Freshwater Economists on the Defensive

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There are some very smart economists saying things about the Great Recession that do not make sense. They have been forced to insert things into their models in order to explain why they can't explain the downturn. Most of these very smart economists are from the "Freshwater School" dominated by the University of Chicago.

Krugman considers two reasons for their confusion: One is merely political. They are simply providing talking points for their favorite politicians. He believes, however, that they are simply trying to defend their reputations. They have spent their careers trying to undermine Keynesian theory and they won't let reality stand in their way.