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Yes, to him depression is a monetary phenomenon.

But stagflation is not depression - depression is what you get when you use interest-rate shock therapy to stop stagflation.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Mon Jun 30th, 2008 at 02:33:17 AM EST
[ Parent ]
Well, in the Great Depression, purchasing power collapsed and producers could not find buyers.  Retaliatory tariffs did their part, e.g. Smoot-Hawley.  Perhaps "Helicopter Ben" could fly to the rescue.  My fear is that, if a worst case, the USA will see a reprise of hyper- inflation, or at least a return the inflation rates of the late '70s and early '80s.  The only way out of such a situation would likely involve coordinated tax, spending and monetary policies.  This requires the Fed, the Treasury, the Congress and the President all to be moving towards a shared goal.  We need this in the worst way, and that is probably how we will get it.  

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jun 30th, 2008 at 11:58:37 AM EST
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