BILL MOYERS: This week on Moyers & Company.

PAUL KRUGMAN: Monetary policy is the aspirin of economic ailments. Take a couple whenever you're feeling that you have a headache. Now we had the over the counter remedy doesn't work and we need the heavy duty prescription medicine, and that's what I'm arguing for.

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BILL MOYERS: Welcome. Just before the holidays, we asked you, our viewers, to recommend the one book you thought President Obama should read as he prepares himself for his second term in office. As ever, your suggestions were thoughtful, provocative and eclectic – from books by authors who have appeared as guests on this broadcast, to works by the late John Steinbeck and A. A. Milne, the creator of Winnie-the-Pooh. You can see a list at our website,

Many of you asked for my choice, too. This is it – Paul Krugman’s End This Depression Now! It’s both prescription and warning: our current obsession with slashing the deficit and avoiding that well-known and worn fiscal cliff is killing us, Krugman writes, getting in the way of what really needs to be done – which is dedicating government to creating jobs and getting us back to full employment. He blames not only Congress but the White House.

Paul Krugman is professor of economics and international affairs at Princeton University. Since 1999, he's been an op-ed columnist at The New York Times and now also writes a blog for the paper titled "The Conscience of a Liberal." According to the search engine Technorati, it’s the most popular blog by an individual on the internet. Author or editor of some twenty books and more than 200 professional papers, Krugman is a thinker so esteemed and widely known in his field he's become an icon. Not only has he won the Nobel Prize in Economics, he’s also the subject of this song by the balladeer Loudon Wainwright III…

LOUDON WAINWRIGHT III: I read the New York Times that's where I get my news Paul Krugman's on the op-ed page that's where I get the blues 'Cause Paul always tells it like it is we get it blow by blow…

BILL MOYERS: As if being immortalized by the blues isn’t enough, there was even an unofficial campaign and petition in the last few days urging President Obama to make Paul Krugman the next Secretary of the Treasury. It was an honor, as Shakespeare would say, that Mr. Krugman dreams not of.

Paul Krugman, welcome.


BILL MOYERS: So, like William Tecumseh Sherman you refuse to be drafted.

PAUL KRUGMAN: Well, you know, fortunately it hasn't come to that point. But I think I probably would.

BILL MOYERS: But you remember what General Sherman said when there was a movement to run him for president. "I will not accept if nominated and will not serve if elected." That was the Sherman like statement you issued.

PAUL KRUGMAN: That's, well, I'm not quite up to Sherman's standards and I don't think I'm quite ready to lay waste to Georgia either. But a good, good man I admire actually.

BILL MOYERS: But the grassroots campaign in your behalf, unofficial, was serious. I mean, over 235,000 people signed on. You broke their hearts. Any regrets?

PAUL KRUGMAN: No, because I probably have more influence than I, doing what I do now than I would if I were inside trying to, you know, do the court power games that come with any White House, even the best, which I don't think I'd be any good at. So no, this is fine. And what the president needs right now is he needs a hardnosed negotiator. And rumor has it that's what he's got, so.


PAUL KRUGMAN: That's right. The president can't pass major new legislation. He can't formulate major new programs right now. What he has to do now is bargain down or ride over these crazy people in the Republican Party. And we what we need now is not deep thinking from the treasury secretary. If the president wants deep thinkers, he can call Joe Stiglitz, he can call other people. What he needs from the Treasury secretary is somebody who's going to be very effective at dealing with these wild men and making sure that nothing terrible happens.

BILL MOYERS: I understand that Jack Lew has Depression art on his, the wall of his office, art done by the Works Progress Administration. Which would be a good sign for someone like you who believes the Depression is back.

PAUL KRUGMAN: That's, I have to say, the most reassuring thing I've heard about him. WPA, you know, they produced a lot of art, which I think it's almost inconceivable now. But also the WPA was one of the really good moments in American policy. In a time of economic disaster, hiring people, giving them jobs to do things that are good, much of which survives and is an important part of our physical planet today. This is great. And the fact that he thinks well of and admires what the WPA did, that's a very hopeful sign.

BILL MOYERS: What could Jack Lew do as Treasury secretary that would make you think he's a kindred spirit?

PAUL KRUGMAN: Campaign against this austerity obsession. We're not going to get a big new stimulus package, much as I would like to see it. No, we're not going to get it this year, anyway. But I'd like to see him saying when somebody says, "Well, we need to slash here, we need to slash there." And he would say "Why would we want to be doing that now? That's actually going to hurt the economy."

BILL MOYERS: But hasn't our economy changed so much since Franklin Roosevelt simply put people on the government payroll?

PAUL KRUGMAN: It's, economics, the underlying rules change a lot more slowly than people imagine. People look and they say, "Oh, you know, back then they were taking ocean liners and now we fly jet airplanes." Or, "Back then we didn't have a global economy." Actually, we did. It's a little bit fancier now. But the basic rules are not are not much changed. It takes hundreds of years for those to change a whole lot. And this is, I can pretty easily assemble a bunch of headlines from the 1930s and they will sound like they're right out of today's headlines. This is the same kind of animal that we confronted in the '30s. This is depression economics. And the nature of the solution is not really very different now from what it was then.

BILL MOYERS: What do you mean, depression economics?

PAUL KRUGMAN: Well, two things really. One is, a recession is when the economy's going down. A depression is when the economy is down. So, you know, the U.S. economy was actually expanding through most of the 1930s, after a terrible big slump at the beginning and another slump later in the '30s. And then it was expanding in between. But we call that whole episode the Great Depression because it was all a period of high unemployment and a lot of suffering.

And, of course, we're in that now. It's not as bad as the Great Depression. You know, it's a great recommendation. Not as bad as the Great Depression. It's terrible. We have a persistently depressed economy, persistent lack of jobs. So in that sense, it's a depression. And there's also a more technical meaning. Depression economics is when the normal things you do to boost the economy, have the Federal Reserve cut interest rates a little bit, are no longer available or effective. It's a situation where the normal rules of what you-- of economic policy, have to be put on hold, and you really need to do extraordinary stuff.

BILL MOYERS: Well, the Fed has kept the interest late very low. And it has made a big difference, has it?

PAUL KRUGMAN: I think it actually has. If they hadn't kept the interest rate low, things would be much, much worse. Meaning--

BILL MOYERS: More people out to work.

PAUL KRUGMAN: That's right. We, you know, this is not as bad as the Great Depression. Again, our famous last words. But part of the reason is that the Fed did learn something from the 1930s. It's learned that raising interest rates to stabilize the price of gold is a really bad idea in times like this. But the trouble is that zero, which is as low as it can get, is not low enough. And we actually know pretty well what you need to do.

BILL MOYERS: The other side of it is that people have been told so long, "Save money. Save money. Americans were not saving.” Now if they save money, they make no money from their savings.

PAUL KRUGMAN: That's right. And, actually the truth is right now saving hurts us. It's because what, another way, yet another way to think about depression economics, depression economics is a situation where the total amount that people want to save is less than the amount that businesses are willing to invest. You can think of that as being the result, a lot of it is because of this overhang of personal household debt from the past.

We had a housing bubble that burst, leaving us with too much construction. We have a financial system that's disrupted. But all of that leads to the fact that there's, the amount that businesses are willing to invest is less than the amount that collectively we all want to save, including corporations that are trying to retain earnings.

Which means that we're awash in excess savings. And if you decide to save more, it's not actually going to help society. I mean, things add up. If there's a crucial, one crucial thing to understand about all this it is that the global economy, money moves around in a circle. And my spending is your income, and your spending is my income. And if all of us try to spend less because we want to save more, we don't succeed. All we end up doing is creating a global depression.

BILL MOYERS: So your prescription in this book, and the book is an argument for the prescription, is that the government should spend more so that people can buy more. In other words, creating demand that will drive the economy. That's the chief argument in here.

PAUL KRUGMAN: That's right. There are some other things you can do. Debt relief, where you can do it, will help because it will make people able to spend more. There're some things that the, maybe the Federal Reserve can do, even though interest rates are zero. But the core thing, the thing that we know works, the thing that all the evidence of history says works in a situation like this is the private sector won't spend, government can step in and provide the spending that we need in order to keep this economy afloat.

BILL MOYERS: As you know, there is an argument on the other side that says that Roosevelt, in spending in the '30s, did not really bring us out of the Depression. It was, and you acknowledge this in the book, the war, in which so much money was spent, you couldn't help but put people to work.

PAUL KRUGMAN: That's right. But the fact that it was a war that finally got the U.S. government to spend enough is not an argument against spending. It's an argument about politics. It's saying that then, as now, lots of people were saying, "Oh, it would be irresponsible to spend," and it wasn't until something external came along that the political restraints were released.

And then, we didn't, we actually were, we had recovered from the Great Depression before Pearl Harbor, because the U.S. economy really went to war in 1940. And presto. I mean, lots of people said, "Oh, spending more can't produce recovery." And then we started our military buildup because war had broken out in Europe. And suddenly, we had recovery.

I made it as a joke, but if we discovered a threat from space aliens and decided that to deal with that threat, we needed to actually, somehow or other we needed to do a lot of infrastructure spending. We needed to build roads and high-speed rail. We would have full employment.

BILL MOYERS: By full employment, you mean?

PAUL KRUGMAN: Something like 5 percent unemployment.

BILL MOYERS: There essentially will always be a certain number of people who are not working for one reason or another.

PAUL KRUGMAN: Yeah. It's a dynamic economy. There's always going to be companies failing. There's always going to be people quitting a job and taking some time to find a new one. There's a lot of friction in the economy. So the fact of the matter is that normal, a normally pretty full employment economy is still going to have 5 percent measured unemployment. That's okay. But there's a world of difference between that and right now the official number is in the high sevens. But a lot of measures suggest it's a lot worse than that. I mean, and most important, we have four million who've been out of work for more than a year, which is unprecedented since the 1930s.

BILL MOYERS: Yeah, you write that we are in a depression that is essentially gratuitous. We don't need to be suffering so much pain and destroying so many lives.

PAUL KRUGMAN: Gratuitous in the sense that there's nothing, the only obstacles to putting people to work, to having those lives restored, to producing hundreds of billions, probably 900 billion a year or so of extra valuable stuff in our economy, is in our minds.

If I could somehow convince the members of Congress and the usual suspects that deficit spending, for the time being, is okay, and that what we really need is a big job creation program. And let's worry about the deficit after we've had a solid recovery, it would all be over. It would be no problem at all, which is what, that's the lesson of 1940, 1941.

BILL MOYERS: Which is?

PAUL KRUGMAN: You can find all kinds of people explaining what was fundamentally wrong with the U.S. economy in 1940, that technology makes it impossible, workers don't have the right skill. Then along came a war in Europe and we started spending. Actually, at that point, spending a lot on infrastructure because we were getting ready for a war. And all of a sudden--

BILL MOYERS: Building harbors, building all kinds of--

PAUL KRUGMAN: And camps, training camps, there are a lot--

BILL MOYERS: --training--

PAUL KRUGMAN: The first thing that happened actually was a lot of construction spending on the giant new camps that the Army was going need. And all of a sudden, all of those unemployable workers turned out to be extremely productive, if you gave them a job. All of those, you know, total inability to get the economy moving turned out to be totally easy to get the economy moving. And we're basically in that situation right now. All the productive capacity is there. All that's lacking is the intellectual clarity and the political will.

BILL MOYERS: You make this so clear in the book, that's why I recommended that President Obama read this book as the one book I would like to see him read before the inauguration next week. If he read it, what would you hope he would fasten on?

PAUL KRUGMAN: I would hope that he would fasten on the notion, you know, he faces real political constraint. So we understand, he can't just pass legislation. But that the most important thing, his policy priority right now should be doing whatever he can to at least move in the direction of the kinds of policies that we want for full employment, that we need for full employment. And that the obsessions of Washington about a grand bargain on the deficit are really pretty much beside the point right now. That, if given a choice between doing something that will help the economy in the next two years, and something that will allegedly settle our budget problems for all, you know, for all time, which is wouldn't, that he should go for the stuff that will help the economy now. That he should not bend on that point.

BILL MOYERS: I can imagine that if you were sitting across the table with him, he might reply, "Look, Krugman, we've got a recovery coming on. Jobs are being created more steadily than ever. Measured unemployment is falling. Households are shaking off their burden of debt. I can see light at the end of the tunnel. I don't think this is the time to do what you're saying."

PAUL KRUGMAN: I think he might have said that two, three years ago. I don't think that president, you know, we happen to have a very intelligent man as president. He's for real. And he does understand. You can have real discussions with him. And I think he understands that, although things have improved some. We actually have had some progress on the economy in the past year. It's a glacial pace, compared with the way we should be. You can do this various ways. But if you think about the plunge that we took and you look at measures like the labor force, a fraction of prime age workers employed, whatever, we have maybe made up a quarter of the ground we lost in that great plunge in 2008, 2009. And it'll take years and years to get back to anything that looks like prosperity at this rate.

BILL MOYERS: What makes this a depression? You know, my generation remembers the photographs of those long lines of people looking for jobs, men and women both. Remembers the sad eyes, the hungry stomachs. Remembers that men were becoming so desperate they were becoming militant. But today, even though you say the situation, in terms of joblessness, is like the 1930s, you can't obviously, you can't transparently look around and see the evidence of a depression.

PAUL KRUGMAN: That's right. It's, and partly that it's not as bad. So by modern concepts the Great Depression had unemployment rates that were as high as 20something percent by modern measures. And even in 1937, when things had improved, before we went into the second leg of the Great Depression, it was still probably about a nine percent unemployment rate by modern standards. And we've got a seven point something, eight percent, whatever. So things are not as bad. But I think a lot of it is just that the optics have changed.


PAUL KRUGMAN: The optic, the misery is there. I mean, is there anybody, I guess if you live in very rarified circles you don't know people who are desperate right now. But I live in pretty rarified circles and I do. I know, I have relatives, friends people I know who have, men my age who've lost jobs and see no prospect of getting another job and are just desperately trying to hang in there until they can collect their social security and get on Medicare. There are young people whose lives have collapsed. You know, they graduate and there's nothing there.

BILL MOYERS: Yeah, you make a very powerful point in here of the impact of being out of work now on the lifetime career of a young person who has no job at the moment.

PAUL KRUGMAN: We have pretty good evidence on, you know, how long does it take to make up for the fact that you happen to graduate from college into a bad labor market. And the answer is forever. You will never recover.

BILL MOYERS: How so, what do you mean?

PAUL KRUGMAN: You will never get, you'll miss years getting onto the career ladder. By the time you get a chance to get a job that makes any sense, you know, that makes any use of your skills, you will already be tarred as somebody, "Well, you're 28 years old and you haven't held a responsible position?" "Well, yeah, I couldn't because there were no jobs." It just shadows your whole life. And it's very clear in the evidence from past recessions, which have been nowhere near as bad as this one.

The other thing I think I want to say here is that we have, in some ways, made things more civilized but also more invisible. Somebody said that food stamps are the soup kitchens of the modern depression. That there're a lot of people who would be standing in line to get that soup, who are instead, and it's a good thing, who are instead getting, I guess it's now called SNAP, Supplementary Nutritional Assistance Program, but who are getting those debit cards, and are getting essential food stuffs. And they're at the grocery store and they look like anybody else. But the fact of the matter is they are still as desperate, they're getting by day to day with the aid of a trickle of government aid, just like the people who were on, standing in line at the soup kitchens in the '30s, but they're not visible. They, we don't have guys selling apples in street corners partly because, you know, the city licensing wouldn't allow that anymore.

But we do have, again, we've got four million people who've been out of work for more than a year. The U.S. social system is not designed to take care of somebody who's been out of work. We have unemployment insurance that's intended to deal with short spells of unemployment. So there's an enormous amount of misery, but it is mostly hidden.

BILL MOYERS: So that's why you refer to it, even though the optics have changed, as a quote "Vast, unnecessary catastrophe"?

PAUL KRUGMAN: Yeah. The amount of damage that's being done is enormous. The amount of suffering of people is enormous. And if it isn't out there, visible on the streets, if it's dispersed across a suburban you know, if you see a house with a for sale sign that's been sitting there for a while, you may not know the story about the family that was driven from its house because they, one or both spouses lost jobs and couldn't find others. Or, and they were foreclosed on. But it's a real story, all the same. And there's lots of that going around. And none of this needs to be happening.

BILL MOYERS: And you argue that this could actually be solved in two years?

PAUL KRUGMAN: That's right. And that's not a number plucked out of thin air. That's a guess at how long it would take to get a serious spending program going. And we could actually make a lot of difference in it even quicker than that because the fact of the matter is, far from having effective job creation program, we've actually been pulling back. We've seen state and local governments lay off hundreds of thousands of school teachers. We've seen public investment in basic stuff like road repair cut way back. If we just went back to normal rates of filling potholes and normal rates of employment of school teachers, that could be done in months.

BILL MOYERS: You wonder why, given the suffering, Congress and the White House haven't acted.

PAUL KRUGMAN: Well, there are I think two, two levels of opposition. And one of them is just raw politics. We have a powerful political movement in this country that has a longstanding goal of rolling back all of the social programs, all the safety net that we've created. They want smaller government. They want reduced public services. Even the idea of public schools is very much under attack. They want it all to be switched to a system of vouchers. And they see this, you and I see a disaster, they see an opportunity. Here we have cash strapped state and local government. Good. Forced to cut back in government. They don't want to do anything that will make it easier for them to, for government as we know it to continue. That movement controls one political party. And that political party controls one house of Congress. And that is enough to stand in the way of a lot of things we ought to be doing. Then there's the second level, which is this odd coalescence of, I picked up the phrase from other people. Actually, from the blogger Duncan Black. "Very Serious People," capital V, capital S, capital P.

BILL MOYERS: You're always writing that these Very Serious People. Who are they?

PAUL KRUGMAN: Yeah. The notion that someone, well, you can look are your random set of, you know Erskine Bowles and Alan Simpson would be the quintessential Very Serious People. The editorial, practically the whole op-ed page, not all of them, but most of "The Washington Post." People for whom this, it's axiomatic that the budget deficit is the most important problem. And that what we really, really need to do right now at a time of mass unemployment is worry about the debt to GDP ratio ten years from now. And it's a very hard thing to crack, partly because it's not actually a rational argument. You very rarely, very rarely see on the Sunday talk shows, people asking, "Why exactly are you so concerned about the deficit right now?" That's sort of a given. That's a starting point. Everybody serious understands that, except that if you ask them why exactly, they can't give you a very good answer.

BILL MOYERS: What is the answer?

PAUL KRUGMAN: It's partly that this is, it sounds serious. Never you know, never underestimate the importance of just plain what comes across. Start so it's partly just it sounds serious, it's the kind of thing that people who wear good suits are likely to talk about. Partly it is actually, of course, a deliberate pressure campaign.

BILL MOYERS: For example, Pete Peterson, Nixon's Secretary of the Commerce, billionaire several times over has set up this Fix the Debt campaign and is said to be putting half a billion dollars into trying to influence the public.

PAUL KRUGMAN: Yeah, actually it's not just Fix the Debt, that's just the latest incarnation. There's also the Committee for a Responsible Federal Budget, there's the newspaper "The Fiscal Times," there's several others. It's a whole portfolio. They all are Peterson Foundation money at the roots, but they're all out there. And yeah, serious attempts to influence public debate are not, by and large, a very lavishly funded enterprise.

BILL MOYERS: But in this case?

PAUL KRUGMAN: But in this case, you've got so half a billion dollars, $500 million of spending with one agenda is going to have a huge impact. You know, policy intellectuals, by and large come cheap. A few hundred thousand in consulting contracts could do a lot there.

BILL MOYERS: Do you think some of them are serious about the debt leading to a loss of confidence on the part of investors in foreign governments? I mean, even three years ago Barack Obama expressed concern about the long term debt and the confidence of people in the U.S. government. Take a listen.

BARACK OBAMA: There may be some tax provisions that can encourage businesses to hire sooner rather than sitting on the sidelines. So we're taking a look at those. I think it is important, though, to recognize that if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the US economy in a way that could actually lead to a double-dip recession.

PAUL KRUGMAN: I remember that well. And at the time it was going on, I do occasionally find myself in meetings with Very Serious People myself. I guess I am personally one now and then. There was this widespread view among people, and not all of it venal, not all of it self-interested, that somehow things were hanging by a thread. That any day now we could have a run on U.S. government debt, which was wrong.

But, okay, I can see how people could for a while have believed that. But a lot of time has gone by since then. And I hope that at least some people have learned better. But it's amazing how little the continued failure of these warnings to actually be vindicated by anything has…how little of that's actually affected the debate.

And there's a special issue here, which I've actually tried to get across now, and I find that I get resistance even from people who are, I would've hoped were more flexible. It's even very hard to tell the story about how this loss of confidence is supposed to work. I mean, it's the United States is not like a European country that doesn't have its own currency.

The U.S. government cannot run out of cash unless Congress prevents it, you know creates an entirely self-inflicted shortage through the debt ceiling. How is it exactly that we're supposed to have this crisis that leads to a double dip recession? It really doesn't even make sense as a story. And yet it is one of those things that people say and by and large, are not contradicted on.

BILL MOYERS: We keep hearing from the right that we're here on the path to becoming Greece, and you say that that's impossible?

PAUL KRUGMAN: Yeah. We, even if, suppose that people decided, investors decided they don't like U.S. government debt, it can't cause a funding crisis because the U.S. government prints money. It’s even hard to see how it can drive up interest rates because the Fed sets interest rates at the short end, and why exactly would the long run rates go up if you don't expect the Fed to raise rates? It could lead to a weakening of the U.S. dollar against other currencies.

But that's actually a good thing. That would make U.S. exports more competitive. That would actually boost our economy. So it's, actually impossible to tell that story, as far as I can tell. And yet, it's not, again we're mostly not in the realm of rational discourse here. It's one of those things where people say it, they hear other people saying it. And they don't actually try to work it through.

And it plays a big role, I'm sorry, in influencing our public discussion. Interestingly, people who actually have money on the line, that is people who are buying bonds, just keep on driving U.S. interest rates ever lower. So actual investors don't care about this stuff. But our political class does.

BILL MOYERS: Why don't they care?

PAUL KRUGMAN: Because first of all, because I think at some level investors understand what I'm saying. That it's very difficult to see any reason why the Fed would raise short term rates, which is controls for years to come. And in that case, long term debt even at a pretty low interest rate is a reasonable investment. Hard to see how a financial crisis actually develops against the United States, U.S. government, which is in this you know, has all the luxury of printing its own currency.

And investments are always about compared to what, right? If you if you say, "Well, the U.S. is a dangerous place to invest," I don't think it is, but particularly where is the safe place that people are going to invest? You know, what is this other asset that they're going to buy? And it doesn't really exist.

BILL MOYERS: You say we're in a liquidity trap. I don't understand that.

PAUL KRUGMAN: Basically, a liquidity trap is we're, back up for a second. How do we normally deal with a recession? How do we deal with a garden variety recession like the 2001 after the dot com bubble burst, or 1991? The answer is that basically the Fed, the Federal Reserve goes out there and prints money.

Or strictly speaking credits banks, you know, credit banks with that extra reserves and buys treasury bills. And that normally starts a chain of events where, okay, the banks have got extra reserves, they lend them out. They, that drives down interest rates, leads to a whole series of events, which ends up with the economy picking up some steam. And what the Fed is doing in that case, it's supplying extra liquidity to the system.

PAUL KRUGMAN: But now we're in a situation, we're awash in liquidity. We've already got, I mean, interest rates are zero. And so anybody you say, "Well, we're going to give you some more cash and you're going to go lend it out," and banks, everybody's going to say, "Well, why would I want to do that? I mean, interest rates are zero. It's, there's no particular incentive for me not to just sit on this cash."

So you pour this extra liquidity into the economy and it just sits there. And that's the liquidity trap. It's a situation in which the ordinary monetary policy thing doesn't work.

A side consequence of that is it also means that if the government goes out and borrows more, it's not going to drive up interest rates because there's all this cash sitting out there looking for a place to go.

So the rules change. And liquidity traps are really rare. I mean, we had one in the 1930s and we've had another one since 2008. And aside from that, we had one in Japan in the 1990s, and that's about it. But when they happen, boy, they change all the rules. You find yourself in a different universe for economics.

BILL MOYERS: And they're not putting people to work.

PAUL KRUGMAN: That's right. A liquidity trap is a situation where the economy can stay depressed and there's no natural, certainly no fast natural route to recovery.

BILL MOYERS: So why would you be calling for more spending, given that reality?

PAUL KRUGMAN: Oh, but that’s the point, then the equation, what we’re looking for always, the problem…Basically all recessions are a problem of not enough spending in the economy. There are a few exceptions, basically, what we call a recession is, a case where there's not enough spending, and so there's not enough jobs. Normally, however, you can deal with that in a very narrow technocratic fashion, which is that the Federal Reserve cuts interest rates and stuff happens.

Now that doesn't work because we're in a liquidity trap. And so, this is where you say, "Okay, we need something else that's going to work, and it's very hard to come up with anything that is clearly effective, other than having the government go out and spend the money that the private sector won't." And this is why it, you know, this is, monetary policy is the aspirin of economic ailments. Take a couple whenever you're feeling that you have a headache. Now we had the over the counter remedy doesn't work and we need the, the heavy duty prescription medicine, and that's what I'm arguing for.

BILL MOYERS: Interesting you say that because I tried to condense to one sentence the message and argument of your book. And I wrote down, "The answer is simple. Increase spending and boost consumption because the fundamental problem at the root of this crisis is a lack of demand."

PAUL KRUGMAN: That's it. Now you can say that all crises’, or most crises’ anyway, most recessions are a lack of demand. But this is an intractable lack of demand. And so, we, we need we need government action of a type that most, at any point during the past 70 years, except this one, I would have said, "No, let's leave it up to my former colleague, Ben Bernanke." But he can't do the job right now. And so, we need the government.

BILL MOYERS: And if the president were sitting across the table from you and asking, "Where would you spend this money, Paul?" What would your answer be?

PAUL KRUGMAN: Right now it's easy because right now we can do it very quickly simply by restoring the spending cuts that have already happened. If you gave me unlimited carte blanche in terms of spending, I would want to go beyond that. I'd want to talk about and pretty straightforward things, even so. We have you know, fix the sewer lines. I mean, we have, we have a lot of, a lot of basic infrastructure needs that are worth doing in any case.

But right now you can get a quick boost just by rehiring those school teachers and filling those potholes. We are something like $300 billion a year short of the spending that we should be undertaking just for the normal business of government. And that extra $300 billion a year would be a really big deal for the economy if we could do it right now.

BILL MOYERS: Would it bring us to what you call full employment?

PAUL KRUGMAN: Probably not. Probably bring us down to an unemployment rate that was more in the 6 to 6.5 percent.

BILL MOYERS: How much would it add to the long term deficit?

PAUL KRUGMAN: Actually, nothing to the long term deficit, or almost nothing because this would not be a permanent set of measures. This would be something we'd do now. It would add headline suppose we spend $300 billion a year right now, additional. That's not $300 billion a year in extra debt because it's, the economy will be stronger, which means more revenue, which means less spending on unemployment benefits.

So it's probably under $200 billion a year in immediate borrowing. And there's a lot of reason to think that would actually, having a stronger economy now would actually strengthen the economy in the long run as well. Or put it this way, the other way, that having a really weak economy now is damaging our future and not just our present. Think about all college graduates who will never get the job they all should get.

That's not just harm for them, that's a future economy that is weaker than it should've been because it's wasting a lot of our talent. And there's a pretty good case, actually a pretty strong case, that if you think about the long run fiscal impact, spending more right now is actually positive even in terms of the long run budget situation because a stronger future economy will mean stronger revenue down the pike.

And the debt we incur right now, well, you know, the interest rate on U.S. long term debt is under 2 percent. Inflation protected U.S. long term debt has a negative interest rate. There's almost no, there's even, on purely fiscal terms, it's arguable that we should be spending more just to strengthen our long run budget position.

BILL MOYERS: Is there a limit to how much we can keep borrowing?

PAUL KRUGMAN: There may be, although all that we know, all of the evidence says it's a lot further away than conventional wisdom has it. I mean, like a lot of people, including Ben Bernanke, I got into all of these things by looking at Japan in the '90s. And Japan famously has run deficits year after year. And it has a level of debt that is about twice what we've got as a share of GDP.

And people have been predicting financial catastrophe for Japan year after year for ten years or more. They've had downgrades. Their debt was downgraded in 2002 by the major rating agencies. And everybody who believed those warnings and everybody -- has lost a lot of money. So it turns out that if you're an advanced country with its own currency and a reasonably stable government, you have a lot of running room on these things.

So am I worried? Yeah, I mean, I am worried about the U.S. fiscal situation 20 years from now. We do have a problem of health care costs and so on. But, you know, I'm worried about a lot of other things 20 years as well. I'm not sure that even if you take that long term perspective, that the budget should be at the top of your list of things to be afraid of.

I'm a lot more afraid, actually, of the great -- the entire southwest of the United States turning into a dustbowl because of climate change, right? So sure, by all means, let's think about it. But it should not be dominating our policy discussion now.

BILL MOYERS: As you know, we're heading toward another knockdown, drag out, shoot it out at the O.K. Corral fight over raising the debt ceiling in a few weeks. President Obama has already said he will not negotiate on raising the debt ceiling. Here's what he said.

BARACK OBAMA: I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed. Let me repeat. We can’t not pay bills that we’ve already incurred.

BILL MOYERS: And here's the response he got the next day from Republican Senator Pat Toomey of Pennsylvania.

PAT TOOMEY: Our opportunity here is on the debt ceiling. The president's made it very clear; he doesn't even want to have a discussion about it, because he knows this is where we have leverage. We Republicans need to be willing to tolerate a temporary partial government shutdown, which is what that could mean, and insist that we get off the road to Greece, because that's the road we're on right now. We only can solve this problem by getting spending under control and restructuring the entitlement programs. There is no tax solution to this; it's a spending solution. And if this president doesn't want to go there, we're going to have to force it and we're going to have to force it over the debt ceiling.

PAUL KRUGMAN: This is a guy walking into a crowded room and saying, "I have a bomb strapped to my chest, and if you don't give me what I want, I'm going to blow up everybody, including myself." And is that a credible threat? Well, there're some pretty crazy people there. And it might be that they're willing to do it.

But by the same token, Obama cannot get into this because then you have government in the hands of -- never mind the Constitution, the government is run by whoever is most willing to wreak havoc with our whole system of -- with the nation. We cannot allow ourselves to be blackmailed into spending cuts, partly because blackmail should not be part of how the U.S. operates, and partly because spending cuts would be disastrous right now. So Obama's right to say he doesn't negotiate. I'd like to know exactly what he will do if it turns out that there is not a quorum of sane people in the Republican party.

BILL MOYERS: If you were Secretary of the Treasury, what would you recommend he do?

PAUL KRUGMAN: I'm for whatever gimmick works. So the most dignified is to say, "Look, this is ridiculous. You are giving the president -- effectively Congress is giving the president inconsistent instructions. It's passed bills mandating spending. It's passed bills that give us inadequate revenue to cover that spending which requires that we borrow. And then you're saying, 'I can't borrow.' Well, you know.

And my reading of the Constitution is I have to obey the due legislative process and go ahead and do this borrowing to meet the bills that we've already incurred, as the president said." That's sort of what people are calling the Fourteenth Amendment solution, that basically it's unconstitutional to give into this debt limit thing. I guess that's your best solution. They don't think that that's workable then you go for anything at hand. And there is this wonderful bit about the platinum coin.

BILL MOYERS: I don’t understand that.

PAUL KRUGMAN: In a 1997 act amended in 2000 which covers issuance of coins and stuff like that. There's one clause that says that the Secretary of the Treasury shall have the right to mint and issue platinum coins in any denomination that he so chooses. Clearly, the intent was commemorative coins. You're going to strike a coin to commemorate whatever, Mother's Day.

But it doesn’t say that. And as far as legal scholars have been able to make out, there's no reason why the Secretary of the Treasury can't order the minting of a coin that says this coin is worth $1 trillion, which need bear no relationship to the actual value of the platinum in it. It has to be platinum, however. And walk that coin over to the Federal Reserve.

Deposit it in and have the Federal Reserve create a bank account for the federal government based on that coin of whatever. It could be one coin for $1 trillion, it could be a thousand coins of a billion each, whatever. And then the government can pay its bills by drawing on that bank account. And it's crazy, it's an accounting gimmick, but then this whole thing is crazy. And if that lets you bypass this nonsense about the debt limit, fine.

There are other routes. I mean, it's possible the government could issue coupons that look like debt and function like debt, but says, "No, they're not debt." They could say, "This -- we have no legal obligation to pay this. We are, in fact, going to pay it, but we have no legal obligation to pay it." That's another alternative. They could--

BILL MOYERS: This is what you'd call--

PAUL KRUGMAN: I'd call it moral obligation coupons.

BILL MOYERS: Moral obligation because the government is morally obligated to pay that at some point, right? That’s what--

PAUL KRUGMAN: That's right.

BILL MOYERS: --you mean by that?

PAUL KRUGMAN: Yeah. So, but it's a moral obligation. We can say it's not a legal obligation so that -- you know, all of this is of course, this is all word games. But then that's not to play games would be irresponsible at this point.

BILL MOYERS: So you would encourage, if you were Secretary of the Treasury, the president to call the Republican bluff?

PAUL KRUGMAN: Yes. I think, now, I think you probably don't commit to doing that until we actually hit the limit. You say what the president is now saying. There is no alternative but for Congress to do the responsible thing and raise this debt limit.

But you don't rule out these alternatives and you make sure that the Republicans know you haven't ruled it out so that it stands ready, and in fact it’s what you do. Hostage negotiations, you have to -- you have to have some credible alternative to giving into the hostage takers demands, and that's where we are right now.

BILL MOYERS: You've confessed before to an occasional sinking feeling that you can count on President Obama to wimp out. And that's your term, "to wimp out" when it matters.

PAUL KRUGMAN: Yeah. The 2011 debt ceiling fight was deeply disheartening because he should not have negotiated on the debt ceiling at all. Same argument as now. This is not how you do it. It is not a legitimate tactic of politics to threaten to destroy the country if you don't get what you want. And people who make that demand have no standing. You should not give them anything.

But he did. He actually did, in fact, make some significant concessions on spending, in order to get a rise in the debt limit. He blinked a little bit on the fiscal cliff. Not as badly as some of us feared, but he did not, in fact, hold out for the full revenue package. And so, some of us are worried. Now, I have to say, I mean, I'm reading my own stage directions here.

People like me are, in part, going after him, warning about the wimping out thing in order to turn that into a self-denying prophesy. That the idea is to make a situation where the president will be aware what people will say about him if he does give in here so it doesn't happen.

BILL MOYERS: More than many economists I read, you keep politics at center stage in writing about the economy. Those are two different narratives in one sense. And yet, you intertwine them as you keep writing and analyzing our situation today. Why is that?

PAUL KRUGMAN: I think we've reached a moment in our history where the extreme nature of our politics and the extreme nature of the economic situation has converged. You know, here we are, on one side we have a once-in-three-generations economic crisis. Right, this is -- starting in 2008, we've been experiencing the crisis that has haunted the nightmares of macro economists since the 1930s. And here it is again.

And this is as dramatic as it gets. It's a situation where you really have to throw out the business as usual. And on the other side, you have this extreme political situation, where a radical movement has taken over one of our two great political parties. And does not-- does not practice politics as usual. Anyone who talks about, "Well, we should make deals the way we used to. What about the Tax Reform of 1986? Why can't we do that again?" And the answer is, well, that might make sense to you if you've been in a Buddhist monastery for the past 20 years.

But that's not today's Republican party. You can't make that kind of deal with them. And so, how can you write about the economics? If you write about economics right now and implicitly adopt the perspective, "Well, let's get reasonable people together in Washington and reach a solution here," you know, you're paying no attention to reality. And, of course, if you talk about the politics without talking about the economics, you're also missing everything. So how could I not be writing about both?

BILL MOYERS: You begin one chapter of your book with a quote from your intellectual mentor, John Maynard Keynes, who writes in his masterpiece The General Theory of Employment, Interest and Money, "The outstanding faults of the economic society in which we live--" and this was the ‘20s and '30s, "are its failure to provide for full employment. And its arbitrary and inequitable distribution of wealth and incomes." Well, we don't have full employment today and we have gross inequality in income. So which is failing us, capitalism or democracy or both?

PAUL KRUGMAN: I guess I have a -- here's where I guess I am an optimist, which is that I believe that you can fix both capitalism and democracy. Not to produce a utopia, but to produce a workable solution. And the reason I believe that is we did that for a pretty long stretch.

Western economies in 1933 and western societies in 1933 were in a pretty horrible state. Mass unemployment, gross inequality, collapse of democracy in a number of places. And in the end, by the time 1950 had rolled around, we had managed to create a more equitable, not totally equal, but a more equitable society, with reasonably full employment.

And that solution lasted for half a century, which is all you can ever expect in human affairs. Nothing is permanent. So I do believe that we can do that again. So it's not that we have to ditch capitalism. I think a market economy is -- this is probably Churchill, right, it's the worst solution except for all the others. And democracy is the worst system, except for all the others.

But it's going to take some work. It's not -- the idea that you can just let markets rip and that you don't need to worry about the state of your democracy, that's wrong. But I'm actually, in a way, a conservative on these things. But a conservative, not -- what we now call conservatives are actually radicals who want to tear down the structure that we built, starting with FDR. And I want to rebuild something like that, a modernized, a twenty-first century version of that system. But it's not out of reach. It's not something that can't be done.

BILL MOYERS: Paul Krugman, “End This Depression Now.” Thank you very much for this conversation.

PAUL KRUGMAN: Thank you.

BILL MOYERS: There’s a chapter called “The Second Gilded Age” in Paul Krugman’s book where he describes the extraordinary rise in wealth and power of the very rich during this era of unregulated greed. Since Ronald Reagan’s election in 1980, the top one percent of Americans have seen their incomes increase by 275 percent. But after accounting for inflation, the typical hourly wage for a worker has increased just $1.23 cents.

Big money, as Krugman writes in this book, buys big influence. And that’s why the financiers of Wall Street never truly experience regime change – because their cash brings both parties to heel. So, the policies that got us where we are today – in this big ditch of chronic depression -- have done little for most, but have been very good to a few at the top.

But those at the top are not satisfied with having only most of it -- they want it all. And if he were writing his book today, Krugman could find plenty of evidence in the deal that supposedly kept us from going over the fiscal cliff. Behind closed doors, Congress larded it with corporate tax breaks worth tens of billions of dollars -- everything from tax credits for NASCAR racing and the railroads to subsidies for Hollywood. Rebates for the rum industry and loopholes for off-shore financing that could help giant multinationals like General Electric avoid billions of dollars in corporate income taxes.

Writing in “The Washington Examiner,” columnist Tim Carney says many of these expensive giveaways were “spawned by a web of lobbyists, donors and staffers surrounding Democratic Sen. Max Baucus of Montana” – chairman of the Senate Finance Committee. As we know from the Obamacare fight, Baucus is a connoisseur of revolving door corruption. “Pick any one of the special-interest tax breaks extended by the cliff deal,” Carney wrote, “and you're likely to find a former Baucus aide who lobbied for it on behalf of a large corporation or industry organization.” Even the pro-business “Wall Street Journal” was appalled. They called it a “Crony Capitalist Blowout.”

CEO’s and lobbyists were tripping over themselves as they traipsed up and down Pennsylvania Avenue between Congress and the White House, privately protecting their interests as they publicly urge austerity on everyone else. Here’s Lloyd Blankfein, CEO and chair of the global investment giant Goldman Sachs, when asked by CBS News’ Scott Pelley about how he would reduce the federal deficit:

LLOYD BLANKFEIN: You're going to have to undoubtedly do something to lower people's expectations the entitlements and what people think that they're going to get, because it's not going to they're not going to get it.

SCOTT PELLEY: Social Security, Medicare, Medicaid?

LLOYD BLANKFEIN: Some things. And you know, you can go back and you can look at history of these things, and Social Security wasn't devised to be a system that supported you for a 30-year retirement after a 25-year career. Entitlements have to be slowed down and contained.

SCOTT PELLEY: Because we can't afford them going forward?

LLOYD BLANKFEIN: Because we can't afford them.

BILL MOYERS: Ah, yes, but Goldman makes sure their entitlements aren't touched. Here's the story. After 9/11 Congress created tax-exempt Liberty Zone bonds to help small businesses rebuild near Ground Zero. Turns out Goldman's friends in high places consider it a small business, too, although it made $5.6 billion dollars in profits last year. As the fiscal cliff fiasco was playing out over New Year’s Eve, faster than the ball dropped in Times Square, a deal was struck in Washington that will extend the subsidies for Goldman’s fancy new headquarters in lower Manhattan. In their 43 stories of glass and steel, and a footprint two city blocks long, Goldman Sachs reigns supreme, thanks to a system rigged by and for the powerful rich.

And then this. Just hours before the fiscal cliff deal’s higher individual tax rates kicked in, Goldman handed Lloyd Blankfein and his top lieutenants “a total of $65 million in restricted stock,” bonuses awarded a month earlier than usual so they could all beat the coming tax hike from which they have been spared for more than 10 lucrative years. It will not surprise you, I am sure, to learn that “corporations announced more special dividends last month than in any other December since at least 1955.” Doing everything they can to avoid helping pay off the debt their CEOs have been urging Congress to cut.

As for working people, tough luck. Because the fiscal cliff deal ends the cut in payroll taxes, the average worker this year will take home about a thousand dollars less.

LOUDON WAINWRIGHT III: Hey, when Paul gets really bummed out, that’s when I get scared. But when Paul says there’s a glint of home, I feel we’ve all been spared.

BILL MOYERS: That’s is for this week. At our website you can find much more on money in politics. Including an illustrated guide comparing the gilded age of the 19th century to our gilded age today. Plutocrats, then and now. That’s at I’ll see you there and I’ll see you here, next time.


Watch By Segment

  • Paul Krugman Explains the Keys to Our Recovery

    The New York Times columnist explains why our top priority should be getting America back to work – if only Washington would stop throwing distractions in the way.

    Air Date: January 10, 2013
    Paul Krugman Explains the Keys to Our Recovery
  • Bill Moyers Essay: The ‘Crony Capitalist Blowout’

    The New York Times columnist explains why our top priority should be getting America back to work – if only Washington would stop throwing distractions in the way.

    Wall Street
    Bill Moyers Essay: The ‘Crony Capitalist Blowout’

Paul Krugman on Why Jobs Come First

January 11, 2013

Our current obsession with slashing the deficit is getting in the way of real work that needs to be done to preserve both our economy and our democracy. In this episode of Moyers & Company, Nobel Prize-winning economist and New York Times columnist Paul Krugman argues that we should put aside our excessive focus on saving money, try to overcome political recalcitrance, and spend money to put America back to work. Krugman offers specific solutions to not only end what he calls a “vast, unnecessary catastrophe,” but to do it more quickly than some imagine possible. His latest book, End This Depression Now!, is both a warning of the fiscal perils ahead and a prescription to safely avoid them.

Later on the show, Bill explains how last week’s fiscal cliff deal gave tens of billions in tax breaks to Wall Street and corporations — what even the Wall Street Journal calls a “crony capitalist blowout.”

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  • MaxI

    Check out Janine Wedel’s work for more insights into these dynamics:

  • David Snyder

    Krugman does the Spock live long and prosper hand shape at 6:34. Yay!

  • David Snyder

    Excellent interview, Bill! Thanks for giving PK another platform. Why suffer needlessly (some suffering is unavoidable, sure). “A man will renounce any pleasures you like. but he will not give up his suffering.” — G.I. Gurdjieff

  • Anonymous

    I’ve been reading Krugman’s columns since January of 2000. I’ve read his books, and I’ve read several of his essays. He’s not the only economist I read — I also try to keep up with Stiglitz and Roubini — but he is the one I’m most regularly in contact with through his writings.

    Therefore, I am not to be trusted by the VSP, who have a habit of treating him as if he were just a celebrity and those of us who follow him closely just a lot of groupies. Indeed, Krugman is the reason why many in Washington cut off their noses to spite their faces — and in the process drag out this recession to the point where it’s not just having a short-term impact but also casting dark shadows over the long term.

    The American empire is in a precarious position right now — has been since the decision to forgo the “peace dividend” available to it at the end of the Cold War. The journey from empire back to republic can be traumatic — just ask Britain — but it can also end in a soft landing. Americans will need to decide how they’d rather make that trip, because the trip is inevitable.

    Ending the depression by getting people back to work, and restoring the gap between rich and poor to a level where the money that’s currently being hoovered upward at least goes through the paycheques of workers first would be the minimum that has to be achieved if Americans are to have any hope of surviving what everybody with at least 2 inches of forehead knows is coming, namely a totally unpredictable and violent climate.

  • John Cirilli

    Where does the amount of money sealed away in offshore accounts doing virtually nothing for the global economy fit into this picture?

  • Russ Clark

    I suppose I’m one of these irrational people concerned with our deficits, debt, and unfunded liabilities. Its disappointing to me when very intelligent people such as Mr. Krugman let a political philosophy overshadow their academic/economic work. Including the information that supports their views and completely avoiding or disregarding any information or facts that would counter that argument. We borrow 40 cents of every dollar we spend, and have a long-term unfunded liability around 80 trillion dollars. I have no doubt that the U.S. government can keep this game up for much longer than anyone could possibily dream. What if we spend another trillion dollars and hire back all the teachers and put all the unemployed on the govt payroll and that still doesn’t create the long-term demand needed to grow. Krugman will come back and say we should have spent 2 trillion, if that doesn’t work its because we didn’t spend 3 trillion. His only answer seems to be that debt doesn’t matter, we can always print more, we can default on all the debt we owe ourselves etc.. Never mentions what that does to the average saver or spender (inflation will eventually be the cause. Didn’t post-war germany have hyperinflation from running the printing press constantly. inflated asset prices ( oil is priced in u.s. dollars and will continue to increase as the dollar is devalued) I’m sure Krugman will be proven wrong but like he said it will probably take another 10 years and by then he will have had a chance to write a lot more columns and books. “I can’t be overdrawn, I still have checks”

  • Rick France

    Thanks for giving Paul a chance to talk and expand on his ideas. Unfortunately, when he appears on the Sunday morning shows he is only given one or two minutes in a ten minute segment. And then he has to spend the time refuting the ridiculous pundits. Even when giving presentations at meetings, Paul doesn’t shine as much as he did during this interview. This was a relaxed, kitchen table conversation. The best I’ve ever seen Paul Krugman express his ideas. It’s wonderful to read him, but very enlightening to hear him explain his thoughts. All and all, another terrific interview.

  • edie groner

    I loved hearing Bill Moyers interview with PaulKrugman for an hour discussing his ideas re. our economy and politics and how joblessness is causing a depression. i loved reading his NYTimes articles and learn alot as I did tonight in his interview. please bring him back frequently for analysis of our ongoing crisis. I loved Bill’s commentary tonight on the fiscal cliff deal iving Wall St. corporations gifts on taxes that working people don’t get.

  • Rob Wheeler

    Dear Bill, Paul, and friends,

    Thank you for this important article and interview with Paul Krugman. There is a major problem with what Paul says, however, and at least one good solution to help us get out of the trap we are in.

    The problem is this, we Americans with about 5% of the world’s population are consuming or using up about 30% of the natural resources; and humanity is already living well beyond the carrying capacity of the earth and has already exceeded a number of planetary boundaries. In short we are living far from sustainably; and cannot continue to use everything up in this way. It just cannot work. So, increasing the level of consumption over the long term will just make things worse – as we are already rapidly depleting the natural resource base.

    For example, water tables are dropping around the world and the Colorado River no longer reaches the ocean for much of the year. It is estimated that most of the nutrition in our soils will be gone within 50 or 60 years. Precious metals are extracted at a rate that will likely doom our high tech economy if we do not start recycling them at a much higher rate. We can all see the results of our failure to produce most, if not all, of our energy from renewable resources – which we have known we have needed to do for at least 40 years now.

    So, it would be fine to say that we should create government programs and increase the level of consumption, make more jobs, and rebuild and revitalize the economy if, and this is a big if, we would invest in transitioning to a Sustainable America. If we would do the things needed to eliminate waste, to live within the carrying capacity, and foster and take advantage of the regenerative nature of the earth.

    Right now we are living so far from sustainably (for example we probably only recycle between maybe 25 and 40% of the primary natural resources, other than fossil fuels, that we use) that investing in a Sustainable America would be the best thing that we could possibly do – whether the increase in investments would come from business and industry, from state and local governments, or from the federal government.

    Restoring soil fertility, investing in recycling and composting processes and facilities, restoring our fisheries, replanting and harvesting our forests in a sustainable manner, refurbishing our buildings to reduce energy usage, replacing coal and nuclear power plants with wind, solar and geothermal facilities would greatly increase real wealth and well being. So, why aren’t we doing more of these kinds of things and how can we now?

    Partially because economists like Paul Krugman and journalists like Bill Moyers haven’t been talking all that much about the need to do things like this (other than Bill’s current focus on climate change) and because even the environmental movement doesn’t seem to totally get it.

    So, how can we overcome our consumption and overuse challenges and invest in a Sustainable America if the government at any or all levels is not doing it. For one we should be creating and developing a national and local strategies for transitioning to a Sustainable America. Any of us could start and participate in the development of such a strategy and campaign. I have been encouraging the US people and government to do so for years; and tens or hundreds of thousands of businesses are already taking steps and adopting measures to help make such a transition.

    So, I am asking Bill and Paul to begin talking about the need for such a campaign and organizing effort and I would be happy to join you on a show or to help you write articles explaining how we could do so. However, I can also tell you this, there are lots of ways that we, the American people, can kickstart our economy while investing in a sustainable future ourselves. One of them is offered by a proposal, called Gradidos, that is already being developed to create a global alternative currency that can sit alongside our existing currencies and gradually replace them.

    You say that there are millions of Americans that are out of work and can barely get their needs met. Well, this is ludicrous. These people have all kinds of job skills and things that they can offer to do that we need to have done that will help to create a healthier and more prosperous America. If we would all begin to use Gradidos, we could pay lots of people that have the time to do the things that need to be done to create a more sustainable America and to invest in real well-being whether this would be tutoring children that are behind in learning, reducing our energy usage, setting up composting facilities and reducing waste, investing in solar and wind applications, creating community gardens, adopting more green and sustainable business practices, increasing the level and amount of preventative healthcare, etc.

    The use of an alternative currency would increase the amount of money that is available to lift up and create a prosperous economy, while ensuring that all of us can be paid while contributing to social well being. Besides this the Gradido proposal has built in functions that will help us to focus on and invest in making the sustainable transition. You can check it out by going to: and there is a great little booklet that explains all of this and can be purchased or is available to download for free at at:

    Please take a look at this and consider and talk about how we can create a truly Sustainable America. Thank you for your considerations everyone.

    Rob Wheeler

    robwheeler22 at

    Skype: robineagle333


  • Lnieto

    I think we need to take a look at countries that are doing well. See Ecuador Desde Afuera. The emphasis is on human resources such as education, health etc

  • Marcia

    I agree with Rob Wheeler. Krugman, like most economists, ignores the laws of physics. We cannot have endless growth in a closed system, although Krugman implies we can. I suggest Richard Heinberg be invited as a guest on the show to tell us his take about the end of growth..

  • Nick

    Wow, I’ve missed watching NOW and am so glad I landed here from Krugman’s blog. This show should be watched in every high school in the nation (certainly in lieu of the material they currently pass show when the substitute teacher shows up). Keep it up Paul and Bill, the atrocities are too great to ignore. Thank you from one 50 year old guy who is looking for a way to get back to contributing to this nation’s greatness – not to mention my retirement.

  • Susan Brewer

    Two of my favorite people! Thanks Bill and Paul for all you do to bring order to our shared chaos.

  • MBrecker

    Unfortunately, part of the problem is that much of the MSM hypes these economists as celebrities and NOT for their actual views on the gobal economy. Best selling Nobel prize winner Joseph Stiglitz. The Marxist Economist Richard Wolfe. The “babe magnet” Roubini (an actual quote from the Huffington Post).
    Is this Or, a serious discussion about economic facts affecting millions?

  • MBrecker

    Another question. While many want Krugman in as Treasury Sec., how would he pay for everything he says he wants to do? There’s “creative accounting” to delay having to deal with the debt. There are also foreign investors. If you own govt. debt and said govt. continues to have a wreckless economy, why would you keep it?
    To help to build your global investments in infrastructure and influence. Is there any other valid reason?

  • Steve

    You’re confusing long-term obligations like Medicare and Social Security, which will be nominally decreased if inflation through growth increases. I/m not talking Weimar Republic inflation of hundreds of thousands of per cent annually, just 3-4 per cent present in a hot economy. The first thing is to create demand that the private sector will not create because it’s sitting on trillions in profits (the most in US history) and still wanting to deleverage any of its remaining debt. We have at least a two trillion dollar backlog in US infrastructure repairs – and investors worldwide are paying the Treasury to hold their money: the 10 year yield is below the inflation rate. Now is the time, especially if we could spend four-five trillion on tax cuts for the rich and wars in Iraq and Afghanistan over the last nine years. Besides, inflation hawks have been crying since 2008 – where is it this terrible inflation that comes with debt? The Japanese don’t have it, with debt top GDP of 200%. There’s no inflation because there’s no demand. We are not Greece, we can and should do this -one trillion dollars in infrastructure and state and local jobs would produce another fifty per cent beyond the stimulus in economic activity, and eliminate the associated borrowing costs through increased tax revenues long term. We are not a household; the US has the power to print money and raise taxes, This has its uses – for example at the end of WWII, US debt was 120% of GDP. We outgrew most of that debt through the fifties and sixties, as any growing economy is bound to do, with an expanding money supply and growth related inflation. The US dollar is worth one-eleventh what it was in 1948! There are problems with Social Security for sure, but we can tweak those down the road, as is required every twenty thirty years to increase the solvency of the system. All this fiscal cliff talk is coming from the upper crust – like Lloyd Blankenfein of Goldman Sachs and big business moguls, but are they willing to cut their own corporate tax loopholes or cut back profligate defense spending? No – they just want and expansion of the Second Gilded Age and the elimination of the safety net for the average US worker.

  • Yeager

    Bill’s wrap-up at the end is even more scathing than the interview with Krugman. These are two great citizens of this country.

  • brian

    i completely agree with you. endless growth exists nowhere in nature… the concept is unnatural and man-made. i lived thru’ that insanity in the corporation in which i worked. regardless of the economic environment, myopic stock-holders (btw, has anybody actually done a survey of average stock-holders to see if, knowing the long(er) term destruction associated with their knee-jerk, thoughtless desire, they still expect, as reasonable/doable/natural/unremarkable/innocuous, investment growth to be incessant and quarterly) demand significant returns each quarter. perpetual motion and economic growth machines both exist in our mind (and some people’s bank accounts) and not, as you rightly point out, in a closed system. only those at the top, and inside the system benefit from that synthetic/perverted fiduciary contraption

  • c p

    Krugman is the primo sycophant among the Washington tax and spend (and spend and spend) crowds, making them totally comfortable with irrational and irresponsible disregard for both the short and long term consequences of funding $87-100 trillion in unfunded liabilities with fiat money. His juvenile name calling, as well as comparison of the problem to a drought in the southwest brought on by global warming, just demonstrate that he has no clue of the consequences (or he would offer a thoughtful analysis instead). What a waste of time.

  • Rocky Mtn Org Meats

    I love simple solutions to simple problems. Paul has a few, the problem is the other side want to make it complicated which it’s not, and it never has been. The people with money want it to have value and the way they do it is make the rest of us believe it does, and really it does not. Zero interest is what money is worth. ANd no matter the legal tender each paper bill if eaten will give your body 4 calories. Hardly worth the effort to chew it.

  • DaveEddy

    In a capitalist system, you may be worth a million dollars figuratively, but if you do not have access to money to buy food you will surely starve to death unless someone with money provides your food or you have the land to grow food. Without sufficient income to support your own needs you become a slave to those who do.
    The distance to a distant star does not change at a particular time. The same is true of the amount of money it takes to provide the needs of a particular nation for a given year. Money is the means to an end not a reason to poveratize nations and ruin people’s lives. It is a tool not a product. Economics is not a game of monopoly; it is the life blood of nations. Going to a titanium standard and providing the finances to fix the economy are brilliant.

  • Victoria Krueger Cole

    It is only after hearing the words of Paul Krugman that I am at peace in life. He validates my feelings and inspires me out of a jaded existence. This is going to be embarrassing for Obama if he does not heed Paul’s warning. The strange part is, is that this is just good old plain economics. It’s not fancy stuff, nor is it deep. That’s why I am so glad Paul called Obama out. Exposed him, if you will. Now it is on the Obama administration to answer to these charges and present some accountability. How about even a little rationality.

  • Kate Maver

    I’d like to know what Krugman thinks of the Obama administration’s support of the TransPacific Partnership (TPP), and its threat to economic democracy and national sovreignity. Most people don’t even know what it is. Why so little reporting on it? None of Krugman’s ideas on econ matter if TPP passes.

  • el bajo

    Personally I thought his interview was short on specifics, other than giving more money to public service unions – didn’t we just try this? All that did was temporarily prop up a bankrupt system that benefits a select few, not the great majority of Americans. Civil service is new to the pain most private sector workers have experienced for 30 years. Relatively speaking they’ve done quite well. To get unemployment to 5%, as he suggested, work programs need to help the rest of the country too.

    Also, I’m definitely no expert on economics but it seems like modern-day Keynesian proponents ignore an 800-pound gorilla in the room. The Depression ended and America’s post-war economy boomed after WWII, partially because nearly every other competitor had been bombed back into the stone age. Demand for products was high, but artificially induced. We were the only game in town.

  • JS

    Blankfein is so out of touch with the reality of the 99% he can’t even bother to do the math. To work for 25 years and collect SS, one would start work at 37. To collect for 30 years, one would have to live to 92! The average lifespan of white US males is 76 and women 82. He doesn’t have to worry about trying to survive on SS for even a year.
    However, I bet he doesn’t miss collecting his SS payments.

  • DaveEddy

    We need to be a part of the solution to needed funding, not a part of the problem. “Cliff” debt is actually funds available to reinforce our economy because it is other nations depending on the stability of our economy to provide interest on their funds. Why believe false assuptions?

  • Harry Anchorite

    Two observations:

    First, I am sure we are all shocked, shocked to learn that there are politics being played in Washington (apologies to Claude Rains). Of course, this has always been the case, and ever more so when the Federal government undertakes to play favorites.

    Second, Mr. Krugman makes it all sound so reasonable – just spend our way to prosperity – but so do all pundits – from Marxists to anarchists – as long as one allows them to explicate in their own little closed systems where all of their assumptions are taken as cosmic truths. Some of us can easily remember how it was explained to us that Fanny Mae Freddy Mac were perfectly sound, needing no additional supervision, and how the housing market was perhaps getting a bit frothy, but if there were a correction it would be mild. The problem for Keynesians is that they seem never to be able to implement more than half of the formula; they can always spend during a downturn but they never manage to put anything away for a rainy day during the upturns. So the debt grows inexorably. I hope the rest of the world understands that the basic laws of economics don’t apply to us.

  • Anonymous

    Krugman’s call for another additional stimulus money falls on deaf ears, which is sad. If 70% of the the Nation’s economic activity is not generated by business, but by you and me buying stuff, then the more of us that are out of work, the weaker or longer delayed will be the recovery.

    Someone needs to cut through the cut spending drumbeat. If Krugman can’t–and he’s way smarter than most of the people calling for cuts–things will just be tougher for many much longer than is necessary.

    Isn’t it time we did what it takes to give our fellow citizens a break and also, not coincidentally, begin a real recovery?

  • AnnefromFL

    Finally, someone who has the great sense to voice what so many of us think!

  • Paul Michael

    I’m tired of Keynesian economists. Their way of thinking has been dominant in this country since 1964 and the value of the dollar has decreased 84% since then. Keep bailing out, deficits don’t matter, etc. Time for a change in my opinion.

  • Cleo

    Great interview.

  • Peter

    No one has claimed “endless” growth—certainly not Krugman. You just made this up.

  • Gene

    I wonder who would keep reminding us of the suffering of millions of economically-distressed Americans if not for Paul Krugman. Also want to mention that the bread line photos we’ve all seen from the Great Depression did not enjoy widespread distribution until years later. When it’s safe — i.e., no longer politically dangerous — similar images and stories will emerge from our Great Recession.

  • Anonymous

    Paul is very neo-Keynesian … unfortunately to the extent that he does not grasp we live on a finite planet. We need a totally new way of development … there are numerous models – many of which provide us with a higher quality of life, greater happiness, more leisure time … and are very sustainable. I am so tired of capitalism isn’t perfect but better than all the others etc. What nonsense.

  • Tim Johnson, Palm Springs

    I am a news hound and I find it amazing that we never heard about the ‘crony capitalist blowout’ on network and cable TV, not even MSNBC!!! And Lloyd Blankenfin of Goldman Sachs has already made it; he never has to work another day in his life, so her certainly has no business putting his big nose into Social Security!!! Tim Johnson, Palm Springs

  • Anonymous

    Paul Krugman rightly reasons that the last vestige of American exceptionalism is her ability to issue currency. (He omits with economic tunnel vision that militarism and war stimulus have become disabilities.) As a Keynesian Krugman believes Capitalism and diluted Democracy can be saved with a large and well placed stimulus. In recommending what worked 75 years ago he is completely honest, and is as he describes himself, a Conservative in our times. Further, it is morally right and structurally optimistic (patriotic) to advocate such a Utilitarian course expected to help most Americans and end financial Royalism (99% as victims of the 1%).

    Richard Wolff will testify (Economic Update, noon Saturdays and Archived, WBAI Pacifica) that Krugman is wrong and in denial. Many Marxists think human development is evolving into a new stage where labor value can be translated into a benign form of ownership overcoming much of the exploitation inherent in Slavery, Feudalism and Capitalism. Wolff’s theories have no birth path without some crisis Krugman would hope never happens. But such Socialist aspirations are just about the only articulated hope of escaping endless repeats of Capitalist crisis.

    Maybe humanity is ready for more justice and fairness, possibly even overripe for it. But the truth is we have overrun the carrying capacity of this planet and now face catastrophic climate change ( as Krugman recognizes when he fears a permanent Southwestern dustbowl). The needed time to adjust is not there to accommodate Krugman’s hopes or even the outdated kibbutz ideas of Wolff. And the main reason is that people have been ruined by the advertising onslaught of Libertine Capitalism and lack of most of the critically needed judgment and capabilities necessary to save Civilization. Crazy Tea Party zealots are only the latest wave of fascists locusts. People steeped in fear, isolation and unreasoned hatred are destined to devour one another. (The ignorant Tennessee arms dealer who called gun owners to violently rebel against sanity and threatened to “start shooting people” in reaction to a possible assault weapons ban (Youtube Jan. 9) alone negates the aspirations of the thousands of peaceful people who outnumber him.) Stupid Oligarchs send Provocateurs even as our ecology is collapsing. No one and no artifact will survive to tell our brief story. Even our myths of God and our atomic weapons will remain forever silent in the vast reaches of space. But what perverts they were, those who expected to eat and breathe wealth. Paul Krugman better visit Disney World, taste the tasteless and count the fading sparkles before it fades out.

  • Robber Baron von Richtofen

    Time to shut down the Wall St. casino scammers and nationalize their assets. Take those hoarded billions in ill-gotten gains and invest it rebuilding America, WPA style.

    Nothing will change in the DC-Wall St. crony plutocracy until the weasel-faced plunderers like Blankfein are all serving life sentences at hard labor. It would be a short sentence too- most of those wimps wouldn’t survive 6 months of real work.

    …think of the Social Security and Medicare costs we would all save!

  • Mel Logan

    Lloyd Blankfein said “Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career.” I worked 65 ½ years to get less than 15 years and that is closer to normal. Blankstein doesn’t have a clue.

  • BajanBoy

    Low nominal rates and negative real yields is a tight monetary policy not easy… until Krugman and Bernanke wake up to this fact their ideas will not produce growth.

  • BajanBoy

    As benefits increase the level of full employment also rises and the longer people will remain out of work…. we just have to look at Europe to see this… 5% may have been a level for full employment in the US, but today it is more likely 6% or higher.

  • WOW

    What you are suggesting sounds like a parallel economy. An economy that functions independently from the national economy. New entities that may not even be answerable to the govt.
    While it may appear as a good solution to the stagnation or defiance seen in our current leadership, it will undo this nation. Most nations that are led by radical extremists sport these types of economies, where “the people”, as a last hope effort to survive (hand to mouth) create parallel economies to bypass their abusive government.

  • Krebs

    You are absolutely right about that

  • DaveEddy

    The law of nature is “Survival of the fittest.”
    Civilization is a people made invention to live together and work together for survival and common cause.

    First came people and then came the need to exchange goods and services and money to make that possible. It should not be a game of monopoly where only the 1% survives.

  • Anonymous

    Mostly an excellent interview of a good and sagacious man.

    However, I have a couple of major problems with Krugman’s analysis:

    1. He assumes infinite economic growth is possible on a finite planet that has already been disemboweled to exploit every mineral of value, and whose ecology is already reeling from man’s heedless materialism; and

    2. He completely misunderstands the money system, claiming that the Treasury “prints the money” and nattering on about the “trillion dollar coin gimmick” while missing the point that the federal gov’t has needlessly ceded almost all money creation to the private banking system, incurring a fantastic opportunity cost and giving a handful of banksters an extraordinary subsidy that gives them frightening power over not just our economy but our political system. It is true that the Treasury prints the trivial amount of paper money that circulates through the economy, but it doesn’t create that money, and it certainly doesn’t create the vast amount of money that exists only as bits and bytes. The only money it creates these days is coinage. The rest of the money supply is created by the Fed (roughly 10% in normal times, more lately), which is really not part of the gov’t (its shareholders are the private banks), and the private banks (roughly 90%). When you get a loan at a bank, they don’t lend you somebody’s deposit, they type the money into existence on a computer. If the Treasury created the money supply, the federal gov’t could replace hundreds of billions of dollars in taxes/borrowing each year with money it created. The power of the banks would also be drastically reduced, as they would have to make money not by creating it from nothing (and charging interest on it), but solely on the spread (between interest charged on loans and interest paid to depositors) that they like to pretend they make their money from. The only reason modern banking is designed this way is because we let banksters design it. Naturally they put in a massive subsidy for themselves. 6000 years of international commerce and hundreds of years of capitalism, and THIS is our best idea on how to do money? I think not. Too bad the economists won’t talk about this issue. They seem to think any complaints about the banking system are some kind of coded anti-semitism. Too bad for all of us.

  • Netizen Nick

    Yes, the terms “economic growth” and “grow our way out” of the economic calamity get bandied about. What really happens when a mature nation plateaus? That’s not such a bad thing, really (take Scananavian countries, for example).

    How can the conversation move from growth and consumption, to convsevation and maintenance within an economy that moves sideways? Perhaps with modest, more natural, organic economic prosperity (less reliance on “bubbles” and bust, like tech and housing)…

  • Pole

    I like and admire Paul Krugman even though he favors Capitalism as a working economic system. When Bill Moyers tried to pin him down on Capitalism’s failures he side-stepped the question with a modification statement. Yes, Capitalism works but needs to be modified to meet today’s problems. Well, the free market philosophy, a significant part of Capitalism has a major flaw shared by most if not all Republicans since the 19th century. That is the matter of priority. Capitalism, business and the Republican faithful favor and prioritize money and property acquisition ahead of and in front of people and the general welfare. It wasn’t until Franklin D. Roosevelt, emulating his cousin’s example, Teddy Roosevelt and his progressive people oriented approach, finally put people and their general welfare ahead of property and money. The Republicans have been busy trying to rescind all of FDR and Truman’s social programs ever since. But I was also interested in how Paul Krugman defined the fact that just about all the large corporations laid people off while they were prospering, holding the many millions in profit in liquid form. Paul defined this priority as the liquidity trap. That implies the larger corporations didn’t have viable options. They were trapped in holding a lot of liquid money for a rainy day. Some might even consider that the top management and board members were Republicans bent on seeing Obama defeated and so wanted to advance the public impression that his policies were failing. I wonder how many late night drinks were downed when he won? As much as I admire Krugman, his vacillated loyalties between his Wall Street buddies and the social contract FDR forged with the American people reduce him in stature.

  • Anonymous

    Hmmmmm… Countries that did not have massive government interventions in the 1930’s ended their economic downturns by 1933-1935. Economic studies using modern modeling techniques including LEI indicate that FDR’s policies extended the USA’s Great Depression for years.

    Paul Krugman claims that WW 2 ended the Great Depression. Using GDP and unemployment figures he would appear to be correct. But that is an easy thing to accomplish. Just pay everyone and claim they are “working” and unemployment would be zero. Deficit spend say, 20% of the GDP and economic “growth” becomes double digit. What are the results?

    The diversion of economic resources to non optimal uses creates economic imbalances. That leads to shortages vs demand which leads to either massive price increases and or rationing/price controls. Which is exactly what happened during the war period Krugman states “ended the Great Depression”. This was not prosperity people. .

    This was also the result when Krugman’s Keynesian economics principles dominated the economy from the very early 1970’s through the very early 80’s. In fact the economic misery index was even worse in that period as it is now. Krugman would return us to that.

    People might want to pay attention to when prosperity actually did return to the nation. That began in the 1946/1947 period and on. That was when government spending dropped drastically. Numerous articles and Krugman like economists at the time claimed that the rapid drop in government spending would result in a return of the Great Depression. The opposite was the case.

    People might also examine some of Krugman’s other concepts. For example, he believes that higher prices are a good thing. We are not paying enough for what we buy? Behind this concept is that the majority of Americans need to drastically reduce their standard of living through real wage reductions. This is based on the “sticky wage” idea. People resist having their nominal wages reduced, so that is accomplished by price inflation, hiding it from the people. One of the many forms of deceit involved in Krugman’s branch of economics. Note the politically connected would likely be protected by increases in nominal wages that the majority would not get.

    Notice also the military Keynesianism theme? “Camps and training”? Making things that do not create real wealth? Training people for unsustainable jobs and a broken future? Is this really what we want? Shortages and a lower standard of living? The politically connected being favored? People “working” but not being productive?

    Or do we want a economic system that utilizes .resources in the most productive ways? Where wealth is generated through ALL economic income demographics making us all more prosperous. A economy where getting ahead is not tied to being politically connected………. WE win where the people pick economic winners and losers through their own choices. Not by advantages created by the lobby’s, or the political class. or the special interests for their own benefit.

  • DaveEddy

    Rob Wheeler,
    Robbing the poor and giving it to the rich will not solve our financial problems; it will make things drastically worse. Without the necessary funds, our nation will fall into poverty and corruption.
    Spinning our wheels will prevent the necessary actions to support our nations urgent needs. We depend on the fiscal capacity to pay our bills and provide for our future. We are not reducing government, we are destroying working people’s lives. We need a stong and well financed nation to retain our reputation as a just and equitable nation.
    USA stands for the “UNITED States of America” not the Useless State of Autism.

  • DaveEddy

    Capitalism is not the problem; what is the problem is the corruption and abuse of capitalism. The efficient exchange of goods and services is the only way to support quality lifestyles at our present level of population and technology. The problem is that we have caveman social mentality with high-tech social systems that are being corrupted by greed and miserliness. We need to fix our Values and priorities before we self-destruct.

  • Phoenician Romans

    Paul Krugman claims that WW 2 ended the Great Depression. Using GDP and unemployment figures he would appear to be correct. But that is an easy thing to accomplish.

    People got jobs, people got money. Everything after that is a lesser problem.

    Just pay everyone and claim they are “working” and unemployment would be zero. Deficit spend say, 20% of the GDP and economic “growth” becomes double digit.

    True EXCEPT for the problem that they’re not producing any real wealth as they do so, and that the extra purchasing power might lead to inflation if purchasing power is not also removed from the economy.

    A better idea would be to tax the rich and those who live off capital more and raise the real wages of those at the bottom, leading to a broadbased increase in demand.

    The diversion of economic resources to non optimal uses creates economic imbalances.

    Yes, but you’re overlooking the teeny-tiny problem that A RECESSION IS ALSO A NON-OPTIMAL USE OF RESOURCES. There’s maybe a trillion dollars in wealth not being created each year as people sit out of work and factories remain closed. This is a considerably worse problem than fretting whether ensuring people can eat might distort the market price of luxury yachts.

    Or do we want a economic system that utilizes .resources in the most productive ways?

    Why don’t you start with an economic system which doesn’t leave tent cities spouting up all over the country while abandoned houses rot in teh suburbs?

  • Anonymous

    Bill, Thank you so much for this interview. For the first time I saw why so many people respect Paul Klugman. This was the clearest explanation I have heard on our current situation. I have emailed the link to everyone I know. Keep up the good work!

  • Alan R

    I just started a petition on the White House petitions
    site, We the
    People. Will you sign it? Until your petition has 150
    it will only be available from the following URL and
    will not be publicly
    viewable on the Open Petitions section of We the

    each please sign this if you agree, or even think maybe it is a good idea, the
    government still has to agree.

    we petition the Obama
    administration to:

    (5)Trillion Works
    Progress Administration JOBS, Infrastructure, SELF RELIANT Energy, Education.
    Min. tax for Corporation


    U.S. needs a
    Jobs policy,

    Works Progress Administration & Import

    Many people leaving the job market because there are no jobs.

    No job for 2 years; go to welfare or social security disability;

    The WPA worked after the Great depression and it can work

    Energy Policy to make Our Energy here so that the Energy prices
    stable. We need Energy to make anything so if prices go up everything else goes

    Our Education system is bad

    A report recently published by
    U.S. students
    ranked 25th among 34 countries in math and science
    Created: Jan
    13, 2013

    Issues: Budget
    and Taxes, Economy, Job


  • MaRioVerde

    I am glad Jimbo and Bob Wheeler took up what I could not have expressed as well.

    I was not surprised Krugman, also from Princeton, fell into the same categoriey as two cousins of mine, former students of Bernanke and one head of an economics department: they keep for granted the system that has been designed to benefit a select few and trivialize/ignore rather the “greatest creative opportunity” of the government (A. Lincoln – and omitted in the movie!), namely to issue currency, by calling it a “gimmick” (re: platinum coin). What other then a sinister gimmick is it, for private interests to print money and loan it to the government? Krugman speaks casually of “borrowing more”, but never is the question raised as to who are we borrowing this money from, who has this kind of money stemming from what kind of activity and who are ‘they’ to demand fees that actually “kill the cash-cow”?

    Some of my sources:
    Stephen Zarlenga: Lost Science of Money
    Ellen Brown: Web of Debt (Public Banking)
    Money Masters
    Money as Debt

  • Anonymous

    The flaw of the capitalistic system does just fines as long as the regulatory agencies do their job. Needless to say our financial crisis was allowed to exist because the SEC; the FED; Congress; Fannie & Freddie; the credit rating agencies all failed the nation. The successful capitalistic system gives us the honor of being the most generous folks in the world.. I find it funny that Bill Moyers program is sponsored by Carnegie ( the big capitalist) & folks find these type of folks uncaring..How many huge foundations has capitalist funded to help the worlds population…Bill Gates & Warren Buffet come to mind.. Their are hundreds of this foundations. Socialistic country do not have charitable giving like the US of A.. Folks are told to go for the govt for help..heaven help if we slide into that pit. I like & support allot of local charities … It makes me feel good and cense of community.. I don’t get that feeling about sending my hard earned income to Washington & have the politicians hand it out to get votes for themselves

  • Anonymous

    Paul Krugman is a different type of economist. John Maynard Keynes theory of full employment, as its called, did not do much to regain employment in the past 4 yrs. I studied Keynes; Adam Smith; Milt Friedman & agree with latter more than Keynes. I directly took a class from Walter Heller while at the U of Mn.. He was known as tax economist.. As economic advisor to JFK he advised him to lower taxes which he did & spurred the economy in the 60’s… LBJ being a tax & spend type got rid of Heller.. Funny a Dem cutting taxes to help the economy.. LBJ went on the grow govt & exit the office having failed to deal with the SE Asia war..sad case of wanting power & not handling it properly..

  • Russ Clark

    I happened to tune into the John Stewarts “Daily Show” and laughed out when I found out that Krugman felt the need to pick a fight with Stewart over Stewarts good sense to lampoon the trillion dollar coin idea that Krugman keeps promoting. You say that you disdain the fact that people consider him a “celebrity” but if his ego and ideas are so thin that he feels the need to attack a comedian for lampooning such a crazy idea- then Krugman has definitely earned the title “celebrity economist”. It is disappointing to see someone of Krugman’s intelligence allowing his political agenda/celebrity overshadow his academic/economic work. Reminds me of when Donald Trump had a public feud with Rosie O’Donnell. Just demeaning to his credibility.

  • Mark Bishton

    Bill, the last little part of your show touched on the corporate ENTITLEMENTS & tax breaks.

    Nothing has & is bankrupting our country more!

    Nothing is ruining the great experiment in democracy more!

    Corporate manipulation and control of our government is at the root of every problem we have and should never be left as a footnote to a topic such as this!

    Cutting down these entitlements & removing these breaks are exactly the kinds of spending cuts that should be suggested by anyone, economist or not, as a significant part of the cure to our severe ecopnomic malise.

    Anyone whose head is out of the sand recognizes that overspending is part of the problem, but too many, like Krugman, talk only about increasing government spending to stimulate the economy without any concern to balance it.

    To not mention the burden of corporate welfare on our country’s fiscal health, implies that the only social security, medicare, etc. are entitlements; when in fact most citizens receiving those kinds benefits have paid/invested into these funds for years. They are not entitlements any more than an annuity is!

    The meaning of words counts and not defending and discerning and highlighting the proper difference between corporate welfare entitlements and the return of rightfully earned investments is a great failing and acquiescence of the liberal media.

    Krugman was remarkably vague in answering some of your questions. I am surprised you let him slide.

    He clearly suggested that spending government money to repel aliens would be a net positive. This is hyperbole at best but he was too adamant that spending alone was all that was needed to believe he had any other part to his plan. Frankly nearly everything he said sounded more like a hem & a haw, than a cogent persuasive argument.

    I’m afraid his better days are behind him & found watching this interview to be a waste of time.

    Of course it is the government’s responsibility to support, nourish and even stimulate the economy. What a shame Krugman had so little in the way of specific programs or places to invest this nations dwindling devalued buying power.

  • Karl Mattlage

    What really astounds me about Krugman’s ideas are that he thinks the printing of more paper money by the government will avert economic disaster in the final analysis. Then how does he explain the disastrous outcome of the Weimar Republic of Germany (in the 1920’s) efforts to pay its huge war reparations imposed by the Versailles Treaty by continual printing of more and more paper money, thereby causing the German Mark to become worthless and hyperinflation to set in. For such an astute economist to ignore the lessons of fairly recent history is truly amazing.

  • Jeff

    To fix many of the problems we face we make it illegal to materially benefit from “serving”, such as for starters:

    – Publicly finance elections exclusively.
    – Make it illegal for any public servant to ever lobby for any compensation.
    – Make it illegal for any public servant to accept a job with a business that they affected while “serving”, at least for a significant length of time to minimize their influence with government officials currently serving.

    Of course this creates as conundrum as the only people who could implement influence reducing changes to the current system are the ones who created a system from which they materially benefit.

  • Johanna

    No offense to either Paul Krugman’s genuine interest in the common good and Bill Moyers elegant and articulate interview, I found myself aghast at Mr. Krugman’s “prescription” for moving America out of the recession and in a positive direction, “spending.” I cannot conceive of what universe Mr. Krugman is residing that he does not comprehend that savings is an absolute priority when unemployment and possible financial ruin are imminent. Spend and not save? Is he insane? I have long heard Mr. Krugman lauded and praised as the only sane liberal voice in the mainstream — a nobel prize winner, for goodness sakes, he can’t be wrong. But wrong he is. He is not thinking of how spending and not saving is a prescription for economic destitution — if he means that individuals must follow that prescription. If he means that the government must spend, I’m all for it. I was very disturbed by his pronouncement that — if a college graduate comes onto the job market and can’t find a job in his field for many years — that “by the age of 28″ his future is ruined. That was a loaded and horribly disturbing statement. No doubt there is truth in it, but by all means, we need to unpack why and how companies (including PBS) reject job applicants who are not fresh out of college and/or reject them as interns if they are not currently enrolled and so help to solidify the wall that stands between them and a career. Does Mr. Krugman suggest that the 28 year old simply give up if he/she doesn’t land a job by the time they are 28 and what, pray tell, does he suggest they do? We have an education- complex which protects itself and its interest (more students, more money) and has helped to lock out smart, qualified candidates based solely on their educational pedigree. We (and Paul Krugman included) can’t just say that 28 is too late to try because companies aren’t going to give a 28 year old with no experience a chance — We need to force reforms in hiring and in the insanity of road blocks to productivity put up by our current system. It is elitist and broken.

  • Dean Charles Marshall

    How many “wake up” calls do we Americans need before we realize our country has been hijacked by a nefarious cabal of special interests who bribe our elected officials in Congress to drive the “get away” car? Paul Krugman is a truth teller, and thank God for that.

  • Alan R

    account is required to sign Petitions. I NEED 151 SIGNED TO MAKE PUBLIC.



    we petition the Obama
    administration to:

    1 Trillion each year
    for 5 yrs Works Progress Administration JOBS, Infrastructure, SELF RELIANT
    Energy, Education. Min. tax for Corp


    U.S.A needs a
    Jobs policy

    Works Progress
    Import Tariffs


    Many people
    leaving the job market because there are no jobs

    No job for 2
    years; go to welfare or social security disability; NEVER PAY TAXES AGAIN, WHO
    WILL? no jobs skills? YOU CAN NOT UNDO THE DAMAGE

    Energy Policy
    TO MAKE OUR ENERGY HERE so prices stable. We need Energy to make everything so
    if energy prices go up the price of everything else goes

    Our Education
    system needs help

    A report
    recently published by Harvard University’s U.S. students ranked 25th among 34 countries in math and


    Jan 21, 2013

    Issues: Budget and
    Taxes, Economy, Job

    Signatures needed by
    February 20, 2013 to reach goal of > 25,000
    creator A.

    San Diego, CA
    January 21, 2013
    Signature # 1

    Paul Krugman
    on Recession and Recovery

    Nobel Prize-winning economist and New York Times
    columnist Paul Krugman explains why our top priority should be getting
    America back to work
    – if only Congress and…

    Please ask your friends to sign this petition so that we get the
    need 151

    to make it public so that the American People can decide for

    ‎1 Trillion dollars for each of
    5yrs, 5 Trillion dollars total for Works Progress Administration JOBS, (less
    than WE spend on the 2 Wars) rebuilding the Infrastructure in the
    U.S.A. and creating
    America JOBS doing it. Our bridges need
    it for sure; We need to build Solar, Wind, and other power plants and creating
    American Jobs to make Our own Energy We have not done since the 1970 oil
    shortage. The title line on the petition is not long enough for the full
    description and neither is the description box of the petition



    Like · · Unfollow Post · 12
    hours ago

    Moyers & Company Show 201: Paul Krugman on Why Jobs Come

    Our current obsession with slashing the deficit is
    getting in the way of real work that needs to be done to preserve both our
    economy and our democracy. It’s all…

    Like · · Unfollow Post · Share
    · 12
    hours ago

    Paul Krugman on Recession and

    Nobel Prize-winning economist and New York Times
    columnist Paul Krugman explains why our top priority should be getting
    America back to work
    – if only Congress and…

  • Eve

    i know you don’t want any objections to your very smug – “know better” ideology. but, in the extremely unlikely event your mind should be open to listening to someone who knows what he is talking about, you’ll find this helpful:

  • Amtak

    Good post, deliaruhe, I’m in the same camp. What bothers me though, and I don’t think the show dealt adequately with it, is the fact that technological advances during the past two decades of widening inequality and job loss have replaced workers with robots. Creating jobs today and increasingly into future may well be beyond our ability and effort. We must start discussing how to reorder our economy so as to reduce inequality in an increasingly mechanized field. Failing that will be far more catastrophic than any fiscal cliff.

  • Alan R

    —– Original Message —–
    Sent: Friday, February 01, 2013 8:01 AM

    Subject: Fw: PLEAS SIGN THIS Petition



    we petition the Obama administration for:

    Works Progress
    Administration JOBS, Infrastructure, SELF RELIANT Energy, Education. Min. tax
    for Corp


    U.S.A needs a Jobs

    Works Progress Administration

    Keep us working, so can Import Tariffs

    No job
    for 2 years; go to welfare or social security disability; NEVER PAY TAXES AGAIN,

    Policy TO MAKE OUR ENERGY HERE so prices stable. We need Energy to make
    everything so if energy prices go up the price of everything else goes

    Our Education system needs help

    A report recently published by Harvard University’s U.S. students ranked
    25th among 34 countries in math and science



    Paul Krugman on
    Recession and Recovery

    Nobel Prize-winning
    economist and New York Times columnist Paul Krugman explains why our top
    priority should be getting America back to work – if only Congress


    Moyers &
    Company Show 201: Paul Krugman on Why Jobs Come First

    Our current obsession with
    slashing the deficit is getting in the way of real work that needs to be done to
    preserve both our economy and our democracy. It’s


    Works Progress Administration – Wikipedia, the free

    The Works Progress Administration (renamed in
    1939 as the Work Projects Administration; WPA) was the largest and most
    ambitious New Deal agency, employing millions of unemployed people (mostly
    unskilled men) to carry out public works projects,[1] including the construction
    of public buildings and ro…


    Paul Krugman on Recession and Recovery

    Nobel Prize-winning economist and New York
    Times columnist Paul Krugman explains why our top priority should be getting
    America back to work – if only Congress and…


    Davos bosses hunt $5 trillion new revenue in low-growth

    DAVOS, Switzerland (Reuters) – Business
    leaders in Davos have plenty to worry about, from the euro zone to global
    geopolitical upheavals, but at heart their problem is simple: how to find new
    revenue in


    Timeline Photos ‎~EDS


    U.S. Students Still Lag Behind Foreign Peers, Outpaced By 24

    U.S. students aren’t progressing to catch up
    to their peers in other industrialized countries. A report recently published by
    Harvard University’s Program on Education Policy and Governance found that
    students in Latvia, Chile and Brazil are making gains in academics three times
    faster than American…


    Moyers & Company Show 201: Paul Krugman on Why Jobs Come

    Our current obsession with slashing the
    deficit is getting in the way of real work that needs to be done to preserve
    both our economy and our democracy. It’s all…


    THE PUBLIC CAN DECIDE. It is not about the money, it is about saving the middle
    class. This is the bail out for main street, at a third the cost of the bail out
    of Wall Street.


    Works Progress Administration – Wikipedia, the free

    The Works Progress Administration (renamed in
    1939 as the Work Projects Administration; WPA) was the largest and most
    ambitious New Deal agency, employing millions of unemployed people (mostly
    unskilled men) to carry out public works projects,[1] including the construction
    of public buildings and ro…


    Timeline Photos ‎~EDS


    Timeline Photos


    AP analysis: Technology kills middle
    class jobs

    AP analysis: Technology kills middle class jobs

    Five years since the great recession engulfed
    the world, millions of middle-class jobs have vanished. Experts fear those
    positions are lost for good – killed by sophisticated technology and smarter
    software in a great reset of the job market.


    Unlike · ·Unfollow Post · January 16 at 9:07am

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    Robinson Jr

    1972 to

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    Robinson Jr

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    Alan H
    Robinson Jr

    What QE3 Means For The Fed’s Balance Sheet: $4 Trillion Here We

    As expected, there has been quite a bit of
    discussion regarding the theoretical implications of the Fed’s new plan to
    purchase $40 billion of agency mortgage back securities per month until such a
    time as the “outlook for

    Like · ·Unfollow Post · Share · January 12 at

  • Jonathan

    I’m not sure why growth is seen as such a problem and its end so inevitable, let alone something to be celebrated. Certainly growth has accelerated and slowed over the course of history, usually driven by new technologies and techniques. Growth has slowed since the first and second industrial revolutions, when transformative innovations (pardon the word) were appearing on an almost yearly basis. Growth in the use of finite natural resources is obviously a problem, but Europe and the United States have both had considerable economic growth over the past three decades with comparatively small increases (or even decreases) in environmental impact. American oil consumption is barely above where it was in the mid 70s, despite a much larger economy and population; European oil consumption is far below its 1970s peak. If a new method is devised to produce a product much more efficiently, its price can be lowered, producing growth, while reducing or maintaining the same level of environmental impact. Likewise, many large new industries, like software, have minimal environmental impact or natural resource consumption. The problem isn’t with growth per se; it’s with allowing people and corporations to damage the environment with virtually no restriction.

  • Isaep Stasko

    Russ; sound like you dis agree with Depression Econ.