Paul Krugman on Deficit Spending

By: Ian Campbell | Mon, Aug 20, 2012
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Paul Krugman is a Nobel prize winner. He seems to think that without further deficit spending the U.S. will face depression - a term and condition most economists find the least attractive of all economic scenarios. One has to wonder whether Mr. Krugman in his 'heart of hearts' believes the United States can come out of the economic morasse it is currently is in - and that seems to be exacerbating - intact and reasonable unscathed.

Mr. Krugman wrote a book titled 'End This Depression Now' that was published three months ago. It is available on Amazon and Kobo. I bought and scanned the book. Some of what Mr. Krugman says I agree with - particularly his comments related to the psychological effects of unemployment on the unemployed. However, in my view he does not either in the book, or in the video that accompanies this commentary, adequately address the consequences of his recommended further Federal Government deficit spending . In particular, he doesn't for me satisfactorily deal with how in the end does the ever increasing National Debt gets satisfied. Rather, he seems willing to embrace a postponement strategy that I believe will simply lead to an ever higher cliff to fall from.

Topical Reference: Krugman: The Government Has To Do More Deficit Spending To Avoid A Full-On Depression, from Business Insider, Joe Weisnethal, July 12, 2012 - reading time 1 minute, accompanying video 5 minutes.

 


 

Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
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Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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