From Professor Krugman: Depression Economics Returns. A few excerpts:
I don’t expect another Great Depression ... [but] We are ... well into the realm of what I call depression economics. By that I mean a state of affairs like that of the 1930s in which the usual tools of economic policy — above all, the Federal Reserve’s ability to pump up the economy by cutting interest rates — have lost all traction. When depression economics prevails, the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly.
Peacenik thinks this is an optimistic post for a Friday. Krugman, recent winner of a Nobel Prize for economics, doesn't think there is going to be a depression. Yippee!! Have a good weekend.
