Quote:
Originally Posted by Tyrone Slothrop
I'm not sure where you found this caricature of a Keynesian economist. I'm not familiar with anyone saying anything like that.
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That's your point run to its logical conclusion.
Your Keynesian/Krugman-esque hypothesis that we can print our way of this rests on the assumption the private sector will inevitably fill in the lack of demand. That Keynesian spending will hold us at equilibrium until the private sector comes back.
In a traditional recession, you're right.
But this is, to borrow from Rogoff, a Great Contraction. We've printed and spent (they necessarily go together), and printed and spent, and we have sustained a better equilibrium than we would have otherwise. But the private sector, and the consumer, hasn't stepped in to pick up the slack.
So what do we do? Two choices. Print more and risk debasing the currency to the point it no longer remains the world reserve (China's been making a solid case for a non-dollar reserve for a long time), destroying the immense advantage we've had since Bretton Woods? Or stop printing and let the economy take some of its medicine, as Less described it.
We can't preserve equilibrium indefinitely, Ty. So tell me, where's the sunset on your Keynesianism? At what point do you say, "Enough. We have to sacrifice some future equilibrium on the employment and human side to preserve the greater equilibrium we enjoy from remaining a AAA rated state with the world's reserve currency"?
That's the problem every Keynesian has right now: They all know it can't persist indefinitely. But few, if any, of them want to admit it.
