In August of 2011, Nobel Prize-winning economist Paul Krugman attached himself to a theory that earned him endless mockery from the right.
"If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months," he declared, arguing in favor of the president's stimulus package. "And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better [off]."
Now, a little less than 12 months later, the stimulus package has been passed and economic recovery is nowhere in sight. What is Nobel laureate, Princeton professor, and New York Times columnist Paul Krugman's solution?
Again, prepare for an alien invasion.
Yes, Krugman stands by his "alien" strategy, arguing with Paul Solman: "The great military buildup that began in 1940 as the United States scrambled to get ready for the possibility of getting involved in this war was what brought us to full employment..." but as Solman interrupted: "But we're not likely to have a credible alien threat any time soon," Krugman joked that he probably should have "broached the thing quietly to some people at NASA" before "[giving] the game away."
Watch the video, below (alien reference begins at 2:18):
Solman asked: "are you suggesting then that there needs to be some collective fiction?"
Krugman responded that there was no need for anything "exotic," and we just need to "restore services at the state and local levels," without specifying which services have been cut.
After a brief discussion of interest rates and spending, Solman asked: "But isn't too much debt a bad thing?"
"Yes, of course it is," Krugman responded. "But by allowing this extremely high unemployment to persist, we are damaging the future."
And his solution to high debt and unemployment, apparently, is to spend like aliens are invading.