The biggest economic crapshoot in human history

On the other hand, even many important conservative, free market economists – including some of President Reagan’s top economists – believe we do need a very big fiscal stimulus a la the 1930s and 1940s. And here is where it gets even more confounding. Maybe a trillion dollar deficit is too small. Most economic historians believe that the Great Depression did not end until World War II because only then was the deficit spending big enough to fully replace the lack of private sector economic activity. FDR was afraid of big deficits and didn’t spend enough to end the depression sooner…

So, if the Depression-WWII theory is to be followed, next year’s deficit should not be a paltry $1 trillion, but rather about $2.5 trillion (in order to be about the same percent of the GDP as the World War II deficits were). At a mere trillion, we may be spending enough to badly inflate the currency without spending enough to lift the economy.