tag:blogger.com,1999:blog-2761684730989137546.post200081229441324103..comments2024-03-29T09:24:36.140-04:00Comments on Mike Norman Economics: Brad DeLong — **Must-Read: What did Alan Greenspan do in 1987 when the stock market suddenly dropped by 25%? He reduced short-term safe nominal interest rates by 200 basis points.mike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2761684730989137546.post-76938791603390614052015-08-25T15:39:44.977-04:002015-08-25T15:39:44.977-04:00Why did fiscal policy become so disliked and monet...Why did fiscal policy become so disliked and monetary policy crowned king? Seems obvious to me that fiscal policy is really the only effective tool. Monetary policy is wholly constrained by demand for credit (hasn't the last 8 years proved that beyond any doubt at all?) Plus, private sector debt is trading consumption now for reduced consumption in the future as you pay back your debt. Fiscal policy has no such hangover.<br /><br />Seems to me that it has roots in class issues and financier self-interest. Encouraged people to load up to their eyeballs in debt, when they don't want anymore, lower the interest rate. Then when you have most of the population fearing bankruptcy, they'll quit demanding higher wages, better working conditions, etc. Didn't Greenspan one time quip that debt solved the labor problem?Joehttps://www.blogger.com/profile/15197727918414570446noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-41110037732718526452015-08-24T12:29:08.716-04:002015-08-24T12:29:08.716-04:00What you are saying is true, Tom, and it has been ...What you are saying is true, Tom, and it has been bothering me as well. <br /><br />However, here in the US the Feds are still spending nearly $4.3 trillion annually. China's growth is 7.0% and they are likely offsetting the negative effects of devaluation by spending more domestically. Europe is the same as it has been for 5 years with elections coming up in Spain, Britain, Portugal, Denmark, Finland, Poland, later in the year. Japan's export of deflation via a weak yen may come to an end soon as they restart their nukes and stop running big trade deficits.<br /><br />I hear ya about the conservatives and the austerians being in power. It's a problem, but I'm watching with my fingers crossed.mike normanhttps://www.blogger.com/profile/03296006882513340747noreply@blogger.com