"If you're going to panic, do it fast and beat the crowd." ~ Jesse Livermore

Thursday, February 7, 2013

Expansionary Policy

Grand Mal Economics by J. Bradford DeLong - Project Syndicate: In the worst case, have the government step in, borrow money, and buy stuff, thereby rebalancing the economy as the private sector deleverages. CommentsView/Create comment on this paragraphThere are many subtleties in how governments and central banks should attempt to accomplish these steps. And, indeed, the North Atlantic region’s governments and central banks have tried to some degree. But it is clear that they have not tried enough: the “stop” signal of unanchored inflation expectations, accelerating price growth, and spiking long-term interest rates – all of which tell us that we have reached the structural and expectational limits of expansionary policy – has not yet been flashed. CommentsView/Create comment on this paragraphSo we remain far short of full employment for the third reason. The issue is not that governments and central banks cannot restore employment, or do not know how; it is that governments and central banks will not take expansionary policy steps on a large enough scale to restore full employment rapidly. Read more at http://www.project-syndicate.org/commentary/the-unreached-limits-of-expansionary-economic-policy-by-j--bradford-delong#FgxGbUloIrTPdklh.99


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