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Thursday, December 20, 2012

End This Depression Now. by Paul Krugman

I spent four years in the early 1970s getting an MPhil or ABD in economics.  My timing was fortunate because I was the beneficiary of all of the research done on the Great Depression and the refinements and analysis of this research over the next 20 years.  Basically this was the creation of macroeconomics as a legitimate discipline within the field of economics.  In The General Theory of Employment, Interest and Money, John Maynard Keynes was the first to formulate a unified macroeconomic theory, and this served as the foundation for what came after: explication, testing, and expansion of Keynes’s theory.  Paul Krugman’s new book, End This Depression Now, written in February 2012, applies the lessons learned from the 1930s to our current depression.  It is brilliant.  Read it.  I can’t imagine a clearer or more persuasive explanation of our current situation and what we can do to get out of it and start growing again.  The kernel of his argument is that yes, we do have a spending problem, too little spending.  The time to worry about debt is in good times, not in depressions.  I haven’t the will or the skill to summarize his arguments, but if you will go explore them yourself, I can promise you an enjoyable read.  He’s a brilliant and engaging writer, and, if you get the recorded version as I did, it is beautifully read by Rob Shapiro.  Some gems along the way are The Capitol Hill Baby Sitting Coop (a real thing that makes a convincing macroeconomic model), Krugman’s mention that Keynes’s work appeared on a list of the ten most harmful books of all time, and his discussion of “Austerity and the Confidence Fairy.”   If only we could get Boehner and Cantor to read this book – and Obama.  He should have listened to Christina Romer.  2012

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