Krugman: Spend Now, Save Later

[axt113]

HappySqurriel said:

Too much debt from both the government and the individual CAUSED the crisis, and all further debt-driven spending will do is make the crisis worse and delay it for a short period of time. I’m talking about outcomes 3 to 5 years down the road at the current rate which can be averted IF YOU DO SOMETHING NOW; all government stimulus will do is the same thing it has done already, and that is temporarily increase productivity by front loading demand and when the stimulus is gone the demand will fall to a lower level (because everyone who would have bought in over the next 12 months was attracted by the temporary incentives).

I’m one of those weird people who was reading about and warning people of the housing bubble in 2003 and 2004 and back then people had the same attitude as you have now; essentially "Its not an immediate problem so why should we do anything about it?" ... In 5 to 10 years you'll be wishing the US only had 15% unemployment.

No I think you misunderstood what caused the crisis, it wasn't the debt but the excess risk that precipitated the crisis.

No further deficit driven spending is the only thing keeping things afloat, without it, we'd be heading into a downwards cycle, perhaps a permanent one.

Ummm, so was I, I was telling people back in the early 2000's that we'd have another downturn that could become a depression, so you aren't unique in that regard, but you seem to be misunderstanding the problem we are facing, you keep trying to argue that the economy will recover if we pull spending, when in fact, that's the exact opposite of what will happen.  If we pull spending, there will be more unemployment, a lot more, and a lot less investment and consumption, and this would happen in months, not the years that even in the worst case scenario, your concerns would occur, this is what it boils down to, what is the immediate concern, the state of the economy, the debt is a longer term concern, something that will need to be addressed, but only once this current crisis is over.