Economics
How Do You Stave Off a Slump? Have Uncle Sam Play the Market
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How the Economy Works:
Confidence, Crashes and Self-Fulfilling Prophecies
By Roger E.A. Farmer
Oxford University Press; 208 pp.; $22.95
A year ago, I wrote a short article for this magazine about an economist with an idea that sounded crazy. Roger E.A. Farmer, a macroeconomist at the University of California, Los Angeles, argued that the government should buy stocks on a massive scale whenever there's a big drop in the market in order to restore the public's confidence and prevent a deep economic downturn. "I get a lot of interest from other economists," Farmer told me, "but it takes a long while for new ideas to spread."