The government’s broadest measure of unemployment and underemployment was 14.8 percent in February. . . . The Labor Department did not keep such a statistic in the early 1980s. But it likely would have been in the neighborhood of 17 percent back then. (Awhile back, I created a similar — though slightly narrower, for reasons of historical consistency — measure, with help from Labor Department economists. It peaked in 1982 at 16.3 percent in December 1982; it was 14.1 percent last month.)

So it’s still too early to call this the worst recession since the Great Depression. But it’s bad, and it’s still getting worse at a rapid rate.

Leonhardt is an economist and I am not but I disagree with him when he says it is too early to call this the worst recession since the Great Depression. The reason is one that Krugman has taught us for a while now - during the 1981-82 recession, interest rates were relatively high and the Federal Reserve could stimulate the economy by lowering them (which it did.) Today, interests rates are at virtual zero - monetary policy simply can not help us anymore. As Krugman explained in a blog post he titled "Return of Depression Economics":

I was alerted to this Media Matters post, revealing that people still don’t get why the current slump is different from the early 1980s, and why fiscal policy is necessary this time. Yes, I know, it’s Joe Scarborough; but still … Anyway, it’s the zero lower bound, stupid. . . .

. . . I wrote down my original liquidity trap model starting from a firm belief that the liquidity trap was nonsense: even if the interest rate is zero, I thought, increasing the money supply must raise demand. So I set out to write a model with all the i’s dotted and t’s crossed, so as to demonstrate that point — and found, to my shock, that the model actually said the reverse.

What comes down to is this: once you’ve pushed the short-term interest rate down to zero, money becomes a perfect substitute for short-term debt. And any further increase in the money supply therefore displaces an equal amount of debt, with no effect on anything. Period, end of story.

Now, maybe the central bank can do other things, like buying long-term debt or risky assets, which will have an effect. But that’s because the central bank is taking some risk off the private sector’s hands. It has nothing to do with increasing M, per se.

In 1981-82, Paul Volcker could and did lower interest rates by increasing the money supply and this had a very beneficial effect on aggregate demand, as expected. Ben Bernanke simply can not do the same thing. There is no interest rate left to cut (no matter what the credit card companies are charging you.)

There is only one way to raise aggregate demand, both in the United States and in the world, through government spending. Some spending will be more stimulative than others and we can argue about what type of spending the government should be doing, but there can be no rational argument (as opposed to silly Limbaughian/McCainian nonsense) about one thing - that the economy of the US and the world economy needs massive government spending right now to stave of a long economic depression.

Speaking for me only