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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (144056)	9/12/2010 4:20:45 PM
From: Mary Cluney	Respond to of 541777

<<<Well gosh, debate over. We should be out of this recession any minute now. >>> The economic debate is over. We tried supply side economics. It did not work. From the best economic data that is available demand drives economies. Get people working and economies get healthier. More revenue allows surplus to pay off debt. The problem is now political. Doing nothing exacerbates the suffering of a large number of our fellow citizen. Supporting and subsidizing the super rich and fear mongering about low income people getting too much help is the alternative to the Obama and Democratic (Reid Pelosi) agenda. No one is standing up with an alternative to end the recession. There are no names that you can put up that stands up for an alternative to getting us out of the recession. The only semblance of an alternative is in the fear, anger, and flowery speeches from opponents of what Obama is trying to achieve.

To: Steve Lokness who wrote (144056)	9/12/2010 4:53:33 PM
From: Mary Cluney	Read Replies (1) \| Respond to of 541777

September 11, 2010, 10:18 am One Model To Rule Them All Not really — but as we approach the second anniversary of Lehman’s fall, a few thoughts on how to think about macroeconomic policy. I was, in a way, ready for this particular mess: a decade earlier, trying to make sense of Japan’s woes, I had thought through the economics of a liquidity trap. Moving back and forth between that basic model and its translation into more traditional IS-LM analysis (pdf), I had a framework ready-made for the mess we’re in. And that framework has held up very well. That basic framework led me to conclude that the Obama stimulus was much too small; that the huge increase in the monetary base wouldn’t be inflationary; that interest rates would stay low as long as the economy remained depressed, despite huge government borrowing. All this has turned out to be true. Now, there’s no virtue in sticking with a model if it fails the reality test; but in this case the model — unlike the economy — has performed well. By contrast, many policy makers and, sad to say, economists, have been frantically inventing new models and doctrines to justify whatever the currently fashionable policy recommendations are. And looking back at that 1999 paper, I see that I anticipated this, too: In the case of the liquidity trap, however, conventional textbook models imply unconventional policy conclusions … To defend the conventional policy wisdom one must therefore appeal to various unorthodox models – supply curves that slope down, demand curves that slope up, multiple equilibria, etc.. So unworldly economists become defenders of analytical orthodoxy, while the dignified men in suits become devotees of exotic theories. The tragedy of our current economic mess is that the solution to our problems is not, in fact, mysterious — basic macroeconomics, macroeconomics that has worked quite well in the last two years, shows the way. But the men in suits have decided that they know better — and the slump goes on, and on, and on. krugman.blogs.nytimes.com