One of the great Keynesian sophists of our time, perhaps the greatest, is Nobel Laureate, Paul Krugman. At the very least, Mr. Krugman's eminent status-he seems, among other things, to be the New York Times house economist-proves nothing less than the following: One should not be overawed by Nobel prize winners.
In the bizarre calculus of Herr Krugman, savers, as per his latest bloviation in the New York Times, represent a problem. They aren't a problem much less THE problem. The problem that devotees of deficit spending nonsense like Krugman have presently is that they are in absolute denial about the marginal productive capacity of debt, which, as of 2003, approached zero. As a result, deficit spending now amounts to a suicide mission. More debt at this stage simply means a bigger hole to dig oneself out of, but with exactly the same defective shovel one had before in which to do so. All the points Mr. Krugman makes in his latest piece, valid though they may be, are as nothing when stacked up against that single, simple, yet not simplistic, fact.
The immense debt that is presently in the system has all along needed to be cleared from the aforesaid system. Insolvent banks should have been allowed, nay, compelled to fail and be folded into solvent institutions. Anything short of that is doomed to failure and (even though by now it's probably too late) nuanced arguments about the exact nature of government spending and its prospective impact on interest rates can't evade that reality.