Theory is not Policy


The US is in a deflationary spiral, which Keynes’ work predicts under certain conditions. Policy should not be confused with theory: theoretically, Keynes is sound in his description of the circumstances and effects of a “liquidity trap.”

Before sounding the death knell, Paul Krugman’s blog (here in the Times) sheds light on Keynes, the liquidity trap, quantitative easing, deflation, and the ECB–with over 400 posts on the liquidity trap alone!

One of his best blog is summary of Keynes and the common criticisms of his work: Keynesianism Explained [].

While many disagree, Keynes is alive and well in theory: Krugman explains quite adequately the case of what, how, and why these conditions mire Europe’s economy, and what they mean beyond. Differences in views must not become indifference to other views, and they should not be dismissed by pretending they don’t exist–or declaring them failed.

Mario Draghi Throws the Kitchen Sink at Europe’s Economic Distress. Again. – The New York Times


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