Paul Krugman Answers Paul Ryan on Debt Crisis: We Can Print Money

January 31, 2013 - 10:53 AM

Paul Krugman

Liberal economist and New York Times columnist Paul Krugman (AP Photo)

(CNSNews.com) – Responding to House Budget Chairman Paul Ryan's warning that if the federal government continues to run annual $1 trillion deficits we will eventually face a debt crisis, liberal economist and New York Times columnist Paul Krugman said Wednesday that that is not a legitimate worry because the U.S. government can always print money and weaken the buying power of the dollar.

Weakening the dollar, Krugman said, would be a good thing.

“The United States is a country that has its own currency--can’t run out of cash because we print the money. If you even try to think what would happen--suppose that investors get down on the United States. Even so, that would weaken the dollar, not send interest rates soaring, and that would be good. That would help our exports,” Krugman said on C-SPAN’s “Newsmakers.”

Krugman was asked whether he thought the U.S. was “in danger of a collapse, a stall, a crisis.”

“No, there’s a whole bunch of reasons why that’s not true. First of all ... that trillion dollar deficit is overwhelmingly the result of a depressed economy, and when the economy’s depressed, it’s good to run a deficit. You don’t want the government to try and balance its budget right now,” Krugman said.

C-SPAN showed a video of former GOP vice presidential candidate Rep. Paul Ryan (R-Wis.), speaking at the National Review Institute in Washington, D.C., on dangers of debt.

“We spend a trillion dollars more than we take in each year. We can’t keep that up. If we stay on this path, we will run the risk of a debt crisis. What is that? That’s a moment where our finances collapse, our economy stalls. We will have to convince the country to change course,” Ryan said.

“The story Ryan is trying to tell just doesn’t actually make sense. There are no historical counterparts to the story he claims we’re at risk of, and of course, Ryan himself desperately, desperately is concerned about the deficit but won’t accept one penny in additional revenue to deal with it,” said Krugman, winner of the Nobel prize in economics and author of “End This Depression Now.”

“All he really wants is to cut spending. If it comes to making any sacrifice on what he cares about, which is taxes, he’s not willing to make that sacrifice,” added Krugman.