Krugman vs. Paul the Crossing the Red Line

[charliebrown]

Professor Paul Krugman and Rep. Ron Paul (R-Texas) went head to head on BloombergTV this week. True to his neo-Keynesian form, Prof. Krugman insisted that the US government could and should add further debt to stimulate growth. Rep. Paul responded by asking how much debt would be too much, to which Krugman replied: “We’re not anywhere close to a red line.”

...

The discussion then turned to contemporary US debt dynamics. When asked just how much additional debt the US could safely accumulate, Krugman responded without hesitation, “We’re not anywhere close to a red line.” Given that the US total government debt to GDP ratio has now risen through 100% and continues to grow rapidly, that struck me as a breathtakingly audacious statement. Krugman did then qualify it, saying that debt/GDP in excess of 130% might be problematic.

Even spend-forever Krugman say 130% is dangerous. Well the last time I checked, Debt/GDP is 104%. If the current trajectory holds 130% will be breached in the last quarter of 2013. Even if we pull pack on the reins right now, I don't think we can avoid broaching 130%. If we do pull back that hard, a recession will surely result. The only thing that can save us is that the limit is a lot higher than 130%

Here is the article in full
http://www.financialsense.com/contri...sible-red-line

[lektrode]

Re: Krugman vs. Paul the Crossing the Red Line

catch the video (from bloomy) here:
http://www.itulip.com/forums/showthr...4-Paul-vs-Paul