The Return of Depression Economics and the Crisis of 2008

The Return of Depression Economics and the Crisis of 2008

Paul Krugman

Language: English

Pages: 207

ISBN: 0393337804

Format: PDF / Kindle (mobi) / ePub

The New York Times bestseller: the Nobel Prize–winning economist shows how today’s crisis parallels the Great Depression―and explains how to avoid catastrophe. With a new foreword for this paperback edition.

In this major bestseller, Paul Krugman warns that, like diseases that have become resistant to antibiotics, the economic maladies that caused the Great Depression have made a comeback. He lays bare the 2008 financial crisis―the greatest since the 1930s―tracing it to the failure of regulation to keep pace with an out-of-control financial system. He also tells us how to contain the crisis and turn around a world economy sliding into a deep recession. Brilliantly crafted in Krugman’s trademark style―lucid, lively, and supremely informed―this new edition of The Return of Depression Economics has become an instant classic. A hard-hitting new foreword takes the paperback edition right up to the present moment.

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dollar of reduced credit from New York leads to several pesos of called loans in Buenos Aires. And as credit contracts, the business situation in Argentina starts to become dicey. Businesses have trouble repaying their loans on short notice, all the more so because their customers are also under financial pressure. Depositors start to wonder whether banks can so The Return of Depression Economics really collect from their clients, and start to pull their money out just in case, further

which hedge funds borrow cheaply in Japan and lend the money elsewhere. But for the most part we have lost interest. The Japanese weren't that tough after all, the public seems to have concluded, so now we can ignore them. This is foolish. The failures of Japan are every bit as significant 56 JAPAN'S TRAP 57 for us as its successes. What happened to Japan is both a tragedy and an omen. The world's second-largest economy is still blessed with well-educated and willing workers, a modern

here is analyti­ cal, much of the writing involves narrative. Partly this is because the story line—the sequence in which events happened—is often an important clue to what theory of the case makes sense. (For example, any "fundamentalist" view of economic crisis—that is, a INTRODUCTION 7 view that economies only get the punishment they deserve—must come to grips with the peculiar coincidence that so many seemingly disparate economies hit the wall in the space of a few months.) But I am also

is a secondary consideration—and thereby pro­ vide jobs, which will make people more willing to spend, which will generate still more jobs, and so on. The Great Depression in the United States was brought to an end by a massive deficit-financed public works program, known as World War II. Why not try to jumpstart Japanese growth with a more pacific version of the same? Japan tried. During the 1990s the government produced a series of stimulus packages, borrowing money to build roads and bridges

DEPRESSION AND OF ECONOMICS THE CRISIS OF 2008 A L S O B Y P A U L K R U G M A N The Conscience of a Liberal The Great Fuzzy Unraveling Math The Accidental Pop Theorist Internationalism Peddling Prosperity The Age of Diminished Expectations Paul Krugman THE RETURN DEPRESSION AND THE W. W. Norton ECONOMICS CRISIS & Company OF New OF 2 008 York London Copyright © 2009, 1999 by Paul Krugman All rights reserved Printed in the United States of America First

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