This week we were fortunate enough to have economist Paul Krugman in for a discussion on politics, the state of the economy, technology, and inequality.
In this first section, I asked him if he thought the “deficit wars” were over… have the days of politicians trying to urgently enact spending cuts basically come to an end. “It looks like it,” says Krugman.
There are still some lingering issues, and there are still a lot of people who haven’t dropped the rhetoric, but with the GOP caving on the debt ceiling, the big issues have mostly gone away.
As for the economy, he sees the likely emergence of a “virtuous circle” forming, with more homes being built (because we’re “underhoused”), home prices rising, people spending more, etc.
One of the big fears these days in the market is that with this “virtuous circle” forming in the economy, that the Fed will tighten prematurely. Krugman isn’t too worried about it. Bernanke gets it, and knows the Japanese experience of the central bank having taken away the punch bowl before the party even starts.
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