Macroeconomics I find interesting but don't entirely understand...

Ron Paul writes in the WSJ about the role of the Fed in the financial crisis.

Eventually, the economic boom created by the Fed's actions is found to be unsustainable, and the bust ensues as this malinvested capital manifests itself in a surplus of capital goods, inventory overhangs, etc. Until these misdirected resources are put to a more productive use—the uses the free market actually desires—the economy stagnates.

Pretty standard Hayekian interpretation. It sounds logical, but I haven't seen much actual evidence. (HT: KPC)

On the other hand, Scott Sumner presents lots of evidence for a different story. It is pretty interesting: his data suggests that it was tight money, not inflation, that caused the recession. Good, short talk.



Bottom line: economics is hard.