It sure is glaring how he doesn't say how we will pay for the stimulus. We can't issue war bonds because we are not at war. Also, the United Nations, IMF, World Bank, globalization, etc, didn't exist during the first depression. So, all money generated then went to stimulate America at almost a 100% rate. Now, a large percentage of the stimulus would go to overseas manufacturers or to pay interest on foreign debt (see our trade deficit). It is hard to compare the previous depression to the tight economic times now because the makeup of the world has changed so much.
LOL. Of course the article you posted has nothing at all to do with him hawking his book, does it? "George Akerlof and I lay out how economic theory needs to be changed in âAnimal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalismâ (2009)."
Two possibilities exist: 1) The US will continue to borrow in increasing amounts from foreign creditors, in a Faustian pact, whereby they sell us manufactured goods because we keep our markets completely open, and over time, we have to raise the yield we pay on the notes we issue, as we shed more and more jobs as capital chases the cheapest labor around the globe, which will necessitate much higher taxes and deficits in the U.S., or; 2) We erect trade barriers, try to insulate ourselves from creditors, and tell the rest of the world to screw off, defaulting on our debt, as it becomes apparent we begin to resemble the Weimar Republic.
i think you're right,if everything comes down in price,deflation,that would make lower wages palatable,those running the show have the most to lose,lobbyists,middlemen ,people living off the fat in the middle from the farm to the grocery shelf,gm is talking of closing 1700 dealerships,their cars would sell faster at 10k than 20k,razorblades for $6,bread for $3.50,the problem is right in front of us
I think this is really the only way out of the crisis. If smarter action had been taken at the outset the crisis could have been contained and a few more years of prosperity could have been enjoyed before the inevitable slowdown, but we are far beyond that point. Now the ONLY thing that will protect our standard of living in a semi sustainable fashion (ie until the rest of the debt catches up with us) is growth. To have growth we need economic activity and as much of it as possible. Economic activity is highest at price equilibrium. We need to learn from Japan's mistakes and let the market find that equilibrium as soon as possible without the taxpayer subsidies. That is how we get a V bottom and not the L that we are heading for. What we are doing by saving bond holders from taking a haircut is sacrificing growth(pretty much what Hussman has been saying). If Obama and the rest of the guys in DC on big money's payroll were serious about helping the middle class they would start liquidating these big banks and sell off their assets. The number of houses sold, if market prices were allowed to operate freely, would skyrocket. People would be back in home depot again buying stuff to fix them up, back in the appliance and furniture stores, etc. and in turn these stores would be hiring people back and these people would have money to spend at local retail joints and on and on. It wouldn't be like it was pre housing bubble burst but at least it would be back to positive GDP growth and we wouldn't be looking at another few years of downward spiral. Most importantly money would flow back in to assets and securitizations because people would have some confidence in prices being realistic again rather than having the government have to bribe investors to buy unrealistically priced stuff in their PPIP program. http://www.theepochtimes.com/n2/content/view/15344/
Lets start by putting the crooks , cheats, and scammers out of business. Unless you think they're the ones keeping the system up and running.
The measures Schiller is proposing would require a virtual command economy to enact. That's been tried many times in the 20th century and never succeeded, why would it work now>
But it has worked many times in the past, and it will work again. You make the mistake of assuming that everybody wants to live and work in a free country that has a high standard of living. That's not the case any more. A large percentage of voters now want to live on somebody else's dime, and they don't really care if their lives are a few notches worse for it. Look at Detroit for an easy example. For the past 50 years it's been going downhill. For the past 30 years it's been a shithole. And it's getting worse. It's ben 50 years of standing up for the black man, and getting even with the rich white people with the obvious results. They care much more about black pride and not giving an inch to "rich" people than they do about making their city a decent place to live. It's the same thing with a planned economy. For some reason, people don't mind losing a little bit if that makes the "people at the top" lose a lot. So a planned economy "works" in that sense just fine.
I think that's what has some concerned. A few people are asking the important question....... "What happens if all this stimulus doesn't work?" Beans and ammo, baby!