Monday, May 3, 2010

Demand vs Savings

A month ago, I wrote:

Consumer demand will bring us out of the recession, but it's also what got us into the recession. I don't envy Sec. Geithner or the folks at the Fed. 

Today, Paul Krugman writes:

[A] liquidity trap world is a paradox-of-thrift world, in which the virtuous individual decision to save more is a vice from the point of view of the economy as a whole. For now, it’s actually a good thing that consumers are behaving irresponsibly.


So my wish is that we be made chaste, continent, and thrifty — but not yet.

But when? Like I said, I'm glad I'm not making these decisions.

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