people who say the deficit was higher during WWII are only correct in terms of numbers but are wrong in a true comparison, here is why. During the depression we exported goods the trade deficit was in our favor then, today we export little so the GDP is not a measure of how much wealth we have created but of how much we have destroyed. Peter Schiff in his book Crash Proof explains:

“Had the past two decades been characterized by genuine prosperity, we would have run trade surpluses and still be the world’s largest creditor, rather than its greatest debtor. I believe that we are fast approaching a perfect storm scenario, with a monetary collapse the most likely way it will play out.”

He calls the GDP (GROSSLY PADDED DATA) saying:
“The GDP started out as the GNP (gross national product) during World War II, when it was used to measure wartime production capacity. It was never intended to be used as a measure of the country’s economic well-being, and its shortcomings are laughably numerous. By definition, the GDP is the sum total of the monetary value of all final goods and services bought and sold within U.S. borders in a given year. The distinction between GDP and GNP, incidentally, is that GDP doesn’t care about the nationality of the producer. It includes everything transacted within our borders, even BMWs manufactured in North Carolina.”

Even the work in rebuilding Katrina was counted and it did not factor in the losses incurred from the destruction. So using the GDP is a mistake to begin with also in the 30’s we were on a 40% gold exchange standard so we had the discipline of gold to serve as a baseline between price and value and to regulate interest rates.

Krugman didn't dare to touch Peter Schiff's or Ron Pauls positions, he avoided it entirely in video #2. Wonder why? I suspect he didn't want to get responses from them (which they would) as well as Marc Faber, Jim Rogers, and folks like Max Keiser.

I damn near spit my coffee out when Krugman said inflation isn't the problem, monetary inflation is at an unprecedented level. Inflation means expansion, in the same sense that a balloon expands when you blow air into it. That is exactly what the FED is doing, that is exactly what this stimulus bill does. Governments love inflation. It’s a way for them to take money from the people without the people realizing they took it.

On Inflation from - Crash Proof
Alan Greenspan, in a 1966 essay, “Gold and Economic Freedom,” called inflation “a scheme for the hidden confiscation of wealth.” On August 16, 2006, Federal Reserve Governor Richard W. Fisher, in a speech titled “An Update on the Status of the Economy and Its Implications for Monetary Policy” and reprinted on the Federal Reserve Bank of Dallas web site, said “[Inflation] is a sinister force that has the capacity to charm and romance the heck out of you, but in the end wreaks only havoc.”

Now look at what the FED is doing with both parties blessing, yes both parties. Remember both partied voted for the bail-out and the Republicans wanted a stimulus package too, just one they could call their own. This is our dollar since 1919, we left gold in 1970, look what happened.
http://research.stlouisfed.org/fred2/fredgraph?s[1][id]=AMBNS

We are being robbed blind while getting sold on the idea it's help

What may well happen, regardless of Obama’s best policies, is foreigners are not going to want our dollars anymore, they’ll stop sending us goods.

All those sterilized dollars sitting in China, Japan, and elsewhere are going to come home to roost. Even if the Fed starts contracting the money supply, prices are going to go through the roof. The Fed is trapped between inflation and recession and it’s too late to stop the consequences of either.

China is warning us
China is right to have doubts about who will buy all America's debt
http://www.telegraph.co.uk/finance/breakingvi...