So, [we have] terrible growth prospects; low inflation… low interest rates... Ordinary macroeconomic analysis tells you very clearly what we should be doing: fiscal expansion and monetary expansion by any means we can manage… And [yet] what are we talking about in policy terms? Spending cuts and an end to monetary expansion. I know the arguments -- fear of invisible bond vigilantes, fear that 70s-style stagflation is just around the corner despite the absence of any evidence... But why do such arguments have so much traction, while everything economists have spent the last three generations learning is brushed aside? One answer is that macroeconomics is hard; the idea that if families are tightening their belts, the government should do the same, is as deeply intuitive as it is deeply wrong. But the susceptibility of politicians… and pundits to these wrong ideas demands a deeper explanation. Mike Konczal ratchets up my rentier argument, arguing that what we’re seeing is "a wide refocusing of the mechanisms of our society towards the crucial obsession of oligarchs: wealth and income defense." That has to be right. [emphasis added] It doesn’t necessarily take the form of pure cynicism; it’s more a matter of the wealthy gravitating toward views of economic policy that make immediate sense in terms of their own interests, and politicians believing that only these views count as Serious because they’re the views of wealthy people. But the upshot is terrible: more and more, this really does look like the Lesser Depression, a prolonged era of disastrous economic performance. And it’s entirely gratuitous.
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Saturday, July 16, 2011
An American Political System Run By Millionaires Will Never Solve the Shared Problems of an America Filled With Non-Millionaires
Krugthulu, noting the recent grimly pessimistic GS report, runs the numbers (again) and makes the inevitable call (again):