Oct 1st, 2011
Kevin Drum argues that the coming double dip will be wholly owned by the Tea Party and their sympathetic (or fearful) agents in the 112th Congress. The kicker:
"If we want them to, both monetary and fiscal policy can have plenty of bite left. Bottom line: If we plummet into a second recession, it will be solely the fault of fanatical conservatives in Congress who refuse for reasons both partisan and ideological to acknowledge that we can do something about this. It'll be the Tea Party Recession of 2011."
I think it's worse than Drum realizes. We're not dealing with a group that's simply opposed to changes in "fiscal and monetary policy" now. We're dealing with a collectively delusional cabal that is opposed to centralized intervention ever. Their meme of "not picking winners" has devolved into an unthinking scheme that ensures greater hardship for most Americans.
So, yeah. They own it.
Showing posts with label monetary policy. Show all posts
Showing posts with label monetary policy. Show all posts
Saturday, October 1, 2011
Friday, May 13, 2011
"Quackery"
May 13th, 2011
It is certainly interesting to find as much shared ground as I have in recent months with writers from The Economist. In a piece this afternoon, the editors note with some alarm that the dominant proposals amongst elected Republicans
aren't just bad ideas, they are disastrously bad ideas:
"Views on the efficacy of countercyclical fiscal policy obviously differ, though prior to the election of Barack Obama Republican legislators had no compunction about voting for stimulus packages (though tax cuts were favoured). The turn against monetary policy is a disturbing and potentially quite dangerous development. Once upon a time, Milton Friedman—a man who basically blamed the Depression on tight money—was the leading economic intellectual of the conservative movement. Now top GOP members can't stop talking about the importance of "hard money" for recovery. Everyone from Rand Paul to Tim Pawlenty to Paul Ryan is on the bandwagon.
This is quackery. It should be noted that mainstream conservative intellectuals strongly back the use of countercyclical monetary policy, and some of the most aggressive critics of too-timid Fed policy—academics like Scott Sumner—have been on the right. Even the punditocracy is not entirely on board with goldbuggery. The National Review's Ramesh Ponurru has been a vocal critic of knee-jerk opposition to Fed policy.
The hard money approach is atrocious economics. I don't think it's outlandish (or even particularly controversial) to say that the biggest difference in the outcome of the Great Recession and the Great Depression was the change in central bank approach to policy. An economic catastrophe was averted. What's more, hard money is a great force for illiberalism. Sour labour market conditions fuel anger at the institutions of capitalism and free markets. And when countries are denied the use of normal countercyclical policies, they quickly reach for illiberal alternatives like tariff barriers.
Antipathy to the traditional role of the Fed is, quite simply, one of the worst intellectual developments to occur in either major party in recent memory. It's distressing that it's been so little remarked upon." EMPHASIS OURS
aren't just bad ideas, they are disastrously bad ideas:
"Views on the efficacy of countercyclical fiscal policy obviously differ, though prior to the election of Barack Obama Republican legislators had no compunction about voting for stimulus packages (though tax cuts were favoured). The turn against monetary policy is a disturbing and potentially quite dangerous development. Once upon a time, Milton Friedman—a man who basically blamed the Depression on tight money—was the leading economic intellectual of the conservative movement. Now top GOP members can't stop talking about the importance of "hard money" for recovery. Everyone from Rand Paul to Tim Pawlenty to Paul Ryan is on the bandwagon.
This is quackery. It should be noted that mainstream conservative intellectuals strongly back the use of countercyclical monetary policy, and some of the most aggressive critics of too-timid Fed policy—academics like Scott Sumner—have been on the right. Even the punditocracy is not entirely on board with goldbuggery. The National Review's Ramesh Ponurru has been a vocal critic of knee-jerk opposition to Fed policy.
Antipathy to the traditional role of the Fed is, quite simply, one of the worst intellectual developments to occur in either major party in recent memory. It's distressing that it's been so little remarked upon." EMPHASIS OURS
When the core economic solutions offered by the elected Republican leadership are at odds with both Paul Krugman and the editorial board of The Economist, it is time to stop taking them seriously altogether.
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