12/04/2012 03:20 pm ET

Paul Krugman On Fiscal Cliff: 'We Created This Crisis Out Of Thin Air'

If Paul Krugman had his way, the government wouldn't manufacture crises for everyone to freak out over.

"It's crazy, the way that we created this crisis out of thin air, when the government is able to borrow at just about the lowest interest rates in history," Krugman told the NPR show On Point on Tuesday, referring to the fiscal cliff, a set of tax hikes and spending cuts scheduled to take place on Jan. 1, assuming Congress and the Obama administration don't reach a deal to avert it.

"The idea we should be obsessed with the deficit right now is insane," he said.

Krugman pointed to interest rates on U.S. government debt, which currently sit at historic lows, an indication that investors aren't concerned about the country's ability to pay off its debt.

The government is scheduled to hit the debt ceiling around February, and Congressional Republicans have threatened to use that as leverage in any budget deal. If lawmakers can't mitigate the fiscal cliff, it may cause a recession, according to economists.

Krugman, the Nobel Prize-winning Princeton economist and New York Times columnist, told WNYC last week that Obama should go over the fiscal cliff to get a better fiscal cliff deal from Congressional Republicans.