That is not dead which can eternal lie

Like Great Cthulhu, dreaming under the oceans in the dead city of R'lyeh, the Chicago School macroeconomists were just waiting for the stars to align before they rose from the depths to destroy humanity. Long have their insane cults waited and prayed for this moment.

Maybe it's the economic crisis, or maybe it's Paul Krugman's dual success as politial pundit and Nobel-winning academic, but the "Fathers of Modern Macroeconomics" (O dubious title) are popping out of the woodwork with policy recommendations supported by neither scholarly papers nor the weight of history. Prominent are the ideas that the Great Depression was caused by liberal economic blundering and that government spending can't change aggregate demand. Neither of these theories has been put forth by any respectable source in the popular press or in scholarly papers in the last five decades.

And yet, the people suddenly championing these ideas are as great and powerful as Cthulhu himself. If there is a "Father of Modern Macroeconomics*", it has got to be either Robert Lucas or Edward Prescott. Here's Lucas:

[W]ould a fiscal stimulus somehow get us out of [the economic crisis], or add another weapon that would help in this problem?...I just don't see this at all...If we do build [a] bridge by taking tax money away from somebody else, and using that to pay the bridge builder... then it's just a wash...[y]ou apply a [stimulus] multiplier to the bridge builders, then you've got to apply the same multiplier with a minus sign to the people you taxed to build the bridge [thus negating the entire effect on aggregate demand]... taxing them later [instead of right now] isn't going to help, we know that...

And here's the ever-snarly Prescott:

The period of the '20s was one of healthy growth, until Hoover's anti-market, anti-globalization, anti-immigration, pro-cartelization policies were instituted, brought this expansion to an end, and created a great depression. Roosevelt's policies prolonged the Depression for over six additional years...

[T]he economy only recovered and it started recovering in 1939...That was the year when Roosevelt said the New Deal is dead. That was the year he called up the businessmen who had fled to England because [of Roosevelt's policies]. [The reason for the recovery] was not [government] expenditures.

It's not surprising that Lucas and Precott would lean toward this kind of view, given their conservative politics; their "Real Business Cycle" model of the economy doesn't even allow for Great Depressions or New Deals, it just assumes them away. The only thing that is surprising is the vehemence and suddenness with which they would make claims like the ones they're making now. Where were you ten, fifteen years ago, Messrs. Lucas and Prescott? Why weren't you out there arguing that the Depression was the fault of government meddling? Why weren't you out there arguing that the New Deal made the problem worse? Were you too busy with more important things? Were you sleeping in R'lyeh, waiting for the stars to align?

To paraphrase the Necronomicon: "That is not dead which can eternal lie, and with strange aeons even bullshit revisionist theories about the Great Depression somehow fail to die."

(*The "Mother of Modern Macroeconomics" would without a doubt be Nancy Stokey, wife of Robert Lucas and probable mistress of Edward Prescott, and co-author of "Recursive Methods in Economic Dynamics"...)