A fascinating confession

It appears the post-2008 economy has humbled, be it ever so slightly, the Nobel-prize winning economist, Paul Krugman:

[L]et me tell you about a dirty little secret of economics — namely, that we don’t know very much about how to raise the long-run rate of economic growth. Economists do know how to promote recovery from temporary slumps, even if politicians usually refuse to take their advice. But once the economy is near full employment, further growth depends on raising output per worker. And while there are things that might help make that happen, the truth is that nobody knows how to conjure up rapid productivity gains.

An interesting admission from a man who never saw a government spending program he didn’t like. The truth is that both the Neo-Keynesians and the Keynesian heretics that call themselves monetarists are up a conceptual creek without a paddle, because both their intellectual models reject the possibility that the quantity of debt can have anything to do with the economy’s ability to grow.

I realize that sounds ridiculously stupid, but it is nevertheless the case. And, as you may have noticed, events are proving otherwise.