Paul Krugman: Who Will Stop the Economic Pain?

[marmar]

via AlterNet:



Krugman: Who Will Stop the Economic Pain?

By Paul Krugman, The New York Times. Posted February 21, 2009.

We're in the midst of a crisis that bears an eerie resemblance to the onset of the Depression. How and when will it all end?



Earlier this week, the Federal Reserve released the minutes of the most recent meeting of its open market committee — the group that sets interest rates. Most press reports focused either on the Fed’s downgrade of the near-term outlook or on its adoption of a long-run 2 percent inflation target.

But my eye was caught by the following chilling passage (yes, things are so bad that the summarized musings of central bankers can keep you up at night): “All participants anticipated that unemployment would remain substantially above its longer-run sustainable rate at the end of 2011, even absent further economic shocks; a few indicated that more than five to six years would be needed for the economy to converge to a longer-run path characterized by sustainable rates of output growth and unemployment and by an appropriate rate of inflation.”

So people at the Fed are troubled by the same question I’ve been obsessing on lately: What’s supposed to end this slump? No doubt this, too, shall pass — but how, and when?

To appreciate the problem, you need to know that this isn’t your father’s recession. It’s your grandfather’s, or maybe even (as I’ll explain) your great-great-grandfather’s.

Your father’s recession was something like the severe downturn of 1981-1982. That recession was, in effect, a deliberate creation of the Federal Reserve, which raised interest rates to as much as 17 percent in an effort to control runaway inflation. Once the Fed decided that we had suffered enough, it relented, and the economy quickly bounced back. ...........(more)

The complete piece is at: http://www.alternet.org/story/128124/krugman%3A_who_will_stop_the_economic_pain/

[corruptmewithpower]

1. Sure hope this isn't like the thirties.

Twelve years of depressiom is way too much.

[Stuart G]

2. dup

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x426865

[54anickel]

4. Strange error on your link

Invalid Topic ID

The page you requested cannot be displayed because the topic ID syntax is not valid. The topic ID must be an integer number.
If you have any questions, please contact the site administrator.

[Possumpoint]

3. Those In Charge

are caught between a rock and a hard place. Debt was/is a method used by the government to spend well past its means.Debt was a vehicle to great wealth in the private segments until it became the rock that is pulling down this economy. For all practical purposes, the Federal Government is bankrupt. A portion of the private segment is also bankrupt. Oh yes, the government can and will still print and borrow money but we are past the point where anyone in the government is seriously considering how or when we're going to pay down or off the debt.

It has started to dawn on the American public how deep in the sh$$t we've crawled and they are withholding their spending. Many can no longer use their house values to sustain a lavish life style of spending well past their means. Consumer spending was 70% of the economy. In the absence of that and without a manufacturing base just where the "F" is the recovery going to come from?