Tuesday, December 02, 2008

Krugman's defense of increased debt

I'm interested in getting your opinion on, Nobel Prize Winner, Paul Krugman's defense for an increase in government debt during these precarious financial times.

The bottom line, then, is that people who think that fiscal expansion today is bad for future generations have got it exactly wrong. The best course of action, both for today’s workers and for their children, is to do whatever it takes to get this economy on the road to recovery.
Basically what Dr. Krugman is saying is, to keep the economy afloat, we need to have unlimited access to increasing government debt. And remember, the only way to pay back debt is to print money or increase taxes. Do you think this is prudent?


David said...

I didn't see him use the word unlimited? Is he really saying absolutely completely unlimited spending? I don't think so.

Anyway, when I took my macro courses (hating it all the way) the thought of the text book author was that the gov't should run deficits in recessions and surpluses in expansions. Thus moderating the business cycle so it doesn't get too hot or too cold. That is also one of the arguments behind progressive income tax policy.

Mac Noland said...

Direct quote; "to do whatever it takes to get this economy on the road to recovery." For me, that means unlimited.