He is so smart that the New York Times, which is the newspaper that all the really, really smart people turn to if they wish to be told what to think by other really, really smart people who all live in financially bankrupt places with incredible taxes and crime rates and corruption. So, here's what this really, really smart guy tells us:
Default is Not Denial But De Truth for Da Future
Want a truly incredible perspective? Try this:
A naive view says that what we need is a return to virtue: everyone needs to save more, pay down debt, and restore healthy balance sheets.
Saving, getting out of debt and having income/expenditures in relative balance is naive! Bad prudent person. Bad!
You see according to the Nobel Prize economist, the real answer is default on the debt rather than repayment. Start by understanding that default means bankruptcy. Someone who loaned money in the expectations of repayment should not get repaid. They should lose their investment in this wonderland and someone who borrowed should be relieved of their moral burden so that they can resume their profligacy. Bad habits will fuel success!
Why doesn't Krugman consider that debt keeps people from growing their businesses, creating jobs and investing in their lives. If people save money, they put it in investments which then have it available for loans. If people pay off their debts rather than default they can resume growth and their own investment while simultaneously the paid-off creditor has funds to reinvest thereby creating a doubling of the impact. If businesses have healthy balance sheets investors are more likely to offer credit and invest in growing the business.
I can't see a downside to my naivete. But, then I'm not among the really, really smart who live in NYC and like Mr. Krugman.
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