Writing in the New York Times, Paul Krugman insists that the US government is not broke. Why? Because it can still borrow money.
To put this in context, you have to realize two things about the fiscal state of America. First, the nation is not, in fact, â€œbroke.â€ The federal government is having no trouble raising money, and the price of that money â€” the interest rate on federal borrowing â€” is very low by historical standards. So thereâ€™s no need to scramble to slash spending now now now; we can and should be willing to spend now if it will produce savings in the long run.
How’d you like this guy to be your financial advisor?
“Mr. Krugman, I’m broke because I have no money in the bank. I’m $220,000 in debt, and it’s ballooning out of control by the day due to interest and new borrowing. What should I do?”
“Does money still come out of the ATM when you put in your credit card?”
“Well then you’re not broke. What’s the problem? Just keep spending and eventually that’ll make everything better.”