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Stocks and Bombs — Krugman

Old Blog Import

The reason World War II accomplished what the New Deal could not was simply that war removed the usual inhibitions. Until Pearl Harbor Franklin Roosevelt didn’t have the determination or the legislative clout to enact really large programs to stimulate the economy. But war made it not just possible but necessary for the government to spend on a previously inconceivable scale, restoring full employment for the first time since 1929.

By contrast, this time around Congress is eager to spend on domestic projects; if the administration wants to pump money into the economy, all it needs to do is drop its objections to things like drought aid for farmers and new communication gear for firefighters. In other words, if the economy needs a burst of federal spending, neither economics nor politics requires that this burst take the form of a war.”

NY Times

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