By Bill Wilson
The week of April 6, the national average of gasoline prices hit
$3.94, according to the Energy Information Agency, with prices
continuing to rise nationwide.
But economist and New York Times columnist Paul Krugman apparently
thinks you’re not paying enough at the pump just yet. Or everywhere else
for that matter. Whether energy, food, or consumer goods, he wants
more inflation, and is encouraging the Federal Reserve to fire up the
printing presses to help stoke the embers of even higher prices.
Why would he want to do that?
Writes Krugman, “large parts of the private sector continue to be
crippled by the overhang of debt accumulated during the bubble years;
this debt burden is arguably the main thing holding private spending
back and perpetuating the slump.”
Therefore, he adds, “Modest inflation would, however, reduce that
overhang — by eroding the real value of that debt — and help promote the
private-sector recovery we need.”
But, non-financial business debt (corporate and non-corporate), while
slightly dropping after the financial crisis, grew steadily in 2011 to
$11.63 trillion — for the first time it’s higher than its peak 2008
level of $11.41 trillion, according to data released from the Federal Reserve.
That indicates that any deleveraging in the non-financial private
sector has already worked its way through the system, else the total
amount of debt owed by private companies would still be decreasing.
So, which “large parts of the private sector” being hurt by debt overhang was Krugman referring to?
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