If you want to understand the economic events of the last half century, you should read two new books. One is Robert Samuelson's The Great Inflation and Its Aftermath: The Past and Future of American Affluence, which explains how the abstract economic theories of Keynesian economists produced not the promised eternal economic growth but the longest sustained peacetime inflation in American history, rising to 14 percent in the times of Jimmy Carter. The other is David Smick's The World Is Curved: Hidden Dangers to the Global Economy, which explains how the abstract mathematical models of financial wizards produced not the promised eternal self-sustaining economic growth but rather a nontransparent financial system, which led to the coagulation of credit and our current financial crisis. Both show how abstract theories proved faulty in practice; both recommend similar common-sense responses: intelligently regulated transparent markets.
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By Michael Barone