Monday, January 03, 2011

Deep Hole Economics

Paul Krugman has written a column today called Deep Hole Economics. He begins by saying:

If there’s one piece of economic wisdom I hope people will grasp this
year, it’s this: Even though we may finally have stopped digging, we’re
still near the bottom of a very deep hole.

He then precedes to pre-emptively attack every Republican idea to begin filling in the hole. In fact his prescription seems to be to keep digging the hole deeper. His solution seems to be increased government spending:

A rational political system would long since have created a 21st-century version of the Works Progress Administration — we’d be putting the
unemployed to work doing what needs to be done, repairing and improving our
fraying infrastructure.

Krugman also wants the Federal Reserve to continue buying long term bonds which at best merely kicks the can down the road a bit.

All the experts continue to insist that Krugman really deserved his Nobel in economics. I guess it is just further confirmation that the academic "experts" aren't the best people to actually run things in the real world.

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