If these ideas sound familiar today, it’s because, like the ideas of Hume and Smith, the same arguments are being recycled again, eighty years later. The idea that the current crisis was generated by the malinvestment of the past, particularly in real estate, is hardly an unreasonable point of view. That Fannie and Freddie caused a global crisis, the extension of that viewpoint, is not. The notion that taxes should be raised to balance budgets in the middle of a recession is the policy orthodoxy of the IMF-EC-ECB troika in the Eurocrisis and US budget reformers such as the Simpson-Bowles Commission. The need for “the return of business confidence” to start the recovery forms the centerpiece of contemporary British austerity policy, despite its yielding zero results to date. But then, as now, the Americans were far from alone in expounding such ideas. Indeed, back in the 1920s such ideas had a pronounced British accent.

Mark Blyth, Austerity, loc. 327