Inode, > The one thing they can't quite comprehend is the fact that the New Deal was an abject failure. As we now know, FDR prolonged the Depression with the New Deal policy. And Krugman wants to do the same old crap.
Krugman, like many Keynesians in this post-modern era, thinks the Depression lasted as long as it did because FDR didn't do enough.
My problem with Krugman is that he doesn't recognize that we're in a bad debt trap, not a liquidity trap:
krugman.blogs.nytimes.com
I mean, come on. This guy thinks that by reducing interest rates to -5% (or doing the equivalent thereof, since even Krugman recognizes that rates can't go below zero), we can climb out of this depression. Yeah, imagine the implications of doing just that.
Monetary policy is being used to slow the fall, not stimulate the economy. Some new solar and wind farms and rail projects are nice, but they don't do jack to jump-start job growth.
What we need is for the bad debt to be flushed out via market forces, but that's unacceptable to The One because the little guy is going to pay dearly for it. Not to mention the institutions that are "too big to fail" such as GM and AIG.
So instead, politicians take the easy road and try to soften the blow. The result will likely be a double-dip recession, but that's OK as long as the politicians can blame someone else for it.
Try explaining all that to Ted, RW, and Alghieri. Their heads would explode.
Tenchusatsu |
