Jim, Julio, and Rogoff are all correct. So long as the banks are willing to supply credit, there is no immediate problem. Once credit ceases, the sovereign debt crisis hits the fan.
Tom Palley just published something indicating that the sovereign debt crisis can be put off if the government just buys back depreciated paper, reducing the debt. The problem would be generating new credit. Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Julio Huato Sent: Thursday, June 10, 2010 9:11 AM To: [email protected] Subject: [Pen-l] "Interests And Ideas" - Paul Krugman Jim wrote: > Julio Huato wrote: >> economies have left behind high rates of indebtedness (private or > public >> doesn't really matter as much as some people think)< > > Actually, it does matter. Private corporations and individuals can go > bankrupt, but a big strong organization such as the US government, > with the power to tax and/or print money isn't going to do so during > the foreseeable future. If we're worrying about the US economy's > future, private-sector debt is much more of a threat. I guess that is a fair point. The state is the "concentration" of society -- to use Marx's formula. That is, the state can marshal a degree of social cooperation that corporations can't and isolated individuals exclude. The U.S. government has ampler wiggle room, although it may also dissolve -- hopefully after it serves its better purposes. Having said that, I was thinking of Reinhart and Rogoff's papers, which show rather remarkably *similar* economic experiences following credit bubbles in the public or private sector -- or in both. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
