Friday, October 17, 2008

Isn't That The Whole Point Of Keynesianism?

Paul Krugman links, seemingly sarcastically to an article (which was published back in July) in the sarcastic news site The Onion which says that "recession plagued Americans demand new bubble to invest in". As someone that the article claims to have interviews put it:

"What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future. We are in a crisis, and that crisis demands an unviable short-term solution."

But what Krugman doen't seem to realize is that this provide a perfect satire of the Keynesian view that we shouldn't worry about long-term effects of policies during times like this. That was their attitude during the time the housing bubble was being inflated. And while some Keynesians express worry about a possible housing bubble during the latter stage of it, they didn't have any problem with the initial creation of it nor did they actually even then advocate policies that would have bursted it. Krugman for example argued against tightening monetary policy and he never objected to his fellow Democrat's promotion of the Community Reinvestment Act or Fannie Mae and Freddie Mac.


Post a Comment

<< Home