PRI’s Studio 360 via FlickrHere’s a great paragraph from Paul Krugman:
Expansionary austerity has been refuted and even the IMF says that short-run multipliers are big. The 90 per cent red line on debt was an artifact of fuzzy maths. The bond vigilantes remain invisible, and the confidence fairy refuses to make an appearance. Clearly, austerian economics has imploded (and some prominent austerians seem to be personally imploding too).
In just the last few weeks we’ve seen the UK get rebuked, Reinhart & Rogoff go down, European interest rates fall, and Niall Ferguson making him self look like a fool equating Keynes’s economic philosophy with being gay (he since apologized).
What’s remarkable is how public this all has been. Academic ideas go in and out all of the time, but not in ways so easily digestible for mass consumption. And usually the pace of intellectual change is glacial. This has happened in blog time.
So it’s really nothing we can recall.
And to the extent that leaders (at least in Europe) are now clearly calling for an end to austerity, it could be quite bullish for the economy.