Freud and the Fed

“I’ve been saying for a long time that we aren’t having a rational argument over economic policy, that the inflationista position is driven by politics and psychology rather than anything the other side would recognize as analysis. But this really proves it beyond a shadow of a doubt; if you really want to understand what’s going on here, the Austrian you need to read isn’t Friedrich Hayek or Ludwig von Mises, it’s Sigmund Freud.”

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So writes the Nobel laureate Paul Krugman in his Web log at the Times. He is reacting to our editorial, “The Female Dollar,” and to the Wall Street Journal’s more substantive debunking of the way gender has eclipsed monetary policy in the debate on the next chairman of the Federal Reserve. And, by George, if it doesn’t appear that Professor Krugman has stumbled onto something.

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