And thank you Bev and George for this opportunity. It’s been great fun.

I think Samuelson also said that while Friedman could do fine economics, he talked hokum to the yokels.

Actually, I think it more or less was always so, to at least some extent. Polls from the 1930s show a majority of Americans wanting the government to cut spending and balance its budget.

What political leaders have to realize is that whatever people say in response to issue polls, they vote on results. Do the right thing for the economy, and the votes will follow.

Actually, yes. He was right about expectations and accelerating inflation at low unemployment; he was right about temporary versus permanent income changes having different effects on consumption. Unfortunately, his biggest claim — that the Fed could easily have prevented the Great Depression, and that fiscal policy is never needed — was dead wrong.

Lots more evidence now. Recent work from the San Francisco Fed (search my blog) shows a huge concentration of wage changes at precisely zero, showing that nominal wage rigidity is very real, which in turn implies a non-vertical Phillips curve. Again, if you have no idea what this is about, lucky you.

I’m very calm about it.

The best model we have for a Greek exit is Argentina when it went off the dollar peg at the end of 2001. The first year was terrible: widespread panic and bankruptcies from firms that had liabilities in dollars but assets in suddenly devalued pesos. Real GDP fell 11 percent. But then the economy bounced back strongly, in part because the devalued peso was great for exports (and even existing exports were worth much more in peso terms).

Greece would also have a terrible first year, although my guess — it’s no more than that — is that it might not be as terrible as Argentina’s if only because the economy has already suffered so much damage and so many of those who might go bankrupt already have. On the other hand, the mechanics of replacing euros with drachmas will be very ugly. Some “experts” (there are in fact no experts on this, myself included) are saying a 50 percent GDP decline, but I think that’s implausible.

Then, I think, recovery. Yes, Greece has exports: shipping, which won’t be much affected and will be worth more in drachmas, tourism which will surge once the chaos is past and cheap package tours to the isles start attracting hordes of Brits, and yes, cheese, wine, and oil.

So ugly, ugly, ugly at first, but with a real hope of redemption.

OK, a mild sorta-kinda defense of Obama. Early in his administration, we was surrounded by smart-sounding people — and their Wall Street friends, who also sounded smart and had great tailors too — who told him that this was a brief panic in the financial sector, and that once the panic was past the economy would snap back. It’s a shame that he chose those people to listen to, but Obama was very much a conventional, centrist guy. (Some people may recall that I tried to tell progressives that during the primary, but they didn’t want to listen).

But that’s all water under the bridge now. I do talk to WH people, and even allowing for the fact that they’re no doubt saying what they think I want to hear, they do know better now. They’re operating under severe political constraints, but maybe after November they’ll be willing to be more daring on that front.

So it’s not fair to think of the president as being just part of the austerity madness. He and those around him have learned from experience, which is more than you can say about the vast majority of politicians.

Organize! Write letters (Congressmen care more than you think, and most journalists have surprisingly thin skins (but mine is made of rhinoceros hide)). Mount primary challenges to DINOs. But don’t do a Nader.

Actually, I have some hopes that if reelected, Obama will be tougher — having put all its chips on the man from Bain, Wall Street will have lost a lot of its clout.

Actually, us! It’s widely argued that FDR’s decision to abandon the gold standard had a salutary effect on inflation expectations, and helped to fuel a pretty good recovery from 1933 to 1937. Unfortunately, at the point he let the Austerians of his day get to him.

Well, I’m not good at White House Kremlinology. We do know that Tim Geithner wanted early withdrawal of fiscal support; Peter Orszag seems to have been sort of on that side too.

But the main thing is probably the parade of Wall Street types who have had lots of access all along. I don’t especially fault the president for letting them have a say, but I think it took him way too long to realize that they were giving really bad advice.

Oh, and one cannot say too much negative about Pete Peterson, the Committee for a Reprehensible Federal Budget (did I get the name right?), and all that. They gave Paul Ryan an award for fiscal responsibility; need we say more?

Actually, I believe the Kennedy tax cuts are way overrated — it’s become a legend that they were responsible for growth, but there were a lot of other factors (and a lot of government spending after 1965, as Vietnam ramped up!)

But the main point surely is that US budgeting was fairly responsible all through the 1960s. We did not run persistent large deficits even when the economy was strong. Reagan and Bush did — and left us in a weaker position than we should have been when a crisis struck for which deficit spending actually was appropriate.

Yes, look at Asia. China had a big stimulus program; so, less well know, did South Korea.

I know that fiscal stimulus is hard to engineer. But one of my points in End This Depression Now! is that we can actually achieve a lot just by reversing the unforgivable austerity we’ve actually imposed when we should have been doing the opposite.

Well, that’s not right; inflation expectations are strongly affected by beliefs about what the central bank will do once the economy recovers. I agree that the Fed has very little traction now; but someday the unemployment rate will drop below, say, 7 percent, and markets are very interested in the question of whether the Fed will pull the trigger at that point or wait until inflation has risen to 3 or 4 percent.

I guess we’d like to believe that people in public life can learn from evidence. But the truth is that it very rarely happens. I think we can safely say that nothing will ever cause Paul Ryan to admit that his economic doctrine is wrong — take away that doctrine, and he’s just some congressman with nothing special to offer.

And on health care, there’s just too much money and ideology at stake for the evidence to sink in. I originally got the term “zombie ideas” from a paper on the Canadian health care system; the paper pointed out that there are myths about that system (terrible quality of care, huge numbers of people seeking treatment in America, endless waits for important surgery) that just keep shambling forward no matter how many times you think you’ve killed them.

And conversely, no matter how many times you show that private insurance markets are terrible at cost control, you just keep getting blithe assertions that only the private sector can control costs.

I guess the question here is, in that case why do people like me bother? And the answer is that hopefully there is a fringe of people who can actually be persuaded. But we can take it for granted that not a single Republican member of Congress is part of that fringe.

Let me run this backwards. I believe that if we tried to keep unemployment at 3 percent for a prolonged period, we would experience accelerating inflation. So I guess I do believe in a NAIRU. Where is it? Probably around 5, although there are worrying signs that prolonged mass unemployment may actually be pushing it gradually up.

But you do have to be careful: saying that too low an unemployment rate will mean accelerating inflation doesn’t mean that stable inflation means that we’re at full employment. Wonk alert! I think we now have overwhelming evidence that there is a long-run, not just short-run, tradeoff between inflation and unemployment at low inflation rates, that we could have lower unemployment in the long run if we accepted 3 or 4 percent inflation than if we insist on keeping the rate below 2 or worse yet below 1. So in that sense I don’t believe in the NAIRU anymore; even the long-run Phillips curve is sloped near the bottom.

For those who have no idea what I’m talking about, lucky you.

But I know of at least one principles textbook that does it all perfectly — and third edition of Krugman/Wells just came off the printers!

The Confidence Fairy is supposed to work like this: the government slashes spending in a depression, and the public says “Wow! They really mean business! My taxes will be lower in the future, so I’ll spend! The government will be solvent, so let’s lend money at low interest rates!” And all this more than offsets the direct effect of mass layoffs of public employees.

Sadly, no government to date has managed to sprinkle the right kind of pixie dust.

Privatization no, I think — that’s poison and I think everyone knows it. Benefit cuts worry me — we keep trying to point out in particular that life expectancy has NOT gone up much for the bottom half of the income distribution, who are precisely the people who depend on Social Security, but it’s hard to get that point through.

The famous luncheon was kind of a disaster, because I’m afraid that the scruffy bearded professors didn’t come across as being the kind of people who really knew how the world works.

Of course, Joe and I did, and the smart money (and I mean money) didn’t — and the WH knows it now. Enough said.

No. But that’s not the problem. The problem is that they make no real effort to get the direction of causation right; if you look at it, it becomes clear that in their key cases high debt was caused by slow growth, not the other way around.