Krugman lecture at MIT
What have we learned from the credit crisis? A lecture by Paul Krugman, my hero. Here are the main extracts:
- This crisis is any many ways similar to the 30s one
- Crisis tend to occur when we forget about previous crisis
- We forgot that banks were unstable (and therefore needed to be regulated). This is mainly targeted at the Americans
- In the Great Depression, the Fed did not even try to expand the monetary base. In this respect, Bernanke did much better.
- Big government with all its flows has the advantage of being an "automatic stabilizer" in periods of crisis.
- Financial crisis have long lasted consequences (cf. "This time is different" by Carmen Reinhart and Kenneth Rogoff). There is a risk that we remove economic stimulus too early and the economy to plunge back into recession.
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