interesting and useful article. Three points, however: 1) to be fair to PK, if I interpret his columns correctly, he sees the QE (expansionary monetary policy, aimed at lowering long-term interest rates) as an inferior alternative to a having second StimPak (expansionary fiscal policy), which is perceived as blocked by GOP obstructionism and BHO cowardice. The effect of the QE at stimulating the US real economy (as opposed to merely causing another financial bubble) seems more a matter of hope than one of belief: if fiscal policy won't do it, maybe monetary policy will (even though banks aren't lending and interest rates have gone down as far as they can go) ...
2) if other countries don't want the QE to devalue their dollar holdings (in terms of their domestic currencies), all they have to do is initiate their own QEs. Exchange rates could stay roughly the same while the _world_ money supply would increase. If it doesn't simply cause another asset-price bubble, it would help world GDP grow. That doesn't solve a lot of real-world problems (such as stagnant working-class living standards and global warming) but it's the kind of global Keynesianism that's needed (though global fiscal stimulus would work much more effectively). 3) while it's right to criticize BHO's policy as "nationalist," the same epithet applies to China's policies. Now, I expect this article to be posted again to pen-l by someone who doesn't read cb's missives. Repetition of postings seems the rule, not the exception. c b wrote: > Why Paul Krugman Waves the Flag for Uncle Sam > > by Michael Hudson > > CounterPunch (November 22 2010) > > > Here's the quandary that the US economy is in: The Fed's quantitative > easing policy? creating more liquidity so that banks can lend more - aims > at helping the economy "borrow its way out of debt". But banks are not > lending more, for the simple reason that a third of US real estate already > is in negative equity, while small and medium-sized businesses (which have > created most of the new jobs in America for the past few decades) have > seen their preferred collateral (real estate and sales orders) shrink. How > can banks be expected to lend more to re-inflate the economy's asset > prices while wages and consumer prices continue to drift down? The "real" > economy as a whole therefore must shrink. >... -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
