Debt and Growth: The State of the Debate – -Paul Krugman

Here’s a short, pithy blog which I recommend from Paul Krugman, Nobel Prize winning, liberal economist, published in the NYT. Check it out!

Debt and Growth: The State of the Debate –

Any thoughts?

Paul Krugman, Laureate of the Sveriges Riksban...

Paul Krugman, Laureate of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 at a press conference at the Swedish Academy of Science in Stockholm (Photo credit: Wikipedia)

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2 responses

  1. Handbag time. What is the fundamental difference between the economics of a state and that of a private household? It seems to me that there is only one: a state can print money. By doing so it penalises the savers, rewards the profligate and creates an impression of greater national wealth which could well be a false impression. Now I know we do not agree on this and I have no great knowledge of the subject but it seems to me just plain common sense that people should live within their means. Achieve that and you can then afford luxuries – go for the luxuries first and what happens?

    Anyway, what’s so wonderful about growth? Can someone please explain.

    • Rodney, I know that we disagree here.

      I maintain, in accordance with Keynesian economics that the state is very different to the individual. States have fiscal policy and monetary policy tools. Keyesians believe in good housekeeping too but with one caveat; in times of recession, Keynesians believe that the government should consider stimulating the economy, including with additional short-term borrowing. Indeed the IMF proposed for the UK £10 billion of infrastructure spending this year financed by additional debt.

      I am afraid that analogies about belt tightening and comparisons with prudent personal housekeeping are a bit misleading, as far as I am concerned.



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