Re: [Pen-l] Krugman on the Global Paradox of Thrift

[Gernot Koehler <gko15@xxxxxxxxxxx>]

Note that Krugman wrote _ global _ paradox of thrift, not just U.S. or rich-country paradox of thrift.

There are lots of opportunities globally to work your way out of the global paradox of thrift, for example:

(a) stop the obscene US embargo - siege of Cuba; bring the Cuban economy into 21st century. There must be lots of investors who would love to put their money to work in Cuba. And even though some Cubans love socialism, they would not mind dumping their 30 year old clunker and buy a new car.

(b) micro-credits (I know they are not popular on pen-l) - but think of that: Let's say there are 2 billion destitute individuals in the global economy. Let's say they are in 400 million households  (average household assumed to be five persons). The majority of those households are probably led by a hard-working woman (as opposed to Wall Street playboys). Give a mircro-credit of $1,000 (one thousand, on average) to each household.  That leads to an aggregate amount of 400 million * 1,000 = 400 billion dollars = 0.4 trillion dollars. Micro-credits have better risk ratings than major US investment houses and banks. There would be an instant boost of global effective demand. And 0.4 trillion dollars is cheap in comparison with the rescue of the banks and the rich investors and speculators. There is a comparative advantage in bailing out the poor, as opposed to bailing out the rich.

GK
Another idea from Hyde Park Soap Box Productions

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