Posted by
Andrews on Tuesday, September 22, 2009 5:37:35 PM
The WSJ has an
interesting article from Arthur Laffer arguing that Bernanke's approach is completely at odds with the lessons he should be drawing from the 1930's. I myself am quite frightened by Bernanke's worry that tightening credit is the real danger. Given our massive inflationary pressures, contraction seems the solution, not the problem. Then again for moderns raised on Keynes or his successors, yes even the "conservative" monetarists, contraction is the great bugaboo, even when it is clearly needed to resolve massive inflationary crises. So I guess we have to wait for a total collapse before we get the contraction we need. (Or have to vote in some sane individuals in 2010 and 2012, provided we can find them... and there seem to be a dearth of those in either party.)
POSTSCRIPT
I have written a lot on this topic. On the problems of both parties on the issue, the best essay is "
Place Blame Fairly, Regardless of Party". To get a list of all my writing, I would recommend reading "
Inflation and Uncertainty", "
Explaining Past Crashes", "
Not Entirely to Blame", "
The Inflation Engine", "
A Thought on the Clinton Surpluses", "
The Importance of Error", "
Cash For Clunkers Revisited", "
The Cost of Big Government", "
Economic Resistance to Recovery" and "
A Strange Wish", and following the links to find most, if not all, of my posts on the topic.