【正文】 ? TEXT A Whiff of the 1930s IN THE SPRING of 1931 Austria’s largest bank, the Credit Anstalt, was on the verge of collapse. The Austrian government could not simply stand by and let it fail, but when it came to the bank’s rescue with large sums of freshly printed domestic currency, the resulting capital flight rapidly depleted Austria’s gold and foreign exchange reserves. The obvious answer would have been to abandon the gold standard and let the currency float. But this solution was unacceptable—not just because a drop in the schilling’s value would magnify the burden of foreigncurrencydenominated debt, but because a currency devaluation would deal a devastating blow to the confidence of a country whose memories of postWorld War I hyperinflation were still fresh. Austria pleaded for help from its neighbors and the thennew Bank for International Settlements, but the offered assistance was too little, too late. In the end, the desperate government resorted to capital controls. Unit Six The Return of Depression Economics — Paul Krugman It is a familiar story to economic historians. It is also astonishingly modernsounding: if the plot does not exactly fit any one of today’s crisisridden economies around the world, it does sound very much like a pastiche of recent events in Indonesia, Malaysia, and Brazil. The main difference now is that financial rescue attempts from the international munity have bee routine. When a country gets in trouble today a SWAT team from the International Moary Fund and the . Treasury quickly arrives on the scene. Suppose, however, that the IMF could use a time machine to send its best money doctors back to that Vienna spring of 1931, but without the ability to offer a huge, noquestionsasked credit line on the spot. What would today’s experts say? What could they tell the Austrians that they did not already know? Unit Six The Return of Depression Economics — Paul Krugman Most modern economists—to the extent that they think about it at all—regard the Great Depression as a gratuitous, unnecessary tragedy. They believe that what might have been an ordinary, fettable recession became a nightmarish slump thanks to the stupidity (or at least the ignorance) of policymakers. If only the Federal Reserve had not been preoccupied with defending the gold standard instead of the real economy。 if only Herbert Hoover had followed an expansionary fiscal policy instead of trying to balance the budget, if only policy in general had not been governed by a “l(fā)iquidationist” philosophy that saw shortrun economic pain as a necessary purgative for previous excesses—then the catastrophe could easily have been avoided. And since we know better now, it cannot happen again. Unit Six The Return of Depression Economics — Paul Krugman Or can it? As little as two years ago I and most of my colleagues were quite confident that although the world would continue to suffer economic difficulties, those problems would not bear much resemblance to the crisis of the 1930s—because economists and policymakers had learned the lessons of that decade and would never again perversely tighten moary and fiscal policy in the face of recession. True, Mexico suffered a severe slump in 1995 and Japan’s economy had stagnated since 1991, but these appeared to be special cases, easily rationalized as the result of exceptionally misguided policy. Perhaps we should have known better and realized, for example, that the dilemma Austria faced in 1931 could just as easily arise in the modern world, and that now as then there are no good answers. In any case, there is no mistaking the lesson of the terrifying economic and financial events of the last two years: Unit Six The Return of Depression Economics — Paul Krugman the economic crisis in Asia, its spread to Latin America, the deepening slump in Japan, and the brief but ominous panic that swept bond markets last autumn. The truth is that the world economy poses more dangers than we had imagined. Problems we thought we knew how to cure have once again bee intractable, like temporarily suppressed bacteria that eventually evolve a resistance to antibiotics. More specifically, the problem of aggregate demand—of getting people to spend enough to employ the economy’s productive capacity—is not, as we might have thought, always a