Wow. Just . . . wow.Title of her post "Paul Krugman's Prophetic Prescience." The quoted paragraph is from a 2002 Krugman article.
The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. 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.
As Arnold Kling says, there's a paragraph I'm sure glad I didn't write.
By the way, murder happens in America. I say that because, obviously, I totally endorse murder like all the fucking time.
If only Kruggles had found that recession around here somewhere.
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