Krugman worships at the altar of John Maynard Keynes. He is a vociferous Keynesian. He wrote the following:
“The boom, not the slump, is the right time for austerity at the Treasury.” So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon, sending the United States economy — which had been steadily recovering up to that point — into a severe recession. Slashing government spending in a depressed economy depresses the economy further; austerity should wait until a strong recovery is well under way.
He really believes this crap. And he is really really WRONG. The reason WHY economies have inflation, bubbles and busts and other failings is BECAUSE of government interference. Crony capitalism is the major contributor to a false and unrealistic economies that eventually and ALWAYS fail. And it is the fault of governments in the creation of crony capitalism.
There has been a very old war between the two schools: Hayak on the side of “free market” and Keynes on the side of “macroeconomics”.
As for me; I follow F.A. Hayak and believe that school of thought is the only workable school. Anything else will ALWAYS cause inflation, bubbles and busts.
“As for me; I follow F.A. Hayak and believe that school of thought is the only workable school. Anything else will ALWAYS cause inflation, bubbles and busts.”
I completely agree. See http://www.youtube.com/watch?v=GTQnarzmTOc&feature=youtube_gdata_player
Very well done.