Krugman says... (long form)

When lenders suddenly decided that they had lent too much, that debt levels were excessive, debtors were forced to slash spending. This pushed the world into the deepest recession since the 1930s. And recovery, such as it is, has been weak and uncertain — which is exactly what we should have expected, given the overhang of debt.

The key thing to bear in mind is that for the world as a whole, spending equals income. If one group of people — those with excessive debts — is forced to cut spending to pay down its debts, one of two things must happen: either someone else must spend more, or world income will fall.

MUGGED BY THE DEBT MORALIZERS, 31 OCT 2010

No, Paul. Keep your eye on the ball. "The key thing to bear in mind" is that this is "exactly what we should have expected, given the overhang of debt."

The problem is debt.


My plan is simple.

I want the Fed to print money and use it to pay off debt.
And I want'em to do it until the economy is growing again.