Lambert at Corrente had it right. The pitfalls and drawbacks of austerity for the working classes are features, not bugs.

But the US Treasuries that make up the Social Security Trust Fund? "Mere IOU's" which mean "there is no trust fund" has been the talking points for some time.

Krugman may not address what you want him to address (though if you aren't reading him, how the hell will you know?), but that doesn't mean that he doesn't have anything to offer.

Increasing taxes on everyone, which Obama plans to do next year by letting the Bush tax cuts expire will just drive another stake in the economy's heart.

The economy tanked because the housing bubble burst. And while the Feds had a handle on that by 4/2008, the increase in oil prices from around $85 a barrel to around $145 by mid July and the resulting $5 diesel and $4.5 gas fueled additional foreclosures.

Meanwhile, to bolster faith in the dollar, the U.S. agreed separately to link the dollar to gold at the rate of $35 per ounce of gold. At this rate, foreign governments and central banks were able to exchange dollars for gold. Bretton Woods established a system of payments based on the dollar, in which all currencies were defined in relation to the dollar, itself convertible into gold, and above all, "as good as gold". The U.S. currency was now effectively the world currency, the standard to which every other currency was pegged. As the world's key currency, most international transactions were denominated in US dollars.

The U.S. dollar was the currency with the most purchasing power and it was the only currency that was backed by gold. Additionally, all European nations that had been involved in World War II were highly in debt and transferred large amounts of gold into the United States, a fact that contributed to the supremacy of the United States. Thus, the U.S. dollar was strongly appreciated in the rest of the world and therefore became the key currency of the Bretton Woods system.

Member countries could only change their par value with IMF approval, which was contingent on IMF determination that its balance of payments was in a "fundamental disequilibrium".

This system failed:

The Bretton Wood arrangements were largely adhered to and ratified by the participating governments. It was expected that national monetary reserves, supplemented with necessary IMF credits, would finance any temporary balance of payments disequilibria. But this did not prove sufficient to get Europe out of its doldrums.

Postwar world capitalism suffered from a huge dollar shortage. The United States was running huge balance of trade surpluses, and the U.S. reserves were immense and growing. It was necessary to reverse this flow. Dollars had to leave the United States and become available for international use. In other words, the United States would have to reverse the natural economic processes and run a balance of payments deficit.

The modest credit facilities of the IMF were clearly insufficient to deal with Western Europe's huge balance of payments deficits. The problem was further aggravated by the reaffirmation by the IMF Board of Governors in the provision in the Bretton Woods Articles of Agreement that the IMF could make loans only for current account deficits and not for capital and reconstruction purposes. Only the United States contribution of $570 million was actually available for IBRD lending. In addition, because the only available market for IBRD bonds was the conservative Wall Street banking market, the IBRD was forced to adopt a conservative lending policy, granting loans only when repayment was assured. Given these problems, by 1947 the IMF and the IBRD themselves were admitting that they could not deal with the international monetary system's economic problems.[8]

The United States set up the European Recovery Program (Marshall Plan) to provide large-scale financial and economic aid for rebuilding Europe largely through grants rather than loans. This included countries belonging to the Soviet bloc, e.g., Poland. In a speech at Harvard University on June 5, 1947, U.S. Secretary of State George Marshall stated:

"The breakdown of the business structure of Europe during the war was complete. ...Europe's requirements for the next three or four years of foreign food and other essential products... principally from the United States... are so much greater than her present ability to pay that she must have substantial help or face economic, social and political deterioration of a very grave character."

There's some really good history of money, including a section specifically on U.S. money (and a lot of other good stuff...and some not so good) included as part of Chris Martenson's Crash Course.

The world has had hundreds of fiat currencies. There is nothing new about that. There's also nothing new about the way every single fiat currency has ended. It isn't the working classes who are the root of the destruction of any nation's fiat currency/monetary system. Time and again it's politicians and central bankers, seeking to preserve the status quo in service to established power, that undermine currency.

Anyway...I don't have an issue with the terms "fiat money" or "fiat currency." They're accurate as far as they go. With fiat money, a nation's currency only has value so long as people have confidence in it. The US has had a great advantage in that our fiat money also happens to be the de facto agreed upon world reserve currency since the time of Bretton Woods. Shifting away from that standard is possible, but it sure ain't easy...and it's hard to think of any viable alternative to US dollars which could possibly serve as a reserve currency for the world at the present. (Lucky for us. Very.)

<Off topic>

Quick note about Chris Martenson: I agree with a great deal of what he has to say, and I disagree with a fairly substantial portion too. Overall, I find his Crash Course to be very worthwhile, and though there are people on both sides of politics who despise him -- Republicans because Martenson says nice things about J.M. Keynes and FDR, and Democrats because Martenson says some things that sound as if they might be Republican -- the fact is that his views seem pretty much apolitical if perhaps with a Libertarian bent, and several weeks ago he posted a polite smackdown to his own message board community for the efforts of some to make it partisan.

I'm not affiliated with Martenson's site. I do encourage people to view/read The Crash Course. It has a few warts, but overall I think it's very, very good.

History has shown on numerous occasions and in numerous countries the result of govt spending & debt expanding to and above GDP.