Reply To: Krugman question


The 1950s was a period of restructuring the capital capacity of the economy from the war economy to normalcy. The wartime controls were removed, the monetary inflation subsided, the government’s taxes, expenditures and indebtedness were receding. It took a few years in the late 1940s to transform the capital stock and then, the freer economy could operate normally.

Take a look at the seminal work by Bob Higgs: