Federal spending has now been flat for several years. Discretionary spending has been cut. Quantitative easing has been ended. According to every Keynesian on the planet, we should be a in a recession right now.
Yesterday, we joked on Twitter that Krugman would say that the earthquake wasn’t “big enough”. Sure enough, someone put up a fake Paul Krugman profile on Google+ making that argument. Krugman has distanced himself from the idea (although a number of his followers agreed with the comment). But let’s remember who we’re dealing with. Here is Krugman on September 14, 2001 arguing that 9/11 would simulate the economy, especially by eroding resistance to counter-cyclical spending. … Read more