to the same place, with the difference that we'll owe a ton of money in the end if we drag out the adjustment process. Once again, you're falling into the trap of applying "household economic" thinking to a macroeconomic problem. Borrowing might increase the future taxes that you personally owe, but it is just as likely that it will increase your personal future wealth because a dollar of borrowing also creates a new financial asset worth one dollar. And since we're at the zero bound that new financial asset not only does not crowd out private sector investment, it actually "crowds in" investment because it keeps that dollar within the GDP flow cycle. You're also making the same mistake that European austerity types are making. Implicit in your argument is the assumption that cutting spending will reduce the deficit. It won't. Austerity policies in the midst of a zero bound recession increase the deficit. So any thoughts that a fiscal cliff will somehow right the ship are completely out of touch with reality, economic theory and historical experience. Finally, the main theme of Menzie's post is the effect of the fiscal cliff on the rest of the world. How exactly would a fiscal cliff help US exports when it would adversely affect our chief trading partners (Canada and Mexico). So much for an export driven growth stategy. Posted by: 2slugbaits at November 10, 2012 05:37 AM Well Paul Krugman is at it again. He called for a housing bubble and