I'm sure it gets frustrating when the obvious solution to the recession is ignored by everyone.
The obvious solution being to prepare for an imaginary alien invasion, right?
I kid. So you really think the obvious solution is just more spending? How did that work out for Japan over the past twenty years?
More spending will just decrease confidence further as economic agents in the private sector tally up in their head how much more they will need to spend in taxes in the future to pay for all of the spending today. People did not do that in the 1930s/1940s, but they are certainly doing so today. The game has changed and Krugman is a smart man who should be realizing this by now.
The "obvious solution" would be the mass destruction of surplus capital like in WW2. But...that was a
world war. Kind of hard to mobilize the economy like that, unless there really WAS an alien invasion coming.
