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Politics : View from the Center and Left
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To: JohnM who wrote (172252)9/19/2011 10:55:39 AM
From: Steve Lokness  Read Replies (2) of 542630
 
<<<<<<The slump in the United States and other advanced economies is the result of a failure of demand — period, end of story>>>>>

I sure wouldn't argue with that. But to understand where we are you have to look at the most recent demand - and what it did to our collective group think. Our most recent demand came from the huge housing bubble. Surely no one - even Krugman - would argue against that. It wasn't JUST all that demand that went into houses but the money that came out of housing in the form of borrowing that people used to do all sorts of stuff. Stuff from remodeling, new yachts, new hot tubs - well all kinds of stuff. That this demand was good for the economy in the short run can't be denied. That it sucks big time in the long time is now becoming obvious. We now are paying for the party we had during those heady Bush years. By that I mean people are deleveraging - paying down their debt. That's a good thing!!

Now Krugman wants to pull money out of the magic money basket and wants people to spend recklessly again - BUT people don't want to. I have asked the question of you John many times before - where do you want the stimulus to come from. More housing? More Japanese cars? More iPods made in China? More what?
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