Krugman Pwns Donaldson on Effectiveness of Stimulus Programs
This morning on "This Week," Sam Donaldson found out why you shouldn’t talk about economics if you don’t know anything about economics while sharing the stage with a Nobel laureate in economics.
DONALDSON: The new head of the president’s council of economic advisers, a few years ago, studied recessions, including our big depression, and wrote a paper saying that she couldn’t find that stimulus programs had really worked in any major sense, now, but I think it’s right…
KRUGMAN: That’s not quite right, actually.
DONALDSON: Am I close enough for government work?
KRUGMAN: No, actually. What she found was monetary policy works better than fiscal policy. Problem is we don’t have any monetary policy because interest rates are already at zero. So it’s actually a paper which is very relevant to experience since the Great Depression but not where we are right now.
One really does wish that Krugman could appear on every talking heads show to swat down BS like this. It’s just like having Alvy Singer trot out Marshall McLuhan every Sunday morning.