These are the people who said that there was no housing bubble, that there was no danger of financial crisis, and then that a financial crisis would not impact the real economy. These are the same people who said they needed a multitrillion dollar bailout of the financial industry, or we would get severe trouble in the economy.
Rival explanations — for example ones that claim government deficit spending doesn't help an economy — fit the evidence far better.
Fake booms and their consequent busts are directly linked to financial cycles, which in turn reflect the swings in money creation.
Bubbles, as we have seen, result from deliberate "expansionary" policies by government authorities, yet Krugman always seems to treat them as being solely the products of private enterprise.
The world already has the Great Depression as a warning. But governments and the bureaucrats who run them have decided to ignore the lesson. The new crisis of interventionism is fast approaching, and the market will not wait for governments to realize their errors.
The recent improvement of the global economy, with particularly high economic- growth numbers for the United States, is just one more deception in a long series of deceptions that have plagued policy makers and investors.
"The true villains were clearly the bankers themselves."
– Mark Gilbert, Complicit
