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Politics : View from the Center and Left
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To: JohnM who wrote (139867)6/28/2010 3:31:54 PM
From: Katelew  Read Replies (1) of 541933
 
I'm worried about deflation and a possible depression of sorts, too. However, I don't share Krugman's belief that more Keynesian style government spending will automatically forestall it.

Krugman possibly should review his reading on the Great Depression before he pontificates further. The Great Depression was preceded by a huge buildup of credit, overspending, and debt (both public and private), and a collapse into indebtedness.....just like now. The Keynesian spending came later, years after the debt bubble burst. There was no system of unemployment insurance to cushion workers, so the government stepped in.

Krugman seems to think that deficit spending right now will forestall something, when in reality it is just setting the stage for a possible depression by adding to the build-up of credit.

It seems to me Krugman has his timeline wrong.
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