That iconoclast Phil Mirowski has published a paper in The Hedgehog Review, "The Great Mortification: Economists' Responses to the Crisis of 2007 - (and counting),"
http://www.iasc-culture.org/publications_article_2010_Summer_mirowski.php, in which he pretty much lambastes almost the entire economics profession, including most heterodox schools of economics as well, for their miserable failures in dealing with or explaining what has been going on in the world economy in the last few years. Few are spared, including even some who have been viewed as having "called it," such as "Black Swan" Nassim Taleb and "Dr. Doom" Nouriel Roubini. About the only economist quoted favorably without a cutting caveat is James K. Galbraith. Otherwise, he sneers at all the running back to Keynes, even if in his final line he wonders "where is our Keynes?" although he is thinking in terms of Keynes as a philosopher of economics rather than as a policy maker or suggester.
The link should be http://www.iasc-culture.org/publications_article_2010_Summer_mirowski.php.
ReplyDeleteIn reading that paper I found a lot of support for my own totally ignorant formulations that have to do with "the art of the possible". Surely, if newly manufactured money is blasted into the pockets of those who have little of it and will spend it rather quickly, then there will be some inflation. Whereas, the Fed cannot lower interest rates below zero then the smart move is to __*CAUSE*__ inflation while allowing the Bush tax cuts to expire. And to keep on pumping until the rich people figure out that they are going to have to do something with their money other than buy T-Bills. Prior ti the Reagan disaster it was not possible for rich people to stay rich simply by puchasing T-Bills. Unless the tax system is made much more progressive than at present, the rate of inflation must be significantly higher than the 5 year T-Bill rate or there will be no investing. Current inflation rate is 1.05% and the 5 year T-Bill rate is 2%. And the banks and the very rich have no reason to risk anything at all. And that, in my estimation, is the cause of the continuing stagnation.
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