... and it will give us a deflationary spiral into real poverty and privation:
We’re suffering from the paradox of thrift: saving is a virtue, but when everyone tries to sharply increase saving at the same time, the effect is a depressed economy. We’re suffering from the paradox of deleveraging: reducing debt and cleaning up balance sheets is good, but when everyone tries to sell off assets and pay down debt at the same time, the result is a financial crisis.This is what the Republicans don't understand or won't accept.
2 comments:
Actually no. I think everyone agrees that's whats happening. No one, consumer or company, is spending money. They are savng because they are worried.
The difference between the liberal and conservative view points, is the conservatives want tax cuts that put more money into the private sector so that both private citizens and companies have money to save and to spend. The liberal idea is to have the government offer money to public areas like school, roads, etc and have jobs come through that way.
I guess if you're assuming that if tax cuts were given to companies / people that they would simply horde the money rather than spend it? Historically, that hasn't been whats happened.
Liberals want more control over whats bought and sold, so the government will decide what to purchase and what to work on. Conservatives, as a general rule, just want to give the money back to the people and don't care what they do with it.
I guess if you're assuming that if tax cuts were given to companies / people that they would simply horde the money rather than spend it? Historically, that hasn't been whats happened.Don't know what history you're talking about. That's exactly the paradox of thrift. Economic actors make decisions based on self-interest, but when all those decisions point in the same direction, deflation follows. It's where the market fails. Deal with it.
Your comment proves my point perfectly. Or, should I say, Paul Krugman's point...
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