Vice Chair Kohn on fiscal expansion
Posted by WARREN MOSLER on May 26th, 2009
Yes, he’s got that part very right!!!
> On Mon, May 25, 2009 at 11:06 PM, Roger wrote:
>
> Federal Reserve Vice Chairman Donald Kohn:
>
> Interactions between Monetary and Fiscal Policy in the Current Situation
>
> [I]n the current weak economic environment, a fiscal expansion may be much more
> effective in providing a sustained boost to economic activity.
> Doesn’t say anything about when. Looks like it’s already too late to forestall a pileup.
>
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May 26th, 2009 at 10:21 am
“Looks like it’s already too late to forestall a pileup.”
Is this an incremental change to your economic outlook?
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May 26th, 2009 at 2:09 pm
Kohn
“[I]n the current weak economic environment, a fiscal expansion may be much more effective in providing a sustained boost to economic activity.:
The speech, as a whole, like Obama’s comments above, is textbook neoclassical that Krugman would support 100%. Fiscal stimulus now, until the first signs of stability, then back to a monetary policy-dominated approach. No sign whatsoever that he incorporated any of the SCE ideas you express on this site or to him in personal correspondence.
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May 27th, 2009 at 11:32 pm
true.
that’s why i said only that he has ‘this part’ right
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Dissenting Comments Encouraged Reply:
May 28th, 2009 at 8:21 am
Hans Bader with the competitive enterprise institute is on C-Span right now saying the stimulus is going to cost jobs long term in the economy according to the CBO. He is also upset that we lost 40,000 US jobs to keep 97 mexican truckers out of the USA. He claims the entire timing of the stimulus is only designed for short run political goals to get democrats re-elected and not much to do with the long run health of the economy. How much crony capitalism and corrupt government can the american people sustain before the government virus kills the host?
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May 27th, 2009 at 11:39 pm
Warren,
It is going to be decades before this is accepted. I’ve been trying to think of a business that can exploit this. Unfortunately, this runs into the problems raised by behaviorial finance, where even if you are correct, and the crowd is wrong, because the crowd is far larger than your potential effect, profits are not realized
I guess the soverign CDS markets are good for a laugh if you have the capital to ride for 5 years.
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