Hutton & Krugman

Paul Krugman's given an interesting interview with Will Hutton in The Observer (edited only slightly):

WH: So, the United Kingdom might actually get through this in reasonably good shape?

PK: Yeah... There hasn't been very much discretionary fiscal expansion when all's said and done

Scott Sumner's reaction:

It’s good to hear that the one country that relied on an aggressive monetary policy, rather than fiscal stimulus, is doing better than the others.

So just to be clear - Krugman's arguing that Obama should spend more, whilst pointing to the UK (a country he acknowledges has utilised monetary policy far more than fiscal policy) as leading the upturn? Also, just to be clear, I don't think anyone argues that quantitative easing can boost measured output in the short term. The real issue (the "exit strategy") is:

• Is this increase in output merely another bubble?
• Does this expansion lead to inflation?

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