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Politics : View from the Center and Left

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To: JohnM who wrote (125533)	11/25/2009 10:13:09 AM
From: Steve Lokness	Read Replies (1) of 543167

John; but my guess is that Krugman is talking about aggregate demand and capacity Well sure he is - but just because i used one example that doesn't mean for a second that that is an isolated example. WHAT created the housing bubble? It was too much printing of money and keeping interest rates too low - it was the sycophant Greenspan. Soooooo, the end result was too much production capacity everywhere. Well almost everywhere. You say that 2by4 production can be moved and some can not. I suspect you mean labor? But the production capacity is still there. You still have empty production facilities - not just for 2by4's but for everything. This was created by the same mechanism that created the housing boom - too much cheap money.I suppose we can put people to work dismantling production facilities but isn't that the same as keeping people working by digging holes and then having them fill them in again? I fail to see the answer to my question that both you and krugman fail to address; where is the demand to come from? We are filling all the demand right now and then some! And THAT is the problem. steve

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