Friday, January 16, 2009
CPI Numbers... Not good
What I don't understand is why we have these twin problems of deflation and debt. Isn't the obvious solution to one something which will would reduce the other? We pruned the stimulus package over concerns about our debt. But why not just print money? How 'bout a little more quantitative easing? Why couldn't we just have Treasury print out $100 billion more in fresh cash, and send it off to states and city governments for them to spend? The worst that could happen is that it wouldn't eradicate deflation, and would *only* reduce our debt. The best thing that could happen is that it would ignite inflation -- killing two birds with one stone.
What if it did ignite inflation? Well, then the economy would be moving again, and then the economy could be controlled by monetary policy. I mean, that's the whole goal here isn't it?
It turns out that Summers has explained to Obama about how, if we have too big of a debt, foreigners won't invest in the US anymore. This was the exact logic which led Summers & Geithner to force high interest rates on Asian countries during their financial crisis (although it should be mentioned that Summers & Geithner were also able to force the asian countries to open up their financial markets to 'more efficient' Wall Street). How in the world did we end up being led, in this crisis, by those who botched the Asian financial crisis? And hows come nobody is making note of this fact?
Posted by Thorstein Veblen at 11:15 AM