Washington Post: Keynes Would Have Seen It Coming

[MattH]

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/13/AR2008101302090_pf.html

The Great Financial Meltdown would not have surprised the British economist, who died in 1946, for he thought that this was exactly how unregulated markets would behave... [Keynes said] governments should vary taxes and spending to offset any tendency for inflation to rise or productivity to fall. And for roughly 25 years -- from 1950 to 1975 -- they did. The developed world grew at an average annual rate of 3.2 percent without a business cycle, with very moderate inflation, and without the benefit of the huge rewards now deemed necessary to keep executives properly incentivized. Then the free-market deregulators and globalizers seized control of the engine room, and boom-bust cycles returned with a vengeance.