Here’s the point: back around 1998 I was among those who looked at the crisis in Asia and realized what it implied — namely, that the problems that caused the Great Depression had not been solved, and that it could happen again. The speculative attacks on smaller nations, the liquidity trap in Japan, were omens for all of us. In 1999 I wrote a book, The Return of Depression Economics, saying all that.What could have been! If only we had good leaders instead of incompetents. If only politicians had virtue instead of mean-spirited partisanship and a lust of lying and manipulation for private gain.
When the 2008 crisis struck, it was immediately clear that this was what we had been afraid of. And it was desperately important that policy makers realize that we were in a world where the usual rules no longer applied.
But they didn’t. The banks were rescued — but as soon as that happened, the moralizers and deficit worriers, the people who see hyperinflation lurking under every bed, took over. Warnings that we were repeating not just the mistakes of Japan but the mistakes of Hoover and Bruening were waved away as the squeaking of people of no consequence, never mind the fact that some of us had pretty fancy credentials.
And now we are exactly where I feared we’d be, repeating all the old mistakes and experiencing all the old consequences.
As I said, I’ll get over it. But grant me a moment to look on the past three years, and despair.
Thursday, September 22, 2011
Paul Krupman writes a post on his NY Times blog and surveys the ruin about him and thinks back over the past 15 years in which he has offered incisive analysis and advice only to see it ignored by the politicians and the big money interests: