August 12th, 2011
02:09 PM ET

Watch GPS: Krugman calls for space aliens to fix U.S. economy?

On GPS this week, we explore the most important topic (the economy) with the most important economic voices. Fareed Zakaria talks to Nobel Prize winner Paul Krugman and Former IMF Chief Economist Ken Rogoff.

The show also turns a myth on its head. China’s not doing the U.S. a favor by buying its Treasury Bonds - the pleasure is very much China’s. We’ll explain.

All that, plus a fascinating look at America’s fractured relationship with Pakistan with the journalist Ahmed Rashid, and a smart, macro look at the London riots with two top British thinkers.

But first, why does Paul Krugman say space aliens could fix the U.S. economy? Here's an edited excerpt of what he and Ken Rogoff had to say:

Ken Rogoff: Infrastructure spending, if it were well-spent, that's great. I'm all for that.  I'd borrow for that, assuming we're not paying Boston Big Dig kind of prices for the infrastructure.

Fareed Zakaria:  But even if you were, wouldn't John Maynard Keynes say that if you could employ people to dig a ditch and then fill it up again, that's fine, they're being productively employed, they'll pay taxes, so maybe Boston's Big Dig was just fine after all.

Paul Krugman:  Think about World War II, right? That was actually negative social product spending, and yet it brought us out.

I mean, probably because you want to put these things together, if we say, "Look, we could use some inflation."  Ken and I are both saying that, which is, of course, anathema to a lot of people in Washington but is, in fact, what basic logic says.

It's very hard to get inflation in a depressed economy.  But if you had a program of government spending plus an expansionary policy by the Fed, you could get that.  So, if you think about using all of these things together, you could accomplish a great deal.

If we discovered that 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. And then if we discovered, oops, we made a mistake, there aren't any aliens, we'd be better -

Ken Rogoff:  And we need Orson Welles, is what you're saying.

Paul Krugman:  No, there was a Twilight Zone episode like this in which scientists fake an alien threat in order to achieve world peace.  Well, this time...we need it in order to get some fiscal stimulus.

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soundoff (336 Responses)
  1. greg

    when i turn on the news all i see is people homeless, out of work, starving africa, losen thier houses,etc and all states and countries in financial trouble.heres one suggestion on what we and other countries can do.. first you install pipelines in every waterway of fresh water that their is you take the e3lectri cell that is being used in california to produce electricity connect to pumpstations that connect to pipelines to keep water moving you are also useing solar panels and wind turbines for extra electric sourses. above pipelines sits a boot that your car drives up on and drops in youput car in neutral and punch in where you want to go engine get to listen to music or talk on your cell phone, no oil being used bthyey can keep it for plastices.magnets eliminate weight of car to increase,plate that car drives up on is set by make of car and year no issue,filters are install to waterlines, that are replace periodioctley.watersupply will also be design to travel over drought prone areas of states and countries to keep farming alive just watch out for mansento corperation selling you the seed.this is just a start to get the economey going again and to eliminate floods and droughts in the future.

    August 17, 2011 at 2:02 pm | Reply
    • dsmith

      Very cute article. I wonder what would the impact on the economy would be if the zombies attacked, or the charactors from tune town, and don't forget the vampires they are very poltically active.

      August 18, 2011 at 9:49 am | Reply
  2. greg

    remember what devinci fear the most.

    August 17, 2011 at 2:05 pm | Reply
  3. AGuest9

    The way aliens (illegal ones, which is what I thought this was actually about when I clicked on the headline) is to go back where they belong, and take their "anchors" with them. Take the ones living better than hard-working Americans by lounging around in prisons, getting free cable and college and health care with you!

    August 17, 2011 at 8:45 pm | Reply
  4. ARi

    When the aliens make their presence known I'll certainly be on their side weather they are perceived as good or bad 😉

    August 18, 2011 at 11:07 am | Reply
  5. Campaign Headquarters

    He's always right –

    August 19, 2011 at 1:04 pm | Reply
  6. AnnaBF

    Aliens stimulating the economy? It might sound humorous but Mr. Krugman touches on an important idea. When people have a common enemy they will band together above their differences to achieve their goal, if the enemy is aliens, immigrants, foreigners, political parties, etc. But in our increasingly globalized, interconnected world, there just isn't any "othesr" any more for us to band together against. Short of aliens landing tomorrow to give us something to unite against, maybe we should unite against what it is that really divides us- our own ego. We are more interconnected than ever but at the same time we are more selfish than ever. Isn't it time that we start looking at the root of the problem?

    August 20, 2011 at 12:55 am | Reply
    • Shion.H

      AnnaBF, your comment reminded me of the movie, "Independence Day" with Will Smith in it? When global crisis arise, countries unite in order to defeat their enemy. Come to think of it, today we find ourselves in a very similar scenario, instead of aliens and UFOs, our world is being threatened by our own over-grown Egoism, which does not match the conditions of today's integral world, where care for balance and harmony is obligatory for it's normal functioning. So let us hope that the whole world will quickly recognize our common enemy, and unite to fight this problem.

      August 20, 2011 at 5:37 am | Reply
    • DebP

      AnnaBF, just brillliant!

      August 20, 2011 at 7:20 am | Reply
    • Willedolla

      Well said AnnaFB! We are divided amongst ourselves and we are own, and humanity's, enemies now.

      August 21, 2011 at 7:03 am | Reply
    • Kathy

      "We are more interconnected than ever but at the same time we are more selfish than ever" this is too right, if we can't recognize the selfish inclination is the root of all problems, is the only mutual enemy, then no crisis would be solved. Seeking the inner correction might be the only way left for humanity to solve all the problems.

      August 21, 2011 at 11:49 am | Reply
  7. Azhitman

    Aliens shouldn't be invited to assist with this issue, Obama will blame them for the US woes and start an intergalatic armaggeddon.

    August 20, 2011 at 3:22 am | Reply
  8. Roger

    Towards the end of his life, Wernher Von Braun, a leading scientist not known for paranoia, warned us that there would be a hoaxed alien invasion to bring about world government.

    August 23, 2011 at 10:34 am | Reply
  9. Teabagged

    If Krugman was anal-probed by Martians, would he be stimulated?

    August 24, 2011 at 12:09 pm | Reply
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