I’ve repeatedly made the point that, more than any other widely read economist, Paul Krugman has been correct in advance about the Great Recession since before it started. His predictions have come to pass. The predictions of his detractors have not. And yet most policymakers are not falling into line, even now. It’s maddening.
Krugman posted this earlier today:
One Point Seven Seven
That’s the current interest rate on 10-year US bonds.
Remember, back in 2009 there was a big debate between people like me, who said that we were in a liquidity trap and that interest rates would stay low as long as the economy was depressed, and people like the WSJ editorial page and Niall Ferguson, who said that government borrowing would bring on the bond vigilantes and send rates soaring.
How’s it going?
And just to be clear: this isn’t just about I-told-you-so. We’re talking about different models, different visions of how the economy works. Their vision led to calls for austerity now now now; mine said that the overwhelming danger was that we wouldn’t provide enough stimulus, and that we would pull back too soon. Sure enough, we didn’t and we did. And now catastrophe looms.