On That Debt...

polifrog




At least some of Krugman's fans have questions or one...

So that brings us to our big question for Prof. Krugman:

Why isn't today fundamentally different from post-World War 2 in key ways that make the comforting post-WW2 analogy flawed?

Namely:

• Today there are massive consumer debts that didn't exist after World War 2
• Today there are massive European debts that didn't exist after World War 2
• Today there is massive global manufacturing over-capacity, whereas after WW2 much of the world's capacity had been destroyed (and needed to be rebuilt)
• Today, there are (fewer) massive lending programs like the Marshall Plan with which we loaned customers money with which to buy our products (Admittedly, the Fed and ECB are trying their damndest, but as you point out, they're pushing on a string).

If Prof. Krugman can explain why none of these differences matter, we'll be more persuaded that the U.S. won't be completely screwed by its huge debt load.
In the meantime, although we support the idea of a huge infrastructure spending program, we're worried.

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