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How Did Paul Krugman Get it So Wrong

Posted on Tuesday, September 15, 2009 at 9:08 pm

jcochrane.jpgJohn Cochrane: If you believe the Keynesian argument for stimulus, you should think Bernie Madoff is a hero. He took money from people who were saving it, and gave it to people who most assuredly were going to spend it.  Each dollar so transferred, in Krugman’s world, generates an additional dollar and a half of national income.  If you believe the Keynesian argument for stimulus, you don’t care how the money is spent. All this puffery about “infrastructure,” monitoring, wise investment, jobs “created” and so on is pointless. See here.

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