Krugman: Debt will not be our downfall

In an interview with Business Insider editor-in-chief Henry Blodget, economist Paul Krugman dismissed the notion that United States is facing potential collapse with high interest rates and burdening debt for future generations.

“If we are going to collapse, it’s going to be because of political dysfunction, not because we have run up too much debt,” Krugman said in a video released Tuesday.

“The budget situation is not optimal,” he said, adding, “There is no fiscal crisis. The economic crisis is a crisis of high unemployment, not a crisis of deficits. I don’t see an iceberg in front of this Titanic — at least not for a couple of years.”

Earlier in the interview, Krugman extolled the virtues of Sweden’s economic system, saying that he far preferred their tax system, where the average income tax rate is 57 percent.

“I think that Sweden is an interesting thing, right?” Krugman said. “Based on the ideology that governs American politics, there should be grass growing in the streets of Stockholm, there should be Mad-Max-style gangs of anarchists roaming the country, and, in fact, Sweden does fine, because they have a well-run tax system, which supports a strong social safety net.”

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