When it’s time to get reassured about their fallacious economic thinking, newspeak liberals inevitably turn to Paul Krugman. He is the “authority” that sanctions everything a “good” economist would not.

Krugman’s latest rant: We are too virtuous. According to him, we’ve been so obsessed by paying off our debts that the economy wasn’t able to take off again. Like FDR and other “great” politicians did before, we need debt-relief programs.

Once more, the Nobel Prize winner is undeserving of his award. First, let’s get this straight once and for all: there has been no austerity. Be it in France, Spain, Greece, Italy or the U.S., governments have been spending more and more (or at least, not less) of their countries’ wealth since 2008. They’ve all been following Lord Keynes’ advice to spend and spend in order to jump start the economy, which was of course bound to fail.

What Krugman and other newspeak liberals fail to realize is that recessions are a vital part of the market’s self-regulating mechanisms (yes, it exists). When the whole economy crashes, it’s because it was artificially lifted – in the early 2000s and before, it was the government’s obsession with increasing home ownership and ending inexistent “racist” practices in banking. As a result, mortgage restrictions were almost annihilated and banks lent to basically anyone since they had no way of knowing about their clients’ credit-worthiness.

When the bubble popped, the first reaction governments should have had was to “do nothing”, i.e. cut spending and taxes and deregulate those insane housing regulations. Unfortunately, they did exactly the opposite: Spending increased like crazy, a host of taxes were created/increased, as were regulations.

In addition, authorities have simply discouraged savings with near-null (if not negative) real interest rates. In other words, people are still encouraged to spend rather than save, which represents the surest way to an even larger depression.

Indeed, what boosts an economy is savings, not spending. By setting aside money for tomorrow, people can help others with great ideas to use these savings (for a price) in order to get rich and, ultimately, improve our lives. Without savings, we simply consume the capital that got accumulated and, in the long run, decrease our standards of living. Those machines won’t replace themselves and new ones don’t magically appear.

In short, Krugman is dead wrong when he says that we are too obsessed with debt. If anything, we are not obsessed enough with it. We are accumulating debt over debt and never paying them back. Skipping the responsibility of assuming one’s debt by relieving those debts would simply shatter confidence, encourage more reckless behaviours and simply destroy the economy. Indeed, would you lend money if you knew they would never pay you back?