Establishment progressive Matt Yglesias has been pushing the idea that printing up money and giving it to everyone is what the economy needs right now:
My view is that the best demand of all [would be] “free money for the rest of us.” There are a lot of different specific ways this can be implemented, but the basic shape of things is that the Powers That Be are great believers in the importance of the credit channel to economic recovery and thus have been willing to provide all manner of free money to players in the banking system. Debt cancellation is a form of free money for the indebted. But why give free money only to banks? And why give free money only to the indebted? Why not free money for everyone? “Everyone,” of course, includes the indebted. But it also includes ordinary people who didn’t happen to avail themselves of the credit binge. It’s an idea so good that it sounds almost silly. “Everyone knows” that you can’t just hand out free money to everybody. Except actually you can. Most of the time it wouldn’t be advisable to do this. In the long run money is neutral, and making more money can’t make you more prosperous. But in the short term, free money for everyone impacts prices. Most of the time it would do so in a dislocating bad way, but under today’s circumstances, it would do so in a useful way. I don’t know what the best way to turn this into a slogan is, but the point is that if the different institutions that together constitute “the government” worked together, they could put more dollars into our hands. Creditors won’t like it because doing this will devalue their existing debt claims, but so what.
(Thanks to Bob Murphy.)
It is also Yglesias who says the Austrians are being “crankish” when they observe that pushing interest rates lower than the interaction of individuals on the market freely sets them will lead to an unsustainable boom. That is crankish. Free money for everyone is not.
Here’s my reply to Yglesias (on the “Austrian theory is crankish” point). (Thanks to Bob Roddis.)
And here’s Prof. Roger Garrison offering a graphical depiction of capital-based macroeconomics, of which Austrian business-cycle theory is a part: