MILTON FRIEDMAN IN GOOD TIMES, KEYNES IN BAD.

Kevin Drum's point about the moderating impact of monetary policy is an important one: To steal George Cooper's insight, our government acts like Milton Friedman when the economy is roaring and John Maynard Keynes when it slacken. Rather than using monetary policy to tighten credit in good times and and loosen it in bad times, we loosen it in bubbles, making them all the bubblier, then loosen it more in recessions. But you can only loosen it so much. That's in part why the Federal Reserve has had to resort to non-traditional methods of "quantitative easing" to continue having an effect on this crisis. To put it another way, you hear a lot about "countercyclical policy" amidst deep recessions. You don't hear much about it amidst periods of joyously fast growth. Instead, our thumb is always on the same side of the scale: We have counter-recessionary policy and pro-expansionary policy. The problem, as Kevin puts it, is both human and political. "How do you ensure that [countercyclical policy] happens not just during downturns, when everyone is eager for it, but also during upturns?" He asks. "Part of the problem is technical — when should you intervene to slow things down? what's the best way to do it? — but the much bigger problem is purely human. After all, no one wants to spoil a party when everyone is having a good time, and there are always a dozen plausible reasons why this time it's different and the economy is truly on a new and sustainable flight path. And so things inevitably get out of control, sometimes disastrously so."The answer to this, in part, was supposed to be that the Federal Reserve chairman is insulated from congressional meddling and popular opprobrium. He can do what must be done. But that didn't work out in the latter years of Greenspan's tenure and he was, in part, considered a hero for permitting such an awesome economy. he doesn't look so good now, of course, and that will be a good warning to his immediate successors, but not necessarily to their successors.