BUSINESS
07/06/2010 04:08 pm ET | Updated May 25, 2011

Paul Krugman On Stephen Colbert: I'm Lucky I Wasn't Arrested By The 'Austerity Police' (VIDEO)

Nobel Prize-winning economist and New York Times columnist Paul Krugman visited Stephen Colbert recently to talk about Congress's recent failure to extend unemployment benefits.

Addressing the jobs situation, Cobert said: "Last week, evidently, the Labor Department reported that we lost another 125,000 jobs -- and I'm pretty sure the guy who created that report was then fired"

Turning to the GOP-led squashing of the much-needed extension of employment benefits, Colbert singled out one new GOP lawmaker. "Thank you, Scott Brown. When you're starving that it is the best time to go on a diet. You're already used to no food."

As for our current economic state, Krugman had this to say: "There's not enough demand, businesses aren't spending enough, right now the only party in a position to sustain demand is the Federal government. The Great Depression was ended by a large public works program -- World War II."

Regarding worries about the current deficit, Krugman's far more concerned about boosting America's sagging economy by helping the unemployed. Here's Krugman:

"If you give money to someone who's well off they're probably going to save a lot of it because they're not living hand-to-mouth. If you give money to someone who is on the edge, who has been unemployed for 30 weeks, who is desperate than they are going to spend it right away. The government doesn't have to spend it, the government just has to provide it to people. And [unemployment] is a very fast, very effective way of creating jobs when you're in this crisis."

Krugman, a vocal opponent of cutting spending during a downturn, joked that during a recent trip to Germany he felt he was "a little bit lucky not to get arrested by the austerity police."

Watch the full interview here:

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