PAUL KRUGMAN: But yeah, ultimately, when you get the—when you get through the complexities and the salesmanship, this (public buyout of $1 trillion in bad private bank assets) is just a complicated way of having the government pay, having you and me pay, for buying these assets at more than any private investor is willing to pay for them.
AMY GOODMAN: Paul Krugman, what would a new system look like? What would you advocate?
PAUL KRUGMAN: I think, in the end, we’re going to have to go back to something that is kind of like the system that emerged from the New Deal, which was tightly regulated banks and financial institutions, limits on risk taking, fairly high taxes for high earners, which—it turns out that, you know, low tax rates create incentives, but the incentives are actually to play dangerous games with other people’s money. A lot of things need to be updated for the twenty-first century and information technology and so on, but basically, our grandfathers got this thing right. Our grandfathers understood that finance is useful but dangerous and needs to be very tightly hedged about with regulations.
(Excerpt from the March 23, 2009 interview in Democracy Now!)