“I’ve been trying very hard to think of how this ends, and it is hard to see,” Krugman said Wednesday at an Economic Club of Canada breakfast in Toronto. “It does look as if this is going to be a prolonged slump in the United States; in Western Europe as a whole.”

Krugman, a columnist for the New York Times who has written books on the financial crisis, said the sovereign debt troubles faced by Greece have warped the debate about economic policies. “A little inflation would actually be helpful right now,” he said.

Financial markets don’t appear to have a fear of future inflationary pressures and the U.S. economy won’t slip into another recession, Krugman said.

Krugman added the U.S. “would be in great shape” if it could keep its health-care costs, which have been rising, in line with Canada’s. Integrated systems and socialized medicine would be the cheapest way to accomplish this, he said.

“If the United States could trade for Canadian health-care costs, our budget problems would be solved for the next 15 or 20 years,” he said.

Krugman also said that the Canadian economy looks remarkably like the U.S. economy in terms of its liabilities.