Some have been speculating on the death of Keynesian economics, but folks need look no further than Paul Krugman to see how strong a grip discredited academic theories still hold on the establishment class. See Krugman's essay this morning, "Macroeconomic Folly":
All of a sudden, people seem to have noticed that policy is moving in exactly the wrong direction. We’re getting headlines like this: Debt Deal Puts U.S. on Austerity Path as Economy Falters.Well, that's fear alright ... fear-mongering.
I’ll need to write up my thoughts here at greater length, but let’s just say for now that what we’ve witnessed pretty much throughout the western world is a kind of inverse miracle of intellectual failure. Given a crisis that should have been relatively easy to solve — and, more than that, a crisis that anyone who knew macroeconomics 101 should have been well-prepared to deal with — what we actually got was an obsession with problems we didn’t have. We’ve obsessed over the deficit in the face of near-record low interest rates, obsessed over inflation in the face of stagnant wages, and counted on the confidence fairy to make job-destroying policies somehow job-creating.
It’s a disaster – and maybe not only an economic disaster.Fears of far-right rise in crisis-hit Greece...
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