Tuesday, August 23, 2011

The Second Great Contraction

This piece by Kenneth Rogoff, former IMF chief economist, now at Harvard, is excellent. He argues that calling the recent economic troubles a recession will tend to mislead us. He says that the proper name is the Second Great Contraction. If you think of pneumonia as just a really bad version of a cold, you won't treat it properly. I am not sure he is right about inflation being part of the cure, but he is, at minimum, framing the question properly.