Lakshmi Rhone wrote: > As for your separate points: > > 1. I don’t see the grounds for betting on a strong growth rate.
Nor do I, but it's possible. Recently a report came out indicating that things are going badly for the US and its allies in Iraq. This could spur a second surge, which stimulates the US economy. > 2. Commodity inflation can affect both final prices and costs. Right, but with unit labor costs flat or falling, final prices of products not directly related to commodities will likely continue to have declining final prices. The CPI-U has less that 4% annual inflation rates these days. It's lower than before the so-called "Great Recession." The core CPI has an even lower inflation rate, naturally. I don't know why people weren't yelling "inflation! inflation!" back when #2 was in office. Inflation rates were generally higher back then. > 3. The stimulus did not have the pump priming effects that Obama hoped it > would have; if it had then state budgets would not be in such bad shape. Obama didn't want a bigger stimulus and/or wouldn't fight to get Congress to go along with a bigger one. It wasn't very stimulative (being too small with too much emphasis on tax cuts). While it's true that the state and local governments would have been in better shape than currently if Obama had stimulated more, falling stock prices would have hurt the balances on pension plans and the general fall in revenues (and rise in transfer payments) would still have been pretty bad. > 4 I don’t see why we should assume that all countries are in position to > expand their money supply in the way the US is. In fact Joseph Stiglitz has > raised the specter of competitive devaluation and global backlash against > the US; the trade wars would not be triggered by dominant fraction of US > capital. It's people like Rubin who should be pushing more countries -- especially the big ones -- to expand their money supplies. The establishmentarians have only made tentative stabs in that direction. Stiglitz's specter is a specter, not a reality. In any event, if there is a competitive depreciation, the currencies will likely end up with much the same relative values. )n the issue of foreign trade, the dominant fraction of US capital is pretty dominant these days. Organized labor -- largely kaput outside of the government sector, which sees trade issues as largely irrelevant. Big Agriculture, big Pharma, and big Tech all want to push exports. It's only small businesses that want tariffs and quotas these days -- and I haven't seen it expressed publicly. > 5 The question is whether low yields on US Treasuries reflect confidence > that US will not monetize its debt away,and should not be taken as a sign > that a big second stimulus would be relatively costless. This is the > conclusion that DeLong, Krugman, Reich, Tyson, Thoma and others are drawing. > Rubin obviously thinks the low yields show how global confidence was > bolstered in the US dollar exactly because the first stimulus was only > moderate in size and the US must do more to keep that trust. the low Treasury yields likely reflect fears of deflation, too. -- 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
