"Right, Dr. K. Business is microeconomics, and has nothing at all to do with maintaining the macroeconomic system under which it operates. A very simple understanding of the macroeconomic requires that you understand that over the long run (the Fed's charter is to stabilize over the short run using monetary policy) the value of production has to equal wages otherwise workers cannot afford to consume what they produce. I guess this principle of Capitalism is too simple for most people to understand, even those in the financial business whose job it is to manage the money system. When this principle of the capitalist money system is breached - if wages paid are too small to buy the results of work - then consumers must be lent the extra money to buy what workers produce. The result, if this goes on for too long, is the kind of debt crisis we are now experiencing. The cause of this is insufficient wages in comparison to the value of production or, if you wish to use another terminology, excessive profits (not reinvested in production). Either way you try to explain it someone's ego (like Mitt Romney's) gets involved and the argument wafts off into irrational irrelevancy. Profits (not spent for consumption) kept by the owner and not paid out in wages MUST be invested in more productive business that create new jobs and wages. Otherwise the system of Capitalism does not work. And that has been going on for far too long." Posted by an RPW from Arizona in the NYT today in response to Krugmans article. This is so perfectly worded and clear that maybe even conservatives can understand it.