Saturday, August 2, 2014

"good krugman ....good krugman.....but "

comes the big contraction  in 1929  and ....

"....Wages fell as the economy was slumping, but bounced back thereafter even though unemployment was high"

". Applying modern arguments to these data one could easily have concluded
that the economy was near capacity in, say, 1939..."

"..... in fact many economists argued at the time that most unemployment was structural, due to the mismatch between skills and the requirements of the modern economy, and could not be cured with more demand."

"But then came massive fiscal stimulus in the form of rearmament and war — and it turned out that there was plenty of slack in the economy, and American workers were just fine."

yup no structural unemployment
come war
full job force remobilization...

and then sum
plenty sum

 riviters out of Roses

 only required adequate spending ...

but notice post  jan  1936 wages go on a second boomer until  pole axed

does wage rate control
trump full remobilization of the potential job force ?

what else  led to this macro policy contrived
   sharp and deep re-contraction

this is the episode most like the recent stunted recovery