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.

Paul Krugman Explains the Keys to Our Recovery

Nobel Prize-winning economist and New York Times columnist Paul Krugman argues that saving money is not the path to economic recovery. Instead, he tells Bill, we should put aside our excessive focus on the deficit, 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.

Some moments from the conversation:

“I probably have more influence doing what I do now than I would if I were inside trying to do the court power games that come with any White House, which I don’t think I’d be any good at… What the president needs right now is he needs a hard-nosed negotiator. And rumor has it that’s what he’s got.” Watch this clip.

“We’re awash in excess savings. And if you decide to save more, it’s not actually going to help society… If there’s 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… 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.”

“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… All the productive capacity is there. All that’s lacking is the intellectual clarity and the political will.”

“[Obama’s] 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 it wouldn’t, that he should go for the stuff that will help the economy now…

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… it’s a glacial pace, compared with the way we should be… 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.”

“We have pretty good evidence on 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’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.” Watch this clip.

“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’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?”

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  • David Snyder

    Krugman does the Spock live long and prosper hand gesture at 6:34. Cool!

  • John Gault

    Krugman, Al Gore, and Obama have really sullied the Nobel Prize. Poor Alfred Nobel is probably spinning in his grave

  • John Gault

    I think we are currently in the Krugman depression. So named because after the Dot Com bust Krugman championed the idea of creating a housing bubble to get us out the mess. Now he is champion more cheap credit and wasteful spending to get us out the Krugman housing debacle. Where does it end? Why do you give this clown a forum.

  • Tom Shillock

    Obama fairly consistently deploys the rhetoric of equity and democracy while serving the plutocratic interests, just like Reagan and Clinton. He is the typical unscrupulous opportunist politician. He has said several times that he agrees with congressional deficit zealots about the “need” to cut Social Security and Medicare benefits. If he are really wanted to cut Medicare costs he would have insisted on the public option which he promised in his campaign, but he did not put up the slightest show of resistance before caving on the issue.

    We Americans have been effectively disenfranchised by America’s two party political duopoly. The irresponsibility over three decades has caused increasing financial crises and economic problems and now the Great Recession. As Lawrence Lessig has pointed out in his book, Republic Lost, the system is thoroughly corrupt because of the way it is financed. The upper class does not see and their lackeys like Obama do not care that they are undermining their own long term interests because they are destroying democratic capitalism in favor of plutocracy..

  • John Gault

    Krugman, like most Government economists and politicians, think best.  According to him, the solutions is easy.  Just have the government spend billions of dollars it doesn’t have. So where does the government get money?  Why it prints it out of thin air of course (actually it goes through an elaborate Kabuki dance with the Fed that fools most of the people most of the time into thinking that they aren’t really just printing money).  You see in Krugman’s universe, money grows on trees.  The solution to a big economic mess caused by too much borrowing and irresponsible spending is to have the government engage in even bigger borrowing and irresponsible spending. Of course government counterfeits steals money from everyone’s pocket and makes us all poorer.  And the stolen booty is used to fund political projects that will buy them more votes or get them more campaign contributions in the future.  And things look good for a while until all the money is gone and more counterfeiting is required.   And we are supposed to believe that this is how a society gets rich or recovers from a recession? Sorry, this fairy tale is just to silly to believe.

  • John Gault

    Yes court jesters have all sorts of tricks up their sleeves!

  • Richard Whiteford

    Yes war stimulated the economy, but as Krugman says, we don’t need a threat from space aliens to stimulate the next surge, we have one that is more ominous than anything humanity has ever faced – global warming. Why don’t we use that challenge to ramp up our next economical surge? If we don’t the economy will be a moot point!

  • Richard Whiteford

    Another question; Krugman projects the future on the business as usual scenario (the future will be the “now” marching forward). How badly will global warming skew future projections that are based on this business as usual scenario if the world is drastically different than anything anyone has considered. Why isn’t anyone talking about what planning is going on now to include that, if anyone is? What if billions of people are displaced, economies are destroyed, and food and water is very scarce? Is anyone forecasting an economic future based upon this scenario?

  • Richard Whiteford

    Have you seen this 2 minute video about climate change/economy?

  • Anonymous

    Why? should or do the answers have to be difficult or hard?

  • Anonymous

    LOL, that’s right, it was all Krugman’s fault. Bush, Greenspan, the Republican Congress were all listening to him and doing exactly what he told them to do. And he started the Iraq war too. Yeah, that’s the ticket — not!

    Hilarious! C’mon, this same unoriginal comment is all over the right wing blogs, taking one phrase in one sentence in one column out of context, and ignoring everything else Krugman was writing. Bush made an entire speech to encourage the housing bubble– In fact, Bush’s May 2002 speech proposing the American Dream Downpayment initiative came several months before Krugman’s snarky comment about a housing bubble in the following August. And furthermore, Krugman was sarcastically quoting Paul McCulley of Pimco at the time.

    Republicans passed the American Dream Downpayment Initiative in 2003, as Greenspan was decreasing interest rates to record lows. The ADDA encouraging lending, which encouraged new mortgage products, provided government grants to be used as down payments, instituted tax credits to make expensive houses “affordable,” and allowed lenders to remove the boring “fine print” regarding things about which the buyer should be wary.

    It was Bush who insisted that Fannie Mae and Freddie Mac meet new higher goals for low-income lending. Bush’s chief economics adviser, Lawrence B. Lindsey, said “No one wanted to stop that bubble. It would have conflicted with the president’s own policies.”

    “The Bush administration took a lot of pride that homeownership had reached historic highs,” former Bush administration Treasury Secretary John W. Snow said in an interview in 2007.

    And let’s not forget the other bubble caused by republicans: the student loan bubble. And just like the bait & switch of predatory ARM mortgages, student loan rates were all set to double this past year. Oh the chicanery!

  • Anonymous

    For over 30 years, we’ve been going along with your Friedman/Hayek/Laffer ideas and look where they got us.

    Time to go back to neo-Keynesian ideas that actually kept our economy stable. Look at the 50’s and 60’s. The Interstate highway system, introduced by Eisenhower, is a great example of what a Keynesian infrastructure stimulus can do for the economy both short term and long term.

  • Anonymous

    “We cannot allow ourselves to be blackmailed into spending cuts,…”

    ….Mr. Krugman, like usual, is correct….the problem is not too much government spending but too little….increase Social Securitys’ COLA, put teachers, cops and fire-fighters back to work, start a few hundred billion in new public works and watch the economy take off….

    ….business is sitting on plenty of money, several trillion dollars but won’t spend any….why?….no customers to buy the trinkets they sell….we need to create trinket customers then tax that greedy 1% and worry about paying down the deficit when the economy booms….

    ….the one thing we mustn’t do is succumb to the greedy 1% and the economic terrorists that dominate the Republican Party….(better keep gitmo open)….to do so will destroy our country….

    ….the Prez missed a golden opportunity to set a new tone and boost main-street confidence by not naming Mr. Krugman as Treasury Secretary….

  • Sergio

    “Yeah! We should all break each others property, and spend all our savings! That will surely bring us out of economic doom!”..Really, are you serious!?

  • Sergio

    We should begin to question all economic hypotheses and see if any of them stand on any actual methodological footing first. If we do not then this argument will continue Ad infinitum.

  • Anonymous

    Has QE3 created inflation? It hasn’t happened. Grains
    have gone up in price because of the weather.

    In five years, total wages, including benefits, per capita have down. If there was inflation, wages should be going up. That hasn’t happened.

    The (overall) multiplier has fallen to .7 That’s an argument for government to become an employer of last resort and aggressive fiscal policy. The multiplier for poor people is above 1.5; for big corporations, less than one-half.

    Cheney said that deficits don’t matter, but now that Republicans do not have the presidency, deficits do matter. Keep in mind that under Cheney and George W Bush, the dollar amount of wealth lost exceeds $12
    trillion. Taking into account the losses from real estate that have occurred since, the total lost wealth amounts to $16 trillion — about $55,000 per capita.

    The dollar amount of the $800 billion stimulus actually devoted to building things, not automatic stabilizers like food stamps and unemployment compensation, was less than $300 billion — about $1000 per capita, of which only about $150 billion, $500 per capita has been spent.

    It’s not that the stimulus hasn’t worked. It hasn’t even been tried.

    What ended the depression was World War Two. The cost of the war was about double the 1939 GDP, nearly triple the 1932 GDP. If we were to have a stimulus sufficient to raise the labor force participation rate up to 70% from 63.5% or so and to reduce the broad unemployment rate U-6 from 14.5% to 5% or so, the stimulus should be about double 2007’s GDP
    — $28 trillion — instead of $800 billion. That’s 35 times bigger.

    There’s a tremendous shortfall in our economy between GDP and potential GDP. There’s so much slack that $95,000 per capita stimulus to build things and to get people employed would not create any inflation.

  • PatrickT

    Keynes, fed up with comments like yours, wrote (in substance), bury cash in the ground and let people dig to find it, that’ll keep them “employed”. And yes, if we all broke each other’s properties, and cared to fix them afterwards, it would take us out of the depression. But Keynes, and Krugman, and Stiglitz, etc. all knew and said that there are better things than burying cash, destroying property, and that’s having the government spend on infrastructure, e.g. schooling. For instance, the government could help you finance a course in Econ101 and everyone would be better off, your analytical ability would be increased and we would be spared comments like yours.

  • John

    The problem is that the US economy is not self sufficient. We import stuffs. As a result, even if you spend a lot of money we will be back in the same problem again. Can any local producer sell their stuffs in Target, Walmart, and etc… Let see a house is 200k. That mean you have to make 50k before tax. Let pretend that you want to produce something. At retail of 10 dollars(wholesale of 5 dollars), you are talking about 3 dollars profit for each items. This also mean you have to sell about 16000 items a year(not possible under current system). When you add housing with eduction and etc…, the number simply failed. In short, the people at the top failed elementary school math. When you print money and give yourself way way too much, the system stop working. To buy raw material in the US cost more than the final goods. In short we are reaching a point where it is cheaper to go to a forest cut the tree down and do it yourself.

    Things to do.
    1. Do new international trade system.
    2. Do new distribution system.

    At minimum you need this 2 stuffs before before you worry about the rest.

  • Anonymous

    As most anyone knows, the government is the source of all money. Try printing your own and the gov will lock you up in prison. The Fed and Treasury make sure there is enough printed and in circulation to equal the wealth whose work created it in the first place.

  • Anonymous

    You shall know them by their works. Obama’s promises:

    Even if the media doesn’t care if he keeps them or not, I do… and I am keeping a list.

  • James Tennier

    About 9 minutes in, Dr Krugman states that government needs to spend more as individuals trying to and corps, saving too much has negative impact overall. I would posit that corps keep out-sized portion of earnings flies in the face of the lesson of Henry Ford.
    “Pay workers enough to purchase products they make.”
    Clearly with the shift to flat incomes for the masses vs extraordinary gains to the wealthy these past three decades, shows the evidence is there.

  • James Tennier

    “create” being the operative word! Bankers creating debt based money, many times over is not nearly the same thing as digging ditches all week and collecting your paycheck on Friday.
    We need to have the bankers and ditch diggers swap places. Couldn’t be any worse for the former middle class than things are now…

  • Anonymous

    Dr. Krugman is a national treasure. Keep him front and center!

    I’d like to see more discussion of why our economy is not functioning. Is it our giant trade deficit, which represents millions of jobs overseas? Income inequality, with corporations and the wealthy hoarding money that the middle class would normally spend? Too much spending and defense and under-taxation since the Bush tax cuts?

    Let’s do the spending but fix the underlying issues that caused this crisis in 2008.

  • farmgirl

    Excellent interview. Paul Krugman certainly clarified a lot of questions. Thank you Paul.

  • Jon C

    While Paul Krugman has great insight, I find it distressing that he seems obsessed with an ever expanding and growth oriented economy as the only answer to economic recovery. It seems that such a great mind would someday, someway, realize that mankind cannot for ever gobble up more and more resources of our finite planet. We need to concentrate on a more steady state economy with a more equitable system of resource distribution. We need to end our boom town mentality and realize that it is a very long way to the next available real estate.

  • whatdayaknow55

    The issue should be jobs. A recent law school graduate

  • Anonymous

    Great Recession has it’s roots in concept of supply-side ecnomics. Millions for decades believed if we just create policy that benefit’s the wealthy, it will be peachy for all???
    Surprise, surprise the only folks who benefited were the wealthy at expense of everyone else. While Dems hands are not completely clean, it was GOP who were the principle instrument in this Grand Deception.

    Anyone who wishes to take the time to review history would learn that good old supply-side was principle cause of Great Depression as well.
    It may have been better had we entered 2nd Depression; then this idea of “feeding the rich” is smart economic policy may have finally died (as it did following Depression).
    As long as half of congress (GOP) still stubbornly hang on to the same concepts that got us to this point, we are in for a LONG SLOW recovery at best.

    As far as National debt is concerned, From 1960 through 2008, every Republican president has increased the debt/GDP ratio and every Democratic President has decreased it.

  • Anonymous

    Perhaps quality jobs should be the goal?
    We are shipping jobs overseas and they are being replaced with Walmart jobs This is what is the effect of our huge Trade Deficit.
    Until our trade deficit reaches better balance, this trend will continue.
    Bernanke’s QE’s in part help replace all the $ we’re sending out the door that ain’t coming back.

  • bkmom5

    How about solar panels on all public buildings including schools (especially in the south and west) to boost manufacture, give jobs to installers/construction workers, cut down on coal/power usage. Encourage banks to work with solar companies to offer multi year payments to make panels more affordable for homeowners as they do in some European countries. Join the 21st century and introduce high speed rail or at least build tracks to make the infrastructure more user friendly (so traveling from NM to FL doesn’t require a trip to IL). * Our country encourages it’s youth to get an education when there are no jobs in sight after graduation. The cliff we should be worried about is the one we’re sending our young people over. It’s not about the debt, it’s about the jobs.

  • Anonymous

    As far as MainStream economists go, Paul Krugman is a voice of Left-of-Center reason.

    However, Krugman’s a bit like Weak Tea, just enough to be considered Liberal, but not enough to be truly Satisfying.

    Krugman pulls his punches in order to be Accepted in Academic Polite Society, but misses (or won’t say) a significant factor in Today’s Economy — the widespread Corruption, Cheating, & False Profits made by the NeoLiberal Financial Sector.

    Who cares about the Liquidity Trap when Banksters can personally walk away Laughing all the Way to their Retirements. You can steal the Money with a Fountain Pen just as well as with a Gun. When the corruption is inbreed into the Financial Culture, & the Main Street economy is chosen to receive the Pain, the economy will continue to flatline (i.e. Japan).

    Paul Krugman doesn’t believe that Neo-Feudalism is possible. But Krugman is Blind. It’s the Plutocrats who control the Republican party & they don’t give a damn about Democracy or the Country, for that matter. (Isn’t Globalization wonderful?)

    IMHO, Michael Hudson is the “economist” Bill Moyers should Really be interviewing. I’m afraid Paul Krugman (which I personally like well enough) doesn’t represent the Future.

  • melvinchisel

    The solution in one sentence? JOBSJOBSJOBSJOBS

  • John Knowlton

    Great show as always Mr. Moyer hits the nail on the head with a stellar guest ! I have a daughter in graduate school, and my hopes for her are that we can somehow pull ourselves out of this sad, controlled, tight-fisted economy. In my mind, this ranks up there with global warming in terms of selling short the future happiness of the many to serve the few.

  • Anonymous

    Okay let’s do.
    Supply-side was in place right before depression.

    Keynes ideas were put in place and we had 4 decades of prosperity.

    Then in Carter Admin we stumbled a bit, largely because of 22% interest rates and oil issues.

    Then we put in place Friedman/Hayek Reaganomics for 30+ years and our economy was brought to it’s knees and brought about major structural problems including debt (Reagan started this trend by tripling it- quite an accomplishment considering we were at peace at the time).

    Okay we’ve examined them.
    Which theory do you think makes most sense?

  • Anonymous

    Of course we could have stayed on the same course we are on when we were hemorrhaging jobs? We could have continued all the same policies and hope something different would happen (Einstein’s definition of insanity).

    Instead Bernanke did what he could do to steer us clear of a 2nd Depression with limited tools at his disposal-(interest rates were zero).
    Lucky for us Bernanke had spent great deal of time studying the Great Depression and acted quickly.

    W left us issues that are going to take LONG time to heal from- if we ever manage to.

  • Michael B.

    Splendid, elegant, intelligent rejoinder.

  • Alexi Gerdau

    Krugman is so far removed from reality it is sad. If Grandma and Grandpa would get some interest for their savings they could spend more and also help their children and grandchildren. How about food prices and inflation? None of that was mentioned on the Bill Moyers interview. Many of the gov. help would be needed less if our savers were not robbed by people like this Krugman and his friends. I am utterly digusted by the cunning cold way of thinking
    of these people.
    Pay Americans a good wage and give savers better returns on their money. That will fix the problem. But they are twisting things around so they and their friends can rake in the bucks.

  • Anonymous

    Big fan of PK, except for the part where he believes dog-eat-dog Capitalism can somehow be ‘saved’ or ‘fixed’ in a way that benefits a few more of us 99%ers.

    The only – ONLY – inevitable result of dog-eat-dog Capitalism is a few really fat dogs, and tens of millions of maimed and dead dogs.

    That’s why it’s not called dog-play-nice-and-share-with-other-dog Capitalism.

  • Anonymous

    The solution is to pay labor a fair wage. There is too much wealth concentrated in the hands of a few worldwide. This is a phenomenon that the great liberators like Moses and Jesus of the bible fought against. Also, the Prophet, Mohammed. We can use sophisticated economics to explain the transfer of wealth from the poor to the rich but the intractable problem of poverty remains with us. Why?

  • Michael C

    Better dig faster than the Fed can hit Ctrl+P if you want that money to be worth anything

  • John McLaughlin

    Thanks to Bill Moyers for keeping up the fight! Appreciate the great guests like Matt Taibbi and Paul Krugman- keeping it rational and real. Fresh air indeed. Washington has become lazy. We need a focus on tough subjects like energy conservation, basic human needs, health economics, and so much more. Looking forward to future interviews.

  • cate mull

    I have been thinking the same thing? With the draughts,wildfires, Sandy and other storms, fires in Australia and ect. across the globe what will happen? Things seem to be at a forever stalemate.

  • nnyl

    Some businesses aren’t hiring because they are having trouble finding workers with the right skills.

  • Anonymous

    A lobotomy for Krugman would be the better solution1

  • Sergio

    Were does all this so called prosperity you think will work wonders for your utopia come from? Through destruction and coercion of other peoples property? If so, we will surely turn back the dial of time and destroy civilization…

  • Sergio

    What about the economic schools before Keynes and his General Theory? Did they not contribute to the building of our civilization?

  • Serban Protopopescu

    Ptolemy’s model of the solar system also contributed to the building of our civilization.

  • Bobby Harper

    I think the closing statement of Mr. Moyers says more about our main problem. Since the Reagan years the top 1% salarys have gone up 280%, and we the people have to work longer with less buying power. Corporate lobbyists run this government. Our infrastructure is our future and we are way behind. As long as war is profitable and this constant corporate greed keeps dictating our lives we will be stuck in high debt and distrust of our so-called leaders

  • Sergio

    Their is a confusion here with the natural and the social sciences.
    Natural science studies objects in nature which are replicable in the laboratory, so to speak, with mathematical equations because there are constants.
    Yet, in the social sciences, e.g., economics, they study human action. Human’s are not replicable in a laboratory. Therefore, there are no constants.

  • Krish

    That’s the difference between a household and a national economy and why we do not nominate anyone who can balance a checkbook to be Treasury Secretary. Sergio, this might be a little too complicated –called aggregate demand.

  • DianeK

    How comforting to listen to voices of reason and sanity from both Mssrs. Kruger and Moyers., I agree with Mr. Kruger that we can no longer discuss politics without economics or vice versa. Capitalism and our democracy are still the best options but they need to be reviewed and reworked to fit today’s new paradigms in a perplex and changing world. Let’s not turn our country into one of the ones we criticize for their lack of humanity.

  • Jane

    I just watched your wonderful interview with New York Times Paul Krugman. I think I would like someone to pull an extraterritorial alarm now. Create jobs any way possible.

  • Sergio

    1. Where is the money coming from to pay for this aggregate demand?

    2. Why not give everyone, man, woman and child, all over the world, a
    million dollars a day, and that will result in more production and more jobs
    and we will all be rich?

  • Davidcoast

    Paul Krugman blasts the premise, on the right, that state governments, hard-strapped, are ideally poised to at last cut back on excessive spending. That is, they have the motivation, which they otherwise would not – my argument. Here, by virtue of refusing to go deeper, you go off the rail, and reveal your compromising liberal bent.

    Why, Bill, why? You sit there and ogle over Krugman’s every word, rarely really taking him to task in a strong assertive way. And then, Krugman argues, while you smile, that those in favor of deficit reduction refuse to state why. That is a blatant misrepresentation of numerous voices who have voiced many reasons why. May I inform you, Bill, that for every dollar the government spends, it has to borrow around 42 cents. Is that not reason for concern?

    Please, get back on a strong track; you produce some great shows, but this is not one. When you face liberals across the desk, you tend to go soft. Try to remember that you are potentially a top journalist.

  • Joseph

    It is amazing that this clown is comparing the 1930’s to today. In the 1930’s there was virtually no government spending, and no deficit. No Medicare program that is going to bankrupt the country. Today we have deficits of over $1 trillion as far as the eye can see, and he wants to spend hundreds of billions more. On what? On whatever President Obama thinks is beneficial. Go away, Krugman.

  • Stephen in NYC

    When are we going to start referring to lobbying as what it really is: bribery. By funneling hundreds of milions of dollars to our elected congressmen and senators in the U.S. Congress through so-called lobbyists, corporations and some issue-oriented organizations have bought influence on how “our” members of the legislature write up laws and vote on them to such an extent that we can truthfully say that those corporations and organizations “own” Congress. That’s bribery, pure and simple, and we shouldn’t be shy to call it that.

    (P.S. Thank you for having the great Paul Krugman on your show this evening; your conversation with him was illuminating.)

  • Anonymous

    Poor economic policy brought on Depression and Recession. That’s why these events are related and why they were discussed.

    As far as debt, this country has not seen a fiscally Conservative administration for over 50 years (Reagan tripled the debt and really got ball rolling), so I hope you’re not pinning your hopes there.

    Just curious. What solutions do you have in mind for Medicare?

    Other than “roll back PPACA” please.

  • Phoenix Risen

    Bravo bravo! Right on! Absolutely true!

  • Phoenix Risen

    That is a bunch of bs. Our overqualified graduates cant get jobs worthy of their education due to the obscene greed of the 1%-ers.

  • Eds

    “We are producing the same amount of goods and services now as we were before the ‘great recession,’ but we’re doing it with five million fewer jobs.” That quote by Mark Shields tells me that corporations no longer need workers, they have robots, and we’re going to have to rethink a lot of things. We need a guaranteed income, or guaranteed jobs, or both. Krugman is so completely right about everything he says it’s scary–expecially when you consider that the government doesn’t even consider his ideas one wit. The long term damage of unemployment is so evident in so many lives, including my own. The fact that politicians just don’t get it and don’t start a modern day WPA is amazing. Krugman’s point about people on food stamps or some kind of aid appearing like anyone else and, in a sense, hiding what’s really going on is so, so true. No, we don’t have soup lines–but we have a tremendous amount of misery that is completely unnecessary if government started SPENDING–and, in turn, corporations started spending those trillion dollars of cash they’re sitting on to provide jobs and incentives for people to succeed as well! Having lived in third world countries I can’t say we’re becoming a third world country–we are a third world country–with food stamps! Yeah, let them eat cake, and they’ll keep quiet?

  • seth

    Partisan rhetoric. It’s time to leave it behind and stop acting as an apologist for Democrats, whose flaws are every bit as egregious as the Republicans. By attempting to delineate between the hypocracies of both parties, you ultimately undermine the truth of what is really happening: we have a government that works to oppress us, not protect us.

  • todd m.

    i watch moyers a lot. he’s great. but krugman’s a krug. i want
    moyer’s to invite Prof. richard wolff on his show. that guy, now that
    guy, has answers for the problems we find ourselves in. krugman simply
    doesn’t face certain facts about the way market-capitalism functions.
    namely, technical unemployment. machines replacing people. it’s
    inevitable. so let’s embrace it. i say less work! screw working!!
    more unemployment. reduce the duration of work weeks at first. get
    people’s heads around the fact that we don'[t any longer need to work
    like slaves…doing mindless jobs just so the “unemployment numbers” go

    then get rid of money entirely…way down the road. we need to
    align with the laws of nature and learn how to survive on a planet. the
    laws governing nature don’t know what the hell capitalism even is…you
    either align the species or you die…and we’re on the way out my

    ..because hey there krugman…coming up with all the jobs in the
    world doesn’t stop the environmental devestation that this economic
    model is causing…doesn’t curb the sociopaths created by this
    model…behavior we pass onto our children, and it doesn’t reduce the
    isolation and loneliness many feel in this dog eat dog economic model we
    endure. he calls for reforms…i want it all to change.

  • todd m.

    glad that some of you agree that capitalism is destroying the planet and that the
    overthrow of capitalism might be a goal worth working towards. but i’d
    love to see your crystal ball….because mine says we don’t have that
    much time. unemployment does at least one thing, it makes people angry,
    and angry people want answers. they want change. fine with me, while
    they are pissed off and not headed off to work and thinking about that
    jet-ski they’re gonna buy , maybe they’ll begin to inquire about the
    planet they live on. and question this completely absurd system we live
    in, and begin to see they’re getting shafted.

    if people get they’re jobs as fast as “prophet krugman” suggests,
    everyone is going to go back to the same consumer culture we live in
    now; chem-lawn sprayed lawns, the 1% running the show, and everybody
    watching monday night football agan. then my friend…..we’re really
    screwed! again, krugman never once talks about the way this
    cancer-riddled economic system he wants so badly to reform is destroying
    and living completely out of touch with the way the LAWS OF NATURE
    dictate a creature on this fragile planet must align with. either you
    change or you die. krugman’s recipe is for a quicker death.

  • todd m.

    right on.

  • todd m.

  • Anonymous


  • Anonymous

    That isn’t a sentence.

  • Anonymous

    I agree. The biggest skill needed is the ability to live on minimum wage while performing a job description formerly compensated at 100K.

  • Anonymous

    Bring on the Georgist: Michael Hudson, but co-guest him with William K. Black. That way the audience will learn how corruption is killing us at several levels.

  • Anonymous

    Interest on $500 bucks at 5% is $25 per annum. I’m sure your grandkids will rebuild America on that. But you are correct that wages haven’t kept up with productivity. Austerity and union busting are both to blame. The truth is that consumerism can’t last.

  • StanS

    Is it any wonder why our politicians can’t do anything to solve economic issues when this guy is Nobel laureate in economics?

  • Anonymous

    Your awkwardly worded post contains some wisdom. The part about raw materials costing more than imported finished goods in the United States is an ingenious observation. I’d add #3. Protectionism, so that ingenuity pays.

    We can’t fix Globalism, so junk it. Under the current regime dominated by transnational corporate players they can manipulate the price of labor just like manipulating the price of currencies in the “carry trade.” But a sustainability problem arises when the suffering caused is treated as an externality. (They perform ecocide and genocide with impunity because extranationalism is lawless.)

  • Anonymous

    See Lester Brown @ Earth Policy Institute. The crisis of famine nears. Humanity has consumed more grain than was produced 8 of 9 recent years. Reserves are nonexistent. Arab Spring probably sprang from rising food prices. Elite investors now speculate in large blocks of farmland especially in the USA and Africa resulting in cash export crops and less food. Look at canned mushrooms in the supermarket. The label says most are a Product of China. How can that be? To Oligarchs we are as inconsequential as goldfish in a tank.

  • Anonymous

    Big bankers spend and speculate with billions of fictive dollars everyday but you deny that option to the mass of imperiled people. Gall is a more apt moniker than Gault. (Ayn Rand was too mentally ill to purchase a gun, but the crazy admire her spunk.)

  • Anonymous


  • Anonymous

    He resembles an older Karl Marx when seen in profile. He’s playing “Weekend at Bernie’s” with a Capitalist corpse. Were you fooled? Warp 5 Mr. Sulu, and get us outta here.

  • Anonymous

    But he carmelized most of the answers. Restoring things justly cut is like resurrecting Twinkies. Problem is that Austerity performs transplants without donors.

  • Anonymous

    Henry Ford got lucky by being in the best place at the best time. Like Bill Gates he had little good advice to share. Remember how he admired Hitler’s murder of unionists? He wasn’t consistent or moral, but only power seeking. The Ford Foundation has proven not so hot either for working people. But a hike in American wages is way overdue as you insist. Pay commensurate with the social value of work performed might also be helpful.
    Bailing out NASCAR hastens global warming and sustains illusions. Corruption is irrational in the aggregate.

  • Anonymous

    Stating facts is not partisan rhetoric, but telling half-truths is.

  • Anonymous

    1. Where is all this bailout and corporate welfare money coming from?
    2. Is a living wage or a safety net immoral?

  • Anonymous

    I’m sorry you’re having trouble paying off Christmas but don’t take it out on the less fortunate.

  • Anonymous

    Over time perpetual war economy has been perfected so that fewer Oligarchs benefit more while labor benefits less. Already corporations can bill billions for useless cyber concepts never produced. The “smartest guys” have learned how to control leaks from the secret room. (and Obama helped) Too bad the bloodlust never abates as knuckleheads kill remotely from La-Z-Boys. (Lloyd, or is it Lord? Blankfein is the archetype for drone pilots. Open shirt collar= Tiefighter)

  • Anonymous

    It’s about jobs that are mutually beneficial to communities.

  • Anonymous

    We don’t need to know “more about Paul Krugman.” We need to know more truth about what the Fascists have in store for us.

  • MBrecker

    You can continue to talk about the Great Depression. You can also talk about various economists, Roosevelt and use the “make me do it” soundbite for the millionth time. Having said that, Krugman’s right in that this comes down to money and power. How come millions don’t march daily all over the country? Because they’re too busy fighting to survive.
    What Krugman’s really saying is who needs the stress of being in govt.? Me be Treasury Sec.? No thanks.

  • MBrecker

    While there are various progressive groups trying to do good work, what do almost all of them have in common? They’re 501(c)s. The have a Paypal/credit card donate button. The have an online store.
    Now, keeping in mind who has more money and power, how are these groups supposed to compete against corporations and lobbyists? I’m not saying give up and do nothing. Instead, recognize the level of how much money and power are involved. If “Moyers and Company” didn’t have their underwriting funds, would they stand a chance against the commercial networks’ “nightly news” programs? No they wouldn’t. On the other hand, taking money from another group means strings attached. I’d be very surprised if your underwriters just give you funding, and that’s it.

  • Sergio

    1. From the State with the use of compulsion by the IRS. Also, let us not forget the Federal Reserve.

    2. A living wage or safety net are not immoral. Yet, the use of coercion to achieve that end is immoral.

  • Sergio

    I have nothing against the less fortunate but everything against those who want to use coercion and compulsion to achieve there ends.

  • Guest

    @pheonix risen – that’s utter crap. There are a lot of reasons that graduates (and by the way – a lot of them aren’t nearly as “qualified” as they think they are) can’t get jobs. One of the single biggest reasons that business’ aren’t spending money is uncertainty. Not knowing whether their taxes are going to be arbitrarily raised is a huge impediment to spending.

  • Pete Joachim

    Can anyone say, specificially, how the increasing federal deficit has hurt them (other than cuts made to social programs forced into play by Congress all in them name of “fear” of the increasing federal deficit)?

  • Anonymous

    I was surprised Paul Krugman didn’t mention the effect that corporate mergers & acquisitions — along with Washington’s tolerance of monopolies, anti-trust violations (tolerance that is bought and paid for by corporate lobbyists), unfair competition, and predatory practices —
    has had on job loss in this country. How about breaking up some of these large, illegal monopolies to increase job availability … AND restore healthy competition?

  • Anonymous

    My understanding of it, in a word, is inflation. The dollar has lost 99% of its value over the years because of our nation’s increased debt. What used to cost a penny now costs a dollar. Every time the Fed prints money to stimulate the economy, that amounts to a loan and the dollar continues to drop in value. And when the Fed lowers interest rates, that only encourages more borrowing. It only solves the immediate problem but creates a increasingly serious long term problem. I believe I read recently that 1 in 6 people now in the U.S. no longer have enough money to even put food on the table. A travesty to say the least.

  • Guest

    Also – inflation leads to unemployment – when companies can no longer pay their debts (because their money doesn’t go as far either anymore), they lay off people or close their doors.

  • Anonymous

    Also – inflation leads to unemployment – when companies can no longer pay their debts (because their money doesn’t go as far either anymore), they lay off people or close their doors. More people out of work, more people who aren’t paying taxes, more people who aren’t spending money = Fed printing more money, more debt, more inflation — and back around again!

  • Anonymous

    By your views, you’d be defined as an anarchist, yes?
    Good luck with that.

    Me, I believe we need work toward progress within the system we have.
    Meanwhile we shouldn’t ignore history- so as to not make the same mistakes ad infinitum;

    And we all should make some efforts to inform ourselves of the FACTS,-
    because without informed electorate, there is no Democracy.

  • Don

    Previously, my research had indicated that “liberal” advocates generally tell the truth and “conservative” advocates always lie. But Krugman said that federal debt as a percentage of GDP has been lower under Obama than under Bush. From the charts I’ve been able to find on the Internet, that is not true. What gives?

  • Dale Kelly

    Excuse me, but one of the things that is very different in the 21st century is the overwhelming profusion of experts explaining reality and drowning out any thread of discussion on how to put all that knowledge together into an effective 21st century solution.

    Let’s get real. This Congress is no stomach for any spending that would create jobs. Business on the other hand has plenty of savings that is waiting for the right opportunity for investment.

    Instead of a war, or staving off aliens we could address a very real current need, the ongoing daily nightmares of our nation’s transportation system. Let’s think big. Upgrading our transportation system would be an investment in a better future whereas infrastructure spending while needed is more of a stopgap measure.

    We have the ability to create a plan that justifies the investment, but we have to take the time to do it right. None of this is obvious because we don’t have an entity, (government, department, industry,
    corporation, company, business) big enough to take it on. It would take a nation working together to address a national problem.

    Our current system costs us time and money everyday and it keeps getting worse. It is too big of a problem to comprehend as individuals so we tolerate short-term patchwork fixes. If we considered working together, calling on all of our resources, we might be able to pull it off. It’s the kind of thing we might do
    if there was an enemy that threatened our future.

    Out there amidst all the Internet noise there are many
    instances of advances that could be applied to improving transportation, but there are obstacles. First, we have to recognize our current system isn’t keeping up. Continuing to expand it the way we have for over 100 years just isn’t enough any more.

    An improved system would require taking the time to create a workable acceptable plan. A suggestion of how we might develop a plan would be to work with our university systems supported by the business community and collaborate nationwide with our advanced communication capabilities which has been modernized in the past 15 years.

    In 2009, President Obama, put forth the idea of building a transportation system capable of meeting the needs of the 21st century. He ended his statement saying, “Imagine what a great project that would be to rebuild America.”

    Before everyone pounces. It is true he was speaking about high-speed rail at the time, but that actually makes the point. Why should we expect the president
    or any one else to have the right answer? Just think of how good of an answer we could come up with if we all worked together with open minds and a
    determination to return to prosperity.

    President Obama is the democratically elected leader of our country. Our people and our businesses are the real source of our strength and ability. What is to keep President Obama from reaching out to us and asking us to find a way?

    It would be interesting to see the response. The Internet is incredible, but there is one thing it never does. It never speaks with one voice. Sometimes we need that to help us find the way.

  • David F., N.A.

    Isn’t a $1T coin sort of like QE on steroids? With QE the Fed has been buying MBSs from the banks (in Sept., QE3 began buying $40B/mo., indefinitely) while the $1T coin will be used to buy debt (equivalent to an Iraq war). So since QE is supposed to cause inflation, wouldn’t a $1T coin have the potential of having a much greater effect? And, if we do use this coin, what debt will be paid off first? Would this money go straight to the banks (like QEs and TARP), or maybe even some Pentagon contractors?

    Plus, since this $1T coin solution came about all because of a coin act amendment from 2000, could this just be another one of Summers, Rubin and Mrs. Clinton’s husband’s brilliant ideas? Because we all saw how well the Gramm-Leach-Bliley Act of 1999 and CFMA of 2000 worked out for us.

    So of the two gimmicks that Mr. Krugman had mentioned, I’d have to go with the 14th amendment.

  • Greg H

    I completely agree. PK believes that the current situation is virtually the same as the Great Depression except less severe. But there is a big difference…..we now have climate change and resource depletion that will only worsen if we continue on the old consumptive growth path. The planet is in dire need of a new economic paradigm that is based on sustainability and learning to live within the constraints of nature rather than trying to bend nature to pursue perpetual growth.

  • Greg H

    Great comment, Todd.

  • Alan R
    just started a petition on the White House petitions site, We the
    People. Will you sign it?

    Until your petition has 150 signatures,
    it will only be available from the following URL and will not be publicly
    …See More
    (5)Trillion Works Progress Administration JOBS, Infrastructure, SELF RELIANT Energy, Education. Min.
    No job for 2 years; go to welfare or social security disability; NEVER PAY TAXES AGAIN, WHO WILL? no jobs skills?

  • Alan R



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

    (5)Trillion Works Progress Administration JOBS, Infrastructure, SELF RELIANT Energy, Education. Min.
    job for 2 years; go to welfare or social security disability; NEVER PAY
    Like · · Share
    Alan H Robinson Jr
    We petition the Obama 3or5Trillion Works Progress Admin

  • Ryan Brown

    I suggest reading this article below on the importance of Crowdfunding and the JOBS Act. If we want resilient, green, self-sufficient, & fair economies we have to start thinking about the way we transform our country into connected local living economies and how funding/lending will help us get there. Non-Accredited Investors are handcuffed/restricted when it comes to investing in their local economies and with people they know and trust and can hold accountable. There must be a revolution in community finance and money must be filtered from Wall Street control to Local Banks and into Business Crowdfunding.

  • Ryan Brown

    I feel this is a great way to drive alternative energy options into the mainstream…it starts with the crowd….

  • Sam in Texas

    Let’s not give Bernanke too much credit. He also let all the banks playing casino with everyone’s money skate by unscathed and without any jail time.

  • Anonymous
  • George Gates

    Great ideas Paul but: Until moderate Republican voters get rid of the extremist, part of the Republican party, NOTHING WILL HAPPEN! And things are going to get worse!

  • George Gates

    No. A living wage and a safety net is not immoral. It’s what a human with a conscience would do.

  • Phoenix Risen

    Right on Fredlinskip! You said it so well! The rich are sitting on their masses of wealth, hoarding it, not spending it. They have no incentive to spend, invest, or lend it. The U.S. has surpassed the maximum amount of money we can give to the rich without causing recession or depression. As Krugman says, they are awash in excess cash. There is no demand to buy the all stuff (supply) because our real income (of the 98%-ers) has dropped and we have no “discretionary” money to spend. The 1%-ers can “supply” all they want but if there is not 98% of the population to buy it, we have a recession or depression. Too much money has shifted from the pockets of the bottom 98% up to the pockets of the 2%, and hence, no demand. Talk about a redistribution of wealth!!!

    Do we really need to go through a Depression before we learn that supply-side economics is a dangerous, short-sighted hoax invented by the rich to make the rich richer? I, too, believe that this Great Recession was not enough to shake us back to our senses. It is only DEMAND-side economics that drives our economy and causes it to grow! Think about it, if you don’t have any customers, you can’t sell anything and the economy is not going to grow.

    And it’s true, in the last 32 years, since Reagan, it has been Republican presidents that have driven up our national debt to these stratospheric levels that everyone says the hate. They are responsible for 80% or more of our total debt. That is a not a political opinion, that is a verifiable, mathematical FACT! Simply look at graphs of the debt since 1980, when it was relatively nothing.

    Wake up people. It is caused by the Republican fantasy of, “you can have everything you possibly want, low or no taxes, unending wealth, and you won’t have to pay for any of it, bear any costs, MAGIC”, just borrow it from our good friends the Chinese, debt doesn’t mean ANYTHING (unless you’re a Democrat, and then it’s the worst thing possible!)

    If only we had to live by Krugman’s economics, we would have no problems!!

  • Sandy

    Do you have any thought processes for goodness sakes, of course he is not saying spend all your savings!! but that you need to lighten up on hording money to help the country.. He is not saying that any one should lose all their savings, He is a very intelligent man you should really listen and open your closed mind!!

  • Don Fisher

    Many voices from many perspectives are needed to get through to the American public, and the world for that matter. Other than PK call out the obscenely wealthy very nicely. PK lays a pathway to that information.

    I think he’d rather not see us go through a depression. He’s more or less said so.

  • Don Fisher

    You honestly think that massive amounts of money, locked away, earning interest and NOT being spent in wages, and incomes to others isn’t throttling the economy?

    It’s axiomatic. If money sits still there is no wealth. Eventually the value of that money, inflation, goes down down down. It happened before, many times, and will happen again unless that money is broken loose and put back in circulation. How almost doesn’t matter, though I prefer it not be by war.

    The problem? The solution?

    The problem is the holders of the money won’t let go unless it is painful to keep it locked away.

    Taxes are the answer. Taxes as levied by Ike for instance, that gave breaks ONLY if you invested in the nation. And penalties if you sent money overseas, and bought more import than investing in export.

    It’s not rocket science. We have ample examples.

  • Don Fisher

    Keynes didn’t invent. He identified. The “economy,” of prosperity existed before he pointed out how it occurs.

    Still money is like stopping respiration and circulation. You will die if it stops entirely. I am tired of being kept barely alive.

    Money MUST MOVE. And the money is locked up. The problem with PK, who I admire by the way, is he doesn’t want to say the word TAX very loud.

    Ike had a 90%+ top tax rate. The ONLY way to ease that pain available at the time was to spend locally.. that is buy back into the U.S. economy and get that money moving again.

    I do NOT think printing more money is the solution, in the end. The solution is to stop the obscene wealth accumulation and sequestering, squirreling it away overseas and in lock boxes in the U.S.

    Enough is enough.

  • Don Fisher

    Ah, but human behavior is. And there ARE constants. Economics is one of those laboratories.

  • GBG

    Please, the last thing we need is our dollar weakened more, which is what this man said is good for our economy. The people don’t want anymore weakening.

  • Anonymous

    The people don’t want…? Please be honest enough to say “I don’t want…”!