Thursday, March 19, 2009

What If?

Washington Monthly asks the question that I've been postulating:
In the cover story of the upcoming March/April issue of the Washington Monthly, economist James K. Galbraith makes the case for a much darker picture of what's in store. He begins by questioning an assumption held by nearly all modern economists, including those around Obama: that economies are naturally self-stabilizing, and therefore that economic slumps can be righted with relatively modest, short-term nudges from government. That idea fits the experience of every post-War recession. But what if the current crisis is less like those downturns and more like the Great Depression, when the economy famously failed to return to normal?