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Sunday, March 08, 2009

Krugman: Return of depression economics

Paul Krugman thinks we are pretty much in the dark, i.e., there are NO rules policy makers can follow in this crisis.

1. Interest rate is down to almost zero, and monetary policy lost its effectiveness.



2. The Fed has been pumping money/credit like crazy, but credit market and lending are still pretty much stuck, with money multiplier sharp falling.



Read his full presentation here.