2013-66 The new normal?

Paul Krugman in the NYT comments on the sad state of the economy. Here is a summary

1. Even before the recession, when there was a bubble in housing and consumers incurred large debts, the economy was not in great shape

2. The recession ended four years ago yet the economy is still weak (this also applies to the Canadian economy)

3. So perhaps we are into a prolonged period of slow growth (he calls it a mild depression).

4. This means that only the monetary policy can help

Why is this happening? Krugman proposes two answers
- slowing population growth
- trade deficits (the second does not apply to Canada, although in recent years we have had fairly large trade deficits)

here are a couple of quotes:

"Again, the evidence suggests that we have become an economy whose normal state is one of mild depression, whose brief episodes of prosperity occur only thanks to bubbles and unsustainable borrowing."

"Why does all of this matter? One answer is that central bankers need to stop talking about “exit strategies.” Easy money should, and probably will, be with us for a very long time. This, in turn, means we can forget all those scare stories about government debt, which run along the lines of “It may not be a problem now, but just wait until interest rates rise.”"