ABSTRACT
While macroeconomic outcomes affect our lives, for most of us macroeconomic theory is a spectator sport. Secretary Geithner played a major role in the formulation of the reform of the financial system, the Wall Street Reform and Consumer Protection Act of 2010. As for macroeconomic theories, Bernanke is a New Keynesian. This is basic Keynes supplemented by expectations of inflation, possible shocks to the supply side, and formal models that explain why wages and prices are not very flexible in the short run. The most fundamental lesson of the Great Depression for crisis is that government must be extraordinarily aggressive. In normal times, government must be strong but little seen; in times of crisis, it must be overwhelming and everywhere.
