Tuesday, April 24, 2012

Henry Blodget: IT’S OFFICIAL: Keynes Was Right

Almost correct post out today by Henry Blodget that looks at a policy of austerity vs. so-called "Keynesian" policies.

Article here at Yahoo!

Henry does "okay" in his comparisons of the different policy approaches but unfortunately veers off the rails here:
Our current debt and deficit situation scares the bejeezus out of me. We absolutely have to get our long-term budget problems under control, and doing so will involve both cutting spending and raising taxes. If we don't do that, we really will collapse, as Niall Ferguson et al have long been arguing. But getting the budget under control by radically chopping spending or increasing taxes this minute, as many Austerians want to do, won't help. In fact, it will likely make the problems vastly worse, because it will put that many more people out of work and reduce tax revenue that much further (just take a look at Europe). Meanwhile, given that we've already racked up $15 trillion of debt,...

Perhaps he is getting there, at least he seems to have taken a first step and has realized that the moron  austerity policy is having a reverse effect.  Now all he needs to do is somehow realize that we have been using a double entry accounting system for centuries if not millennium and that a government sector liability code corresponds to a non-government sector asset code and we may be able to welcome Henry into the MMT paradigm.


widmerpool said...

As Felix Salmon pointed out, Peter Peterson has completely won the day.

Anyone who tries to talk sense has to add that phony disclaimer ("Oh, certainly we have serious LONG TERM debt issues, but...") so they aren't ridiculed as a spendthrift.

Mike Norman said...

It took us 234 years to run up $15 trillion of "debt" but only 7 mos to pay off $36.5 trillion! WTF, Henry!@*%^$#

Mike Norman said...


You're right!

reslez said...

Also ignoring the trillions we gave away to the banks when they sneezed, that somehow vanished when the average senior citizen needs medical care.... He needs to make the mental leap that we are dealing with limitations of our own design, not limitations imposed by natural law.