Paul Krugman of the NYT is a respected economist — after all he’s won a Nobel Prize for his work. He paints a grim picture in his latest column, “The Third Depression,” which puts blame mostly on worldwide government policies:
We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.
And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
You read that right — “inadequate spending.” Like President Obama, Krugman thinks we need to spend our way out of this economic crisis. For obvious reasons this makes absolutely no sense for us common folks without a Nobel Prize. I get the feeling that it’s Krugman’s ego writing and not his brain…
First, the W.H. and Democrat-controlled Congress have proven to the American public (and the world) that their massive spending created negligible growth in the economy. All the bailouts and stimulus packages were expensive failures. The credit market is still stagnant and the housing market is still in the dumps. Unemployment hovers around 10%. Whatever positive results the president promised with his economic policies came out very, very empty.
Second, the administration’s push and Congress’ passage of government program expansions like ObamaCare only made things worse. Any idiot can figure out that any expansion of government means sucking private sector resources dry. Government does not create jobs. For every “job” the government claims it has created, it only means your taxes may be higher. It’s a simple concept really: Where does the salary of a government job come from? Taxes, of course!
What’s really troublesome is the fact that European nations have realized this exact problem with government irresponsibility and are hoping to turn things around with austerity, but not the Obama administration. What’s happening to Greece and Spain should serve as a reminder to nations about their government spendings. Rest assured that poor economic policy can bring down nations and devastate a currency. That’s why countries like Britain and Germany are cutting spending drastically. Yes, it’s painful in the near-term, but should prove to be the right path toward a sustainable recovery.
In the words of CNBC’s Rick Santelli: Stop spending! Stop spending! Stop spending!
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- Paul Krugman: Why We Could Be Entering ‘A Third Depression’ (huffingtonpost.com)
- Krugman: A depression is coming (theglobeandmail.com)
- Paul Krugman Throws In The Towel, Says We’re Headed For Another Depression (businessinsider.com)
