Some commenters on the last post seem to be getting caught up in issues that seem to me to miss the point. Bob Murphy writes: "You guys are something else. Does it matter that that Mellon quote--which Krugman uses to characterize the 1930s record in the eyes of his readers--was produced in Hoover's Memoirs, so that Hoover could explain that he did the opposite of what Mellon suggested?"
The problem is, he didn't really do the opposite from Krugman's perspective, although he might have from Bob's perspective. "Opposite" all depends on where the origin of your particular Cartesian plane lies.
Here's one way of putting it that IMO makes much more sense in reading Krugman's article: Barack Obama is Herbert Hoover and Paul Ryan/Ron Paul is Andrew Mellon. Of course Obama/Hoover didn't exactly listen to Ryan/Paul/Mellon. But the point is the whole atmosphere is still one of austerity. Yes we have relatively less austerity than Ryan/Paul/Mellon would want us to have or that the EU has. But that doesn't mean that there isn't a problem - that there isn't still in Krugman's words "an urge to purge". That is where the center of gravity is - with austerity. Of course it's not the austerity that Bob Murphy wants. He doesn't want a hiring freeze and a 20% pay cut for federal workers. He wants them fired. But "not satisfying what Bob Murphy is interested in" is not the definition of austerity.
As I said yesterday, Hoover was an austerity president. So was the early Roosevelt. They both did some nice things on the margin. In the monetary realm the early Roosevelt did some very good things. But it was still a period of relative austerity. Would a hypothetical President Mellon have been even more austere? Well of course he would have. So?
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