hennings

            TFRX,

            Don’t put words in my mouth.  When I asked the question “Is 47% of the American population disabled and not able to work?”  I am suggesting that everyone who has a job should be paying taxes.  No special rates for the wealthy, no special rates for the not so wealthy.  EVERYONE should contribute.  I like the idea of a FairTax, which is consumption based and would eliminate a huge chuck of lobbyist.  

            I know I’m getting off topic here, but I’m quite surprised that the left isn’t on board with the FairTax.  It strips a large chunk of power from the government to the people, simplifies the tax code, encourages individual savings, no taxes loop holes, and it’s FAIR.  Sounds like a silver bullet.

        • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

           CA is so heavily dependent on revenue from the “rich” that they are in deep trouble.

      • ebw343

        For thje past 30 years, the government has been radically redistributing wealth from the broad middle class to the  1%.

        Why is it only “class warfare” when we fight back?

      • Azra

        Getting rid of tax cuts for the elite would go a long way in the right direction.

  • GretchenMo

    The instability created by inflation will foster commodity investment, primarily gold.  There will be no economic benefit.

  • GretchenMo

    We have the potential for a privately-funded economic bonanza in domestic oil and gas production (but government is getting in the way) and Krugman wants the government to take on more risky projects with taxpayer and lenders money.

  • Greyman

    Former Enron advisor Paul Krugman, concerned as he has been throughout his professional life with income (re)distribution, pulls down a “usual” fee of $20,000 AN HOUR for his peppy little talks, according to his Wikipedia entry. NPR affiliates may have to hold special fundraisers across the country just to pay for today’s show, so it had better be good. 

    • Ray in VT

      If he’s got a new book out, then this is probably a part of the publicity/book tour.

    • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

       He’s part of the academic welfare state where faculty and administrators are paid outrageous salaries for little work and pass on the cost to students so they graduate with huge debt. Why isn’t he and Liz Warren crusading for students? Because they are hypocrites who want to protect their gravy train.

  • ToyYoda

    I am all for anyway we can get ourselves out of this depression, but is spending the best way to do it?  Didn’t Hyman Minksy argue in his book “Stabiliziing an Unstable Economy” that spending our way out of a depression only makes the economy more unstable in the future and causes bigger bubbles that will burst?

    So Krugman wants us to spend out way out of a depression.  If that’s the best way to do it, great.  But can he address the other side of the equation?  When times are good, nobody want to reverse the spending habit.

    thanks!

    • jpa

       Yes, government can re-stimulate the economy.
      Listen and read to Kruger. Check out what is happening
      with Austerity in the U.K.

  • feettothefire

    The Bush administration gave us TARP, a seven hundred plus BILLION dollar bailout of Wall St., and probably of the worlds economy. This “bailout” of private business with my tax dollars was as Keynesian an action as ever taken by any administration. Many believe it saved the worlds economy from ruin. Maybe it did. Maybe the world’s economy would have stabilized without it, although that’s highly doubtful. While I hear an occasional criticism from conservative thinkers of this bailout, in any practical sense, the silence is deafening. Bernanke was on board, as was Paulson and Geithner, top men in the Bush administration’s economic braintrust. If conservative’s really believe that Keynesian economics and redistribution of wealth are as terrible as they say, it would help their cause mightily if they would launch as much criticism at this gigantic example of these terrible “liberal” bailouts of private enterprises as they do at most federal involvement in the public good. 

  • Eric M. Jones

    Paul my friend,

    Use the word STUPID. Really, it time to be less polite.

    • TFRX

      Addendum: Don’t forget that when the Sunday Morning Gasbags are getting their feelings hurt about someone’s “tone”, it means they’re afraid for their place in the mediascape.

      And they will then stop at nothing to tell us that “both sides do it”.

      Paul Krugman wears the honorable badge of “shrill” for a reason.

  • Ellen Dibble

    Obviously Big Government is the tool of Big Money, more and more so every year.  Lobbyists and campaign influence in the news, in the halls of the legislature, all up and down K Street.  Isn’t it reasonable for the little guy to ask that Big Government be REDUCED! Government is fat with Big Money, and Addicted. Intervention! Bernanke knows how to do this, right?

  • TomK in Boston

    Paul, thanks for confronting the voodoos with real economics and real facts. They just parrot their scripts from 1980 as if they haven’t already been tried and failed. To listen to them, the policies that causes the Bush crash are exactly what we need now, and the rich who are doing better than any time since 1929 and paying the lowest tax rates are in danger of being victims of class warfare. It’s insane, but for some reason the sheep want to believe it.

  • Azra

    At last, we can get this settled once and for all, from the Nobel prize winner. We can’t get better than that.

    This is exactly the advice we need right now. Thank you.

  • jpa

    Thanks for this show Tom … I am so impressed with Paul Krugman…he understands the economy and doesn’t
    believe in “trickle down” NONSENSE! Will the US ever
    recover from “Globalization”?

    • GretchenMo

      He believes the trickle should come from the government.

      • jpa

         Nothing wrong with governmental policies if they work and they are not corrupted by corporate payoffs.

        • GretchenMo

          More often they’re corrupted by union payoffs but that’s what a $400 million investment by unions in the 08 election will do for you.

          • Jemma Oldman

            Yes, I too am concerned about government’s being corrupted into helping those who still have decent wages’ keep such, and in so doing also buoy-up even non-members’ compensation.  This distracts government from its proper and natural roles of backing any claim to a property ‘right’ that an already-powerful person might make, keeping our workers afraid, and keeping the brown people in line.

  • TFRX

    Who was it who said that “the best thing we can do for the deficit in a dozen years is to add 2% to the GDP now”?

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    Infinite growth is not sustainable. Boom and bust are inherent, unavoidable components of capitalism. Due to massive government intervention we’ve turned an exploding ship into a slowly sinking one. But either way that ship has to sink before we can come back to the boom portion of the cycle.

  • http://gregorycamp.wordpress.com/ Greg Camp

     He may be right that we need more stimulus, but at what point are we going to pay down the debt?  Democrats want to increase spending during down times, while Republicans want to increase it during the good years.  Neither talks much about getting rid of debt.

    • TomK in Boston

      The debt is a paper tiger. Once we get the economy going and start taxing the rich it will fade like tears in the rain. That’s what happened to the WW2 debt. If you buy the chicken little stuff about deficits as far as the eye can see, remember that in 2000 it was surpluses as far as the eye can see. We’re not that good at predictions.

      • http://gregorycamp.wordpress.com/ Greg Camp

         Fourteen trillion dollars isn’t a paper tiger.  It’s real debt.

    • Victor Vito

      Does it really have to be paid down?

  • Edith

    Great to hear Paul Krugman on the radio today.  Here in Spain they are killing us with austerity.  They’ve raised our taxes, cut everyone’s benefits across the board,  They are cutting our education and our healthcare, yet nothing gets better.  More people are unemployed and tax revenues have actually fallen as fewer people have jobs.  Austerity clearly does not work.  It only inflicts more pain on the weakest people in the society and eventually all of us. 

    What I am curious about is that the economic model that we have necessitates constant growth.  Is it possible to continue to grow as our resources diminish? I’m referring to cheap fuel which has fueled growth up to now. 

    • Guest

      “Growth” mentality IS the problem. It does, however, support their economic philosophies, but does nothing to address an over populated planet or limited resources. Implementing the required measures, such as, limiting birth rates, is not a topic our politicians have the moxie to address. 

      • Edith

        I wish someone would talk about this.  The model we have requires that we constantly grow but we live on a finite planet.  How is exponential growth  going to be sustainable moving forward?  Krugman is such a fine mind.  I would be curious to know if he has any views about this.  

    • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

       This is what happens when you run out of other people’s money. If Spaniards hadn’t engaged in tax evasion or a large black market economy or legalized lots of illegal immigrants then you would be better off.

      • Edith

        You are very good at repeating cliches but I don’t think you know too much about what Spaniards do or how we live.  

  • http://gregorycamp.wordpress.com/ Greg Camp

    Those things have not manifested themselves yet.  Observe Europe to see where we’re headed.

  • potter

    He has been a voice crying in the wilderness, consistently right for awhile now about us here and about Europe. It’s infuriating how the deficit hawks keep their traction, how this recession-depression is being blamed on Obama. Obama’s problem is that he felt he was forced to compromise. 

  • Josh

    75% of all jobs Major U.S. corporations created last year were outside the U.S. They are sitting on 2 trillion dollars in cash.

    They have no intention of creating jobs here. 

    TAX THEM AND HIRE PEOPLE TO REBUILD THIS COUNTRY.

  • Tina

    QUESTION:  Are Republican “job creators” holding back on creating jobs until THEY are in the White House and holding the majority of both houses of Congress so that they can take credit for the upturn in jobs?

    • Gerald Fnord

      The answer is obvious, but it is not noticed because it is the water in which we swim.  

      They are so doing—it is euphemised as ‘lack of confidence’—which is how it’s perceived on an individual level, and does not necessarily take the form of an active conspiracy, more a matter of the game’s being set up such that all the effective players will act in much the same way. 

  • GretchenMo

    How is inflation working in Zimbabwe? 

    • jefe68

      Your comments are very revealing. You seem more interested in posting inane diatribes than really trying to understand a point of view. 

      • http://gregorycamp.wordpress.com/ Greg Camp

         As are yours.  Zimbabwe is an example of what happens when inflation gets out of control.  There have been other countries that went through that and had to work their ways out.  Why don’t you address the point?

        • Victor Vito

          You’re too reasonable to allow the America/Zimbabwe alaogy to pass.

          • http://gregorycamp.wordpress.com/ Greg Camp

             The Weimar Republic is another good example.  Germany had fought a war and got deep into debt–in part from the penalties assessed after the war ended.  Another case is Argentina.  Zimbabwe is a worst case, but worst cases are possible.

        • jefe68

          Zimbabwe, you are going to use this nation as an example of inflation in relation to the US. Why not just use our own experience.

          The
          inflation rate in United States was last reported at 2.7 percent in
          March of 2012. From 1914 until 2010, the average inflation rate in
          United States was 3.38 percent reaching an historical high of 23.70
          percent in June of 1920 and a record low of -15.80 percent in June of
          1921. Inflation rate refers to a general rise in prices measured against
          a standard level of purchasing power. The most well known measures of
          Inflation are the CPI which measures consumer prices, and the GDP
          deflator, which measures inflation in the whole of the domestic economy.
          This page includes: United States Inflation Rate chart, historical
          data and news.

    • TomK in Boston

      Brilliant analogy, yep. the USA is just like zimbabwe.

      How’s that austerity and voodoo econ working in europe and in the USA?

    • Lydia Lopokova

      Much worse than it worked in the ‘Fifties and ‘Sixties (pre-Vietnam buildup)—that is to say, well.

    • GretchenMo

      The point is inflation expectations cannot be controlled.  Do you think Zimbabwe wanted the instability of runaway inflation?  Of course not! 

  • Ralph, Orchard Park, NY

    Why does the government continue to borrow and then have to tax to pay it back in the future rather than “print/coin” and then tax as necessary to control inflation.  Is it that no policy makers know how to do so or is it that doing so could/would adversely impact those that make money off of money?

  • Rogers8

    Isn’t it time to drop the ‘we’ in describing the current situation… Conservatives/Republicans are clearly on the side of business and using the current crisis as a way to permanently depress wages and expectations… 

  • Michael M. Ross

    Question for Paul:
    Why have the world’s top economies completely forgotten the The General Theory of Employment, Interest and Money - i.e. Keynesian economics?

  • Michael M. Ross

    Question for Paul:
    Why have the government world’s top economies completely forgotten The General Theory of Employment, Interest and Money - i.e. Keynesian economics? My answer: Because they’ve been bought by billionaires, I guess…

  • Ellen Dibble

    The bigger government gets, the more power and manipulation (to the extent legal; I’m not saying necessarily “corrupt”), the more the big effects are in the interests of the one percent.  It seems you need a little government, without all the strings attached to sponsors, in order to have the Vox Populi actually register.  If you can organize to be wielding millions of bundled dollars, then your point about reducing the cost of health insurance might be heard.  But even then, if it impacts on profits of Big Money, good luck with your time and efforts.  

    • Julian Schwinger

      The moment you allow for limited liability you give Capital such power that in the absence of a powerful government there is no chance at all that anything can stand in its amoral way.  Yes, government is subject to regulatory capture, but all the calls to reduce the size of government now current are calls to reduce or to eliminate precisely those portions that have not yet been captured, and so are anathema to Capital.

      • Ellen Dibble

        I am posting in this vein because I’m hoping Krugman will focus on the ways voters tend view big government, the way that definition is self-servingly manipulated by the Right.  I’m waving that flag as hard as I can.  It seems to me the “big” that tax-paying don’t-tax-my-tea sorts are objecting to really shakes down to the bigness of the money that shakes into government like salt and butter sauce.  That bigness makes it, as you say, more and more subject to Capital and its interests.  But that bigness is actually not the same as the size of the national debt.  But that bigness seems like the Huge Shadow of Power, whether it’s from Special Interests flowing through the legislature via laws and regulations, or whether it’s direct from our elected representatives, unmediated by campaign contributions and lobbyists.  It looks a lot like I’m being taken advantage of, whether by Washington and Uncle Sam, or Corporations disguised as Uncle Sam.  So I think I’ll vote Republican and get them Off My Back.  I think that’s how the electorate is thinking these days.

  • Steve

    Economics seems to be based on the idea of perpetual growth. Which in itself is unsustainable. ultimately the planet isn’t geting any bigger, which would be required for modern economic theory to really work.
    Are there other economic models that might not run us off a cliff.

    • Victor Vito

      Lots of people think infinite growth is sustainable.  I don’t agree, but it is fairly common.

  • Sheila Childs

    Why do we not establish Roosevelt -like programs? There are so many jobs that need doing – just cleaning up after disasters, rebuilding aging infrastructures. Put people to work!!

  • GretchenMo

    Please, look at government spending over the past 50 years.  The big government folks like Krugman have won and this is what we have to show for it.

    • Prairie_W

       But Gretchen, the government spending folks have not been like Krugman.  They have been successive Republican administrations and their spending has benefited the defense and energy industries, not the country as a whole.  We have fake wars, pitted interstates, dependence on oil instead of peace, a healthy infrastructure, and energy from a variety of reliable sources.  Not to mention a huge sector of this nation in poverty.

  • Worried for the country(MA)

    Hey, Dr. Krugman, we need more federal government spending?

    We are already at 24% of GDP, the highest since WWII.

    So we need more military spending, Solyndra and GSA conferences?
     

    • GretchenMo

      Not high enough apparently! 

    • Rillard Womney

      Yes, we do need more Solyndras…good venture capital activity expects most of its targets to fail—so, strictly speaking, we do not need more Solyndras, but we need more of the same that produced Solyndra, because that’s the way we get both Solyndras and the World-Wide Web, and it’s impossible to tell a priori which will be which.

      • Guest

         Excellent! Exactly right. Thanks.

    • Spokel

       Why not cherry-pick more INSTANCES of unrepresentative examples of Dr. Krugman is talking about?

  • troll doll

    How do you grow government without more invasion into peoples privacy and limiting peoples rights? I think that government’s role is to protect its citizens, but I find that most of our money is going into maintaining authority and bolstering private militatry and contractors.

  • Hbdansby

    Both parties claim we need to have growth, but given the rise of China and India and the demand that makes on resources, isn’t it likely we are entering a no-growth era? Should we not be focusing on sustainability? Is not the real cause of the current depression the end of growth?

  • Drew (GA)

    Thank you so much Mr. Krugman for calling a Depression a Depression. I agree with every thing you have stated twenty minutes into the show, this is a rarity to say the least.

    As I’ve said before:
    Economic Depression: “A period marked by low production and sales and a high rate of business failures and unemployment”

    Am I missing something? A depression by any other name…

  • Ellen Dibble

    If the stimulus of World War II jump-started our recovery from the Great Depression, you’d think that the wars of the last decade would have created a wave of prosperity.  People would not have been creating white profits, speculative bubbles, but rather putting their shoulder to the wheel.  Apparently the people with influence and power have No Idea what to do with their profits to benefit the People, except to puff up retirement funds (investments), which is probably not a bad thing with people living to about 80 years old nowadays (or people who have enough money living to that age; poor people, not so much).

    • feettothefire

      Please tell me you’re not trying to compare the economic effect of our Afghanistan/Iraq adventures to the massive economic effect of “WORLD WAR II.” If so, it’s time for a history lesson.

      • Ellen Dibble

        I think there have been contractors of many sizes and shapes, and defense industry elements with huge political influence, who always see a national mobilization as an economic plus, and tend to see such engagements as limited in just the right way.

        • feettothefire

          The fact remains that the amount of stimulus provided to our economy by the wars of the last ten years is laughingly small when compared to what the war effort in the forties provided. We practically built our entire war machine. Millions were employed outside of the military. Comparing the two is meaningless.

  • http://gregorycamp.wordpress.com/ Greg Camp

    Oh, right, we’ll pay for the debt in the good times to come.  We’ve heard that before.

  • Scott B, Jamestown NY

    Krugman’s opinions further what Thomas Mann and Norman Ornstein’s new book, “It’s Even Worse Than it Looks” says about those that are blocking recovery – The Republicans whose only agenda is going against fact, science, and history to try to prop up an ideology that keeps getting further to the right and further from reason, all in an effort to regain and hold power, and return the US to some imagined perfect past.

  • Ellen Dibble

    The size of government is the Size of the puppeteers, the Weight of concerted organized special interests, that is pushing against it, on all sides, and certainly on the president in an election year.  To be realistic now, how would it benefit  the oil industry for the government to reinforce national infrastructure and so on, funnel a lot of money to the states, and so on?  How would the big financial firms benefit?  Isn’t that the real question?  

  • Jim

    old conservatives like me really hates the neo-cons because some of us strongly believe military spending is the problem. and these conservative elitists in washington refuse to hear it.

    STOP THE EGREGIOUS MILITARY SPENDING!!! YOU ARE RAPING THIS COUNTRY

  • Kastlebrill

    I am with Paul Krugman.   He is right, and has been right.   He is so logical.    The parts of government which are still growing are the ones which are intrusive.   The parts of the government which actually serve he people have been disasterously shrunk. 

  • ghm52

    What does Prof. Krugman think about sending a stimulus check to each American? Divide the bank bailout amount by our population (every person) and Voila! We the People solve this mess OUR WAY without wars, etc!

  • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

    One only has to look at CA and IL to see the road to ruin under Democratic rule if Obama is re-elected. Bloated public union salaries and pensions, illegal immigrants, enlarged welfare state, healthcare  costs, and govt  waste and fraud. Why don’t you ask Krugman about the economies of CA and IL? 

  • GretchenMo

    Austerity didn’t come first, higher interest rates did. 

  • Ellen Dibble

    I was bellyaching about the national debt all during the decade of 2000-2008.  Where was Krugman then?  

    • TFRX

      Not in power. Not getting anyone’s ear. Watching Joe Lieberman being the “Democrat” on talk show after talk show.

      Maybe what we should be asking is how Republicans keep getting labeled “fiscally responsible” when they don’t submit balance budgets, year after year, during expansions.

  • Guest

    I agree with Steve and that we must limit GROWTH and that means have LESS BABIES. When are people going to wake up to supply and demand. The Demand is greater than the Supply and we must address that now or start the extinction process. Either one works!

    • Lol Execs

      The growth issue in Europe, Japan (and soon) China is due to rapid decleration in birth rates. The rapid aging in Europe and Japan are one of the reasons why I question a long term recovery in those countries. And it’s a big reason why the USA is different.

      Long term growth is a function of increase in population and increase in productivity. Increase in productivity (of all kinds) means equivialent output for less inputs …greater efficiency. And tha increase in productivity means that a higher level of population can exist on the same number of resources.

  • http://twitter.com/Dave_Eger Dave Eger

    There have been a lot of people in government positions, Bernanke, Geitner, and Paulson just ot name a few, who have made people think the government look like it doesn’t know what it’s doing. Guys like the Koch’s that that you mentioned take advantage of it almost too well. I agree with you that there is a place for government, but I don’t think it’s anything like what all the people mentioned above imagine. The political system, and thus the government that those politicians occupy, seems to act too often in the interest of corporations rather than that of the public they were they where intended to represent.

  • http://gregorycamp.wordpress.com/ Greg Camp

    I’m still waiting for Krugman to tell us how the debt will be paid down.  I don’t want hopes and wishes.  I want a practical solution that will pass Congress.

    • Ray in VT

      I practical solution may not be able to pass in Congress.  A real solution will probably hurt, and many politicians will not do that which they think will make their own re-election less likely.

    • Victor Vito

      There is your problem.  You used “practical” and “passing congress” in the same sentence.

    • jimino

       “a practical solution that will pass Congress” is not possible, given the current Republican party and its elected members of Congress.  Please see ‘Even Worse Than It Looks’ by Thomas Mann and Norman Ornstein.

      Until we realize that many members of Congress have no desire whatsoever of acting in our country’s best interests, or even understanding what those interests are, things will not improve.

      • http://gregorycamp.wordpress.com/ Greg Camp

         Don’t leave out the Democrats.  They do the same thing.

        • jimino

           No. They don’t.

  • GMG

    Could our indebtedness bite us in a way that models drawn from the economic history of the past couple of centuries don’t take into account?  We are in an unprecedented situation in terms of the combination of debt, climatic disruption, public misinformation and political impotence, such that even an eventual economic rebound seems far from a certain.

  • Drew (GA)

    And the obvious problem with recently failed “stimulus” measures is that which was being “stimulated”. If you stimulate the things that largely created the crisis in the first place (speculation, debt capitalization, etc.) on steroids why would there be an expectation of a benefit? To stimulate the cause of repeated failures and expect a decrease in the resulting problems is the very definition of insanity.

  • TFRX

    Have we gone half the show without anyone talking about “multiplier effect”?

  • Worried for the country(MA)

    Krugman just exposed himself as a partisan hack.

    His analysis of the Paul Ryan budget is blatantly dishonest.  The Ryan tax plan is revenue neutral and not a tax cut.

    In truth, Ryan’s budget is a modest 4% cut in the ‘growth’ in discretionary spending.

    • Ray in VT

      I believe that he said that the plan is mostly tax cuts for the wealthy and benefit cuts for the poor.  That can be revenue neutral.

      • Worried for the country(MA)

        Revenue neutral IS revenue neutral.  The truth is we don’t know the distribution by income class.

        The potential cuts in the Ryan budget are at least 10 years out with the caps on Medicare.

    • Guest

       Seriously?

  • Geoff

    While more stimulus and a higher inflation target make sense in the short-run, what does Professor Krugman think we should do about the longer term divergence of wages and productivity growth? Household debt has skyrocketed over the last three decades because consumers’ income is not growing enough to drive economic growth without heavy borrowing.

  • Webb Nichols

    The core issue remains that there are more people in the world then there are
    jobs. It takes 2.5 billion people to run the world’s economy, all items
    agriculture, manufacturing, transportation, etc,.

     

    There are 7 billion people alive in the world. If you strip out children, age
    13 and below, and seniors , 65 and over, one is left with an adult population of
    approximately 4.4 billion people. There is the problem, roughly half the adult
    population is extraneous.

     

    The question remains. What are we going to do about the people who want to
    work but cannot find work. In the United States unemployment will remain between
    7-9%.

     

    It is also time to stop measuring economic vitality in terms of growth and
    expansion. We should look at renewal, stasis, balance and reclamation.

    • Victor Vito

      You are going to draw a lot of heat if you argue against the “infinite growth paradigm”.  It is certainly one of the world’s sacred cows.

  • Michael

    One of the first things we will have to do to end the depression ever is to admit that we are in a depression! (see: Japan, Greece, etc.)

  • http://gregorycamp.wordpress.com/ Greg Camp

    Bernanke isn’t offering a substantive argument?  Neither is Krugman.

    • Christine Gallo

      Did you even listen to this program?

      • http://gregorycamp.wordpress.com/ Greg Camp

         Yes.  I heard a great deal of vague assertions and a lot of talk about increasing spending.  Your point?

  • reader41

    It seems that the state layoffs and cutbacks are part of the Republican agenda to keep unemployment as high as possible into the election. How can the obama administration overcome this agenda?

    • GretchenMo

      That’s crazy!  Incumbents would get slaughtered.

    • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

       Obama had plenty of opportunities to create jobs but his plan is to make sure that enough sheeple are dependent on govt welfare to ensure votes.

  • Lol Execs

    Actually raising inflation is a pretty good idea. I don’t know why debt monetization doesn’t come up more frequently.

    • TFRX

      People who own paper, who are owed others’ debt, are not interested in the value of that going down owing to a little inflation.

      • Christine Gallo

        I guess they are going to be happier when we all start walking away from the debt?

        • TFRX

          Well, if one is a corporation, it’s “good business sense” to not pay a debt, by any means possible. Restructure, managed bankruptcy, invade and stripmine, whatever.

          Now if only the riffraff (disclaimer: I may be one) could play games like that and be lauded by the WSJ editorial page and CNBC, rather than scolded as losing the moral fortitude that made this country great.

  • http://gregorycamp.wordpress.com/ Greg Camp

    And inflation has a way of, oh, I don’t know, inflating.

  • G. T. Elliott

    If we agree with Krugman and his theories make sense, what can we do as individual consumers or voters to support this economic policy.  There isn’t anyone to vote for who would even acknowledge this as a potential position.

    • GretchenMo

      Spend everything you got; borrow a lot and spend even more. 

  • Worried for the country(MA)

    Hey Krugman, you should go grocery shopping sometime.  We already have 4%+ inflation.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    Steady state capitalism requires expansion and contraction (boom and bust) – we have been twisting the system for decades on the misguided notion that you can have just the boom part forever. The correction that will be required to “fix” this is going to be huge, ugly and very, very long.

  • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

    Krugman is a complete a**. We were in an incredible economic bubble. Millions of jobs were lost forever. People were spending like drunken sailors, we can’t keep doing that. The US allowed 30 million immigrants over the past couple of decades. It’s clear that much of  that immigration was wrong. The UK is also facing the problems of their own misguided immigration policies. We now have too many workers and the 8 million illegal immigrants in our workforce is badly hurting our native working class unemployed. How he can think that having millions of illegal immigrants who are low skilled and poorly educated and heavily use the welfare system is sheer lunacy.

    • Prm15

      Exhibit one: an incoherent farrago of propagandist cliches, badly written.

    • Christine Gallo

      Sure, it is all due to the immigrants…
      That is exactly what the Natives said when we were killing off the buffalo, and spreading our “white” diseases.
      Not much has changed, has it?

  • Ellen Dibble

    I do recall high interest rates under Carter into Reagan, and I learned in a big way to buy carefully now, not to wait.  The same dynamic had people buying houses in the 2000s, expecting them to be worth more later.  However, from our experience with changing technology, we learn not to buy the computer or printer or e-book reader now, but to wait.  It’ll cost less and be better next year.  
        If inflation returns, the Carter/Reagan dynamic of buy-now will be reinforced.  But thanks to 40 years of anticipation, I won’t need to buy much.  They can impose a Value Added tax now; I have taken precautions.

    • Roberto

      One facet of American spending is that we do too much for fun or entertainment. Those dollars have been redirected from education, transportation or energy discoveries. We as a nation, but not everyone, have become fatter and lazier. We need to get back to basics. We can’t all have a bigger house with more lawn. We should not all be driving SUVs and ignoring public transportation. We all need to guide our children to pursue technical careers as a more lucrative choice to compete in a world economy. We also need to take better care of the most indigent members of our society, not becoming increasingly divided between haves and have nots.

      • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

         We can do what we like as long as we are fiscally responsible. We do not have to take care of the most indigent if they were irresponsible. We are going to be facing a huge number of retirees who will only have SS to depend on. Why? Because they didn’t bother saving during their lifetimes, they frittered it away. The “govt will take care of us” mentality has taken hold. You don’t really think that liberals won’t try taxing you more to support these people do you?

        And how about these parasites? Want to support them as well?

        http://www.youtube.com/watch?v=ST8i2QmrXeY

  • GretchenMo

    How do you prevent stagflation and what makes you think you can?

  • Greyman

    “Modestly high(er) inflation” is acceptable and welcome, per former Enron advisor Paul Krugman, whose “usual” consulting fee amounts to no more than $20,000 AN HOUR. No one need invoke Zimbabwe or Weimar Germany: all they have to do is invoke the Presidency of Jimmy Carter, whose “little bit of inflation” never hurt anyone, hunh?

    • TFRX

      Let me guess: Hyperinflation in 73-75 happened under Carter too?

      • Greyman

        Of course not: the high inflation of the period followed the end of Nixon’s imposition of temporary “wage and price controls”, a command-economy approach given Nixon in 1970 by a Democratic Congress. Monthly inflation rates 1973-75 failed to hit the highs Carter helped deliver by almost 3%.

        • TFRX

          I’m waiting for you to ret-con the 2008 bailouts and TARP as happening under Obama too.

          And let’s forget the oil crisis, while we’re at it.

    • jpf

       I think it was Gerald Ford who passed out the WIN buttons (Whip Inflation Now) long before Jimmy Carter. Wasn’t it Richard Nixon who ended Bretton Woods, closed the gold window, and then had to invoke wage and price controls in 1971?

      • Greyman

        I don’t know that Nixon “had” to impose wage and price controls, but his willingness to impose a command-economy approach shows how divorced Nixon was from market economics, and apart from that, the Democratic Congress-supplied approach didn’t work–the heavy lifting didn’t come until a decade later when Volcker was leading the Fed.

  • jpf

     I’m with Mr. Krugman on the need for government intervention  but I don’t believe inflation is the answer. With inflation we’ll have higher prices but less buying power because wages will remain stagnant

  • Tina

    QUESTION:  If banks can borrow money from the government for so little in interest, how come bank credit cards have such HIGH interest rates?

  • Lmmaloney

    My own son is a case study in how current policies are wrecking the future. At the early stage of his career as an architect, he was laid off twice in three years. He was rehired twice, also — but always at a lower salary, and now, even after two raises, he is not earning what he received in his first job. He cannot carry his wife on his group health insurance because the premiums are too high. And of course he has massive student loans to repay!

  • http://gregorycamp.wordpress.com/ Greg Camp

     Dismiss the other side–thanks Krugman, but we’re still waiting for you to explain the magical event of debt reduction in the fairy tale future.

    • Christine Gallo

      Debt goes down the more people who are employed and paying taxes, and not drawing on benefits.

      • http://gregorycamp.wordpress.com/ Greg Camp

         You mean the way that it did during the eighties and the aughts?  Or do you mean deficits?  Both go down when income is greater than spending, and to make a serious reduction in debt, that condition has to continue for a while.

  • Nancy

    I really believe in Paul Krugman…but! My husband is now underemployed after being laid-off and unemployed more than 18 months. I’ve given up looking for employment and do as much to scrimp and save at home, doing everything from scratch and buying very little. We are barely making ends meet and the idea of inflation really scares me! How would this policy help us? It sounds like it would hurt us.

    • Roberto

      Huh? There are jobs in the Boston Globe each day. If you haven’t enough income, pursue one of those. Temporarily. Kurgan argues that inflation forces those with cash to invest in better returns like new ventures or homes, or risk losing purchasing power. Apple sits on billions but could be creating a dividend for stockholders. Corporations with overseas profits won’t bring them home bc of US taxes, so come up with compromise to get that capital back into US circulation. I as an individual don’t have those extra resources but if capital from others begins circulating and creating new opportunities, more people are employed and more cash ripples through the economy. Result: more people hire me as a consultant to manage their public relations as business expands. Short term we have cut back on things we like to spend on (health club, eating out, travel on weekends, or skiing, for example) bc we don’t see a positive horizon. If Krugman’s ideas stimulate the economy, we will have more confidence and spend the little we do on discretionary items. If the cost of that stimulus is a bit of inflation, so what? If we don’t correct the situation at all, how big is the downside, and how much longer will this crisis grow? The primary thing that Bernanke knows from his personal research and expertise is that the US did too little in the Depression, not too much. Only the WWII investments in military solved that. I dont want war, rather a heightened investment in our country’s infrastructure, energy needs and alternatives, better-insulated homes, safer cities and better training and education leading to a resurgence in middle or lower middle incomes by reclaiming innovation and quality products made right here in the USofA.

  • Witterquick

    Sounds like Krugman has a short term fix.  What about the long term???

    • jefe68

      Did you listen to what he was saying? The long term is affected by the short term. What is it with people obsessing on the long term when there is so much going on right now that needs to be addressed? It’s as if you have this fantasy about some how the future will be better if the long term is taken care of now. Here’s one thing the future will bring if we do not get people working again, more strife, hunger, crime, and need. The sort term is how we get to fiscal health during an economic crisis. 

      • Witterquick

        The point is long term consistant policies so we aren’t continually in a knee jerk reaction to immediate needs.

  • Erin in Iowa

    Does Mr. Krugman ever get sick of fighting over things that were settled 80 years ago? Part of me wants to give up and let the crazies have their way for the next 40 years or so just so people will forget this austerity lunacy.

    • Drew (GA)

      As long as we can all find someone to tell us what we want to hear instead of what we need to hear (the truth) we won’t learn anything. Forty years from now if we continue to let the Bull run wild our China Shop will be in be in ruins. And some of us will still be expecting prosperity to trickle down. The only thing that will trickle down though will be the rain passing through the non-existent roof above our heads.

    • toomuchhoopla

      Actually, what Krugman asserts here is common sense and accepted – it is those who have been trying to distort the workings of economics in order to try to find ways to support and promote the “ideology” of “trickle down” that have been doing more and more “myth making” for a couple of decades now – naturally, they do not want people to get back to reality and common sense – because they “believe” that cutting taxes and restoring a purely laissez-faire, survival of the fittest style capitalistic system will work well – despite the fact that both economics and history do not support their ideology and never has supported their assertions. 

      Loosening restrictions and regulations & not controlling the natural bubble effects and tendency to concentrate wealth in the hands of a few that is a natural tendency of laissez-faire & unrestrained capitalism caused the Great Depression, S&L crisis, Robber Barons, monopolies & once again, this most recent crisis) - 

      They are so enamored with this overly simplistic and cartoonish ideology that they refuse to acknowledge that it just does not work the way they “imagine” it, and that it never has – totally free markets do not work like a well-oiled perpetual motion machine. Things tend to naturally cog and bunch up and bubble and bust and lead to a wealthy few who are the “fittest” who have “survived” the game leaving a majority with less power, opportunity, resources or the purchasing power to create employment necessary for a well functioning economy. They also ignore the fact that nations that do not have the things that our government provides, infrastructure, educated work force, legal system, national security) are not wealthy nations – and can’t become so without the things that government provides – does not happen. 

      It is a fairy tale that is not supported by the evidence, so in order to perpetuate this fantasy and myth, they have had to engaged in huge distortions to promote policies that are pretty much undermining the success of our nation - 

      We have to get back to reality and common sense and this is where Krugman comes in – He restores sanity, reality, commonsense, and hopefully our ability to enact the (tried and true) policies to get us out of his mess

  • http://www.facebook.com/profile.php?id=828864007 Susan Bechhoefer

    Paul Krugman is my new hero.  I’ve not yet heard anyone on mainstream media make the statement that there is a small group of VERY wealthy people that have a vested interest in keeping the economy unstable.  Bravo.

  • Thorstein Veblen

    The problem with popular approval of government spending in a recession/depression is that humans think linearly and in terms of their own experience. On a personal basis, if your spending exceeds your income, you cut back on spending. No brainer. The problem is that the government is very much not the same as an individual. It is charged with ensuring that the overall economy is working well. In a recession the problem is that jobs and wages are down, so there are less spenders buy things. Workers pull back spending because confidence is down. It’s similar to a plane flying at below stall speed. If the plane flys too slowly, not enough air flows over the wings to keep it aloft. A naive instinct would be to pull back on the stick to point the plane higher to avoid crashing. But this just slows the plane down more and makes things worse. The educated pilot’s solution is the counter intuitive notion to aim the plane down to the ground to regain air speed and lift. Once you have air speed, then you can level off and resume your normal flight. Likewise, when the economy is in stall, we need to temporarily point the nose down, increase governement spending in such a way as to increase employment and consumer confidence to boost private sector spending until wages are back and goverment revenues are restored though a normal functioning economy.

  • John C

    I have been a long standing supporter of conservative policies and enjoyed the products of what came out of our think tanks because they felt so inherently true, however I have slowly come around to the point that their validity has passed it’s day in the sun, and that we need new answers for the problems we face today.

    So my question is if it’s the bad policies promulgated from the right that have gotten us here, do the these think tanks promulgate these bad policies out of ignorance? Or is it more like calculated logic for their own benefit?

    • William

      Which bad policies? Small government and small budgets?

      • Christine Gallo

        What small government?  What small budgets?  Notice it is selective.  For the GOP military industrial is huge.  War on drugs, and crime ~ the same.
        Depending on where you sit, you see money flowing out in equally huge amts.

      • jimino

         When was that policy ever implemented in the real world?

        • William

          Never. To Conservatives, that is their basic economic theory. John c. mentioned that he does not agree with conservative policies. I have not seen many conservatives policies in years. We have a huge government and huge spending budgets.

  • http://gregorycamp.wordpress.com/ Greg Camp

    A stimulus check is unsustainable.  That would create a big spending spree that would then go away.

    • GretchenMo

      Unless we guarantee lifetime employment as we do now.

  • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

     OWS are a bunch of crybabies. Stupid people went into severe debt for unmarketable degrees. But that’s the progressive way now. Complain when you lack personal responsibility.

    • TFRX

      How can they be indebted degreed idiots and unshaven smelly dropouts at the same time?

      The mind reels.

    • Guest

       I agree that many people today are majoring in “worthless” degrees and that the cost of that education is insane. So, we have 2 points to address: who pays for one’s college and why does it cost so much?

      Why don’t we look at the education in foreign countries? The countries that are whipping our butts have much more affordable education systems then we do but they do NOT let everyone go. One must test into these institutions and go to an appropriate educational facility according to their abilities. Some will go to trade schools while others can go to elite institutions. This is what you earned.
       
      We need to do the same.

  • Drew (GA)

    We need JOBS! Not a stimulus check.

    • GretchenMo

      So another housing bubble or a different bubble?

      • Drew (GA)

        We’re a good piece of the way through another Tech Bubble right now (my opinion). I realize the inefficiency that is inherent in most Government spending, I would MUCH rather there be some inefficiency that is a result of something productive. Infrastructure, Resource Restructuring (we could actually do something about the Petroleum Problem as opposed to just talking about it), Public Service sector improvements, etc..

        I don’t want ANY bubble to answer your question. If we can’t control ourselves though, it would be nice if there was something other than broken lives left behind when they pop.

    • TFRX

      It’s a proven fact that when people who aren’t rich get some extra money they spend it. At this point in the business cycle, even more so.

      That creates jobs.

      Some folks talk about the proverbial “helicopter drop” of money, wherein if certain amounts of cash which have gone to big institutions in 08-09 had just been dropped evenly out of a helicopter onto Everywhere USA, and suggest that it would have had a better effect on the economy.

      There is some truth to that.

      • Drew (GA)

        I agree completely that spreading the bailout funds to the poverty stricken would have provided a greater benefit. That horse has not only left the barn though, it’s halfway across the next county. It doesn’t take a genius to realize that those in poverty will spend 100% of their income, what other choice do they have? The wealthy will never realize that selling their s___ won’t be possible when there’s none left who can afford it. And I hope it’s clear that I don’t think jobs will come from the self proclaimed “Job Creators”, the true providers of sustainable employment aren’t the ones who constantly toot their own horn.

        Nice comment

        • TFRX

          The wealthy will never realize that selling their s___ won’t be possible when there’s none left who can afford it.

          Agreed. If you and I are waiting for them to be the “leading indicators” of when all our economic overlords wake up to “not enough demand”, the economy will shudder mightily.

  • http://www.facebook.com/profile.php?id=100001436729213 Wes Nickerson

    I agree with Paul Krugman. We need to spend our way out of this depression. Neither the Republicans nor the Democrats are doing what needs to be done. It’s time for a Green New Deal. It’s time to support the Green Party. Vote for Jill Stein for president.

    http://www.jillstein.org/green_new_deal

     

  • GretchenMo

    Instead of sending people a check, why not just let people keep more of what they earn?

    • Christine Gallo

      Had you been listening to Dr. Krugman, he explained, it wouldn’t provide the stimulus to the economy that it needs.  It wouldn’t provide jobs.

      • GretchenMo

        Why not? 

        • jefe68

          Because it’s not enough. Did you listen to the show or is it that your hearing is compromised so much by your political dogma? 

  • Eric M. Jones

    The Panama Canal— the largest
    construction project in history at the time— cost $375 million in 1913 dollars.
    The CPI from that time to today has grown 21.2X, making the cost in 2008
    dollars about 7.95 billion dollars. So $800 billion today would buy from scratch,
    100 Panama Canals.

     

    Here’s another, perhaps more
    practical purchase–

     

    The approximate cost of
    constructing a twin track 10,000 km maglev train system including 300 kph
    trains, tunnels, bridges and stations, between major US cities is about $800 billion.
    Average construction cost would be about $USD 50 million per kilometer. About
    1200 maglev cars would be needed. The rolling stock would cost only US$20
    billion.

     

    Actually, like most big mass
    transit systems, it would not be able to pay its own way, but at least you’d
    see where your money went…. and how fast.

  • Worried for the country(MA)

    Dr. Krugman, what is the duration of the US debt?

    What will the servicing of the debt be in 7 years when the bulk of the debt comes due?

    Even with rosy Government inflation estimates, the interest payments will be greater than military spending.

  • Worried for the country(MA)

    Full employment under Bush?

    Say it ain’t so, Paul.

    • Drew (GA)

      Well when you have a “War” going…Is it your opinion that we should just stay at war perpetually? It only works to a point, the past several years are what results beyond that point.

      • Worried for the country(MA)

         Last I checked, we are still at war.

        And no, I don’t like it.

        • Drew (GA)

          Agreed, we are and will remain at war, we’ll never defeat Terror.

          I don’t like it either.

  • Dave in Lyndonville, VT

    Part and parcel of so many of the Fed’s policies since 2008
    have been to save the big banks in the name of “systemic risk”.  While not directly related to the issue of
    stimulating the economy, the Fed itself has intertwined the two.  And yet, these banks operate with impunity,
    recently described as the “bartenders” who never shut off their drunken
    patrons. Why should they, I assume they reason, because they know the Fed will
    backstop them.  How is that a free market
    system?  Does Dr. Krugman agree with the Fed’s
    approach with the big banks or would he offer something different?
    Dave in Lyndonville, VT

  • ghm52

    What about making the banks offer 10% interest on savings for those of us not wishing to invest in the stock market? It’s absurd that that option is no longer viable!

    • GretchenMo

      And so all they have to do to make money on your deposits is to lend to people at 11% and above.  In this environment, I’m sure those sorts of returns are readily available.

  • Ellen Dibble

    The people who depend on handouts and “don’t want to work,” in my experience, look at a huge chasm if they leap off the subsidies and into self-supporting middle class.  It isn’t worth it.  After earning a certain amount, reportable income, it’s a losing proposition.  Your rent in affordable housing goes up and up and up; your portion of the medical insurance you pay (under Obama’s plan, or in Massachusetts) goes up and up.  You lose, depending on the state, food stamps, child care, on and on — all those losses pretty much fostered by tax deductions at state or developer levels to the Deep Pockets.  Your difficulties in getting over that chasm is thanks to the legislative work of Powerful Interests.  
        So the caller who said people have no motivation to contribute — I see why.

  • GretchenMo

    We should cut taxes even more.  The problem with Bush’s tax cuts were that they were too small! 

    • Osullivan

      yeah! that’ll do the trick! the tax cut cure-all

      • GretchenMo

        It’s always worked in the past.  I’ve been saying for the last 3 years that what was being done wasn’t going to work and I’ve been right; so now listen up, and cut taxes!

        • Ray in VT

          The case may be different at your state/local level, but federal tax rates are at their lowest levels in decades and the amount of federal tax collection as a part of the GDP is the lowest since either 1949 or 1950.

        • jefe68

          What past are you talking about?
          the 50′s when taxes were at there highest and so was growth. Or the Bush years when growth was at an all time low and then lead to the largest economic downturn since the Great Depression.

      • Azra

        It’s been working so well.

    • Jason___A

      Indeed…more fiscal insanity is what we need.

      • GretchenMo

        We shouldn’t be worried about the deficit/debt now, only the economy.

    • Zero

      God knows, all we have to do is make the rich a little richer and then everyone will have high paying jobs with excellent benefits. 

      • GretchenMo

        Cut everyone’s taxes!  No class warfare!

        • Zero

           If you cut everyone’s taxes, you will actually see class warfare.  Go read a history book.

      • Azra

        Yes, that’s automatic.

    • TNarch

      George W. Bush passed two huge tax cuts in 2003 and again in 2005.  The only growth visible after these cuts occurred at the upper end of the income bracket while the middle and lower end either stagnated or shrank.  Then in 2008 we learned that the growth at the upper end was almost purely imaginary as the housing bubble burst and the financial sector collapsed.  So, tax cuts did not spur economic growth in the past and there’s no reason to expect them to grow the economy now.  

      • GretchenMo

        They were not big enough!

  • http://www.facebook.com/demarcus.i.jackson Demarcus Ibdul Jackson

    Professor Krugman just makes so much sense. I am not an economist, but the notion that an economy like our own can practice stern austerity as a means to economic prosperity is, on its face, an totally absurd idea. I never understood it and listening to Professor Krugman, I now understand why I never understood it–because it makes absolutely NO SENSE WHATSOEVER! Thank you, Professor Krugman, for making well-reasoned, empirically-based arguments instead of politically expedient, fear-based arguments that do nothing to get our wonderful republic back on track.

  • Mark Del

    Republicans suggest that cutting taxes allows investors to create more businesses and hiring; however, as a businessman, I am not going to hire anyone unless I have work for them. Seems to me there is a disagreement here; what do you think?

    • GretchenMo

      So the answer is some busywork for government union members?

      • jimino

        I would start with getting something in return for all the money we spend on the military besides enriching connected contractors and a lifetime obligation to care for the injuries and mental health problems caused by putting our troops in ill-defined roles for which they are not trained in an effort to attain unachievable and undefinable goals.  If you want to talk about money for nothing, that’s where you must start. 

        Here’s a news flash: They work for the government!  Deploy them here where they can actually do something of clear benefit to our country.  And they will learn some worthwhile skills while doing so.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    Government spending would work – if the government didn’t borrow huge amounts of money every year, even during the good times this would work. We’ve privatized profits and socialized losses into unmanageable mess.

    • Call_Me_Missouri

      “We’ve privatized profits and socialized losses into unmanageable mess.”

      That’s an oversimplification, don’t you think?

      We HAD to socialize losses due to Deregulation that allowed banks to become Too Big to Fail and instead of Socializing all of the Banks Gains for the next 10 years we let them profit off the Feds loans and only pay us back a pittance in interest.

      Except for AIG, BoA and I’m guessing a few others…  Most banks have paid back their loans in full with interest and eventually AIG and BoA will have to pay up too.  We will end up making money on those bailouts.

      And well…  Borrowing money at an obscenely low interest rate is always a better idea than borrowing money at a higher interest rate…  so I can’t think of a better time to be borrowing Money for this Country.

      We should be borrowing money to rebuild our Power Grid and Energy sources…  But with the idiots in Congress we’ll never do what is smart.  We’ll wait until it’s too late and borrow at high interest rates and pay top dollar for everything we do.

  • Jim Small

    How can we pay for the unfunded mandates of government employees, social security and medicare AND take on,say twice the public debt that we have now? Should we not deal with both kinds of debt together?

    Jim Small, Burlington, Iowa. 

    • TFRX

      Neither Medicare nor Social Security are the crisis you think it is. You’re being had.

    • Call_Me_Missouri

      By borrowing money at probably the LOWEST INTEREST RATES in the CENTURY.

      Two basic rules…

      Buy Low….    Sell High….

      Borrow money when Interest Rates are LOW, don’t wait for them to go back up.

      There is NO VALUE in working on the Debt now.  The Austerity measures they are enacting in Europe are going to Bankrupt the entire EU eventually.

      You cannot grow using shrinking policies.  Eliminating Debt means Cutting Spending which is a Contractionary Policy that should only be enacted when the Bond Markets price your Bond Rates at a HIGH interest rate.

      We should BORROW NOW and when we are out of our recession we should IMMEDIATELY cut spending so as to not create a bubble.

      • jimino

         Social Security is fully funded for the next 20+ years, due to the largest tax increase ever on the wage-earning middle class, imposed during the Reagan administration, with the cooperation of a Democratic Congress. 

        And the so-called recent dire warning predicting when those funds would be expired is the same date forecasted in 1993.  The willingness of Americans to be gladly lied to, whether due to ignorance or partisanship, is stunning.

  • Worried for the country(MA)

    Dr. Krugman, what about all the cash big business has overseas because of high US corporate taxes?

    It is a fact that we now have the highest corporate tax rate in the industrialized world.

    • jimino

        G.E. paid 2.3% of it’s profit in federal taxes over the past decade.  Is that the high tax rate you’re talking about?

      • Worried for the country(MA)

         GE has 1000 tax lawyers on staff and countless lobbyists to help them write the 73,000 page tax code.

        Ever since Japan lowered it’s tax rate last month, the US 35% tax rate is now the highest in the world.

        • jimino

          So we really don’t tax corporations as high as you claim.

    • TFRX

      You keep throwing around “fact”. But don’t take my observation personally.

  • Roberto

    I believe we need to invest more in boosting economy. But with hedges. Yes for better education opps and lowering costs in progressive manner (tho many would argue, we have huge swath of middle or lower middle income with nary the resources for 2 or 4 degrees). More govt investment in basic R&D, something we did so well post-WWII. But balance these expenses with reduction of our military we are trying to solve all the problems of the world and losing battles at home in our youth, cities and industry

    Higher taxes for passive incomes of

    • Roberto

      Carried interest investors. No one seems to be able to show how some taxation of capital or 1-5mm estates will hurt the economy. No one seems to be investing in the new technical skills of the 21rst century. Why is there not a massive focus on energy and alternative fuels to both build technical expertise the entire world will desire, and solve a global issue? Instead, we have DC Stalemate, and sink further in almost every index vs other developed nations…

  • Ockitaris

    I like Mr. Krugman;
        But saving the economy is a bust when it comes to saving the earth.  Right now we are between the 2 most important holidays Earth day and  May day.    And the Earth comes first.   Mr. Krugman motive i understand is to save capitalism.   But capitalism forces the working class against the economic wall to continue to take from nature to give to the wealthy.  Ie to make rich men richer.   Wasting the  earth  to do so.
    2 Items that would do away with depressions would to end private ownership of land and place a limit on how much money/wealth an individual could own.  It has been known for centures that land ownership creates poverty.

     

    • Zero

      Private property is a constitutional right. And capitalism can remain under control and work for everybody, it there are strong labor unions and a healthy safety net. 

      To me, the core of the problem isn’t capitalism or communism.  The problem is a willingness to let a few economic elites control the majority of the labor class.  Republicans fight for bartering power to be in the hands of a slime minority and their electorate thinks that there is no way that the majority (labor class) can have power over the rich minority.  I call them happy surfs.  Adam Smith knew all of this, yet republican politicians name-drop Smith and go against what he says.  And it all works because republicans are too lazy to read him.    

      • Zero

         slim/slime–Freudian slip

  • I hear an agenda

    It would be easier to take Krugman seriously if he’d stay away from the political digs.

    • TFRX

      What do you mean “seriously”?

      Right-wing economists (and pols who are hailed as smart) say names all the time, get fluffed endlessly by out “librul media”, and have their crap narratvized on a weekly basis.

      Paul Krugman gets to fight back by never, ever call them out?

      I’m not interested in pretending there’s only one set of rules here.

    • Azra

      Sometimes the truth is hard to hear.

  • Penelope Miller

    Paul Krugman, my darling, my dream.  Talk economics and write your brilliant, concise, coherent columns to me some more :)

    I am with the caller who is in deep disappointment that president Obama failed to listen to the most consistently correct economist in the USA. 

    I am also of the belief that too many Americans cannot think except in terms of propagandist cliches and bumper stickers.

    As an adjunct college writing teacher, I also believe the reason so many Americans cannot identify credible argument vs. propagandist cliche — is the sad lack of emphasis on critical reading and analytical writing in American schools and colleges.

    Paul Krugman’s brilliant writing is a reflection of his brilliant thinking.

    Just sayin’.

    • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

      If you truly believe that you are capable of distinguishing between credible argument vs propagandist cliche then I feel very sorry for your students for you are simply clueless.

      Daniel Okrent, the former ombudsman for the NYT was spot on when he said about this about Krugman.

      “Op-Ed columnist Paul Krugman has the disturbing habit of shaping,
      slicing and selectively citing numbers in a fashion that pleases his
      acolytes but leaves him open to substantive assaults.”

      • Zero

         What substantive assaults?  Please inform.

    • Bill5

      I strongly endorse what you say!  I would add, though, that Obama did follow the approach Krugman promotes, but many economists claim the stimulus just wasn’t big enough.  I suspect Obama compromised too much, much to the disappointment of many Democrats and Independents like myself.
       
      By far the bigger, more immediate and over-riding issue now , is to ENTHUSIASTICALLY support Obama’s re-election (and reclaim the Congressional seats held by extremists) to make sure the extreme elements of the Republican Party do not take OVER the country (not as they say “take it back”).  Their economic policies and “wonderful” budget (as Romney calls it) just don’t make sense- more unemployment, more tax breaks for the wealthy, larger burden on the middle class and poor, etc.  There are just too many scary (actually terrifying) aspects of the Republican agenda, tactics they use, and outrageous use of money to achieve their goals (both Romney and the ultra conservative Super PACs).  I doubt that any of the ’08 Obama supporters, who are presently disappointed in Obama, would be thrilled by the outcome of a Republican President and Congress.  Not voting for Obama and Congressional representatives is in essence voting for the Republican agenda.
       
      Recent experience demonstrates that CONSERVATIVES WOULD HAVE A MUCH BETTER CHANCE OF INFLUENCING A DEMOCRTIC DOMINATED GOVERNMENT than LIBERALS OR INDEPENDENTS WOULD HAVE INFLUENCING A REPUBLICAN DOMINATED GOVERNMENT!

    • Zero

      Spectacle is replacing literacy.  Historically speaking, democracy rises with literacy and falls with spectacle. 

      We are seeing the rise of an Oligarchy and the right is bringing it on.  The right has been fabricating a communist threat and cutting the humanities at the same time.  Sound familiar? 

      I’m not saying that traditional totalitarianism is arising, but we are certainly losing our republic to a corporatocracy.    

      • Penelope Miller

        I agree wholeheartedly that spectacle is replacing literacy.  Are you citing Chris Hedges’ views or anyone else in particular when you claim that democracy rises with literacy and falls with spectacle?  Intuitively that sounds right, but what’s your source? Thanks for replying, BTW.

        • Zero

          I’m sorry I replying late.  Yes, Hedges’ is informing my viewpoint.  But also, Martin Luther and the Reformation informs my viewpoint.  The history of the Gutenberg press and some other issues.  In my initial comment, I was referring to when Hitler fabricated a communist enemy that “allegedly” burned down the Parliament building, which then allowed him to seize power, end the Wiemar Republic, burned literature, and constructed a heavy image-based culture.     

          I taught a class on New Journalism when I was on grad school.  I gave the students an archive project to collect various magazines from the 50s, 60s, and 70s, and compare them with a collection of today’s issues.  What we found is that the older issues were far more textual and even the images/pictures were shot to be interpreted.

          Today, there is a lot less text and more image.  We have turned into an image-culture.  The advertizements have less text, the magazine itself had less text, and the articles have become predominantly gossip and celebrity oriented. Today’s images are uninterpretable.  In “People Magazine” for example, the image has transitioned from a facial shot of Mia Farrow wearing white (from The Great Gatsby), freckles, and biting a string of pearls…to…what it is today cleavage and a smile. Rolling Stone was very politically conscious with their covers, but not so much now. 

          New Yorker Magazine is the only one that has not changed.       

            

  • jan

    If the price of energy continues to rise which seems inevitable, particularly liquid fuel, which our economy depends on, won’t the exponential growth you are seeking to jump start be unsustainable

  • Adrian from RI

    The Nobel Prize committee saw fit to bestow the Peace Prize on faux man of peace Yasser Arafat in 1994.

    The Nobel Prize committee saw fit to bestow the Economics Prize on faux man of economics Paul Krugman in 2008.

    Paul Krugman should stop making up facts without a license. In the meantime: Zimbabwe here we come egged on by the likes of Krugman.

    • Christine Gallo

      Please do some reading before you post.  You won’t embarrass yourself, or the rest of the country, by sounding so incredibly uninformed.

    • Zero

      Why do you right wingers almost always dismiss arguments and facts without counterarguments and counter-facts?  If you don’t have an argument and you don’t have facts, then why are you commenting? 

      It looks like you just had to say some inane bs to make you feel better about voting against your economic interests.  There is an empirical reality swirling around your solipsistic head.  If you don’t like what Krugman says, then argue against it.

    • jefe68

      I think Dr. Krugman already stated that when people start using ad-hominem attacks, as you do here, you have already lost the argument.

      • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

         Krugman should know, he does it all the time.

        • jefe68

          So you don’t know the real definition of ad-hominem. Or at least you seem to be unable to parse the difference between someone responding and defending their point of view using sound rhetoric and ad-hominem attacks. Which seems to be how the right rolls.

    • northeaster17

      Just another well thought out attack from the Hannity Limbaugh wing of the asylum.

  • Christine Gallo

    Please ask Dr. Krugman, how  Norway and Sweden wrested control of their country from the 1% and corporate big wigs in the early 1900′s?

  • Bruce

    When Reagan famously said that “government is not the solution to the problem, government IS the problem,” it marked the beginning of the end of progress for our brand of capitalism.
     
    To a great extent, we have the “Gipper” as well as Jack Kemp and Phil Gramm to thank for the conservative mantra of tax cuts for the wealthy, deregulation for Wall St., and globalization for the multi-national corporate elites—the toxic mixture largely responsible for our economic decline.
     
    The Reactionary Right seems to be counting on a peculiar form of American exceptionalism—an exceptional almost pathological form of collective amnesia and myopia that they hope will propel them to electoral victory in Nov.
     
    A careful examination of Reaganomics should disabuse any rational person of the supply-side, laissez-faire delusion.  In the face of economic reality (i.e. insufficient revenues resulting from marginal income tax cuts that were supposed to unleash economic growth that would offset the lost revenue) the “Gipper” increased taxes 11 times and raised the debt ceiling 18 times, and he still presided over record deficits with the national debt quadrupling to 3 trillion dollars during his tenure.
     
    How much more proof do we need that our “mixed economy” requires increased social investment, not less, as we move forward?

    • Bruce

      Thanks On Point for bringing a rational voice to the conversation about how to address the challenges to our economy and the failure of our politics to deal effectively with them. 

      • Ray in VT

        Although I disagree with the perspective, I would like for On Point to bring on someone like Thomas Sowell, perhaps in conjunction with someone like Krugman, in order to offer some competing views.  Such a discussion could get overly technical, but I think that it would be valuable and interesting.

        • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

          It is despicable of NPR to be a mouthpiece for the very partisan Krugman. Typical of them to show their liberal bias.

          • jefe68

            Oh please, they have had on the opposing economist such as Niall Ferguson to name a few. By the way the very nature of your comment is partisan, so you’re not making a very good argument. Dr.Krugman has a point of view, a very valid one at that. That you find that partisan speaks volumes about you and the right wing dogma that you think trumps all others.

          • feettothefire

             I’m not sure what you’re trying to say. Are you opposed to partisans? Liberals? People with a bias towards something? Since most people who can think have some degree of bias on most issues, I guess you believe NPR should put no one on the air. That would make for some boring radio.

  • Toby

    I have a question.

    Paul is talking about how to restore the economy to the way it was prior to 2007.

    My question is, why did house prices go down unexpectedly? Since this was one of the elements that contributed to the economic collapse, was it indicative of some larger issue with how our economy works. Are we reaching critical mass for global population and strain on resources?

    Continuing with a model of infinite growth seems short-sighted  (and not even discussing any other models) especially for one of our greatest thinkers on economic issues. Is anyone thinking bigger than just repairing what we had in 2007?

    • Call_Me_Missouri

      There was nothing unexpected about housing prices tanking.

      When the home loans dried up as a result of the crash of the derivatives market (ie the money that backed the loans) drying up, demand for housing tanked, therefore there was a glut of supply in housing and therefore house prices went down the toilet.

      Economics 101, right?  Supply…  Demand…

      House prices are not going to go back up until the rate of Foreclosures diminishes to regular numbers and the loans become more available to regular borrowers…  This won’t happen until people get back to regular levels of employment…  Hence Paul is spot on.

      It’s a shame that we have a useless Congress who does not understand that with interest rates so low we should be borrowing now (not later) and that they do not see this as the opportunity to build a Green Economy and to Re-Invent the US.  They’re losers.

      • Tobyj

        It was unexpected in that financial instruments such as CDOs were built on the assumption that house prices would never go down.

        But my main point is (at risk of sounding like a doomsday-survivalist type) that the modern global economy is founded on another troublesome assumption: growth

        Growth at the clip we have experienced in the last 50 years is not sustainable.

        Why do I never hear economists or politicians acknowledge this or propose economic models that take reality in to account?

        I understand that this may sound naive, but assuming that oil, water, agriculture can sustain consumerism and population growth at recent levels is more naive!

    • Petedmers

      Prices decreased when demand fell because no one had jobs because the executives took all of the wage money for themselves and couldn’t pay the workers.

  • potter

    I hope Obama wins this election even though he has been infuriating regarding having the boldness and courage to do what is right, what he knows is right, what he would have to fight for. Lord help us of he does not win. But if he does win, perhaps the “legacy thing” will kick in and he will actually show us some leadership. 

  • Greyman

    “Conscience of a Liberal” . . . whose “usual” consulting fee is only $20,000 AN HOUR. Not bad pay for a liberal conscience, hunh, even for one who earned a measly $37,500 consulting for Enron?

    • Zero

      But rich liberals are willing to pay back to the society that allows them to become wealthy. 

      • Azra

        I’m not acquainted with any rich liberals. Weathy people I know of, (except the self-made ones), all seem to be Republicans. Maybe it’s just this area.

        • Ray in VT

          Oh, you don’t know the “limousine liberals”?

          I’d say that a slight majority of the wealthier people whom I have know have been conservative.

          Of those whom I have known well it was the people who started out poor who were liberal and those who came from wealthy families who were conservative.  I’m not trying to make a partisan jab or anything here, but the wealthy people whom I have know who were conservatives were some of the biggest jerks whom I have ever known.  It’s a small small, and I’ve met plenty of poor jerks, but that has been my experience.

          • Zero

            If you look at a political map, the counties with the highest property value are blue.  The states with the best universities are blue. 

            I live in the South, and from my own experience, rich republicans live in gated communities, with similar looking houses, and fancy cars.  Rich liberals live in areas that tend to be close to more ethnic diversity, their houses are unique, and they never buy BMWs.  In a word, rich liberals are not as opulent.

            And if you look our generation of politicians: Bush, Bush, and Romney have lived their entire lives in the upper class; Reagan, Clinton, and Obama actually achieved social mobility.  Clinton and Obama did it with intellectual labor, and Reagan had the face of a supporting actor.    

          • Azra

            My point exactly. Maybe we live in the same area.

  • http://pulse.yahoo.com/_7Q76XCU5URJ5CKZPBEZSJAKQMM Heres the fix

     You’re right Ryan – the Dems are using the ‘Tax the Rich’ screed to divert attention away from the fact that the middle class has to be taxed heavily to pay for all the free stuff.

  • Thinkin15

    The right is hell bent on demonizing government so that they can  create an Oligarchy. They want to take this country back to the Robber Baron era. Keep the masses poor and desperate and they will have no accountability from the voters.

    • Thinkin15

       By “they”, I mean the corporations and the wealthy.

  • Meredith Sumner

    Interesting that consumer spending is so pivotal to restoring our economic health, yet serious cutbacks in government (both federal and state) spending are also considered to be a solution. It seems that appropriate balance (useful approach to for many kinds of recovery); some spending; some saving is, as Mr. Krugman states, is appropriate for both the goose and the gander.  How can consumer spending by itself start the economic engine when the most prolific consumers (those at the lower end of the wealth spectrum, whether by earnings or resources) aas a group have the fewest resources for consumption?  Is this a new take on the trickle down theory – The burden again is on the little guy.

  • feettothefire

    For well over one hundred years the free-marketeers have been touting the efficiency of the marketplace and the fail-safe ability of private industry to keep the economy healthy and our cupboards full. Despite this reassurance, we have had a great depression, perhaps another one on the horizon, and many recessions of various degree. Bubbles have burst. People have gone to jail. We’ve also had stretches of great prosperity. Proponents of “free market only” thinking will claim that the good times were because of unhindered business expertise and the bad times were due to poor government policy. If marketplace priciples were all we needed to keep the economy healthy, it seems to me it would simply have become the De facto reality.  I’m still waiting. Maybe I missed something. 

    • Drew (GA)

      Maybe I missed something too. I’m going to go get my wetsuit on and wait for the next Bubble to burst.

    • Zero

      The hell with Dodd-Frank!  Bring back Glass-Steagall!

    • William

      We have pretty regulated markets and when something comes along that is not regulated, it soon will become regulated. You can’t open a carpet cleaning company without various permits. Which to some, is just great, because they are protecting the dimwitted public from the evil carpet cleaners. But to an unemployed guy trying to start a business they hinder his progress. This is just a small example of failed government ideas, but if you look at the larger companies and consider what they must go through to open a business there is little wonder we are not seeing much job creation. I would imagine people with money, business etc…say “why bother”.

      • feettothefire

         If you’re going to try to tell me that over regulation has been the reason that free market principles didn’t long ago rescue the country and its economy from never ending turmoil, you can save your breath. I’m not part the “dimwitted public.”

      • jefe68

        So let me unpack your comment here.
        You’re saying that a carpet cleaning company is being hampered by regulations and that these regulations are keeping it from doing busniess.
        What regulations would those be? Illegal dumping of the chemicals used in this enterprise?
        The proper use of these chemicals?
        Your comment is really absurd in it’s content and spin.

  • calyx43

    I agree that more government expenditure is required; but the question is what type of expenditure will be most effective.  In my view, there are two forms of expenditure that need to be re-examined, i.e.:

    1. Tax expenditures.  Every time the government adds a tax deduction (e.g., mortgage interest or accelerated depreciation on equipment), it is a form of a tax expenditure.  It is trying to encourage a particular socially-useful economic activity through the tax code.  Although there may be the intended effect, by building it into the tax code and creating a built-in political constituency, it becomes harder to change it when economic circumstances change.

    Moreover, those tax preferences or “expenditures” tend to benefit those at the higher income levels.  Consider the carried interest provisions that benefit hedge fund managers by allowing them to pay 15% tax rates on millions of dollars of earnings.  A big political perception problem for Mitt Romney and his ilk, but they love it.

    The movement to more fairness in our tax code requires doing away with many of those preferences in return for a reduction in tax rates for all of us (hey, isn’t that something that even right-wing Republicans can embrace – no class warfare there!).

    And anticipating those trickle down supply siders who say that those rich people spend money too and create jobs, they really don’t don’t in the way that’s good for the country.  Never worked and never will.  Hiring more construction workers for high-end homes, and caterers and servers for garden parties doesn’t create and employ the people with sophisticated technical skills to make this country productive for the long term.

    2. Direct Government expenditure.  If the Government will be writing the checks, the challenge is to pick the expenditures that work for the long-term good for the country and its citizens.  We don’t need more military spending (and – God forbid – wars of choice that go along with them without any accountability of the political leaders who make them). No more expensive military hardware – the planes, tanks and vehicles – designed for a Soviet-style land war that has been replaced with asymmetrical threats from terrorists and rogue governments.

    We also don’t need more politically-inspired but economically irrational projects that may provide temporary construction work, but don’t improve the long-term infrastructure and productivity of the country and it workforce.

    We do need more spending on roads, bridges, telecommunications (including next generation Internet), and health and education.  More research and development spending through DARPA and other agencies.  All of those improve the productivity of the country for the long term, and improve the skills of our work force.  

    In sum, yes to more spending, but make it smarter and with longer-lasting effects.

    • Drew (GA)

      Nice

  • Zero

    Top income has gone up without new jobs.  What is so hard to understand about that? 

    Tax “job creators” to actually create jobs.  Right now public employment is 16% of the economy.  Hire back the 600,000 public employees the republicans laid off with new taxes on our “job creators.”  Would that not create new demand for the private markets?  Would not that new demand force the “job creators” to hire more people to produce product for the new demand?  Would not wages go up for the labors of the private market because there are fewer of them to chose from? 

    Or we can make the top a little richer and go on faith that they will create more jobs. 

  • kendep

    Krugman’s position is refreshing when everything else we hear is Cut, Cut, Cut.  Where is the call for higher taxes?

    In the 20th century we had WWI,WWII, Korea, Viet Nam and the Depression.  In each of those traumatic situations which forced huge unplanned spending government acted responsibly with big hikes putting by far the biggest load on those best able to bear it.  In WWI the top tax rates went from 15% to 77%.  The initial hike in the depression was from 25% to 63% and by the end of WWII it topped out at 94%.  The top rate was above 60% from 1932 to 1982.  It was above 90% for 20 years after WWII.  In spite of Korea and Viet Nam the huge WWII debt level had been cut by 75% by 1980.

    This century’s trauma has been treated very differently. The attack on Iraq was launched between two tax cuts totalling $!.75 trillion.  The Bush cuts were supposed to end when the economy crashed and congress refused to let that happen.

    This ignores the fact that the Reagan cuts doubled the debt in 12 years.  

    The highest rate today is 35%, half of the 1981 level.  Worse the richest who rely heavily on capital gains are only paying 15% on that income.  And then there is the “Romney rate” of 15% on carried interest that I don’t understand but it all adds up to huge income gains for the richest.  Last fall the CBO reported that from 1979 to 2007 top 1% saw income gains of 275%.  Someone making one million in 1979 is up to $3.75 million now while the bottom 20% has only gained 18% - $20,000 is up to $23,600.  The real need is to raise taxes at least the top half and make the rich more comparable to 20th century levels.  Few of the wealthy suffered greatly under that burde then.     

    • William

      It seems counter productive to pull people down instead of lifting people up. Raising taxes to make things “fair” just gives political leaders a sound bite and more money to waste.

  • augluc

    If I can put in my two cents I’d
    like to highlight that you are a sovereign nation in the sense that the US is a
    currency ISSUER in contrast to Europe where each country is only an USER of a
    stateless currency (EURO).  This crucial
    difference would allow you to put in place “innovative” politics that would
    allow getting out of the hole fairly quickly. 
    A severing nation will always be solvent.  A nation that uses a foreign currency can obviously
    default.  The Modern Money Theory is the
    solution; these economists are, to my knowledge, the leading expert on this
    field and should have more visibility: http://neweconomicperspectives.org/p/about.html.

    Also, Warren Mosler (http://moslereconomics.com/) has
    something very interesting to say about it. 
    He wrote a book (http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf)
    that debunks the most common belief that are paddled by mainstream media about
    the spending, the deficit, inflation, healthcare and so on.  It’s absolutely worth reading.

    Tom, with all due respect to
    Prof. Krugman, host Warren Mosler, Stephanie Kelton, Bill Black, Randall Wray
    and take the two hours for the event. 
    You will do a very big service not only to US citizen but to the entire
    world as well.  Thank you.  

  • MarkKnoeller

    Are the forces that appose Mr. Krugman’s suggestions related to those that apposed the liberal changes during the Depression? “New Deal”?

  • Keith Woekman

    Small tweaks in money supply, interest, stimulus et al do not address the size of the trade imbalance which hs gutted the dollar. Since 1985, the trade deficeit is on an exponential curve and remains on trend. We are only speeding to deeper water as we encourage consumer spending and business ships our currency overseas.

  • brettearle

    While the following is only indirectly related to the vital economic issues discussed today, it, nevertheless, might have been extremely useful had the producers trotted out some well-known Supply-Siders, for a broader debate, on the program today.

    If Niall Ferguson or, Milton Friedman, had been the sole guests, respectively, I’d be saying the same thing.

    • Worried for the country(MA)

       Krugman couldn’t handle it.

      • jefe68

        Well he took issue with your comment on air.
        I also thought he did a very good job in explaining how your reasoning was based on falsehoods.
        I agree with Dr. Krugman, you have lost the argument by bringing up absurd points of view based on nothing. To even suggest our nation is like Greece is absurd on all levels. It’s a disingenuous argument meant only for one thing, sound like a scare tactic. It’s just dumb rhetoric.

        • Worried for the country(MA)

           Usually I enjoy debates when both sides honestly present their views.  It makes the show more interesting.

          How about Krugman debating Bernanke?

          I honestly don’t know if Krugman could handle it.  He had some trouble yesterday on the “This Week” and that was just a 6 person panel.

          I never brought up Greece so you must be confusing me with someone else.

          However, our debt to GDP ratio is approaching Greece.

          • jefe68

            Did you listen to the show or not?
            Did you not hear what the difference between our nation and Greece was in terms of economic policy? 
            It’s amazing, it really is amazing.

          • Zero

            60% of Greece’s economy is public employment.  It is 16% in America. 

            How are we spending money in relation to Greece? 

            The wealth of our nation is tied up in wars and a few rich guys bank accounts. Quite the opposite of Greece, and that is why republican politicians are full of horseshit every time they mention Greece.

          • Worried for the country(MA)

            Of course Greece is not the US.  However, the important similarity is debt to GDP ratio.  Then you respond with an irrelevant statistic about government employment.

            I have been very consistent.  There are entering a debt crisis.  It is real.

            Further our unfunded liabilities exceed $100T.  These entitlements represent false promises to our citizens made by politicians of both parties.

            We probably only have 2-4 years to solve the debt crisis before we hit a catastrophic tipping point.

          • Zero

            I know where our Debt to GDP ratio is and I also know about Greece.  But you are going about it in all the wrong ways.  You and the republicans are proposing cuts that are not driving our deficits.  You are not serious about our deficits, and if you were, you would look at our leading drivers and try to remedy them.

            (1) The Bush Tax Cuts
            (2) The Afghan War
            (3) Medicare Part D

            The republicans not only want to keep to top two drivers but exacerbate them, while Obamacare restructures Medicare Part D in 2014, which eliminates the massive fraud amongst the suppliers of the care. 

            Are you serious about fixing the budget or do you want to cut something like welfare (which is nowhere near a driver of the deficit) and exacerbate what is actually causing our debt.

            I have said this to you many times, but you constantly ignore the numbers and stick with a narrow argument that has caused our ballooning debt since 1980. 

          • jefe68

             No, it’s a bad analogy.
            You are right, you have been constantly wrong.
            Your take on the Great Depression is a one example I think points to how you use revisionist history. Not the reality of what happened.

        • brettearle

          If you’re referring to my comment, that implies that “Worried”, and You, must know more than Nobel Prize winners, would that be right?  

          • Worried for the country(MA)

             I’m quite certain that I know more than some Nobel winners, like Al Gore and Barack Obama :) .

            Regarding Krugman, I am in complete agreement with you that it would have been more interesting to have Niall Fergeson or Marty Feldstein or Greg Mankiw debate Krugman.

            Milton Friedman wouldn’t be so interesting today since he died in 2006.

          • jefe68

            No, I was not. It was Worried’ comment that was read on air.
            Again, I see a real huge problem on this forum with people who seem to lack the ability to parse what is being said. Comprehension seems to be a real issue here. If you read my comment(s) with any form of comprehension you would have realized that I happen to agree with Paul Krugman, 100%.

          • Worried for the country(MA)

             My comment during the show?

            I don’t think so.  I didn’t comment on Greece.

          • jefe68

            You have in the past and today. One of your comments was read on air.
            That and the GOP’s use of Greece as an example were debunked by Krugman. I’m not mistaken both subjects came up around the time Tom read your comment. Your comments and that of others use Greece all the time as an example that is not only wrong it’s also absurd. We are not Greece, nor is GB  or France for that matter.

          • brettearle

            (1)  You reposted and repositioned the above comment,  “Well, he took issue with,” AFTER I made my comment.

            (2) I did not hear “Worried”‘s comment read on the air.

            If I had, I would have recognized the context more clearly.

            (3) I stand corrected; after I made the comment, I became more familiar with your views and scrolled down to look at them.

            I should have done that beforehand.

            (4) Your ciritcism is technically valid–but much too petty.

            Not everyone is expected to do the kind of due diligence on every comment, that you’re clamoring about–even with comments that go to the heart of the “Issues” matter, rather than ours….which have more to do with logistics.

          • jefe68

            What’s petty is how people do not listen and are making comments based not on the content of the show but on their preconceived ideas based on ideology.
            While Dr. Krugman is clearly left of center he has a track record and history to back up his ideas and thesis of today’s show. Something that a lot of people commenting here, Worried is a very good example, have a history of doing. 

            We all have our ideological bents, but there is a point when logic and reasoning should prevail.

    • Zero

      On Point does bring on supply-siders, every now and then.  We know their arguments.  And I too would love to hear Krugman debate.  But there is value in just hearing what a prominent economist says. 

      Not every program has to be a debate; it is nice to have an economist flush out more of his or her thoughts, so we get a broader idea of this brand of economics or the other way around for other economic theories. 

      • brettearle

        When I say debate, I mean deeper discourse.

        I don’t mean a shouting match–such as the almost `humorous’ kerfuffle over the closing down of the Boeing Plant in Washington, on the show, last August between Epstein and Shaiken. 

        When someone is interviewed, it can be too linear, without greater substantive forethought and afterthought.

        [That's why the "Newsmaker Interviews", on "The NewsHour", for example, are my least favorite segments on that PBS program.]

        If a specialist is on firm ground, his ideas will deepen and will strengthen, when challenged by an opposing point of view.

        A Nobel Prize winner’s work will usually stand up to scrutiny.

          

        • Azra

          That’s fine, if it works for you,but, personally, I’ve had it with any kind of conflict, or even difference of opinion now, and only want to listen to one guest at a time. Think it’s shell shock, from putting up with so many of them in the past. I’ve reached saturation point.

      • Azra

        So glad someone agress with me about this. I hav more than had my fill of contasting opinions and interests, and rarely listen to the usual type of program anymore; I prefer being able to hear the ends of sentences. Republicans ewill rarely let Democrats speak. They either interrupt and not let the other person finish, or if a non-Republican is talking about an especially great thing that President Obama is doing, or has done, they won’t let ANY of yhe words get out; they simply shout the person down. The more impressive the accomplishment, the more determined they are not to let anyone hear about it. They’re always much louder, and extremely rude, so there’s no mistaking them for Democrats.

        That’s why I stopped watching “The View”. Elisabeth Hasselback doesn’t shout them down, she SCREECHES them down, won’t stop until it’s time for the break. Of course, after the break, they start on a completely different topic.

        Anyway, programs like this are so refreshing, and so rare, that I must commend On Point, for this breath of fresh air. Thank you, from the bottom of my heart.

        Anyway, if there’s any hint of uncivil bickering,

        • Azra

          (Continued)

          I now turn off the program, and relax.

  • GT

    As banks and corporations descended into the valley of death 4 years ago they offloaded cost retained tax loopholes and caught a ride to safety via the government bailout. Now they are swimming in profits and sitting on cash. 
    Now banks are reluctant to loan money corporations are reluctant to invest and growth remains slow. The government can’t do it alone how can we partner better with business rather than simply applying over the top stimulus?

  • GT

    As banks and corporations descended into the valley of death 4 years ago they offloaded cost retained tax loopholes and caught a ride to safety via the government bailout. Now they are swimming in profits and sitting on cash. 
    Now banks are reluctant to loan money corporations are reluctant to invest and growth remains slow. The government can’t do it alone how can we partner better with business rather than simply applying over the top stimulus?

    • Anne Arthurs

      As Krugman pointed out, the problem is not the corporations are sitting on money, it’s that there isn’t the demand from the economy to prompt them to invest.  They’re  not going to hire if they don’t need the workers, or produce more if no one is buying.  It’s the same cycle we’ve seen for the last 4 years:  People don’t have jobs so they don’t have money, so they don’t buy, so companies don’t hire to make more stuff, because no one is buying.  Hiring more public workers (teachers, police, construction workers) would put more money in people’s hands, who would spend it, who would prompt companies to create more goods and hire people.

  • Dave

    Stimulus? Please god, not to wall st or the banks.
    Consider this: Give that stimulus money (say…$1mil? ea) to people..age 50 + with some strings attached. Pay off all their debt. Retire from their job.  Maybe some IRA investment requirements. Purchase health care insurance.  etc.

    If there are 50 million americans, that’s 50 million jobs that open up.  Mortgages paid up. Retirement savings.
    These number are best guess, and of course job training would be required for the work force.  But emloyers’ overhead would be reduced since the older employees retire. And neither Rep or Dem who qualify would turn it down…
     

  • Zero

    Krugman says that his ideal stimulus would include infrastructure projects, but what about TARP just handing over money to the banks without stipulations…?

    I’m pretty sure the economy would be a lot better if Bush and Paulson would have forced the banks to refinance mortgages, credit card debts, student loan debts, etc., and stipulate that there are to be no bonuses and CEO and Executive salaries have to come down.  

    • feettothefire

       Unfortunately, TARP was a necessary evil. To have done anything else would simply have resulted in the ruin of us all. But the failure of the Bush administration to hold Wall Streets feet to the fire (get it?) was just a clear example of political cowardice. And any other administration of any political persuasion would have been just as cowardly. Here was a chance to finally force Wall St. to  live up to its fiduciary duty and institute changes that would have made a real difference in all our futures, but, of course politics had to get in the way. As long as government is infested with “politicians” who stand in awe of the might of Wall Street, we’ll never see any tough new oversight of Big Money’s shenanigans.

      • Toby

        The cash injection might have been necessary, but to allow the banks to use the money as they saw fit was not necessary, it was reckless.

        • feettothefire

          Almost every decision politicians make are reckless, even the ones that turn out to be good ones. From the time they first come into office their primary concern is re-election. Good governance is, at best, a distant second. Weighing the possible effect of a particular vote on one’s re-election chances is more important than the issue itself. It’s why Wall Street received the legislative equivalent of a mild “tsk,tsk” from congress after the meltdown of 2008. Courageous legislation of historic proportions could have been passed in the wake of that fiasco, but instead, we got new laws that practically apologized to Wall Street for the inconvenience they would cause. Politicians are self-interested cowards. Things would work out much better if only we could eliminate them from government.

  • feettothefire

    There’s a strange sentiment that pops up on this message board every time On Point does a show with a single guest on a contentious issue. Whether it’s health care, the economy, foreign policy, or politics, it happens every time. People, both left and right, Republican and Democrat express their disappointment with Tom Ashbrook for failing to provide a fair balance of viewpoints. The title of today’s show is “PAUL KRUGMAN.” Why in the world would the producers feel the need to include any other guests in order to provide us with HIS thoughts on the economy? The show was a discussion with Paul Krugman. It was not a round table discussion on economic policy, nor was it presented as such. I find the discussions Tom has with individual guests to be far more enlightening than any of the “group” sessions which usually turn out to be little more than “Oh yeah, says you” blather. As commenter ZERO states below, not every show must be a debate. An in depth interview or discussion with an individual will always leave us with more to chew on than a lot of smarmy attempts at oneupsmanship, whether we agree with the guest or not.

    • Toby

      Indeed. I think of Tom Ashbrooke as one of a few islands of reason and seriousness in a media-sphere that largely misses the substantive issues of the day in favor of providing a forum for partisan mudslinging.

      Thank you Tom Ashbrooke, keep up the great work. 

    • Lin

       Amen. Thank you.

  • Ben Millstein

    The Republican argument for austerity is really just a strategy to keep Obama from having success and winning another term. They supported stimulus originally and obviously don’t mind spending when they’re in control and can take credit for the accomplishments they achieve.

    • Worried for the country(MA)

       $6T in deficit spending in  4 years is NOT austerity by any definition.

      • Worried for the country(MA)

         Oh, and not even Ryan is proposing austerity.

        • Zero

          Huh?

          • Worried for the country(MA)

            Ryan’s budget calls for a 4% cut in the $1.2T discretionary budget.  This is NOT austerity, especially given the increases since 2009.

            Are saying that there isn’t 4% fat in the federal budget?

          • Zero

            I’m saying that you can cut out the majority of the deficits by getting out of Afghanistan and a 3% tax hike on the to.  But if you want to balance the budget–get out of Afghanistan and tax the top 49% (like it used to be).  That seems far more sane than cutting from the consumer class in a demand-crippled economy.

            I love how you agree with the Ryan Budget that is nothing more than the stripping away of New Deal, but you claim to not be a republican. 

            I used to respect you, but you are turning into a joke. 

          • Worried for the country(MA)

             Removing ALL of the Bush tax cuts ONLY raises $400B.  It will hurt the economy but I’m not sure by how much.

            How much are we spending in Afghanistan?  I see a Wolf Blitzer analysis that claims $100B/year.

            Our deficit is $1.2T this year.

            How do we address the other $700B?

          • Zero

            I’m going to the CBO website and once again show you the numbers where the Bush Tax Cuts are half the deficit.  We’ve lost at least $3 Trillion thus from the Bush Tax Cuts.

            Second, I think we should tax millionaires and up at 49%.  And $250K to $1M at 41$.  Then get out of Afghan.  Hire back the public employees that would create new demand for the private markets, thus creating new tax payers.  (You didn’t argue against that point below.)  The stimulus spending is scheduled to stop around 2013, Obamacare reduces the deficit by a 100 billion over the next ten years.

            I don’t think all of the Bush Tax Cuts should be repealed yet because the Middle Class and Lower Class are not spending money in the market due to debt, student debt, and rising tuition for the kids.  But you want to cut more social programs that help the demand side of the economic equation. 

            However, think the Clinton rates might be better for the consumer class than the Bush Rates.  The middle class made more money under Clinton, and average middle class income fell $2,000 under Bush before the recession (even thought they had lower taxes under Bush).  So…. 

          • Worried for the country(MA)

             Thanks for the CBO link.

            You have some fuzzy math in your static analysis that the Bush tax cuts add up to $3T.

            We can agree to disagree on policy prescriptions.  I am conviced we need policies that promot economic grwoth.

            btw – hiring government workers to stimulate demand NEVER works.

          • Zero

            Here is CBO outlook budget.  There is a graph with 29 slides.  Look at slide 5 in particular.  Look at how much Bush’s tax cuts engulf the deficits. 

             http://www.cbo.gov/publication/42905

          • Zero

            Excuse me: slide 6 in particular.

          • Worried for the country(MA)

             Yes, but those are the ENTIRE Bush/Obama tax cuts, not just > $250K.

          • Worried for the country(MA)

            Reading your comment it appears your major criticism of the Ryan budget is the Medicare reforms he proposes.

            You know that he modified the plan this year with bi-partisan modifications?

            I also hope you understand that Medicare  is not sustainable, ASIS.

            Personally, I haven’t decided if I like the Ryan solution to the problem.  What I do know is that Obama or other Democrats (other than Wyden) have offered alternatives.

            I’m surprised that you focus on that part of Ryan since it doesn’t kick in for 10 years.

            Also, Ryan means tests Medicare benefits.  I have no issue with that.

          • Azra

            How much if we get rid of those tax cuts for the elite too?

      • Azra

        Unless we’re already down to the bare bones.

    • GretchenMo

      Congress’ approval rating is even lower than Obama’s.  The strategy you suggest could be death to incumbents, all incumbents.

  • http://twitter.com/cwooley89 Charles Wooley

    your paul krugman?
    my dad totally loves your shit
    (get him to greek)

  • Pierre

    Increasing government spending alone will not be enough to correct this struggling economy.
    Taxing the rich is not enough also.
    No matter how many jobs are added, as long as 25% of the value added is funnelled over to the million dollar salaried people, the flow of money is diverted from economy. This reduces the market place for the goods and services produced because the rich don’t turn their money over as quickly as the common worker. The effect is catastrophic for the market place for goods and services that produce the jobs needed. This is the primary reason that the economy faulted.
    A dollar in the hands of the worker will return to the market place within a week or so while the same dollar in the hands of the very rich will take months to return to the market spent for goods or invested. That means that every dollar given to the million dollar salaried person reduces the amount of money spent in the market place probably 10 times. Figuring that every $50,000 spent in the market place represents one good job, every million dollar increment paid in salary to someone who is not contributing equivalent value, represents about 250 jobs.
    The wealthy investor is paid from profits and is not responsible for the disaster except if he is the one paying these huge salaries.
    The high salaried person is paid from expenses which includes the cost of all labor. The entity that is paying the high salaries is stealing from his workers to pay these salaries so restricting such payments is not only right but mandatory.
    This is a private sector practice which the government must curb before any progress is made. The only way yo stop this is to disallow payments to individuals over a million dollars from being expensed when calculating taxable business income.

    • jimino

       I agree with much of what you say, but disagree on the amount of increased productivity going to the wealthiest.  It’s a lot closer to 80% than 25%. 

  • Worried for the country(MA)

    Here is a question for Dr. Krugman.  CA is one of the largest economies in the world.  The model he proposes for federal government mirrors what has happened in CA.  CA is attempting to spend their way out of their woes and it is only making matters worse.  Why should we follow CA’s example?

    Based on his comments today, he would probably say CA does not have the ability to print its own money.
     

    • Zero

      How about I turn this around on you?  Why not use Germany as an economic model?  Free college, free health care, a robust renewable energy initiative, taxes on the rich, etc.

      Second, I would hardly use California as an example since a republican was governor during its decline. 

      • Azra

        Ten points!

      • jefe68

        Worried’s remarks are disingenuous and designed to be flippant. California has huge problems based not only on how, and the operative word is how, they are spending but with a some bad choices they made about taxes. It’s interesting to note that large California based corporations such as Apple are part of the problem. They are doing everything in their power to avoid paying state taxes. And yet they use all of the California’s infrastructure.

      • Zing

         How about you go to Germany?

        • Zero

          I rather make America a better place.  Every time you republicans say something like this I get more and more convinced that republicanism is surely destructive.  

    • GretchenMo

      I don’t think you’ll get an answer.

      • GretchenMo

        Instead you’ll be attacked.

    • TomK in Boston

      CA is viciously cutting education spending to the point that tuition is soaring and the U of C, where biotech and the internet were created, is gonna be seriously crippled. I don’t think that’s a good tradeoff for letting the rich get even richer. Where is all this spending you’re talking about?

      Do you prefer the euro austerity model? Have you noticed how that’s working out? How about our own voodoo econ model. How has the middle class done since 1980? How did that financial deregulation work out? How did those bush tax cuts work out? Please, Don’t pretend to be all reality-based while ignoring so much that disagrees with your ideology.

      Anyway, a state is not a nation. The USA can run a deficit like we did in WW2, a state can’t. Apples and oranges.

  • Rob (in NY)

    Tom,
     
    I was listening to the replay of this broadcast and I am extremely disappointed at any implication that Krugman’s track record in predicting economic events is infallible (or even more accurate than other economists).    

    As an example, a significant cause of this past recession (or depression) was the housing bubble that prececeded this crisis. 

    Here is Krugman’s own words in a 2002 Op Ed arguing how then Federal Reserve Chair Alan Greenspan needs to “create a housing bubble to replace the Nasdaq bubble”.  Unfortunately, the Federal Reserve followed this course of action.     
     
    http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

    • jimino

       Your reading is flawed, or more likely thru less-than-unbiased glasses.  PK simply said in the piece you quote that, in his and Allen McCully’s analysis, the Bush administration’s only plan for getting out of the recession at that time was to replace one bubble (NASDAQ) with another (housing).  He certainly did not advocate that.  He simply predicted it.  Totally accurately. 

      • jefe68

        It’s interesting how people, and in this case people who are supporting right wing rhetoric, seem to have a lot of problems with comprehension.

        • Azra

          Not really, when you consider the way they vote. Lake of comprehension is rife over there on the right.

      • twenty-niner

        Wrong.

        Here’s the whole paragraph:

        The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble

        …and now Krugman wants to replace the housing bubble with a government spending bubble.

        Further, Austrian economists picked both the tech and housing bubbles very accurately. In 2007/2008 when Bernanke was making speech after speech stating that risks in the economy were contained and that he expected further growth, the Austrians were correctly predicting collapse due to massive malinvestement.

        • jimino

           I can’t help it if you are incapable of understanding the written word and a compound thought process.  PK consistently lamented and criticized the Fed policy and Bush administration “ownership society” that helped fuel the housing bubble.

          The mere concept of a “government spending bubble” shows a profound misunderstanding of the definition of an economic bubble.  I expect more coherence from you.

          • twenty-niner

            Why is this so hard to stomach? Krugman even argues today for extremely loose money from the Fed as he does during every downturn. 2001-2002 was no exception. 

            There are other Nobel-prize winning economists who argue that loose money leads to malinvestment, as history repeatedly demonstrates. I tend to agree with them.

            And here’s what really gets me about liberals who advocate for more aggressive money supply expansion. Fed printing is the absolute ultimate in trickle-down economics. The idea is literally print money; give it to the richest institutions and shareholders in the world at 0% interest; let them do what the want with it (such as betting on oil futures); and after all of that, maybe a tiny rounding error of a fraction will get lent to Joe the Plumber at a much higher interest rate with a big side order of fees and penalties. That’s some serious trickle down with a yellow tint to it.

          • Upl8n8

            The Fed doesn’t print money. They control the flow of money:

            http://finance.yahoo.com/blogs/daily-ticker/no-fed-does-not-print-money-just-explain-150433185.html 

            Giving banks loans so that the banks can in turn give us loans, for things such as cars, houses, small businesses… etc.  as well as large companies.

            It isn’t all trickle down…

          • twenty-niner

            Ugh.

            I see you’ve got the brochure.

            The primary duty of the Fed is to expand the money supply as the economy grows. Some (like the current Fed chairman) believe the cart can push the horse – expanding the money supply before the economy grows. This can lead to biflation, bubbles, and severe dislocations.

            The Fed takes assets on its balance sheet (in recent history, many questionable assets) and it return, prints money in exchange for those assets. It can either keep those assets for a short period of time via REPOs or permanently via POMOs. 
            People who trade fin can take advantage of these dislocations, but in general, these are destructive to the overall economy. 

        • Upl8n8

          twenty-niner… jimino is correct.  RTWFA (W = Whole).  You completely took this statement out of context.  Krugman is stating what the administration needs / will have to do to fix the recession.  He is not advocating for a housing bubble.  You would know this if you went on to page 2 of the article.  It seems like you just stopped at the end of page 1, lol.

    • TomK in Boston

      I’m extremely disappointed and amazed that anyone is still advocating reagan voodoo economics in view of its total devastation of the middle class since 1980. Etcha’s solution to the Bush crash is more of what caused the bush crash. Did you guys ever hear about learning from mistakes as opposed to doubling down?

  • Hetzel, Bob

    Paul,  what do we do about the national debt???

    • Anne Arthurs

      Economist keep saying it:  The best way to reduce our debt is to get people back to work, so they’re paying income and sales tax instead of collecting unemployment and food stamps.

      • TomK in Boston

        Right. The biggest factor in the debt is the state of the economy, next is tax rates and war spending. The GIANT WW2 debt vanished like tears in the rain once the dynamic, high-tax post-war economy got going. Going in the opposite direction, the Clinton surplus vanished very quickly with the Bush recession, tax cuts and wars. 

        Similarly, the right has been ecstatic about how the recent report shows a shorter (mere 20 yrs, LOL) time SS can pay full benefits with no changes. That always happens in a recession, and when the economy is booming, the report always shows a longer lifetime.Don’t listen to talk about how debt or surplus will go on forever. The economy can change very quickly and we’re not good at predicting. The most important thing to understand now is that debt hysteria is being used as a club to scare the middle class into giving up even more. Don’t fall for it.

  • A guy in Chicago

    Republicans at the national level routinely talk about reducing government regulation. I take this to mean reducing oversight so corporations can make more money at the expense of the health of the people and the environment.

    I WOULD like to see streamlined regulation at the local level…reducing the time it takes someone to get a permit to start a business. And I would like to see an attack on the petty corruption that stifles innovation.

    • Zing

      1. You’re cracked.

      2. Get cracking!

  • http://www.facebook.com/maximillionaire Max Spiewak

    Where can I find out more about the musical interludes that were played? One in particular caught my attention

    • Lin

       I have asked that question so many times. Never a reply.

  • JDG

    Krugman is a left wing puppet.

    • Crsheltn

      make that a Nobel Prize winning left wing puppet, if you please (JDG stand for Just Don’t Getit, no doubt)

      • Rob (in NY)

        So what is your point?  

        Paul Krugman was awarded a nobel price for his contributions to the field of economics related to comparative trade theory, which has absolutely nothing to do with his broader political and economic philosophy.  I congratulate Krugman for his contributions to the field of economics in this specific area, but the nobel prize in economics has never been intended as an endorsement of the recipients’ broader  economic and political philosophy.  

        Milton Friedman and FA Hayek were both awarded the nobel prize in economics.   Do you accept the political/ economic views of these 2 nobel prize winning economists?     Although I would argue that the specific nobel prize in these 2 cases  (e.g. Friedman work on the money supply and Hayek’s on pricing theort) was more close aligned with Friedman and Hayek’s broader economic/political philosophy, I would  not argue that the nobel committee endorsed the view of these two economists either.  

    • Zero

      I guess it takes a Ph.D. to become a puppet.

  • aj

    In regards to the (May Day) march out of Manhattan’s Bryant Park at noon tommorrow… Tommy Morello says, ” A reminder to New York’s Finest, you can’t arrest us all!”

    Yeah Tommy, Fuck Bloomberg! Bring that shit in! Tommorrow we march! Worldwide!! Music please…
    http://www.youtube.com/watch?v=9J95nCJY5Ho

    Aaaaaaaaaaaaaaaaaahhhhhhhhhhhhhhhh!!!!!!!!!!!!!!!!!!!!!

  • aj

    ” Take the power back! “

  • TomK in Boston

    Hey, the GoP is going crazy over the President reminding us about the actual, true things Etcha has said about how it would be a waste of time and $ to go after bin Laden. Imagine the unfairness of actually quoting Etcha’s own words. Talk about dirty politics. The Etcha doesn’t show those words anymore, so you’re not supposed to remember them. And isn’t it disgusting to exploit the “war on terror” for political gain?

    http://imgs.sfgate.com/blogs/images/sfgate/nov05election/2010/08/30/Bush.jpg

  • Scott653

    1. The problem with stimulus spending is that it is a temporary solution and eventually runs out
    2. Obama’s stimulus spending mostly ran out in July 2011, the unemployment rate was still 9.2% at that time
    3. The economy is not coming back like it should is because our corporate tax rate is the highest in the industrialized world – i.e., 35% in US compared to 15% in Europe – and Obama has implemented policies that create uncertainty for the businesses (i.e., Obamacare, Dodd-Frank, Buffett Rule, etc.)
    4. The high corporate tax rate in the US is the reason why companies like GE are shipping thousands of operating plants and jobs overseas
    5. If you still believe government stimulus, high taxes and crushing regulation are the answer, please examine the country of Singapore: one of the fastest growing and wealthiest countries in the world; has the highest trade-to-GDP ratio of any country in the world; is the only country in Asia with a AAA credit rating from all major credit rating agencies; has an unemployment rate of 2%; has some of the lowest corprate tax rates in the world; and has a very strong manufacturing base.
    6. Lastly, remember two points:
    a) Obama chose to extend the Bush tax cuts when he had control of Congress and could have let them expire
    b) Republicans called for increased regulation on Fannie/Freddie however Democrats chose to ignore the calls for regulation because they believed people had a right to a home they could not afford – the fall of Fannie/Freddie is what sent our economy into a tailspin

    • jimino

       GE has paid 2.3% of its profits over the past decade in federal taxes.  Just how low do you think the effective rate should be?

      Obama never had control of Congress.  Look up “Republican Filibuster, record number during Obama administration”.

      • Zing

        1. Precisely why GE sent its jobs overseas. Do you get it now?

        2. Rush Limbaugh predicted Obama would be weak and ineffective, but no one listened. 

        • jimino

           Sp jobs were sent overseas because their effective corporate tax rate on US profits were taxed at 2.3%?  If I am going to “get” anything, it obviously won’t be from someone as economically confused as you and your ilk.

          • feettothefire

            Now that “He who’s name must not be spoken” seems to have left us (Please God, make it so,) do you think Zing is lobbying to replace him? Based on the few childish comments he’s made so far today, I’d say he’s got a lock on the job.

          • aj

            Modavations! Modavations! MODAVATIONS! LOL.

            Don’t worry, don’t worry. I threw some salt over my shoulder in the devils eyes.

            P.S. I thought Zing was the same as ” Still Here. ”  Feet, click on Zing’s profile and comes up as Still Here. 

          • aj

            my left shoulder

          • aj

            I kind of miss the old troll.

          • feettothefire

            Don’t even joke about such things. You might jinx our luck.

          • Gregg
          • aj

            OMG. That is effin hilarious! Everybody needs to see that. Too funny!

          • Ray in VT

            What about Lord Voldemort?

        • Fusers

          Because you base your point on the ramblings of a drug seeking degenerate, you are irrelevant.

          • Gregg

            Really? Is that what you got?

        • aj

          Are you related to Still Here? Or did you change your handle because there was 2 still here’s?

    • blacksun

      Scotty you are paying too much attention to Fox and the Tea Baggers. 35% in theory not in practice very few large corps even pay 25%. GE paid 0%,Apple 9%, Walmart 24%. Read Sun Times 29 Apr and find out why very few come even close to your estimate. Austerity is not the answer.Deficit reduction is important but the primary issue is UNEMPLOYMENT!

    • Bruce

      Freddie & Fannie are not the bogeymen…the liar loans and subprime mortgages were created by private mortgage cos. like Countrywide in that segment of the market that was totally unregulated by the Feds.
      The loans were then sold to Wall St. investment bankers, who then bundled them into CDO’s that were approved (some say fraudulently) by the credit rating agencies (non-governmental entities) and sold to pension plans, commercial banks, insurance companies and, yes, Freddie and Fannie, which also backed many of them.
      Blaming the sub-prime mortgage crisis and subsequent economic collapse on Freddie and Fannie (and implicitly Community Re-Investment Act provisions which applied only to FDIC regulated banks, not to the private mortgage companies like Countrywide) fits a convenient paranoid, anti-government conspiracy theory.  However, it does little to advance our understanding of what actually happened or how to prevent similar debacles in the future. 

      CRA has been with us since the 1970′s.  Fannie & Freddie have been around since the 1930′s. It was GOP led-efforts in the 1980′s and ’90′s that succeeded in deregulating the banks and insurance cos. (Glass-Steagall gutted by Phil Gramm Tex-R) and in preventing regulation & transparency in the derivatives market.  Our economy was brought down by the reckless speculation and excessive debt to finance it that were enabled by a conservative movement bent on deregulating the financial services industry and expanding its share of the GDP to a heretofore unprecedented level that many independent economists view as unhealthy for the economy as a whole. 

      Freddie & Fannie did not originate a single one of these liar loans, nor did they sell any of them to investment bankers, who then repackaged them into toxic derivatives that would ultimately undermine our economy and threaten the world’s financial system. 

      Freddie & Fannie were guilty of accounting abuses, over-leveraging, and perhaps lack of due diligence.  And we should not be pleased with how they were managed.  But no one by now is falling for the charade of blaming the Fed. with a consistent but irrational revisionist history that ignores the facts in the service of a paranoid, anti-government narrative.

    • jefe68

      Nice tale you are spinning here. If you believe that Fannie and Freddie are the reason the economy went into recession you need to do a more research. It was the huge amount of default swaps coupled with a huge amount of toxic assets backed by nothing. Investment firms, such as Bear Stearns, Leheman’s and the insurance giant AIG were at the center of it all. So were Morgan Stanley, Goldman Sacs, and JP Morgan. All the banks were in on this huge game. To put all of this on Fannie and Freddie is disingenuous.  

      • Scott653

        You are correct. Credit default swaps are largely responsible for the housing bubble burst. However, credit default swaps were motivated by policies in Washington that did not see the danger in providing mortgages to sub-prime home buyers that had high risk of defaulting, that had poor credit, had no obligation to provide a down payment and were too ignorant to understand adjustable rate mortgages.
         
        The repeal of the Glass-Steagall Act – led by Charles Schumer (D) of New York and signed into law by President Clinton – significantly reduced oversight and regulation in the area of credit default swaps. It was only a matter of time before millions of sub-prime buyers fell behind on their payments and defaulted due to their adjustable rate mortgages and their lack of understanding of how adjustable rates work. This then sent banks (the lenders) and insurance companies who insured these mortgages into a tizzy. Due to lack of regulation and the repeal of Glass-Stegall, Fannie and Freddie were a part of this process of providing mortgages to those that could not afford one and targeting sub-prime buyers without comprehending the long-term consequences.  

        • jefe68

          Sorry, you’re wrong. Credit default swaps were designed for AAA assets that were bundled up and used as leverage. As a way for large investment banks, such as JP Morgan, to have more cash freed up.
          By bundling up assets and risk, such as EXXON, it was a way to free up capital.
          It was never meant to be used in mortgages which were very risky. EXXON was a risk, but they sure did have a lot of assets and capital. 
           
          Schumer was not the one who did away with the Glass-Steagall Act it was the Gramm-Leach-Bliley Act of 1999 signed into law by President Bill Clinton.  Get your facts right.
          The way mortgages came int the Credit Default Swap was done by mortgage companies and taken up by the cowboys of Wall Street, Bear Stearns and Lehman Brothers. The sub-prime market came into the picture as a result of bad actors who took advantage of the lack of regulation and the as well as the complete break down in how the regulators worked. It was a shell game and we, the citizens of the United Sates, lost.

  • GretchenMo

    Krugman’s answer to the economic malaise caused by the bursting of the housing bubble (which was inflated to overcome the bursting of the internet bubble) is to expand the government debt bubble even more than its current unsustainable path. 

    What happens when that bubble bursts? What happens if interest rates required by lenders to the US government rise by 100 basis points, 200 basis points … ?

    • Still Here

      Interest rates never go up and housing prices never go down.  Never!

      • aj

        Are you  related to Zing?

    • jefe68

      First off the debt is funded by US treasury bonds.
      Second the rate we are borrowing at is astonishing low.
      Third, you need to try to understand the difference between the causes of the housing bubble and how governments use debt and the rate of that debt to GDP.
      It’s high now, and it should be lower, but it’s offset by the fact that everyone wants our bonds. We could have debt at 100% of GDP and do so for a decade. I would not advocate this, but the US is a very good bet in these terms. Of course from reading your comments you seem to have a somewhat of a misunderstanding of how government debt works.

    • Still Here

      Krugman’s philosophy depends on a static view of the world.  He and his sheep, like the one below, cannot address your concerns.

  • Border Girl

    Great show today and a fascinating guest.

    • George the Fifth

      I agree about the guest.  Krugman makes massive good sense.  Not a great show, though, for one reason: Ashbrook finds it necessary to interrupt all over the place.  But then, Tom perpetually plays this interrupting game on all of his “shows”–to hear himself talk, to interject fatuous asides, to “show” us how smart he thinks he is.

      • Debbie R

        I think he imagines he’s keeping guests “on point”. But he mostly repeats the same questions over and over, and only rarely engages with what the guest actually said

  • http://profile.yahoo.com/ZUBMJ57QUOXM7JNJYSDUSA2HKY yahoo-ZUBMJ57QUOXM7JNJYSDUSA2HKY

    Tom Ashbrook sounds surprised that some people would continue advocating policies that would actually increase the deficit.

    But in fact, what scares these people is the prospect of having to fund the safety net. What they want is to make people desperate enough to be willing to accept lower standards of living and work for less money with less security than they have now.

    So any attempts to shore up the safety net, or shore up the economy without significantly cutting benefits is something they are simply not interested in because they feel it goes against their long term interests.

  • Fusers

    Krugman’s description of Paul Ryan as a “Flim-Flam” is apt. Why the whole world can’t see that is beyond me.

    • Azra

      THE REST OF THE WORLD SEES IT? THEY ALSO THINK THAT ROMNEY IS A JOKE? IT’S ONLY SOME AMERICANS WHO DON’UNDERSTAND.

      • Azra

        ^

        Sorry. Didn’t realize that cap lock was on, caussing question marks to appear, instead of periods.

        • aj

          That is funny, but my keyboard has the period and question mark on different keys. What kind of keypad are you using? I am using HP.

          • aj

            P.S. Are you going to protest in the rain tommorrow, with the workers of the world? It’s May Day. From Athens to Madrid to Santiago to New York. The global 99% is on a General Strike for May Day worldwide!

          • Azra

            It’s a brand new (four weeks?) Barnes and Noble Nook, a present from a very dear friend, who is an avid reader. Still trying to find my way around, but I really love it.

          • Azra

            Yes, Nook has question mark and period on the same key.

          • aj

            COOL!

        • aj

          Just admit you were typing with your toes ;^)

          • Azra

            In order to know that, YOU must also be typing with your toes. :)

          • aj

            No, no, I’m typing with my skillful two fingers. The problem is I can’t concentrate on the keys! Too distracted by the thought of your cute lil’ toes in action, lol. Just kidding, I can’t help myself, sorry!

          • Terry Tree Tree

            “cute little toes in action” 
              She has her webcam on?
               Her Hubby doesn’t object?

  • Emma Fraylington

    Writing here from the UK, London.

    Time is 00:44,

    Woman phoned up – Giving 700 Billion to the US People? Really… Are you insane?! $700 Billion USD is a LOT of money, giving it to the people would just mean it would NOT go back into the banks, infact, you might as well burn the money… I mean, come on! People will sit on that money. It will NEVER end up back in general circulation… Think about it… The WHOLE world is in crisis with economics, not just the US, but also the UK and other parts of the EU as well as international countries. Greece? Well, the EU is suffering because of them! Italy will be next to drop down the toilet, and us, the EU will bail them out… But, when the UK goes into recession, who bails us out? Nobody. Why? Because to be honest, nobody cares.

  • Emma Fraylington

    You all want to know why there is LESS jobs?

    Population is GROWING,
    Computing & Computer Generated WORK is GROWING,
    Combine the two –

    You have MORE People, and MORE people replaced by electronic/computing. This means, more people are WITHOUT work. Companies not expanding, labor becoming industrialized and OUTSOURCED is killing the job market.

    • Ray in VT

      Marketplace did a series a few weeks back on robots stealing our jobs.  You definitely see it in certain sectors.  Dozens of jobs were eliminated at a company that I used to work for when they replaced the people who ran lots with an automated track delivery system.  You hear it all of the time in the discussion about American worker productivity.  Companies can and have squeezed more and more output out of fewer workers.

      • Gregg

        But shouldn’t they? Doesn’t efficiency work against the worker? Does that make it bad? Are milking machines good for the employer and by extension the consumer or are they just another way to screw the milker?

  • Pingback: Expert Opinions | suddenlycompletely

  • Lin

    When I hear Paul Krugman on the economy I always feel on the verge of crying. Crying in despair as to WHY no one is doing what this man says? We need help. And what he says is proven.

  • Mo

     Seems like this can be seen as battle between young and old. If I were an aging baby boomer – a selfish one – I would want low taxes and less government spending so as not to spur inflation, which would erode the savings in my bank account. I don’t care if we wreck the country. I’m old! Let the next generation worry about it. The young on the other hand, need stimulus, jobs. Let there be inflation! Let it erode the mountain of school and other debt that I have! The problem is that it is the old who run the show.

    • Alan in NH

      I think you give the old less credit than they deserve. You have them saying,”I don’t care if we wreck the country.” Really? Have you met old folks who speak that way? I don’t know anyone who advocates that level of selfishness, and I’m a little older than the boomers. 

    • Terry Tree Tree

      ONLY the Old 1%!

  • http://www.facebook.com/people/Daniel-Johnson/783768858 Daniel Johnson

    Since WW2 we have continued increased spending on our military and related technologies and infrastructures to great benefit to the nation both publicly as well as privately. Why wouldn’t anyone arguing debt and recovery in Washington argue for a transfer of spending geared toward economic and technological competition globally instead of military competition.  We need R&D representative of an advanced, technologically developed nation; not driving ourselves into debt preparing for an enemy that no longer exists.  It’s about economic success in our modern world, not dominance by strength.

  • Linda

    Thank God there are scholars like Prof. Krugman who know and care enough about this country and its people to keep speaking the truth about what should be done to get our economy back on track!  Start listening Chairman Bernanke and Congress.

  • Gregg

    Thank God Paul Krugman isn’t in charge of anything. If we must listen to the advise of liberals (actually we don’t) then let’s listen to Erskine.

    http://www.bloomberg.com/news/2012-04-29/u-s-perfecting-formula-for-budget-failure-says-bowles.html

    • StopSpendingNow

      Erskine Bowles makes a lot of sense.  Anyone who thinks about the economy for more than a minute would know that more and more borrowing coupled with more and more spending will only exacerbate the problem.
      Do you know that you can’t get a patent for a perpetual motion machine from the US patent office?  Why?  Because everyone knows that it’s impossible to create an engine that creates more power than it uses.  The money taken out of the economy by government spending will never produce more than it took out.

      • Zero

        Your comment is a tad schizophrenic: are you saying government stimulus spending takes money out of the economy…?  You wrote, “money taken out of the economy by government spending”…what do you mean?  …Spending on wars…? 

        All you right wing nuts say that the WWII ended the depression and not FDR (even though the country was trending better except the few times FDR had spending cuts), but what about WWII put an ultimate end to the depression?  …Government spending on manufacturing…i.e., stimulus! 

        Today, we are not in a war big enough for that kind of manufacturing need but you can do plenty of infrastructure projects that puts people to work in the same fashion that ended the Great Depression.  Okay? 

        Second, take a look at what is happening to England. 

        Third, money that sits in Romney’s bank accounts is not helping the economy.  Money got to flow, and government taking it out of his accounts and putting it into the economy and into the debt is the sane thing to do.  You just probably think that it is better for the economy to crash than to tax Romney more.  Just get over it; Romney and his kids will still be stinking rich.

        • Gregg

          Of course stimulus spending takes money out of the economy. Where do you think it comes from?

          • eric

            The government creates it out of thin air.  That’s how money is created.  To a large extent, moving to this system (off of the gold standard) is what got the world out of the depression.  Countries that went off the gold standard earlier saw their economies recover earlier.  This is basic, basic economics.

        • StopSpendingNow

          There are several fantasies that pervade your comments:  that the rich didn’t earn their money, and they don’t have a right to choose what they do with their wealth; that the wealthy keep their money in a mattress and don’t invest it; that spending by the government is somehow superior to spending by the people who earned the money; that the rich getting richer somehow caused the poor to get poorer; that all would be fine if everyone had cradle to grave entitlements and a government job; that the government is currently austere and spending hasn’t exploded to unprecedented levels.  None of these things are true.

          • Zero

            There is actually a finite amount of wealth in this country that disperse according to economic policy, so yes, the 1% has sucked up a lot of wealth since 1980.  99% of America didn’t decide to become ‘lazy’ that year–it’s economics. 

            Third, some people (i.e., Romney) are born into wealth.  Nonetheless, wealth is only possible within a society.  No man can build a swimming pool, drive a BMW, go to college without a society.  Your big illusion is that you think everyman is an island unto himself.  The successful ought to pay back into the society that allows them to become wealthy.  No one is saying that you can’t be rich, but you can take most of the nation’s wealth and expect that to last. 

            That is your delusion. 

          • StopSpendingNow

            Your opinion that there is a finite amount of wealth is so irrational that it defies logic.  Let me relate two stories:  Story 1 – several years ago I invested a portion of my retirement account in Apple stock, and it has grown rapidly; as a result, I have more wealth now than I did before I made the investment.  Story 2 – I have a client who was of very modest means.  Through his own ingenuity and efforts, he invented a medical device which has made him wealthy, certainly among the top .5% in the country.  Please explain to me how in either of these instances the creation of wealth made someone else poorer.

          • Zero

            Capitalism has an essential problem of under-consumption, which means that the labors cannot afford all of the supply that is produced because the entrepreneur must as well derive an income off of the product.  The more money the entrepreneur puts in his pocket, the less money for the labors to buy the product.  Capitalism usually gets around this problem with credit card debts, but eventually people stop buying product and pay off their debts causing a recession (which is exactly what happened and what is happening now).  Today, there is abundant supply and capital, but low labor and demand.  Because the republican party steps on unions, the labors cannot get together and demand that the CEOs take less money to beef up worker wages.  (This is straight out of Adam Smith.) Granted, the entrepreneur must always make a higher wage than the labors, but the ratio cannot be 350:1 (dollar). 

            Japan has the best income equality in the world and they have a flatter tax than America does.  Do you know why?  Of course you don’t.  Japan’s wage ratio is 10:1.  That is the CEOs make relatively the same has the labors.  Japan has strong unions, and a great economy.

            So that is how the rich elite makes everybody poor: they step on unions and refuse to be taxed at the same time.

            America needs to have one or the other: either strong unions or high taxes on the rich.

            For example,the ideas of Steve Jobs made him rich, but he kept people people poor when he moved production to China where people are not allowed to unionize, yet he sells his product here, accumulating American wealth without paying adequately back into thee American system that would maintain consumer demand.  Yes, there is high demand for Job’s product, but there is also high demand in thrift stores, Walmart, General Dollar, and not for companies that are geared for middle income. 

            I actually prefer the flatter tax, strong labor model that Japan uses.  But the republicans main problem is that they think bartering power should be in the hands of an elite minority.  That is the way it was in Feudalism.  When you think like that you become like Gregg, a happy surf.  And the wages of the majority are mostly in the hands of a minority.  The need to be mostly in the hands of the majority. 

            Otherwise, what you are proposing is a society where winner takes all.  And in those societies there is no room for a middle class.  Again, in the words of John Donne, “No man is an island entire of itself; every man is a piece of the continent, a part of the main.” 

            This is why society is actually made of interdependent citizens working together to improve the quality of life for all its people.

            Society is not a bunch of individuals in it for themselves.  Individualism is predominantly an illusion and often narcissistic.        

          • Zero

            And never have I said that everyone should have a government job.  You have falsely turned my position into a radical one to feed your own delusion. 

            And in relation to other G20 countries: America has the second lowest tax rate.  Only Japan has a flatter tax rate, which is possible for them because they have strong labor representation.  If you step on labor unions and cut taxes for the rich at the same time, you are invariably going to create a lot of poverty.  It has nothing to do with how ‘hard people work,’ if they’ve earned it or not, etc.  This is how the republicans are killing the middle class.

            Your version of capitalism is not a competitive market place were corporations and businesses compete, but a competitive humanity where neighbor competes with neighbor.  You are not a capitalist; you are a social Darwinist.  

          • Karen

            Um actually, I have a friend who works for a family in the top 1%.  When the economy fell under Bush the family went to the Bahamas that winter and while sitting at a formal white tie dinner they discussed the economy and their place in it.  My friend said that they discussed how nobody in the family or extended family would have to work a day for the next 15 to 18 years and they could survive the recession.  When I asked my friend what the father of the family does, she said he does nothing.  Absolutely nothing.  So there are families in the top 1% who are doing nothing but hoarding their money.  You just aren’t around them.  BTW I have worked for families int he top 1% and I can tell you what jobs they create.  Nanny, House Manager, Chef, House Keepers, Second Nanny, Gardeners, Third Nanny, Personal Assistant and sometimes Horse Trainer/Keeper.  

  • http://twitter.com/cwooley89 Charles Wooley

    krugman is the man, 
    I read his column every mon&friday in the NY times 
    And between his column today and this show the man is on fire 
    I wish that they had a conservative on her so he could drop a verbal shellacking

    • Azra

      . . . and try to explain even more tax cuts for the elite.

  • EdTheMexican

    Mr. Krugman, would not know sound economics if it bit his right big toe!

    • http://twitter.com/cwooley89 Charles Wooley

      hows your nobel prize treating you?

      • Azra

        Where’s yours?

        • Cooper5

           He doesn’t need one. He didn’t make a juvenile ad hominum attack on Paul Krugman.

  • Zero

    Krugman was just on Charlie Rose and that interview was more in depth than Ashbrook’s.  Probably because there were no callers during the Rose interview.  The Charlie Rose website (www.charlierose.com) hasn’t displayed the interview, but it should appear soon. 

    • Azra

      Mitt is on right now. His wife is also there, to hold his hand. How sweet.

  • Janice200

    There is a great book by historian Barbara Tuchman called ‘The March of Folly.’ She describes how governments simply ignore masses of evidence to the contrary and follow self-destructive paths. The insistence on austerity probably another instance of that.

    • Worried for the country(MA)

       Who is insisting on austerity?

      $5T+ of deficit spending is no way austerity.

      • Zero

        Cutting heating for the poor and firing 600,000 public employees is austere.

        But modest tax hikes on the rich is class warfare…?

        • Azra

          How dare you! Think you better get your priorities in order.

          THIS IS AMERICA !!!

      • Still Here

        Slowing spending growth is even too austere for public union pension members and the Democrat candidates they fund.

  • Worried for the country(MA)

    Paul vs. Paul

    An interesting debate between Ron Paul and Paul Krugman on monetary policy.

    http://www.nationalreview.com/corner/297335/paul-vs-paul-paul-krugman-and-ron-paul-battle-bloomberg-noah-glyn

    • Azra

      Maybe that’s why he’s not the candidate.

  • Joan

    It is shocking that the Republican Party has done NOTHING
    to help struggling American workers and homeowners since
    the downturn in the market since 2008 and has blocked Demo-cratic efforts to do so. What an evil & dysfunctional Party!

    All the more reason we should all help to boot them out
    where we can in 2012 election…

    Yet, on the other side of this —Paul Krugman is right the
    Feds should act and make loans available to the states so
    they can rehire essential workers (school , fire and police)
    as Paul krugman has suggested. In addition, make funds/
    loans available to the states for infrastructure upgrades…

    That would be the right and decent thing to do and it would bypass the evil inaction of the GOP leadership in Washington under Mitch Mc Connell and John Boehner and others……. 

    • Still Here

      No essential workers have been fired.  Those who have been fired are not missed, therefore not essential.  Budgets have consequences, thankfully state and local governments have to live within the constraints of a budget and limited ability to borrow.  If only the Feds had to play by the same rules.

      Democrats are trying to bankrupt this country.  It’s shameful!

    • Gregg

      The Republican House has passed 25 jobs bills which languish in the Democrat controlled Senate.

      • Cooper5

         The Devil is in the details, Gregg: what’s in the so-called “Jobs Bills” the Republicans passed?

        • Gregg

          Solutions.

  • Joan

    Obaman should pledge to help & protect struggling American
    homeownwers and workers by challenging the banks & refuse
    to make any budget cuts as Robert Reich has suggested in his
    column….

    http://www.huffingtonpost.com/robert-reich/obama-romney-economy_b_1438652.html 

    • aj

      “Obama should…challenge the banks”

      Well yeah, but Obama won’t! So what are all you lib’ Dems going to do about it. I say impeach, or at minimum don’t enable the perpetual scandelous BETRAYAL of corporate zionist Democrat cowards.

      But I know you will vote for Barack come November. So at minimum, come outside and play today, it’s May Day and workers around the globe are on Strike! Bring your raincoat!

      Will you join us? Will you join the Revolution? Today, noon, at Bryant Park, in Manhattan. They can’t arrest us all!

      • TomK in Boston

        Obama won’t challenge the banks because he is, by historical standards, a moderate republican, and they don’t do that. Of course in our current world with the debate framed by the insane BHO is a lib, but that is an illusion.

        I like Krugman a lot. One thing he says is that he is a defender of the America of his parents generation. I agree! The post WW2 era of high taxes, strong gvt regulation, and big gvt projects was paradise for the middle class. When GDP went up, the median income went up; now it all goes to the top. BTW we were capitalists, not socialists, during that period of the cold war with the commies. There are many versions of capitalism. The right says that if you don’t buy the Ryan hunger games version you’re a socialist, but that’s nonsense.

        What I don’t get: We had this great system, we switched to reagan voodoo economics in 1980, and it’s been all downhill for the middle class. The results are in big time, it’s not a matter of theories from the righty think tanks anymore. Isn’t the logical response to return to what worked? Why not? Of course the super rich love the current system, as it has redistributed everything to them, but why does anyone else still vote for voodoo? Voting for Romney, a job destroyer and financial con man, is the ultimate self-hatred for an average Joe or Jane.

  • Vince D

    The elephant in the room is being ignored: The trade deficit. By importing so much, we are effectively exporting jobs, and of course the tax revenue that those would be taxpayers would have contributed to the treasury.

    The 800 pound gorilla is also being ignored: Excessive mmigration, legal and otherwise. H1B visas have allowed employers to dump their American workers and replace them with foreigners. There are 7-8 million illegal aliens directly displacing Americans in the workforce, and allowing employers to pay sub-par wages to millions more.

    The free market fundamentalist, cheap labor lobby is a huge reason that we’re in a depression. why can this truth not be told?

  • curbain

    Very much enjoyed the show, as it mirrored a recent article I have written for the construction industry. There is a lot of gloom and doom, but there are some bright spots we need to keep in mind that, in my opinion, will help pull us out of this quagmire if it’s orchestrated correctly. Read more…

    The five myths of Made in USA: The truth will  surprise you! Here’s the link.
    http://ctsmag.com/index.php/component/content/article/1-latest-news/286-the-five-myths-of-made-in-usa-the-truth-will-surprise-you.html 

  • http://twitter.com/Dave_Eger Dave Eger

    If you don’t spend money traveling to China, what about spending money in America? Half the stuff here is made in China, and the rest is made in our prisons.

  • twenty-niner

    There has been quite a bit of debate on this forum about whether Krugman advocated the loose money policies that led to the housing bubble. Krugman has always been an advocate of the “helicopter drop”, and “helicopter drop” is a perfect metaphor because it implies an indiscriminate littering of resources on the roof tops of big investment banks. Beyond the NY Times article from 2002, which is the most commonly cited source, let me present a series of quotes that further show Krugman’s plea to fuel up those helicopters:
    (http://www.pkarchive.org/global/welt.html)

    “For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn’t you lower interest rates?”

    May 2, 2001 (http://www.pkarchive.org/column/5201.html)

    “It’s still not clear that Mr. Greenspan has caught up with the curve — let’s have at least one more rate cut, please — but the interest-rate cuts do, cross your fingers, seem to be having an effect.”

    http://www.pkarchive.org/column/5201.html

    July 18, 2001 (http://www.pkarchive.org/economy/ML071801.html)

    “KRUGMAN: I think frankly it’s got to be — business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).

    DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she — or I should say he and she, can they bring back this economy?

    KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don’t know”

    August 8, 2001 (http://www.pkarchive.org/economy/ML082201.html)

    “KRUGMAN: I’m a little depressed. You know, inventories, probably that’s over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates haven’t fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. It’s not a happy picture.”

    • twenty-niner

      A few more:

      August 14, 2001 (http://www.pkarchive.org/column/81401.html)“Consumers, who already have low savings and high debt, probably can’t contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery…. But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates — and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1…. Sooner or later, of course, investors will realize that 2001 isn’t 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.October 7, 2001 (http://www.pkarchive.org/economy/ML071801.html)“Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package”Dec 28, 2001 (http://www.pkarchive.org/column/122801.html)“The good news about the U.S. economy is that it fell into recession, but it didn’t fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed’s dramatic interest rate cuts helped keep housing strong even as business investment plunged.”.

  • Brian Riordan

    I think that in one SURE way the present ‘recession’ is WORSE than the Great Depression. And that has to do with the number of individuals who are finding the ‘welfare’ route OUT, ie., the number of bogus Social Security Disability claims/cases which have been sought and secured, particularly after individuals unemployment benefits have been exhausted. It truly does appear that there exists a compliant bureaucracy. I certainly don’t claim to know what the answer to this malaise is, but matters are getting such that I don’t foresee a way out.

    • jefe68

      So you have empirical proof of this?
      What you’re saying is that the derivatives and default swaps that seemed to be the cause of the collapse is not the reason. It’s individuals claiming SS disability.
      Really?

    • Still Here

      Excellent point.  Makes sense.

  • d_arcy_2

    Sadly, Mr. Krugman seems to have acquired a bad case of “Nobel Conceit”.
     
    You could almost hear the smirk on his lips as he said, several times, forecasts were correct, were wrong.  Notice he never spelled out what his forecasts were.

    • DT

      Okay, but can we at least agree that the fiscal austerity programs European countries implemented haven’t worked for them? That’s got to count as empirical evidence, no?

    • JayB

      We are to eschew him for being too accurate?

  • Still Here

    Krugman, what ended the depression of 1920-21?

    • jefe68

      The spending and speculation of the Roaring Twenties is what ended it and then that brought about the Great Depression. You think you are being smart, but you’re not.

      • Still Here

        Do you think before you write?  A depression was ended by speculation.  What fostered that speculation, dimwit?  What was the fiscal and monetary policy response to that depression?

        Your ignorance is boundless.  Krugman needs better defenders than jokes like you.

        • jefe68

          The 20, 21 depression was caused by the end of WW1 and the huge influx into the labor pool by returning solders.
          From what I’ve read about this period it seems, wait, why am I bothering to even respond to you. You don’t care what people have to say. You use insults and are into posting your right wing diatribes as a rule.

          • Still Here

            I didn’t ask what caused it. I asked what fiscal and monetary policy were just prior to its ending. 

            You haven’t read anything have you.  As usual you’re wasting everyone’s time.

          • jefe68

            I read what posted. Like I said you think your clever. You are not. You own a computer so why not Google it: http://en.wikipedia.org/wiki/Depression_of_1920%E2%80%9321

            The speculation that ran rampant in the upswing of the 20′s brought us the Great Depression. Just as the shell game of Wall Street did that era they are still doing now.
            What is a waste of time is your demagoguery and bile.

          • Still Here

            Seriously, your ignorance is amazing.

          • jefe68

            That I don’t buy into your right wing BS?
            No I’m not ignorant. I find all this BS about the rescission of 1920 to be nothing more than smoke screen. It’s about supporting the idea of austerity.
            Well it does not work. It did not work then, and it wont work now. The boom of the 20′s was due to a lot of speculation on Wall Street and the introduction of products that attracted people from all walks of life. If you look at agriculture it had little or no gains during that decade. Industry did, but that was beginning of mass production.

            You’re nasty act is tiresome.
            You see everything through this weird right wing lens that is coupled with can only be called contempt for others. I feel sorry for you.

          • StillHere

            Go back to the top of the thread and read the question.I’m tired of your stupidity.

    • scott roney

      I’m sure Krugman being a economics “Professional” never heard of the depression of 20-21 and its aftermath, right?

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  • Warren

    1.”We contend that for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”
    2.The inherent vice of capitalism is the unequal sharing of blessings;the inherent virtue of socialism is the equal sharing of miseries”.
    Winston Churchill.

    Mr.Krugmans idea to solve our problems is a war with aliens

    • econo2107

      ‘Mr.Krugmans idea to solve or problems is a war with aliens’

      his point is that by employing people, even to do work of very little value, helps the economy

      this is standard Keynesian economics. It is mainstream economic thought with vast empirical evidence. 

      also you misquote him there,

      his example never featured an actual war with aliens, but rather employment in preparation for such a war (but in the example they then realize that there is no threat)

      he’s just pointing out that getting people to do work helps the economy, because workers use wages to buy from other people, who then use that money to buy from others….etcetera

      • Texgb

        Except that, as PROVEN time and time again, KEYNESIAN ECONOMICS DON’T WORK AND AREN’T GROUNDED IN REALITY.

  • Dave

    Jobs are leaving the USA and they’re never coming back”.  Says who, the business roundtable and others who benefit from such public policy? As if the “economy” was a force of nature over which we have no influence. We can make different decisions (most of our trading partners have). For example: 1) Public financing of congressional elections, to re-gain control of our elected officials & public policy (best $10B we would spend every 2 yrs) and 2). If a company wants to sell in our $14 trillion market, they must produce and employ here (like most US firms are required to do in other countries WTO notwithstanding).Yes, we would have a little more inflation (during transition), lower, more realistic Corp profits & stock values. But we would also have lower unemployment, higher incomes for working families, 1/2 the trade deficit (mostly oil) and more taxes to the Federal Treasury to reduce that deficit. More equality & a better social outcome, WOW what a disaster!!
     
     
    We could even strike a grand bargain with the business community, setting the corporate tax rate at zero (or even less than zero if the math works- a corp earned income tax credit?) on all profits from domestically produced products sold.  The government would collect taxes on increased employment and would spend less on safety net programs, more than offsetting the zero corporate tax rate.  This would also moderate inflation as companies would pay domestic workers rather than pay income taxes and could limit price increases while maintaining profit levels.  This would also be a great time to eliminate most or all loopoles and reduce rates (paid on profits from non-domestic products). 
     
    I am a fiscal conservative who wants to reduce or eliminate the need for a safety net, not just push the costs & pain off the government’s books (as the Ryan budget does).  We need to be able to afford to be conservative with regard to taxation and government spending, broadening employment and the tax base as described herein will accomplish that. 
     
    It is estimated that some 40 million people are employed worldwide producing clothes & shoes that are sold in the USA.  In the past we made our own clothes & shoes, this would be a great place to start.  True these are not high wage “sexy” jobs, but they would satisfy 70% of our workforce- folks just looking for a steady job to support themselves.  We outsource even very high end jobs requiring advanced degrees, this labor arbitrage must stop.  We simply must increase the multiplier-effect of our GDP to benefit more of our citizens.  It is not just a fairness issue or better social outcomes, it is good business when consumers have more money to spend. 

    • jefe68

      Problem with your idea is that the majority of people using the safety net are the elderly, disabled and children.
      The Ryan budget is a fraud, it’s all about giving more tax breaks to people who do not need them and taking away services and programs for those who desperately do. It’s the height of social Darwinism.

  • W540926747010

    Exactly
    why Dad
    and mom Absolutely
    adore Portable
    Van
    DVD Players

    Anyone which
    has ever taken road
    trips with buy yes, dear on
    dvd
    will be
    aware that this
    process could
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    are lots of
    methods to
    stay children entertained while driving. You
    may choose to go the
    frequent route, of playing the alphabet game on car license plates,
    but after:
    this
    is basically the Twenty-first
    century. Playing “I spy with my little eye” for 8 hours quickly
    becomes tedious and boring… this
    means you could step it
    down a notch, whilst
    our
    kids entertained accompanied
    by a portable car DVD player.Most car
    suddenly susan
    dvd
    systems and players now sport a
    prolonged battery
    life than your laptop, and
    this time
    of advancing technology they’re
    becoming smaller plus
    much more compact. There
    is barrels
    of portable DVD players out
    there, at
    a huge
    selection of prices.A recommendation I’d
    personally give is
    to try to observe
    the trusted brands, like
    Sony. Other unknown brands may
    be cheaper, but more
    than by
    having a well-known A Different
    World DVD Set
    , be
    confident what
    you really buying. You
    will not understand
    joint
    of mind with unproven brands. Also, you
    can obtain well
    known brands for
    nice prices by looking
    online: try places like Amazon, or Google purchasing
    sales and promotions.
    Checking reading
    user reviews before
    you purchase is
    a nice strategy
    to find out what models in
    avoiding and which
    of them ultimate
    value.The two biggest
    factors in
    selecting a
    transportable car DVD player are
    the battery,
    plus
    the measurements
    the screen. When
    you have three kids in
    the back seat, obviously ensure
    want
    to consider an
    even greater screen. Also, you
    don’t need your DVD player’s battery to die midway
    through another exciting round of Finding Nemo… any
    time you continue
    to have 3
    hours left vehicle.
    Take
    note though that
    you can will
    also get accessories for
    use vehicle,
    including
    a charger. So research
    options and rates, and
    look for a
    wonderful car DVD system in
    your case, you
    and your family, including
    your lifestyle!

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