[This article is excerpted from An Austrian Perspective on the History of Economic Thought, vol. 1, Economic Thought Before Adam Smith.]

For some inexplicable reason (for Keynesians, unfamiliar with being out of economic fashion), the recent G-20 meeting resulted in some consensus (at least outside the US) of controlling inflation and curbing deficits. Paul Krugman, dismayed at such at outcome, called the conference “deeply discouraging”. In his anguish at watching the world leaders contort themselves ever-so-slightly towards controlling their budget deficits and reigning in spending, he penned some his dire predictions in the NYT:

Personal income information released this week by the Bureau of Economic Analysis shows total personal income increasing 0.4 percent, or $54 billion, from April to May 2010. Year over year, personal income is up 1.6 percent, or $191 billion. In spite of recent growth, total personal income is still down $24.4 billion, or 0.2 percent, from the peak reached during May of 2008.

In short, personal income has gone nowhere over the last two years as it plummeted $479 billion, or 3.9 percent, from May 2008′s peak to March 2009′s nadir. It has generally increased each month since.

Existing home sales did not do as well as expected in May, while new home sales fared even worse.

The Supreme Court handed down this term’s final four decisions today: Christian Legal Society Chapter v. Martinez, on public university limitations on a Christian student group’s rights of association; the McDonald v.

This is the third annual edition of What To Do With What You Did Over Your Summer Vacation. The 2008 installment is here, and the 2009 installment is here.

[Excerpted from chapter 7 of Theory and History]