Paul Krugman says call it what it is: a depression. “A recession is when things are going down; a depression is when things are down, and stay that way for a long time.”
Krugman offered this opening comment to a sell-out crowd in San Francisco, where he was highlighting a Commonwealth Club event and promoting his new book, End This Depression Now. Ending this depression now is entirely possible, if you believe Nobel Prize-winner Krugman, and this writer believes Paul Krugman. Aside from in-house economist Bud Johns, who has accurately foretold so many economic events as to be spooky even if he hasn’t yet won a Nobel Prize, Krugman is the only living person able to make economic sense to my mathematically-challenged right-brained self. During his San Francisco talk he ticked off enough data to paint the picture — and it is not a pretty picture. Krugman compared the problematic impasse to a family car that had broken down. Its battery was dead. A new battery would make it run. But the man of the house refused to recognize the bad battery or consent to getting a new one, suggesting instead that the rest of the family just walk or take the bus. “You have a problem,” Krugman noted, “but the problem isn’t with the battery.”
So how to fix it? Before offering the answer, Krugman said first we have to understand that “government workers” aren’t the evil bureaucrats in Washington, but are the teachers, firefighters, service workers everywhere who are out of work, with their numbers threatening to be increased. Then he listed steps he would recommend:
First, a huge infusion of money (none of this timid stuff, which Krugman reminds us is what had FDR triggering a double-dip depression in the late 1930s) from the feds to the states, so they can start re-hiring those teachers and public sector workers.
Second: debt relief, starting with mortgage debt and soon extending to other areas like student loans.
Third — then we get into monetary policy, and not even Bud Johns and Paul Krugman can explain that to yours truly in adequately simplified terms.
So the national debt remains staggering and everybody worries about what we’re bequeathing our grandchildren. At least we might keep the country afloat, mass desperation relieved and families together, and that would be something to bequeath.
Paul Krugman did not approve this over-simplified message. But he still gets my vote.