The Guardian reports that the US lost another 131,000 jobs in July. Much of it can be attributed to the Census winding down, and laying-off employees, but June estimates have been revised to 221,000 from 125,000. Paul Krugman suggests that politicians may be busy redefining what it means to have a good economy. Dr. Krugman has been deeply critical of current economic policies around the world in his blog and his column. Of particular concern is the move by many countries to “tighten their belts” and cut spending. It’s truly astonishing that so many people around the world have forgotten the Great Depression and written Keynesian economics off. Increasing government spending is the only feasible method of stimulating the economy at this point. The Fed is already up against the zero bound, so there’s not much that can be done by way of monetary policy to help the economy. We desperately need big spending on public works. Hell, it’s obvious that the US has crumbling infrastructure in need of major overhaul. Why not fix our stuff and stimulate the economy at the same time?
There are other economic issues here, such as the out-sourcing of US manufacturing, limiting the effects of economic stimulus, but that’s another issue to be tackled after we stabilize the economy.