James Henderson wrote:
>Given the current economic situation and Gaffney's concerns, how 
>about Friedman's remark --
>
>"We are all Keynesians now" in the December 31, 1965 edition of Time magazine.


Milton Friedman (1968, p. 15) clarifies that the Time magazine quote 
was a misrepresentation of what he said: "in one sense, we are all 
Keynesians now; in another, no one is a Keynesian any longer.  We all 
use the Keynesian language. and apparatus; none of us any longer 
accepts the initial Keynesian conclusions."  That is a long way off 
the impression one gets from the Time magazine quote.

I also wonder why some are so quick to draw comparisons between the 
current US economic situation and conditions of the Great Depression.

Unemployment in all of 2008 averaged less than 7% and economic growth 
averaged about -0.1% (0.9% Q1, 3.3%Q2, -0.5%Q3, -3.8%Q4); the price 
level is still rising, not falling as in the Great Depression, and M1 
and M2 are rising rather than contracting as in the Great Depression.

We have the FDIC protecting people's deposits unlike in the early 
1930s when the fear of losing deposits led to massive withdrawals 
into cash hoarding (8 billion between 1930 and 1933) with 2,000 banks 
failing each of those years.  The rate of unemployment was 7.5% in 
1992 and 9.7% in 1982, but I don't recall people talking about "the 
worst economic depression" since the Great Depression in those 
days.  I think historians of economic thought would help greatly by 
assisting in interpreting economic events in context rather than 
joining in the fear mongering that has been in the air since the 
summer of 2007.

As for Gaffney's concerns, he should consult the relevant literature 
documenting Irving Fisher's numerous activities and recommendations 
of policy to address the falling price level during the early 1930s 
as a means of dealing with the Depression.  Throwing accusations at 
Fisher for not having done much, if anything, to address conditions 
in those days might be excusable if they came from someone who didn't 
claim an interest in or familiarity with the history of economic 
thought, I think.

James Ahiakpor