tag:blogger.com,1999:blog-3240565408401956331.post1042866276417503904..comments2023-07-08T05:49:38.333-04:00Comments on Larry Davidson's Thoughts on Macro and Other Stuff: Blinder makes Monetary Policy on the MoonUnknownnoreply@blogger.comBlogger4125tag:blogger.com,1999:blog-3240565408401956331.post-60894954459094897532010-11-23T11:08:41.630-05:002010-11-23T11:08:41.630-05:00Crash,
Have you tried aspirin for your headache? ...Crash,<br /><br />Have you tried aspirin for your headache? It is a wonder drug. The long answer to your question is in my two posts about supply-side policy. The shorter answer is that today's current problem has more to do with supply than demand. The press has been pushing the idea that households won't spend because they either don't have a job or they are worried about losing one. I interpret this as a supply problem. If firms were more optimistic about the future then they would hire more workers and this would create both supply and demand. Supply-side policy is aimed at reducing tax rates, regulations and other factors that might be clouding the future.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-25754531472982771592010-11-23T10:36:50.831-05:002010-11-23T10:36:50.831-05:00I may be missing something.....I usually am & ...I may be missing something.....I usually am & it's part of my frontal lobe....but if people aren't working & earning, how is supply going to help w/o an equal/greater demand? We wind up w/ huge inventories w/ the businesses paying huge taxes on them & laying off more people because demand for all of this supply isn't there. My head hurts.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-26258863497112798932010-11-23T09:23:19.297-05:002010-11-23T09:23:19.297-05:00Dear Crash,
In Keynes' book, the General Theo...Dear Crash,<br /><br />In Keynes' book, the General Theory, he lays out why he would NOT use monetary policy in a severe recession. Bernanke and Blinder should have listened to Keynes. Some Keynesians have a more moderate view of money but acknowledge Keynes' point in what they call the liquidity trap. They model this as a flat LM curve in the infamous IS-LM Model. When the LM curve is flat, monetary policy has no impact on the economy but fiscal policy is effective. <br /><br />My view is that in today's economic situation NEITHER monetary nor fiscal policy is going to be very effective. Aggregate Supply Policy would be more useful.Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-25009705353778572742010-11-22T21:11:45.730-05:002010-11-22T21:11:45.730-05:00Prof Larry,
You lost me at Keynes and Krugman....e...Prof Larry,<br />You lost me at Keynes and Krugman....especially Krugman.Anonymousnoreply@blogger.com