But the economists DIDN'T get everything wrong

Ummm, as PK would say, I thought his article was about what got us into the recession, not how we best get out.

So the opinion-offerings of the past year are quite tangential to his point that we let our banking system shift from a carefully-regulated, risk-averse set of institutions into the incentives to maximize profit with no concern for regulation, nor the certainty spelled out by types like Diamond & Dybvig that borrowing short and lending long ALWAYS produces a banking/currency crisis in the absence of government backstops.

Or maybe, Alan Greenspan is a banker, not an economist? Certainly, he was listening to a lot of people before he made his maddeningly obtuse mumblings. They must have not been economists, either, or maybe he was just in an echo chamber?

"Unless you believe that pretty much anyplace other than Arizona State University is a third-tier school, this is patently untrue, evidence of the extreme isolation of the remaining true believers in rational expectations and real business cycles and other such elegant but profoundly unhelpful macroeconomic theories developed since the 1960s."

The real story is how some economists are still getting it wrong; and how a significant part of the Congress is still clinging to the profoundly unhelpful macroeconomic theories and calling for a repeal of the stimulus package.

Read your book yesterday & Krugman NYT piece today: the "resemblance" is actionable!

Book is great! I'm economist (a quant, but long troubled by academy's literal acceptance of simplistic "rational expectations" models) & found the story accurate & insightful--rare for journalists discussing subtleties of economics....

[...] Krugman article: “How did economists get it so wrong?”  (NYTimes also Clusterstock, Curious Capitalist, Infectious Greed, Crossing Wall [...]

Summers' take really counts as a "great willingness to experiment"?? Hmmm...

[...] at TIME’s Curious Capitalist, says he’s heard this refrain before, too. In fact, he wrote it, or something basically just like it.) But Krugman isn’t just interesting in slinging mud. [...]

I think government should focus on the long term policy issue rather than short term stimulus policy. Now economy is back to normal with increasing economic growth, strong investor from rising stock prices, commodities prices and the strong expectation on rising price from ISM-price paid index. This means we are normal and maybe more than normal because ISM-Price paid index shows the very high inflation. Meaning that all stimulus policy both fiscal and monetary policies will affect only price now from the current expectation. Surely, we will have the high inflation and this will kill economy and create the instability in the economy. We face a lot of bubbles and crashes and governments are prone to growth policy rather than long-term policy from stability and now we have Tech bubbles, Subprime bubbles and we have only rising unemployment with higher cost of living. We cheat the unemployment rate that we change methodology; so we have 9.7% rather than 16% from we used to have 3%. How can we call this is the right policy? I think if all policy makers do not change their views to focus long term problems such as low saving rate, over-consumption, over-debts, rising aging people, healthcare problems, uncontrollable budget debts and deficit. We will have only high unemployment with high cost of living at the end and this is from the wrong policy from short-term growth rather long-term growth with stability.

[...] on whether the pretty good response of policy-oriented economists in the crisis undercuts the thesis — I don’t think so. I mean, yes, my colleagues are [...]

[...] En mi opinión hay cosas que exagera algunas cosas- por ejemplo, no creo que sea cierto que la literatura económica hubiera olvidado la “economía de la catástrofe”, como la literatura sobre crisis monetarias del que él mismo es el autor más importante muestra y que se ha desarrollado especialmente a lo largo de la década de los noventa. Algo similar ocurre con las nuevas finanzas institucionales (Bernanke, Gertler, Stiglitz, etc…). Esto, por supuesto, es un problema de apreciación y de lo que uno decide considerar como “ortodoxo”. Estoy totalmente de acuerdo con el comentario de Justin Fox. [...]

It's 40 years after the Moon landing and Krugman got his PhD in 1977. What has he said about the planned obsolescence of automobiles? How much have Americans lost on the depreciation of crapmobiles every year since 1969?

Our so called economic system depends on economists that can't do algebra. Double-entry accounting is 700 years old. How hard can it be with today's computers? When have our economists suggested that it be mandatory in the schools?

NO! We need to keep the consumers $tupid. That would screw up our game theory.

Economic Wargames

Do yourself a favor.

Watch "Why The Meltdown Should Have Surprised No One" by one of the only truly competent economists in the U.S.... Peter Schiff.

Krugman acknowledges you in his blog (still should have mentioned you in the article though):
The Conscience of a LIberal

[...] on whether the pretty good response of policy-oriented economists in the crisis undercuts the thesis — I don't think so. I mean, yes, my colleagues are smart [...]

There are several distinct professions that share common this common moniker.

1. The economists themselves (e.g. D.Kahneman).
2. Strange folk that tries to apply economic methods to study capital markets.
3. Capital market voodooists.
4. Morons like Krugman who do not understand even the basics (if we would not work we will all die from hunger). BTW, it is very indicative that he sees himself best fit to sit in judgement.

[...] Reaction has been coming in from across the blogosphere, check out responses from Brad DeLong, Justin Fox, Scott Sumner, James Kwak, Arnold Kling, Andrew Samwick, Noam Scheiber, David Warsh, Don Marron, [...]

Kudos on the Myth of the Rational Market! I wrote to John Mauldin on friday after he recommended the PK article and commented that there was surely more than inspiration from your book in the New York Times piece. A fellow economist sent me a letter from Brad DeLong from a few years back where PK credited Larry Summers for an idea which stemmed from a co-written article by Summers and DeLong. This behaviour is not healthy and more than nettlesome coming from a respected academic. Anyway, perhaps a little bit of controversy with PK may lead to more new readers of your book!

[...] I've gotten a few messages from friends and strangers this week telling me that they think I should have been harder on Paul Krugman for not mentioning my book in his big NYT Mag essay on the "How Did Economists Get It So Wrong?" [...]

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