Krugman's 'End Depression Now' Convincing Call for Stimulus Spending

Nobel Economic Prize Winner Paul Krugman calls for more stimulus spending.


Whether you are a "sort of" New Keynesian or an “Austerian,” after reading Paul Krugman's "End This Depression Now" you will have a better understanding of economics and the arguments for and against more government spending (i.e. stimulus) to get us out of the depression.

While many economists call for austerity - cutting government spending to reduce the deficit - Krugman, winner of the Nobel Prize in Economics, makes a good case for more government stimulus spending when the economy is in a depression. He does not deny we need to cut government spending, but argues that this is the wrong time to do it.

With unemployment high, consumer spending is down. People and businesses become more and more cautious about spending and this stalls the economy even more. Among other recommendations such as mortgage relief, he claims a huge injection of government spending would get people back to work, jump start the economy and put us on the road to recovery. Krugman’s thesis finds support in the Economist magazine in its outlook for Europe. His criticism of Obama is that his stimulus program was not big enough.

Krugman is of the opinion that if the politicians had some courage to act, the problem could be solved quickly. Unfortunately, our political class  (both parties) is mired in polarizing, uncompromising extremism and can’t seem to focus on getting anything accomplished other than raising Super Pac money and getting reelected . They may need a “stimulus” kick from voters. Term limits anyone?

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REVMAN September 27, 2012 at 08:44 PM
Kaptain again yor so right --The announced QE3 news merely commits $40 billion a month of new stimulus funds -- a significant wad of cash. Slightly unexpected was the announced use of that money: to buy Fannie Mae and Freddie Mac bonds.BOTH COMPANIES ARE BANKRUPT,and this isn't called a stimulus or bailout it's called QE3 which will put us in debt for TRILLIONS more.
Andrew Ziemba September 27, 2012 at 09:31 PM
It pains me to say so, but even with super strict term limits, this country is hopeless. Unfortunately this country and it's policies, both foreign and domestic, will only change when our country experiences a total economic collapse through the inflationary destruction of the US Dollar. This will happen relatively soon. The recovery from this collapse will depend greatly on what time and how severe the crash is. There is no stopping it now. It is like we have jumped off the top of a skyscraper. There is nothing we can do now. Do your best to prepare for the worst. Also, don't forget, when all else fails, they take us to war.
Kaptainsteve September 28, 2012 at 02:09 AM
Andrew, you are right on both accounts. The dollar will crash in MONTHS, not years, and war is always an option of misdirection just to make sure we blame the wrong people and not the crooked banks and politician. Most people have no clue a. How corrupt banks like JPMorgan, Citibank, Wells, BofA, MFGlobal and the rest really are and b. How the Fed's policy is complicit in their scams and has guaranteed the imminent crash of the dollar and HYPERinflation. As long as they keep arguing about the "differences" between Obama and Romney and phony arguments like how much to tax each other, they will never wake up and nothing can ever change. They just can't believe it will ever happen to us. Quote; "Deutsche Bank’s report is “Gold: Adjusting for Zero.” It reckons we’re in a situation that is “Zero for growth, yield, velocity and confidence.” It says: “We believe there are nearly zero real options available to global policy-makers. The world needs growth and is willing to go to extraordinary lengths to get it.” It forecasts bluntly that the value of the dollar will plummet in the first half of 2013 to less than a 2,000th of an ounce of gold. It reckons “the growth in supply of fiat currencies such as the USD will remain an important driver.”" http://www.nysun.com/editorials/germany-eyes-gold-standard/87997/ http://rt.com/programs/keiser-report/episode-346-max-keiser/
Kaptainsteve September 28, 2012 at 02:19 AM
Revman, Yes sir, you are right. And the Fed announced $40B, but that's just the starting figure, it can always be increased even more. With the wholesale Fed rate at just about 0%, the effective tax rates due to inflation is in real terms apprx. 90%. Max Keiser explains it here; http://rt.com/programs/keiser-report/episode-346-max-keiser/ They are again, using yet another scheme to transfer wealth from us to them. The uber rich get richer, and everyone else gets indentured servitude. The baby boomers have done it. They've lived the good life, sucked all the wealth from our bones, they're getting their medicare and social security and got to enjoy driving their gas guzzling SUV's, and now the game is just about over except for a little bit of picking off the bones of the carcass of what was once a great country and people. These people never cared about morality or ethics. They just wanted what they wanted and took it, and now everybody else must suffer the hangover for their partying and the worst thing about it all is that all the while they cloked themselves in the phony facade of global warming, the environment, social programs galore and political correctness.
R Eleveld September 28, 2012 at 02:25 AM
The crash of a currency is when the production of currency is on a massive scale. Something like 400B per month ad infinitum. Our currency will have value until some point when no one is willing to accept it with restrictions. We are not close to that option... yet. As for the purchase of GSE bonds, it is a way to pump funds into the economy since the GSE's are effectively backed by the full faith and credit of the US. So it is a shell game by which liquidity, read as cash, is pumped into the market increasing available credit to buy more paper backed by the US Treasury and the taxpayers.


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