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Monday, August 24, 2009

Professor Paul Krugman at war with Niall Ferguson over inflation

Professor Paul Krugman at war with Niall Ferguson over inflation - Times Online: "The collapse of the American banking system allowed Krugman to say that advocates of laissez-faire capitalism had got it wrong. “We’re all socialists now,” he said, calling for the government to “seize the commanding heights of the economy”.

Niall Ferguson has taken a similarly rugged approach to academia and public life, never afraid of a contrary approach. This runs through many of his general works — he argued that the British Empire was not a bad thing and that a de facto American-led empire could do even more good works.

The same approach runs through his economic histories. In his best known book, The Ascent of Money, he examined how good banking and financial systems eclipsed poor ones.

Unlike Krugman, he has been sceptical about the effectiveness of government programmes to fix the economic crisis. “My worry is that we end up with an over-reaction,” he said. “All this zeal for regulation actually grows out of a very faulty analysis. If deregulation were such a big problem, why was it that the most regulated entities, banks, caused the biggest trouble?”"

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