Scott Sumner pointed out David Beckworth and Ramesh Ponnuru’s op-ed in the New York Times yesterday, which I excitedly read through at lunch. Aside from some small points I’d quibble with, their op-ed was the Market Monetarists narrative of what turned a garden variety recession into the monstrous Great Recession: The Fed did it!
I am not sure what I expected from the comments section, but this “new” development appears to not have been well received by commenters at the NYT. If it had been delivered in person, I think I could imagine some rotten tomatoes being lobbed from the audience.
The most encouraging comment I read was one that granted the take-away that we can be overly concerned about inflation, but that the rest of the story was simply nonsense – everyone knows it started with a bubble bursting in housing….
The rest of them were just reiterations of the bad bank scenario, with dashes of low interest rates causing too much borrowing, or can the Fed and we won’t have any of these problems because everyone knows the Fed distorts the free market.
When I looked at it last night, the comment total was upward of 600, and they were all the same.
Especially with the ‘can the Fed’ stories, given that there has to be some medium exchange and whatever its limitations are would also distort markets, the ignorance on display is rather breathtaking. It reminded me of Donald Trump related forums that ran the gambit from name calling and accusations of right-wing conspiracy theories.
A possible better approach for a next time would be to walk people to the cause of the Great Recession by first walking them through how the stock market crash did not cause the Great Depression. First dispel one myth people don’t really care about and give them some facts to chain together with the modern version. There is really not much difference between the two, and if one can agree with the first setting, it would be hard not to at least consider the facts about the second before trying to play pin the tail on the donkey with it.
I think I’d at least try the Heritage Foundation approach, how interest rates distort our thinking about monetary policy, if I were to leave talking about the Great Depression for another time. For many it would be learning something new, not just a rearrangement of questionable facts to fit the purpose, and then they could chain new facts, like the sterilization of bank lending as a transmission mechanism to the broader economy, with the MM narrative of the Great Recession.
Overall, though, it was a great first try for Beckworth and Ponnuru, and I hope that the drubbing they took in the comments section will not deter them from doing it again.