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See Krugman's blog: The Anti-Scientific Revolution in Macroeconomics (January 12, 2014)
So what did happen? Keynes offered an answer: it is, in fact, possible for economies to suffer from an overall lack of demand. Other people had said things along these lines, but Keynesian economics put it front and center.

...

So let me summarize: we had a scientific revolution in economics, one that dramatically increased our comprehension of the world and also gave us crucial practical guidance about what to do in the face of depressions. The broad outlines of the theory devised during that revolution have held up extremely well in the face of experience, while those rejecting the theory because it doesn't correspond to their notion of common sense have been wrong every step of the way.

Yet a large part of both the political establishment and the economics establishment rejects the whole thing out of hand, because they don't like the conclusions.

Galileo wept.



A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Jan 14th, 2014 at 10:08:50 AM EST
It's pretty obvious, the world is being managed down to a shit level. It won't take long.
by das monde on Tue Jan 14th, 2014 at 10:34:40 AM EST
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BBC News today:

The UK's inflation rate fell to the Bank of England's target of 2% last month for the first time since November 2009, helped by a slowdown in the increase of fruit prices.

The slowdown in the increase of fruit prices will provide welcome relief to struggling British families, who no longer need be haunted by the daunting economic spectre of ever-more expensive fruit.

It's a shame that low inflation means that interest rates will have to go up soon (sic).

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Jan 14th, 2014 at 11:01:25 AM EST
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It's a shame that low inflation means that interest rates will have to go up soon (sic).
WHat!?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Jan 14th, 2014 at 02:16:48 PM EST
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To be fair, the news item actually says the opposite - for now.

But it also hints that low inflation = recovery = increased pay pressure = higher interest rates.

'S inevitable, innit. Just watch what happens if pay rises get anywhere near the inflation rate.

Still - at least we can all afford cheap fruit this month.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Jan 14th, 2014 at 02:25:43 PM EST
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Well, I must admit that my closing sentence was a direct hint at that post.

Krugman has had three terrific posts in a row, understandable by anyone, I should think, without being dumbed down.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue Jan 14th, 2014 at 11:17:04 AM EST
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