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SENTRY JOURNAL » Economic Depression, Obama, Paul Krugman » Brace for impact we could be headed for a third depression

Brace for impact we could be headed for a third depression

Today I found a very revealing article on  In the article Nobel Prize winning economist Paul Krugman warned that the U.S. economy is in the “early stages” of a depression, one which will be much more severe than the Great Depression.  Now the major problem I have with Mr. Krugman is he believes spending is the way out of this mess.  He definitely embraces the Keynesian economic model; a model that the Obama administration fully bought into. 

The thing to key in on is we have a far left economist saying we’re in trouble.  With the exception of Rick Santelli and conservative talk radio there really hasn’t been a peep from the MSM about the dire straits our economy is in.  The MSM continues to try paint an economic rosy picture even though all economic indicators are heading south.  Just yesterday we saw a huge drop in consumer confidence.  However we are starting to see an agreement from both sides of the economic debate that trouble is on the horizon.   

Mr. Krugman further went on to write, “this third depression will emerge as a result of the failure of government economic policy.”  He believes we should actually throw more money at the problem, an idea that simply isn’t working.  I mean let’s face it, if you wanted to use as a benchmark as what not to do during an economic downturn, one needs to look no further than the Obama economic game plan.  That plan includes out-of-control spending, raising taxes across the board by allowing the Bush tax cuts to expire, increase the tax burden on small businesses, create heavy financial regulations, push cap and trade, nationalize the banking and auto industries, and raising the corporate tax rate.  I’m sure I missed a few but you get the picture.  The government has indeed failed miserably in addressing the economic woes we face. But not for the reasons the Mr. Krugman believes.  Instead they concentrated on a domestic agenda while the economy continued to sputter along.  Their answer was the same as Mr. Krugman’s; just throw money at the problem and regulate.  This plan has failed.  These actions have propped up companies and banks that should have failed under a free market system.  This is how the free market corrects itself.  If the free market was allowed to do its thing we would have experienced some pain, but the pain would have been short lived.  Once the market goes through its adjustment, real sustained growth can take place.  The problem is through stimulus we didn’t allow the market to adjust, we just injected money to relieve the pain leaving the disease to still attack our economy.  This isn’t rocket science folks.

The one thing we need to take away from Mr. Krugman’s concerns is that there are signs that a huge economic downturn is on the horizon.  We need to be prepared and informed.  If we’re not, this just might end up being another crisis for the administration to advance their agenda. 

Liberty forever, freedom for all!


Filed under: Economic Depression, Obama, Paul Krugman

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  • Gorges Smythe June 30, 2010 at 12:58 AM

    You can be sure the economists aren't going to be throwing THEIR money on the fire!

  • John Carey June 30, 2010 at 7:08 PM

    You got that right GS. The Dems have no problem throwing OPM at it though.

  • Teresa June 30, 2010 at 11:41 PM

    Throwing more money at the problem is the wrong way to go. Obama and his admin have only extended the pain and exacerbated our economical problems. They need to stop their massive spending, lower all the tax rates across the board, and this will help to spur economic growth. They need to stop their plans for Cap & Trade and repeal Obamacare and then investors will feel more confident about investing. But, now investors have no idea what new taxes are coming around the bend or the what the costs of the tax hikes are going to be so their confidence is waning or shaky.

  • John Carey July 1, 2010 at 4:26 PM

    I agree Teresa. His economic plan, if that's what you want to call it is destroying wealth in the private sector and stifling growth.