One I’m Right About (I Think)

By the time we entered WWII, we were pretty dead in the water recovery-wise because of FDR’s wussing out on Keynesian policies (scared to continue them by the era’s GOP wingnuts).

I say: If the wartime economic policies weren’t Keynesian, they were close enough. QED, I say.

And not quite so explicitly, yet clerly enough, Professor Krugman agrees.

And he agrees so explicitly in his 16 February 2009 column:

If you want to see what it really takes to boot the economy out of a debt trap, look at the large public works program, otherwise known as World War II, that ended the Great Depression. The war didn’t just lead to full employment. It also led to rapidly rising incomes and substantial inflation, all with virtually no borrowing by the private sector. By 1945 the government’s debt had soared, but the ratio of private-sector debt to G.D.P. was only half what it had been in 1940. And this low level of private debt helped set the stage for the great postwar boom.


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