> Yeah, and what about the Minsky paradox, and the danger of validating > threatened financial practices? The factoid I quoted yesterday, that the > bailout era has been one of financial crises of unprecedented severity and > frequency, argues that indulgence does have its downside. I don't dispute the presence of a downside. I would say conservatives routinely exaggerate the downside (like your friend Jim Grant, whose book I read and enjoyed). I wouldn't accuse liberals of doing the contrary, but I think you could say fairly they (we) err on the side of indulging inflation rather than deflation. (That would be the proletarian liberals, as opposed to Robert Rubin's ilk.) The point is the extent of the net gain, if any, right? > And the Mexican working class did so well by that country's 1995 "bailout." Targeted bailouts are different than monetary ease that is aimed at quieting financial markets. For financial institutions, I would argue against such bailouts and support the use of monetary policy to soothe the economy's subsequent irritations, such as they are. In the case of Mexico, some kind of debt relief would be the right and progressive thing to do. In a different political universe, one could imagine separating relief for the government from relief for the relevant, undeserving rich. I was reacting to Walker's imitation of Jim Grant (Tom -- "Money of the Mind" is very entertaining and by virtue of its critique of the democratization of credit, an excellent tutorial in the virtues of the democratization of credit). Max ================================================== Max B. Sawicky Economic Policy Institute [EMAIL PROTECTED] Suite 1200 202-775-8810 (voice) 1660 L Street, NW 202-775-0819 (fax) Washington, DC 20036 Opinions here do not necessarily represent the views of anyone associated with the Economic Policy Institute. ===================================================
