So the tighty righties are pointing at Greece and saying, "See? That's the future of the United States."
Now, I guess I can forgive them, since they have no conception of modern technology and thus can't see the biggest difference between the U.S. and Greece. See, there's also another way to fund the parts of the deficit that are due to the current economic downturn. The U.S. government has this marvelous new invention called the PRINTING PRESS, see, that has only existed recently, since 1450 (*only* 550 years -- just yesterday, geologically speaking, y'know). Now, in normal times using the printing press would cause inflation. But in this case, the parts of the economy that have been idled by the downturn would sell the idle resources currently not in the economy to the government in exchange for the newly-printed currency, thereby maintaining the goods-to-currency ratio thereby not causing inflation. This would also put people back to work, meaning the government could then collect that money back in the form of taxes and thus be able to cut back and eventually discontinue the Fed's Treasury purchases as the economy recovered. This assuming that we fix the tax code to capture more revenue of course -- my recommendation is that we fix it to collect pretty much the OECD average of around 35% of total GDP collected as taxes, from local to federal levels, with progressive taxation of the investor class (the upper classes) to suck out some of that investment money that right now is going to fund one bubble after another due to a shortage of worthwhile investments to put it into...
I realize that for most conservatives, the printing press is a new and novel invention, and they don't understand its operation and thus dismiss it entirely from their thoughts. But the fact that the U.S. has a printing press for its currency, and Greece does not, is a real and valid difference between the U.S. and Greece that cannot be dismissed just because conservative luddites are uncomfortable with a 550-year old invention, yo.
-- Badtux the Snarky Penguin
You sound a lot like Krugman, though he seldom applies much snark.
ReplyDeleteI'm developing a hypothesis about conservative/libertarian/Austrian economics.
1) Hayak and von Mises both lived through the Austrian hyper-inflation of 1923, and reacted to that experience the way Ayn Rand reacted to living under Stalinism.
2) Austrian economics isn't so much wrong as it is mis-applied. I think the Austrian principles are a valid sub-set of general economics, but only applicable to certain types of economic situations. They commit the composition error of wanting to apply the Austrian principles to every econ situation. They are also guilty of projection, when the accuse Keynesians of, frex, wanting deficit spending all the time.
This guesswork at the moment. I don't have anything solid to back it up.
Cheers!
JzB