The problem I have with so called liberal economists like Paul Krugman is not that he's wrong about his prescriptions for what would solve our economic problems. Yeah, austerity in the US should be expected to reduce economic growth, cause a lot of suffering, and increase unemployment, just as it has in Europe. He's not wrong that preparation for an alien invasion would boost our economy even if it was later discovered that the invasion threat was a hoax. He's not wrong to suggest that the new I-Phone 5 could boost our economy by causing people to discard perfectly good phones.
Where he's wrong is that he doesn't recognize that his solutions allow us to continue down this unsustainable path. Capitalism needs ever expanding consumption. Krugman knows that the problem is lack of demand. So when consumers already have all the products they would ever need you have to contrive wants so that people will continue to consume more. Break windows. Throw away phones. Prepare for a war against a non-existent threat. Dig some ditches and re-fill them. This is what Capitalism requires.
What Americans don't recognize is that they are already fantastically rich. I found a really well written piece describing our riches, particularly relative to even the wealthiest people of the past, right here. If you are reading this blog post you are probably among the richest people in the world today. In fact you are way richer than most people that have ever lived. How is it that we don't live like we are rich? Instead we work and work for decades filling our homes with junk that we don't want and don't use? How many of us can actually fit 2 cars in our 2 car garages? I can with a lot of effort if I pile boxes full of crap high and to the side. At the moment I can't get 2 cars in, because I have too much stuff that I don't use in there.
Chris Hedges has a good piece on this topic here. Also a good interview on Democracy Now here. We are committing suicide by growing our economy when it is not really necessary for our happiness. It's only necessary because our system is Capitalist. It will not go on forever. It will either end with a massive economic collapse and unimaginable suffering or we will change the system drastically on our own terms.