Thursday, July 16, 2009

Krugman: Deficits Saved The World

From Krugman's Blog:

The private sector financial balance—defined as the difference between private saving and private
investment, or equivalently between private income and private spending—has risen from -3.6% of GDP in the 2006Q3 to +5.6% in 2009Q1. This 8.2% of GDP adjustment is already by far the biggest in postwar history and is in fact bigger than the increase seen in the early 1930s.

That’s an interesting way to think about what has happened — and it also suggests a startling conclusion: namely, government deficits, mainly the result of automatic stabilizers rather than discretionary policy, are the only thing that has saved us from a second Great Depression...

1 comment:

Campbell Patricia said...

Wow! I so know what you mean. I'm sorry i can't help you any more!