Yet, as I have read Krugman's columns over the last year, his criticism of Obama, Geithner, and Bernanke has not been over their policies of printing vast sums of money or driving our government into unpayable debt. No, he is upset because they have not tried to turn our economy into something akin to Venezuela or Bolivia.
I mean, what's there for a Keynesian not to like in a situation in which the state effectively shuts out entrepreneurs and raises the barriers for private firms that are not looking for handouts? When the original "TARP" was debated in September 2008, many of us objected not on ideological grounds (although certainly libertarians aren't going to support this kind of thing), but also on longer-term economic issues.
In a recent interview with the New Yorker, financial economist Eugene Fama forcefully made the point to let the bad financial institutions fail. He was not speaking as an ideologue; he was speaking as someone who understands finance and human nature. Asked about the claims by Bernanke and Henry Paulson that not bailing out the banks would have brought the entire financial system crashing down, Fama's reply is instructive:
Maybe it would have—for a week or two. But it pretty much stopped for a week or two anyway. The credit markets stopped for more than a week or two. But I think that was really a function of increased uncertainty about the future.