Well, we could always have a massive inflationary event where countries all around the world are required to print frantically in order to make production soar of goods that will never be consumed (but instead will be blown up) and thereby achieve full employment and get the economy kickstarted again. That would do it.
Of course, the last time we did that some 70,000,000 people ended up dead, but surely we can figure some way to do this stimulus again today without all those dead bodies being so messy all around, right? Right? Hello? Anybody out there in Chicagoland? Yo, Austrians, can you hear me? Oh wait, why are they putting their hands over their ears and shouting "I hear nothing! I hear nothing!"?!
Hold it, there's my Congressman and Senators, let me tell them about this great new plan for kickstarting the economy again. Wait, why are they running, screaming as if in terror, the moment I open my beak and start talking about this great new plan to party like it's 1941 except, like, without all that death and killing stuff? All that's here are us New Keynesian penguins, are we really that scary?!
- Badtux the Baffled Penguin
Goig from solutoins to causes, we have this by Krugman, earlier today.
ReplyDeleteJamie Dimon Was Right
About the 19th century, that is.
Dimon was castigated by many people, me included, for saying that a financial crisis is “the type of thing that happens every five, ten, seven, years.” Hey, no big deal.
But that is the way banking worked once upon a time. I’m reading Gary Gorton’s Slapped by the Invisible Hand, which tells us that there were bank panics — systemic crises — in 1873, 1884, 1890, 1893, 1896, 1907, and 1914.
On the other hand, there were no systemic crises from 1934 to 2007.
The problem, as Gorton makes clear, is that the Quiet Period reflected a combination of deposit insurance and strong regulation — undermined by the rise of shadow banking. So we have a choice: restore effective regulation or go back to the bad old days.
Cheers!
jXb the Non-Austrian trombonist