Krugman sez: Debt non-explosion


Radio filled with talk about “the debt explosion?

Not so, Krugman’s charts say:

August 31, 2011, 6:36 pm

The Debt Non-Explosion

A conversation I had earlier today suggested that it might be worth pointing out a fact that isn’t as widely known as it should be: namely, that there has not been an explosion in debt over the past few years. There has been a big rise in federal debt, but this has gone along with a collapse in private borrowing, so that overall debt growth has been lower than it was in the pre-crisis years:

Source.

Bear this in mind when someone starts ranting about hyperinflation just around the corner thanks to explosive debt growth.

Which suggests, once again, that it will be up to the government to do the economy growing.  It’s not a question of whether we think, philosophically, that government should be the main driver of economic expansion.  It’s a question of, what do you do when private business is sitting on $1.5 trillion in cash instead of hiring, and businesses who lack the cash are not borrowing to hire either, despite record low interest rates?

Under these conditions, it might be considered unpatriotic NOT to support a massive stimulus program, yes?

Didn’t anybody take high school economics?

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2 Responses to Krugman sez: Debt non-explosion

  1. Jim says:

    Mark,

    If you have been to MFB before, apologies for not welcoming you. It’s Ed’s blog, of course, but I still like to thank people of whatever persuasion for coming by. Partly because I see so much value in the material Ed posts — about such diverse subjects, too! (I’ve learned more about Scouting than I ever dreamed possible!)

    So welcome aboard. Do you have a blog of your own? I want to start one but I can’t get out of the damn bathtub! :-)

    Peace!

    Jim

    Like

  2. mark says:

    With interest rates so low, now is a good time for the government to borrow. It’s almost like getting “free” money.

    Like

Please play nice in the Bathtub -- splash no soap in anyone's eyes.

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