Prof. Krugman argues that we can ignore our spectacularly huge debts because, in the post-World-War-2 period, the government portion of these debts were even bigger (see second chart).
In the two decades after World War 2, which were extraordinarily prosperous, we worked these debts off. And that’s just what we’re going to do this time, Prof. Krugman argues. So don’t worry, be happy. …
So that brings us to our big question for Paul Krugman:
Why is the current period not fundamentally different from the post-World War 2 period in several critical ways that make your happy analogy flawed?