The European Tribune is a forum for thoughtful dialogue of European and international issues. You are invited to post comments and your own articles.
Please REGISTER to post.
More from Krugman's post: So you might be tempted to say that monetary policy has consistently been too loose. After all, haven't low interest rates been encouraging repeated bubbles? But as Larry emphasizes, there's a big problem with the claim that monetary policy has been too loose: where's the inflation? Where has the overheated economy been visible? So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? Summers's answer is that we may be an economy that needs bubbles just to achieve something near full employment - that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn't just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s. OF COURSE all the growth since Reagan can be associated with bubbles. When wages are suppressed in all but the financial sector almost all discretionary income ends up in the hands of the already well off. Wealth holders seek profitable employment for their wealth and find it in a series of asset bubbles. And this is largely invisible to 'Mainstream Economics' as it wants to 'look through the veil of money' and take a Net Money View, which treats all debts and credits between private domestic sector agents as merely debts owed between agents INSIDE the economy which should be netted out. Nothing to see there. Move on folks. It is unseemly for you to stare at the wealth of the rich. They stole their money fair and square - right before your eyes. You couldn't see it because of the economics they had spent so much of their wealth teaching you - if you did not remain a confused, ignorant wretch.
So you might be tempted to say that monetary policy has consistently been too loose. After all, haven't low interest rates been encouraging repeated bubbles? But as Larry emphasizes, there's a big problem with the claim that monetary policy has been too loose: where's the inflation? Where has the overheated economy been visible? So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? Summers's answer is that we may be an economy that needs bubbles just to achieve something near full employment - that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn't just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s.
But as Larry emphasizes, there's a big problem with the claim that monetary policy has been too loose: where's the inflation? Where has the overheated economy been visible?
So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? Summers's answer is that we may be an economy that needs bubbles just to achieve something near full employment - that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn't just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s.
OF COURSE all the growth since Reagan can be associated with bubbles. When wages are suppressed in all but the financial sector almost all discretionary income ends up in the hands of the already well off. Wealth holders seek profitable employment for their wealth and find it in a series of asset bubbles. And this is largely invisible to 'Mainstream Economics' as it wants to 'look through the veil of money' and take a Net Money View, which treats all debts and credits between private domestic sector agents as merely debts owed between agents INSIDE the economy which should be netted out. Nothing to see there. Move on folks. It is unseemly for you to stare at the wealth of the rich. They stole their money fair and square - right before your eyes. You couldn't see it because of the economics they had spent so much of their wealth teaching you - if you did not remain a confused, ignorant wretch.
To impose deflation today to compensate for inflation yesterday is industrial-grade distilled insanity.
- Jake Friends come and go. Enemies accumulate.
by Cat - Jan 25 14 comments
by Frank Schnittger - Jan 22 1 comment
by Frank Schnittger - Jan 26
by Oui - Jan 9 19 comments
by Frank Schnittger - Jan 13 28 comments
by gmoke - Jan 20
by Oui - Jan 15 90 comments
by gmoke - Jan 7 13 comments
by Cat - Jan 2514 comments
by Frank Schnittger - Jan 221 comment
by Oui - Jan 219 comments
by Oui - Jan 21
by Oui - Jan 20
by Oui - Jan 1839 comments
by Oui - Jan 1590 comments
by Oui - Jan 142 comments
by Frank Schnittger - Jan 1328 comments
by Oui - Jan 1212 comments
by Oui - Jan 1120 comments
by Oui - Jan 1031 comments
by Oui - Jan 919 comments
by NBBooks - Jan 810 comments
by Oui - Jan 717 comments
by gmoke - Jan 713 comments
by Oui - Jan 68 comments
by gmoke - Jan 48 comments