Back in 2007 one could take some pride in being an economist. There
were a set of truths that were pretty widely accepted, at least among
the more elite macroeconomists...
1. "Monetary policy can be highly effective in reviving a weak economy even if short-term interest rates are already near zero." The quote is from Mishkin's text editions 1-9 (removed from 10). Friedman and Bernanke made similar statements, as did many others.
2. A much more stimulative monetary policy, perhaps involving leaving the gold standard, would have prevented the 50% fall in NGDP during the early 1930s, and thus would have largely prevented the Great Depression...[...]
5. Low interest rates do not imply easy money. (Again, Bernanke, Mishkin, Friedman, and many others made this point. It's what we've been teaching our students from the number one money textbook.
6. Higher minimum wage rates and extended UI benefits increase the natural rate of unemployment.[...]
11. Natural disasters do not cause higher unemployment in big diversified economies, AD shocks do. This explains why Japan's unemployment rate rose after its NGDP fell sharply in 2008-09, but did not rise at all after the tsunami.
12. Big increases in government spending, taxes, and regulation may cause harm to the economy, but don't really play much of a role in the business cycle. They don't cause the unemployment rate to rise in the short run, as FDR and LBJ showed.[...]
17. Price gouging is actually a good thing.
18. The "broken windows fallacy" really is a fallacy.