As no one interested in macroeconomics has failed to notice, Ben Bernanke is having a debate with Larry Summers on what’s behind the slow recovery of growth rates since the financial crisis of 2007.
To Bernanke it’s basically a question of a savings glut.
To Summers it’s basically a question of a secular decline in the level of investment.Lars P. Syll’s Blog
To me the debate is actually a non-starter, since they both rely on a loanable funds theory and a Wicksellian notion of a “natural” rate of interest — ideas that have been known to be dead wrong for at least 80 years …
The Bernanke-Summers imbroglio
Lars P. Syll | Professor, Malmo University
4 comments:
Glad someone also took on this nonsense! Oooh, look at these two guys who got everything wrong talk about fancy schmancy eco-nomics!
So did they agree how many angels are on the pinhead?
Gavyn Davies in the Financial Times sets out the basic ideas in Summers’s original “secular stagnation” speech here:
http://blogs.ft.com/gavyndavies/2013/11/17/the-implications-of-secular-stagnation/
As Davies put it, Summers thinks that if demand is still insufficient at the zero bound, then negative rates are the “only means available to boost demand”.
In short, Summers doesn’t understand that it’s possible for the state to simply create fiat and spend it. And he’s far from the only so called “professional” economist who doesn’t understand that point. Robert Mugabe understands the point, of course.
I.e. levels of ignorance amongst the world’s so called “leading economists” are of jaw dropping proportions.
Dear Tom, when i read this sad story on state of mind on academia ,what first come up to my mind,its go back to a more sincere age,Philosophy classes in 1970s!I think of “Repressive Tolerance”
by Herbert Marcuse. Somewhat hardreaden but basically a analyze that sadly still hold waters in my view! 1965.http://www.marcuse.org/herbert/pubs/60spubs/65repressivetolerance.htm
Post a Comment