at right. His interpretation is that the tremendous increase in the base shows that the Fed is trying to expand the money supply like crazy but nothing is happening, i.e. a massive liquidity trap. (Krugman is not alone in this interpretation, see e.g. this post by Bob Higgs). Thus, Krugman concludes, Friedman was wrong both about monetary history and monetary theory. ” source...
“The monetary regime has changed and, as a result, many people are misinterpreting the recent increase in the monetary base. Paul Krugman, for example, posts the picture at right. His interpretation is that the tremendous increase in the base shows that the Fed is trying to expand the money supply like crazy but nothing is happening, i.e. a massive liquidity trap. (Krugman is not alone in this interpretation, see e.g. this post by Bob Higgs). Thus, Krugman concludes, Friedman was wrong both about monetary history and monetary theory. ” source...
at right. His interpretation is that the tremendous increase in the base shows that the Fed is trying to expand the money supply like crazy but nothing is happening, i.e. a massive liquidity trap. (Krugman is not alone in this interpretation, see e.g. this post by Bob Higgs). Thus, Krugman concludes, Friedman was wrong both about monetary history and monetary theory. ” source...
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