It is very strange to see Joe Scarborough trying to win an economics argument with Paul Krugman. Krugman doesn’t know politics as well as Scarborough, but he does have a Nobel Prize in economics. He also has a track record. He’s been making predictions in print at least two times a week for years, and you can check his predictions to see how they turned out. On economic matters, he’s been very accurate. He’s certainly been better than average. Meanwhile, the austerity measures that have been pursued with such gusto in Europe offer us a counterexample. Austerity might assure that taxes are low and moneylenders get every possible bit of currency they lend out back with interest, but austerity is bad for economic growth and bad for employment. And low economic growth and high unemployment cause government debt.
People know that you have to spend money to make real money, but they somehow don’t think that applies to the government. At some point, you’d hope people would notice that printing money hasn’t caused inflation and big deficits haven’t driven up interest rates and that the economy performed better during the Stimulus than before or after it.
High unemployment is bad and has huge direct and indirect costs to society and the government. The best thing we could do is to spend a bunch of money to employ people doing whatever. Or, you know, just start handing out wads of cash.
In any case, Scarborough just thinks it’s bad to run a deficit and he can’t imagine why it could possibly be a bad idea to run smaller deficits during a time of slow economic growth and high unemployment. It’s a bad idea because it makes the problem worse. Is this really that hard to accept?
