Some history of economics as background for the current debate over secular stagnation initiated by Larry Summers.
vox.eu
Secular stagnation: The history of a heretical economic idea
Roger Backhouse, Professor of the History and Philosophy of Economics, University of Birmingham, and Mauro Boianovsky, Professor of Economics, Universidade de Brasilia
Summers’s original secular stagnation speech was a disorganized ramble. In fact he more or less admitted he had no idea what he was talking about. However, if it contained anything coherent I agree with Gavin Davies’s take in the Financial Times. Davies understood Summers to be saying that SS occurs where interest rates are zero and demand still isn't enough, and in that situation we’re bug*ered because negative rates are impractical and there’s nothing else we can do.
ReplyDeleteFor Gavin Davies, see:
http://blogs.ft.com/gavyndavies/2013/11/17/the-implications-of-secular-stagnation/
As every MMTer knows, there is a very easy solution to the above dilemma, namely to create fiat and spend it (and/or cut taxes).
The moral is that if you’re famous and you’ve run out of ideas, don’t worry: just produce some catch new phrase like “secular stagnation”. Everyone will be mesmerised, and you’ll make millions going round the country making speeches about your totally meaningless catchy new phrase.