Economists Rock ... Really

Paul Krugman takes a break from hobnobbing with the King of Sweden and writing for The New York Times to publish an open letter on economic policy to Barack Obama in -- wait for it -- Rolling Stone. Some excerpts follow:

If things continue on their current trajectory, Mr. President, we will soon be facing a great national catastrophe. And it's your job — a job no other president has had to do since World War II — to head off that catastrophe ...

You .. have to pull this plane out of its nose dive yourself, because the Fed [Federal Reserve] has lost its mojo...

By all means you should try to fix the problems of banks and other financial institutions. But to pull the economy out of its slide, you need to go beyond funneling money to banks and other financial institutions. You need to give the real economy of work and wages a boost. In other words, you have to get job creation right — which FDR never did...

How much spending are we talking about? You might want to be seated before you read this. OK, here goes: "Full employment" means a jobless rate of five percent at most, and probably less. Meanwhile, we're currently on a trajectory that will push the unemployment rate to nine percent or more. Even the most optimistic estimates suggest that it takes at least $200 billion a year in government spending to cut the unemployment rate by one percentage point. Do the math: You probably have to spend $800 billion a year to achieve a full economic recovery. Anything less than $500 billion a year will be much too little to produce an economic turnaround...

That said, the future is what matters most. This month we celebrate your arrival in the White House; at a time of great national crisis, you bring the hope of a better future. It's now up to you to deliver on that hope. By enacting a recovery plan even bolder and more comprehensive than the New Deal, you can not only turn the economy around — you can put America on a path toward greater equality for generations to come.