Woj reports on The Atlantic Live conference in Washington, D. C.
This past Wednesday I attended The Atlantic’s Second Annual Economy Summit featuring many previously high ranking government officials (e.g. Federal Reserve Chairman Paul Volcker, Secretary of the Treasury Robert Rubin, and FDIC Chairman Sheila Bair). Though these former public officials and many others remained focus on the issue of public debt and deficits, the conference was actually promoted on the basis of turning the focus to private debt. Since my understanding of economics suggests concerns over private debt should be the main focus of current policy, I was personally excited to hear from Steve Keen, Michael Hudson and Yves Smith.Bubbles and Busts
Hudson, Keen, Smith and Others Explain Why Private Debt is the Problem
Joshua Wojnilower
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2 comments:
Well OK private debt is a bit of a problem. But there’s nothing there that Mosler’s law doesn’t solve. The law states “There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.”
Hope that's solved Wojnilower's problem.
Ralph,
Sorry but could you clarify which problem that addresses?
Mosler's law correctly, in my view as well, provides a short-term solution to a financial crisis brought about by excessive private debt. However, "a sufficiently large tax cut or spending increase" will not alter any structural incentives inherent in tax and/or regulatory policy that may have led to the build up in private debt. Without those alterations, the methods to alleviate the crisis based on Mosler's law may actually reinforce existing perverse incentives and lead to far bigger build ups of private debt and financial crises in the future. That's why I think Hudson's focus on both the immediate and longer-term solutions is extremely important.
(Apologies if the above is unrelated or repetitive but thought it might help clear up questions about my perspective/the post.)
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