Apparently some members of the Fed have noticed inflation isn’t the real problem right now:
A subtle but significant shift appears to be occurring within the Federal Reserve over the course of monetary policy amid increasing signs that the economic recovery is weakening.
James Bullard, the president of the Federal Reserve Bank of St. Louis, warned that the American economy was at risk of becoming “enmeshed in a Japanese-style deflationary outcome within the next several years.”
On Thursday, James Bullard, the president of the Federal Reserve Bank of St. Louis, warned that the Fed’s current policies were putting the American economy at risk of becoming “enmeshed in a Japanese-style deflationary outcome within the next several years.”
The warning by Mr. Bullard, who is a voting member of the Fed committee that determines interest rates, comes days after Ben S. Bernanke, the Fed chairman, said the central bank was prepared to do more to stimulate the economy if needed, though it had no immediate plans to do so.
Wouldn’t it be awesome if the Fed and other government agencies took advantage of domestic Nobel Prize winning economists? For christ sake- someone google “Krugman+lost+decade” and tell me how many hits you come up with. He’s done just about everything except tattoo it on his chest and back and then do a pay-per-view boxing match with Tonya Harding.
Woo-hoo… I’d pay to see that!
Krugman is an idiot.
Instead of just saying “Tax cuts!” to every single question, he wants to actually be right sometimes. He’s clearly not maximizing his own revenue and minimizing the time he puts in by avoiding the right wing gravy train. Could you imagine the payout if he changed his tune right now?
Therefore, he must be a shitty economist. Or not a sociopath. Really doesn’t matter, anyways. You’re forgetting, most of these guys want to blow up the world. It’s a feature, not a bug.
Because Niall Ferguson. Plus, shut up! Austerity Now!
The right has been pushing the “inflation is coming!” meme since Obama took office. It’s a scare tactic rooted in little economic sense/analysis and a good way to sell gold.
My right-wing mother-in-law warned us about inflation last fall when she visited and when we asked her why this would occur she had no idea. Heard it on RW media.
Here’s a hint: hard to have inflation when consumers don’t have money to spend.
Can you translate your post into English?
102,000 hits, as of a minute ago.
About 103,000 results (0.28 seconds)
Bah, Jeremy beat me to the easy joke.
Paging El Cid.
@BGinCHI: i’m guessing snark.
Jim, Foolish Literalist
One rather wonders what it would take to persuade Ben S. Bernanke that a plan, immediate or otherwise, to stimulate the economy was necessary.
Kinda like: “The deficit caused the recession!”
Well, he’s no Megan McArdle that’s for sure!
Also, too, I get ~128,000 hits for: krugman+lost+decade.
However, I get 36,400 hits for: krugman “lost decade”; which is probably more indicative of what we’re talking about.
Inflation is the Uncle Buck that doesn’t visit you till it’s time to celebrate better times.
Bill E Pilgrim
You have to realize the fact that DFHs point something out is a deterrent to taking it seriously in Serious Person Land. If liberals of any kind are saying it, then you can’t possibly be seen taking it seriously. Not until it seeps under the defenses somehow and some Serious Person slips and says it too, then the floodgates open.
So that means that the liberals should all just shut up actually, or only say these things to each other. Maybe in some sort of e-mail list. Thingy.
@Bill E Pilgrim:
But what can the Fed do that it’s not already doing? “Jawboning” seems to be about all that’s left in the arsenal, unless I’m missing something. To really be effective, Congress would have to pass more stimulus, no? And with GOP filibusterage, opposed by Harry Reid’s brilliant leadership, what’re the chances of that?
He’s done just about everything except tattoo it on his chest and back and then do a pay-per-view boxing match with Tonya Harding.
Perhaps if he wore an Uncle Sam top hat with stars-n-stripes undies and tea bags dangling on his ears and misspelled his message on a sandwich board in front of the capitol someone important might pay attention?
I think it’s in Teabaggerese, which means it doesn’t really translate to English.
Also, too, it’s snark.
Bill E Pilgrim
@General Stuck: What part can I help you with?
If Krugman says “Inflation?? Don’t be silly, deflation is the danger” then conservatives, that is, everyone taken seriously in Washington, is practically obligated to believe the opposite.
Ignoring liberals is a feature, not a bug.
Tearing ones hair out and wondering “Reality-based economists are saying it as loudly and clearly as possible, why can’t they hear it?” is silly, they can’t hear it because of who is saying it.
At times like this I wish I paid more attention in the monetary policy class I took in the mid-90’s that was taught by a member of the Phily Fed, but I was always more interested in the micro side of things.
@Bill E Pilgrim:
It’s a lot like the way we deal with Megan McArdle, only we are actually justified by facts and the historical record.
It’s always fun to read a post here without noticing the signature and say to myself, “That’s John”..and be right 100% of the time.
I’d like to have someone tell me what Krugman has been wrong about.
Jim, Foolish Literalist
Jawboning can be pretty potent. If he came out and said, flat out, not in economist jargon, that unemployment was a far greater threat to the overall economy than the deficit, if he walked a few dopey Blue Dogs through the math that borrowing at very low interest rates is less damaging than a continued, metastasizing unemployment tumor, it would make the filibuster harder to sustain– they only need to cut two from the herd. As many people have pointed out, Alan Greenspan repeatedly inserted himself into legislative debates, most notably on the first round of Bush tax cuts.
They do snark like they do economics.
From the article:
Money sitting around is what causes deflation.
Philadelphia Fed President Charles I. Plosser, Fucking Idiot.
Bill E Pilgrim
@MattR: Except in her case she justifies your decision to never take her seriously every time you read anything she writes.
It’s wonderfully affirming that way.
@Jim, Foolish Literalist:
I really wish Bernanke would do that. You know, teach.
Too bad they got him from Princeton where that’s optional.
(yeah, I know, Krugman is also….)
I never disagreed with Krugman’s conclusions, but he has no sense of political reality.
That said, Clinton (and I’m almost certain Obama) asked him to serve on his economic team and he refused. That’s always been my problem with him.
It sorta what made me lost respect for Ed Schultz. There he is blovating about the Senate, which he’s right about and when a Senate seat opens in his own home state, he refuses to run. He likes to complain about a problem, but do nothing to help change it. He doesn’t, as the President says, grab a mob, he just supervises the mopping.
I’m no optimist when it comes to the economy but I’m convinced now that Peter Schiff is a complete crank because he’s still howling about the threat of hyper-inflation.
I’m sorry, but correctly calling the housing bubble (which anyone not so blinder by greed and stupidity and fat bonuses could have seen) doesn’t make you automatically right about everything.
@Bill E Pilgrim: Okay, got you,. Deflation bad – so is inflation. You don’t get much inflation when the economy is rotten, and people are out of work and not buying shit so hypercompetition sets in and prices plummet. Inflation is not really a concern until the opposite occurs. Inflation is not some crank theory, it actually happens when economic activities goes higher and manufacturers need to expand to meet demand, but there is less money available for borrowing to meet that expansion. And thus interest rates go up from hypercompetition for loans like with excessive government borrowing, and thus prices to consumers go up as well to pass those higher interest rates on to consumers.
I’m not an econ person, so if this general scenario is not historically true, please educate me.
Or he felt that what was offered didn’t speak to what he was good at.
Since you don’t that he was offered anything and you certainly don’t know in what capacity he would have been working, it seems exceptionally thin gruel to think you can make a better assessment than him about where he’d do the most good.
Elizabeth Warren OTOH seems ready and willing to head the new consumer protection agnecy, so it will be interesting to see if she gets the nod or not.
@Jim, Foolish Literalist:
I agree, the Fed could be doing a whole hell of a lot more to influence Congress than they’re doing. Things are bad enough that they should probably bring in Greenspan since for some reason Congress seems to think he knows WTF he’s talking about even though his policies were the ones that crashed the economy.
Problem is, there’s an army of PhD economists arguing both sides of the debate. Ones side is yelling “deflation!” together with Krugman, the other’s yelling “inflation!”. Each can offer up their own historical examples but no one can agree who’s right – not even the leading experts in the field, much less the politicians ultimately in charge of fiscal policy. Sure part of that is ideology, but it’s also the inadequacy of economics itself – a “science” with lots of fancy math and but no controlled experiments that can show who is right.
The right’s inflation fears come from theory… they like to quote Milton Friedman saying inflation is a monetary phenomenon.
The “reasoning” is: Money supply has increased. So more money chasing same amount of goods leads to higher prices.
Velocity of money, productivity changes resulting in more goods being available are hand waved away.
Most of the increase in money supply at this point is in the form of increased reserves held by banks. It isn’t getting into consumers hands.
Bill E Pilgrim
@General Stuck: I’m not sure I followed, Stuck, but inflation is a danger, just not the actual danger right now, would be Krugman’s position, not to mention anyone remotely reality-based, yes.
Clarification: they need to bring Greenspan in to do a mea culpa and support a Keynesian policy.
Jim, Foolish Literalist
@Mnemosyne: Get him to dress up in chains a la Jacob Marley “I wear the chains I forged in office, of economic inequality, speculative real estate investments, deregulation, and tax cuts for the rich…. BOO!”
Inflation is basically too much money chasing too few goods, right?
The GOP doesn’t do unconditional love and they don’t do unconditional economic policy. If Fox warns about inflation over and over it ain’t because they have shrewd econ minds. They are push-polling, offering “news” as influence.
@Bill E Pilgrim:
Well no, not right now. This all comes back to the government needs to spend more to create jobs and economic activities and that alone will get us out of our current low job creation.
The problem is we don’t have the money and have to borrow it which may well set the table for greater inflation later on. And is there a law of diminishing return with government spending to push permanent job creation, in lieu of other factors structural with the economy?. There are respected economists on both sides of this issue. Krugman is smart, but that is relative when economics is concerned. I don’t have a clue. btw:)
Right. And deflation is basically the opposite.
Which gets at why Plosser would have said that having piles of money laying around means there can’t be deflation. What Plosser isn’t mentioning is whether that money is actually getting into consumer’s hands via credit, wages, etc. We know there are some problems on that front.
I’d pay to see that.
Well I’m pretty sure they weren’t going to ask him to be Secretary of Defense, but it’s pointless since he shot down the idea of serving in government before he was even asked, saying he couldn’t bite his tongue.
I respect that, because I think being in government forces you to tone it down, but it makes me mad when he makes suggestions about what Obama should have or shouldn’t have done politically. If he thought this to be true, he should have served in the administration
But, but, Niall Ferguson has an English accent! He must be right!
Bill E Pilgrim
@General Stuck: I’m not going to disagree with your last statement ;)
Seriously, read some of what Cole refers to in Google land, the bajillions of words Krugman has written about deflation vs inflation fears right now, everything you mention in your second paragraph is addressed, debunked, I would actually say, in great detail. Much better than I can paraphrase here.
Taking just one line, “there are respected economists on both sides of the issue” is actually pretty iffy depending on how you define “this issue”. Finding anyone, even Krugman’s detractors, among economists, who actually think we need to be pulling back and not doing all we can to create growth and jobs and so on right now would be pretty hard.
NB: Niall Ferguson is an historian. And Amity Shlaes has a bachelor’s degree in English.
@Bill E Pilgrim: I’m not sure if this was mentioned but prices fall because of wages falling. I’m not an economist but when repubs preach just take lower wages and spend less, it feeds into this. Deporting all the illegals at this point would send our economy into a tail spin at this stage. I think..
Maybe someone can correct me.
(And original, according to google.)
Is there really anything to indicate that Krugman would have more influence inside the government than out? Perhaps Krugman thinks that the public pressure he can generate as a journalist is far greater than the weight his words would be given as part of the administrations team. Same thing with Ed Schultz and the Senate. Would a failed Senate run be more helpful to the country than continued advocacy on television? To use your mop analogy, it is more than just supervising the moppers. It is also encouraging others to grab a mop and join the efforts.
Bill E Pilgrim
@General Stuck: You should read this interview, related to the “we don’t have the money right now” comment you made.
Galbraith is brilliant, and another Nobel winner, Stieglitz, says pretty much the same things.
Yeah, I don’t see it that way. Some people are better at working from the inside, others are better at being on the outside. Both roles have value and you gotta know where your strengths are.
DougJ @ Top:
The only problem there is that Ed Prescott, he of the Real Business Cycle Theory, won a Nobel Prize too.
I’m pretty sure we don’t want the Fed listening to Prescott. Unfortunately, I think some of them already are.
When an academic says that he is too disorganized and bad at management, and too undisciplined in the loudmouth department, to serve in a high government position, I take that at face value.
I don’t see how Krugman’s statements disavowing interest in a high government position disqualifies him from doing political analysis. I would rather read his political analysis than stuff from the WaPo or Politico, or most of the other NY Times opinion columnists.
Anyway, if people like Summers and Geithner represent Obama’s perspective on economics, Krugman, like Stigltiz, or Laura Tyson, or Alan Blinder, or Akerlof, had zero chance of getting within ten miles of an administration job of any kind. Tyson was rumored to have been considered for something, but I don’t think it was serious.
Krugman was a low level policy wonk in the Reagan administration, but that was in a different era when there were different standards (that is, reality based experts had some influence regardless of ideology. That was a very different era, I think preCambrian, when all sorts of exotic viewpoints flourished compared to the current Age of Very Serious People).
The right likes to quote Friedman, yes, though I doubt they understand him. It was, after all, the monetarists who came up with the idea of using the velocity of circulation to calculate inflation in the first place.
David in NY
I’m not sure, if I were Krugman, and knew I was going to have to deal with Larry Summers regularly, that I would have wanted a job with the administration. (Anyway, isn’t this pretty damn hypothetical — no actual job offer, no actual rejection?)
Adding, I would have said this if I thought of it before jl:
@Bill E Pilgrim: Progressives sure like their heroes, I like Obama, but of course he actually has power, so that’s okay. I posted an article here a while back from 1996 by Krugman, with him pooh poohing the idea that government spending is a good idea in certain severe econ downturns as opposed to normal bidness cycles. And I think this one would qualify as severe, if any would.
And for Galibrath to make such a profound and certain statement as that, flies in the face of history, if you lived during the 70′ and early 80’s you have an idea what runaway inflation can be like, and that it is a real concern and can eat you alive financially before you know what hit you.
If you want to follow faithfully your heroes, then have at it. Krugman will deliver the ponies, most of the time, but they are invisible ones.
Nobel Prizes are given for specific advancements in research, and should never really be taken as an endorsement of an economists view on anything outside of the research for which they won the prize. Krugman won his for contributions to New Trade Theory and Prescott won his, for the most part, for his work on technology shocks.
The prize has been given to adherents to virtually every economic school of thought that exists. Hell, Gunnar Myrdal (a socialist) and Friedrich Hayek (a libertarian) shared the Nobel Prize in 1974.
Are there any economists who argue that inequality is bad for the economy? That basically trickle down economics not only doesn’t work but that it is harmful to the economy as a whole?
Calvin Jones and the 13th Apostle
@Nick: Would you want to serve in that cesspool called the Senate? It’s a wonder that Bernie Sanders can deal with the stupidity there.
@Bill E Pilgrim: Like I said, you want to jump on the Krugman Rasputin band wagon, have at it. I will just walk.
I am not against spending money, and even borrowing as much as is needed up to the point where more isn’t necessarily better. But don’t blow smoke up my ass telling me borrowing billions and trillions from the fucking Chinese is just groovy. I will spit that out with all the other conventional wisdom last words.
Calvin Jones and the 13th Apostle
@David in NY: Why wouldn’t Tyson? She’s exactly the type Obama seems to like. She’s in that same neo-liberal camp as Summers, Geithner and the rest of those clowns are. She was part of the Clinton economic team.
1970s-style inflation would have to be predicated on some kind of systemic supply shock. Without the oil embargo and the policies surrounding it, the inflation of the 70s never would have happened. And without such a supply shock, you do not see high levels of both inflation and unemployment happening simultaneously.
In other words, the 1970s were a economic outlier. We are not living in the 1970s, and likely won’t live through anything like it again until global petroleum reserves fall well below aggregate demand.
Again, what causes deflation is the fact that money is laying around instead of moving through the economy. That’s what the liquidity trap is, that’s what causes depressions (or great recessions) to perpetuate (edit). People stop spending and start saving money. Which causes less money to circulate through the economy, which causes people to lose their jobs since demand is weak. Which causes even less money to circulate through the economy. It’s a downward cycle that needs spending and inflation to correct it.
Worrying about inflation now is like worrying about the scar that open heart surgery is going to leave on your chest.
@Sly: Yea, well, we also haven’t lived through anything like the deficits we are ringing up now either. So six half dozen or another. I was just pointing out that inflation exists and once it starts it takes on a life of it’s own. Krugman has said that himself. The thing is, we are in uncharted territory right now, at least since the GD, and I don’t want to borrow any more money from the fucking Chinese as is absolutely necessary.
And further, this entire country had better start living within it’s means and not on easy unlimited credit, not just the government. That is cotton candy growth and prosperity. Maybe we need to slowly contract our lifestyle of gluttony. Ever consider that?
And in case you all are wanting to holler deficit fear monger at me, there is a difference in being concerned about it and demagoguing it for political gain like the wingnuts are doing. And knee jerking the other direction as the wingers, that deficits are nothing to be concerned about doesn’t seem to me as that much different than they are, just the flip side of the same coin.
Bruce (formerly Steve S.)
It doesn’t take a Nobel laureate to figure out that the party presiding over high unemployment, regardless of whose fault it is, is going to get its ass kicked at the ballot box.
Anyone who read this article and is worried about the deficit or selling debt to the Chinese is an idiot.
Inflation is running at 1.4% . The Fed has done nothing to get it back to above 2%.
This is the best time in recent history to borrow money.
Government has an absolute responsibility as the spender of last resort to jump into this economy with both feet.
If this isn’t one of the 2 or 3 vital reasons for having a government I don’t know what is.
@Bill E Pilgrim: You’ve ran full force into the epic stupidity that is Stuck.
if the fed wants to prove krugman wrong, they can do it. whoever runs the printing press ultimately determines whether there’s inflation or not.
Right now the government can borrow at 1.7%. The practical impact of this is that adding another, say, trillion dollars to the debt would only increase our long term debt position by 170b over 10 years. And even if it did borrow another trillion dollars, it would not put itself over the debt to GDP ratio that existed in the late 40s and early 50s.
Why you make a distinction between borrowing from the Chinese and the Fed/Intergovernmental holdings, I dunno. The latter two groups hold a far greater percentage of our public debt then China.
Yes. Then I remembered that John Q. Public can’t print his own fiat currency. Comparisons between private individuals and a government that has monetary sovereignty are inapt.
Deficits are nothing to be concerned about right now. Just like your municipal water bill is nothing to be concerned about when your entire town is on fire.
Blitherings from renowned economics/poolitical expert Corner Stone
One of these days you may figure out that when you open your big Texas pie hole it actually helps my side of the argument.
You do realize that Dick Cheney was saying pretty much the same thing only a few years ago. And it was liberals who were hollering about running up the deficit and that Cheney was full of it. Around we go.
@General Stuck: Bottle worm got you again dog?
It’s ok. Whyn’t you sleep it off?
@Corner Stone: You might try coming up with some insults of your own rather than stealing mine. It’s called creativity.
if you can make the case that borrowing money at this rate is a poor decision please do so.
Your folksy malapropisms won’t suffice. Please tell us why borrowing at under 2% is a bad thing.
Different contexts, on multiple fronts, so I don’t buy the analogy.
@General Stuck: Well I read your nonsensical screed and all I could conclude was that you were drunk.
Your normal mode is epic stupid but that had the extra flair of complete bullshit to it.
So if you’re not drunk then you must really have Sullivanesque level understanding of broad macro economic conditions.
How on earth am I supposed to decide who’s right, Paul Krugman or General Stuck?
@Corner Stone: I will, Soon as you can tell me how spending a few hundred billion in a deeply structurally flawed economy of 14 trillion dollars a year, will actually do what Krugman is now preaching, absent any other consideration for other problems the economy is facing in recovering. But I know, being a Noble Winner libtard hero makes his word next to the word of gawd.
And at 2 percent interest a year, we pay upwards of 400 billion a year just in interest. Just pocket money, I know. And if I have to explain why borrowing a plug nickel from the Chinese is not a good idea, you wouldn’t be able to understand it anyway. It’s all ideologue wanking, all the time for you. Depending on what the pony of the day is.
@Mark S.: I have a newsletter which can help you arrive at the correct conclusion in this matter.
@Bill E Pilgrim:
Its a shame Galbraith’s brother is such a war-mongering ass hole.
There is no real long term inflation risk in the current situation. Volcker already showed its pretty god damned easy to stop inflation by just raising the Fed Funds rate. Now, when he did this he was starting at a much higher rate so increasing the rate caused a lot of short term pain. But now with in effectively at zero when signs start to show inflation beyond 3% you just increase the rate. And you don’t need to mess around with quarter points either. Three or four quarters of full point increases will slap inflation back into its hole pretty quickly.
This is one of the more dishonest debates in a long time. The fact that conservative economists are making it discredits the whole lot of them. They wouldn’t think to make this argument if the situation were the exact same and McCain had won the Presidency. And there’s a reason for that – the numbers say there is absolutely no inlfationary risk.
@Mark S.: LOL, My Noble Prize came out of a box of Cracker Jacks, so it shouldn’t be hard to decide, unless you have a sweet tooth.
I would hope that Plosser would have said that money LYING around would do something. Money doesn’t lay*, since it’s not an active agent.
*although I’ve been trying to get mine to hatch and that hasn’t happened either. Where’s that dang golden goose?
Waves good luck to the Krugman Jingo truck.
@General Stuck: Stuck. How about you try again?
There’s math involved, and formulas that indicate a certain level of stimulus that would provide relief in our economy. So I understand why you would be confused.
But I’m going to continue holding onto my purple pony idea that $1.4T spent into local state economies might help relieve the almost 10% unemployment rate.
And why you care who buys our debt is beyond me. What is China going to do about it? Default and lose trillions of their own?
If I am a nutty ideologue for wanting people to go back to work, I guess I’ll take that description.
No they wouldn’t be making this argument, liberals would be making it. It’s called politics, and Krugman can’t help himself playing them and mixing his economics with them. He has a history of this.
That’s because there are two parts to responsible Keynesian economics and one of those is the responsibility to pay down debt or build surpluses in good economic times. But the delusion of the GOP the last thirty years is that they think the exact opposite – they run massive deficits when there is plenty of private investment in the economy and preach austerity when there are private investment and consumption short falls.
This isn’t really the Fed coming around, it’s the Fed Board of Governors having three nominees simultaneously confirmed that were appointed by Obama. Shortly, 5 of 7 members will have been picked by Obama; this is a very good thing, but will undoubtedly amplify the brain dead “kill the Fed!” business.
In the not too distant future, China will become an economic superpower to the degree it can sustain the blow from calling in our loans and denying our loan requests, .
China is not our friend, and neither are others of our creditors. And I am not against getting people back to work, and you can’t prove to me spending a few hundred billion more will accomplish that, other than pure faith in your heroes.
And fuck you for suggesting my CAUTION not opposition to more borrowing in any way means I don’t care about people finding work. Double fuck you asshole.
AND I WILL REPEAT ONE MORE TIME, THAT IF THE WINGNUTS WERE IN POWER, LIKE WHEN BUSH WAS, IT WOULD BE THEM DEMAGOGUING THE DEFICIT as not mattering, INCLUDING KRUGMAN ET ALL. AS WELL AS MOST BJ COMMENTERS.
No, actually Keynesian economists wouldn’t be making that argument at all. There were a whole lot of economics pieces written by DeLong and Krugman Galbraith in the first half of 2008 when the Presidential election was still up in the air and even when the economy was just “really bad”and not “historically awful” they were advocating the same things they are now: assuming a FFR at the lower bound and borrowing money being cheap, borrowing money is a great way to fill the demand gap.
@Ailuridae: No it is not the complete opposite for wingnuts. Their idea of stimulus is tax cuts in a recession is tax cuts, and to the degree that money gets spent, they are stimulus, just like any other infusion of government money into the economy. Of course, that doesn’t work as well giving rich people the biggest cuts, because they already have more money that they can spend.
But the politics of opposition are the same with either party and their experts on this or that policy.
Honestly. You’re telling us you’re not drunk?
But the politics of opposition are the same with either party and their experts on this or that policy.
Again, no. And we have a very specific example in John McCain’s chief economic adviser during the campaign, Mark Zandi. He’s been beating the drum since the get go for far, far bigger stimulus and rightly been laughing at inflation fears. Your assertion isn’t just cynical its also demonstrably untrue.
@Corner Stone: Keep talking, you are my best debate asset.
@Ailuridae: We have a better example of eight years of gop running the entire government. Some ex campaign manager for Mccain doesn’t get the job done for your argument. This flipping and flopping over the deficit and it mattering or not depending on which party has the WH and to a lesser degree the congress has been going on for decades. It is not new.
edit – and I will add again that I am not against borrowing money to stimulate the economy into a quicker recovery, as I and others stated a short while back, the very large amount that would take is not politically feasable, And also what many of you are arguing for is a return to our previous level of lifesyle, which imo, and others is not sustainable based on easy cheap credit and little personal savings. Something needs to give, and will, sooner or later. We will retract by choice in a controlled manner of all at once from total fail
@General Stuck: Ok, I will.
It’s clear you have an innate hatred for Krugman because he’s spoken out against this administration time and again.
Therefore nothing he says can possibly be right.
But the actual point of fact here is that there is no inflation, and we are on the cusp of deflation.
The government can borrow money from multiple sources at less than 2%. The economy needs an influx of cash, at all levels.
China et al doesn’t have to be our friend, nor does anyone consider them such.
Not really. This is the case of Bullard who had been overly concerned with inflation (the vernacular here is ‘hawk’ but i don’t use that out of respect for Hank Hall) reversing course and articulating the correct concern for deflation. Yellen et al’s appointment may have helped to change his mind but its more likely that he is just looking at an overwhelming amount of data that point to him being simply incorrect.
FWIW, Bullard was a Bush II appointee.
Sgt. Jrod and his Howling Commandos
If you honestly think there’s no fucking difference between running a deficit so the Prez can start a couple wars while giving a gigantic tax cut to his wealthy friends, and running a deficit to stimulate a half-dead economy, then I pity you.
It’s seriously sad and frightening. I pray my mind doesn’t go like that.
@Corner Stone: I like Krugman, and he will always be a personal hero of mine for standing up to the bully Bill O’reilly on that PBS show, I forget the name,. Charley Rose, I think.
But he is not gawd of economics and has a habit of mixing politics with his obvious talents and knowledge of economics.
I agree with Truman about one armed economists. And will not follow blindly his teachings, and especially when I sniff politics in play.
Sgt. Jrod and his Howling Commandos – Shut up you lying sack of shit, I said and believe no such thing. DIAF motherfucking firebagger.
Not his ex campaign manager. His chief economic adviser.
There is nothing inconsistent with saying the deficit is a long term concern but far less of a concern than the risk of a deflationary spiral and the current unemployment numbers. To pretend that it is inconsistent is silly.
100B in aid to states right now would do the economy a world of good right now. As would federalizing Medicaid. As would a host of other programs that would come in at < 250B. The stimulus that was passed has done a tremendous amount of good already. Repeating that it wouldn't doesn't change the reality that it would indeed be quite helpful
@General Stuck: In that case, the actions of Republicans for most of the eight years they ran things are irrelevant.
Well, why didn’t you say so. I support fully expansion of the safety net in times like these and helping the states is Ok too.
I am talking about massive temporary makework and tax credits for business big and small.
And here is also an idea I am for and have said here many times. I am for Americans paying for their shit and not borrowing it for others to pay off, like their kids. I am for letting EVERY GODDAMN BUSH INCREASE EXPIRE into PERMANENT DEATH. Save for maybe a few middle class breaks like child credits and the like.
I AM ADDITIONALLY IN FAVOR OF INCREASING TAXES ON THE WEALTHY, even more, TO THE EXTENT NECESSARY TO PAY FOR OUR SHIT, AND THAT ALSO MEANS DOING AWAY WITH COMPLETELY THE FICA CAP FOR MEDICARE AND SS.
I think that is a better idea than owing the Chinese a red cent.
Don’t know what you are trying to say with this. The debate is whether or not deficits matter as liberals now are claiming they don’t, as opposed to a few years ago when that was flipped. The morality issue of whether dems or repubs have better, or more noble reasons, is what is irrelevant and another topic of discussion, and total bullshit conflating them into what Jrod asswipe was doing.
@General Stuck: The reason I bring it up is that deficits being good or bad is not a decision that can be made in a vacuum. It depends on economic conditions at the time, what the money is being used for, etc. There is nothing inherently inconsistent about supporting a deficit at one point while criticizing one at a later date.
Before I go further, I am wondering if we can agree on this basic point.
Sgt. Jrod and his Howling Commandos
@General Stuck: Of course, you said nothing of the sort! You merely said that Cheney’s claims from 10 years ago about the deficit were equivalent to people on the left saying things about the deficit now! It’s only natural for a person to assume that you think there’s no important distinction between the two, since you’re the one who brought up Cheney in the first place.
No, retard, it’s pretty central to the question. Deficit created to jump-start the consumer economy has a very different effect on the economy than deficit created to shift money into the hands of the already wealthy. There’s also a big difference between running deficits when the economy is doing well and doing so when it’s ground to a stop.
There’s also a difference between a government’s budget and a household’s, but I fear I’m getting too complicated for you to follow.
EDIT – Firebagger is really the lamest insult I can think of, but it really doesn’t fit somebody, like me, who thinks Jane Hamsher is a useless dumb fuck. I just see little to gain from obsessing over her like people here.
FFS China isn’t buying any of our debt right now and only holds about 1/5 of the foreign publicly held debt the US has. The UK on the other hand has an insatiable desire for our debt (quadrupling their holdings in the last year and by all measures in the pits are willing to buy indefinitely) as does Japan (who is going to pass China as the leading holder of debt before the end of 2010). If the US wanted to it could stop selling any debt to China at any point and still not see interest rates on debt go up. There is right now an insatiable demand for US bonds. Heck the US could find enough takers to pay the Chinese tomorrow and still not see interest rates on bonds rise substantially.
This is the kind of unhinged, fact-free Chinese menace type of thinking that belongs on red state or free republic.
I find the above … muddled.
Have some clarity. Followed, alas, by more mud. :-)
Inflation is defined as a general, overall increase in prices. Deflation is, well, the opposite. These are easy and simple. Unfortunately, reality rarely is.
Here’s the first complication: we can have both at the same time. It depends on what you are buying. Suppose that food and energy (two things everyone needs) are decreasing in cost over time. That looks like overall deflation. But suppose, at the same time, college costs are increasing rapidly. That looks like inflation. But if you are not going to college (nor sending kids there), you may not care about the college-education inflation.
Right now, we have pretty rapid college and health-care cost inflation (better than 10% per year) with electronic device deflation (computers and TVs getting cheaper) and food and energy prices holding fairly steady on average. Housing prices are mainly dropping (slowly now but it was fast for a while). For most people, this mostly works out to “neither inflation nor deflation”, but it depends on the exact mix of purchases.
Now, nation (or “gross domestic product”) wide, we can look at what people are actually buying and what is happening with costs … and we can add “theoreticals” (hypothetical situations) to attempt to project what happens in various cases. There are two really bad situations that are immediately reasonably obvious, the two “spirals”.
A deflationary spiral occurs when prices drop so people hoard cash for future purchases (when they’ll get more), which makes product demand drop, which makes businesses lay people off and lower prices, which makes people hoard cash, etc. In this situation the money supply generally decreases (more on that in a bit).
An inflationary spiral occurs (and goes hyper-inflationary) when prices rise so people spend quickly before that happens, and also demand higher salaries, which makes product demand rise but costs also rise so businesses can’t fire people no matter what and instead raise prices, which makes people buy quickly while demanding higher salaries, etc.
Both of these are bad, and both have one thing in common: once they start happening, people plan their lives around them in various ways. The “expectations” become “embedded”, as the economist types like to put it. As long as inflation or deflation is relatively mild, people tend not to plan based solely on these monetary phenomena, but rather on “real needs”.
Now let me touch on the money-supply part of this. This gets tricky because people are used to thinking of money as an unchanging metric, a sort of yardstick where inches and feet (or centimeters and meters, for some) always mean the same thing. Dollars, however, are actually pretty stretchy. Money—more generally, anything used as a medium of exchange (the broadest definition of money)—also obeys the laws of supply and demand: it becomes worth more when there’s more demand for it with no change in the supply, or a decrease in supply with no change in demand; and it becomes worth less when there’s less demand for it with no change in supply, or more of a supply with no change in demand.
Because money is “anything used as a medium of exchange”, and a promise to pay in the future (i.e., borrowing) is used as a medium of exchange (think about it!), debt is money. (This is unavoidable, even though some folks deplore the idea. The fact is, as long as one person can promise to pay another one tomorrow for something delivered or done today, this kind of debt will be “money”. It may not be “legal tender”, but it will still be a medium of exchange, because people are people.)
Since debt is money, the act of borrowing increases the money supply. This means that buying a house on credit (or a mix of cash and credit) increases the money supply. A business taking out a loan … increases the money supply. If your house value goes up and you take out a home equity loan, you have increased the money supply.
The opposite also holds, of course. Pay off your loan, you have decreased the money supply. Someone’s house drops in value, way below what he owes on the mortgage, and he sends “jingle mail” (abandons it and mails the keys to the mortgage holder) … he’s just decreased the money supply. Businesses stop borrowing, the money supply goes down.
In general, inflation goes with increases in the money supply (because if something will cost more tomorrow, better buy it today, even if you have to borrow the cash, and besides, a thousand bucks next year won’t buy as much so you’ll pay the loan with easier-to-get inflated dollars). Deflation goes with decreases in the money supply: the mirror image of inflation, as usual.
Note also that in deflationary situations, a loan becomes more burdensome, rather than less. It’s harder to get a thousand bucks next year, to pay off a loan, than it is now, because a thousand bucks next year will buy more food, or a nicer TV, or whatever, when all prices have dropped. So everyone is encouraged to pay off loans, worsening the deflationary spiral.
Lately, the Federal Reserve has been fighting very hard, via all those secretive back-door things they do, to increase the money supply “just enough” to offset all the huge decreases that are occurring because everyone is trying to get rid of loans, and so on. It is something of a delicate balancing act. If deflationary expectations become “embedded”, there will be nothing at all that they can do, and this is, I think, what worries Krugman (among others).
No, they are two separate things. Using the budget deficity as an argument for opposing the Iraq war conflates the two issues of whether deficits matter in an economic sense, which is what we are debating. The morality and wrongness of the Iraq war stands by itself, or should. The deficit argument was irrelevant and used as ammunition to oppose that war. Which is okay in politics, not for pure, or attempted pure discussion on the effect of deficits on the body economic.
Democrats used the deficit argument in the proper way when Clinton was president, by agreeing they matter and doing something about them. Raising taxes to, as I just said. To pay for our shit. That is the proper mindset imo, and what we should be agitating for now.
Whether or not deficits matter in the reality of the machinery of our economy, they matter greatly to the business folks who make decisions based largely on how they feel about government and the country at large living withing their means. It is as American as Apple Pie, as well as basic human nature, and is purely, or largely so, related to the psychology of willing to take risk, which is the real engine of our free market based system.
And without willingness to take risk by those who hire workers, nothing much will happen on the job front.
@Sgt. Jrod and his Howling Commandos: Fuck off firebagger and His Howling Asshole.
So because Cheney is an asshole warmonger, his saying deficits don’t matter is bad, and rightius liberals saying it, makes it okay. Just so we are straight.
Cheney wasn’t the only wingnut saying that, other wingnuts that were saying the same are now howling that deficits do matter. It is really no different when the roles are reversed. But you all can believe you are right because wingnuts are bad actors and spend and borrow for bad reasons.
Money, and spending and borrowing it, has no ideology, nor political party,.
How is China, or anyone else for that matter, able to “call in” the debt on Treasury bonds?
The difference is between now and a few years ago. There is something happening now that was not happening a few years ago.
Anyway, I haven’t heard any liberals saying deficits don’t matter, they are saying that they are a much lower priority than getting the US economy moving again.
Liberals are saying that action taken against the deficit now will hurt the chances of an economic recovery now.
Conservatives are saying that the deficit will harm the economy in the future. True, but irrelevent if the economy has been run into the ground in the present.
Everybody knows the deficit has to be dealt with, they are arguing about the timing.
Gen. Jrod and his Howling Army
@General Stuck: This calls for a promotion!
Ooh, please brer Stuck, don’ call me a firebagger again! It hurts mah pride so! Strikes to the quick, it does!
Where on earth are you getting that MattR is arguing about the Iraq War? All he’s saying is that basic Keynesian economics argues that you shouldn’t worry about deficits during recessions but that you should pay them down during good times. I thought your comment at 100 meant that you at least accepted that general premise.
@Sly: I don’t know, maybe they say they want the cash, but mostly they will just quit lending us money, I suspect, as will others when we don’t contract our high living by easy credit ways, both personal and government.
This empire is crumbling from the bottom, not just the top. We are all to blame for thinking a free lunch is our birthright.
It is obvious i am in the distinct minority here on this issue. So I will just say you may well be right, and I could may well be wrong. In fact I am likely wrong. How is that for contrition.
Now it’s time for my noodle dinner.
They’re not, or not exactly. But they could sell their bonds to someone else: transfer them, rather than redeeming them. This has indirect effects on Treasury’s sale of new bonds (of any duration). See http://en.wikipedia.org/wiki/United_States_Treasury_security.
@General Stuck: While I disagree with you and think economics has a role when evaluating whether to go to war, I will concede that point because that was not really what I had in mind when I said “what you spend the money on”. I was thinking more in terms of tax cuts versus spending or specifically the types of tax cuts and/or spending and the type of return expected. The point I am trying to make is that if you gave an economist a series of hypotheticals without any political context, there are times he would suggest that running a deficit is OK and there are times where he would oppose the idea. Different economists will have different criteria for when a deficit is OK or not and they will think it is OK a different percentage of the time, but any decent economist will have at least one scenario where running a deficit is a good thing and one where it is a bad thing.
@Mark S.: Of course, I didn’t say Matt brought up Iraq, he did generally say that what wingers borrowed money for was less noble than what dems propose, and I agree. But that is not relevant to discussion of the pure effects of deficits on our economy. I just used Iraq as the obvious bad reason the wingnuts used to justify and create them.
Somebody else on another blog made a pretty good analogy to the short term demand gap in the economy and the long-term deficit. I forget the exact details so I’ll make something up off the cuff
The long term deficit is like a malfunctioning sump pump in your basement. You basement floods once, twice, three times a year rendering the room largely unusable and posing a serious long term threat to your house at its foundation. It is clearly something you need to address and on almost any given day it should be the primary concern of you as a homeowner. Not addressing the sump pump (or debt) issue is really irresponsible in almost any situation.
The short term demand gap and unemployment situation however is like a house fire. And how would you describe someone who is hyper concerned about their sump pump when their house is on fire? You would rightly call that person a stupid fucking ass hole. Same thing with someone arguing about the long term debt with unemployment at 10% and no signs of abating. Stupid. Fucking. Ass hole.
@MattR: You make my entire point here. Politics is always in play with these debates on the national level. And Krugman is not immune from that. It is the reason I tried to separate them here on a tiny blog.
That goes for the wingnuts as well as liberals. So when I here Krugman says this or that claimed or implied as pure econ wisdom, I know it is not. Not for him, not for anybody, except maybe Obama who is the one ultimately responsible and will alone get the credit or condemnation of adopting this or that theory from whomever.
Exactly. And if the economy starts growing again, that deficit would look a lot better. And fuck the GOP and their concern trolling about the deficit when they won’t consider letting the Bush tax cuts expire, won’t say what in God’s name they would actually cut, and have absolutely no fucking plan for curbing health care costs (which is the real long term debt problem we face). They are the party of absolute stupidity.
I don’t know, maybe they say they want the cash, but mostly they will just quit lending us money, I suspect, as will others when we don’t contract our high living by easy credit ways, both personal and government.
I’ve already posted a table showing that they have already stopped buying US treasuries (i.e. lending us money). They have already quit lending us money, we are still borrowing money and doing so at less than 3% without the Chinese purchasing any.
And China isn’t a fucking loan shark. If China no longer wants to loan us money and completely divest itself of US treasuries they can do that in the open market where there is currently an insatiable demand for US federal debt.
This is just another in a series of never ending reminders for me to never, ever talk anything financial, economic or quantitative in a community of my fellow progressives.
Can we all agree on this one point. It is better to collect the revenue in taxes from the citizens of a country to run that country, rather than to borrow it from another country?
Gen. Jrod and his Howling Army
@Ailuridae: To extend that metaphor a bit further, if somebody living in the house was to plug all the drains in the basement and start running the garden hose down there, you might suspect that person was a bit reckless. If that person then lit the house on fire, then screamed at the firemen to go away so they don’t flood the basement with their hoses, you might start to suspect that the person wants the house destroyed. And is a hypocrite. And a stupid fucking asshole.
Sorry, but I was working too hard to pay for things, what with all the inflation that we got now, ’cause of the deficit.
@Ailuridae: Okay then dude, borrow away as much as you want, trillions, gazillions, and justify it with as many tables and graphs as you can muster, but don’t blow smoke up my ass that it is good or benevolent thing in the least. I won’t buy that. And it will certainly keep business wary and unwilling to take the risks needed to increase business activity and hiring.
I think Wall Street used cool graphs also too for their big party.
Gen. Jrod and his Howling Army
@El Cid: I know! It’s terrible how inflation is over 10% now. Why, I just- wait, what?
Oh, my bad, it’s unemployment that’s over 10%. Inflation is under 2%. Well, still. That old inflation, man. Scary stuff.
Gen. Jrod and his Howling Army
Right, because that won’t happen with massive unemployment.
Everyone has to tighten their belts! If we all just stop spending so much, jobs will magically grow from the fertile soil.
Group Think Gone Wild.
As a general rule of thumb? Sure. In the height of the worst recession of the modern era? Nope. If we can inject money into the economy at effectively .25% then that is far more desirable to do that using debt than taking money out of the economy to pay down debt.
And, again, most of our debt is not financed by other countries. Its about 4B of a total det of 14.2 or 14.3 And only 870B is held by China and that number is dropping both as a raw number and a percentage of our overall debt. China is not “financing” the US in any meaningful way – its a retarded conservative talking point. China holds 6.2% of US debt.
This is comparably fucking stupid to when GOP idiots were talking about medical malpractice costs driving health care inflation.
@Gen. Jrod and his Howling Army:
yeah, this worked wonders for my ancestral homeland. The austerity train fucking saved Ireland.
China can say they want the money until they’re collectively blue in the face, but they won’t get it from the U.S. government in any manner other than what is explicitly called for in the bond itself. This isn’t loansharking. Or even adjustable rate mortgages.
I don’t really consider secondary market reselling to be a big problem. The worst case scenario is that it becomes more difficult to finance new debt if supply on the secondary market balloons out of control, and there’s no sign of that. While there have been some spikes in bond prices, the general trend over the past year has been a slow decline.
China could, theoretically, try to sell all their Treasuries. But they won’t for the same reason why China, or any other foreign creditor, wouldn’t demand all the cash up front even if they could: They’ll make more money off the coupon rate anyway.
Gen. Jrod and his Howling Army
Funny how nobody can ever have an honest disagreement with Stuck. Nope, you’re all just a bunch of hivemind automatons! You must be a Hamsher-cultist or maybe you drank the Krugman Kool-aid, but there’s no possible way that any free-thinking person could ever draw any conclusion but Stuck’s!
Sleep it off, slugger. Maybe tomorrow Cole will make you a nice firebagger thread and you won’t have to think so hard.
Well at least you didn’t actually pound the table when the facts were so clearly against you.
Right. At least, that’s true now and for the foreseeable future … which is why long term interest rates remain so low, and the Treasury has no problem selling new paper.
Everyone always does what they think is in their own best interest (or what their emotions tell them to, in the case of most individuals; we can hope that “larger minded entities”—businesses and governments—are normally more rational, although I’m not entirely convinced). The trick is figuring out, in advance, what other people will think. Or, if you’re in marketing/advertising (or are a Republican candidate), pushing them to think what you want them to. :-)
We’re not all agreeing some 3-D picture is really a sailboat if you stare at it long enough.
Some of us understand risk and debt and finance.
You. Obviously. Do. Not.
@Ailuridae: You have to start paying for shit sometime. And what you are advocating for is returning to the status quo that got us into this mess.
Here is a clue, Wall Street, greedy repubs, etcc…… etc….. are not alone to blame for our fuckedupedness, and really are but a small part of it.
WE ARE ALL mostly to BLAME COLLECTIVELY AS A SOCIETY FOR LIVING TOO FAR ABOVE OUR MEANS
We elected the politicians who set this in motion and reelected them, and when they opened the casssino doors in Vegas/Wall Street, we elected them again, and are about to do the same all over again this fall.
You know why. We like easy wealth with easy credit and few rules of the road, so long as the good times roll. Game up and some hard times ahead to make things right.
Whether we borrow more or not, imho.
I really gotta go.
@Ailuridae: You don’t have any facts Allurdae, what you have is faith, and that is all.
Maybe that’s enough. We shall see.
Why would those of us in reality agree to something that makes zero sense in our current context?
I want to borrow money at 1.7% to pay off debt at 3% or higher.
@BGinCHI: All professors teach at Princeton, although some (e.g. Krugman) will only teach one small seminar. My guess is that Bernanke also taught just one class.
I do have the facts. Like the fact that China isn’t financing our debt contrary to your stupid fucking assertion. That’s a fact that apparently you were completely oblivious to. And you still haven’t owned up to in a very fucking weaselly way.
We can have a conversation about debt but my position on that is pretty clear and consistent. The US debt problem is a health care spending problem and the health care spending problem is a doctor and provider compensation problem. But that’s a point that pretty much everyone in America at the moment is too chicken shit to admit. Mercifully it’ll have to be addressed in the next 20 years whether through a reasonable means of compensating doctor’s less well or something far more severe.
He argues he’d rather see tax cuts than deficit spending in the face of a whopping big recession, and he argues that inflation is still too scary a problem in the face of a deflation to actually do anything to correct unemployment.
Someone explain again how Stuck isn’t a Republican?
It’s true so long as the U.S. Government has any financial credibility, really. In other words, a supply increase in the secondary market that was of sufficient size to cripple sales in the primary market would probably be what happened after the U.S. government literally collapsed, not before.
Gen. Jrod and his Howling Army
@NobodySpecial: No Republican could possibly hate the left as much as Stuck does.
@Sly: Well, yes, but also no, in one important sense: what is more likely to “cripple future sales” of Treasuries is the ability to get a better, yet still apparently safe, rate of return elsewhere. For instance, if by some bizarre marketing trick, everyone suddenly collectively believed that ten trillion dollars of debt offered by (say) India at 25% was completely, totally safe, that’s where the money would go.
I am not claiming that anything like this will, can, or even could happen. But we have seen higher rates (than 3 to 4 percent) in the past, when the US did not collapse. So we probably will again (without the US collapsing). So we should probably take advantage of the great rates right now to sell lots of debt right now. (Which is what Krugman is saying, in part.)
The financial woes of the middle class aren’t the result of excess spending, but diminishing incomes when adjusted for inflation. We aren’t living beyond our means because our living has become intensely more expensive than that of our forebears. To some degree it has, but not in any of the important metrics.
The problem is that the means to pay for it has been taken away. Lenders are essentially filling that void in demand.
I already agree and stated I am for borrowing money for certain things that are also stimulus. Such as your earlier comment for a small amount, of 350 billion or so to help states out and shore up the safety net.
But as far as anyone having any true facts in a situation we haven’t been in, in most of our lifetimes, I don’t think so. We have theories and faith, whichever remedy we come down on.
My basic position is take good care of the safety net and start collecting more revenue by taxes. LOL, people hollering about creating jobs that have largely already done gone overseas. What jobs are you all talking about exactly.
I am arguing for an entire new mindset based mostly on real capital with borrowing for steady sustainable growth. Otherwise, we are propping up the same system will only return us to where we are, but with bigger bills to pay. i think we are mostly fucked long term, but maintain some faith in American spirit and figuring shit out at the last possible moment.
Which was basically my original point: fear of U.S. financial insolvency is pretty baseless unless you assume that, at one point, everything goes completely off the rails first. Which basically means we’ll have bigger problems to worry about.
@Sly: I absolutely disagree with this comment. But so be it.
Stuck doesn’t care. We should all tighten our belts a bit, and get ready for some sacrifice and tough choices.
Because people who have had stagnated wages for over a decade are somehow to blame. They have been profligate, spent too much, and ran this economy into a ditch.
Listen, I am upsetting conventional wisdom by people who are a lot smarter than me on this topic. Though not certainly right, but I will defer to your alls expertise and Corner Stones following along like a loyal puppy.
Just expressing my thoughts on the overall problems we have here, and stick by them, wrong as they might be. time will tell. And give the pumas a scritch behind the ears for me.
Shorter Stuck – You are right and I am wrong, but stubborn.
I can’t do better than that.
Pushing off problems until the last possible minute IS the American Spirit. This country has done it since its founding. We should change our national motto from E Pluribus Unum to: “If you wait until the last minute to do work, that means you’ll only have to work for one minute.”
We have theories which can be substantiated by data. Deficit fears are driven largely by expectations of phenomena that are not present in the data. Those are pretty much the two key points being raised by the likes of Galbraith and Krugman. Those pushing debt fears and austerity are the ones playing with goblins and fairies.
Tonya Harding would kick his ass, she’s a tough bitch
@Sly: Can’t argue with data. Go in peace bro.
They (or some fraction of them) are “to blame” in one sense though: a lot of them kept voting for politicians whose policies made the situation worse (i.e., for Republicans).
I actually think it started primarily with Reagan, whose policy was essentially “seed corn is tasty, we have extra, let’s eat!” Bush 1 was more sensible, tried to scale back the ever-increasing seed-corn eating a bit; Clinton was both lucky and able, and kept production from the remaining seed-corn increasing; and Bush II went all out with the seed-corn redirection up-income/up-wealth, where it has rotted. We’re now nearly out of seed corn, and the fix will be long and slow, no matter what. So in some sense, we’re stuck with “going hungry”.
(We do, however, have to stop sending so much of it up-income/up-wealth. I say this even though I am actually closer to the top than most. In some sense, I am a class traitor … except that I have not yet made it to the top 0.1%, and both my sympathies and my sense of justice are more Warren-Buffet-esque than Larry-Ellison-esque.)
It’s not CW you dumbass. It’s hard to argue that debt is cheap and it just makes sense to understand we need to borrow money to inject straight into the economy.
You can try it on, as you’ve pathetically attempted but you’ll fail as you’ve demonstrated.
@Corner Stone: Lemme give you a big stuck hug tough guy.:)
The Fed could do quite a bit, really; search Matt Yglesias site, he talks about it regularly.
Uh, I think that would be incorrect. Both mechanisms (of current deficit increase) and context actually do matter. You seem unwontedly simple minded today, General.