Princeton professor Paul Krugman took a victory lap of sorts last week in a column in the New York Times. Krugman, who has been calling for even greater stimulus spending to pull the U.S. economy out of its funk, pointed to the UK's crappy economy as an illustration of the downside of spending cuts and "austerity."
So is Krugman right? Is more Keynesian stimulus spending the best way to return the U.S. economy to health, deficits be damned?
Heck no, says Peter Schiff, CEO of EuroPacific Capital.
Paul Krugman has always been wrong about this, says Schiff, and he's still wrong.
Yes, getting the U.S. economy back on track will be temporarily painful. But it's time for the U.S. to take its medicine and get its mammoth budget deficits under control. If we don't do that now, says Schiff, doing it later will be even more painful.
Among other horrors Schiff expects if the US continues down its current path are a complete collapse of the dollar, rampant inflation, and soaring US interest rates.