Ok, so maybe you thought I didn’t know what I was talking about in my essay about Why We Have Government.
If you didn’t like my explanation, then you can read the explanation by Paul Krugman, the most recent winner of the Nobel Prize for Econimcs.
I suppose I really shouldn’t use worn out phrase, “Nobel Prize winning economist”. After all Mitlon Friedman was a “Nobel Prize winning economist”. He couldn’t figure out when to stop touting his own award winning research as the answer to ever possible question.
Well, Krugman is just giving some basic economic lessons in his column. He explains “the paradox of thrift”. He also explains “a liquidity trap”. His conclusion on what needs to be done comes in the following paragraph:
No, what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.
Sounds remarkably similar to what I wrote. Perhaps he learned his introductory economics from the same book that I did.