Comment

May 04, 2012cshahriari rated this title 5 out of 5 stars
Paul Krugman makes a strong case for governments and central banks to change their current policies, namely an increase of the inflation targets from the current 2% to a slightly higher 4%. Combined with government stimulus, his suggested medicine for the world economy is meant to restore employment to an acceptable level while the private sector is slowly trying to recover. "So this is very much a time to step on the gas pedal, not take our foot off it" Page 222. I can only agree with his approach as the Austerian approach in Europe and other parts of the world don't deliver the expected results. People may not like his suggestions but history shows that this is the right way to deal with the "Depression" and I quote: What can be done? One way is to find some way to reduce the real value of debt. Debt relief could do this; so could inflation, if you can get it, which would do two things: it would make it possible to have a negative real interest rate, and it would in itself erode outstanding debt. Yes, that would be rewarding debtors for their past excesses, but economics is not a morality play. (Pg. 147)