DeLong on Neoclassical Macroeconomics and Williamson and Cowen

This is a good passage:

"One thing that I think is wrong is in the passage Tyler quotes. It is the claim that what we have now "is not a Keynesian inefficiency associated with real rates of return [on savings vehicles] being too high; in fact real rates of return are too low". In the Keynesian-or perhaps it would be better to say Wicksellian--framework, when you say that real rates of return are "too high" you are saying that the market rate of interest is above the interest rate consistent with full employment, and with savings equal to investment at full employment. Wicksell called that interest rate the "natural rate of interest" and it is relative to that natural rate of interest that Wicksellian (and Keynesians) speak of interest rates being "too high" and "too low". Thus Williamson is wrong when he say that what we have now--when the natural rate of interest on relatively safe securities is negative and the market rate of interest is not--is "not a Keynesian [or Wicksellian] inefficiency". It is precisely such an inefficiency. To claim that it is not misinterprets Keynes (and Hicks, and Wicksell), and misleads readers trying to understand what they did and did not say."

It's funny how "not RBC" has been conflated with "not regular economics" or "not neoclassical economics" in recent discussions of Keynesianism. Even Krugman has admitted he does "irregular" economics, but I'm not sure why. This is fairly regular stuff, although it's true it's not late-twentieth century flavor of the month (decade?).