Krugman's column commending the new Canadian government's economic policy includes a good summary of our current economic situation:
- "We’re living in a world awash with savings that the private sector doesn’t want to invest, and is eager to lend to governments at very low interest rates. It’s obviously a good idea to borrow at those low, low rates, putting those excess savings, not to mention the workers unemployed due to weak demand, to use building things that will improve our future."
- "Strange to say, however, that hasn’t been happening. Across the advanced world, the modest-size fiscal stimulus programs introduced in 2009 have long since faded away. Since 2010 public investment has been falling as a share of G.D.P. in both Europe and the United States, and it’s now well below pre-crisis levels. Why?"
- "The answer is that in 2010 elite opinion somehow coalesced around the view that deficits, not high unemployment and weak growth, were the great problem facing policy makers. There was never any evidence for this view; after all, those low interest rates showed that markets weren’t at all worried about debt. But never mind — it was what all the important people were saying, and all that you read in much of the financial press. And few politicians were willing to challenge this orthodoxy."
- - Paul Krugman, Keynes Comes to Canada, New York Times, Oct. 23, 2015