In early 2009 both Paul Krugman and Brad DeLong frequently argued that we needed to use fiscal stimulus because the Fed was out of ammunition. These posts and articles contributed to an appalling lack of understanding of the role of monetary stimulus, especially on the left. Even Matt Yglesias has conceded that this is a weak spot for progressives. Of course that’s not to say that these two figures never said unconventional monetary stimulus was worth a shot. But the vast majority or readers assumed that they were saying the Fed was out of ammunition, as that’s the message they highlighted. Obviously things changed later on, and now both are demanding monetary stimulus from the Fed.
I see that Brad DeLong is now trying to rewrite history, and deny he made these claims. This surprises me, as he wrote an article for The Economists Voice (published in February 2009) that was almost entirely devoted to the proposition that monetary stimulus (and several other options) were not feasible, and hence Obama’s fiscal stimulus plan was the only solution to the recession. Just a month later I published a rebuttal in the same journal. Indeed I got into blogging primarily because I was appalled by what I was reading in the other blogs during late 2008 and early 2009. Almost no one was talking about how tight money was driving NGDP sharply lower, and dramatically worsening the recession.
I’ll say this in defense of Brad DeLong; he didn’t go off the deep end like Krugman did in response to the Romney economic paper. I read all the criticism, but when I looked at the paper I couldn’t find a single place where they had misquoted anyone. The fact that the people they relied on don’t entirely agree with their conclusions is not surprising. All papers in support of campaign promises are going to rely on rosy scenarios. But why the big fuss? It seems to me that Taylor, Hubbard, Mankiw and Hassett quoted each paper accurately. I’ve seen Krugman quote papers and then leave out the part that conflicted with his views. And yet he throws around terms like “fraud.”
Update: Mark Sadowski commented as follows:
You should provide a link to your Economist’s Voice article so people don’t have to search for your rebuttal: