NYT's Krugman to President-elect Obama: Think big

Further, Krugman doesn't bring author Amity Shlaes up, but she's one who argues, incorrectly in the view of yours truly, that the federal government's intervention prolonged the Great Depression. Briefly, in Shlaes' interpretation, the downturn of the 1930s was a pull-back following the Roaring 20s that the market would have corrected, had the federal government not intervened.

Shlaes' take on the Great Depression is as flawed an analysis of economic policy as one will find. Had the New Deal not intervened, the Depression would have been longer. Further, the problem, as Krugman noted, with the early New Deal years was not that the government had intervened, but that government spending was not big enough.

When government spending did increase to large levels, the Depression ended, Krugman notes, and the proof of that -- the evidence that philosophically and empirically refutes Shlaes' absurd thesis -- is the increased U.S. Government spending for World War II. When government spending increased to a large amount at the start of and throughout World War II, the U.S. economy boomed, and expanded, and became more dynamic, and diverse, and sophisticated, with an enormous increase in the nation's productive capacity - - to the point where the United States economy became the strongest economy on the face of the earth.

All because of government spending, Krugman states, adding that he hopes President-elect Obama is listening.

Fiscal Policy / Economic Analysis: Likewise, yours truly hopes President-elect Obama is listening, as well.