Paul Krugman ~ It's Depression, Not Recession

Paul Krugman in a keynote speech yesterday at the Netroots Nation Convention 2012 in Providence, Rhode Island (my slightly edited transcript).

A Recession is when things are headed down. A Depresssion is when things are down.

It's not as bad as the Great Depression but it's incredible awful. If you don't know people who are suffering then you must be living in a very rarified environment - with the Romney clan or something.



Every time I hear some politician saying we need to think about the Debt and the burden on the children, I think what about the young people right now who can't get their lives properly started?"

None of this has to be happening....We didn't have a plague of locusts. We were not hit by a tsunami. There wasn't some act of God that created this terrible situation. It was acts of man. And perhaps more importantly right now, it's easily solvable. We've seen this movie before. We know how this worked.

You tend to think that people who are demanding that we solve this thing quickly must be crazy idealists who are defying the wisdom of economic knowledge. But it's actually the other way around. It's actually the people in charge who are refusing to end this thing quickly, who are ignoring the lessons of history and rejecting economic knowledge that we know from history.

There are lessons that I thought we had learned really well like Do not slash government spending and lay off hundreds of thousands of workers in the middle of a Depression. I thought we knew that, and yet we've been ignoring all of that hard-earned knowledge.

I have seen an advance copy of the New York Times Book Review of my book . . . and the reviewer is shocked at the lack of respect I show for 'highly respected people' like Erskine Bowles and Alan Simpson. There's a phrase I picked up . . . "Very Serious People" - capitol V-S-P, and we've been living under the tyranny of the Very Serious People who are partly defending class interests and partly just plain getting it wrong. Just going with their prejudices instead of what we know from textbook economics, what we know from 80 years of historical experience, and are messing this up.

We could solve this. Solving this Depression is not fundamentally an economic problem. It's a political problem. It's a problem of getting those Very Serious People out of the way and doing what we actually all ready know, which is why gatherings like this are important. Thank you all.