HERE'S A STORY WORTH WATCHING This murder was highly suspicious and unusually timely. Something big going on here.
FOR A RATIONAL MIND AT WORK, READ THIS The words of a true conservative and a rational mind at work.
SAVING FOR HISTORICAL PURPOSES It will be fun to see where this ends up.
THE FACE OF THE DEMOCRAT PARTY This could all happen. And you thought Obama was a bad leader?
HERE'S THE EXPLANATION OF A TRUE BELIEVING KEYNESIAN.
-Paul Krugman, March 11, 2012
What we had in 2008 was a financial panic. When the government allowed Lehman Brothers to fail, suddenly faith in the integrity of the entire financial system tottered, and the entire fragile edifice came crashing down at once. When the anemic 2009 stimulus (barely passed in the face of vehement Republican opposition) provided a floor below which the economy would sink no further, that action was not viewed by many as the correct strategy to prevent further devastation, but perversely, as the action which caused said devastation.*
The huge cuts in state spending, followed by the sequester, resulted in de facto austerity for the US. This was incredibly damaging. The problem was a temporary lack of demand, not a lack of productivity. Although the financial services sector of the economy needed reform, the rest of the economy was quite strong. Instead of a normal recession and recovery, ignorance and political tribalism doomed us to a long Great Recession, and the worst economy since the 1930s.
Macro economics is not kitchen table economics. When everyone in the country cut their spending at once, it endangered everyone else's income.
We needed stimulus spending during the crisis, and fiscal belt-tightening only afterpositive growth was well established. The benefits of that positive growth not only provide a good value for every stimulus dollar spent, it also mitigates the problem of the existing debt (more growth = higher tax receipts). Sacrificing stimulus in favor of austerity only increases the relative size of the debt hole we find ourselves in.
Furthermore, despite quantitative easing, we now find ourselves skirting very close to stagflation. This is due in large part to the desire of people around the globe to park their money in US Treasuries despite the fact that, due to zero bound interest rates, they're actually losing money on our debt. Think about that. We could be using all those no interest loans to be repairing our crumbling infrastructure and creating huge numbers of jobs and stimulating the entire economy. Instead we're throwing it into tax cuts for the wealthy. Those infrastructure projects will need doing someday anyway, and it's utterly inevitable that they will then cost far more than they would have at any time during the past 6 years, when low demand and high capacity in the construction industry would have made such projects an historic bargain.
Now the real question is, why would the same people who have consistently gotten this drastically wrong ever have their ill-formed opinions taken seriously ever again? The answer to that is too depressing to even address here.
* One of the few statements of which it can be said that a broad consensus exists among leading economists is that the 2009 stimulus halted the free fall of the US economy. If you still find yourself arguing this point, well, you just might be a big dumb idiot. Sorry about that. At least you'll have lots of company.
