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May 27, 2010

Professor: double-dip recession is a virtual certainty

Depressions aren't normal business cycles, they're caused by naive/misguided public policy.

"Itís frightening," said Professor Tim Congdon from International Monetary Research. "The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly," he said.

The US authorities have an entirely different explanation for the failure of stimulus measures to gain full traction. They are opting instead for yet further doses of Keynesian spending, despite warnings from the IMF that the gross public debt of the US will reach 97pc of GDP next year and 110pc by 2015...

..."Fiscal policy does not work. The US has just tried the biggest fiscal experiment in history and it has failed. What matters is the quantity of money and in extremis that can be increased easily by quantititave easing. If the Fed doesnít act, a double-dip recession is a virtual certainty," he said.

Mr Congdon said the dominant voices in US policy-making - Nobel laureates Paul Krugman and Joe Stiglitz, as well as Mr Summers and Fed chair Ben Bernanke - are all Keynesians of different stripes who "despise traditional monetary theory and have a religious aversion to any mention of the quantity of money"...

...However, Mr Ashworth warned against a mechanical interpretation of money supply figures. "You could argue that M3 has been going down because people have been taking their money out of accounts to buy stocks, property and other assets," he said...

Yea, the average American is snapping up stocks and property like crazy these days. I just got an E-Z loan and picked up Trump Towers just last week and should be rolling phat by next month.

I suspect by "other assets", this Ashworth buffoon means things like guns, ammo, gold and MRE's.

The grave error all the Obama administration wonks made was in treating this recession/depression like previous ones where some Keynesian government largess DOES give things a kickstart. Keynes was not entirely wrong on that count, but even his writings suggest he'd have realized our current situation was atypical; not one that could be easily Bondo'd over by stock/naive "spending" prescriptions.

John f'ing Kerry thinks things are just dandy though and the government needs to just "sell" the shit sandwich harder to the public.

..."We've come back," he says of the nation, Wall Street, and the economy. "This is an amazing resurgence." ....the Democrats should change their communications strategy "to better sell what we've done."...
Are you feeling resurged? If resurgence means comatose and near death, I guess I am.

I think the Democrats have done a very fine job of selling what they've done.


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posted by Purp at 09:07 AM

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