yin or yang......yin or yang......meanwhile billions suffer...........
----- Original Message ----- From: "Tom Walker" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Friday, October 04, 2002 9:59 AM Subject: [PEN-L:30899] Re: PK's the man with the plan > One Krugman ready or not? > > Gosh, I seem to recall someone by the name of Paul Krugman, I believe it > was, mocking William Greider a few years ago for his naive "fallacy of > composition" belief in the possibilty of overproduction. Now I realize that > investment and production are not synonyms, but it seems to me that the > arguments against the _possibility_ of overproduction would pertain equally > to the possibility of overinvestment. "Or, to put it a different way: > Productivity growth in one sector can very easily reduce employment in that > sector. But to suppose that productivity growth reduces employment in the > economy as a whole is a very different matter." > > http://web.mit.edu/krugman/www/hotdog.html > > Paul Krugman wrote, > > "The key point is that this isn't your father's recession -- it's your > grandfather's recession. That is, it isn't your standard postwar recession, > engineered by the Federal Reserve to fight inflation, and easily reversed > when the Fed loosens the reins. It's a classic overinvestment slump, of a > kind that was normal before World War II. And such slumps have always been > hard to fight simply by cutting interest rates." > > Contrasts with: > > "Here again, however, there is a deeper answer. It is possible for economies > to suffer from an overall inadequacy of demand--recessions do happen. > However, such slumps are essentially monetary--they come about because > people try in the aggregate to hold more cash than there actually is in > circulation. (That insight is the essence of Keynesian economics.) And they > can usually be cured by issuing more money--full stop, end of story. An > overall excess of production capacity (compared to what?) has nothing at all > to do with it." > > > Tom Walker > 604 255 4812 > >
