John Cochrane makes a number of good points in his recent WSJ column. A slice:

Keynesians told us that once interest rates got stuck at or near zero, economies would fall into a deflationary spiral. Deflation would lower demand, causing more deflation, and so on.

It never happened. Zero interest rates and low inflation turn out to be quite a stable state, even in Japan. Yes, Japan is growing more slowly than one might wish, but with 3.5% unemployment and no deflationary spiral, it’s hard to blame slow growth on lack of “demand.”

Our first big stimulus fell flat, leaving Keynesians to argue that the recession would have been worse otherwise. George Washington’s doctors probably argued that if they hadn’t bled him, he would have died faster.

With the 2013 sequester, Keynesians warned that reduced spending and the end of 99-week unemployment benefits would drive the economy back to recession. Instead, unemployment came down faster than expected, and growth returned, albeit modestly. The story is similar in the U.K.

Its a sad point of history when academia indoctrinates students to have such a small magnifying lens of space and simplified assumptions to believe one sided economics and historical narratives.

Amid the recession we are currently in. I see it as opportunity to observe and conduct hypothesis on the various fiscal and monetary policy that have been made so far to unwind this recession.

There’s a tectonic mindshift going on in the science of economics right now, but you wouldn’t know it by tuning in to the likes of Martin Wolf, Paul Krugman, Andrew Sorkin, Lawrence Summers, Tim Geithner, Ben Bernanke, Dominique Strauss-Kahn or most of the professors teaching Economics 101 around the world. These old-school practitioners of neoclassicism are stuck in the past, versed in only one language: the language of pure, unadulterated money.

As oil reserves dwindle and climate tipping points loom, they babble on endlessly about liquidity, stimulus, derivatives, bond markets, sovereign debt, AAA ratings and investment banker bonuses. They never say a word about melting glaciers, eroding coral reefs, rising sea levels, fizzing oceans or the methane that’s bubbling out of the arctic tundra. Like medieval theologians who argued endlessly about how many angels can dance on the head of a pin, today’s economists argue incessantly about how economic growth can be sustained forever on a finite planet. Ten years from now, as the blowback from the externalities of their way of doing business repeatedly hammers us and global warming kicks in with a vengeance, we’ll look back in shock and awe – and wonder what it was about these logic freaks and their money narratives that so mesmerized us.

Five hundred years ago astronomers following Ptolemy’s geocentric model of the universe were tearing their hair out trying to make sense of all their calculations of the sun, moon and stars moving around above us in the night sky. It was only when Copernicus pointed out that we are not the center of the universe – the sun does not revolve around the Earth but rather the other way around – that all their convoluted calculations fell magically into place.

Today something eerily similar is happening in the science of economics: Economists and lay people alike are realizing that our human money economy is a subset of the Earth’s larger bioeconomy rather than the other way around. Over the next few years, as this monumental shift of perspective kicks in, all the economic, ecological and financial craziness of the industrial era will evaporate, and a new sustainable way of running our planetary household will fall magically into place.

Economics students, especially PhD students, in departments around the world have a crucial role to play in ushering in this new paradigm. Go to kickitover.org and join the movement.

Filled with logical fallacies, my favorite, award-winning punching bag tries to make a few points, and ends up making two (the first one he probably without even realizing it).

...even if you persuade yourself that the moral hazard created by financial firefighting outweighs the benefits of avoiding a 1931-style cascading crisis, the fact is that policy makers will intervene.

Ah-ha! So there is a moral hazard!

There is something morally wrong with "too big to fail" and rewarding mistakes with money, rather than lessons!

Sadly, his second point is true, that policy makers will intervene. No matter what.

Nothing makes a member of the political class salivate more than someone else's money.

But Paulie!

That's what you're supposed to be there for! To think creatively and figure things new things out! Instead, you're just prescribing the same medicine over and over again.

So the only feasible strategy is guarantees and a financial safety net plus regulation to limit the abuse of those guarantees.

It’s imperfect; it faces the constant threat of regulatory capture; but it has worked in the past, and it’s the only game in town.

Like a doctor, frightened of the future. And for whom the unsustainable ends justify the immoral means.