Throughout history there have been many schools of economic thought. Like Protestant churches, it seems like every time any economist had the slightest quibble with the existing orthodoxy they broke off and formed their own branch of economic thought. This time, we have discovered the real truth. Until someone within that "new" school disagreed and they spilt and so on and so on and so on....
But even with all this variety of economic thought, with all the neo, classical (and neo-classical), post, pre, and new modifiers attached to distinguish the various schools, we have arrived at the point where there seem to be three major viewpoints on economic policy: Austrian, monetarist, and Keynesian. The monetarists had their run, the Keynesians are enjoying their revival, and the Austrians are in their usual position on the sidelines saying "we told you so."
However, recent developments, like the Fed's renewed efforts to print money and debase the currency, lead me to wonder if perhaps there might be a more appropriate name for the current school of thought that guides our government's approach to the economy: the hair of the dog school. I didn't originate it and variations have been floating around for some time. But I think it's quite an accurate description of what's going on.
The American economy walks into a bar.
Bartender: Geez bud, you look terrible. Need a little pick me up?
Economy: Yeah, I'm coming off quite a bender.
Bartender: Mind if I ask what did ya in?
Economy: Well, to start with let's just say those Fed guys really had that money tap flowing. They sure know how to party.
Bartender (sliding glass across bar): Here ya go. This'll get you back on your feet in no time.
Economy (knocks it back): Not bad. What was it?
Bartender: More of the good money stuff man. That'll get your cash flowing in no time. Want another? I can always make more.
Economy: No thanks. I'm still not feeling too good. Probably shouldn't have been mixing...
Bartender: Yeah, that'll always get ya. What else was it that brought you to this state?
Economy (sheepishly): I knew I shouldn't have, but I just couldn't stop with the irrational spending and unsustainable debt. I thought the party would never end.
Bartender: Know exactly where you're coming from. I know just what you need. Let me whip up my special StimulusBudgetBusterpalooza. I'll throw in extra earmarks too.
Pushes large fishbowl concoction across the bar a few minutes later.
Economy: Is that really going to make me feel better?
Bartender: Maybe not tomorrow, but it will right now. Why worry? Go ahead and splurge. Works best is you use the straw.
Twenty minutes later.
Economy: That helped a little, but I think it's wearing off. What else you got?
Bartender: Well, what else got you trouble?
Economy: I think what finally pushed me over the edge was government intervention in markets leading to perverse incentives that socialized risk and privatized reward.
Bartender: Now you're talking my friend. If you want to feel better now what you need is a strong dose of nationalization. (pours shot & sets it across bar) Don't nurse it either.
Economy (throws down shot & winces): Whew, that's strong stuff. I'm really not felling good now. Maybe I should just quit...
Bartender: Okay, okay. I usually save this for special occasions, but you look like you really need it.
Reaches up to highest shelf behind bar and pulls down dusty bottle. Blows off dust to reveal XXX.
Economy (warily): What's that?
Bartender: Oh this? It's nothin' much. Just a little brew of confiscatory taxation and onerous regulation. It's been aging for years now and should be especially potent. It really is the only thing that can cure what ails you at this stage.
Economy (backing away from the bar): You know, maybe I should just go home and try to sleep this off.
Bartender: Oh c'mon. Just one more. What's the harm in that?