it s not much of a mystery. it s liberalization. we had from 1935 to 1980 we had a very tightly controlled banking system in just about every country because the great depression was right there in people s memories, the great bank runs. we had strong constraints on international movement of capital so in many ways it was an inefficient system, hard to get a loan, money couldn t fly too high but it was a safe system and then we said, whoa, this is we ve learned to manage these things, let s open it up and actually since 1980 it has been one crisis after another. latin american debt crisis, savings and loan crisis, asian financial crisis and then, of course, the big kahuna which is the crisis we re still dealing with. is there a way of conceiving of a solution to that that is not just going back to what we had during the new deal, or is that the solution? is there some way to combine the insights of the policy revolution that happened in the new deal with the policy revolution tha
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and moral sense that people need to pay a penance. when there s a crisis there s sin and the only way to get out of sin is penance, and you have a great argument of that in the return to depression economics and i want to talk about that and about your role in the public debate right after we come back. [ coughs ] [ angry gibberish ] [ justin ] mulligan sir. mulligan. take a mulligan. i took something for my sinuses, but i still have this cough. [ male announcer ] truth is, a lot of sinus products don t treat cough. they don t? [ male announcer ] nope, but alka seltzer plus severe sinus does it treats your worst sinus symptoms, plus that annoying cough. [ angry gibberish ] [ fake coughs ] sorry that was my fault sir.
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this is something that s interesting is people that are like yourself that are making the case for kind of a macro economics, keynesian 101, demand stimulus, things like that have been relegated to the margins of the very serious people debate in the beltway and it becomes a political question ultimately, right, the kind of policy question is fairly clear, from where you stand and where i stand so why is there then the gap between macro economics 101 and what policy-makers in washington talk about? i think there s two things going on. one of which both of which are odd and disturbing but one is sort of grand and one is sort of petty and in some ways the petty may be more important. so the grand thing is washington has been dominated by 30 years by a right wing establishment whose goal is very much to cut back on roll back the great society and the new deal, roll back social security, medicare and medicaid and from their point of view, all of this crisis is an opportunity.
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