Krugman begins his piece http://www.nytimes.com/2012/06/25/opinion/krugman-the-great-abdication.html?_r=1 about the European economic crisis by discussing Germany, then says the U. S. is not all that different.
"the Fed announced some actions ...
[But it is] ..." (according to everyone who knows anything) ...
"pathetically inadequate "
OK. That is what K says about the Fed's actions. Why? It must be that...
" [the Fed is] afraid to do anything that might be seen as providing political aid to
President Obama, that is, anything that might help the economy."
That sounds spot-on, for sure. I don't know whether he is right about the Fed's deep inner motivations, but the idea that the Republicans simply see everything in terms of politics seems plausible. Thus, if they are as blind as they seem to be, they might put opposing Mr. Obama before common sense. Helping the economy is no different from anything else. It pales before their hatred of their enemies.
The problem comes when I see that all of Krugman's solutions are very typical ones. We need more than that. He is not thinking very far outside of the box, is he? He wants typical remedies, like "growth," etc. We need something much more that only the usual kinds of remedies. He is OK, but he has a limited range of solutions to offer. These guys mostly just play around with their economic theories rather than reformulating the very meaning of economics itself. All these economists are trained in the same rituals.
This is actually pretty good, if you can get over your l-r biases, and substitute bank-created money for government spending. It is a "conservative" approach, but he has basically correct concerns. And he knows you need a bigger, more long-term solution, or actually the case, I think, is you need several of those (I have one of them, if anyone wants to email me, I shall tell you about it).
ReplyDeleteI am an outsider - I do not play the Republican vs Democrat game.
Mr. Krugman, day after day we have to read how you suggest that more Government spending is the solution. But where were you when the World economic prospects looked brighter - were you on your white steed cautioning social democracies to curtail chronic overspending? If the US did not already have massive debt prior to 2008, the great recession would never have happened.
The living standard of the West has artificially been elevated for decades by Government overspending, fueled by politicians reflecting the collective greed of the voters. That is the obvious problem here. And you keep on harping about the short term symptomatic solution, when a lot of us wish to hear about the cure on the long run. And we are not necessarily Republicans or Democrats.