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Wednesday, May 25, 2011
Real versus nominal
Stiglitz is not a monetary economist. He would point to increases in food and fuel costs as reasons that US economic policy is out of whack (a very technical term, of course). Bloomberg writes about the real economy here. This article reminds me of last night's discussion about a good stimulus program. Jared's group went "monetarist" on us--a school of thought led by Milton Friedman that believed any stimulus had no effect because it was "monetarized" through inflation and not through real changes in the economy. Bloomberg is pointing to real changes but the cause may be the overactive stimulus.
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Rub it in :)
ReplyDelete"It is not enough that I should succeed," Gore Vidal once remarked. "Others must fail."
Economist Paul Samuelson evidently agrees.
A big government man from way back--in an edition of his best-selling college textbook Economics, he argued that "the remarkable fact is not how much government does to control economic activity, but how much it does not do"-- Samuelson, now 93, gave an interview not long ago. The current crisis, he claimed, validates his own economic views--and invalidates those of his longtime rival, the late free-market economist Milton Friedman.
"Today we see how utterly mistaken was the Milton Friedman notion that a market system can regulate itself," Samuelson said. " ... Everyone understands now, on the contrary, that there can be no solution without government. The Keynesian idea is once again accepted that fiscal policy and deficit spending has a major role to play in guiding a market economy. I wish Friedman were still alive so he could witness how his extremism led to the defeat of his own ideas."
http://www.forbes.com/2009/02/19/milton-friedman-keynes-opinions-columnists_paul_samuelson_print.html
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