Tuesday, 8 July 2014
The useless Brookings Institution.
I used to respect the BI. I have a BI book which I bought 30 years ago and which is falling apart because I’ve read and referred to it so many times: that’s “Creating Jobs” (editor: John L.Palmer). The book is about employment subsidies, workfare, etc.
Roll forward 30 years and we get BI articles like this by Ron Haskins on the debt. The BI are desperately trying to publicise this short article on Twitter, so presumably they think it’s clever.
In fact Hoskins simply trots out the Kenneth Rogoff view of the debt, namely that it’s comparable to a household debt, and must be repaid by cutting government spending or raising taxes.
He completely fails to get the point that there’s little difference between the debt (at low rates of interest) and the monetary base. He also fails to get the point made by Keynes and MMTers, namely that if the private sector is not supplied with the amount of debt / base money it wants, it will go into savings mode and we get Keynsian paradox of thrift unemployment.