"The most terrifying thing of all is that being completely, comprehensively, unmistakably, fundamentally, fatally, totally wrong has not led Robert Murphy to rethink or modify any of his analytical positions or ideological beliefs by even one iota.I think it's fair to say that he hasn't changed his perspective on how the economy works to date (he certainly hasn't dropped dismissing Krugman), although he has acknowledged how badly this has gone at a couple points.
I mean, one would expect an announcement on his weblog like: "I have been totally wrong, about everything. I am closing down this weblog for five years to avoid misleading readers while I intellectually retool. You will find me sitting at the feet of Paul Krguman, chanting 'om mani padme hum' until I achieve enlightenment."
Not gonna happen..."
Even more embarrassing for Bob is that he lost a potential bet he seemed curious/eager about with an MMT commenter on his blog about 5 percent inflation too.
One of the nice things about Brad DeLong is that he regularly lays out where he was wrong in the past and has changed his mind. I'm curious if any Austrians who were predicting things similar to Bob have thoughts along these lines as well. Bob is not alone, after all. Peter Boettke recently suggested that the crisis confirms Hayek's position. Is there any grounds for these sorts of claims? Should they be revising any viewpoints in the way that DeLong did much earlier in the crisis?
Often you'll hear Austrians say that we're at the zero lower bound because the central bank is pinning us there with easy money policy. That explanation begs a lot of questions itself, of course, but you certainly can't say that and then also explain how low inflation is consistent with your theory. The Keynesian story, of course, has an answer for both the low inflation and low interest rates.
What's interesting is that in Bob's defense of himself (a year ago!) he cites the eurozone crisis and the flight to quality. This is quite close to admitting the Keynesian position, if only he would make that leap. A flight to quality in the face of revised expectations about returns to capital investments of any sort in an uncertain future is precisely the mechanism here. That will give you what we observe today - not the realization of a discoordinated capital structure followed by expansionary monetary policy.
Brad DeLong doesn't think Bob can come to terms with all this. I'm not so sure. Bob was able to embrace Sraffa over Hayek. And if you thought the lefties liked Keynes, wait until you see what they think of Sraffa! Bob knows when to aknowledge the other side has a point without abandoning the good points that the Austrians make. So will he do it this time?