Raghu channels Paul Krugman below: I don't follow Krugman on a regular basis, so maybe there is an answer. But does PK give any indicattion of a debt level he thinks would be too high, where he would recommend no more? If he was Goldilocks, what would be "just right" and how are policymakers supposed to recognize that point?
David Shemano >> Krugman with some very interesting observations on the "pain caucus". >> >> http://krugman.blogs.nytimes.com/2010/06/02/interests-and-ideas/ >> -----------------------------------------snip >> On the first point, the pain caucus isnt being orchestrated in the >> same way that, say, the cut-entitlements caucus (and its not the same >> thing). For sure, the likes of Pete Peterson etc. are deliberately >> pushing the line that Social Security must be destroyed; but its >> really hard to see exactly where the line that the Fed funds rate must >> rise is coming from. Or maybe a better way to put it is that in this >> case I dont think theres a vast hard-money conspiracy; its a bad >> idea bubbling up among many people. >> >> Now, none of those people are the sorts who are likely to find >> themselves, or anyone they know, among the long-term unemployed. So >> class is certainly a factor. But I find myself in conversations with >> people I dont think have a deep urge to inflict pain and/or safeguard >> the rentier class who nonetheless ask, But how long can we keep >> interest rates low? Wont bad things happen? >> >> Which is not to say that this position makes any sense. What it does >> reflect, instead, is the pervasive bias toward believing that imposing >> suffering is good policy. I wrote about this bias a little while back, >> citing Keynes, who similarly noted the strange collection of motives >> behind the punishment mentality; yes, one motive was this: >> >> That it could explain much social injustice and apparent cruelty >> as an inevitable incident in the scheme of progress, and the attempt >> to change such things as likely on the whole to do more harm than >> good, commended it to authority. >> >> But its not just simple class interest which is why arguing with >> the ideas can make a difference. >> >> >> >> >> -raghu. >> _______________________________________________ >> pen-l mailing list >> [email protected] >> https://lists.csuchico.edu/mailman/listinfo/pen-l >> >>
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