Many American roads are in pretty bad shape — I can attest to that, after driving up to Massachusetts and back for family business last week. When you combine that fact with the underlying macroeconomic situation, of which more in a minute, the case for spending substantial sums on repair seems obvious.

But Obama’s proposal for what is actually a modest infrastructure program appears to be going nowhere, thanks to a fight over how to pay for it.

Which brings me back to something I started saying way back in 2008, which is still true: when you’re in a liquidity trap, virtue becomes vice and prudence becomes folly. Asking how we pay for infrastructure may seem prudent, but it is in fact deeply foolish.

Think about it: what would the true costs be of repairing our roads? It wouldn’t divert capital from other investments — capital has no place to go, and markets are practically begging the federal government to borrow funds and put it to work:

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It also wouldn’t divert labor from other uses: unemployment among construction workers remains high:

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So it’s deeply irresponsible NOT to spend this money, and foolish to worry about financing.

Clearly, however, we’ve learned nothing from five-plus years of depression economics.