The right is wrong - I (Krug) was right

Krug is flabbergasted that an eminent economist like Samuelson (I think he wrote my college econ textbook) can write an article saying people have lost faith in macro since it couldn’t help with an economic recovery.  Krug begs to differ, what has happened is exactly what he and his Keynesians colleagues thought would happen if you didn’t follow is policy prescriptions four years ago – there should be no surprise.

Krug seems to say Allan Meltzer (big shot right-leaning economist) is a putz (my words) he call him out for being puzzled that all the money printing the Feds have done has not led to inflation.  Krug re-explains that he said four years ago it would not but Meltzer did not listen and now Meltzer said it was because economic growth was weak due to regulatory stuff and Obamacare – nuts says Krug, he was just wrong and won’t admit it.

Krug comes back with another post on how classical economic theory has held up well in the crisis and a lot of what happened (including Europe’s issues) could be explained by existing models.  He also breaks out with a couple graphs showing the current recovery in Europe is worse compared to the Great Depression.  And he squarely lays the blame for this poor recovery on bad policy.  By following long known economic models, recovery would be on its way but European policy makers refused and instead went for austerity - so the blame for all the suffering is with them.

Krug also makes clear that his success in forecasting low inflation and not recovering quickly from the economic crisis since the stimulus was lower than he wanted was due to his knowledge of the appropriate economic models and his experience is seeing what Japan went through in the ‘90’s.