The Return of Depression Economics (2008)

From The Council on Foreign Relations' Foreign Affairs web site:

Many economists hate to admit it, but today's economic turmoil shares some uncanny -- or downright scary -- similarities with the prelude to the Great Depression. Many policymakers seem to have unlearned the basic lesson of that calamity: boost demand in the face of an economic slowdown and reduce the volatility of capital flows. Rigid adherence to anti-inflationary policies will only deepen the crises in emerging markets. As the IMF continues to insist on fiscal austerity and many governments instinctively resist capital controls, a wider recession looms. With a distinct whiff of the 1930s in the air, we had better refresh our memories and relearn the basics of Depression economics.

Paul Krugman is Professor of Economics at the Massachusetts Institute of Technology.