Nobel Laureate and NYT columnist Paul Krugman says, optimistically, that we’re not looking at the next Great Depression and that we won’t even hit the 1982 unemployment highs of 10.7%. Phew. BUT: We’re still facing Depression Economics, by which the traditional policy tools government might use to jolt things no longer work.
His solution? (Hint: He’s helping to lay the groundwork for Obama’s actions)
- A large stimulus package (duh)
- A swath of aid specifically targeted at the distressed (double duh)
- And now’s not the time to worry about deficits
So what’s the number he’s looking for?
All indications are that the new administration will offer a major stimulus package. My own back-of-the-envelope calculations say that the package should be huge, on the order of $600 billion.
So the question becomes, will the Obama people dare to propose something on that scale?
Let’s hope that the answer to that question is yes, that the new administration will indeed be that daring. For we’re now in a situation where it would be very dangerous to give in to conventional notions of prudence.
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