Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘contraction’

The Second Great Contraction

Posted by hkarner - 7. August 2011

Date: 07-08-2011
Source: Project Syndicate: Kenneth Rogoff

Erfrischend, wie klar hier Rogoff ist: “there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation”. Als hätte er die Föhrenbergkreis Arbeiten gelesen. Ode: wir halt die seinen! (hfk)

CAMBRIDGE – Why is everyone still referring to the recent financial crisis as the “Great Recession”? The term, after all, is predicated on a dangerous misdiagnosis of the problems that confront the United States and other countries, leading to bad forecasts and bad policy.

The phrase “Great Recession” creates the impression that the economy is following the contours of a typical recession, only more severe – something like a really bad cold. That is why, throughout this downturn, forecasters and analysts who have tried to make analogies to past post-war US recessions have gotten it so wrong. Moreover, too many policymakers have relied on the belief that, at the end of the day, this is just a deep recession that can be subdued by a generous helping of conventional policy tools, whether fiscal policy or massive bailouts.

But the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation. Den Rest des Beitrags lesen »

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Fiscal Fantasies

Posted by hkarner - 23. Juni 2010

June 18, 2010, 4:09 am, Paul Krugman

It’s really amazing to see how quickly the notion that contractionary fiscal policy is actually expansionary is spreading. As I noted yesterday, the Panglossian view has now become official doctrine at the ECB.

So what does this view rest on? Partly on vague ideas about credibility and confidence; but largely on the supposed lessons of experience, of countries that saw economic expansion after major austerity programs.

Yet if you look at these cases, every one turns out to involve key elements that make it useless as a precedent for our current situation. Den Rest des Beitrags lesen »

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