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As Markets Crash Krugman Wants to Double Down on Debt

As Markets Crash Krugman Wants to Double Down on Debt
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Seven years from the crisis, we now live in a world that is swimming in debt. Central banks globally have taken a page from the Federal Reserve and have printed trillions. China has borrowed from itself and built entire ghost towns full of high rise condos and office buildings that are 99% empty. To slow their stock market crash they once again devalued their currency, the Yuan. The BRICS are slowing, the emerging markets are slowing, and the PIGGS… all slowing. The U.S. economy, which will soon be approaching $20 Trillion in national debt and has printed apx $4 Trillion to artificially support a post recession economy which has lead to a whopping 1-2% GDP (supposedly the strongest economy in the world.)

Stock markets are coming off their worst week since the financial crisis and the New York Times resident Keynesian stalwart Paul Krugman suggests the world’s problem is there is not enough debt.

From today’s Debt is Good:

there’s a reasonable argument to be made that part of what ails the world economy right now is that governments aren’t deep enough in debt.

The purpose of the Krugman debt is infrastructure. This would be considered ‘useful things’ (aka ‘good debt’) as it’s building value: arguably beneficial.

His article also points to the discussion of the need to raise interest rates, which the Fed has been purposely delaying, (IMO this is the biggest hint the Fed believes the economy is far from stable). Krugman asserts that not only should we increase debt, but raise rates, thus increasing the cost of that debt.

Raising rates on it’s own is not the problem. Raising interest rates would be a sign the economy has improved. Only in the illogical world that Krugman lives can an ‘economist’ suggest to raise both debt and rates.

But maybe that’s why I don’t work for the NY Times.