Paul Krugman: 1937


1937, by Paul Krugman, in NY Times: Between Friday’s US job report and today’s economic news from the rest of the world, it’s hard to avoid the sense that things are going bust all over. Austerity is really biting, and the global economy is sputtering.

Plus, Europe! Spreads are widening out drastically, again — and where is the ECB? Still unwilling to concede that its move toward monetary tightening was exactly the wrong thing. And Munchau is right: if all of Europe is going to be engaged in fiscal austerity, with the ECB adding to the downdraft instead of fighting it, there’s no way the peripheral countries can make it.

What gets me, always, is that there is nothing mysterious about this crisis; nothing is happening that someone who read Paul Samuelson’s original, 1948 edition of his textbook would find puzzling. And old-fashioned textbook analysis tells us quite clearly what we should be doing about it. Hint: not austerity.

But much of the economics profession has turned its back on what it used to know, and policy makers have chosen to go with fantasies about expansionary contraction rather than macroeconomics 101.

Advertisements
This entry was posted in Paul Krugman. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s