and I’m no hardcore fan of Professor Krugman.
To begin, I do think he was over the top in his support for Ms. Hillary Clinton and opposition to Mr. Barack Obama during the Democratic Party’s 2008 primary race.
Conversely, I think Professor Krugman supports President Obama but will not allow his political support of President Obama to color his analysis of the Obama Administration’s economic policies. I’m of the same mind – President Obama is good for our country but I adamantly oppose his administration’s current economic policies with respect to our financial/credit system. I believe them to be just the same ol’ economic policies that brought us to our current predicament.
Someone once defined insanity as repeating the same action with the expectation of getting a different result – new, more equitable economic policies are now needed.
Our current economic problems require bolder action on the financial front than the Obama Administration is offering. Much of what is needed has been spelled out by economists like Paul Krugman, James K. Galbraith, Joseph E. Stiglitz, et al; so, I see will not repeat them here.
But Professor Krugman’s comments on the Obama Administration’s toxic-asset plan are worth emphasizing (see his New York Times Op-Ed "The Market Mystique"; national paper edition, 2009 March 27):
"Much discussion of the toxic-asset plan has focused on the details and the arithmetic, and rightly so. Beyond that, however, what’s striking is the vision expressed both in the content of the financial plan and in statements by administration officials. In essence, the administration seems to believe that once investors calm down, securitization – and the business of finance – can resume where it left off a year or two ago." Paul Krugman, 2008 Nobel Prize winner in economics.
Professor Krugman’s point seems to be the same one made in my aforementioned comment on insanity, repetition, and expectations.
What did the economic polices of the last 30 years do for the well being of middle and working class Americans?
Gave them a false sense of economic security, shipped their jobs overseas, diminished their real income/wages, increased their indebtedness and made their retirement less secure to name a few things.
UPDATE: Re Ben Bernanke, Milton Friedman and John Maynard Keynes
Milton Friedman and Anna J. Schwartz, in their book A Monetary History of the United States, 1867-1960. The Monetary History argued that monetary policy alone was the principal contributing cause of the Great Depression and was the solution to like events in the future. Ben Bernanke supports this view of monetary policy.
Conversely, John Maynard Keynes argued that monetary policy and lack of aggregate demand were major contributing factors to the Great Depression; thus monetary policy and fiscal policy (to create aggregate demand) were necessary to tools for fixing future recessions and/or depressions.
It seems that the loose monetary policy of the Greenspan Fed has rendered moot the notion that monetary policy alone was the cause and cure for recessions and/or depressions.
See Chairman Ben Bernanke's 2004 speech, "Money, Gold, and the Great Depression"for more details.