DeLong Smackdown Watch: Things I Used to Believe Edition

Duncan Black:

Eschaton: I certainly didn't believe in #s 1 [that the highly leveraged banks had control over their risks], 3 [that fiscal policy no longer had a legitimate countercyclical role to play], or 5 [that economists had an effective consensus on macroeconomic policy: the government should] intervene strategically in asset markets to stabilize the growth path of nominal GDP], though I probably thought them to be more true than I do now. I didn't believe 2 [that the Federal Reserve had the power and the will to stabilize the growth path of nominal GDP] completely, but close enough. I did believe in 4 [that no advanced country government with as frayed a safety net as America would tolerate 10% unemployment]. Oh well.