Over at the TPMCafe Book Club, Paul Krugman, Brad DeLong, Dean Baker, Robert Reich, Mark Thoma and Dana Chasin discuss Krugman's The Return of Depression Economics and the Crisis of 2008. Krugman:
This is a heavily revised new edition of The Return of Depression Economics, originally published 9 years ago. When I wrote the original version, I had Asia on my mind. Some people looked at the crisis that swept Southeast Asia and at Japan's monetary trap, and saw them as proof of the superiority of the American system. I looked at the same things and saw them as omens. I worried that similar things could happen to us. And now they have.
Right now the world economy is in a nosedive, and understanding what I call “depression economics” — the weird world you get into when even a zero interest rate isn't low enough, and a messed-up financial system is dragging down the real economy — is essential if we're going to avoid the worst.
Response at the book club.