In the final chapter of his The Return of Depression Economics, Paul Krugman offers advice as to how the United States should address the deepening economic recession it finds itself in. Paul does so with a degree of pessimism about the likelihood that his advice (or policies consistent with it) will be adopted that is unwarranted.

Paul lays emphasis on the need to bring "good old-fashioned demand-side macroeconomic" to bear on the current crisis, "but its defenders lack all conviction, while its critics are filled with passionate intensity."

I would say instead that its defenders are busily designing a stimulus package likely to be five or six times the size of last year's and by far the largest in absolute terms in U.S. history. Meanwhile, many of its critics, including some politicians who agreed this fall that our economy is fundamentally sound, will be out of a job next Jan. 6 when the new Congress is sworn in.

Paul puts his finger on the great paradox facing policymakers trying to reconcile diametrically opposing short- and long-term imperatives in helping guide the country out of the recession. "In the short run, the world is lurching from crisis to crisis involving the problem of generating sufficient demand," citing the serial experience over the last 15 years of Japan, Mexico, Thailand, Malaysia, Indonesia, Korea, and Argentina.

The problem is that the internet and housing bubbles that presaged, and perhaps precipitated, our most recent recessions grew (as most bubbles do) from a form of "irrational exhuberance" (aka, "demand" with a wizard's cape and an obscurantist tongue).

So, the challenge is simultaneously to restore rationality and stimulate spending -- or lending, in the case of financial institutions. And then turn the ship about face again, just in time try to forestall inflation and... that's right, the next bubble.

Prof. Krugman has some ideas on this score that ought to be guiding principles to policymakers. First, he argues for a stimulus package of four percent of GDP. Second, he argues that we should remember that "most of the money in the first package took the form of tax rebates, many of which were saved rather than spent."

The package reportedly being assembled by the Obama team, an estimated $850 billion according to the lead story in today's Washington Post, should satisfy Krugman's, "demand." The tax/spending balance of the package itself remains in the balance, but almost no one thinks the tax-weighted ratio struck by Bush last year is going to be repeated.

In the end, signals strongly indicate that a more classically Keynesian strategy will be pursued, and Krugman's general policy preferences and prescriptions will be vindicated. Let us hope that, in the end, we will all have been debating recession, not depression economics here. And that the end will come soon.