Friday, June 03, 2011
What can I say? It’s an acronym kind of day. I really wanted to put an ITYS (I Told You So) up there but it really wasn’t me. It was Krugman. Krugman Told You So. From today’s column:
The Mistake of 2010
"And the news has, indeed, been bad. As the stimulus has faded out, so have hopes of strong economic recovery. Yes, there has been some job creation — but at a pace barely keeping up with population growth. The percentage of American adults with jobs, which plunged between 2007 and 2009, has barely budged since then. And the latest numbers suggest that even this modest, inadequate job growth is sputtering out.
So, as I said, we have already repeated a version of the mistake of 1937, withdrawing fiscal support much too early and perpetuating high unemployment.
Yet worse things may soon happen."
It’s not too late. As Professor Krugman explains in the article, the United States (because it is perceived as the safest haven for money) is able to borrow money at unbelievably low rates -- currently 3%. People are throwing money at the U.S. Treasury. It’s vitally important you understand this. The Republicans/Conservatives/Free Marketeers keep telling you that interest rates are going to go up. They’ve been saying it. And they’ve been wrong for these two critical years.
We could have designed a stimulus package to put people back to work fixing our infrastructure. We could have put millions back to work. And in case you haven’t thought it out, labor is cheap right now too. Cheap money and cheap labor. And we make some desperately-needed repairs to our infrastructure. It wasn’t just a win-win, it was a win-win-win opportunity. Instead of hitting a home run, the Republican’s filibuster forced us to bunt -- a stimulus package that was too small to do the job and diluted with tax breaks. We’ve got 14 million people still out of work and the Republicans were complaining about reseeding the National Mall.
It’s not too late. We could still enact a new stimulus plan. Well, except that it’s politically impossible with the Republicans in control of the House. Currently, the Republicans are busy trying to ruin the credit of the United States by refusing to raise the debt limit. You need to think on that too. They want to take more money out of the economy (i.e. put more people out of work) by cutting spending. And if they don’t get their way, they’re threatening to default on our debt which will raise our borrowing costs --perhaps to disastrous levels. In other words, they are threatening to cause the very disaster they have been (falsely) warning you about for the last two years. It’s insane.
I know you’re busy trying to live your life but if you don’t know about the 1937 Recession -- the recession within the Depression -- you need to read up on it.
June 3, 2011