Krugman? Oh yes, Paul Krugman is probably considered as the Jesus on Pseudo-Keynesian economics. By reading some things that Krugman have written, it’s not even Keynesian or neo-Keynesian economics, even through some of his works in microeconomics are not bad at all. This is one of the reasons that I believe that macroeconomics is not science at all, but junk science on the edges.
Let Mr. Krugman speaks with his great « wisdom »:
“To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
-Paul Krugman, August 2002
With this logic, was Krugman was for the wars of the 2000? For some Keynesians, it’s clear that having a few wars is probably one of the best « public works » project ever, especially with the fallacy that people are thinking that the Second World War ended the Great Depression.
And again, the most worrying thing is that people still teach this non-sense to our children, without teaching the Broken Window Fallacy that the massive resources (combined with the awful sacrifices) used for war could be used for other purposes which are much more constructive in the long term.
Anyway, Keynesianism was totally perfect for as a economic policy for politicians to win elections. This is why politicians are loving this economic strategy.