Jesse's Café Américain Wed 2010-09-29 09:13 EDT

Slouching Towards Bethlehem: Double Dip or Banana Split?

Jesse

NBER: "If the 2010 contraction we are now monitoring in consumer demand for discretionary durable goods scales to the full economy as faithfully as the "Great Recession" did, the second dip will, at minimum, be 33% more painful than the first dip and will extend at least half again as long." This is the case for trouble dead ahead, a worse decline in consumer activity and therefore GDP than the first, and the likelihood of further quantitative easing from the US Federal Reserve to patch over the inability of the political process to reform the financial system and balance the real economy because of their myriad conflicts of interest. These policy errors favoring a small minority will most likely result in a stagflation of the most pernicious and corrosive kind, high unemployment and a rising price of essentials, that may ultimately test the fabric of society...

Banana Splits; Bethlehem; double dip; Jesse's Café Américain; Slouching.

Credit Writedowns Sat 2010-05-22 20:38 EDT

Out of control US deficit spending [MMT introduction]

Regular readers know that, while I have a little of what Marshall Auerback calls deficit terrorism in my DNA, I fully support fiscal stimulus as a means to arrest a deep downturn...the US economy will not be able to sustain recovery for long without stimulus. The likely result of withdrawing stimulus is a recession that is deeper than the last one aka a major depression...a lot of talking heads are trying to bamboozle people with tales of woe about hyperinflation and sovereign bankruptcy in the US to support specific claims about what deficit spending can and can't do. Deficit hawks, in particular, are on the warpath...I am throwing in the towel on policy makers because it's clear that Obama has been captured by the deficit hawks and we are headed for a painful recession within the next two years...The policy debates aren't working because the actual mechanics of a fiat monetary system are being obscured by ideological political debates. So, what I want to do is lay the foundations of modern money with you so we can strip away the politics and ideology from the economics...

control; credit writedowns; deficit-spending; MMT introduction.