Krugman Attacks Us – OpEd

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When Paul Krugman starts attacking us, we know we’re doing something right. John Maynard Keynes’s presumptive heir, Krugman apparently doesn’t like the findings of our recent book edited by Research Fellow David Beckworth, Boom & Bust Banking: The Causes and Cures of the Great Recession, exposing the profound fallaciesof Lord Keynes’s love affair with fiscal “stimulus.”

It may not give Krugman solace that Beckworth and Research Fellow Scott Sumner, another contributor to the book, recently addressed Congressional staff members at a Capitol Hill seminar we co-sponsored with the NCPA on the role of the Federal Reserve in causing the Great Recession and provided solutions to prevent the next financial crisis. Sumner has just been named #15 of Foreign Policy’s Top 100 Global Thinkers (19 places ahead of Mr. Krugman), which writes that, “Sumner just might have permanently shifted U.S. monetary policy.”

The best hope for a better world is better ideas taking root, and our harvesting these vitally important insights is irreplaceable.

Throughout the current Great Recession, we’ve been a beacon of sense in the fog of calls to “do something” when much of what the government had already done created the mess in the first place. At the very beginning of the financial crisis, Research Fellow Stan Liebowitz prepared the study, “Anatomy of a Train Wreck: Causes of the Mortgage Meltdown,” which became the cover feature for the October 20, 2008 National Review, was widely picked up elsewhere, and included in our book, Housing America: Building Out of a Crisis, edited by Randall Holcombe and Benjamin Powell.

And the Independent Institute has continued at the forefront, calling out the official pronouncements leading Americans further up the garden path from crisis to crisis. Our recent book, Financing Failure: A Century of Bailouts, by Vern McKinley, similarly traces the genesis of financial crises to government policy. Most recently, McKinley reveals in “The Fannie Mae ‘Wind Down’ That Isn’t” (Wall Street Journal, November 26, 2012), that these disastrous policies will continue unabated, and we can only expect a continuing vicious cycle until we massively rein in the power of government regulators and restore markets and financial stability.

To harvest a real future for liberty, we need to accelerate the impact of this work. As we continue to hear misguided cries by Krugman and others to “stimulate” our way into another housing and inflationary bubble, we have to speak louder than ever with the countervailing truth.

If we do nothing, Washington will pursue ever greater tax and spending policies that will only exacerbate and deepen the next financial crisis. With your help we can build support for market-enhancing economic policies that drive prosperity, equitably, for all.

David J. Theroux

David J. Theroux is Founder, President and Chief Executive Officer of The Independent Institute and Publisher of The Independent Review. He received his B.S., A.B., and M.S. from the University of California, Berkeley, and his M.B.A. from the University of Chicago. Books produced by Mr. Theroux have been the recipients of the Eric Hoffer Book Award Grand Prize, Templeton Freedom Award, two Mencken Awards for Best Book, seven Sir Antony Fisher International Memorial Awards for Best Book, two Benjamin Franklin Awards, four Independent Publisher Book Awards, Peter Shaw Memorial Award, and three Choice Magazine Awards for Outstanding Book. He is Founder and President of the C.S. Lewis Society of California, and he was founding Vice President and Director of Academic Affairs for the Cato Institute and founding President of the Pacific Research Institute for Public Policy.

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