Krugman of 25 September:
I think it’s fair to say that a majority of economists believe that excessive private debt played a key role in getting us into this economic mess, and is playing a key role in preventing us from getting out. So, how does it end?
In the end, I’d argue, what must happen is an effective default on a significant part of debt, one way or another.
Or, we could just print money and use it to pay off debt.
2 comments:
The title? From an old Bobby Vinton song. (Bad music from the '60s.)
Oh, yeah -- In that post Krugman also says:
"The problem with this view is the fallacy of composition: when everyone tries to pay down debt at the same time, the result is a depressed economy and falling inflation, which cause the ratio of debt to income to rise..."
But if the Fed prints money and uses it to pay off debt, we circumvent that problem!
Art
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