Three Things Worth Reading
Sorry for the lack of posts this week. I’ll be better next week…
In the meantime three things worth reading.
“Whatever the explanation, I like the results: the IMF has been doing terrific research work, and has been a breath of fresh air in policy debates.”
– Must say I agree.
“Now consider the 2008 crisis, when all the liquidity in the world dried up as every equity dealer in every bank had to become a credit analyst such that the system as a whole ground to a halt. Saving the global payments system from itself was essential, and so the unreconstructed brute Keynesianism of output gaps and stimulus was wedded to an enormous redistribution of wealth from taxpayers to rentiers, as financial bailouts became the order of the day. But once the system was stabilized, this time around the critics would have a hard time being heard.”
“Thirty years of spectacular returns and not blowing up (at least in the Western core states) had convinced everyone from the OECD to the ECB, from the BIS (with a few exceptions) to the IMF, from the Swedish central bank to the US Federal Reserve, that markets were rational, prices were right, and policies were optimal. Those invested in selling ‘the Great Moderation’ could hardly be expected to turn around and tear it all down so easily. With so many distributed authorities invested in ‘paradigm maintenance’ the forces for paradigm change had to spread their fire over such a wide area that their effect was dissipated. That’s one reason, among many, why there was no Paradigm Lost.”
And lastly, Steve Keen on Minsky/Krugman – I don’t entirely agree with all of this, but an interesting read.
“So while Krugman reaches some policy conclusions with which I concur—such as arguing against government austerity programs during a debt-deflationary crisis—his analysis is proof for the prosecution that even “cutting edge” neoclassical economics, by continuing to ignore the role of aggregate debt, is part of the problem of the Great Recession, not part of its solution.”