what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.
And we all are retrenching. Just yesterday I suggested we do some pretty major renovation around the house, something Diane has been pushing for now for several years. Guess what? Not now; don't want to go into debt. And so we hold onto our money and make things worse (according to Mr. Krugman). Oh, and by the way, Mr Krugman references another one of those "Great authors of the Western World', this one St. Augustine, when he is saying that now is not the time for consumers to not buy - we just had a 3.1% dip in the third quarter. Here's the quote:
Sooner or later, then, consumers were going to have to pull in their belts. But the timing of the new sobriety is deeply unfortunate. One is tempted to echo St. Augustine’s plea: “Grant me chastity and continence, but not yet.”
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