I was wondering when the Krugman/Blinder forces would get back into the act. Maybe I read the wrong publications, but this duo has been pretty silent lately. But wait no more, the day after Thanksgiving, Alan Blinder weighed into the Wall Street Journal for more. More what? Of course, another drumstick or piece of pumpkin pie. Or another couple trillion of stimulus for the US economy.
The Blinder issue is not how many trillions to spend. The issue is speed. Of course,
Blinder won’t take ownership of the speed idea as he quotes Jason Furman saying “the economy can’t wait until the Biden Administration takes office” to
create the requisite trillions. Blinder is saddened that the Fed is out of
bullets and cannot help. Strange that he can admit that zero interest rates for
an extended period of time won’t help enough – yet he believes so fervently
that a few trillion here and there of fiscal urination is all that is needed…and
right now. I guess he never taught that part of the macro course called crowding
out. Surely a few trillion will save the economy. Not!
I am writing this on November 27 and so
Blinder believes with all his pea-picking heart that if we have to wait until
January, the US economy will collapse and he and his rich friends
will have to sell their stocks at a very low value. Geez, did you know that the
economy is perched on a knife’s edge and will plummet into an abyss in two
months?
Nowhere in
his article does he explain why the next 60 plus or minus days are so critical.
Geez Alan, what’s up? Is the US economy such a basket case that it can’t wait
for 60 days for Biden and his debt-loving buddies to start spewing money here
and there?
It is
interesting and curious how he pinpoints all sorts of hot spots that need help. State and local governments, small businesses, and such, but his punchline is that the ones who need it the most are the “under dogs” of society. His words, not mine. He
must be assuming that all the previous provisions in the tax and spending code have vanished and therefore we need to spend a lot more to help those
people. He doesn’t exactly explain how he will turn them into “over dogs” but let's
not be hypercritical.
This is the
kind of gooblygook that politicians love. A guy with a lot of degrees and a nice
home at Princeton writes a scholarly sounding article and they can’t wait to make passionate speeches and legislate. If Blinder says a couple trillion – then they will up the bid a few
trillion. And the sad thing is that after all the politicking, those underdogs
will still be underdogs and the usual politicians will have endeared themselves to
the usual voters.
Th standard chain of distribution requires demand at each level. For the most part the companies that have services or demand that the distribution system is willing to buy to reach the final buyer will continue making those things. If the demand is marginal in terms of "we can do without for a while" the less of the products and services will be sold. Proportionately, employment by these entities will decline with no real option unless other providers of other products and services is increasing. Was the original product or service really needed or was it created as reaction of demand in betters? A large infusion of capital into these sections of the market if demand has lessened has only marginal returns. ergo...one can only need so many Pizza houses. Bottom line is investment by the government into these channels may offer no return sufficient enough to justify the investment. On the other hand investment in housing, streets, infrastructure will have a return.....but the debt the US has to absorb is large and must keep in competition with all of the other rich(G22) countries to get it.
ReplyDeleteDear LSD. My econ prof down here in Tuna Skewl commented on yer Blinder blog. He sed any one with a piggy bank ‘n who can balance a checkbook (note reference to youse guys on the topside terra firma cuz down here we don’t have piggies and check books’ paper getz soggy . . . .) knowz Blinder is full-0-whale poop. He sed Blinder’s say’n spend more on top-0-existing debt is equivalent to yer body writ’n checkz it can’t cash.
ReplyDeleteSome folks, like Blinder, don't write bad checks but think it is okay if the government does. He doesn't understand when enough is enough.
Delete