inflation. that hasn't happened. predictions that austerity or cutting back on government spending was going to be exp expansive because we would improve confidence. we have had a number of experiments as anyone can really ask for. and basically, people went with the -- have been right about all of the major stories in the past few years. >> paul krugman has an article in the "new york times," "earth to ben bernanke." you say that you don't think the u.s. has learned from the great depression. let's listen to a response that the federal reserve chairman didn't have. the fed should seek a higher inflation rate to achieve lower unemployment. >> the view of the committee is

that that would be very reckless. we have -- we, the federal reserve have spent 30 years building up credibility for low instable inflation which has proved extremely valuable in that we were able to take strong innovative actions in the last four or fife years to support the economy without leading to an unanchoring of inflation speculation or a destabilization of inflation. to risk that asset which i think would be quite tentative and perhaps doubtful gains on the real side would be, i think, an unwise thing to do. >> last your response, paul krugman? >> okay, so the first thing is among those critics who called for higher inflation in times like these was a guy by the name of ben bernanke who was very critical of the bank of japan ten years ago for following pretty much the same course that the federal reserve is following

right now. it's -- i mean -- it's central banners fee, they love to talk about credibility, i understand there's some concerns there, but i think you have to put what i believe are the quite small risks of taking some more aggressive action, remember, we're not talking about hyper inflation, we're talking about a target of 3% or 4% inflation, which is about what the inflation rate was during ronald reagan's second term in office, versus the not missed but the reality of destructive, extremely high unemployment. every month that this goes by, we are losing more people who will never get back to the workforce. every month that this goes by, many more american families are suffering from high unemployment. i think it's uncouple bent on the feds to take some risks to its precious credibility. i don't think america can do it on its own. but it is one of the

institutions that has some freedom of action. and as i said in that article, i wish chairman bernanke would reread what professor bernanke had to say because i believe in his professor years he had it right. >> can you explain the current role that you think exists that mr. bernanke might be facing? >> okay. this is speculation, at this point, we don't know. and i like to imagine that somewhere a locked drawer, he's got a notebook in which he writes, the truth i believe that mike witford and paul krugman, all the economists who are urging me to do more actually had it right. he said the view of the committee. he didn't start by saying in my view, he said the view of the committee. look, the fed, if you're the fed, what do you like better? just thinking about the institutional imperative here. do you like the idea that it's

your job to cause an economic recovery. or do you like the notion that your job is to do what is considered responsible for the fed to do, and as long as you have done that, whatever happens to the economy not our fault. the view that he's expressing there makes life much, much easier for the institution. and i think what has happened and people around him have ended up putting priority over making life easy for the fed. which is not their job. they're not there to have an easy life. they're there -- their mandate says price stability but also full employment. they should be there, they should be worrying about why they're failing so bad on the full employment. >> paul krugman, nobel prize winning economist at princeton university and author of the new book "end this depression now." frank joins us from virginia beach on our independent line. frank, go ahead. >> caller: mr. krugman you have been around for a long time and there's been plenty of times back in the early '90s when you

could have come out and said, folks, this is not going to end good, with all of the ridiculous manipulation of the markets using artificial, monetary and fiscal tinkering to manipulate things, you know, you have had -- you know present of opportunities to say, hold it, we can't continue to ease, ease, ease and stimulate, stimulate, stimulate. i mean a fifth grader could be trained to add stimulus to the economy. the problem is we don't have any real economists in washington. there's no intellects left in washington. there's no academics they have traded their intellects for a security blanket and a pacifier. >> let's just be clear, when george w. bush pushed for unfunded tax cuts. i said don't do this. i said this is the time that the economy is reasonably strong, this is the time to be paying

found federal debt. i was really very strongly against that. when he called for unfunded wars, i said don't do this, we're not supposed to be running up debt for a war of choice at a time when the economy is not in need of stimulus. so this is -- you know, this is all wrong, i was actually somebody who was very much against irresponsible budgets. unfortunately what was what we did, now with the economy deep depressed, now is the time when we do need to spend and the public policy needs to depends on situations. it's not true about me, and -- you know if you want to say that we have had artificial stimulus, all these years, again, it's been -- world war ii is 67 years ago. and most of that period, we had an economy that did very well. did well with quite a lot of active policy by both the federal reserve and the federal government. so the question, if you think that's an unsustainable policy,

wow, that's a pretty long run. it's only that the missteps that we have made in the past few years that are the real disaster. >> ron asks by e-mail from colorado, at what level of debt do you become concerned that the u.s. will no longer be able to borrow money? >> countries, advanced countries with stable governments and their own currencies have got a lot of leeway. there was an interesting thing, when the people -- we have had these debates and people say john may for said that government spending was the answer. but back in the 1930s, government doesn't have the debt levels as we do now. it turns out that britain had a substantially high level of debt to gdp than we have now. those facts can run 130%, 140%, it's good, but it's not

catastrophic. and japan, it's 200%. and people have been predicting a japanese debt crisis, for as long as i can remember, basically for about a dozen years and they have lost an enormous amount of money because of the fact of the matter is that japan is still a -- and they're able to borrow at less than 1% interest rates. so i don't know where that red line is, but all the evidence suggests it's a long ways off from where we are eight now. now is not the time to obsess about that debt level, i'm sorry, go back to the point i made in the beginning, slashing spending right now does not actually improve the situation. even if you are worried about debt levels, slashing spending now is actually going to make things worse. you sound terribly afraid of the level of debt, but if you're going to do a policy because of that that actually makes the set situation worse, you're not helping the situation. >> paul krugman, don from las crews says says that we heard

from a republican congressman, mr. -- the congressman talked about concern he's hearing in town halls back home where people are really afraid of the debt and are concerned about the next generation, where did that fear come from? we're hearing from you, don't worry about it so much right now. where is america getting this terror of the debt? is it because of it worsening in europe? where does it come from? >> a lot of it because it's actually the belt way echo chamber, people inside washington charted obsessing or talking about it. a lot of people who talk most about the debt really don't care about it at all, they're just using it as a stick with which to beat the president. but they're all talking about it in washington, they come from people who have made a career of warning ominously about the debt. not that i have a particular grudge, but trace a lobby organization. and you'll find that the funding goes back to a couple of guys,

pete peterson in particular. but the other thing is, if you can look at polls from the 1930s, and i have done -- i look at the polls from 1936, lots of people then said, oh, president roosevelt should cut spending, i'm worried about the department and in 1967 he did just that, he sent the economy in a tail spin. the economy had a pretty good recovery. so the fact that the push lick has gone a view which is largely conditioned by what they read in the newspaper and -- that's not a guide for what we should actually be doing in regard to public policy. >> caller: paul, i watched you last night on msnbc, and i have a couple of comments and a question the question was the

su surplus which i think should be used to pay back social security. the bush tax cuts where i think i got $5 and rich people got thousands of dollars. the iraq war, the afghan war. my question is, if those things had not happened and obama had not inherited all of the problems from the bush, is there any way to judge where our economy would be right now? >> yeah, i have a pretty strong -- i mean, it's not going to be quite what you want to hear. i think we would have had the crash. we would be in this depression even if we hadn't had those tax cuts by bush. it was actually 30 years of financial deregulation and a general sense of complacency

that set the stage for this. people forgot how bad the economy can get, so they got careless, that includes politicians so we took away the safeguards that were put in the 1930s and sure enough we managed to reproduce the great the depression, fortunately on a smaller scale. some of the financial deregulation, some of the -- under president bush. there were serious attempts by state attorneys general to do something about subprime abuses and the bush administration stopped those cold. so the financial crisis wouldn't have been quite so bad, but without those unfunded wars, without those tax cuts, u.s. debt right now would be around $3 trillion less than what is it and i think people would be a lot more relaxed about spending the money we needed to spend to help us recover if we didn't have that $3 trillion of debt. i think we have to do that

spending anyway, but, boy, we did exactly what you shouldn't do, we ran deficits during the good years. the good years are the times when you do want to pay down debt. i'm all for it being fiscally responsible when the economy is strong enough to stand it and the result was we came into this bad period with a debt number that looks big, it's still manageable, but i wish it were smaller. >> clyde is our republican caller. >> caller: i want to continue the conversation you had with dr. paul the other day. this is a quote from john maynard in 1920, by continuous process of inflation, governments can confiscate secretly an unobserveded and important part of the wealth of their citizens. the process engages all of the hidden forces of an economic law this side of destruction.

and not one man in a million can diagnose. let me preface -- >> yeah. >> collide, why do you think that's significant? why are you sharing that where us? >> caller: my senior year, 1971, i planted one acre of tomatoes and i grossed $3,000 off that acre. that was when the silver dollar and the paper dollar were the same value. yesterday silver closed about 2,000 an ounce. today if i grew the same acre of tomatoes, i would have to have 345,000 paper federal reserve notes. and two years ago, the federal government sold my farm and home. and if you want the end this depression, you get farmers -- we have been producing crops and

life stock since 1986 below 1932er rant levels. that's the problem, that's the way you end the depression. >> okay, there's way too much in one pack there. let me just say, hyper inflation, real situations where governments are trying to pay their bills by printing money and prices go through the roof are a bad thing. sort of obviously. that ee's what king was writing about because there was some hyper inflation after world war i. that has not happened at any point in u.s. history. it's just not the story, it's a completely different animal. by all means, i have -- -- we're talking about policies that provide full employment.

again, we have people talk amount about inflation, they obsess inflation, they talk about the stories of inflation. i always think it's kind of interesting that the germans talk endlessly about the 1923 inflation, which was indeed a terrible thing. but they don't talk about the 1930s and 1932 deflation because -- sticking with the gold standard at a very bad time to go that. and it was actually the inflation not the deflation that paved the way for you know who to take power. policy depends on circumstances. this is the time not to be worrying about hyperinflation. we're a little bit of inflation can actually help, history has shown in many cases that that's true arntds that's true again right now. >> paul krugman has a new book out called "end this depression now." we are using a new medium called tout. let's take a looking at one of

the touts that came in with a question for paul krugman. >> paul, you describe our current economic situation is a chronic condition. the answer for me as an individual would be to cut my spending and to raise my income preferablythrough hard work, what do you think as the answer for our country. >> this gets to the heart of the issue because a country is not an individual. the crucial thing to understand and the way that the whole essence of what macroinflation is about. the essence of how we even have inflation is this my sp spending is your income, and your income is your spending -- post of us end up moore because we have ended up with less income and whatever we gained with the spending cuts are more than made up for by the loss of income. right now we have a situation where a large part of america

for good reasons is being forced to spend less. households ran up too much debt during the crisis. they have's all that happens, that's all that you have is that a lot of players in the economy is cutting spending and nobody's increasing spending, then you get a depression. then you get an economy where everyone is worse off. now it's time to do the opposite of what the private sector is doing. if the private sector won't -- and think also about the countries that have practiced austerity. think about greece or aireland, what it's actually happening in countries that are trying this austerity is their first way of -- that can't be right. and so my -- everything what i'm

saying, but basically what any sort of reasonable economic analysis says is we have to find a way to keep people employed, we have to find a way to have this economy produce, if you try and think in terms of a household budget, you're going to be led into a disasterous set of policy decisions. >> caller: corning, mr. krugman it's an honor to talk to you and we need some -- here's a comment, please get off the msnbc and get on the fox news. those guys to need to get something strait out there. >> i don't like talking to tv shows that cut off my mike when i'm winning the argument. >> caller: could you explain to the american people economic base multipliers? we don't understand that dollars that are put into the economy generate up to $1.75 and how

that kind of thing works? i mean that goes right to your spending. and could you also explain when i look country is doing the best economically our tax rates are around 38 to 50%. and when our country is doing the worst economically, is when we're at the lower tax rate levels because there isn't the spending, the economic multipliers, driving the economy. when i listen to the tea party people say, let's cut government, kill it all. we're just cutting off our nose to spite our face. >> okay. so let me see if i can keep these two things. actually, the multiplier is -- think about what we should be doing right now. what i think we should be doing right now. which is to be rehiring those schoolteachers, policemen, firefighters.

they would -- that would directly be employing those people, because those are real jobs. anybody who thinks that teach ing first grade is not a real job has never actually tried to teach young kids. al also, that would put more money in the pockets of firefighters and schoolteachers. a dollar in the economy, at a time like this, when the economy is operating with lots and lots of unemployment, generates additional spending. it's not just the direct employment from the spending, but the indirect effects as it goes down the chain. that's the multiplier. aund 1.50 right now, we think. that's certainly part of the story. i suppose that i propose that we go to an america where tax rates on the rich were much, much higher right now.

and also, where the minimum wage was way higher where it is right now, relative to the average earnings, and which unions were much more powerful, and a third of the workforce. a lot of people would say, that's a disaster, that would be a collapse in the economy. i just described america in the 1950s. america in the 1950s had higher taxes at the top, and much stronger protections for workers than we have now. it also experienced the best generation of economic growth that we ever had in this country. a lot of what goes on right now, what people think as the truth is actually just prejudices that have been cultivated by a decades long propaganda campaign. none of it is hearing about what it takes to make this country prosper or true. >> we have the demonstration that says, what you really need, you need good education, good infrastructure. try imagine doing a highway system today. and that's what leads to a

successful economy. >> upper sandusky, ohio, debra joins us. >> caller: i agree with everything you say mr. krugman. and we pay our taxes. when we want the police or the fire department, we want them here. the way things are going, our governor casey is going to get rid of everything. and i just wanted to thank you very much for your book. >> can i say a resident of new jersey who goes into new york quite a lot, i am seriously annoyed at a governor who yells at people. who cancelled the proposal, the well developed plan to put a second rail tunnel under the hudson river, where the world's greatest city is linked to my state by a 100-year-old tunnel. whatever happened to the country that used to think about the future. >> the house republicans are talking about getting out of

sequestration by cutting social programs and holding steady on defense spending. what do you think of sequestration? does it need to stay in place? does it need to happen. >> we shouldn't be doing any of this. now is not the time for spending cuts. is a mistake, i think the president made a big mistake by thinking he could deal in good faith with the republicans. i would like the whole thing to go away, this is not the time. it is kind of amazing that they are prepared to defend any claims that they really care about efficiency and government. if there's one area of the government that has a lot of clear waste is defense spending. in order to avoid doing anything about trying to control those costs. they're willing to inflict enormous human suffering on the most vulnerable members of our society. i think that's telling you something about where their values are. >> author of the new book, end this depression now.

he's also a nobel prize winner in economics. thanks for joining us this morning. in a few moments, the state opening of british parliament. a hearing on the role and future of the federal reserve. after that, an updated plan for border security. these men go through things and have scars that no one can understand except each other. >> the first thing that startled us was the relationship between herbert hoover and harry truman. they were different men and they ended up forming this alliance that neither of them would have anticipated. it ended up being enormously productive, and formed the foundation of what became a very deep friendship. the letters between them later in their lives are really extraordinary. >> it may be the most exclusive

club in the world. michael duffy and nancy gibes on the relationships of the american presidents. sunday at 8:00. at the state opening of the british parliament wednesday, queen elizabeth ii outlined the government's priorities for the kohling year. the last state opening was two years ago, shortly after the last general election. this is a little less than two hoursp a very warm welcome to the program. it's been two years since the queen last opened parliament. the very early days of the

coalition government. so today, we'll be looking at david cameron's program for the year ahead. just a week after those heavy losses for them in the local elections, we'll be asking what the program tells us about the state of the coalition, it's ambitions, it's direction after a few turbulent months. and all the while, we'll be enjoying the sights and sounds of a full state occasion, despite some rather damp weather. stay with us for the best view and the best analysis. this is where the queen will be arriving in around 45 minutes time. the palace of westminster, the journey from buckingham palace. many of the local roads have been closed, part of a very complex network of security measures in place. on their way already to provide the music a little later on, the band of the guards. and they are directed today by

major darren wolfendale. and they will provide the salute when the queen arrives at westminster in a short while. not too long to wait. inside the palace, a glorious view, this is the scene inside the house of lords, where peers are already claiming their seats for the state opening. it is without question, the grandest of parliamentary occasions, where the queen will be summoning members to the commons and will unveil the government's legislative program for the session ahead. the queen's speech written for her by the government, and very much the government's program of legislation. some new faces in the house of lords this time, it's been two years, as i said, since the last queen's speech. among them, we have some people from film, drama and theater. also from the world of broadcasting, we have joan

bakewell, who took a seat early today. we have the prominent divorce lawyer too, uma shackleton, who has represented the prince of wales and paul mccartney. other very familiar faces too. we have michael grade, lord grade, former chief executive and bbc chairman. and dame betty floyd, the former speaker of the house of commons. just a few of the familiar faces there, we'll spot a few more later on. and from our studio ear on the green, we will be able to see the royal procession as it makes its way to the sovereign entrance, which is just behind me there, which is the base of the victoria tower. to shed some light on the content of the speech, and how it fits into the political climate, we have from the government, we have the cabinet minister, chancellor secretary.