A recession happens when, for whatever reason, a large part of the private sector tries to increase its cash reserves at the same time…if the problem is that collectively people want to hold more money than there is in circulation, why not simply increase the supply of money?

The Great Depression happened largely because policy-makers imagined that austerity was the way to fight a recession; the not-so-great depression that has enveloped much of Asia has been worsened by the same instinct. Keynes had it right: Often, if not always, “it is ideas, not vested interests, that are dangerous for good or evil.”

—Krugman, from Slate in 1998, responding to talk about Hayek, Schumpeter and the Austrian school’s “overinvestment” or “hangover” theory of recessions.