U.S. Is Now in a Depression, Professor Says

Posted by ChrisMonty on January 13th 2009

Connect

F My Life: It's Funny, It's True, Except When It Happens to You

: Image by Tony the Misfit via Flickr

One U.S. professor thinks that we're now in a Depression. What do YOU think?

Richard Posner, an influential law professor at the University of Chicago, believes the United States has entered a depression. The conservative lecturer believes Keynesian-style stimulus would be a better solution to the economics crisis than tax cuts.

Posner acknowledged that "depression" is an ambiguous term, but in the Becker-Posner Blog, a daily commentary he writes with Nobel Laureate Gary Becker, he argued that the current environment fits his own definition: "There is no widely agreed definition of the word, but I would define it as a steep reduction in output that causes or threatens to cause deflation and creates widespread public anxiety and a sense of crisis."

Posner said conservative economists, such as Fed Chairman Ben Bernanke, generally do not like deficit-spending programs that sponsor public works and transfer payments. However, monetary policy has proven inadequate to staving off the recession, he said, which has converted "almost the entire economics profession - virtually overnight - from being Milton Friedman monetarists... to being John Maynard Keynes deficit spenders."

So what do you think? Is the U.S. in a Depression?