Economists Discover the World!

Jared Bernstein exclaims : "The macro blogosphere is on fire, as Bernanke, Summers, and Krugman are having a fascinating discussion... we've made important diagnostic progress here by bringing the international dimension... into the discussion."

You mean to tell me that up to now economists have left out the international dimension? If only these New Keynesians had read Keynes, they would have known that Keynes was on to this dilemma in the early 1930s. "National Self-sufficiency," 1933:

"...I have become convinced that the retention of the structure of private enterprise is incompatible with that degree of material well-being to which our technical advancement entitles us, unless the rate of interest falls to a much lower figure than is likely to come about by natural forces operating on the old lines. Indeed the transformation of society, which I preferably envisage, may require a reduction in the rate of interest towards vanishing point within the next thirty years. But under a system by which the rate of interest finds, under the operation of normal financial forces, a uniform level throughout the world, after allowing for risk and the like, this is most unlikely to occur. Thus for a complexity of reasons, which I cannot elaborate in this place, economic internationalism embracing the free movement of capital and of loanable funds as well as of traded goods may condemn this country for a generation to come to a much lower degree of material prosperity than could be attained under a different system."