04/27/2012 08:06 am ET Updated Jun 27, 2012

Paul Krugman: We Live In A 'World Of Zombie Economic Policies'

This was the month the confidence fairy died.

For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets.

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