Bob Murphy has a great post about Berkeley Keynesian Brad DeLong. You can read the DeLong passages themselves at Bob’s blog, but let me give you Bob’s commentary. (The rest of what follows is all Bob.)
Now I know, I know, DeLong, Krugman, Thoma, Baker, et al. wanted more stimulus from the get-go. But it sounds like DeLong is here saying that the 50% increase in federal debt since 2008, as well as the tripling of the Fed’s balance sheet, have achieved virtually nothing. Remember, the way everybody justified those things–even as the economy stayed in the crapper lo these many years–was to say, “Sure, but use counterfactuals: Had we done nothing, this would have been like the Great Depression.”
According to DeLong, this is (almost) like the Great Depression….
We increased the federal debt by 50%, and tripled the Fed’s balance sheet…and yet DeLong is saying we are still screwed for at least most of the next generation. We need to borrow and print even more to at least let our kids see what a good economy looks like, at some point in their lives.
Is this the story people were telling us back in 2008? Does anyone remember DeLong saying something like:
[FAKE DELONG QUOTE FROM 2008]: Don’t listen to those nutjob Austrians who want to let the investment bankers eat their bad loans! The economy would be absolutely awful if you follow their liquidatonist advice. What you need to do, see, is bail out the banks, and spend such-and-such for everything to be fine; trust us, we’ve read Keynes. Oh, by the way, should you for some reason only do 85% of what we tell you, then we will have a repeat of the Great Depression and your kids will think 8% unemployment is normal. So don’t wuss out on us.
I sure don’t. I think that might have influenced the public’s acceptance of the stimulus package and various rounds of QE, had DeLong explained that upfront.