From: Lakshmi Rhone " I am also not convinced by the left Keynesians arguing that all we need do to eliminate unemployment is expand debt financed government programs. Well it may be true that there is little evidence that there would capital crowd out effects given that the present debt financed expenditures are not putting pressure on interest rates. But it seems obvious to me that if Obama were to spend like Krugman is demanding (and the Fed were to commit itself to a high inflation target) that there is a great possibility that business (US owned and foreign) will not expand in the US given the fear of future tax burdens and the instability associated with inflation. That is, the animal spirits are not likely to be strengthened by even more fiscal expansion. On the contrary. It seems like we are stuck over the medium term with at least astonishingly high levels of unemployment with a greater possibility of a double dip about which the government can do nothing than of a spontaneous increase in business confidence and real investment (in something other than inventories).
LR ^^^^^^^^^ CB: What do you make of the idea that crises are inevitable ? That no policy will avoid them ? _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
