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private sect or spending and, 33, 47, 211–12unemployment in, x, 5–12, 24, 110, 117, 119, 210, 212see also financial crisis of 2008–09; recovery, from depression of 2008–essions, 27disproportion betw een cause and effect in, 22–23, 30–31government spending and, 135–36 , 137, 231Keyne s’s definition of, xSchumpete r on, 204–5see also Great Depression; recessionsgulation, financial, 54, 56, 67, 85, 114under Carte r, 61unde r Clinto n, 62income inequality and, 72–75, 74 , 81, 82, 89under Reagan, 50, 60–61, 62, 67–68right ward political shift and, 83supposed benefits of, 69–70, 72–73, 86vatives, 98see also specific financial instrument s aluation, 169, 180– 81flation, 1 59com bubble, 14, 198

ghi, Mario, 186

ed-income tax credit, 120nome trics, 233nomic output, see gross domestic productnomics (Samuelson), 93nomics, e conomists:academic sociology and, 92, 96, 103Aust rian school of, 151complacency of, 55disproportion betw een cause and effect in, 22–23, 30–31ignorance of, 106–8influenc e of financial elite on, 96Keynesian, see Keynesian economicslaissez-faire, 94, 101lessons of Great Depression ignored by, xi, 92, 108liquidationist schoo l of, 204–5monetarist, 101as morality play, 23, 207 , 219renew ed appreciation of past thinking in, 42research in, see research, economicRicardian, 205 –6see also macroeconomicsono mics of Happine ss, T he” (Bernanke) , 5nomy, U.S.:effect of austerity programs on, 51, 213

election outcome s and, 225–26postwar boom in, 50, 70, 149size of, 121, 122supposed structural defect s in, 35–36see also global economycation:austerity policies and, 143 , 213 –14depression of 2008– and, 16income inequality and, 75–76, 89inequality in, 84te achers’ salaries in, 72, 76, 148cient-market s hypothesis, 97–99 , 100, 1 01, 10 3–4ertsson, Gauti, 52engreen, Barry, 236tions, U.S.:economic growth and, 225–26

of 2012, 226rgency aid, 119–20 , 120, 144, 216ronmental regulation, 221ys in Po sitive Ec onomics (Friedman), 170, 166benefits of, 168–69 , 170–71creation of, 174economic flexibility constrained by, 18, 169–73, 179, 184fixing problems of, 184 –87investor confidence and, 174liquidity and, 182 –84 , 185trade imbalances and, 175 , 175 as vulnerable to panics, 182 –84 , 186wages and, 174–75ope:capital flow in, 169, 174, 180

common currency of, see eurocreditor nations of, 46debto r nations of, 4, 45, 46, 139



democracy and unity in, 184–85fiscal integration lacking in, 171 , 172–73 , 176, 179GDP in, 17health care in, 18inflation and, 185 , 186labor mobility lacking in, 171 –72, 173 , 179193 0s arms race in, 236social safety nets in, 18unemployment in, 4, 17, 18, 176, 229, 236ope, debt crisis in, x, 4, 40, 45, 4 6, 138, 1 40–41, 1 66–87austerity programs in, 46, 144, 185, 186, 188, 190budget deficits and, 177fiscal irresponsibility as suppose d cause of (Big Delusion), 17 7–7 9, 187housing bubbles and, 65, 169, 172, 174, 176interest rates in, 174, 176, 182–84, 190liquidity fears and, 182 –84recovery from, 184–87unequal impact of, 17–18wages in, 164–65, 169–70, 174–75opean Central Bank, 46, 183Big Delusion and, 179inflation and, 161 , 180interest rates and, 190, 202–3monetary policy of, 180, 185, 186opean Coal and Steel Community, 167opean Economic Community (EEC), 16 7–68opean Union, 172hange rates, fixed vs. flexible, 169–73

utive compensation, 78–79“outrage constraint” on, 81–82, 83ansionary austerity, 144, 196–99

enditure cascades, 84a, Eugene, 69–70, 73, 97, 100, 106

nie Mae, 64, 65–66, 100, 172, 220–21ell, Henry, 100, 192eral Deposit Insurance Corporation (FDIC), 59, 172eral Housing Finance Agency, 221eral Reserve, 42, 103aggressive action needed from, 216–19creation of, 59foreign exchange intervention and, 217inflation and, 161, 217, 219, 227interest rates and, 33–34, 93, 105, 117, 134, 135, 143, 151, 189–90, 193, 215, 216–17as lender of last resort, 59LTCM crisis and, 69money supply controlled by, 31, 32, 33, 105, 151, 153, 155, 157, 183

recessions and, 105recovery and, 216–19in 2008 financial crisis, 104, 106, 116uncon vent ional asset purchases by, 217eral Reserve Bank of Boston, 4 7–48berg, Larry, 72uson, Niall, 135–36, 139, 160na Fáil, 88usters, 12 3ncial crisis of 200 8–09, ix, x, 40, 41, 69 , 72, 99, 10 4, 111 –16Bernanke on, 3–4Big Lie of, 64–66, 100, 177capital ratios and, 59credit crunch in, 41, 110, 113, 117deleveraging in, 147Federal Reserve and, 104 , 106

income inequ ality and, 82, 83leverage in, 44–46, 63panics in, 4, 63, 111, 155real GDP in, 13see also depression of 2008–; Europe, debt crisis inncial elite:political influence of, 63, 77–78, 85–90Republican ideology and, 88– 89top 0.01 percent in, 75, 76top 0.1 percent in, 75, 76, 77, 96top 1 percent in, 74–75, 74, 76–77, 96see also income inequalityncial industry, see banks, banking industryncial instability hypot hesis, 43– 44ncial Times, 95, 100, 203–4and, 1 84

l integration, 171, 172–73 , 176er, Irving, 22, 4 2, 44–4 6, 48, 49, 52, 163bility:



currency and, 18, 169–73paradox of, 52–53This House (TV show), 112ida, 111d stamps, 120, 144d, John, 56closures, 45, 127– 28ign e xchange markets, 2 17ign t rade, 2 21News, 134k, Robert, 84

ddie Mac, 64, 65–66, 100, 172, 220–21trade, 167

dman, Milton, 96, 10 1, 18 1, 205on causes of Great Depression, 105–6

riel, Peter, 20non, Joseph, 219 , 221diner, Chance (char.), 3n–St. Germain Act (1982), 61 , 67ewood (char.), 55–56, 68ko, Gordon (char.), 80eral Theo ry of Employment, Interest, and Money, T he (Keynes), 93, 94, 96, 205, 208many, 17, 1 73banking industry in, 30capital flow from, 169Europe an debt crisis and, 179fear of inflation in, 180fiscal stimulus and, 180, 185interest rates in, 174lending by, 46, 200trade imbalances and, 28, 175, 175 wages in, 165, 169, 175many, Weimar:Great Depression in, 19hyperinflation in, 150 , 162ed Age, second, 70, 71–72index, 77

SI countries, 175, 175 s-Steagall Act (1933 ), 59–60, 62, 63, 85 –86, 113al economy, debt in, 43–44, 46and Man at Yale (Buckley), 93smiths, 56–57don, Robert, 38on, Gary, 60

ernment, federal:Obama’s supposed expansion of, 118, 119–21

solvency of, 139200 8 financial crisis blamed on, 64, 65, 100ernment, state and local:aid to, 125–26, 213austerity policies and, 213 –14 , 220effect of deficit-reduction policy on, 143employment levels of, 213–14 , 217 ernment debt, 39, 51, 136–37, 192in global economy, 43–44, 46, 146long-te rm effect of, 141ratio of GDP to, 141–42, 145S&P downgrading of, 140, 193–94short-term, 153see also deficitsernment spending, 24, 25–26, 136, 224consumer spending affected by, 39

cuts to, 28, 143–44, 189, 200, 237deficit-reduction and, 143depressions and, 135–36 , 137, 231for emergency aid, 119–20 , 120, 21 6Great Depression and, 35, 38–39, 231impact on GDP of, 143, 144, 212, 234–35, 235 Keynesian theo ry of, 53, 93, 94–95as percentage of GDP, 119recovery and, 211–16research on, 231–38in 2008 financial crisis, 104, 117, 188unemployment and, 209, 212see also stimulus, fiscalmm, Phil, 85–86, 113mm-Leach-Bliley Act (1999), 85at Britain, see United Kingdom

at Depression, x, 9, 13, 21, 60, 82, 91, 107, 148–49, 201, 204credit crunch and, 110debt levels in, 46



Friedman on causes of, 105–6government spending and, 35, 38–39, 231lessons learned in, xi, 20, 22, 50, 51–52, 92, 108, 18 8, 208political impact of, 19unemployment in, 38Wo rld War II and, 148at Recession, see financial crisis of 200 8–0 9at Slump o f 1 930 , T he” (Keynes) , 21

ece:debt crisis in, x, 4, 18, 46, 138, 140–41, 175, 175, 177, 178, 186, 191, 192, 200debt to GDP ratio in, 178, 178 EEC joined by, 168unemployment in, 4enspan, Alan, 54–55, 69, 99–1 00enwich, Conn., 71–72e nw ich’s O ut rageo us Fort une ” (Munk), 71

ss, Bill, 13 4, 1 90s domestic product (GDP), x, 17, 136 , 219government spending as percentage of, 119household debt as percentage of, 48–50, 51 , 14 9impact of government spending on, 143, 144, 212, 234–35, 235 ratio of government debt to, 141–42 , 145real, see real gross domestic producttax rates and, 232–33rcut s,” 114–15, Robert, 234piness research, 5 –6, 10–11th care, in Europe, 1 8th care reform, 124, 22 6th insurance, unemployment and, 10

ge fund managers, income of, 72 , 76, 78, 7 9

ge Fund Mirage, T he (Lack), 79m, Bradley, 7 8ks, John, 22er, Adolf, impact of Great Depression on rise of, 19

me Affordable Refinance Program (HARP), 220e, loss of, 4sehold debt, 149consumer spending and, 45, 47, 126, 146, 149dec line in, 210income inequality and, 84lack of equity and, 127, 220Obama administration and, 128overhang in, 93, 163–64, 219–21as percentage of GDP, 48–50, 51 , 14 9see also mortgagesse of Representat ives, U.S.:

Republican control of, 226, 228see also Congress, U.S.; Senate, U.S.ing sector:

construction in, 24, 32, 47, 112, 113European bubbles in, 169, 172, 174, 176home loss in, 4, 10, 45net worth of, 117postwar boom in, 50prices in, 111–12 , 117recovery and, 219–21U.S. bubble in, 14, 24, 32, 33, 65, 99, 111–12, 127, 172, 219see also mortgagesbard, Glenn, 227

man Events, 94gary, 19

and, 181maculate inflation,” 154, 165me:family, since World War II, 73– 75, 74 spending and, 28, 30, 34me inequality, 70, 93, 208, 2 09CBO estimate of, 76–77consume r spending and, 83correlation of tax rates with , 82and depression of 2008–, 85, 89–90deregulation and, 72–75, 74 , 81, 82, 89education and, 75–76, 89household debt and, 84lack of skills blamed for, 75and polarization of Congress, 89rise in, 71–9 0, 74

sense of we ll-being and, 5social norms and, 81– 82, 83top 0.01 percent and, 75, 76



top 0.1 percent and, 75, 76, 77, 96top 1 percent and, 74–75, 74 , 76–77, 96200 8 financial crisis and, 82, 83me security, 12 0–21, 120

epression of 2008 –, 210tion, 53, 147, 149conspiracy theo ries about, 160–61core, 157–58, 161costs of, 162CPI and, 156–57in depression of 2008–, 151–52, 156–57, 159–61, 189, 227desirability of moderate ly high rate of, 161 –65Europe and, 180, 185, 186fear of, 149, 150–65, 180, 203Federal Reserve and, 161, 217, 219, 227hyper-, 150, 162inertia in, 158 –59measurement of, 156–59mortgages and, 163–64recovery and, 219as self-perpetuating, 158–59structure investment, 148deficit reduct ion and, 143depression of 2008– and, 16–17recovery and, 215tute for New Economic Thinking, 41rest rates, 199, 201Austerians and, 189, 196, 202–5, 207in bond markets, 132–41, 133 in European crisis, 174, 176, 182–84, 190, 202–3and fear of default, 139

Federal Reserve and, 33–34, 93, 105, 134, 135–36, 143, 151, 189–90, 193, 215, 216–17inflation and, 151long-te rm vs. short-term, 137–38 , 216–17zero lower bound in, 33–34, 51, 117, 135–36, 147, 151, 152, 163, 231, 236rnational Monetary Fund, 17, 103, 145, 16 1–62, 18 6, 190, 19 8, 237stors, rationality of, 97, 101, 103–4nd:debt to GDP ratio in, 178 EEC joined by, 167nd, debt crisis in, x, 4, 18, 140–41, 175, 175, 176, 178, 186, 200housing bubble and, 172interest rates in, 176internal devaluation and, 181unemployment in, 4, 18, 172, 181, debt crisis in, 4, 45, 13 8, 14 0–41, 175, 175, 17 8unemployment in, 4, 18

, debt to GDP ratio in, 178, 178 a Wonderful Life (film), 59

n, 183, 201austerity policies in, 198financial troubles of, 31, 91, 152, 194, 216, 218government debt as percentage of GDP in, 139–40 , 140, 19 2stimulus effo rt in, 198en, Michael, 98cre ation policies, 1 88 , 224conse rvative animus to ward, 96and fear of deficits, 131, 143, 149, 206–7, 238fiscal stimulus as, 238New Deal, 39recovery and, 228–29 , 238see also Ame rican Recovery and Reinvestment Act ; unemployment

, Steve, 78nal of Money, Credit and Banking, 26nal of the American Statistical Association, 35b onds, 115 , 115

n, Lisa, 12cki, Michal, 94–96, 206en, Peter, 172nes, John Maynard, 93, 205, 208, 21 0depre ssion as defined by, xon “long run,” 15magneto trouble analogy of, 22, 23, 35–36on markets, 97, 98on recovery process, 21renewe d appreciation of, 42on Ricardian eco nomics, 205– 6

on spend ing vs. austerity, xinesian economics, 101, 134 , 135, 22 7–28New, 103, 104



opposition to, see ant i-Keyne siansrole of government spending in, 53, 93, 94–95ean War, 234, 235, 235 nn, Robert, 38

r mobility, 171–72, 173k, Simon, 79ez-faire, 94, 101Vegas, Nev., 112ia, 181man Brothers collapse, 3, 4, 6 9, 100, 111, 1 14, 115 , 115, 155, 157, 188, 191man effect, 115 ers of last resort, 59ing, loans, 30-lease p rogram, 39rage, 43, 44, 4 7, 48in financial crisis of 2008– 09, 44–4 6ral Democrats, U.K., 200als, 89dationists, 204– 5dity, 33euro and, 182–84 , 185retu rns vs., 57dity t raps, 135–36, 137, 13 8, 143, 144in depression of 2008–, 32–34, 38, 51, 136, 155, 163money supply and, 152, 155unemployment and, 33, 51, 152a, Ryan, 125g Term Capital Management (LTCM) failure, 69as, Robert, 91–92, 102, 107as project, 102 , 103

roeconomics, 91–92, 227 , 231“dark age” of, 92“freshwater,” 101–3, 110–11“real business cycle” theo ry in, 103“saltwater,” 101, 103–4neto t rouble, Keynes’s analogy of, 22, 23, 35– 36kiw, N. Gregory, 227ufacturing capacity, 16ginal product, 78kets:“efficient” hypothesis of, 97–99, 100, 101, 103–4inflation and, 202investor rationality and, 97, 101, 103–4Keynes on, 97, 98198 7 crash in, 98panic in, 4speculative exce ss in, 97, 98in 200 8 financ ial crisis, 117

Cain, John, 113Connell, Mitch, 109Culley, Paul, 48Donald’s, 6, 7

icaid, 120, 120, 12 1icare, 18, 1 72

tzer, Allan, 151–52cken, H. L., 87

mi, Fla., 112n, Atif, 47sky, Hyman:financial instability hypot hesis of, 43–4 4, 47renewe d appreciation of, 41, 42–43sky moments, 48, 111, 146bank runs as, 58, Billion Prices Project of, 161etarism, 101, 13 5etary base, 31, 3 2, 188

netary Control Act (1980), 61etary policy, 39, 10 5, 207deficit spending and, 135expansionary, xi, 151 , 185 , 188short-term interest rates in, 216–17net ary Theory and th e Great Capito l Hill Baby Sit ting Co-op Crisis” (Sw ee ney and Sw ee ney), 26–27ey market funds, 62ey supply:in babysitt ing co-op example, 27, 29, 32–33Federal Reserve and, 31, 32, 33, 105, 151, 153, 155, 157, 183liquidity traps and, 152, 155

ntgomery Ward, 148–49ody’s, 113, 194al hazard, 60, 68



gan, J. P., 59gan St anley, 131 , 134tgage-backed securities, 62, 112, 114tgage relief, 53, 126–28, 219–21Obama administration and, 220 –21tgages, 30, 93defaults on, 47–48, 172foreclosure and, 45, 127–28real value of, 163 –64subprime, 65, 99“underwater,” 127, 220see also household debtligan, Casey, 6dell, Robert, 172k, Nina, 71, 72

amura, Emi, 23 6onal Bureau of Economic Research, 4onal Institute for Economic and Social Research, 201onal Review, 25ral experiments, 21 2, 233 , 235raska, high employment in, 37international investment position, 44ada, housing bubble in, 111, 172

w De al, 38, 50ob-creation programs of, 39

w Keynesians, 103, 104 Yorker, Th e , 125York Times, 80–81, 151

0s, economic conditions in, xi

ma, Barack, 150business confiden ce and, 95deficit and, 130, 131, 134, 143inflation unde r, 152spending cuts and, 28, 131, 143stimulus plan of, see Ame rican Recovery and Reinvestment Actand 2012 election, 226worker redundancy and, 36ma administration, 116, 117, 210and deficit reduction vs. job creation, 225, 228household debt relief and, 128and inadequacy of stimulus, 123–26, 130–31, 213mortgage relief and, 220–21unemployment and, 110, 117upy Wall Street, 64, 74–75, 76nd gas industry, 37deregulation of, 61prices in, 159mum currency area, 171 –72cle Partners, 72anization for Econo mic Cooperation and Development (OECD), 189 , 190 , 191, 202ourke, Kevin, 23 6orne, George, 178, 200, 201

cs, 59euro as vulnerable to, 182–84, 186of 1907, 59in 200 8 financial crisis, 4, 63nte au, Rob, 189, Ron, 150– 51oll tax credit, 229l Harbor, Japanese attack on, 38y, Rick, 151, 218tty, Thomas, 77–78, 81–82

co, 131, 1 34o, Edward, 65–66ser, Charles, 36–3 7cy makers:Austerian influence on, 188–20 7influenc e of financial elite on, 23– 24, 96informed public and, xiilessons of Great Depression ignored by, xi, 50, 92, 189in 2008 financial crisis, 115–16ics, politicians:anti-Keynesianism in, 93– 96influence of money in, 63, 77–78, 85–90lessons of Great Depression ignored by, xi, 50revolving door and, 86, 87–88as roadblocks to recovery, 23–24, 123–2 4, 129, 130–31, 211, 218, 219, 222, 223le, Keith, 88–89r, aid to, 89, 120, 144, 216ugal:



debt crisis in, 18, 175, 175, 178, 186debt to GDP ratio in, 178, 178 EEC joined by, 168ate debt :Europe an crisis and, 182overhang of, 39, 52, 53, 93, 163–64ate-equity firms, breach of trust and, 80–81ate sector:saving vs. investment in, 137spending by, 25–26, 143–44, 235–36perity, unemployment and, 9

dit’s fallacy, 225

ntitative easing, 193, 218– 19

n, Raghuram, 190, 203–4gan, Ronald:defense spending under, 236deficit under, 142deregulation under, 50, 60–61, 62, 67–68inflation under, 152, 161, 162business cycle, 1 03estate loans, bad, 68, 80gross domestic product (real GDP), 12–14CBO estimates of, 13–14in 200 8 financ ial crisis, 13ssions, 13, 18, 172, 2 01historical patte rns of, 122, 128–29long-te rm effect s of, 17Lucas project and, 102, 103of 1937, 38of 1979–82, 13, 31of 1990–91, 31of 2001, 31see also depressionsnciliation, 124, 226–27very, from depression of 2008 –, ix–x, 208–22aggressive action needed in, 216–19, 221–22deficit and, 212government spending and, 211–16housing sector in, 219–21inadequacy of stimulus in, 108, 109–10, 116–19, 122–26 , 130–31, 165, 212, 213, 229–30inflation and, 219infrastructure investment and, 215ob creation and, 228–29 , 238

lessons of Great Depression and, xi, 20, 22long-term focus as mistaken in, 15

as moral imperative, 229 –30Obama administration and, 123 –26 , 210political roadblocks to, 23–24, 123–24, 129, 130– 31, 211, 218, 219, 222, 223research-based policies for, xi, 212, 217self-inte rest and distorte d ideo logy as roadblocks to , 20slow pace of, 4supposed lack of project s in, 212, 213–16will as key to, 20, 217, 218, 219–20

nhart, Carmen, 129, 62, 114

ub blica, La, 188, 196ublicans, Republican Party, 107, 151, 228austerity programs espoused by, 190, 218, 227Big Lie of 200 8 financial crisis espouse d by, 64–65ext remism in, 19financial elite and, 88– 89

inflation and, 160ob-creation policies opposed by, 227, 228–29scorched-earth policy of, 123–24, 131stimulus and, 109arch, econo mic, 5–6, 10–11correlation vs. causation in, 83, 198, 232–33, 23 7misleading, 196 –99natural experiments in, 212, 233, 235policies based on, xi, 212, 217, 231–38hinking Macroecon omic P olicy” (Blanchard e t al.), 1 61– 63rn of Depression Economics, T he (Krugman), 31, 6 9, 91

rns on investment, liquidity vs., 57nolds, Alan, 78rdian e quivalenc e, 107rdo, David, 205 –6

dl, Brian, 25–26, 29, 106

taking, 43, 54, 55deregulation and, 61–62, 63–64, 80limiting of, 60



off, Kenneth, 129mer, Christina, 104, 107, 1 08, 228 , 237–3 8mney, Mitt, 80, 226, 227oseve ltian reso lve,” 217, 218, 219–2 0enthal, How ard, 88– 89in, Robert, 86

z, Emmanuel, 77–78, 81 –82uelson, Paul, 43, 93ent, Greg, 225

ngs, personal:depletion of, 4, 10, 83–84and spending drop, 41, 136ngs, private sector, investment vs., 137ngs and loan crisis (1980s), 60, 67–68, 72–73, 80s Law, 25, 106

äuble, W olfgang, 23eiber, Noam, 228ff, Peter, 150

umpeter, Joseph, 204–5esteem, unemployment and, 10– 11ate, U.S.:Banking, Housing, and Urban Affairs Committe e of, 85filibusters in, 123reconc iliation in, 124 , 226 –27and 2012 election, 226see also Congress, U.S.; House of Representatives, U.S.

dow banking, 63, 111 , 114–15arson Lehman, 85mons Bedding, 80–81pson, Alan, 193

Minutes, 3, 36, lack of, 35 , 36 –38

mps, see recessionsh, Al, 87

th, Karl, 154th Barney, 85al safety ne ts, 10, 1 8, 119– 21, 120, 21 6al Security, 18, 157, 17 2, 224n:debt to GDP ratio in, 178, 178 EEC joined by, 168inflation in, 169 , 180n, debt crisis in, 4, 45 , 46, 14 0–41, 1 73, 17 5, 175, 176, 178, 179–81housing bubble and, 30, 169, 180interest rates in, 176, 182–83internal devaluation and, 180 –81

and lack of national currency, 181–8 2unemployment in, x, 4, 18, 181–82wages in, 169, 180–81ding:in babysitt ing co-op example, 27, 28, 32–33, 34demand and, 25–26government vs. private, 25–26, 143–44, 235–36income and, 28, 30, 34low level of, 24–25, 51Say’s Law (Treasury view ) of, 25, 106see also business investment; consumer spending; government spendingecoach (film), 55–5 6, 68flation, 154dard & Poor’s, 113, 1 34U.S. debt downgraded by, 140, 193–94nsson, Jon, 2 36

litz, Joseph, 118, 11 9, 125–2 6, 237ulus, fiscal, 106–7, 108, 117, 165and depression of 2008–, see Ame rican Recovery and Reinvestment Actob creation and, 238

see also government spendingrime loans, 65, 99, Amir, 47mers, Larry, 80, 99, 125ly and demand:

money supply and, 154we althiest individuals as exemp t from rules of, 78ly shocks, 154lusses, 19 8ainable output , 13–1 4den, 184199 0s eco nomic slump in, 122

eney, Joan and Richard, 26–27

es of Fiscal Adjust men ts” (A lesina), 196–97



fs, 167his, Lorie, 9 3s, tax rates:correlation of income inequality with, 82cuts in, 117, 121, 124, 143, 195–96, 217GDP and, 232–33hikes in, 189 , 200progressive, 89right ward political shift and, 83hers:and depression of 2008–, 16, 214 income of, 72, 76, 148spending cuts and, 143, 213–14nology, workers as made redundant by, 36

year Treasury constant Maturity rate (DGS10), 133, 14 2eoret ical Framew ork fo r Mone tary Analysis, A ” (Friedman), 101Time Is Different (Reinhart and Rogoff), 129

ma, Mark, 41–4 2mas H. Lee Partners, 81t, paradox of, 51– 52t (savings and loan) industry, 60, 67 –68, 72–73, 80

e, 4, 101ay Show, 36c assets, 1 13sportation investment , 16–17, 215elers Group, 63, 85sure of the Sierra Madre, The (Traven), 7sury, British, 25sury, U.S., 153sury bills, 153het, Jean-Claude, 186 , 188, 1 95, 196

ubled Asset Relief Program (TA RP), 116king industry, deregulation of, 61-Income Trap, The (Warren and Tyagi), 84gi, Amelia, 84

S, 86mployment, 114, 198, 208austerity policies and, xi, 189, 203–4, 207 , 237–38churning and, 9college graduates and, 11–12, 16, 37, 144–45confidence and, 94–96definitions of, 7–8demand and, 33, 47in depression of 2008–, x, 5–12, 24, 110, 117, 119, 210, 212in Europe, 4, 17, 18, 172, 176, 229, 236government spending and, 209, 212

in Great Depression, 38historical patt erns of, 128 –29as involuntary, 6lack of skills and, 35, 36–38liquidity traps and, 33, 51, 152Obama administration and, 110 , 117post-2009 decreases in, 4, 210, 211, 211, 22 9prosperity and, 9sense of we ll-being and, 6stagflation and, 154wages and, 52–53, 164–65among youth, 11, 18, 229see also job-creation p oliciesmployment, long-term, 9–10in Great Depression, 38health insurance and, 10

loss of skills in, 144self-esteem and, 10–11stigma of, 10, 15–16, 144mployment insurance, 10, 120, 121 , 144, 216 , 229in Europe, 176nization, decline in, 82ed Kingdom, 59, 1 83austerity programs in, 190, 199–2 02depression of 2008– in, 199–20 2EEC joined by, 167government debt as percentage of GDP in, 139, 140, 140, 19 2interest rates in, 182–83, 201lend-lease program and, 39turn to right in, 83ed States:as “cente r-right” country, 224

China’s trade with, 221government debt as percentage of GDP in, 139, 140, 19 2net international investment position of, 44



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ISBN 978-0-393-08877-9 (hardcover)nancial crises—United States—History—21st c entury. 2. Recessions—United States—History—21st cent ury. 3. United State s—Economic p olicy—21st c entury. 4. Unemployment—

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