In a recent column for the New York Times, the world’s most famous Keynesian, Paul Krugman, attacked Austrian business cycle theory (ABCT). In addition to repeating his decades-old claim that ABCT suffers from an internal contradiction, as well as his charge that the Austrians misdiagnosed the 2008 financial crisis, in his latest piece Krugman argued that the 2020 pandemic really was a “reallocation shock” along Austrian lines. Yet even here, Krugman claims, the Austrian prescription of laissez-faire is dead wrong: as a new paper presented at the Jackson Hole monetary conference allegedly demonstrates, we need easy money from the Fed in order to rearrange labor without causing needless unemployment. It won’t surprise … Continue reading Rebutting Paul Krugman on the “Austrian” Pandemic