Robert Skidelsky on Keynes' recipe against global depression

Many economists are coming to the conclusion that the coordinated global efforts undertaken in 2009 to save the global economy from another Great Depression were successful, writes British economic historian Robert Skidelsky in an article published in the business paper Jornal de Negócios: "To be sure, the cost to many governments of rescuing their banks and keeping their economies afloat in the face of business collapse damaged or destroyed their creditworthiness. But it is increasingly recognized that public-sector austerity at a time of weak private-sector spending guarantees years of stagnation, if not further collapse. So policy will have to change. Little can be hoped for in Europe; the real question is whether President Barack Obama has it in him to don the mantle of President Franklin Roosevelt. To prevent further crises of equal severity in the future, Keynesians would argue for strengthening the tools of macroeconomic management. ... Hayekians [adherents of Austrian economist Friedrich von Hayek] have nothing sensible to contribute. It is far too late for one of their favourite remedies - abolition of central banks, supposedly the source of excessive credit creation."

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