Is fiscal austerity now in vogue?

23 October 2010 |permalink | email article

The new British budget announced on Wednesday and the rhetoric and the announcement that accompanied it caught the attention of Paul Krugman, the New York Times columnist and Nobel laureate. It suggested to him it might have come directly from the desk of Andrew Mellon, the Treasury secretary who told President Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages.

Krugman noted there has been a noticeable change in the rhetoric of the government of Prime Minister David Cameron over the past few weeks – a shift from hope to fear. It should be fair warning to President Obama, and Republicans who might take over Congress in 2011, about the dangers of balancing the budget now based on a dangerous fallacy. 

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