Must-Read: Paul Krugman: Stop-Go Austerity and Self-Defeating Recoveries

Must-Read: Paul Krugman: Stop-Go Austerity and Self-Defeating Recoveries: “Britain’s election results… were consistent with the general proposition that elections hinge…

…on whether things are improving in the six months or so before the vote. Cameron and company imposed austerity for a couple of years, then paused… the economy picked up… [and so gave] them a chance to make the same mistakes all over again. They’ll probably seize that chance. And… there’s a good chance that the resumption of austerity will usher in another era of stagnation…. There’s a somewhat similar problem in the euro area, as Barry Eichengreen noted…. The policies that pulled Europe back from the brink were made politically possible by fear… of collapse… [and] deflation. But as the fear abates, so does pressure…. My pessimism here could be all wrong…. But my guess is that we’re looking at an era of stop-go austerity, in which politicians who refuse to learn the right lessons from history doom their citizens to repeat it.

May 21, 2015

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