Given the long-run historical record and given the temporal stickiness of ideas, that conservatives start from theories--the naive mechanical quantity theory of money, the naive fiscal theory of the price level, and a form of Lafferism that sees security of property and low tax rates as the principal requisites of commercial and industrial prosperity--that were by and large adequate for the pre-World War I era but have not been adequate sense is, to me, not surprising. And that it should be difficult to argue them out of these frames of mind is, to me, not surprising.
What is surprising is the professional economists of note and reputation.
In an earlier day, the professional Republican economists had no problem pushing the goldbugs to the margins of, well, Reason magazine and its World War II Revisionism issue--Arthur Burns, Milton Friedman, and Herb Stein disliked the goldbugs of their day even more than Paul Krugman dislikes the goldbugs of ours, for they saw them as not only analytical idiots but also as dangerous in their potential to discredit the Good Old Cause via their ravings. And they argued Republican politicians into a commitment to use at least monetary policy to stabilize aggregate demand at full employment for two generations.
But not today.Grasping Reality
Monday DeLong Smackdown: The Wellsprings of Bad Monetary Economics in Goldbugism
J. Bradford DeLong | Pofessor of Economics and chair of the Political Economy major at the University of California, Berkeley
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