Error No. 1:
Since the Fed decided to trade crap for Treasuries and to engage in QE2, Mr. DeLong, the major buyer of Treasuries was the Fed, not 'the public' to which you refer, sir. When the treasuries market exploded, it was not J6P buying but the Fed, acting in cahoots with Treasury Dep't to purposefully keep rates low in order to stimulate recovery. In other words, the usual Keynesian remedy. But it was a bond market whose primary feature was the Fed as the buyer, not the presumably free and open one you assume.
Being a former Treasury official, it would seem elementary that you would know this. But you don't refer to this important fact once in your piece.
You dope.
On this situation we need deficit spending. The government spends and borrows, creating more of the safe, cashlike assets that private investors want. As these bonds hit the market, people who otherwise would have socked their money away in cash -- diminishing monetary velocity and slowing spending -- buy bonds instead. A large, timely government deficit thus short- circuits the adjustment mechanism, avoiding the collapse in monetary velocity.
Oh, my God.
Can't you, sir, see that this notion has been as disproven as serious thoughts of a flat Earth?
Take a look around you, sir, all that has happened is the exporting of inflation. No jobs at all have been created. If a few have indeed been created, the cost has been exorbitant.
Velocity has indeed collapsed, and all you prescribe for the patient has been done. The collapse of velocity took place after the medicine you suggest was force fed into the economy. How, given this fact, can you write this crap with a straight face?
This kind of insane thinking permeates DC and the think tanks and the media.
God help us from these incompetents.
We are screwed.
The academic economists are a tribe of idiots and they run things. |
