Monday, August 29, 2011
Paul Krugman And The Alien Invasion?
During an interview with Fareed Zakaria, Paul Krugman suggested (in jest) that if were to fake a space alien invasion, the resulting surge in government spending and the monetary expansion would end the recession within 18 months. The flaws in his position are so glaring that even Stevie Wonder could see them! Have we not already engaged in profligate government spending via the wars in Iraq, Afghanistan and Pakistan? Estimates place the total cost as high as $3.7 trillion! And to no avail, the federal reserve has already presided over an aggressive expansion of the money supply via quantitative easing.
Krugman cites World War II as an example of massive government spending pulling the United States out of the Great Depression. But, he fails to consider the unique set of circumstances that allowed us to quickly pay off our war time debt. Specifically, in 1945 we were the only advanced, industrial nation that was not completely devastated by the war. And we did not face staunch competition from and massive trade deficits with China, Indian and other resurgent nations. Were we to follow his recommendations, the costs (increased debt and inflation) would be certain, while the benefits would be dubious. But, if we were invaded by aliens, the only consolation would be that as one of earth's biggest a**holes, Krugman would surely be one of the first earthlings subject to an intergalactic anal probing.