Summary: Mainstream economists have recommended additional rounds of stimulus as the economies slow in Japan, the EU, and USA. Instead the Austerians have won the political debate, recommending the liquidationist policies of Hoover in 1929-30. Brad DeLong (Prof Economics, Berkeley) asks "How Is It That We Have Lost the Argument?" -- It's the triumph of dingbat … Continue reading Why have mainstream economists lost the argument about the need for more economic stimulus?
Economic theory as a guiding light for government action in this crisis. But which theory? The dominant Keynesian economic theory, or that of the Austrian School? (see the links at the end for background information about each). Here is an excerpt from the Drobny Global Monitor of 5 March 2009, by Andres Drobny (see his bio … Continue reading Economic theory as a guiding light for government action in this crisis
Summary: an economist explains the current state of the science of economics, and then Bruce Bartlett repeats to us the most-famous modern economist's advice about a similar situation. Excerpt from a post by Prof Brad DeLong (Economics, Berekeley) at his blog Grasping Reality with Both Hands. It is so perfect that it needs no elaboration: The problem is that economic theory … Continue reading About the state of economic science, and advice from a famous economist
Judging from the comments on the FM site, most readers should carefully review these articles. I believe this crisis results from a paradigm crisis in Keynesian economics, as we reach the boundaries of his vision -- specifically, the point at which aggregate private sector debt becomes a limiting factor for the economy's growth. But however … Continue reading The greatness of John Maynard Keynes, our only guide in this crisis
Summary: Two bright lights shine amidst the torrent of bad economic news. First the G20 meeting. Second, President-Elect Obama's new team at the Treasury Department. I suggest that we avoid disappointment by expecting little from either. We are far "off the map", with little in history or economic theory to guide us. Only time and … Continue reading Expect little or nothing from meetings like the G20 – or the Obama Administration