Ep. 99 Krugman Doesn’t Get What Happened in 2008

11 August 2017     |     Tom Woods     |     10

Krugman claims the downturn of 2008 was caused by inadequate “demand.” The Austrians claim the downturn was more complicated: it involved problems in particular sectors that had been artificially expanded, not a system-wide problem of not enough spending.

Thankfully, we can resolve this dispute swiftly enough — and we do, in this episode.

Krugman Column

Structural Unemployment: Yes, It Was Humbug” (August 4, 2017)

Contra Columns

Austrians Can Explain the Boom and the Bust,” by Bob Murphy
Putting Austrian Business-Cycle Theory to the Test,” by Bob Murphy
My Reply to Krugman on Austrian Business-Cycle Theory,” by Bob Murphy


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  • CristobaI


  • CristobaI

    Krugman is an Economics Denier.
    Shouldn’t he be locked up for denying the science behind the Business Cycle???

    • Don Duncan

      These ignorant fools are no threat to anyone but themselves and those who chose to believe them, “in a free society”. But no such society exists, thanks to the mass myth of authoritarianism that finds expression in the institution of govt.

  • http://2vnews.com 2VNews

    The collusion between the federal government and banks with the Federal Reserve, FDIC, FHA, HUD, Freddie Mac, Fannie Mae, Community Reinvestment Act and more is what led to the financial crisis.

    When government gets in bed with big business we get: ratings agencies rubber stamping investments, regulators looking the other way, banks giving liar loans, the government bailing out banks and taxpayers paying for everything.

    Abolish the Fed, FDIC, FHA, HUD, Freddie Mac and Fannie Mae. Repeal the Community Reinvestment Act.

  • https://www.facebook.com/david.rogers.hunt David_Rogers_Hunt

    Once again Austrian economics demonstrates that policies that work invoke pain first, pleasure later,… while Keynesian economics always appeals to those who prefer pleasure now, pain indefinitely postponed. https://uploads.disquscdn.com/images/fe1ff29f047cb1e758b41d60478dc08f56abc721856012a9cbfc44f9f10fb723.png

  • JD Bertron

    I enjoyed your classic explanation of the business cycle, and how during the crash, a sharp devaluation of capital and labor is necessary to recover. Unfortunately, for people who lose their jobs, this is a very hard thing to hear and makes us seem callous. How about also explaining how in a normal market economy prices would give ample warning to disappearing professions, or offer many opportunities for workers in failing mismanaged businesses ?
    Thanks !

  • http://second-amendment-origin.com Capt J Parker

    This is one of the Best Contra Krugman episodes. I keep reading Krugman because despite my aversion to his political slant I do think he does a good job of demonstrating how to get a quick rough answer an economic question buy looking at some key metrics. This episode really exposed how slippery Krugman can be at making the metrics seem as though they support his position when a close look shows they really support a different position.

  • Chase Miller

    Krugman always has the worst article titles expected from a completely illogical, inconsistent, naval-gazing academic

  • davegrille

    The Krugman theory of history is great .Any occurrence which doesn’t fit can change .

  • Dan Monroe

    I recall reading that during the Obama years FT employment was redefined to include working one hour a month. Is that an urban legend? If not, has FT employment since been redefined more honestly–like 40 hrs./week?