Things aren’t going to collapse, but I don’t expect anything to improve anytime soon either. We’re looking at stagnation, slow and sideways, fits and starts. It’s going to take a long time for things to unwind.
Keynesian fiscal / monetary policy can play a role in buffeting business cycles, but the government (both CA and Feds) expanded spending wildly during the good years — and cut taxes to boot. (Fucking retards.)
It’s the exact opposite of what Keynes prescribed. And it’s contributed heartily to an unsustainable debt overhang in the larger economy, which limits our policy options and contributes to currency risk.
Yeah, dollar crisis, massive bank runs, that would definitely precipitate the next big depression. America will be collectively sucking on dirt if that ever happens. Really not a good outcome, pareto failure.
So I don’t agree with Krugman, but I don’t know what the right approach is either, probably just a middle ground, enough stimulus to prop things up, don’t let it collapse, give things enough of a push to keep unwinding.
