... and Paul Krugman says they have a strong Keynesian bias.
I tend to agree. Krugman takes a recent Greenspan op-ed to task for regretting that fiscal stimulus does not seem to be causing any inflation, because it makes people "complacent". There's no attempt to delve into why we haven't seen any inflationary response to an unprecedented budget deficit. It's just random and unfortunate for Greenspan. I think it only makes you "complacent" if you don't understand why we haven't seen the inflationary response. I'm not complacent. I don't talk about it as much on here, but in other fora I regularly harp on the long-term debt. There are very real and very obvious risks to public debt. If you know the difference between why we have debt in the short-run and what it is doing and why we're going to have debt continue to accumulate in the long-run and what it will do, there's nothing about the stimulus that makes you "complacent". It's only if you act like all recessions are identical (say, if you're one of those people that thinks 1920-21 is comparable to 2008-2010) that you might get "complacent".
Anyway, I've always wondered when the other shoe is going to drop with these inflation fear-mongers - and I hate to say it, but I'm looking at you, my Austrian readers. A year or two ago we heard warnings about inflation all over the place. They were all sufficiently vague, of course. We never really hear that much anymore. The opponents of stimulus now talk about sovereign default instead. I have news - sovereign default ain't gonna happen just like a large inflation ain't gonna happen. At some point these people need to face reality and account for what they got wrong.
I've wondered this about the inflation of the 70s too in the past. Does it mean nothing to these inflation-fear-mongers that prices were tame (and falling at certain points) after the enormous deficits of the New Deal and World War II? It took decades of boom-year deficit spending and two more grueling wars just to get up to double-digit inflation (which, in the grand scheme of things, isn't that high anyway). I'm no expert on the 70s, but it's also important to note that most economists seem to agree that (1.) price expectations, and (2.) supply shocks had at least as much to do with that inflation as fiscal or monetary profligacy. You would think that would have made a dent in the deficit-doomsdayers arguments, but no! The 1970s are held up as an example of what government spending can do to the economy.
I guess my question is - when does the cognitive dissonance kick in? When do these people start realizing that the story they're pushing doesn't match up with reality? We're not clamoring for year after year after year of deficits, after all. There's strong support in my camp for getting the medium- and long-term debt under control. Nobody is saying that public debt is consequence-free. We're just saying it has different effects under different conditions and the conditions right now warrant fear of just about anything but inflation.
And then there are those who highlight or highlighted inflation as the primary concern. At some point, they have to relent. I suppose the methodological aversion to relying on experience is strong enough with many of these people that the process of aligning their theory with reality might take a while.