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The Fed is doing its best to not muck up the economy, given the ideological shackles they and the US Treasury work under, which is that anything that fiscal policy can do, monetary policy can do better, therefore there's no space for fiscal policy even at the zero lower bound, where if monetary policy doesn't work, fiscal policy must work even less.

See Stephanie Kelton's latest in the LA Times: Forget the Fiscal Cliff

History tells the tale. The federal government has achieved fiscal balance (even surpluses) in just seven periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, 1920-30 and 1998-2001. We have also experienced six depressions. They began in 1819, 1837, 1857, 1873, 1893 and 1929.

Do you see the correlation? The one exception to this pattern occurred in the late 1990s and early 2000s, when the dot-com and housing bubbles fueled a consumption binge that delayed the harmful effects of the Clinton surpluses until the Great Recession of 2007-09.


And creating jobs is what we need to do. Until the fiscal cliff distracted us, we all understood that. Today, we have roughly 3.4 people competing for every available job in America. The unemployment rate is like a macroeconomic thermometer -- when it registers a high rate, it's an indication that the deficit is too small.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Carrie (migeru at eurotrib dot com) on Sat Dec 22nd, 2012 at 04:23:40 AM EST
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