There is a thoughtful article in the Financial Times by Paul De Grauwe which is found in http://www.ft.com/cms/s/0/478de136-762b-11de-9e59-00144feabdc0.html?ftcamp=rss
It notes the big disagreement between two opposing camps on macro-economics (the Ricardians versus Keynesians), regarding the application of budget deficits in a period of severe recession. It then argues that this disagreement between the two camps is not just of academic interest it matters a great deal for the future decisions of investors and policymakers.
For share investors, it tells them whether, as a consequence of the temporary budget stimulus, they should be buying or selling long term government bonds and whether they should expect inflation to deteriorate or to remain under control.
For policy makers, it tells them if the additional GDP is stable and sustainable – or whether it will produce big rises in interest rates and, with it, another big recession. They must also decide if monetary policy will simply build up massive amounts of liquidity and lead to higher inflation – or whether the central bank can withdraw the liquidity as fast as they injected it, with no risk of inflation.
Most people are not sure which camp is right (with a modest majority in the Keynesian camp). The world is deeply divided.
How can the science of macro-economics resolve the crisis? On this issue, Paul de Grauwe has no solution. Efficient markets cannot take care of themselves and are not superbly informed. They need a lot of prudential regulation to address animal spirits. But how much regulation is appropriate?