The basic story on the budget deficit is very simple: we badly need large budget deficits in the short-term. They are the only force that can sustain demand in the economy after the collapse of housing construction and the loss of the consumption that had been supported by $8 trillion in illusory housing bubble wealth.What was I saying to Gabba about my penchant for uphill politico-ideological projects? Throw in a "fuck AIPAC, fuck small business" platform, and you're getting a sense of the entirely improbable path I'd like to see the Dems' socialist wing travel.
In the longer term we will need to reduce our trade deficit to replace this demand, but this can only be brought about by a reduction in the value of the dollar against the currencies of our trading partners. If our budget experts had been capable of independent thinking before the crash, they would have pointed out the over-valued dollar as a main cause of imbalances in the U.S. economy. Unfortunately, most of them are still incapable of recognizing the obvious.
The other big oversight that the budget experts commit is the failure to recognize the positive role that moderate rates of inflation can play in our economic recovery.
Wednesday, September 30, 2009
Posted by lex dexter
Quoth the Lex Dexter Chair of Telling it Like It Isn't Not: