Monday, June 25, 2012
We are victims of the Refuseniks
And, as Paul Krugman points out, there are sizable elements of this group in all the major economies. In the US they are called Republicans and in Europe they are a mixed bag of financial heavy hitters. What they have in common is a refusal to do what is needed to rescue the wobbly world economies.
Among economists who know their history, the mere mention of certain years evokes shivers. For example, three years ago Christina Romer, then the head of President Obama’s Council of Economic Advisers, warned politicians not to re-enact 1937 — the year F.D.R. shifted, far too soon, from fiscal stimulus to austerity, plunging the recovering economy back into recession. Unfortunately, this advice was ignored.The Very Special People are trying to ruin us and the rest of us are allowing them to live so they can do it.
But now I’m hearing more and more about an even more fateful year. Suddenly normally calm economists are talking about 1931, the year everything fell apart.
It started with a banking crisis in a small European country (Austria). Austria tried to step in with a bank rescue — but the spiraling cost of the rescue put the government’s own solvency in doubt. Austria’s troubles shouldn’t have been big enough to have large effects on the world economy, but in practice they created a panic that spread around the world. Sound familiar?
The really crucial lesson of 1931, however, was about the dangers of policy abdication. Stronger European governments could have helped Austria manage its problems. Central banks, notably the Bank of France and the Federal Reserve, could have done much more to limit the damage. But nobody with the power to contain the crisis stepped up to the plate; everyone who could and should have acted declared that it was someone else’s responsibility.
And it’s happening again, both in Europe and in America.
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Reading the comments on that Krugman article is a depressing thing. So much ignorance, so much misunderstanding of the basics of what money is (hint: pieces of toilet paper with pictures of dead people is pretty much it, and if there ain't enough of it to conduct all the trades necessary to keep an economy moving, you just print more thanks to the wonders of that medieval invention, the PRINTING PRESS). But of course our rulers prefer us to be ignorant, because if the majority weren't, the Very Special People would be strung up from the lampposts like the looters and thugs that they really are (every single one of them got rich by stealing the output of their workers and then calling it their due -- every single one of them).
WASF.
- Badtux the Waddling Penguin
WASF.
- Badtux the Waddling Penguin
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