Paul Krugman: End This Depression Nowâ€
In his preface Krugman starts off by informing the reader of where we are currently with unemployment rate, a graph illustrates the plunge that both United States and Europe suffered during 2007 until early 2010. However where the graph diverges from one another in early 2010 when the American economy become reinforced with more jobs, while our European counter parts have suffered even more with their level of unemployment. The partial recovery that Krugman recalls started for Americans in 2010 was mostly influenced by two advantages that we have over Europe. First our single currency is backed by one government, meaning civilians in ...view middle of the document...
He talks about involuntary unemployment, and describes how politicians even couple economist declare that the unemployed simply lack the will to work, while Krugman views this as the lack of job opportunity in the market. Stating that fact that when McDonald offered to hire 50,000 workers over one million people apply. This ratio only shows the desperate need the stability in American lives today. Furthermore Krugman relates this issue with young adults and college students, whose potential student loans that may have increased interest rates may be difficult to manage in a market where effective job openings are available. Comparing our current slump to that of Europe, Krugman recalls how the economic slump has not effected all regions the same. Krugman concludes this chapter with the determination that as long as we donâ€™t give up on todayâ€™s leaders they will execute the correct plan to resolve the economic crisis.
(2) Depression Economics
In his second chapter Krugman declares the use of depression economics to revive our economy. As Krugman continues demand is what needs to be risen but with economic output so low the increase in government spending would be necessary that to promote consumption with the nation. Krugmanâ€™s goal in this chapter is to connive the reader that the causes of our economically woes can be fairly and easily obtained if the people in position of power understood the realities of the current crisis. This chapter continues to show the forces that empowered the nation during the last decade. One of those forces being the high and rising prices in the housing market, along with the spending of consumers whose ability to take a loan for purchase of an automobile allowed there lifestyle to partake a luxuries lifestyle. With the Feds ability to influence interest rates in the manor to allow the ability to obtain loans more flexible for consumers. In the end of this chapter Krugman states that the process of spending ourselves out of prosperity is as simple as it sounds, but the fact that Krugman states is the problem we face is influencing the powers of Washington.
(3)- Minskey Moment
In hopes to prevent another financial crisis like the one in 2008, the Institute for New Economic Thinking was found in mid-2011. Ironically this group of economist studied old books from economist such as the well-known John Maynard Keynes along with works from Irving Fisher and Hyman Minsky.
The Night they Reread Minsky- During his time Minskyâ€˜s work was ignored by the mainstream, for reason that illustrate him as an economist who â€œcried wolf too oftenâ€ meaning his predications of a crisis came too frequently. However Minskyâ€™s idea of how leverage concerning the buildup of debt relative to assets or income. Minsky saw how the rise in leverage can eventually lead to economic instability and potential economic crisis.
The Minsky Moment- As Minsky pointed out leverage (rising debt compared with income or asset) seems...