According to Krugman, why did economists get it so wrong?
According to Krugman, Economists
relied too much on the principles of a market based economy and
forgot that firms will not commit themselves to resurrect the
economy when problem or crisis takes place. It is the reason that
they mistook beauty for truth. Further, economists did not consider
the moral hazard, greed and adverse selection that come with the
deregulation and a free flowing economy with no signs of
depression. Further, economists also did not anticipate the fall of
the big companies and other players in the market expecting support
from the government and Fed. It made economists to get it wrong in
their projections and expectations of the US economy getting stable
and out of the any sign of slowdown.
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