Have you read the reviews on Krugman's new book yet? [ Ссылка ]
Paul Krugman won the Nobel Prize in Economics for his work on the economies of scale in international trade. He went to Yale and MIT. He now works at Princeton. He has written several books, including Conscience of a Liberal. For a short period, he worked for the Reagan Administration.
In addition to criticizing Bush's economic policies, Krugman also harshly criticized the environmental policies. The new book Krugman wrote is The Return of Depression Economics. In policy there are hard problems and easy problems. Finding money to fix the highways is an easy problem is an easy problem. Reducing the crime rate is a hard problem. In macroeconomics, we try to manage the economy as a whole. Stagflation was a hard problem. No one has been able to solve it. Plain old fashioned recession - lack of demand - was supposed to be an easy problem. We thought that the FED could just print some money and everything would be fine.
The problem of depression avoidance has been solved. But about 10 years ago, there were some doubts about whether depression prevention had really been solved. This came from looking at countries like Japan. The problem in Japan didn't have anything to do with the fundamentals of Japan. Instead, it was an omen that there is something wrong with all markets. We thought that maybe it could happen to us, and it has.
The normal way to deal with a downturn is for the central bank to print money. That's not literally what they do, but you push money out there and push down the interest rate on government debt. When you cut the target fed funds rates, that makes its way through to things like mortgage rates.
