Quote:
Originally Posted by Tyrone Slothrop
Hey, look: It's a free lunch.
Delong
Would be curious to hear club or Hank respond to the substance (as opposed to the politics) of this.
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This comment:
"In sum, on the benefits side of the equation: more jobs now, $500 billion of additional consumption of goods and services over the next two years, and then a $40 billion a year flow of higher incomes and production each year thereafter."
Sounds intentionally vague to me. Once the infrastructure is built, the gains from it will fade. It is a one shot deal - not unlike our original stimulus. We're not going to see that $40bil year in year out indefinitely, which is why Summers avoids offering any projection on its sunset (NPI).
Sounds like he's advocating paying $200 billion over thirty years to knock a point off the unemployment rate. That's not a bad idea. But it's not a game changer, or anywhere near the fix we need, either.
If his logic holds, why not a borrow a trillion and knock the rate back to 5%? Oh, that's right... We did that once already, and the positive effects were, predictably, temporary.
You realize Summers accidentally points out the problem with stimulus with this idea. It admits that artificially-created consumption can only provide a temporary solution because, by its necessarily temporary nature, the multiplier effects left in its wake tend to also be temporary.
...Which brings us back to Cowen, and the crux of the issue at hand: Where's the new private sector advance to bring us out of this mess for real? That's the only question that matters.
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