The Gospel of Evolution

Krugman on Friedman and Monetarism. For those of you who can’t read the article, Krugman is talking about Milton Friedman’s belief that the Fed’s control of the money supply can only have a negative effect. Jerome Powell, the chair of the Federal Reserve, made the point that Friedman’s belief might have been true 40 years ago, but things have changed since then. Krugman makes the further point that the “cause and effect” of money supply to economy is more likely to work the other way: that the economy drives the money supply. This REVERSES the most potent of Friedman’s claims about the Great Depression, that Federal meddling caused it, when in actuality it was private enterprise that caused it. And Krugman has stats to support this claim.

What this means to me is that we are actually learning more and more about how the economy of a superpower works, and that we are not helpless in the face of economic factors that cannot be manipulated. We haven’t had a depression since the 1930s, and only one real recession since then (and also, per Krugman and Obama, we could have recovered from that recession a lot faster than we did), and both of those things were common before Black Tuesday. Have we actually learned new things about how to keep our economy chugging? I think we have.