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We know what we need and it's the domestic economic politics of the West of the 1940s to early 1970s (might be nice to end imperialism, too).

Minsky's 1986 Stabilizing an unstable economy contains an economic history of the US 1945-1985. His analysis is that what made 1945-65 special and stable was that the private sector was stuffed with US treasury securities as a result of the enforced savings and investment of the war economy, and it took 20 years to unwind those government bond holdings. Then after roughly 1965 financial innovation started out of necessity since banks couldn't do their business just shuffling US treasuries. And then financial crises hit every 5 years or so, until now.

So it may not just be the political economy - maybe you couldn't pull it off with today's balance sheets.

Incidentally, Minsky dates the start of stagflation well before peak oil in the lower 50 US states (he doesn't mention peak oil), which means that maybe stagflation wasn't only or even primarily about resource constraints, as many of us here appear to believe.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Carrie (migeru at eurotrib dot com) on Sun Jun 6th, 2010 at 02:43:09 PM EST
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