And You Thought Bernanke Was Bad: Brad Delong Fantasizes About Replacing Him With A $6 Trillion Quantitative Easer
BREAKING NEWS: Janet Yellen To Run The World
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Sadly, this is not a joke. The discussion of possible Bernanke replacements has already begun, and Brad Delong is positively giddy about the prospect of a new and improved Fed Chairman willing to do $6 trillion in monetary stimulus (quantitative easing through the purchase of longer-dated Treasuries) between now and October.
You read me right. These shameless political econo-trolls (Keynesians are more politician than economist as they advocate massive spending as a means to win elections, all notions of fiscal sanity be damned) are more dangerous to your children than any other form of human species. They would gladly sacrifice $6 trillion to keep their party in power.
The seemingly benign task of reading their polluted machinations sends me into near apoplexy. I have no words to express the disgust I have for these creatures, who would suggest we mortgage your children's future via absolute dollar destruction, so that their side might retain a few more House seats in November.
Without words, I will resort to the only thing I have left: raw emotion. Fuck you Brad Delong. You are the most irresponsible, despicable Keynesian econo-troll I have ever come across, including your cousin Krugman. May you and your kind (Keynes) lose power and may you personally get buried under 2,000 pounds of Ding-Dongs inside your Berkeley headquarters. And do not share the processed chocolate delights with your soulmate Christina Romer, as she, like you, has had plenty already.
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Super Galactic Queasing
Excerpt:
No Exit: The Case for $6 Trillion More Monetary Stimulus, by Joseph Gagnon, Peterson Institute for International Economics: A lively debate is under way between those who want more fiscal stimulus to create jobs and those who worry that our national debt is already too high. Both sides are ignoring the obvious alternative--one that would create jobs and lower the deficit. In a newly-posted Policy Brief, I present the argument for easier monetary policy in all the main developed economies.
As the latest job figures demonstrate, the economies of the United States, the euro area, Japan, and the United Kingdom are suffering from historically high rates of unemployment. In all four economies, the overwhelming majority of forecasters see weak economic growth and lackluster job creation over the next two to three years. In Washington, the Obama administration has just held a Jobs Summit, underscoring the concern about how to put more Americans back to work. Clearly, we need more macroeconomic stimulus to reduce the suffering and allay the long-term damage caused by persistent unemployment as well as to ward off the risk of harmful deflation. But record peacetime fiscal deficits and rapidly rising public debt point to monetary policy, rather than fiscal policy, as the way to go.
Short-term interest rates already have been reduced to near zero. But the Federal Reserve and its counterparts have other tools to use for monetary stimulus. Over the past year, the Federal Reserve and the Bank of England have pushed down long-term borrowing costs for both the public and private sectors through their large-scale purchases of long-term bonds. There is considerable scope for additional purchases to drive borrowing costs even lower. The European Central Bank and the Bank of Japan should join the Federal Reserve and the Bank of England in combined purchases of an additional $6 trillion in long-term bonds designed to push 10-year bond yields down another 75 basis points.
At a time of concern about fiscal deficits, it is important to note that reducing yields on government debt actually reduces the federal deficit. Reducing yields on private debt will also speed the repair of private sector balance sheets and encourage businesses to invest and expand employment. A more rapid recovery further reduces fiscal deficits by raising revenues.It is time to stop arguing about tradeoffs. Monetary policy can create jobs and reduce the deficit at the same time.
I would prefer a different word than "monetary policy" to describe Joe Gagnon's proposed policy: it affects the economy not by changing the monetary base but rather by changing the riskiness and duration of the asset pool held by the private sector, and thus seems to me to be more banking than monetary policy. But it is a coherent plan based on a coherent, and in my view likely to be accurate, view of the world.
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DB Here. Under this plan the Dollar would be destroyed, Euro dysfunction be damned
It's a short term fix (that would boost jobs only in the near term) that is shamelessly political in nature, and is outlandish even by lax, econo-troll standards. Gagnon and Delong would obviously do anything to see their side win, and in a just world, the mere suggestion of this idea really ought to disqualify them from ever being taken seriously again.
Oct 8, 2013 at 7:46 PM
Reader Comments (83)
"The Case for $6 Trillion More Monetary Stimulus"
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worth checking out the very negative reader commentary about this idea...
http://delong.typepad.com/sdj/2009/08/obama-to-reappoint-fed-chairman-ben-bernanke---wsjcom.html
Bernanke's Reappointment: David Wessel writes: "Obama to Reappoint Fed Chairman Ben Bernanke - WSJ.com: President Barack Obama will announce Tuesday that he is nominating Ben Bernanke for a second four-year term as chairman of the Federal Reserve, White House Chief of Staff Rahm Emanuel said...
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Two reactions:
1. I think Bernanke is one of the best in the world for this job--I cannot think of anyone clearly better. He has made only one big mistake--buckling under to pressure from all those yelling at him for enabling moral hazard and not finding a way to takeover Lehman Brothers, and he is not going to make the same mistake again...
2. I am surprised that he is being reappointed. I would have thought that the combination of people angry because he has given too much public money to the banks and people angry because he didn't stop the recession would together make him damaged...
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Brad...nice that you have come to defend yourself except you offer nothing in response besides calling me insane...you give a link above that shows that at the time of his re-appointment, you supported the choice, and that you were surprised Obama reappointed him considering his bailout baggage....below is one of your quotes....
"I think Bernanke is one of the best in the world for this job--I cannot think of anyone clearly better. He has made only one big mistake--buckling under to pressure from all those yelling at him for enabling moral hazard and not finding a way to takeover Lehman Brothers, and he is not going to make the same mistake again..."
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I don't even understand your response...so what if you supported Bernanke at the beginning -- you were wrong then just as you are wrong now to support GAGNON's notion of $6 trillion in monetary stimulus -- back in August when you showed praise for Bernanke's reappointment, you should have followed Taleb, or even Dean Baker and Dr. Galbraith who, among many others, have all argued that you DO NOT return the reins of Central Banking power to someone whose policies helped cause the train wreck in the first place...
So, in summary, you supported Bernanke when Obama nominated him (your FIRST MISTAKE)...and now deep down you wouldn't mind replacing Bernanke (who DOES deserve to go) with a Fed Chairman who would become exceptionally loose with monetary stimulus....
In essence, you support using the Fed's magic printing press to create $6 trillion, that would be used to stimulate the economy by pushing the yield on the long end down by 75 lousy basis points...you DID NOT address the inflationary fallout that inevitably will come from such actions...
And one last point while we have your attention...you could NOT be more wrong about Lehman in your above quote...as Chanos and many have said (Taleb as well), letting Lehman go was the ONLY smart thing that happened in the Fall of 2008....you could argue that it's wind down should have been handled in a more orderly way (a mechanism SHOULD have been in place, I agree), but to make the case that Lehman should have been saved shows that you are captured by Wall Street to a certain degree...
Lehman bondholders got just what they deserved (about 11 cents on the dollar), for reckless lending to an over-leveraged MBS junk-house....if only more bank creditors could have been treated similarly....
I can hear you know..."but you can't punish the bondholders, it will hurt pension funds and regional banks that invested in this credit..."
Our regulars have been fighting the propaganda wars against this type of thinking for more than a year...we are not unaccustomed to your line of thinking...
In summary, though I give you credit for showing up and responding to the points I made in my opinion piece, I don't see that you have brought any evidence with you, that I was incorrect in ANY of original my assumptions...
And one last thing...I did some looking and Joe Wiesenthal at Clusterstock has wriitten something similar about you and GAGNON...here's that link...
http://www.businessinsider.com/liberals-fantasize-about-firing-bernanke-and-replacing-him-with-someone-who-will-quantatively-ease-like-crazy-2010-1
Is that really you?? SUH-WEET!! Really, I mean it. I was wondering if you 'd be interested in a fantastic article about 'possible' (more like obvious) insider trading by former NY Fed Chair Stephen Friedman in Dec 08 and Jan 09:
http://dailybail.com/home/is-stephen-friedman-guilty-of-insider-trading.html
YOUR EYEBALLS WILL POP OUT!!!!
With that out of the way, I have to agree with DB on the "polluted machinations" of "super galactic" proportions, et al. Ever so skillfully articulated, DB.
So--WOW--this is epic! I'm just gonna step back, grab some--uh--popcorn and watch the fireworks!
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And one last point Brad...I was on the Seeking Alpha call 9 months ago when Geithner's PPIP plan was being unveiled to his adoring public...you were there with Felix Salmon, James Kwak, and Mark Thomas if memory serves...and in that open dialogue, you criticized others who called Geithner's plan a giveaway to hedge funds (and others who might participate)...you were very concerned about ANY language that painted Summers, geithner and Obama in a bad light...
Here's that link...readers can follow it back to the Seeking Alpha complete piece (if it's still up) where they can see your shamelessly political leanings for themselves...
For the record,since you likely don't know our site, we are independents here, not beholden to the 1-party plutocracy that rules this nation...
We make it a habit of torching both sides whenever possible...Republicans are generally equally despicable when it comes to destroying the dollar and bailing out anything that moves...
http://dailybail.com/home/no-need-to-bailout-seeking-alpha-discussion-of-bank-bondhold.html
I'll say it one last time on behalf of my regulars, who have toiled with me every step of the way through the bailout morass of the past 12 months...--- STOP IT...cease and desist with irresponsible notions of job creation that will bankrupt this country and destroy the dollar...
The bubble economy is gone and the jobs have gone with it...and there's nothing you or anyone else can do to hasten their return...we are in the midst of a recession that is NECESSARY but painful...20 + years of easy money, stimulative policies have almost destroyed us...it's time to take our medicine, pare back dramatically, and wait for the debt bubble to finally implode...
I realize that for you and other Keynesians, my prescription is akin to suicide...but so be it...sometimes recessions are necessary, and you should allow this one to run its course...there is no need for us to repeat the 20-year Japanese experiment of never-ending stimulus and quant easing...it hasn't worked for them, and it won't work for us...
Steve
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Steve, you are way too nice, my friend. You'll get more dialogue and discussion out of a box of Ding Dong's than you will out of J. Bradford DeLong. Just ask the guys at The Austrian Economists ...er... Coordination Problem what they think of DeLong's idea of "debate." As you pointed out, he didn't even bother answering any of the questions or issues you raised.
I would be shocked to find out that the two of you have been having a private back-and-forth over email, but that isn't really his MO. Nor with most of the (pseudo-)Keynesians.
My opinion? Stick with the Ding Dong's.
The fact is that no one can answer those questions once you get two or three removes from the original govt outlay. Nor can we model what would have happened across the entire economy as those events, each of which are two or three removes from some original govt. outlay, come together to form some unknown and unforeseeable combination of economic factors.
Even worse, we have no idea what the effects on GDP would be beyond the short-run. Maybe the economy would have been better three years from now if we HADN'T saved the auto companies in the way we did. Maybe not. Five years from now might give a different answer. We just don't have any way of knowing, nor can we model what would have happened even in aggregate terms.
Someone like Jimmy Rogers would say quick and painful downturns are better than Japanese zombification. Rogers isn't an economist building mathematical models, but he intuits a path of development that is possible and even likely, but yet most Keynesian models can't even account for it. Economic actors coordinate their activities in unforeseeable ways, and often much quicker than economists imagine. This is the "coordination problem." It's a "problem" for the economy as a whole, but it's a "problem" in a totally different way for central planners. The economy can and does solve the problem, with local knowledge and incentives toward efficiency, not by omniscience. Central planning through fiscal spending could solve the "coordination problem" ONLY by means of omniscience. That's what people like Krugman won't hear. It's never about the structure of capital across time, it's all about aggregates and algebra. Unfortunately, they're just plain wrong.
I would be shocked to find out that the two of you have been having a private back-and-forth over email, but that isn't really his MO. Nor with most of the (pseudo-)Keynesians.
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you are right...no response yet from delong...he posted his original comment at 11:35 am friday morning...so he found the story pretty quickly...he must be one of RSS readers...which kind of surprises me...i wouldn't have thought any keynesian would subscribe to the feed for the bail, considering my views...
the ding dong comment was probably not that bad but i did make the post personal at the end and i wanted to remove that...
he likley was reacting to my personal attack more than the content of the stroy...becasue there is really no argument he can make against it...he supports $6 trillion in monetary stimulus...no buts about it...
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http://delong.typepad.com/sdj/2010/01/beyond-the-bad-economy-jobs-retirement-health-and-social-insurance-national-academy-of-social-insurance.html
In June 2007 the S&P Composite was at 1500 and a ten-year 5% coupon $1000 U.S. Treasury bond sold for $990. By March 2009 the S&P was at 800 and ten-year 5% coupon $1000 U.S. Treasury bonds (would have) sold for $1170. This great wheeling of asset prices—45% cumulative loss on risky equity and 23% cumulative gain on safe debt—is a collapse in the risk tolerance of the market, a grand flight to safety as nearly everybody tried to dump the risky parts of their portfolios and scramble into safe assets.
Such large movements in asset prices matter to everybody. Financial markets sent the real economy signals that all risky investments should be avoided, and all risky organizations should be shrunk. And the firms of the real economy responded by firing people.
Since at least 1825—when Britain’s canal speculation-driven bubble collapsed, and when Robert Banks Jenkinson Second Earl of Liverpool begged Bank of England Governor Cornelius Buller to do something—governments have responded to such collapses in risk tolerance. Households feel poor and stop spending and businesses stop investing and shrink operations because risky asset prices have collapsed as investors scramble for safety. The government tries to fix the situation by making more safe assets and expanding the demand for risky ones:
Guarantee private debt to turn risky assets into safe ones.
Nationalize troubled institutions to turn dodgy liabilities into gilt-edged ones.
Buy long-duration and other risky assets for cash.
Reduce the demand for safe assets by eliminating any expectations of nominal deflation.
Print up a huge honking extra tranche of new safe assets—government bonds—by bringing forward in time government spending and postponing taxes.
There are limits to these policies. The feckless bankers who caused the problem have leveraged positions in risky assets—and benefit enormously from policies that raise their prices. Knowledge that there was a Bernanke put last time will encourage future irrational exuberance. Governments that buy up so many assets that they own banks and companies are unlikely to run them well. If too many risky assets are generated the central bank then faces the task of somehow withdrawing them before we replace our depression problem with an inflation one. The huge honking tranches of bonds printed up have to be amortized. And if you print up so many extra bonds—run such huge honking deficits—that you crack the Treasury bond’s status as safe asset then you have not raised but instead reduced the supply of safe assets, and moved into a world in which the only well-performing asset classes are sewing needles, bottled water, and ammunition.
With that as background, I have two things to say.
First: we need bigger deficits now. Unemployment is at 10%. The U.S. government can borrow for thirty years at an expected real rate of 2.12% while leaving bondholders holding 100% of inflation risk. Over the past 30 months the private market has swallowed an extra $2.9 trillion in U.S. Treasury debt—from $4.9 to $7.8 trillion—without that extra debt having moved Treasury interest rates up at all. Commit $1 of real cash flow to debt amortization and you can raise $40 today if you are the U.S. government selling into the Treasury market—and only $15 if you are an S&P 500 company. If you have any trust in price signals at all, right now they are yelling at us that the government should be raising more money on financial markets and spending it.
And there is no sign in financial markets that we are close to the edge of America’s debt capacity right now. And our reserve army of the unemployed is larger than the U.S. armed forces at their World War II peak.
Second, we need smaller deficits later for a value of “later” equal to “soon,” as in “before 2015.” CBPP wants to stabilize the debt-to-GDP ratio in normal times. But we have to do better. We need the debt capacity to run large deficits in extraordinary times: World Wars II, Marshall Plans, bribing the Chinese to build nuclear rather than coal-fired greenhouse gas-emitting power plants, paying to move the population of Bangladesh to Alberta and build them places to live there, and fighting depressions are all things that all for large deficits, and if your debt-to-GDP ratio is stable in normal times you won’t have the debt capacity to do so.
Getting smaller deficits later for “later” equals “soon” is going to be very hard...
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You would learn something, and be less likely to make complete and utter fools of yourselves.
Like I said, Steve, should've stuck to your own gratuitous insults and left it at that.
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Bottom line, my children (and their children) never agreed to have Geithner and Paulson save their friends with their money, nor did they agree to letting Bernanke test a narrow set of (untestable) hypotheses about deflation and the causes of economic depression.
These guys can never go back--they are wholly invested in their special, exalted, only-true-geniuses-(and-that-means-not-you)-can-get-this-stuff mathematical models. Never mind the fundamentals they base them on are completely fallacious.
Perhaps Mr. DeLong should just get a shovel and start with the ditch digging, since it all boils down to that being the 'the way to go'.
Funny, I really AM eating popcorn. (With both hands.)
The fact is, that DeLong, or any professional economist, could run circles around me in playing the kind of conceptual games that economists do. And most of them would be better than me in math. That being said, it should be clear to anyone who has taken the time to read some of the arguments, that Keynesian economics (which isn't the same thing as the economics of J.M. Keynes) is full of conceptual problems and some degree of theoretical incoherence. In other words, the criticisms made by the Austrian school (and others) are persuasive, in my view.
And yet, even as Austrian Business Cycle Theory (ABCT) gives a theoretically coherent account of how boom-busts happen, and why they happen, and even though that theory largely seems to conform to empirical facts, ABCT and the other critiques of Keynesian models still cannot formally model / explain what the effects of fiscal and monetary stimulus are likely to be once the bust has occurred. I'm not certain it even can be modeled (for sure, how the heck would I know?). But if it could, what are the possible scenarios? (Obviously, I'm not talking about modeling the fiscal-year GDP-effect of x govt stimulus, given y multiplier, z borrowing costs, etc. We have no way of modeling whether GDP in year 5 or 10 or 15 is greater with or without fiscal stimulus in year 1.)
I mean, once you reach the point where a govt.-induced boom-bust has occurred, is it possible that "stimulus" of some sort is better than letting the govt-created bust to unfold on its own? There's a whole range of issues to be considered here, chief among them being time-frame. But you also have to consider borrowing costs -- beyond anecdotes about how "low" or "advantageous" they are at the moment, because it isn't simply about the rate of interest (nominal or real). The total principal matters immensely from a political and ethical standpoint, as well as an economic one. It is our children who will bear the total costs, regardless of interest rates, of our "stimulus" efforts. (BTW, the avg. maturity on US Treasuries outstanding is about 4-5 years, not 30. Anyone want to guess why we aren't selling 30-year bonds exclusively? Or why not 50?)
The kind of fiscal policy we're running is clearly a generational transfer of wealth. The question is whether our children would be worse off without the enormous debt burden we'll be handing to them down the road. Practically speaking, we can't know the answer to that question (we can never know what *would have happened*). But even speaking in theoretical terms, how would you "measure" better off vs. worse off? And say you simply wanted to model the GDP effects of stimulus vs. no stimulus (or something like) across a period of x years, there just aren't models to adequately account for that.
http://www.auburn.edu/~garriro/mainstreammacro.pdf
What you propose (larger stimulus and deficits in the short run) has been happening in Japan for 20 fracking years...
How is that working out for them...?...(Debt is now greater than 200% of GDP...and they have no growth to speak of...)
When the bubble has a hole, all attempts at re-inflation will fail...no matter HOW MUCH HOT AIR you exhale...
Did you read this massive NON-PARTISAN study released last week...Stimulus spending on road construction (something you advocate), doesn't help employment...
Spend a lot or spend nothing at all, it didn't matter, the AP analysis showed....
http://hosted.ap.org/dynamic/stories/U/US_STIMULUS_UNEMPLOYMENT?SITE=CAVEN&SECTION=HOME&TEMPLATE=DEFAULT
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Or did you simply choose to ignore the findings since they don't fit your tired narrative...?
"But the Federal Reserve and its counterparts have other tools to use for monetary stimulus"
I'm about to expose the greatest Keynesian "secret":
When you boil off the bullshit, the Fed only has one tool - devaluing the dollar. Two tools if you count NOT devaluing the dollar as a tool (I don't). That's it. The really fucked-up part is they can't even do that right.
So the Federal deficit for 2009 was $1.42 T ($4,700 per person) and we have nothing to show for. They repaved roads that didn't need to be repaved in my area - Big fuckin' Deal.
Now imagine what the world would be like if every family of four got a check for $18,800:
The tsunami of mortgage foreclosures would slow.
People would pay off their 30% credit cards
they'd buy cars
they'd have money for down payments on homes
they'd invest it or they'd save it.
So bank balance sheets would be cleaned up (and they'd probably have more money to lend). No mortgage modifications (if 20 grand don't fix you, you're screwed). No cash for clunkers, no home buyer rebates and no other stupid programs. Sure, the dollar declines, but this way, it's fair to everybody.
But no. you jack-wipes always insist on dumping a big pile of cash on the most dishonest people on the planet, hoping they'll be kind enough to let us borrow our way to prosperity. Of course, they steal as much as they possibly can (which wasn't in your equation, was it?), and when the "plan" fails, you want to try it again. Insanity is doing the same thing over and over and expecting different results. You're "top-down" solutions have never, and will never work. They do however, inevitably lead to total economic collapse.
But if you really, really want to get fancy-pants about it, let the government loan us our own money, at say 2%, and mandate a minimum holding period of say, two years.
Then stand back and let Darwin's magic work.
And you cannot model the impact of future changes and innovations. These guys delve deeper and deeper into the bottomless pit of the mathematical without questioning these fundamental issues. They are genius witch doctors. Then they cross their fingers in hopes that A) an increase in future production from some magical innovation or B) fiat money will help make up for any shortcomings in their ‘brilliant’ models. I really think this is their modus operandi.
And fiat money is flat out, no question, absolutely and wholly IMMORAL. It's the witch doctor poison, administered alongside a healthy dose of fear mongering and intimidation. If we would just be brave enough to refuse this medicine, we could recover from many of our ills.
You said: "...once you reach the point where a govt.-induced boom-bust has occurred, is it possible that "stimulus" of some sort is better than letting the govt-created bust to unfold on its own?" If the 'stimulus' is designed to smooth things over and EASE us back down to natural levels of consumption, then yes. In theory it's OK but it can never work in a country as large and diverse (re: politically corrupt) as ours. Plus it's got to be productive and not consumptive spending. (They gave us consumptive spending, obviously—that political corruption at work again.) Does anyone believe our politicians can ever leave the politics out of this issue? They want to convince people they can restore the conditions that were (artificially) created and enjoyed before. Any attempt to 'stimulate' to an unsustainable level is just a waste of time and money. The only things that remain inflated are the egos of these so-called economists and leaders. What I find REALLY interesting and sad is that keeping their egos inflated supercedes even their OWN childrens' welfare. What kind of a parent does that?
That’s IMHO, but what do I know? I’m just someone out here with my husband, working as a team to produce something of value to the community, spending and investing it wisely so we can provide for our extended family’s and sometimes our friends’ needs. Too bad that’s considered crazy or not good enough by guys like DeLong. Sorry for the long rant, but I just hate people like DeLong who try and intimidate me into thinking I don’t know how to take care of myself.
STICK IT, Brad! And Krugman, too. Yeah--STICK IT, Paul!
Oh, I feel better now. :)
I think you hit on the major problems with trying to model the effects of monetary and fiscal stimulus. Of course, we can never compare apples to apples on an empirical basis, but even still the knowledge problem (to say nothing of political problems) is paramount.
On the other hand, I think most economists really do believe their own story. I asked Steve Horwitz about that one time and he says that people like DeLong and Krugman really do believe what they say. Others of us are willing to consider other possibilities. What little I know about this topic is from trying to figure out where the Austrians, for example, are WRONG. I think the Austrian account is correct, has lots of explanatory power, and yet is incomplete. I suspect that will be the next big breakthrough in macroeconomics -- a heterodox (Austrian, post-Keynesian...?) account of what happens after the bust and how to model policy effects.
Oh, and the "intimidation" factor is clearly in play here. It's interesting to see the reign of the experts crumbling all over the place, in large part thanks to the "internets." (Thanks, Al Gore.) Whether it's global warming, Keynesian policy prescriptions, or swine flu, people have grown very skeptical of the experts. That's all to the good, as an old friend from Texas used to say.
(dialing back) Hells no, it wouldn't be right!
I was reading this and thought of some of the things you wrote earlier. It's by Fred Reed, who is a gifted writer btw, and wickedly smart -- sort of like a modern-day Jonathan Swift (if Swift had come from Alabama and spent time in the US Marines). He's writing about science as dogma and how probing questions from outsiders are often treated like some kind of dangerous heresy. Good stuff.
http://www.lewrockwell.com/reed/reed172.html
;)
If you want some serious libertarian-style rap, this guy's really good. Check out his "McBama."
http://www.myspace.com/neemav
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important point...
It's the biggest and oldest scam in the book. It's what the struggle for true freedom all comes down to.
I'm a PhD trained economist, but was formerly an engineer, and so have a slightly different perspective than many economists who went straight through college and graduate school without having their models tested against the real world:
(1) Your point about "real" Keynesians is dead on. During expansions (which is what we are technically in now), the government should be saving and the Fed should be unwinding its balance sheet to prepare for the next recession. Even if you believe in Keynesianism, it only has a chance to work if those two things occur. The model falls apart with constant, non-cyclical borrowing and money-printing.
(2) I have studied quantum mechanics and statistical thermodynamics, which forms the ties between the microscopic and macroscopic worlds. Many of the macroeconomists like to fancy themselves as the equivalent pioneers in their field to the original quantum physicists, and being a math wiz is all part of the persona. However, most in the mainstream do not pay attention to scientific, real world evidence like the natural scientists before them! This is why you have the models behind LTCM's bail-out providing Nobel Prizes to their developers when real people are hurt. This is why economic theory which blew up bubbles in the 2000's takes no responsibility for the financial crisis. The only macro guys I have seen "do it right" are the ones who take micro-interactions into account and inform their models with real scientific feedback (see Santa Fe Institute for some good examples).
These economists throwing "spending" at our economy is like a driver throwing any carbon-based material into his gas tank and saying "carbon is carbon." No it is not! Carbon has to be in the specific form that matches an engine's design and spending needs to focus on markets and capital formation where it will be most efficient.
I personally believe that government has a role to spend in markets that would fail on their own. This typically takes place in markets that have difficulty valuing future resources, like education and environmental sustainability. However, this macro insistence that simply printing money will lead to a productive economy is absurd. If you believe this, then I have some banana peels to sell you to power your luxury vehicles. "There's always money in the banana stand."
I hope everything goes well with you.
Truthynews,
No one here believes merely printing money is the answer.
I do realize that ... that's why this site provides me with sanity.
Where can I get some of that sanity stuff Truthynews is talking about??? I think I need some.
I think Janet Yellen is Bernanke's stand in crash dummy. She's gonna take the hit when Ben's bullshit monetary policies finally detonate the economy like a twenty megaton nuke in a toilet paper plant, turning all those greenbacks he printed into worthless confetti. Ol Ben will be sitting in a Mediterranean Villa laughing his ass off.
Ben and his buddies always make short work of smart women, an example being Brooksley Born. Greenspan, Summers, Rubin and company got her tossed out the door on her butt even though she was smarter then all of them put together.
I think Goldman Sucks after advising their clients to sell, bought a shitload of physical gold so things might pop pretty soon.
If this was my site & I had to read all the comments,I'd abandon it too. roflmao
Somehow though I suspect our new left dimmocrud party will line the pockets of the wealthiest of the world instead while they crush the chattle formerly known as their constituents and or Americans, the poor the middle class, etc, and then WHINE AGAIN how the republicans won't let them spend enough... how schools and jobs suck, etc...